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11 88 0 Solutions AG — Interim / Quarterly Report 2017
Aug 17, 2017
2_10-q_2017-08-17_f20d2eb4-9fa5-41d2-a655-c466912029c0.pdf
Interim / Quarterly Report
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Results
Key Figures of 11880 Solutions Group at a glance
| in EUR million | 6M 2017 | 6M 2016 | Variance absolute | Variance in percent |
|---|---|---|---|---|
| Revenues and earnings 11880 Solutions Group | ||||
| Revenues | 20,4 | 23,0 | -2,6 | -11% |
| EBITDA1 | -0,7 | -1,3 | 0,6 | - |
| Net loss | -4,4 | -5,7 | 1,3 | -23% |
| Details Segments | ||||
| Revenues Digital | 13,2 | 14,7 | -1,5 | -10% |
| EBITDA1 Digital |
-0,6 | -1,1 | 0,5 | - |
| Revenues Directory Assistance | 7,2 | 8,2 | -1,0 | -12% |
| EBITDA1 Directory Assistance |
-0,1 | -0,2 | 0,1 | - |
| Statement of financial position² | ||||
| Total assets | 28,6 | 34,4 | -5,8 | -17% |
| Cash and cash equivalents3 | 7,3 | 10,5 | -3,2 | -31% |
| Equity | 19,1 | 23,5 | -4,4 | -19% |
| Equity ratio (in percent) | 67% | 68% | - | - |
| Cash flow | ||||
| Cash flow from operating activities | -2,2 | -3,3 | 1,1 | - |
| Cash flow from investment activities | 2,4 | 4,0 | -1,6 | - |
| Cash flow from financing activities | 0,0 | 0,0 | 0,0 | - |
| Net Cash flow4 | -3,2 | -5,3 | 2,1 | - |
| Key figures for the 11880 share | ||||
| Earnings per share (in EUR) | -0,23 | -0,30 | 0,07 | -23% |
| Share price (in EUR)5 | 0,97 | 0,98 | -0,01 | -1% |
| Market capitalisation | 18,6 | 18,7 | -0,1 | -1% |
| Employees | ||||
| Number of employees6 group |
617 | 736 | -119 | -16% |
1 Earnings before interest, tax and depreciation
2 Comparative values as of December 31
3 Portfolio of cash and cash equivalents as well as financial assets, available for sale
4 The net cash flow is calculated as the operating cash flow plus cash flow from investing activities minus interest expenses, adjusted for the changes in money market
5 Xetra-closing prices as of last trading day
6 Headcounts as of June 30
| Results | 03 |
|---|---|
| Letter from the Management Board | 06 |
Group Interim Management Report
| Course of business, material events | 07 |
|---|---|
| Financial situation | 08 |
| Segment report | 09 |
| Outlook | 09 |
| Employees | 10 |
| Comparability of disclosures | 10 |
| Responsibility statement | 11 |
Interim Consolidated Financial Statements
| Consolidated income statement (IFRS) | 14 |
|---|---|
| Consolidated statement of comprehensive income (IFRS) | 15 |
| Consolidated statement of financial position (IFRS) | 16 |
| Consolidated statement of cash flows (IFRS) | 18 |
| Consolidated statement of changes in equity (IFRS) | 20 |
| Notes to the interim consolidated financial statements | 22 |
| Corporate structure 11880 Solutions Group | 32 |
| Imprint | 33 |
Letter from the
Management Board
Dear shareholders, customers and business partners,
We are highly pleased with the performance of the Company in the first half of 2017. Our completely overhauled and significantly expanded product portfolio is extremely popular with both small and medium-sized businesses, enabling us to acquire a significant number of customers on a net basis after more than five years of massive customer losses. At present, all of the Company's key figures significantly exceed our expectations.
Even the stock market is beginning to slowly reward this positive trend. The share price is finally trading around the one-euro mark, and we are extremely optimistic that the share will continue to perform positively in future in parallel with our business development.
Our latest customer numbers are particularly encouraging. In this year alone, we expect to add 4,000 new customers – a trend that will lead to a significant rise in revenue in the Digital segment in the 2018 financial year.
More than 12,000 companies in Germany already use the listing service we launched at the end of 2015. This product helps companies to ensure that their latest company information is listed on all important online portals. It is an efficient product for small budgets that also acts as an excellent bridge to our other offerings for our sales team.
Our ratings aggregator werkenntdenBESTEN also provides our customers with an excellent argument for establishing or reinforcing their online presence. That is why, for the first time in many years, we allocated a small marketing budget to a highly effective football sponsorship deal in June and August. Few spectators in the stadium or watching at home on television will have missed our werkenntdenBESTEN brand at the DFL's relegation play-offs and Supercup. The number of people accessing the portal shows us that this effort has really paid off.
We also made crucial progress in other areas of the Company over the past six months of the current financial year. Our aim is to adjust the entire organisation to fit the revised product and sales structure. We have streamlined processes, made better use of synergies and pooled resources. The closure of our site in Martinsried, near Munich, where ten employees were still working, formed part of these efforts. While the restructuring of the Company is not yet complete, and we still need to implement several measures in the second half of the year, these can be financed by a performance that significantly exceeded our expectations.
Our focus in the second half of 2017 is to continue establishing our new products. We want to increase awareness of them and get even more companies in Germany excited about them. At the same time, we will expand our portfolio to include several new products such as appointment bookings, job postings and banners to further enhance the value to our customers.
Dear shareholders, please rest assured that the next six months will be just as exciting for 11880 Solutions AG as the last!
We would like to thank you for your trust!
