ACCOUNTS - Final Accounts

An analysis of turnover by class of business is as follows:

MSC.SOFTWARE LIMITED - Company Information

Caseware UK (AP4) 2020.0.247 2020.0.247 2020-12-312020-12-312020-12-31falsetruetruetruetruetrue2020-01-013532truefalse 02033042 2020-01-01 2020-12-31 02033042 2019-01-01 2019-12-31 02033042 2020-12-31 02033042 2019-12-31 02033042 c:CompanySecretary1 2020-01-01 2020-12-31 02033042 c:Director5 2020-01-01 2020-12-31 02033042 c:Director6 2020-01-01 2020-12-31 02033042 c:RegisteredOffice 2020-01-01 2020-12-31 02033042 d:Buildings d:ShortLeaseholdAssets 2020-01-01 2020-12-31 02033042 d:Buildings d:ShortLeaseholdAssets 2020-12-31 02033042 d:Buildings d:ShortLeaseholdAssets 2019-12-31 02033042 d:PlantMachinery 2020-01-01 2020-12-31 02033042 d:PlantMachinery 2020-12-31 02033042 d:PlantMachinery 2019-12-31 02033042 d:PlantMachinery d:OwnedOrFreeholdAssets 2020-01-01 2020-12-31 02033042 d:FurnitureFittings 2020-01-01 2020-12-31 02033042 d:FurnitureFittings 2020-12-31 02033042 d:FurnitureFittings 2019-12-31 02033042 d:FurnitureFittings d:OwnedOrFreeholdAssets 2020-01-01 2020-12-31 02033042 d:OwnedOrFreeholdAssets 2020-01-01 2020-12-31 02033042 d:CurrentFinancialInstruments 2020-12-31 02033042 d:CurrentFinancialInstruments 2019-12-31 02033042 d:CurrentFinancialInstruments d:WithinOneYear 2020-12-31 02033042 d:CurrentFinancialInstruments d:WithinOneYear 2019-12-31 02033042 d:ReportableOperatingSegment1 2020-01-01 2020-12-31 02033042 d:ReportableOperatingSegment1 2019-01-01 2019-12-31 02033042 d:ReportableOperatingSegment2 2020-01-01 2020-12-31 02033042 d:ReportableOperatingSegment2 2019-01-01 2019-12-31 02033042 d:ReportableOperatingSegment3 2020-01-01 2020-12-31 02033042 d:ReportableOperatingSegment3 2019-01-01 2019-12-31 02033042 d:ReportableOperatingSegment4 2020-01-01 2020-12-31 02033042 d:ReportableOperatingSegment4 2019-01-01 2019-12-31 02033042 d:ReportableOperatingSegment5 2020-01-01 2020-12-31 02033042 d:ReportableOperatingSegment5 2019-01-01 2019-12-31 02033042 e:UnitedKingdom 2020-01-01 2020-12-31 02033042 e:UnitedKingdom 2019-01-01 2019-12-31 02033042 e:RestWorldOutsideUK 2020-01-01 2020-12-31 02033042 e:RestWorldOutsideUK 2019-01-01 2019-12-31 02033042 d:UKTax 2020-01-01 2020-12-31 02033042 d:UKTax 2019-01-01 2019-12-31 02033042 d:ShareCapital 2020-12-31 02033042 d:ShareCapital 2019-12-31 02033042 d:RetainedEarningsAccumulatedLosses 2020-01-01 2020-12-31 02033042 d:RetainedEarningsAccumulatedLosses 2020-12-31 02033042 d:RetainedEarningsAccumulatedLosses 2019-01-01 2019-12-31 02033042 d:RetainedEarningsAccumulatedLosses 2019-12-31 02033042 d:RetainedEarningsAccumulatedLosses 2019-01-01 02033042 d:FurtherSpecificTypeProvisionContingentLiability1ComponentTotalProvisionsContingentLiabilities 2020-01-01 2020-12-31 02033042 d:FurtherSpecificTypeProvisionContingentLiability1ComponentTotalProvisionsContingentLiabilities 2020-12-31 02033042 d:FurtherSpecificTypeProvisionContingentLiability1ComponentTotalProvisionsContingentLiabilities 2019-12-31 02033042 c:OrdinaryShareClass1 2020-01-01 2020-12-31 02033042 c:OrdinaryShareClass1 2020-12-31 02033042 c:OrdinaryShareClass1 2019-12-31 02033042 c:FRS102 2020-01-01 2020-12-31 02033042 c:Audited 2020-01-01 2020-12-31 02033042 c:FullAccounts 2020-01-01 2020-12-31 02033042 c:PrivateLimitedCompanyLtd 2020-01-01 2020-12-31 02033042 d:WithinOneYear 2020-12-31 02033042 d:WithinOneYear 2019-12-31 02033042 d:BetweenOneFiveYears 2020-12-31 02033042 d:BetweenOneFiveYears 2019-12-31 02033042 2 2020-01-01 2020-12-31 02033042 7 2020-01-01 2020-12-31 02033042 8 2020-01-01 2020-12-31 xbrli:shares iso4217:GBP xbrli:pure

