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JDC Group AG

Interim / Quarterly Report Aug 22, 2019

4522_10-q_2019-08-22_974870eb-b917-44cb-8e74-78cbd9d79700.pdf

Interim / Quarterly Report

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Interim Report 1.Half of 2019

Inhalt

JDC Group AG at a glance 3
Management Board letter to shareholders 5
Group management interim report 9
Situation of the group 9
The group's business model 9
Research and development 9
Economic report 9
Overall economic conditions 9
Sector-specific conditions 10
Competitive position 10
Business performance 11
Situation 12
Major key figures 12
Financial position 12
Cash flows 13
Earnings performance 14
Segment reporting 14
Opportunities and risk report 15
Outlook 16
Economic outlook 16
Markets and sector outlook 17
Outlook for the JDC Group 17
Consolidated financial statements 18
Consolidated income statement 18
Consolidated statement of comprehensive income 19
Segment reporting 20
Consolidated balance sheet 24
Consolidated cash flow statement 26
Consolidated statement of changes in equity 27

Notes 28

Contact 42

JDC Group AG

P & L
in kEUR
2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
Changes
compared to
previous
30/06/2019
kEUR
30/06/2018
kEUR
Changes
compared to
previous
Revenues 25,702 22,010 16.8 52,513 44,474 18.1
Gross margin 7,457 6,694 11.4 15,594 14,351 8.7
Gross margin in % 29.0 30.4 –4.6 29.7 32.3 –8.0
Total operational costs 7,479 6,861 9.0 14,813 13,698 8.1
EBITDA 838 534 56.9 2,367 2,014 17.5
EBITDA margin in % 3.3 2.4 37.5 4.5 4.5 0.0
EBIT –22 –167 86.8 781 653 19.6
EBIT margin in % –0.1 –0.8 87.5 1.5 1.5 0.0
Net profit –360 –619 41.8 145 –210 > 100
Number of shares in thousands (end of period) 13,128 11,935 10.0 13,128 11,935 10.0
Earnings per share in EUR –0.03 –0.05 40.0 0.01 –0.02 > 100
Cashflow/Balance sheet
in kEUR
30/06/2019
kEUR
31/12/2018
kEUR
Changes
compared to
year in %
Cash flow from operating activities 491 *
1,066
–53.9
Total equity and liabilities 83,427 85,547 –2.5
Equity 33,485 33,344 0.4
Equity ratio in % 40.1 39.0 2.8

*30/06/2018

Stefan Bachmann CDO

Ralph Konrad CFO, CIO

JDC GROUP FINANCIAL SERVICES | Annual Report 2007 4

Dr. Sebastian Grabmaier CEO

Management Board letter to shareholders

DEAR SHAREHOLDERS, DEAR BUSINESS PARTNERS,

We are happy to be able to report to you that during the first half of 2019 JDC Group AG was once again able to significantly increase revenues and operating profit compared to the previous year.

Revenues increased by roughly 18 percent in the first half of 2019. Earnings before interest, taxes, depreciation and amortisation (EBITDA) also rose by 18 per cent and earnings before interest and taxes (EBIT) rose by around 20 percent compared to the previous year.

Results for the 1st half and the 2nd quarter of 2019

JDC Group AG again significantly outperformed the first half of the previous year in terms of revenues and earnings.

Revenues in the first half of the year saw an encouraging rise of 18 percent to 52.5 million Euro (H1 2018: 44.5 million Euro). Quarterly revenues in the second quarter, which is normally a weak quarter in the broker market, rose by around 17 percent to 25.7 million Euro (Q2 2018: 22.0 million Euro) and were therefore atypically only slightly below the level of the first quarter.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by around 18 percent to 2.4 million Euro in the first half of the year (H1 2018: 2.0 million Euro). At kEUR 838, EBITDA for the second quarter was even around 57 percent above the level of the same quarter of the previous year and within plan despite increased personnel costs and IT costs in anticipation of the acquired large projects (Q2 2018: kEUR 534). During the course of the year, we expect to see further growth and additional improvements in income as a result of additional expenditures invested for new key accounts.

Despite slightly negative earnings before interest and taxes (EBIT) in the second quarter (EBIT: kEUR –22 compared to kEUR –167 in the same quarter of the previous year), EBIT rose significantly in the first half to kEUR 781, which corresponds roughly to an increase of 20 percent. (H1 2018: kEUR 653).

At kEUR 206, consolidated earnings before taxes (EBT) were therefore also significantly above the previous year (H1 2018: kEUR 70).

JDC Group AG also developed positively in terms of relevant key financial data: As at 30 June 2019, equity capital stood at 33.5 million Euro. The equity capital ratio therefore stood at 40.1 percent (31 December 2018: 33.3 million Euro and 39.0 percent).

Our individual business segments performed as follows:

ADVISORTECH

The Advisortech segment increased its revenues even more than the entire Group in the first half of 2019 to 44.4 million Euro. It was therefore roughly 22 percent above the same period of the previous year (H1 2018: 36.5 million Euro). In the second quarter, revenues stood at 21.0 million Euro and therefore around 17 percent above the 2nd quarter of 2018 (18.0 million Euro).

Earnings before interest, taxes, depreciation and amortization (EBITDA) came to 3.1 million Euro in the first six months of 2019 and were significantly higher than the previous year's level (H1 2018: 2.6 million Euro). In the second quarter, EBITDA rose to 1.3 million Euro (Q2 2018: 0.8 million Euro).

At 1.8 million Euro, earnings before interest and taxes (EBIT) in the first six months of 2019 were likewise significantly above the previous year (H1 2018: 1.5 million Euro). In the second quarter, EBIT was 0.6 million Euro, as compared to 0.2 million Euro in the same quarter of the previous year.

ADVISORY

In the Advisory business segment, revenues in the first six months of 2019 increased by 6.2 percent. Revenues were 12.9 million Euro, as compared to 12.1 million Euro during the same period of the previous year. In the second quarter, revenues also remained above the level of the previous year (6.8 million Euro compared to 6.1 million Euro in Q2 2018).

Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the Advisory segment fell slightly to Euro 0.0 million in the first six months of 2019 and in the second quarter (H1 2018: Euro 0.1 million).

Earnings before interest and taxes (EBIT) for the segment thus likewise decreased slightly in the first six months of 2019 to –0.2 million Euro (H1 2018: –0.1 million Euro). In the second quarter, EBIT was –0.2 million Euro, as compared to 0.0 million Euro in the same quarter of the previous year.

Outlook

Our forecast for the remainder of 2019 is positive.

In the first half of 2019, JDC Group significantly increased revenues and earnings compared to the same period of the previous year. The Advisortech segment was able to grow particularly strongly, due to the key account sales. However, significant parts of this growth will only become apparent from the second half of 2019.

The costs already allocated for the administration of key accounts still influence the Group's profitability, but the economies of scale of the business model can already be identified.

In the coming weeks and months, we will acquire several new key accounts on the basis of our marketleading settlement platform. In doing so, we want to finally establish JDC as the outsourcing partner for large and very large financial intermediaries in Central Europe and over the long term make it the first choice for handling retail client insurance transactions for banks, major brokers, captive brokers and insurance agents.

It is primarily from this segment that we anticipate further significant increases and therefore positive earnings contributions as is typical every year and for the sector.

This is why we are reaffirming our guidance and continue to expect sales of at least 110 million Euro and significantly improved earnings.

