Interim / Quarterly Report • Nov 12, 2014
Interim / Quarterly Report
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Unaudited condensed interim consolidated financial statements as of September 30, 2014
| 7.1.-9.30. 2014 |
7.1.-9.30. 2013 |
Change | 1.1.-9.30. 2014 |
1.1.-9.30. 2013 |
Change | |
|---|---|---|---|---|---|---|
| EUR 000s | EUR 000s | Percent | EUR 000s | EUR 000s | Percent | |
| Net sales | 11,639 | 11,290 | 3.1 | 33,890 | 36,434 | -7.0 |
| Gross profit | 4,098 | 4,695 | -12.7 | 11,958 | 15,792 | -24.3 |
| EBIT | -655 | -371 | 76.5 | -2,896 | -1,085 | >100.0 |
| Net income for period | -606 | 327 | <-100.0 | -2,426 | -303 | >100.0 |
| Earnings per share in EUR (basic) | -0.03 | 0.01 | <-100.0 | -0.12 | -0.02 | >100.0 |
| 9.30.2014 | 9.30.2013 | Change | ||||
| EUR 000s | EUR 000s | Percent | ||||
| Liquid funds* | 18,788 | 14,455 | 30.0 | |||
| Equity | 22,694 | 18,381 | 23.5 | |||
| Total assets | 33,401 | 27,933 | 19.6 | |||
| No. of employees | 234 | 266 | -12.0 |
| Security Identification Number (WKN) |
940883 | |||
|---|---|---|---|---|
| ISIN | NL0000238145 | |||
| Type of share | Ordinary bearer shares | |||
| Stock market segment (Frankfurt Stock Exchange) |
Prime Standard | |||
| Initial public offering | 10.09.2000 | |||
| Designated Sponsor | Equinet | |||
| Issued capital in EUR | 1,150,000 | |||
| No. of shares | 23,000,000 | |||
| Sector | Advertising | |||
| Key share figures | Q1-Q3 2014 |
Q1-Q3 2013 |
||
| XETRA closing price at end of period (EUR) |
0.89 | 0.85 | ||
| Highest price (EUR) | 1.04 | 1.05 | ||
| Lowest price (EUR) | 0.86 | 0.79 | ||
| Market capitalization at end of period (EUR) |
20.1m | 19.6m | ||
| Average no. of shares traded (XETRA) per day |
22,345 | 26,309 | ||
| Earnings per share (basic) (EUR) | -0.12 | -0.02 | ||
| Net cash per share* (EUR) | 0.82 | 0.63 |
| Shareholder | No. of shares |
Percentage share holding |
|---|---|---|
| EMA B.V. | 9,486,402 | 41.25 |
| Treasury stock | 1,759,292 | 7.65 |
| Axxion S.A. | 1,163,501 | 5.06 |
| Dieter Koppitz** | 699,338 | 3.04 |
| Euro Serve Media GmbH | 436,963 | 1.90 |
| Subtotal | 13,545,496 | 58.90 |
| Free float | 9,454,504 | 41.10 |
| Total | 23,000,000 | 100.00 |
** On March 18, 2014 came to our notice, that – according to the Dutch WFT – Mr. Dieter Koppitz' voting rights in ad pepper media International N.V., Amsterdam, The Netherlands, ISIN: NL0000238145, WKN: 940883, have exceeded the 3 percent limit of the voting rights on February 17, 2014 and on that day amounted to 3.0406 percent (this corresponds to 699,338 voting rights).
* (liquid funds – long term debt)/number of shares outstanding
The ad pepper media group is one of the leading independent marketing networks in the field of online advertising. ad pepper media International N.V., based in Amsterdam, Netherlands, is the central management and holding company for the companies in the ad pepper media group. With ten companies in six European countries and the USA, ad pepper media is currently managing campaigns for thousands of national and international advertising clients in more than 50 countries. Our online advertising activities are centered around three business divisions: ad pepper media, Webgains and ad agents.
The ad pepper media division offers the entire spectrum of successful display, performance and e-mail marketing. Its main products are iSense, SiteScreen, iLead, iClick and mailpepper.
iSense provides advertisers and publishers with a revolutionary semantic targeting technology enabling them to place their adverts in a targeted manner and in relevant surroundings for each website. At core, iSense consists of the patented Sense Engine™ technology and is the result of ten years of research and development by Prof. Dr. David Crystal, one of the world's leading linguistic experts. Operating under the name SiteScreen, the technology offers advertisers' maximum security for their brand, as the placement of adverts in inappropriate surroundings can be blocked.
iLead is an ideal solution for advertisers aiming to extend and expand their customer databases. It enables potential new customers that have already shown interest in the products and services offered by the advertiser and consented to being approached to be contacted by telephone, e-mail or post.
iClick is ad pepper media's performance marketing solution enabling advertisers to efficiently attract quantifiable volumes of eligible internet users to their websites.