Registered number: 02033042

MSC.SOFTWARE LIMITED

AUDITED

DIRECTORS' REPORT
AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED
31 DECEMBER 2020


MSC.SOFTWARE LIMITED

COMPANY INFORMATION

Directors	Mr P Guglielmini
	Miss H E Peall


Company secretary	Miss H E Peall


Registered number	02033042


Registered office	Cedar House
	78 Portsmouth Road
	Cobham
	Surrey
	KT11 1HY


Independent auditors	Wellden Turnbull Limited
	Chartered Accountants & Statutory Auditors
	Albany House
	Claremont Lane
	Esher
	Surrey
	KT10 9FQ


MSC.SOFTWARE LIMITED

CONTENTS

	Page
Directors' report	1 - 2
Independent auditors' report	3 - 6
Statement of income and retained earnings	7
Balance sheet	8
Notes to the financial statements	9 - 20


MSC.SOFTWARE LIMITED

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2020

The directors present their report and the financial statements for the year ended 31 December 2020.

Directors' responsibilities statement

The directors are responsible for preparing the directors' report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the directors are required to:

∙select suitable accounting policies for the Company's financial statements and then apply them consistently;

∙make judgments and accounting estimates that are reasonable and prudent;

∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Principal activity

The principal activities of the Company in the year under review continued to be the provision of marketing and technical support for the holding company's engineering analysis software products and associated consultancy and training services.

Results and dividends

The profit for the year, after taxation, amounted to £265,390 (2019 - £155,775).

During the year the directors did not recommend payment of a dividend (2019 - £NIL).

Directors

The directors who served during the year were:

Mr P Guglielmini

Miss H E Peall

Principal risks and uncertainties

Competitive pressures in the UK is a continuing risk for the company, which could result in it losing sales to its
key competitors. The Company manages this risk by providing value added services to its customers and by maintaining strong relationships with customers.

Page 1


MSC.SOFTWARE LIMITED

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2020

Financial instruments

The Company's principal financial instruments comprise its bank balances and trade creditors. The main purpose of these instruments is to finance the Company's operations.
In respect of bank balances the liquidity risk is managed to ensure that funds are available to meet expenditure
as it falls due. The directors expect this position to continue.
In respect of cash flow risks management monitor customer and supplier credit terms in order to ensure the company has sufficient operational working capital. In addition cash flows are also monitored at a Group level and where additional funding would be required this can be provided from within the Group rather than seeking external third party funding sources.
In respect of price risk the Group monitors market conditions for its products and acts accordingly to ensure the risk to profitability of the company is low.

Research and development activities

The Company is a partner in various projects for which it receives grants from UK Research and Innovation (UKRI) which is the national funding agency investing in science and research in the UK.

Disclosure of information to auditors

Each of the persons who are directors at the time when this directors' report is approved has confirmed that:

∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Small companies note

In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.

This report was approved by the board on 24 September 2021 and signed on its behalf.

Miss H E Peall

Director

Page 2


MSC.SOFTWARE LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MSC.SOFTWARE LIMITED

Opinion

We have audited the financial statements of MSC.Software Limited (the 'Company') for the year ended 31 December 2020, which comprise the statement of income and retained earnings, the balance sheet and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

∙give a true and fair view of the state of the Company's affairs as at 31 December 2020 and of its profit for the year then ended;

∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

∙have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Page 3


MSC.SOFTWARE LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MSC.SOFTWARE LIMITED (CONTINUED)

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

∙the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

∙the directors' report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

∙the financial statements are not in agreement with the accounting records and returns; or

∙certain disclosures of directors' remuneration specified by law are not made; or

∙we have not received all the information and explanations we require for our audit.