Thanks to our employees and shareholders

Last, but not least, we would again like to offer our heartfelt thanks in particular to the employees and sales partners of both JDC Group AG and our subsidiaries, since our success is based on their commitment and motivation.

We would also like to extend thanks to our shareholders, who continue to have faith in our business model and support and approve the actions taken by our executive and supervisory boards.

We would be very pleased to enjoy your continued support.

Sincerely,

Dr. Sebastian Grabmaier Ralph Konrad Stefan Bachmann

Group management interim report

SITUATION OF THE GROUP

The Group's Business Modell

JDC Group AG stands for modern financial advice and intelligent financial technology for advisors and customers. In the "Advisortech" business unit, we provide our customers and advisors with modern advisory and administration technology using the Jung, DMS & Cie. Group. While many sales and distribution partners perceive the technological transformation as a problem and the young fintech companies as the new competitors, we perceive the "technology" factor to be a great opportunity. Solutions from the "Advisortech" business unit will help advisors in the future to take even better care of their customers and generate increased sales as a result. In the "Advisory" segment, we broker financial products to private end customers via independent advisors, brokers and financial distributors using the FiNUM. Group. With over 16,000 connected sales partners we are one of the market leaders in the German-speaking area.

Research and Development

The "Advisortech" business unit provides our clients and consultants with advanced consulting and administration technology through the Jung, DMS & Cie. Group. The JDC Group is involved in pursuing the development of proprietary software solutions. During first half year 2019, in-house efforts in this regard amounted to kEUR 488. Please also refer to the relevant remarks contained in the annex to the consolidated financial statement.

ECONOMIC REPORT

Overall Economic Conditions

The German economy started the year 2019 with growth. Based on calculations compiled by the Federal Statistical Office, gross domestic product (GDP) for the first quarter of the year in comparison to the fourth quarter of 2018 grew by 0.4 percent. In the second quarter of 2019, GDP was 0.1 percent lower compared to the previous quarter. The decline is due to the lower trade balance. According to the federal government's forecasts, Germany's GDP will grow by 0.5 percent in 2019. DIW forecasts growth of 0.9 percent. It is the lowest level in six and a half years, according to DIW. Uncertainty is particularly caused by the growing concerns about individual European countries, primarily Italy, and the possibility of an escalating trade conflict between the US and the rest of the world. It impairs the investment activity of companies worldwide. In the first half-year, German exports grew slightly, but the trend is moving downwards. However, the uncertain global economic situation has a negative impact on the business development of the JDC Group and its subsidiaries. Households are currently cutting back on spending on investments or life insurance products. If an economic downturn actually occurs, it will result in declining revenues.

The Market and Competitive Position

THE MARKET FOR INVESTMENT PRODUCTS 1)

The German fund industry witnessed a net inflow of new funds totalling EUR 42 billion in the first half of 2019. Special funds showed high inflows of EUR 38.3 billion. Retail funds received a total of EUR 1.8 billion.

In the middle of the year, the members of the German Investment Funds Association (BVI) managed retail funds with a total volume of EUR 1,053 billion. Open-ended special funds contribute EUR 1.8 billion to the portfolio. At the end of June 2019, the fund industry managed total assets worth EUR 3.2 trillion for its investors. This corresponds to an increase of around 6 percent compared to the previous year.

THE MARKET FOR INSURANCE PRODUCTS 2)

In 2018, premiums received in the insurance industry showed a slight year-on-year increase. The performance of private health insurance, property insurance and life insurance was responsible for this. Assuming the same conditions, a continuation in this development of approx. 2 percent is expected for 2019.

Premiums received for private health insurance policies are currently showing slightly positive performance. There is currently also a positive development in property insurance contribution income. Premiums received for life insurance are currently showing positive performance again.

Overall, the industry aims to achieve stable or slightly increasing year-on-year premium performance.

OUTLOOK

The financial services market will continue to be shaped by ongoing uncertainty, volatility, and low interest rates in 2019. The interest loss incurred above all on insurance policies in the current low interest climate will further reduce the net return on insurance products. Moreover, sales of investment and life insurance products may decrease compared to the previous year.

Competitive Position

JDC Group AG competes with different companies in its individual business segments.

COMPETITORS IN THE ADVISORTECH SEGMENT

In its Advisortech segment, the JDC Group AG sells via its subsidiaries of Jung, DMS & Cie. Aktiengesellschaft (JDC) products such as investment funds, closed funds, structured products, insurances, and financing products to end customers (B2B).

1) Unless indicated otherwise, all data referred to in the following description of the investment product market was taken from the BVI press release on 13 August 2019.

2) Unless indicated otherwise, all data referred to in the following description of the insurance market was taken from the website of the Gesamtverband der deutschen Versicherungswirtschaft e.V. (GDV).

As a broker pool, JDC is in competition with all companies brokering the aforementioned financial products via independent brokers to downstream brokers or end customers. These include broker networks/pools, such as Fonds Finanz Maklerservice GmbH and BCA AG, as well as commercial banks, savings banks, cooperative banks, and financial sales companies.

Based on the JDC Group's assessment, market barriers to entry are now very high in the broker pool business. Due to past developments, there are large numbers of brokerages, especially broker networks/ pools, that are characterized by a widely varying sizes and degrees of professionalism. Having said this, the broker pools market has nevertheless seen substantial consolidation in recent years. During this period, JDC has grown and acquired smaller competitors leaving the market and/or continually integrated their customers.

Competitors in the Advisory Segment segment

In its Advisory segment, JDC Group AG offers advice on and brokers financial products to end customers (B2C) via its subsidiaries FiNUM.Private Finance Deutschland and FiNUM.Private Finance Österreich. In general, all companies are in competition with numerous market players, i.e. alongside financial sales operations and standalone brokers the companies also compete with exclusivity-bound organizations at insurers and banks, as well as with direct sales, such as internet-based operations. Based on the assessment of JDC Group AG, the companies' main competitors can be identified by reference to the different business models and target groups as follows:

FiNUM.Private Finance Deutschland and FiNUM.Private Finance Österreich focus on advising sophisticated private customers (the so-called "mass affluent market") in Germany and Austria. The business mix consists almost equally of wealth accumulation and wealth protection (insurance). The main competitors are thus commercial and private banks, as well as financial advisory companies focusing on sophisticated customers, such as MLP AG, Horbach Wirtschaftsberatung AG as well as private banking units of commercial banks and saving banks).

BUSINESS PERFORMANCE OF THE GROUP AND ITS SEGMENTS

Owing to its strength in sales, increasing market relevance and reliability for product initiators from both the insurance and investment sectors, JDC Group AG has become an increasingly attractive partner.

Meanwhile, JDC Group AG is also an institutional partner for financial product distributors and/or financial product brokers that are looking for a strong partner for their back offices in dealing with a rapidly changing regulatory environment.

The positive performance results primarily from an increase in sales and revenues in the Advisortech segment. The outsourcing arranged with Albatros Versicherungsdienste, as well as other acquired key accounts, are providing a distinct increase in sales. Increased personnel costs and material expenses in anticipation of additionally acquired large projects had a slight negative impact on the result. However, a clearly positive earnings trend can be determined overall. In the second half-year, we will be able to announce additional large products. With consistent costs, this will lead to higher profitability.

For further details, we refer to the following statements on the status of the JDC Group.