Christian Maar Chief Executive Officer 11880 Solutions AG
Michael Geiger Member of the Management Board
Munich, 09 August 2017
Group Interim Management Report to compare all quotes and choose the
Course of business, material events
During the current financial year, the 11880 Solutions Group is focusing its operational efforts on its new sector portals and the werkenntdenBESTEN.de search engine.
Less than a year after launch, demand for 11880.com's sector portals is already extremely high. More than 500 consumer inquiries for detailed quotes in the most important service sectors and trades are now being recorded each day - and this figure is rising fast. The number of customers is also growing, with 11880 Solutions Group's net customer base increasing by 2,000 companies in the last six months alone. As a result, the Group's offering is being expanded further over the next few weeks.
In the past year, 11880.com has launched 17 specialist portals in the most important trades and service sectors. In addition to obtaining comprehensive information about companies in their desired search area, consumers also receive useful tips and information and, most importantly, have the opportunity to ask for quotes for specific jobs from selected providers. This enables them one that is right for them. Meanwhile, businesses receive specific inquiries from new customers without having to invest in online marketing which usually results in high levels of coverage waste.
The werkenntdenBESTEN.de review search engine rounds off the Group's information offering perfectly, as online reviews are now cited by more than 70 percent of consumers as the most important factor in their purchasing decisions. By creating werkenntdenBESTEN.de, the first independent search engine for online reviews, the 11880 Solutions Group has developed a platform that offers unparalleled value for both consumers and companies. The site gathers all of the customer reviews published online for a service provider, doctor, tradesman or fitness studio in one place.
Earnings (EBITDA) in the first half of 2017 are within the range of the guidance published for the full 2017 financial year. Consolidated revenues are also developing as planned. The digital business accounted for around 65 percent of consolidated revenues in the first half of 2017. Due to the continuing downturn in the market, revenues from traditional voice-based directory assistance declined by around 12 percent year-on-year as expected. Cash funds declined from EUR 10.5 million to EUR 7.3 million compared with 31 December 2016, which was also in line with planning. Encouragingly, the implementation of extensive measures enabled the Group to achieve a significant year-on-year reduction in selling and distribution costs and general administrative expenses in particular.
Mr. Andrea Servo resigned from his post as a member of the Supervisory Board with effect from 19 January 2017. At the Annual General Meeting on 27 June 2017, Ms. Gabriela Fabotti, Chief Financial Officer of 11880 Solutions AG's shareholder Italiaonline, was elected to the Supervisory Board.
Financial situation
Results of operations
Consolidated revenues as of the 30 June 2017 reporting date were EUR 20.4 million (previous year: EUR 23.0 million).
The consolidated cost of revenues was EUR 12.6 million in the first half of 2017, a decrease of 5 percent year-on-year (previous year: EUR 13.3 million). This cost reduction is primarily due to lower personnel expenses.
Selling and distribution costs were reduced from EUR 9.4 million to EUR 7.7 million, a EUR 1.7 million or 18 percent improvement. This was achieved by reducing personnel expenses, depreciation and amortisation, and general administrative expenses/distribution.
The general administrative expenses incurred in the first six months decreased by 17 percent year-on-year, from EUR 5.8 million to EUR 4.8 million. The reduction in expenses was mainly driven by lower personnel expenses.
Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by EUR 0.6 million year-on-year, from EUR -1.3 million to EUR -0.7 million. Earnings after taxes at the half-year mark were EUR -4.4 million (previous year: EUR -5.7 million). Overall, the decline in revenues by EUR 2.6 million was compensated by cost savings. In addition, the Group was able to improve earnings by a further EUR 1.3 million.
Net assets and financial position Capital expenditures
Capital expenditures in the first half of 2017 totalled EUR 2.4 million (previous year: EUR 3.1 million). Expenditures focused on product improvements and innovations in the Digital segment. Total capital expenditures also include capitalised customer contracts of EUR 0.8 million (previous year: EUR 1.0 million) and capitalised customer websites in the amount of EUR 0.5 million (previous year: EUR 0.7 million).
Statement of financial position
As of 30 June 2017, total assets amounted to EUR 28.6 million, showing a decrease of EUR 5.8 million compared with 31 December 2016 (31 December 2016: EUR 34.4 million).
Current assets declined from EUR 23.2 million to EUR 19.0 million. This was due mainly to the decrease in availablefor-sale financial assets by EUR 3.4 million. As of 30 June 2017, the 11880 Solutions Group had investments in short-term money market and bond funds that are reported as available-for-sale financial assets. The fair value of these investments was EUR 6.3 million (31 December 2016: EUR 9.7 million). The decrease in trade accounts receivable by EUR 1.2 million, from EUR 10.3 million as of 31 December 2016 to EUR 9.1 million, was attributable mainly to the declining business.
As of the reporting date, the Group had non-current assets worth EUR 9.6 million (31 December 2016: EUR 11.2 million). The decline by EUR 1.6 million stemmed from the decrease in property and equipment and intangible assets as a result of depreciation and amortisation.
On the liabilities side, current liabilities decreased by EUR 1.3 million to EUR 8.2 million (31 December 2016: EUR 9.5 million). Accrued current liabilities fell from EUR 5.7 million to EUR 4.4 million, primarily due to the decrease in provisions for personnel.
The 11880 Solutions Group has no significant non-current liabilities, no liabilities in foreign currencies and no loan liabilities to banks.
Equity declined by EUR 4.4 million to EUR 19.1 million compared to 31 December 2016 (31 December 2016: EUR 23.5 million) due mainly to the net loss for the period.
Cash flow & financing
Cash flow from operations in the first half of 2017 amounted to EUR -2.2 million, compared to EUR -3.3 million during the prior-year period.