∙the directors' were not entitled to take advantage of the small companies' exemptions in preparing the directors' report and from the requirement to prepare a strategic report.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 1, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Page 4


MSC.SOFTWARE LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MSC.SOFTWARE LIMITED (CONTINUED)

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. We evaluated management’s incentive and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Audit procedures performed by the engagement team included:
• Enquiry of management and those charged with governance as to actual and potential litigation and claims;
• Enquiry of entity staff in compliance functions to identify any instances of non-compliance with laws and regulations;
• Agreeing revenue recognised in the period to supporting audit evidence and assessing the accuracy of revenue recognised in accordance with transfer pricing agreements;
• Reviewing financial statement disclosures and verification to supporting documentation to assess compliance with applicable laws and regulations;
• Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business; and
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.

Page 5


MSC.SOFTWARE LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MSC.SOFTWARE LIMITED (CONTINUED)

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Mark Nelligan FCA (senior statutory auditor)

for and on behalf of

Wellden Turnbull Limited

Chartered Accountants

Statutory Auditors

Albany House

Claremont Lane

Esher

Surrey

KT10 9FQ

27 September 2021

Page 6


MSC.SOFTWARE LIMITED

STATEMENT OF INCOME AND RETAINED EARNINGS

FOR THE YEAR ENDED 31 DECEMBER 2020

	2020	2019
Note	£	£


Turnover	4	4,832,738	4,050,389
Cost of sales		(54,178)	(22,816)
Gross profit		4,778,560	4,027,573
Distribution costs		(665,740)	(349,461)
Administrative expenses		(3,838,914)	(3,584,668)
Other operating income	5	42,552	66,640
Operating profit	6	316,458	160,084
Interest receivable and similar income	10	2,000	8,603
Interest payable and similar expenses	11	-	(139)
Profit before tax		318,458	168,548
Tax on profit	12	(53,068)	(12,773)
Profit after tax		265,390	155,775



Retained earnings at the beginning of the year	1,797,760	1,641,985
Profit for the year	265,390	155,775
Retained earnings at the end of the year	2,063,150	1,797,760

There were no recognised gains and losses for 2020 or 2019 other than those included in the statement of income and retained earnings.

The notes on pages 9 to 20 form part of these financial statements.

Page 7


MSC.SOFTWARE LIMITED REGISTERED NUMBER:02033042

BALANCE SHEET

AS AT 31 DECEMBER 2020

		2020		2019
Note		£		£

FIXED ASSETS
Tangible assets	13		32,938		53,461
CURRENT ASSETS
Debtors: amounts falling due within one year	14	945,322		875,170
Cash at bank and in hand	15	1,675,252		1,707,072
		2,620,574		2,582,242
Creditors: amounts falling due within one year	16	(439,914)		(687,495)
NET CURRENT ASSETS			2,180,660		1,894,747
TOTAL ASSETS LESS CURRENT LIABILITIES			2,213,598		1,948,208
PROVISIONS FOR LIABILITIES
Other provisions	18	(40,448)		(40,448)
			(40,448)		(40,448)
NET ASSETS			2,173,150		1,907,760

CAPITAL AND RESERVES
Called up share capital	19	110,000	110,000
Profit and loss account	20	2,063,150	1,797,760
SHAREHOLDERS' FUNDS		2,173,150	1,907,760

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 24 September 2021.

Miss H E Peall

Director

The notes on pages 9 to 20 form part of these financial statements.

Page 8


MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

1.	General information

MSC.Software Limited is a private company, limited by shares and incorporated in England and Wales, registered number 02033042. The registered office is Cedar House, 78 Portsmouth Road, Cobham, Surrey, KT11 1HY.
During the year the place of business was 4 Archipelago Lyon Way, Frimley, Camberley, GU16 7ER.

2.Accounting policies

2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
These financial statements are presented in sterling which is the functional currency of the Company
and rounded the nearest £.