COMPANY SITUATION

Major Key Figures

FINANCIAL POSITION

Assets in kEUR

30/06/2019
kEUR
31/12/2018
kEUR
Changes
in %
Intangible assets 50,602 46,136 9.68
Fixed assets 705 759 –7.11
Financial assets 186 148 25.68
Deferred taxes 2,601 2,700 –3.67
Long-term non-current assets
Accounts receivable 824 1,068 –22.85
Other assets 2,048 2,257 –9.26
Current assets
Accounts receivable 15,447 16,657 –7.26
Other assets 4,936 3,759 31.31
Cash and cash equivalents 5,522 11,801 –53.21
Deferred charges 556 262 >100
Total assets 83,427 85,547 –2.48

Of the Group's non-current assets, amounting to EUR 57.0 million as of 30 June 2019 (previous year: EUR 53.1 million), EUR 50.6 million (previous year: EUR 46.1 million) are comprised of intangible assets. The increase results from the acquisition of equity investments in the Advisortech segment.

Current assets fell to EUR 26.5 million (previous year) EUR 32.5 million). The main reason is the reduction in short-term receivables and deposits with banks. Bank deposits fell by EUR 6.3 million to EUR 5.5 million.

The balance sheet total decreased to EUR 83.4 million, compared to EUR 85.5 million in 2018. This essentially results from a reduction of the credit balance by around EUR 6.3 million and a rise in intangible assets by EUR 4.5 million, compared to 31 December 2018.

Overall, at EUR 31.4 million, the long-term debt capital has increased slightly (previous year: EUR 27.0 million). Current borrowed capital fell to EUR 18.5 million as compared with EUR 25.2 million in the previous year. This includes EUR 14.5 million of accounts payable trade and EUR 3.7 million of other liabilities.

The consolidated JDC Group had an equity ratio of 40.1 percent of total assets as of 30 June 2019 (31 December 2018: 39.0 percent) of the balance sheet total. The consolidated JDC Group thus continues to benefit from very strong equity resources.

Liabilities in kEUR
30/06/2019 31/12/2018 Changes
kEUR kEUR in %
Equity 33,485 33,344 0.42
Non-current liabilities
Deferred taxes 3,145 1,665 88.89
Bonds 14,862 14,813 0.33
Liabilities due to banks 2,548 107 >100
Accounts payable 8,993 8,810 2.08
Other liabilities 184 184 0.00
Provisions 1,704 1,455 17.11
Current liabilities
Accrued taxes 137 334 –58.98
Liabilities due to banks 92 2,584 –96.44
Accounts payable 14,527 17,508 –17.03
Other liabilities 3,687 4,729 –22.03
Deferred income 63 14 >100
Total equity and liabilities 83,427 85,547 –2.48

CASH FLOWS

The cash flow statement records the evolution of cash flow within the reporting period in the form of cash inflows and outflows.

Cash flow from ongoing business activity fell by kEUR 575, from kEUR 1,066 to kEUR 491, as of 30 June 2019. This mainly results from the reduction of liabilities.

Cash flow from investment activity is negative at kEUR –4,989. This is exclusively comprised of payments for investments in consolidated companies.

The financing activity results in a negative cashflow of kEUR –1,782 , which essentially results from scheduled principal repayments and interest payments.

Cash and cash equivalents amounted to kEUR 5,522.

The Group's financial resources were adequate during the year under report. The company safeguards is short-term liquidity by working with monthly liquidity planning.

EARNINGS PERFORMANCE

P & L in kEUR
30/06/2019 30/06/2018 Changes
kEUR kEUR in %
Revenues 52,513 44,474 18.08
Gross margin 15,594 14,351 8.66
Gross margin in % 29.7 32.3 –8.05
Total operational costs 14,813 13,698 8.14
EBITDA 2,367 2,014 17.53
EBITDA margin in % 4.5 4.5 0.00
EBIT 781 653 19.60
EBIT margin in % 1.5 1.5 0.00
Net profit 145 –210 >100

The Group's profit situation improved in the first half of 2019. Half-year sales increased by EUR 8.0 million, or 18.1 percent, to EUR 52.5 million (H1 2018: EUR 44.5 million).

Gross profit increased by around 9 percent to EUR 15.6 million. This is primarily attributable to the key account contracts.

EBITDA (earnings before interest, taxes, depreciation and amortisation) rose slightly by 18 percent to EUR 2.4 million (H1 2018: EUR 2.0 million). EBIT also grew to EUR 0.8 million (H1 2018: EUR 0.7 million).

Earnings after tax improved to EUR 0.1 million, compared to EUR –0.2 million in the previous year.

SEGMENT REPORTING

Segment Advisortech

Revenues in the Advisortech segment grew significantly to EUR 44.4 million, compared to EUR 36.5 million in the previous year. At EUR 3.1 million, the EBITDA also increased significantly, after EUR 2.6 million in the same period of the previous year. EBIT stood at EUR 1.8 million, compared to EUR 1.5 million in the previous year. In the second quarter, sales amounted to EUR 21.0 million (Q2 2018: EUR 18.0 million). EBITDA amounts to EUR 1.3 million after EUR 0.8 million in the second quarter of the previous year. EBIT is at EUR 0.6 million (Q2 2018: EUR 0.2 million).

Segment Advisory

Segment revenues performed positively, reaching EUR 12.9 million, as compared with EUR 12.1 million in the same period of the previous year. EBITDA fell from EUR 0.1 million in the same period of the previous year to EUR 0.0 million. EBIT also fell from EUR –0.1 million to EUR –0.2 million. In the second quarter, sales rose to EUR 6.8 million (Q2 2018: EUR 6.1 million). EBITDA amounts to EUR 0.0 million after EUR 0.1 million in the second quarter of the previous year. EBIT is at EUR -0.2 million (Q2 2018: EUR 0.0 million).

Segment Holding

The earnings in the Holding segment remained relatively constant. Segment revenues amount to EUR 0.9 million as compared to EUR 1.0 million in the previous year. EBITDA fell slightly to EUR –0.8 million as compared to EUR –0.7 million in the first half of 2018. EBIT also fell to EUR –0.8 million as compared to EUR –0.7 million in the previous year. In the second quarter, revenues are at EUR 0.5 million (Q2 2018: EUR 0.5 million). EBITDA amounts to EUR –0.4 million after EUR –0.4 million in the second quarter of the previous year. EBIT is at EUR –0.4 million (Q2 2018: EUR –0.4 million).

OPPORTUNITY AND RISK REPORT

The future business performance of our company involves all opportunities and risks associated with the sale of financial products and the acquisition, management and sale of companies. The risk management system at JDC Group AG is structured to facilitate the early detection of risks and the derivation of suitable measures to minimize such risks. Financial instruments are exclusively used for hedging purposes. In order to identify possible problems in the affiliated companies and their investments at an early stage, the most important key figures are collected and evaluated on a monthly basis.

JDC Group AG is managed by means of a monthly reporting system, which includes the most important key figures and takes particular account of the liquidity situation. Furthermore, the Management Board is kept informed of the current liquidity situation on a daily basis.

Relevant company-related risks are as follows:

  • When brokering financial products and insurance policies, the possibility cannot be excluded that cancellations will give rise to expenses that are not covered by corresponding recourse claims towards brokers. The increased insurance revenue in the JDC Group means the recovery of this type of recourse claim is set to play a more important role. In the context of its sales arrangement with insurance companies, JDC Group AG in some cases issues letters of comfort for its subsidiaries.
  • Claims may be asserted against the JDC Group in connection with incorrect information or advisory provided by its sales partners. Whether the risks involved are covered by existing insurance cover or recourse claims towards brokers can only be assessed on a case-by-case basis.
  • Volatility on the capital markets and the difficulty in forecasting product turnover place high requirements on liquidity management. Lack of liquidity could pose a threat to the Group's continued existence.
  • Seller guarantees customary to the market were granted upon execution of the company sales. Any infringement of these seller guarantees may lead to unscheduled expenses for the JDC Group.