The cash inflow from investing activities in the first six months amounted to EUR 2.4 million (previous year: EUR 4.0 million). The cash flow from investing activities includes the purchase and sale of money market funds and bond funds. The year-on-year decrease in cash inflow is attributable mainly to the lower volume of sales of available-for-sale financial assets (30 June 2017: EUR 3.5 million; 30 June 2016: EUR 6.0 million).
The cash flow from financing activities was EUR 0.0 million in the first six months, which is unchanged from the previous year.
Cash funds
Cash funds (cash and cash equivalents and current available-for-sale financial assets at the end of the period) declined from EUR 10.5 million to EUR 7.3 million compared with 31 December 2016, which was in line with the budget. The decrease in cash funds by EUR 3.2 million (net cash flow) corresponds to the sum of the negative cash flow from operations of EUR -2.1 million, adjusted for the market valuation of securities, and the cash flow from investing activities of EUR -1.1 million, adjusted for the sale of fund shares.
Segment report
At EUR 13.2 million, revenues in the Digital business were down year-onyear (previous year: EUR 14.7 million). The Digital business now accounts for around 65 percent of total revenue (previous year: 64 percent). Six-month earnings (EBITDA) as of the reporting date were EUR -0.6 million (previous year: EUR -1.1 million).
The traditional directory assistance business accounted for EUR 7.2 million of total revenues (previous year: EUR 8.2 million). The decrease in this segment of EUR 1.0 million was not as high as in the previous year (EUR 2.8 million). Earnings (EBITDA) improved by EUR 0.1 million in the first six months to EUR -0.1 million (previous year: EUR -0.2 million).
Outlook
Directory Assistance segment
In the Directory Assistance segment, the 11880 Solutions Group anticipates that the negative trend with respect to call volumes in Germany will also persist in 2017. The Group expects call volume in 2017 for directory assistance to decrease less sharply than in 2016. To partially offset the effects of this downturn in revenue, work focuses on increasing revenue per call. The Group assumes that it will only be able to achieve smaller increases in the future. New business models are being examined – and in some cases also tested – in order to ward off decreases in business volume and ensure long-term success.
The 11880 Solutions Group expects the Directory Assistance segment to generate flat revenues in the range of EUR 12.1 to EUR 15.1 million in 2017. In 2016, segment revenues were EUR 16.2 million.
In terms of the development of earnings, the 11880 Solutions Group's budget continues to expect EBITDA for the Directory Assistance segment to come in at around EUR -0.9 to 0.6 million in 2017. In 2016, EBITDA amounted to EUR 0.3 million.
Digital segment
The extensive capital expenditures made in 2016 in new products such as the listing service, the vertical portals, in the brand and in optimising corporate structure and overhauling its product portfolio have created the basis for sustainable revenue and customer growth. In 2017, the strategic focus is on werkenntdenBESTEN.de, the expansion of the range of vertical portals offered and new advertising products on the 11880.com platform. In the area of new customer business, the 11880 Solutions Group is working on a continued, noticeable increase in the 2017 financial year. The 11880 Solutions Group is committed to building on its success in 2016 and achieving a significant increase in the customer portfolio in 2017 too.
Overall, the 11880 Solutions Group plans to once again generate revenues within a range from EUR 25.1 to EUR 28.1 million in the Digital segment in 2017. In 2016, segment revenues were EUR 28.5 million.
In the Digital segment, the 11880 Solutions Group expects to post EBITDA within the range of EUR -1.4 to EUR 0.1 million in the 2017 financial year. By means of comparison, the figure for the last financial year was EUR -2.4 million.
Group
At group level, the 11880 Solutions Group expects to post revenues of EUR 37.2 to EUR 43.2 million in 2017. In comparison, revenues were generated in the amount of EUR 44.7 million in 2016. The 11880 Solutions Group also continues to expect EBITDA in 2017 to be in the range of EUR -2.3 to EUR 0.7 million as a result of capital expenditures in the digital business. In comparison, the Company generated EBITDA in the amount of EUR -2.7 million in 2016.
Cash holdings
For the 2017 financial year, the Company has decided to replace the net cash flow key figure with the cash holdings key figure (freely available liquidity) because in its current situation cash holdings is a more meaningful and important parameter for the Company than net cash flow.
The planning of the 11880 Solutions Group continues to assume positive cash holdings of between EUR 3 and EUR 6 million as of the end of the 2017 financial year. Cash holdings at the end of 2016 amounted to EUR 10.5 million.
Employees
On 30 June 2017, the 11880 Solutions Group had 617 employees (head count; excluding Management Board, trainees, "mini-jobs" and dormant employment contracts). Year-on-year, this represents a decline of 16 percent (previous year: 736). The decline in the workforce is due in part to the downsizing of the Telesales team. Furthermore, massive restructuring measures initiated in December 2016 resulted in a reduction in administrative staff by almost 100 at all Company sites.
Comparability of disclosures
The 6-month report for 2016 and the consolidated financial statements for the year ended 31 December 2016 have been published on the 11880 Solutions AG website at: https://ir.11880.com/ finanzberichte.
Planegg-Martinsried, 09 August 2017 The Management Board
Christian Maar Chairman of the Management Board
Michael Geiger Member of the Management Board
Responsibility statement
"To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group in the remaining months of the financial year."