mailpepper provides advertisers with an effective means of addressing mailing shots to very broad or highly specific target groups that have explicitly consented to being contacted via ad pepper media or the advertisers.
is one of the leading international affiliate networks, with offices in the UK, France, Germany, Spain and the USA. What makes affiliate marketing so attractive for all participants is the way it facilitates wide coverage via a large number of websites while offering performance-related compensation. Affiliate marketing is a commissionbased advertising model where website operators (affiliates) drive internet traffic to the site of advertisers (merchants) and receive a percentage of the sales generated there in return. It is not only the excellent service Webgains offers that is so convincing – in recent years it has also taken the lead by offering technological novelties on the platform, such as Voucher Management Tool, Multiple Datafeeds, Page Peel and Mobile Tracking.
specializes in search engine advertising (SEA), search engine optimization (SEO) and performance marketing. ad agents advises well-known companies in the mail order, travel and numerous other sectors that already have sophisticated e-commerce strategies in place and that offer goods and/or services via their websites or their internet shops. In this, ad agents help its customers to be located quickly and precisely on all standard search engines and to transform these search results into successful transactions. ad pepper media holds a 60 percent stake in ad agents.
All mentions of "ad pepper media International N.V.", "ad pepper media", "ad pepper media group" or the "group" in this management report relate to the ad pepper media group.
This management report contains forward-looking statements and information based on the beliefs of, and assumptions made by, our management using information currently available to them. We have based these forward-looking statements on our current expectations, assumptions, and projections about future conditions and events. As a result, our forward-looking statements and information are subject to uncertainties and risks, many of which are beyond our control. If one or more of these uncertainties or risks materializes, or if management's underlying assumptions prove incorrect, our actual results could differ materially from those described in or inferred from our forward-looking statements and information. We describe these risks and uncertainties in the Risk Factors section of our annual report 2013.
The words "aim", "anticipate", "assume", "believe", "continue", "could", "counting on", "is confident", "estimate", "expect", "forecast", "guidance", "intend", "may", "might", "outlook", "plan", "project", "predict", "seek", "should", "strategy", "want", "will", "would" and similar expressions as they relate to us are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date specified or the date of this report. We accept no obligation to publicly update or revise any forward-looking statements as a result of new information that we receive about conditions that existed upon issuance of this report, future events, or otherwise unless we are required to do so by law.
Revenue and profits (EBIT, EBITDA, gross margin) are some of the parameters which ad pepper media analyses monthly and compares with the original business plan to control and monitor the development of individual subsidiaries. In addition, further key performance indicators are calculated each month for control purposes and are used within all the operating companies of the ad pepper media group. External indicators are also regularly analyzed for company management purposes. In addition, there are weekly scheduled jour fixes as well as regular shareholder meetings with the individual subsidiaries.
In its latest report, the International Monetary Fund (IMF) has confirmed a renewed increase in the risks facing the global economy in recent months. In its new Global Economic Outlook, the IMF issued a further downward correction in its growth forecast for this year. Rather than the 3.7 percent growth still forecast in April, the IMF now only expects to see global economic growth of 3.3 percent this year. At 3.8 percent, the growth forecast for 2015 is set to return to a slightly higher level. However, this figure too is lower than the equivalent forecast in April. The IMF has thus been obliged to repeatedly reduce its expectations. Its growth estimate for Germany is also lower than previously. The IMF now only expects economic growth of 1.4 percent this year and 1.5 percent next year, equivalent to a reduction by half a percentage point for 2014 and 0.2 percentage points for 2015.
The report refers to the following main reasons for its outlook. On the one hand, the euro area faces the risk of stagnation, rather than the upturn hoped for following years of economic crisis. The joint currency area is set to grow by 0.8 percent this year and 1.3 percent in the coming year. Both figures have been corrected significantly downwards. Furthermore, according to the IMF geopolitical crises, such as those in the Ukraine and the Middle East, could have detrimental effects on economies far beyond the areas specifically affected, for example due to rising energy prices. Finally, the IMF has once again pointed out the urgent need for structural reform in numerous countries. The downstream implications of the major recession around six years ago are thus more intractable than previously believed.
In its latest report dated September 10, 2014, the Circle of Online Marketers (OVK) within the Federal Association of the Digital Economy (BVDW) points to the ever greater presence of the digital advertising market and its position within the overall advertising market. The German market reflects these developments. Net advertising investment in digital display advertising (online and mobile) and search word marketing now account for a 25.5 percent share of total advertising expenditure. The internet is thus drawing ever further ahead of daily newspapers (20.2 percent) and consumer magazines (8.5 percent) and steadily catching up with TV (28.4 percent).*
According to relevant forecasts, this trend is set to intensify in future. The forecast development in global advertising sales in individual media classes up to and including 2015 shows that digital marketing will maintain its advance through to 2015. By then, the Internet is forecast to account for a 47.6 percent share of advertising sales.**
* Source: OVK Online-Report 2014/02 ** Source: Statista 2014, ZenithOptimedia
ad pepper media Int. N.V. sold its marketing business to Ströer Digital Media while also agreeing on a joint data utilization concept. The company is thus pressing consistently ahead with becoming a leading data-driven performance marketing group.