Relevant market-related risks are as follows:

  • The company's business success is basically dependent on economic developments.
  • Developments in national and global financial and capital markets are of considerable importance to the success of JDC Group AG and the consolidated group. Persistent volatility or negative developments could impact negatively on the profitability of JDC Group AG.
  • The stability of the legal and regulatory framework in Germany and Austria is a factor of great importance. Particularly changes at short notice to the underlying framework for financial services companies, brokers and financial products could impact negatively on the business model of JDC Group AG.

Relevant regulatory risks are as follows:

  • Under the MIFID II discussions, portfolio commissions are to be paid only when used to improve the quality of client services. Precisely how this is to operate is unclear. Consequently, this could result in short-term reductions in revenue in the investment segment.
  • Implementation of the EU's GDPR (General Data Protection Regulation) affects those businesses in the financial services sector that make considerable use of personal data. We will be subject to comprehensive information and documentation obligations, which must also be implemented in the Group's IT systems. This will result in an increase in IT costs.

The Management Board cannot discern any other risks to the company's existence or growth and is of the opinion that the risks identified are manageable and do not constitute a threat to the Group's continued existence.

The Management Board sees the following opportunities: Currently, many financial services providers are in a financially weakened position. Along with poor sales in recent years, regulatory requirements have significantly increased. As a result, the financial resources of many competitors are exhausted and the pressure to consolidate has increased – which is to the benefit of large market participants, including JDC Group companies.

In 2019, the JDC Group made some important changes that will have a decisive effect in the coming years. In 2019, exclusive cooperation agreements were concluded with RheinLand Versicherungs AG, Sparda-Bank Baden-Württemberg as well as Bavaria Wirtschaftsagentur GmbH. Moreover, Jung, DMS & Cie. took control of the investment pool KOMM Invest GmbH in 2019.

The Management Board believes all of these developments will produce positive results for the JDC Group AG's investments and therefore for the JDC Group AG itself in fiscal year 2019.

OUTLOOK

Economic outlook

According to IMF forecasts, global economic growth should only reach 3.3 percent in 2019, compared to 3.6 percent in 2018.

Customs increases and trade conflicts are cited as the most significant declines in growth. Worsening financing conditions result from a stricter monetary policy. The IMF growth forecast amounts to 0.7 percent for the 2019 financial year, after being corrected downwards. The reasons for this, amongst others, are the punitive tariff duties imposed on one another by the US and China, Brexit and tensions in the Gulf.

According to the IMF growth forecast, the economy in the eurozone will grow unchanged by 1.3 percent in 2019. According to the Fund, it should be 1.6 percent again for 2020.

In May, the industry orders plummeted by 8.6 percent in comparison to the previous year. Production has also been weakening for months. Because of this and the trade war between the US and China, several experts are warning of a recession in export-dependent Germany.

Market and sector outlook

According to information from December 2018, the ECB purchase programme should come to an end, as the rate of inflation was higher than economic growth. In the current year, with a very volatile market, the ECB has already indicated that it will not diverge from the path of cheap liquidity. It remains to be seen how the institution will conduct itself in an upcoming recession.

Outlook for the JDC Group consolidated group

EXPECTED BUSINESS PERFORMANCE

Expectations with regard to the performance of the JDC Group for 2019 are based on the macroeconomic assumptions presented in the Group Management Report. The expansion of political crises, not least owing to continued protectionist trade policies of the United States as well as an unregulated Brexit, can have a significant impact on the financial, asset and earnings position of the JDC Group. Corporate planning occurred on the basis of detailed surveys and assumptions that the JDC Group AG views as realistic.

Clear and sustainable improvement in business operations will be paramount for the JDC Group in 2019. In 2019, the Group will focus on

  • acquiring new key clients and thereby on scaling the platform and
  • optimising internal procedures and cost management.

Specifically, we expect Group revenue in 2019 to be around 15 percent higher than in 2018, that absolute gross profit will rise and that the Group will achieve an EBITDA significantly above that of the previous year. In all, the Management Board is expecting positive business performance by the Group as a whole.

Wiesbaden, August 22, 2019

Dr. Sebastian Grabmaier Ralph Konrad Stefan Bachmann

Consolidated income statement

Notes 2. Quarter
2019
kEUR
2. Quarter
2018
kEUR
01/01/–
30/06/2019
kEUR
01/01/–
30/06/2018
kEUR
1. Commission income [1] 25,702 22,010 52,513 44,474
2. Capitalised services [2] 246 150 488 338
3. Other operating income [2] 74 69 99 169
4. Commission expenses [3] –18,565 –15,535 –37,506 –30,630
5. Personnel expenses [4] –4,133 –3,771 –8,369 –7,633
6. Depreciation and amortisation of tangible and [5]
intangible assets –860 –701 –1,586 –1,361
7. Other operating expenses [6] –2,486 –2,389 –4,858 –4,704
8. Other interest and similar income 1 1 2 4
9. Interest and similar expenses –284 –326 –578 –587
10. Operating profit/loss –305 –492 206 70
11. Income tax expenses –49 –126 –54 –265
12. Other tax expenses –6 –1 –7 –15
13. Net profit –360 –619 145 –210
14. Earnings per share –0.03 –0.05 0.01 –0.02

Consolidated financial statements

Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

Consolidated statement of comprehensive income

2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
01/01/ – 30/06/2019
kEUR
01/01/ – 30/06/2018
kEUR
Profit or loss for the period –360 –619 145 –210
Other income
In following periods in the profit
and loss account to be reclassified
into other results 0 0 0
In following periods not in the profit
and loss account to be reclassified
into other results 0 0 0
Other income after taxes 0 0 0
Total income after taxes –360 –619 145 –210
Attributable to:
Parent company's shareholders –360 –619 145 –210

Segment reporting

Advisortech Advisory
30/06/2019 30/06/2018 30/06/2019 30/06/2018
kEUR kEUR kEUR kEUR
Segment income
Commission income 44,404 36,450 12,859 12,110
of which with other segments 536 607 4,214 3,479
Total segment income 44,404 36,450 12,859 12,110
Capitalised services 488 338 0 0
Other income 104 105 23 64
Segment expenses
Commissions –32,502 –25,597 –9,528 –8,794
Personnel expenses –5,716 –5,223 –1,657 –1,480
Depreciation and amortisation –1,313 –1,109 –271 –245
Other –3,654 –3,510 –1,656 –1,772
Total segment expenses –43,185 –35,439 –13,112 –12,291
EBIT 1,811 1,454 –230 –117
EBITDA 3,124 2,563 41 128
Income from investments 0 0 0 0
Other interest and similar income 264 294 7 23
Yield on other securities 0 0 0 0
Depreciation of financial assets 0 0 0 0
Other interest and similar expenses –760 –779 –314 –301
Financial result –496 –485 –307 –278
Segment earnings before tax (EBT) 1,316 969 –537 –395
Tax expenses –138 –333 84 54

financial statements Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated 21 Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