Planegg-Martinsried, 09 August 2017 The Management Board
Christian Maar Chairman of the Management Board
Michael Geiger Member of the Management Board
Interim Consolidated Financial Statements
| Consolidated income statement (IFRS) | 14 |
|---|---|
| Consolidated statement of comprehensive income (IFRS) | 15 |
| Consolidated statement of financial position (IFRS) | 16 |
| Consolidated statement of cash flows (IFRS) | 18 |
| Consolidated statement of changes in equity (IFRS) | 20 |
| Notes to the interim consolidated financial statements | 22 |
| Corporate structure 11880 Solutions Group | 32 |
| Imprint | 33 |
Consolidated income statement (IFRS)
| Quarterly Report ( unaudited) |
6-Months Report ( unaudited) |
|||
|---|---|---|---|---|
| in kEUR | 1.4. - 30.06.2017 | 1.4. - 30.06.2016 | 1.1. - 30.06.2017 | 1.1. - 30.06.2016 |
| Continuing operations | ||||
| Revenues | 9,977 | 11,164 | 20,395 | 22,956 |
| Cost of revenues | -6,176 | -6,841 | -12,627 | -13,314 |
| Gross profit | 3,801 | 4,323 | 7,768 | 9,642 |
| Selling and distribution costs | -4,060 | -4,696 | -7,654 | -9,362 |
| General administrative expenses | -2,373 | -2,812 | -4,801 | -5,785 |
| Other operating income | 1 | 20 | 1 | 21 |
| Other operating expense | 4 | -1 | -1 | -13 |
| Operating income (loss) | -2,627 | -3,166 | -4,687 | -5,497 |
| Interest income | 82 | 66 | 105 | 133 |
| Interest expense | -6 | -24 | -11 | -27 |
| Gain (loss) from marketable securities | 22 | 25 | 35 | -11 |
| Gain (loss) on foreign currency translation | -1 | 0 | -1 | 0 |
| Financial income (loss) | 97 | 67 | 128 | 95 |
| Income (loss) before income tax | -2,530 | -3,099 | -4,559 | -5,402 |
| Current income tax | -1 | -116 | -1 | -116 |
| Deferred income tax | 33 | -155 | 174 | -155 |
| Income tax | 32 | -271 | 173 | -271 |
| Net income (loss) from continuing operations | -2,498 | -3,370 | -4,386 | -5,673 |
| Discontinued operations | ||||
| Net income (loss) from discontinued operations | 0 | -1 | 0 | -27 |
| Net income (loss) | -2,498 | -3,371 | -4,386 | -5,700 |
| Attributable to: | ||||
| Owners of the parent | -2,498 | -3,371 | -4,386 | -5,700 |
| Non-controlling interests | 0 | 0 | 0 | 0 |
| -2,498 | -3,371 | -4,386 | -5,700 | |
| Earnings per share for net income (loss) for the reporting period attributable to ordinary equity |
||||
| holders of the parent (in euro) | -0.13 | -0.18 | -0.23 | -0.30 |
| Earnings per share for continuing operations for net income (loss) for the reporting period |
||||
| attributable to ordinary equity holders of the parent (in euro) |
-0.13 | -0.18 | -0.23 | -0.30 |
| Earnings per share for discontinued operations for net income (loss) for the reporting period attributable to ordinary equity holders of the |
||||
| parent (in euro) | 0.00 | 0.00 | 0.00 | 0.00 |
See accompanying notes to the consolidated financial statements.
Consolidated statement of comprehensive income (IFRS)
| Quaterly Report ( unaudited) |
6-Months Report ( unaudited) |
|||
|---|---|---|---|---|
| in kEUR | 1.4. - 30.06.2017 | 1.4. - 30.06.2016 | 1.1. - 30.06.2017 | 1.1. - 30.06.2016 |
| Net income (loss) | -2,498 | -3,371 | -4,386 | -5,700 |
| Other comprehensive income (loss) | ||||
| Items that can be reclassified subsequently to profit or loss |
||||
| Available for sale financial assets - | ||||
| Changes of the fair value, net | 23 | 2 | 66 | -8 |
| Available for sale financial assets - | ||||
| Reclassification to profit or loss, net | -15 | -14 | -30 | -13 |
| Foreign currency translation difference | 1 | -1 | 1 | -1 |
| Other comprehensive income (loss) after tax | 9 | -13 | 37 | -22 |
| Total comprehensive income (loss) | -2,489 | -3,384 | -4,349 | -5,722 |
| Thereof from: | ||||
| Continuing operations | -2,489 | -3,383 | -4,349 | -5,695 |
| Discontinued operations | 0 | -1 | 0 | -27 |
| -2,489 | -3,384 | -4,349 | -5,722 | |
| Attributable to: | ||||
| Owners of the parent | -2,489 | -3,384 | -4,349 | -5,722 |
| Non-controlling interests | 0 | 0 | 0 | 0 |
| -2,489 | -3,384 | -4,349 | -5,722 |
See accompanying notes to the consolidated financial statements.