The following principal accounting policies have been applied:

2.2

Compliance with accounting standards

The financial statements have been prepared using FRS102, the financial reporting standard applicable in the UK and Republic of Ireland. There were no material departures from that standard.

2.3

Financial reporting standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

∙the requirements of Section 7 Statement of Cash Flows;

∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);

∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;

∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Hexagon AB (publ) as at 31 December 2020 and these financial statements may be obtained from P.O.Box 3692 SE - 103 59 Stockholm.

Page 9


MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

2.4

Going concern

These Financial Statements have been prepared on a going concern basis which means that the Company will continue to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of the financial statements. In assessing the appropriateness of the going concern basis of preparation the Directors have taken into account the key risks of the business, including the uncertainty surrounding COVID-19. In doing so the Directors have considered the Company’s business model and availability of cash resources. The Company principally incurs administrative and selling costs and these are recharged to fellow group companies. The directors cite, if required, the continued support and liquidity available from the Company’s ultimate parent Hexagon AB. Having undertaken this assessment, the Directors have a reasonable expectation that the Company has sufficient resources to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of these Financial Statements and the Directors considers it appropriate to prepare the Financial Statements on a going concern basis.

2.5

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Commission revenue - This is recognised when the customer has received the access codes to the software and the sales invoice has been raised in Germany.
Training services - Revenue is recognised at the time the training is completed. Revenue collected on training contracts in advance is deferred and taken into income as the training is provided.
Corporate marketing income - Revenue is recognised in the same period as the coporate marketing cost is incurred.
Consulting services - Revenue from a contract to provide consulting services is recognised by reference to the stage of completion of the contract.
The stage of completion of the consulting service contract is determined as follows:

Installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at the balance sheet date;
Servicing fees included in the price of products sold are recognised by reference to the proportion of the total cost of providing the service for the product sold taking into account historical trends in the number of services actually provided on past goods sold; and
Revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses are incurred.

Page 10


MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

2.6

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is Sterling.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of income and retained earnings.

2.7

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to the statement of income and retained earnings on a straight line basis over the lease term.

2.8

Government grants

Grants of a revenue nature are recognised in the statement of income and retained earnings in the same period as the related expenditure.

2.9

Interest income

Interest income is recognised in the statement of income and retained earnings using the effective interest method.

2.10

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in the statement of income and retained earnings when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the Company in independently administered funds.

Page 11


MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

2.11

Taxation

Tax is recognised in the statement of income and retained earnings except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

2.12

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Leasehold improvements	-	over period of the lease
Computer equipment	-	3-5 years straight line
Furniture, fixtures and fittings	-	4-5 years straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the statement of income and retained earnings.

2.13

Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

2.14

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

Page 12


MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

2.Accounting policies (continued)

2.15

Creditors

Short term creditors are measured at the transaction price. Other financial liabilities are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

2.16

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.

2.17

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the statement of income and retained earnings in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the balance sheet.

2.18

Onerous leases

Where the unavoidable costs of a lease exceed the economic benefit expected to be received from it, a provision is made for the present value of the obligations under the lease.

2.19

Financial instruments

The Company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from and to related parties.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the statement of income and retained earnings.

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MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

3.	Judgements in applying accounting policies and key sources of estimation uncertainty

There are no judgements or estimates when applying the accounting policies that have a significant effect on the amounts recognised in the financial statements that are not readily apparent from other sources.

Commission income	2,901,753	2,720,510
Corporate marketing income	1,519,680	892,999
Consulting income	243,452	173,216
Seminar training	19,677	96,761
Project income	148,175	166,902
	4,832,737	4,050,388

Analysis of turnover by country of destination:
	2020	2019
	£	£


United Kingdom	3,164,883	2,990,487
Rest of Europe	148,174	166,902
Rest of the world	1,519,680	892,999
	4,832,737	4,050,388

5.	Other operating income
		2020	2019
		£	£

	Other operating income	42,552	66,640

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MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

Exchange differences	(28,266)	53,785
Other operating lease rentals	153,803	142,987
Depreciation - computer equipment	26,575	19,285
	155,494	69,917

7.	Auditors' remuneration
		2020	2019
		£	£

Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements

9,785

All other services

1,713

5,040

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MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

Wages and salaries	2,689,280	2,444,185
Social security costs	314,843	292,030
Cost of defined contribution scheme	404,044	214,919
	3,408,167	2,951,134

The wages and salaries figure for 2019 has been amended to include all employee costs processed through the payroll.