Holding Total reportable
segments
Transfer Total
30/06/2019
kEUR
30/06/2018
kEUR
30/06/2019
kEUR
30/06/2018
kEUR
30/06/2019
kEUR
30/06/2018
kEUR
30/06/2019
kEUR
30/06/2018
kEUR
943 993 58,206 49,553 –5,693 –5,079 52,513 44,474
943 993 5,693 5,079 –5,693 –5,079 0 0
943 993 58,206 49,553 –5,693 –5,079 52,513 44,474
0 0 488 338 0 0 488 338
0 0 127 169 –28 0 99 169
0 0 –42,030 –34,391 4,524 3,761 –37,506 –30,630
–996 –930 –8,369 –7,633 0 0 –8,369 –7,633
–2 –7 –1,586 –1,361 0 0 –1,586 –1,361
–745 –740 –6,055 –6,022 1,197 1,318 –4,858 –4,704
–1,743 –1,677 –58,040 –49,407 5,721 5,079 –52,319 –44,328
–800 –684 781 653 0 0 781 653
–798 –677 2,367 2,014 0 0 2,367 2,014
0 0 0 0 0 0 0 0
505 500 776 817 –774 –813 2 4
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
–278 –320 –1,352 –1,400 774 813 –578 –587
227 180 –576 –583 0 0 –576 –583
–573 –504 206 70 0 0 206 70
–7 –1 –61 –280 0 0 –61 –280
–580 –505 145 –210 0 0 145 –210

Segment reporting

Advisortech Advisory
2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
Segment income
Commission income 20,967 17,972 6,843 6,059
of which with other segments 230 356 1,878 1,665
Total segment income 20,967 17,972 6,843 6,059
Capitalised services 246 150 0 0
Other income 63 24 11 45
Segment expenses
Commissions –15,383 –13,043 –5,174 –4,346
Personnel expenses –2,784 –2,532 –853 –746
Depreciation and amortisation –686 –576 –173 –121
Other –1,853 –1,799 –836 –894
Total segment expenses –20,706 –17,950 –7,036 –6,107
EBIT 570 196 –182 –3
EBITDA 1,256 772 –9 118
Income from investments 0 0 0 0
Other interest and similar income 131 146 3 11
Yield on other securities 0 0 0 0
Depreciation of financial assets 0 0 0 0
Other interest and similar expenses –375 –420 –158 –151
Financial result –244 –274 –155 –140
Segment earnings before tax (EBT) 326 –78 –337 –143
Tax expenses –66 –157 18 30
Segment net profit 260 –235 –319 –113

financial statements Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated 23 Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

Holding Total reportable
segments
Transfer Total
2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
487 496 28,297 24,527 –2,595 –2,517 25,702 22,010
487 496 2,595 2,517 –2,595 –2,517 0 0
487 496 28,297 24,527 –2,595 –2,517 25,702 22,010
0 0 246 150 0 0 246 150
0 0 74 69 0 0 74 69
0 0 –20,557 –17,389 1,993 1,854 –18,564 –15,535
–496 –493 –4,133 –3,771 0 0 –4,133 –3,771
–1 –4 –860 –701 0 0 –860 –701
–399 –359 –3,088 –3,052 602 663 –2,486 –2,389
–896 –856 –28,638 –24,913 2,595 2,517 –26,043 –22,396
–409 –360 –22 –167 0 0 –22 –167
–408 –356 838 534 0 0 838 534
0 0 0 0 0 0 0 0
254 248 388 405 –387 –404 1 1
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
–138 –159 –671 –730 387 404 –284 –326
116 89 –283 –325 0 0 –283 –325
–293 –271 –305 –492 0 0 –305 –492
–7 0 –55 –127 0 0 –55 –127
–300 –271 –360 –619 0 0 –360 –619

Consolidated Balance Sheet

Assets
Notes 30/06/2019
kEUR
31/12/2018
kEUR
Non-current assets
Intangible assets [7] 50,602 46,136
Fixed assets 705 759
Financial assets [8] 186 148
51,493 47,043
Deferred taxes [9] 2,601 2,700
Long-term non-current assets
Accounts receivable [10] 824 1,068
Other assets [10] 2,048 2,257
2,872 3,325
Total non-current assets 56,966 53,068
Current assets
Accounts receivable [11] 15,447 16,657
Other assets [11] 4,936 3,759
Other securities 0 0
Cash and cash equivalents 5,522 11,801
Deferred charges 556 262
Total current assets 26,461 32,479
Total assets 83,427 85,547

Consolidated financial statements

Total equity and liabilities

Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

83,427

Liabilities 30/06/2019 31/12/2018 Notes kEUR kEUR Equity Subscribed capital Capital reserves Other retained earnings Other equity components Non-controlling interests Total equity Non-current liabilities Deferred taxes Bond Liabilities due to banks Accounts payable Other liabilities Accruals Total non-current liabilities Current liabilities Accrued taxes Liabilities due to banks Accounts payable Other liabilites Deferred income Total current liabilities 13,128 21,638 445 –1,726 0 33,485 3,145 14,862 2,548 8,993 184 1,704 31,436 137 92 14,527 3,687 63 18,506 13,128 21,638 –1,867 33,344 14,813 27,034 17,508 25,169 [9] [12] [12] [12] [12] [13] [14] [14] [14] [14] [14]

445

0

1,665

107 8,810 184 1,455

334 2,584

4,729 14

85,547

Consolidated cash flow statement

01/01/–30/06/2019
kEUR
01/01/–30/06/2018
kEUR
Changes to previous
year in kEUR
1. Result for the period 145 –210 355
2. + Depreciation and amortisation of fixed assets 1,586 1,361 225
3. –/+ Other non-cash itemised income/expenses 52 616 –564
4. –/+ Profit/loss from disposals of fixed assets 532 208 324
5. –/+ Increase/decrease of inventories, accounts receivable as well as other assets
188 –696 884
6. – /+ Decrease/increase of accounts payable as well as other liabilities
–2,012 –213 –1,799
7. = Cash flow from operating activities 491 1,066 –575
of which from discontinued operations 0 0 0
8. + Cash receipts from disposals of intangible assets 2 0 2
9. Cash payments for investments in intangible assets –1,334 –3,881 2,547
10. + Cash receipts from disposals of fixed assets 4 0 4
11. Cash payments for investments in fixed assets –61 –203 142
12. + Cash receipts from disposals of financial assets 0 0 0
13. – Cash payments for investments in financial assets 0 –5 5
14. + Cash receipts from the disposal of consolidated companies 0 0 0
15. – Cash payments for the acquisition of consolidated companies –3,600 0 –3,600
14. – Cash payments for financial assets in the scope of cash forecast 0 0 0
15. = Cash flow from investment activities –4,989 –4,088 –900
of which from discontinued operations 0 0 0
16. +/- Cash receipts/-payments from capital increase 0 0 0
17. + Cash payments from the issue of bonds 0 0 0
18. – Cash payments from loan redemptions –796 –46 0
19. – Interest paid –986 –926 –750
20. = Cash flow from financing activities –1,782 –972 –60
of which from discontinued operations 0 0 –810
21. Non-cash itemised changes in cash and cash equivalents (total of pos. 7, 17, 22) –6,279 –3,994 –2,285
22. Cash and cash equivalents at the beginning of the period 11,801 6,362 5,439
23. = Cash and cash equivalents at the end of the period 5,522 2,368 3,154
Breakdown of cash and cash equivalents 30/06/2019
kEUR
30/06/2018
kEUR
Changes to previous
kEUR
Cash and cash in banks 5,522 2,368 3,154
Current liabilities due to banks 0 0 0
5,522 2,368 3,154