Consolidated statement of financial position (IFRS)
| (unaudited) | (unaudited) | ||
|---|---|---|---|
| in kEUR | 30 June 2017 | 30 June 2016 | 31 December 2016 |
| A S S E T S | |||
| Current assets | |||
| Cash and cash equivalents | 994 | 1,664 | 801 |
| Trade accounts receivable | 9,098 | 10,416 | 10,310 |
| Current tax assets | 79 | 123 | 132 |
| Available for sale financial assets | 6,288 | 11,518 | 9,691 |
| Other financial assets | 206 | 178 | 141 |
| Other current assets | 2,284 | 2,223 | 2,164 |
| Total current assets | 18,949 | 26,122 | 23,239 |
| Non-current assets | |||
| Goodwill | 3,489 | 6,789 | 3,489 |
| Intangible assets | 4,743 | 7,169 | 5,982 |
| Property and equipment | 1,410 | 2,100 | 1,723 |
| Other financial assets | 2 | 2 | 2 |
| Deferred tax assets | 4 | 4 | 0 |
| Total non-current assets | 9,648 | 16,064 | 11,196 |
| Total assets | 28,597 | 42,186 | 34,435 |
| in kEUR 30 June 2017 30 June 2016 LIABILITIES AND EQUTY Current liabilities Trade accounts payable 628 981 Accrued liabilities 4,357 4,513 Provisions 39 169 |
31 December 2016 737 5,690 72 0 |
|---|---|
| Current tax liabilities 0 116 |
|
| Other current liabilities 3,153 2,388 |
2,962 |
| Total current liabilities 8,177 8,167 |
9,461 |
| Non-current liabilities | |
| Provisions 542 777 |
593 |
| Provisions for retirement benefits 243 48 |
243 |
| Deferred tax liabilities 495 712 |
649 |
| Total non-current liabilities 1,280 1,537 |
1,485 |
| Total liabilites 9,457 9,704 |
10,946 |
| Equity | |
| Share capital 19,111 19,111 |
19,111 |
| Additional paid in capital 32,059 32,059 |
32,059 |
| Retained earnings -32,166 -18,672 |
-27,780 |
| Other components of equity 136 -16 |
99 |
| Equity attributable to owners of the parent 19,140 32,482 |
23,489 |
| Total equity 19,140 32,482 |
23,489 |
| Total liabilities and equity 28,597 42,186 |
34,435 |
See accompanying notes to the consolidated financial statements.
Consolidated statement of cash flows (IFRS)
| (unaudited) | (unaudited) | |
|---|---|---|
| in kEUR | 1.1. - 30.06.2017 | 1.1. - 30.06.2016 |
| Cash flow from operating activities | ||
| Income (loss) before income tax from continuing operations | -4,559 | -5,402 |
| Income (loss) before income tax from discontinuing operations | 0 | -27 |
| Income (loss) before income tax | -4,559 | -5,429 |
| Adjustments for: | ||
| Amortisation and impairment of intangible assets | 2,213 | 2,736 |
| Depreciation and impairment of property and equipment | 485 | 541 |
| Depreciation of current intangible asssets | 1,285 | 969 |
| Gain (loss) on disposal of property and equipment | 1 | 13 |
| Interest income | -105 | -133 |
| Interest expense | 11 | 27 |
| Gain (loss) from marketable securities | -35 | 11 |
| Gain (loss) on foreign currency translation | 1 | 0 |
| Valuation allowance for trade accounts receivable | -742 | 321 |
| Gain (loss) from the sale of subsidiaries | 0 | 27 |
| Changes in non-current provisions | -56 | -259 |
| Changes in non-current other and financial assets | 0 | 10 |
| Operating loss before changes in operating assets and liabilities | -1,501 | -1,166 |
| Changes in operating assets and liabilities: | ||
| Trade accounts receivable | 1,672 | 75 |
| Current intangible assets1 | -1,237 | -1,184 |
| Miscellaneous current assets | -234 | 238 |
| Trade accounts payable | 201 | 225 |
| Current provisions | -33 | 3 |
| Accured expenses and other current liabilities | -1,139 | -1,551 |
| Income taxes received | 52 | 80 |
| Cash used in operating activities | -2,219 | -3,280 |
| in kEUR | 1.1. - 30.06.2017 | 1.1. - 30.06.2016 |
|---|---|---|
| Cash flow from investing activities | ||
| Purchase of intangible assets excl. customer contracts | -909 | -1,448 |
| Purchase of customer contracts with contract period > 1 year | -16 | -364 |
| Purchase of property and equipment | -252 | -129 |
| Proceeds from sale of property and equipment | 1 | 0 |
| Disbursement for the sale of subsidiaries | 0 | -151 |
| Disposal of available for sale financial assets | 3,490 | 5,971 |
| Interest received | 105 | 133 |
| Cash provided by investing activities | 2,419 | 4,012 |
| Cash flow from financing activities Interest paid |
-6 | -7 |
| Cash used in financing activities | -6 | -7 |
| Effect of exchange rate changes on cash and cash equivalents | -1 | -1 |
| Change in cash and chas equivalents | 193 | 724 |
| Cash and cash equivalents at the beginning of reporting period | 801 | 940 |
| Cash and cash equivalents at the end of reporting period | 994 | 1,664 |
| Cash and cash equivalents as well as short-term available for sale financial | ||
| assets at the end of reporting period | 7,282 | 13,182 |
See accompanying notes to the consolidated financial statements.
1) Current intangible assets include exclusively purchases for capitalized customer contracts and websites for customer with a contract period up to one year and are shown separately within the operating activities.