The average monthly number of employees during the year was as follows:

	2020	2019
	No.	No.

Administration	4	4
Sales	6	6
Consulting	20	19
Marketing	5	3

	35	32

9.	Directors' remuneration

The directors receive no remuneration from the Company.

10.	Interest receivable
		2020	2019
		£	£

Other interest receivable

2,000

8,603

11.	Interest payable and similar expenses
		2020	2019
		£	£

Other interest payable

139

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MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

Corporation tax
Current tax on profits for the year	53,068	12,773

Profit on ordinary activities before tax

318,458

168,548

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019 - 19%)	60,507	32,024
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment	2,440	6,693
Depreciation in excess of capital allowances	788	283
Adjustment in research and development tax credit leading to an increase (decrease) in the tax charge	(10,667)	(26,227)
Total tax charge for the year	53,068	12,773

Factors that may affect future tax charges

There were no factors that may affect future tax charges.

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MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

13.	Tangible fixed assets

	S/Term Leasehold Property	Computer equipment	Fixtures & Fittings	Total
	£	£	£	£
Cost or valuation
At 1 January 2020	116,163	174,803	70,829	361,795
Additions	-	6,979	-	6,979
Disposals	-	(2,087)	-	(2,087)
At 31 December 2020	116,163	179,695	70,829	366,687
Depreciation
At 1 January 2020	116,156	121,349	70,829	308,334
Charge for the year on owned assets	-	26,575	-	26,575
Disposals	-	(1,160)	-	(1,160)
At 31 December 2020	116,156	146,764	70,829	333,749
Net book value
At 31 December 2020	7	32,931	-	32,938
At 31 December 2019	7	53,454	-	53,461

14.

Debtors

					2020	2019
					£	£


Trade debtors	166,530	90,748
Amounts owed by group undertakings	636,661	622,200
Other debtors	31,095	30,593
Prepayments and accrued income	111,036	131,629
	945,322	875,170

15.	Cash and cash equivalents
		2020	2019
		£	£

	Cash at bank and in hand	1,675,252	1,707,073

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MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

16.	Creditors: Amounts falling due within one year
		2020	2019
		£	£

Trade creditors	69,640	81,054
Amounts owed to group undertakings	29,366	188,712
Corporation tax	52,982	12,773
Other taxation and social security	83,944	84,185
Other creditors	30,827	97,225
Accruals and deferred income	173,155	223,546
	439,914	687,495

17.

Grants

The Company is a participant in several projects for which it receives grants from UK Research and Innovation (UKRI) which is the national funding agency investing in science and research in the UK. During the period grants were received of £45,962 (2019 - £167,102).

18.	Provisions

	2020	2019
	£	£

At 1 January 2020	40,448	40,448
Charged to profit or loss	-	-
At 31 December 2020	40,448	40,448

This provision relates to the property the Company operates from and the expected cost to restore it to its original state once the lease comes to an end and the Company vacates the property.The lease expires in 2027

19.	Share capital
		2020	2019
		£	£

Allotted, called up and fully paid

110,000 (2019 - 110,000) Ordinary shares of £1 each	110,000	110,000

20.	Profit and loss account

Profit & loss account

The profit and loss account represents cumulative profits and losses net of dividends and other adjustments.

Page 19


MSC.SOFTWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

Not later than 1 year	173,154	142,081
Later than 1 year and not later than 5 years	191,062	256,843
	364,216	398,924

22.	Related party transactions
	The Company has taken advantage of Section 33 paragraph 1A of Financial Reporting Standard 102 not to disclose transactions with wholly owned group members.

23.	Controlling party

The Company's parent undertaking is MSC. Software Corporation, a company incorporated in the USA. The ultimate parent undertaking is Hexagon AB (publ). The consolidated financial statements of Hexagon AB (publ) as at 31 December 2020 and may be obtained from Hexagon AB (publ) P.O. Box 3692 SE -103 59 Stockholm.

Page 20