Consolidated financial statements

Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

Consolidated statement of changes in equity

Number of
shares
Sub
scribed
capital
kEUR
Capital
reserve
kEUR
Other
retained
earnings
kEUR
Cash flow
hedge
marked to
market
kEUR
Securities
marked to
market
kEUR
Other
equity
com
ponents
kEUR
Shares
without
domi
nating
influence
Total
equity
kEUR
As of 01/01/2018 11,934,971 11,935 12,845 766 0 0 2,486 0 28,032
Result as of 30/06/2018 –210 –210
Other equity changes 0
Retained earnings 0
– Allocation from earnings 0
As of 30/06/2018 11,934,971 11,935 12,844 766 0 0 2,276 0 27,822
As of 01/01/2019 13,128,461 13,128 21,638 445 0 0 –1,867 0 33,344
Result as of 30/06/2019 145 145
Other equity changes –4 –4
Retained earnings 0
– Allocation from earnings 0
As of 30/06/2019 13,128,461 13,128 21,638 445 0 0 –1,726 0 33,485

Notes

1 General information 29
1.1 Declaration of compliance by the
Management Board 29
1.2 Accounting principles and valuation
methods applied 30
1.3 Basis of consolidation 30

2 Notes to the interim consolidated

financial statements 31
2.1 Notes to the consolidated income statement 31
2.1.1 Commission income [1] 31
2.1.2 Other capitalised services and
other operating income [2] 31
2.1.3 Commission expenses [3] 32
2.1.4 Personnel expenses [4] 32
2.1.5 Depreciation and Amortisation [5] 32
2.1.6 Operating expenses [6] 33
2.2 Notes to the consolidated balance sheet 34
2.2.1 Intangible assets [7] 34
2.2.2 Impairment expenses 34
2.2.3 Financial assets and other
non-current assets [8] 35
2.2.4 Deferred tax assets and liabilities [9] 36
2.2.5 Non-curent assets [10] 36
2.2.6 Current assets [11] 36
2.2.7 Equity 37
2.2.8 Non-current liabilities [12] 37
2.2.9 Accruals [13] 38
2.2.10 Current liabilities [14] 38

2.3 Related parties 38

3 Significant events after the reporting date 39
4 Statement of changes in equity 39
5 Cash Flow Statement 39
6 Segment reporting 40

1 General Information

The JDC Group (JDC Group) is a diversified financial services company with the operating segments Advisortech and Advisory plus Holding.

The company was registered on 6 October 2005 under the name Aragon Aktiengesellschaft in the commercial register of the Wiesbaden district court (HRB 22030). The annual shareholders' meeting decided the change of name into JDC Group AG on 24 July 2015, this was fulfilled with the entry into the commercial register on 31 July 2015.

The company's registered office is located in Wiesbaden. The address is:

Kormoranweg 1 65201 Wiesbaden Federal Republic of Germany

JDC Group shares are admitted for the open market (Scale).

The interim financial statements for the reporting period from 1 January 2019 to 30 June 2019 relates to the parent company and its subsidiaries on a consolidated basis.

1.1 DECLARATION OF COMPLIANCE BY THE MANAGEMENT BOARD

JDC Group's interim financial statements for the first half year of 2019 and the corresponding previous year period from 1 January 2018 to 30 June 2018 have been prepared in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB), which is applicable in the European Union (EU). The term IFRS also includes the International Accounting Standards (IAS) which are still in place. All interpretations binding for financial year 2019 by the International Financial Reporting Interpretations Committee (IFRIC), formerly the Standing Interpretations Committee (SIC), as applicable in the EU have likewise been applied. In the following the term IFRS has been used throughout.

The interim report has not been subject to an auditor's review.

JDC Group AG is not a parent company within the meaning of Section 315e (1) and (2) of the German Commercial Code (HGB) that is required to prepare interim financial statements. JDC Group AG voluntarily prepares its interim financial statements under IFRS.

1.2 ACCOUNTING PRINCIPLES AND VALUATION METHODS APPLIED

The consolidated financial statements consists of the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and the notes to the consolidated financial statements.

The separate financial statements of JDC Group AG and its subsidiaries have been included in the interim financial statements in observance of the recognition and valuation policies applicable throughout the Group.

The interim financial statements have been prepared in euros (EUR), which is the functional currency of the Group. Except as otherwise indicated, all figures have been rounded to the nearest thousand Euros (kEUR). The interim consolidated income statement has been prepared in accordance with the total cost accounting method. The consolidated financial statements have been uniformly prepared for the periods presented here in accordance with the following principles of consolidation, accounting and valuation.

The interim financial statement, including figures from the comparison period in the previous year, was basically compiled according to the consolidation, accounting and valuation principles applied to the annual report 2018. A detailed description of these principles is published in the notes of the annual report 2018. The annual report is available on the company's website: www.jdcgroup.de.

1.3 BASIS OF CONSOLIDATION

In addition to JDC Group AG the interim consolidated financial statements generally include all subsidiaries under IFRS 10, in which JDC Group AG holds a majority of voting rights or which it can control by other means.

On 1st April , 2019, KOMM Investment & Anlagevermittlungs GmbH was newly included in the scope of consolidation of the JDC Group. The Group subsidiary Jung, DMS & Cie. Pool Gmbh acquired 100 percent of the shares in KOMM Investment & Anlagenvermittlungs GmbH in April 2019.

With the exception of Jung, DMS & Cie. GmbH, Vienna/Austria, jupoo finance GmbH, Vienna/Austria, FiNUM. Private Finance AG, Vienna/Austria, and FiNUM. Private Holding GmbH, Vienna/Austria, all of the subsidiaries are registered in Germany. In addition to the parent company, the interim consolidated financial statements also include the direct subsidiaries and sub-groups Jung, DMS & Cie. Aktiengesellschaft, FiNUM. Private Finance Holding, Wiesbaden, and FiNUM. Private Finance Holding GmbH, Vienna/Austria.

Consolidated financial statements

Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

2 Notes to the interim consolidated financial statements

2.1 NOTES TO THE CONSOLIDATED INCOME STATEMENT

Income by segment is shown in the segment report.

2.1.1 Revenues [1]

Income relates essentially to initial and follow-up commission from brokerage services in the three segments of insurance products, investment funds and investments/closed-end funds as well as other services and breaks down as follows:

2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
01/01/–30/06/2019
kEUR
01/01/–30/06/2018
kEUR
Initial commission
Insurance products 11,502 10,035 25,140 20,219
Investment funds 3,966 3,040 6,838 5,763
Shares/Closed-end funds 996 1,021 2,226 1,775
Follow-up commission 5,048 4,355 9,284 8,898
Overrides 1,306 1,385 3,562 3,665
Services 885 715 1,666 1,076
Fee-based advisory 865 709 1,490 1,546
Other income 1,134 750 2,307 1,532
Total 25,702 22,010 52,513 44,474

The commission income increased by 18.1 percent compared to the previous year to kEUR 52,513.

2.1.2 Other capitalised services and other operating income [2]

2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
01/01/–30/06/2019
kEUR
01/01/–30/06/2018
kEUR
Capitalised services 246 150 488 338
Reversal of impairments/
income from receivables written off 0 0 0 0
Income from provision's release 21 16 31 79
Income from security sales 0 0 0 0
Income from statute-barred debt 2 0 2 0
Income from benefits in kind 10 12 21 25
Other operating income 41 41 45 65
Total 320 219 587 507

Capitalised services amounted to kEUR 488 (30 June 2018: kEUR 338) and were primarily achieved by developing in-house software solutions (Compass, World of Finance, iCRM and portal geld.de) (cf. ref. 2.2.1.1 Concessions and Licences).