Consolidated statement of changes in equity (IFRS)
| Equity attributable to owners of the parent | |||||||
|---|---|---|---|---|---|---|---|
| in kEUR | Share capital | Additional paid in capital |
Retained earnings |
Other components of equity |
Total | Non- controlling interests |
Total equity |
| Balance at January 1, 2017 | 19,111 | 32,059 | -27,780 | 99 | 23,489 | 0 | 23,489 |
| Net income (loss) | - | - | -4,386 | - | -4,386 | - | -4,386 |
| Available for sale | |||||||
| financial assets | - | - | - | 36 | 36 | - | 36 |
| Foreign currency translation | - | - | - | 1 | 1 | - | 1 |
| Other comprehensive | |||||||
| income (loss) | - | - | 0 | 37 | 37 | - | 37 |
| Total comprehensive | |||||||
| income (loss) | 0 | 0 | -4,386 | 37 | -4,349 | 0 | -4,349 |
| Balance at June 30, 2017 | 19,111 | 32,059 | -32,166 | 136 | 19,140 | 0 | 19,140 |
| Balance at January 1, 2016 | 19,111 | 32,059 | -12,972 | 6 | 38,204 | 0 | 38,204 |
| Net income (loss) | - | - | -5,700 | - | -5,700 | - | -5,700 |
| Available for sale | |||||||
| financial assets | - | - | - | -21 | -21 | - | -21 |
| Foreign currency translation | - | - | - | -1 | -1 | - | -1 |
| Other comprehensive | |||||||
| income (loss) | - | - | 0 | -22 | -22 | - | -22 |
| Total comprehensive | |||||||
| income (loss) | 0 | 0 | -5,700 | -22 | -5,722 | 0 | -5,722 |
| Balance at June 30, 2016 | 19,111 | 32,059 | -18,672 | -15 | 32,482 | 0 | 32,482 |
See accompanying notes to the consolidated financial statements.
Notes to the interim consolidated financial statements
1. Presentation of the interim consolidated financial statements
The business operations of 11880 Solutions AG (hereinafter also referred to as the Company) and its subsidiaries comprise the provision of telecommunications services of all kinds, the design and marketing of information databases and marketing advertisements, the provision of online marketing services, the provision of DA services (directory assistance services) about the subscribers of public telephone networks as well as other DA services in Germany and abroad.
11880 Solutions AG is a listed stock corporation under German law domiciled in Fraunhoferstrasse 12a, 82152 Planegg-Martinsried, Germany, and has been registered in the Commercial Register of the Munich Local Court, Germany, under registration number HRB 114518.
These condensed interim consolidated financial statements of 11880 Solutions AG and its subsidiaries were prepared for the first six months ended 30 June 2017 in accordance with the International Financial Reporting Standards (IFRSs) – as applicable in the European Union.
All International Accounting Standards (IASs), International Financial Reporting Standards (IFRSs) as well as the interpretations of the IFRS Interpretations Committee (IFRIC) and the interpretations of the Standing Interpretations Committe (SIC) whose application was mandatory as of 30 June 2017 were taken into account.
The interim consolidated financial statements were prepared in accordance with IAS 34 Interim Financial Reporting and should be read in the context of the audited consolidated financial statements for the 2016 financial year.
The consolidated financial statements of the 11880 Solutions Group (hereinafter also the 11880 Solutions Group / the Group) are presented in euros (EUR). Unless stated otherwise, all values were rounded to thousands of euros (EUR thousand).
The interim consolidated financial statements are generally prepared using the historical cost system.
The interim consolidated financial statements have not been audited. They were released for publication by the Company's Management Board on 9 August 2017.
The consolidated financial statements and the group management report prepared as of 31 December 2016 were submitted with the publisher of the Federal Gazette and published electronically in the Federal Gazette.
2. Changes in accounting policies
The accounting policies applied in the interim consolidated financial statements are consistent with those applied in the consolidated financial statements for the 2016 financial year, except for the changes explained below.
Amendments to IAS 12 Income Taxes – Recognition of Deferred Tax Assets for Unrealised Losses
The amendments clarify the question of the recognition of deferred tax assets on temporary differences from unrealised losses.
The new guidance was issued in January 2016 and – subject to EU endorsement of the standard – must be applied for the first time for financial years beginning on or after 1 January 2017. Voluntary earlier application is permitted.
The amendments do not affect the Group's net assets, financial position and results of operations.
Amendments to IAS 7 Statement of Cash Flows – Disclosure Initiative
The objective of this amended standard is to improve the information provided about an entity's financing activities. The amendments to IAS 7 set out that in the future entities will be required to provide enhanced disclosures on changes in liabilities arising from financing activities in the statement of financial position during the reporting period if cash flows from those financial liabilities were, or future cash flows will be, included in cash flows from financing activities in the statement of cash flows. In addition, the disclosure requirement also applies to changes in the carrying amount of financial assets if cash flows from those financial assets were, or future cash flows will be, included in cash flows from financing activities.
The amendments were issued in January 2016 and must be applied for the first time for reporting periods beginning on or after 1 January 2017. Voluntary earlier application – subject to EU endorsement – is permitted. When the entity first applies those amendments, it is not required to provide comparative information for preceding periods.
The amendments do not affect the consolidated financial statements.
Annual improvements to IFRS – 2014- 2016 cycle
These include clarifications concerning:
- IAS 28 Investments in Associates and Joint Ventures
- IFRS 12 Disclosure of Interests in other Entities
- IFRS 1 First-time Adoption of International Financial Reporting Standards
The amendments were issued in December 2016. The date of mandatory application is 1 January 2018 for amendments to IFRS 1 and IAS 28 (with voluntary early application with regard to IAS 28) and 1 January 2017 for amendments to IFRS 12. The amendments have not yet been transposed into EU law.
The application of the amendments related to IFRS 12 does not affect the consolidated financial statements. For further amendments see 3.
3. Future changes in accounting policies
IFRS 9 – Financial Instruments
In particular, the new standard IFRS 9 Financial Instruments contains thoroughly reworked rules concerning the classification and measurement of financial instruments, accounting for impairment of financial assets and hedge accounting. In addition to the fair value through profit or loss (FVPL) and amortised cost categories, the standard stipulates a third classification: fair value through other comprehensive income (FVOCI).
The standard was published in July 2014. Initial mandatory application is stipulated for financial years beginning on or after 1 January 2018. Earlier voluntary application is permitted.