The other operating income of kEUR 45 (previous year: kEUR 65) relates essentially to income from resolution of accruals kEUR 18 (previous year: kEUR 3).

2.1.3 Commission expenses [3]

The positon contains mainly the commissions for independent brokers. The expenses, which rise in relation to commission income, increased by kEUR 6,876 to kEUR 37,506 versus the previous year (30 June 2018: kEUR 30,630).

2.1.4 Personnel expenses [4]

2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
01/01/–30/06/2019
kEUR
01/01/–30/06/2018
kEUR
Wages and salaries 3,462 3,153 7,054 6,426
Social security 671 618 1,315 1,207
Total 4,133 3,771 8,369 7,633

Personnel expenses essentially comprise wages and salaries, remuneration and other payments to the Management Board and employees of the JDC Group.

Social security includes the employer's statutory contributions (social security contributions).

In the annual average the Group companies employed 280 staff (previous year: 255), excluding Management Board members (fulltime-equivalents).

2.1.5 Depreciation and Amortisation [5]

2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
01/01/–30/06/2019
kEUR
01/01/–30/06/2018
kEUR
Depreciation and amortization of intangible assets –723 –667 –1,472 –1,361
Purchased software –101 –681 –116 –125
Internally developed software –211 –378 –638 –710
Insurance portfolios –405 440 –706 –478
Contract preparation costs –6 0 –12 0
Other intangible assets 0 –48 0 –48
Depreciation and amortization of
property and equipment –137 –34 –114 0
Total –860 –701 –1,586 –1,361

Consolidated financial statements

Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

2.1.6 Operating expenses [6]

2. Quarter 2019
kEUR
2. Quarter 2018
kEUR
01/01/–30/06/2019
kEUR
01/01/–30/06/2018
kEUR
Marketing costs 210 145 443 353
Travel costs 113 114 221 250
External services 183 211 315 306
IT costs 752 688 1,554 1,420
Occupancy costs 383 393 748 737
Vehicle costs 99 89 190 173
Office supplies 25 37 55 65
Fees, insurance premiums 185 178 343 332
Postage, telephone 70 76 155 144
Write-downs/impairments of receiveables -29 33 -4 64
Legal and consulting costs 282 245 490 471
Training costs 16 16 31 33
Human resources 0 0 1 0
Supervisory board compensation 42 28 58 62
Non-deductible input tax 56 61 124 131
Impairment IFRS 9 0 0 0 0
Other 99 75 134 163
Total 2,486 2,389 4,858 4,704

The advertising expenses are comprised of costs for trade fairs, customer events, printed matter and entertainment.

Third-party services include expenses for agencies, external workers, share services and general meetings.

IT costs are comprised of expenses for the general IT operation (servers, clients, data centre), software leasing, scanning services and software licences, if they are not capitalisable.

Occupancy costs include expenses for rent, incidental rental costs, energy supply and cleaning costs.

Vehicle costs include expenses for the vehicle fleet.

Under fees and insurance premiums, expenses from insurance policies, contributions to professional associations and BaFin/FMA (Austria) fees are reported in the balance sheet.

The legal and advisory costs include expenses for legal issues/legal advisory, tax advisory, annual financial statement and auditing costs, as well as general accounting costs.

On the basis of the existing revenue structure and the included, non-taxable payments, the JDC Group has an input tax deduction rate of approx. 13%, this is recalculated annually on the basis of the ongoing shifts in the revenue structure.

2.2 NOTES TO THE CONSOLIDATED BALANCE SHEET

2.2.1 Intangible assets [7]

2.2.1.1 CONCESSIONS AND LICENCES

The position "Concessions and Licences" essentially comprises software licences for standard commercial software (depreciaton period 3 years linear) and customer base (depreciaton period 15 years linear) with a carrying amount of kEUR 23,512 (31 December 2018: kEUR 21,572).

In the financial period internally generated software tools totalling kEUR 488 (30 June 2018: kEUR 338) were capitalised. These are essentially company-specific software applications (Compass, World of Finance, iCRM and portal geld.de) to support sales of financial products.

2.2.1.2 GOODWILL

Goodwill results from the first-time consolidation at the time of the relevant business combination.

30/06/2019
kEUR
31/12/2018
kEUR
Advisortech 21,621 19,096
Advisory 5,461 5,461
Holding 7 7
27,090 24,564

2.2.2 Impairment losses

Goodwill was subjected to an impairment test as of 31 December 2018. A possible impairment requirement results from the value comparison of the Carrying amount of the CGU or group of CGUs including the business assigned to it or Goodwill at its recoverable amount. If the book values exceed the recoverable amount, then one is Impairment of goodwill in the income statement. The recoverable amount is the maximum of the fair value less costs to sell and the value in use.

The achievable amount of the generating mediums of payment relevant entities Advisortech and Advisory are determined on basis of calculation of use value under applicaton of estimated cash flows before income taxes. The estimation are deviated from management and supervisory board approved detailed budgeting of the group companies for the financial year 2019. For the financial years 2020 and 2021 moderate growth ratse (phase I) are assumed. For the subsequent periods, the cash flow was forecasted as perpetual annuity (phase II).

Consolidated financial statements

Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

The discount factor (capitalization interest rate) for the Group companies is calculated on the basis of the capital asset pricing model. The underlying determination of the capitalization interest rate assumptions, including the risk-free base rate, the market risk premium and the beta factor, are determined on the basis of publicly available information or capital market data.

At one of the yield curve, risk-free base rate of 0.21% (previous year: 0.80%), a market risk premium of 6.07% (previous year: 5.17%) and taking into account a beta factor of the comparative investment from 0.95 (previous year: 1.01), a capitalization interest rate of 6.0% (previous year: 6.0%) is calculated. In the capitalization rate a growth discount is used to calculate the present value of the first cash flows of the perpetual annuity 1.0% (previous year: 1.0%). An additional, essential influence on the free cash flow is the assumptions for revenue growth and earnings development of the operating units.

The rise in the discount rate before taxes to 8.0 percent (viz. + 2 percent) does not mean a loss of value for the mediums of payment relevant entities. The decline of planned EBIT in the mediums of payment relevant entities by –20 percent does not require a loss of value. A significant reduction of the planned EBT growth beyond this may lead to the book value exceeding the achievable amount. However, as significant measures have already been initiated for increasing EBT, the Management Board regards this scenario as unlikely. For the cash-generating units Advisortech and Advisory, the fair value less the costs of disposal.

In the financial year, as in the previous year, none amortization of goodwill required. As of December 31, 2018, the market capitalization was above the carrying amount of its equity.

2.2.3 Financial assets and other non-current assets [8]

30/06/2019
kEUR
31/12/2018
kEUR
Available-for-sale
Shares in affiliated companies 25 25
Investments 123 123
Securities 38 0
Total 186 148

The breakdown of book values is as follows:

2.2.4 Deferred tax assets and liabilities [9]

30/06/2019
kEUR
31/12/2018
kEUR
Deferred tax assets
Tax reimbursement claims from loss carry-forwards 2,507 2,606
Tax reimbursement claims from financial liabilities 94 94
Total 2,601 2,700
Deferred tax liabilities
Intangible assets (software) 2,070 1,522
From other recognition differences 1,075 143
Total 3,145 1,665

For the German companies, deferred taxes were calculated on the basis of a corporation tax rate of 15.0% plus solidarity surcharge of 5.5% and the local trade tax rate of the city of Wiesbaden of 454.0% (combined income tax rate: 31.72%).