The Group is currently analysing the effects on the consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 requires an entity to recognise revenue in the amount in which it expects to receive consideration for the assumed performance obligations, i.e. the transfer of goods and provision of services. Revenue must be recognised when the customer receives control over and can obtain benefits from the agreed goods and services.
In September 2015, the IASB published an amendment standard concerning the date of initial application, thus confirming the postponement of the effective date of IFRS 15 by one year to 1 January 2018. Voluntary earlier application of the provisions is permitted.
The Group is reviewing which effects the application of IFRS 15 has on the its net assets, financial position and results of operations.
Clarifications to IFRS 15 Revenue from Contracts with Customers
The amended standard includes clarifications on the following issues in IFRS 15:
- Identification of performance obligations
- Classifying a company as a principal or an agent
- Revenue from granting licences
- Relief provisions for first-time application
The amendments were issued in April 2016 and must be applied for the first time for reporting periods beginning on or after 1 January 2018. Earlier application is permitted. The amendments have not yet been transposed into European law.
The effects of these amendments on the consolidated financial statements are being reviewed as part of the assessment of the effects of IFRS 15.
Amendments to IFRS 2 Share-based Payment – Classification and Measurement of Share-based Payment Transactions
These amendments include the following clarifications and/or revisions:
- Effects of vesting conditions on the measurement of a cash settled share-based payment transaction
- Classification of share-based payment transactions with net settlement features, i.e. free of withholding tax
- Accounting for modifications to share-based payment trans actions from cash-settled to equity-settled
The amendments were issued in June 2016 and must be applied to transactions granted or amended in financial years beginning on or after 1 January 2018. Earlier application is permitted, subject to recognition by the EU. Retrospective application is only permitted if this is possible without the use of hindsight.
The effects of the amendments to IFRS 2 on the consolidated financial statements are being reviewed.
Annual improvements to IFRS – 2014-2016 cycle
These include clarifications concerning:
- IAS 28 Investments in Associates and Joint Ventures
- IFRS 12 Disclosure of Interests in other Entities
- IFRS 1 First-time Adoption of Inter national Financial Reporting Standards
The amendments were issued in December 2016. The date of mandatory application is 1 January 2018 for amendments to IFRS 1 and IAS 28 (with voluntary early application with regard to IAS 28) and 1 January 2017 for amendments to IFRS 12. The amendments have not yet been transposed into EU law.
The application of this amendment is not expected to affect the Group's net assets, financial position and results of operations.
IFRIC 22 Advance Consideration in Connection with Foreign Currency Transactions
This interpretation clarifies the exchange rate used when reporting foreign currency transactions in a company's functional currency for the first time if the company makes or receives advance payments for the transaction's underlying assets, expenses or income.
The interpretation was issued in December 2016 and must be applied for the first time for reporting periods beginning on or after 1 January 2018. Voluntary earlier application – subject to EU endorsement – is permitted.
Effects on the Group's net assets, financial position and results of operations are currently being reviewed.
IFRS 16 Leases
The IASB issued the new standard IFRS 16 on lease accounting which supersedes IAS 17 Leases and the associated interpretations, IFRIC 4, SIC-15 and SIC-27.
A lessee must now account for all leases in the form of a right-of-use asset and a corresponding lease liability at the present value of the minimum lease payments. Consequently, the right-ofuse asset must be depreciated over the lease term on a straight-line basis, while the lease liability must be measured using the effective interest method. A uniform presentation is made in the income statement in which a depreciation charge is continuously recognised for each lease agreement and interest expense is allocated over the lease term. While a lessee is no longer required to classify a lease as either a finance lease or an operating lease, IFRS 16 still requires lessors to do so.
The standard was issued in January 2016 and must be applied for the first time for financial years beginning on or after 1 January 2019. Voluntary early application is permitted if the entity also applies IFRS 15 Revenue from Contracts with Customers at this time. The standard has yet to be endorsed by the EU.
The Group is currently analysing the effects of IFRS 16 on the consolidated financial statements.
IFRIC 23 Uncertainty over Income Tax Treatments
The IFRIC 23 Uncertainty over Income Tax Treatments interpretation published by the IFRS IC contains provisions concerning the recognition and measurement of tax risk positions and thus closes relevant existing loopholes in IAS 12 Income Taxes.
The published interpretation also includes references to existing obligations concerning explanatory notes in accordance with IAS 1.122 and IAS 1.125 – 1.129 for discretionary decisions, assumptions and estimates made while accounting for tax risk positions. Reference is also made to the provisions of IAS 12.88 and the obligation to indicate any contingent tax assets and liabilities.
The interpretation was published on 7 June 2017. The mandatory date of initial application for IFRIC 23 is 1 January 2019; however, voluntary early application is permitted – once the corresponding disclosure and endorsement has taken place. The amendments have not yet been transposed into EU law.
4. Restructuring measures
The restructuring plan initiated in October 2015 aimed at the discontinuation and closure of the entire field sales unit as of 31 December 2015 was largely completed in the 2016 financial year. By carrying out these restructuring measures in the field sales unit, the Group responded to the Company's challenging economic situation and focused on the telesales distribution channel as part of a new sales strategy.
As of 30 June 2017, the obligations related to restructuring measures presented in the consolidated statement of financial position totalled EUR 44 thousand (31 December 2016: EUR 88 thousand).
5. Segment reporting
For the purpose of management control, the 11880 Solutions Group divides its activities into two operating segments, Directory Assistance and Digital.
The two segments' main key performance indicators for operations are revenues and EBITDA (earnings before interest, taxes, depreciation and amortisation).
The accounting principles for the segments match those described in the consolidated financial statements for the year ended 31 December 2016.
There were no intersegment revenues in the first six months of the current financial year or in the same period of the preceding year.
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The table below shows the revenues and earnings of the group's operating segments:
| 1 January - 30 June 2017 in EUR thousand | Directory Assistance | Digital | Group |
|---|---|---|---|
| Revenues | |||
| Revenues from transactions | |||
| with external customers | 7,226 | 13,169 | 20,395 |
| Total revenues | 7,226 | 13,169 | 20,395 |
| Earnings | |||
| EBITDA | -86 | -618 | -704 |
| Depreciation and amortisation | -932 | -3,051 | -3,983 |
| Net financial income | 128 | ||
| Earnings before income taxes | -4,559 | ||
| 1 January - 30 June 2016 in EUR thousand | Directory Assistance | Digital | Group |
|---|---|---|---|
| Revenues | |||
| Revenues from transactions | |||
| with external customers | 8,216 | 14,740 | 22,956 |
| Total revenues | 8,216 | 14,740 | 22,956 |
| Earnings | |||
| EBITDA | -192 | -1,059 | -1,251 |
| Depreciation and amortisation | -817 | -3,429 | -4,246 |
| Net financial income | 95 | ||
| Earnings before income taxes | -5,402 |
6. Financial instruments
The following table shows both the carrying amounts and the fair values of all financial instruments recognised in the interim consolidated financial statements, including their levels in the fair value hierarchy: It does not contain any information about the fair value of financial assets and liabilities that were not measured at fair value if the carrying amount suitably approximates the fair value.
| Carrying amounts pursuant to IAS 39 measurement category: |
Fair value | |||||
|---|---|---|---|---|---|---|
| as of 30 June 2017 in EUR thousand |
Loans and receivables |
Available-for- sale |
Financial liabilities measured at amortised cost |
Level 1 |
Level 2 |
Level 3 |
| Financial assets measured at fair value |
||||||
| Securities | - | 6,288 | - | 6,288 | - | - |
| Financial assets not measured at fair value |
||||||
| Cash and cash equivalents | 994 | - | - | |||
| Trade accounts receivable | 9,098 | - | - | |||
| Current other financial assets | 206 | - | - | |||
| Non-current other financial assets |
2 | - | - | |||
| Financial liabilities not measured at fair value |
||||||
| Trade accounts payable | - | - | 628 | |||
| Carrying amounts pursuant to IAS 39 measurement category: |
Fair value | |||||
|---|---|---|---|---|---|---|
| as of 31 December 2016 in EUR thousand |
Loans and receivables |
Available-for- sale |
Financial liabilities measured at amortised cost |
Level 1 |
Level 2 |
Level 3 |
| Financial assets measured at fair value |
||||||
| Securities | - | 9,691 | - | 9,691 | - | - |
| Financial assets not measured at fair value |
||||||
| Cash and cash equivalents | 801 | - | - | |||
| Trade accounts receivable | 10,310 | - | - | |||
| Current other financial assets | 141 | - | - | |||
| Non-current other financial assets |
2 | - | - | |||
| Financial liabilities not measured at fair value |
||||||
| Trade accounts payable | - | - | 737 |
In the first six months of the current financial year, there were no changes in the valuation techniques applied and no movements between the levels of the fair value hierarchy.
8. Disclosure regarding the corporate bodies of 11880 Solutions AG
Change in the Supervisory Board
Mr. Andrea Servo resigned from his post as a member of the Supervisory Board with effect from 19 January 2017. In accordance with the recommendations of the Nomination Committee, the Supervisory Board proposed that Ms. Gabriela Fabotti, residing in Alassio, Savona, Italy, CFO of Italiaonline S.p.A., Assago, Italy, is elected as a member of the Supervisory Board as a shareholder representative to replace the Supervisory Board member who departed on 19 January 2017. Ms. Gabriela Fabotti was elected to the Supervisory Board at the Annual General Meeting on 27 June 2017.
9. Report on post-balance sheet date events
No reportable events of particular significance occurred between the 30 June 2017 interim reporting date and the time of preparation of these interim financial statements.
10. German Corporate Governance Code
The joint declaration of compliance by the Management Board and Supervisory Board of 11880 Solutions AG in accordance with section 161 AktG relating to the German Corporate Governance Code was made on 15 December 2016. The exact wording of the declaration can be retrieved under https://ir.11880.com/ corporate-governance/entsprechenserklaerung.
Planegg-Martinsried, 09 August 2017 The Management Board
Christian Maar Chairman of the Management Board
Michael Geiger Member of the Management Board
7. Related party transactions
Business transactions carried out in the current financial year between 11880 Solutions AG and its subsidiaries that are considered affiliated companies were eliminated in consolidation and are not explained in these notes to the financial statements. As of 30 June 2017, there were no other companies considered related parties.
Related parties here primarily comprise the members of the Management Board and the Supervisory Board. In the current financial year, there were no transactions between the 11880 Solutions Group and members of the Management Board or the Supervisory Board extending beyond the existing employment, service or appointment relationship or the contractual remuneration for this relationship.
Corporate structure 11880 Solutions Group
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Investor Relations Telephone: +49 (89) 89 54 - 0, E-Mail: [email protected]
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Responsible 11880 Solutions AG, Fraunhoferstraße 12a, 82152 Martinsried www.11880.com
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Dominik Buschmann Laura Fischer 11880 Internet Services AG 11880 Solutions AG · Fraunhoferstraße 12 a · 82152 Martinsried www.11880.com 176-MONTHS REPORT 2017 11880 Solutions AG 6-Months Report 2017