For the Austrian companies, the corporation tax rate of 25.0% has been applied, which has been in force since 2005.

2.2.5 Non-current assets [10]

30/06/2019
kEUR
31/12/2018
kEUR
Accounts receivables 824 1,068
Other assets 2,048 2,257
Total 2,872 3,325

The accounts receivable relate essentially to commission receivable from the cancellation reserves. The other assets contain mainly of receivables to consultants.

2.2.6 Current assets [11]

30/06/2019 31/12/2018
kEUR kEUR
Accounts receivable 15,447 16,657
Other assets
Commission advances 556 262
Prepaid expenses –420 –420
Other 5,356 4,179
Total 20,939 20,678

Accounts receivable essentially relate to commission receivable from partner companies and broker pool partners from brokerage services and the cancellation reserve.

The remaining other assets essentially relate to tax refund claims and short-term loans.

Prepaid expenses relate to payments on account for advertising events in the subsequent year, insurance, contributions and motor vehicle tax.

2.2.7 Equity

Movements in the Group equity of JDC Group AG are shown in the statement of changes in equity (cf. also ref. 4).

2.2.8 Non-current liabilities [12]

30/06/2019
kEUR
31/12/2018
kEUR
Bond 14,862 14,813
Liabilities to banks 2,548 107
Accounts payable 8,993 8,810
Other liabilities
Other 184 184
Total 26,587 23,914

Under the position bond is a corporate bond of the Jung, DMS & Cie. Pool GmbH from 2015 displayed in the balance sheet, it is shown in continued costs of purchase under usage of the effective interest method.

Under liabilities to banks is a loan from FiNUM.Private Finance AG, Vienna/Austria, issued through Bank Austria and a loan from JDC Geld.de GmbH, Wiesbaden, issued through Fintechgroup Bank AG.

Non-current liabilities under accounts payable pertain to liabilities from broker's commissions retained until expiration of the cancellation reserve. The obligation to pay broker's provision usually has a residual term of one to five years. Other liabilities contain mainly long-term part of loan obligation.

2.2.9 Provisions [13]

30/06/2019
kEUR
31/12/2018
kEUR
Pension provisions 421 421
Provisions for cancellation liability 1,237 986
Provisions for threatened claims from financial loss 46 48
Total 1,704 1,455

Under provisions for cancellation liability is determined on basis of estimation and therefore not on personell classifiable parts of cancellation risks from business parts displayed. Furthermore are here provisions for threatened claims from financial loss displayed.

2.2.10 Current liabilities [14]

30/06/2019
kEUR
31/12/2018
kEUR
Pension provisions 46 46
Provisions for taxes 91 288
Liabilities to banks 92 2,584
Accounts payable 14,527 17,508
Other current liabilities
Loan obligation 0 761
Other 3,687 3,968
Deferred income 63 14
Total 18,506 25,169

Trade payables are served at maturity.

2.3 RELATED PARTIES

Transactions with members of the Management Board and Supervisory Board:

30/06/2019
kEUR
30/06/2018
kEUR
Supervisory Board
Remuneration 55 56
Management Board
Total remuneration* 446 439

* The total remuneration of the Boards of JDC Group AG is disclosed, even when the costs have been borne by subsidiaries.

3 Significant events after the reporting date

No significant events occurred after the reporting date.

4 Statement of changes in equity

The development in Group equity as of the reporting date is shown in the statement of changes in equity, which forms part of the interim consolidated financial statements.

5 Cash flow statement

The Group's financial position is reflected in the cash flow statement, which forms part of the interim consolidated financial statements in accordance with IFRS.

The cash flow from operating activities was positive with 491 kEUR.

In the cash flow statement, the changes in cash and cash equivalents in the JDC Group during the financial year under review is reflected by the payment inflows and outflows from operating activities, investment activities and financing activities. Non-cash operations are summarized in one amount and are shown in the cash flow from running operating activities.

Cash and cash equivalents

Cash and cash equivalents are broken down in the consolidated cash flow statement. Cash and cash equivalents with a residual term of a maximum of three months are pooled in this item. Cash equivalents are current investments that can be converted into cash at any time and which are only subject to minor fluctuations in value.

6 Segment Reporting

JDC Group AG reports on three operating segments which are managed independently by committees responsible for the segment in accordance with the type of products and services offered. The designation of company segments as business segments is based in particular on the existence of segment managers responsible for the results who report directly to the chief operating decision maker of the JDC Group Group.

The JDC Group Group is divided into the following segments:

  • Advisortech
  • Advisory
  • Holding

Advisortech

In the Advisortech segment, the Group pools its activities involving independent financial advisers. The offering encompasses all asset classes (investment funds, closed-end funds, insurance products and certificates) provided by different product companies and including order processing and commission settlement as well as various other services relating to investment advice for retail customers. The advisors were supported by "allesmeins", a digital insurance folder actively managed and the World of Finance.

Advisory

The Group's activities that focus on advisory and sales services for retail customers are bundled in the Advisory segment. As an independent financial and investment adviser, we offer our customers holistic consultancy services for insurance, investmentfunds and financing products that are tailored to the customer's particular situation.

Holding

In the segment Holding includes the JDC Group AG.

The measurement principles for JDC Group's segment reporting are based on the IFRS standards used in the consolidated financial statements. JDC Group evaluates the performance of the segments using, among other things, the operating results (EBIT). The revenues and preliminary services between the segments are allocated on the basis of market prices.

GEOGRAPHICAL SEGMENT INFORMATION

JDC Group Group is mainly acting in Germany and Austria, therefore the customer Group forms a single geographic segment (German-speaking region of the European Union).

Consolidated financial statements

Consolidated income statement Consolidated statement of comprehensive income Segment reporting

Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Notes

Executive Bodies of JDC Group AG

Management Board

DR. SEBASTIAN GRABMAIER

Grünwald Attorney CEO

RALPH KONRAD

Mainz Businessman (Dipl.-Kfm.) CFO, CIO

STEFAN BACHMANN

Frankfurt Businessman CDO

Supervisory Board

JENS HARIG

Kerpen Independent entrepreneur Chairman

EMMERICH KRETZENBACHER

Hamburg Graduated Certified Accountant Deputy Chairman

KLEMENS HALLMANN

Vienna Independent entrepreneur

JÖRG KEIMER

Wiesbaden Attorney

The remuneration of the Management Board and Supervisory Board is disclosed under ref. 2.3. There is no obligation to disclose the remuneration of individual members of the Management Board in accordance with Section 314 (1) No. 6a Clause 5 ff. of the German Commercial Code (HGB), as JDC Group AG is not a listed joint stock company within the meaning of Section 3 (2) of the German Stock Corporation Act (AktG).

Kontakt

JDC Group AG Kormoranweg 1 65201 Wiesbaden

Telephone: +49 (0)611 890 575 0 Telefax: +49 (0)611 890 575 99

[email protected] www.jdcgroup.de

The Interim Report of JDC Group AG is available in German and English. The German version is legally binding. The reports can be downloaded from the company's website: www.jdcgroup.de

We will provide you with additional information about JDC Group AG and its subsidiaries upon request.

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