In anticipation of the fair, the ad agents, ad pepper media and Webgains divisions hosted a successful event with more than 300 customers and business partners on the eve of the trade fair.
By sponsoring the "Rockstars Aftershow Party" to round off the first day, ad agents, ad pepper and Webgains also gained further visibility among trade fair visitors.
ad pepper media International N.V. can report sales of EUR 33,890k for the first nine months of 2014. This corresponds to a reduction of 7.0 percent compared with the equivalent period in the previous year (Q1-Q3 2013: EUR 36,434k). While sales at the Webgains segment grew by EUR 3,798k, or 21.5 percent, to EUR 21,487k, the ad pepper media segment had to absorb a reduction in sales by EUR 6,305k (-46.4 percent) to EUR 7,279k. At EUR 5,124k, sales in the ad agents segment were at the same level as in the previous year (Q1-Q3 2013: EUR 5,161k). The downturn in sales in the ad pepper media segment was attributable in particular to an as yet unsatisfactory operating business performance in Germany, contrasting with the pleasing performance seen in Spain and the UK. It should be noted here as well that the sales reported for the previous year's nine month period still include sales attributable to operations since sold and/or discontinued (Emediate ApS, Crystal Semantics Ltd, ad pepper media BeNeLux B.V.). Excluding this factor, the growth in sales in the first nine month of the year of 2014 would have amounted to 5.7 percent at the group, and the reduction to 20.9 percent in the ad pepper media segment. On a like-for-like basis, the ad pepper media segment also generated sales growth in the third quarter, with a year-on-year increase in sales of EUR 277k, or 11.5 percent.
The gross profit, the actual performance indicator, decreased also significantly by EUR 3,834k to EUR 11,958k respectively by 24.3 percent. As a percentage of sales, our gross margin accordingly declined from 43.3 percent to 35.3 percent. This sharp reduction was also mainly due to the disposed or discontinued operations at the ad pepper media group already referred to above. Net of this factor, the reduction in gross profit amounted to 2.2 percent. The pro forma decline in the gross margin was in turn – analogous to the development in sales – once again chiefly due to the business performance of the ad pepper media segment in Germany falling short of expectations in the first nine months of 2014.
Gross profit in the third quarter amounted to EUR 4,098k (Q3 2013: EUR 3,522k) representing an increase – on a comparable basis – of 16.3 percent.
Operating expenses fell sharply by 12.0 percent, or EUR 2.024k, to EUR 14,854k. This reduction in costs was chiefly due to the aforementioned deconsolidation items.
The disproportionate decline in the gross profit compared with the reduction in costs meant that all key profitability figures fell short of the figures of the corresponding period of the previous year. Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to EUR -2,743k for the first nine months of 2014 (Q1-Q3 2013: EUR -871k). Earnings before interest and taxes (EBIT) amounted to EUR -2,896k, as against EUR -1,085k in the previous year's period. Earnings before taxes (EBT) amounted to EUR -2,445k in the first nine months of the financial year (Q1-Q3 2013: EUR -803k). Net income for the period amounted to EUR -2,426k (Q1-Q3 2013: EUR -303k).
The gross cash flow amounted to EUR -2,997k (Q1-Q3 2013: EUR -1,069k), while a figure of EUR -3,387k was reported for the cash flow from operations, as against EUR -2,671k for the first nine months of 2013. The net cash flow from investing activities amounted to EUR 3,428k in the first nine months of 2014 (Q1-Q3 2013: EUR -193k). The cash flow from financing activities amounted to EUR 0k in the first nine months of 2014, compared with EUR -95k in the equivalent period in the previous year.
Total assets reduced by EUR 2,861k to EUR 33,401k compared with December 31, 2013. At that trade receivables decreased to EUR 6,331k (December 31, 2013: EUR 7,071k). Trade payables decreased to EUR 7,766k (December 31, 2013: EUR 7,962k).
Liquid funds (including securities measured at fair value) dropped by EUR 2,914k to EUR 18,788k compared with December 31, 2013 (EUR 21,702k). Cash and cash equivalents changed only slightly compared with June 30, 2014 (June 30, 2013: EUR 19,220k). Among other factors, this was due to the inflow of funds from the sale of mediasquares to Ströer Digital Media. Furthermore, ad pepper media owns a total of 1,759,292 treasury stock shares. The group still has no liabilities to banks. The equity ratio amounted to 67.9 percent (December 31, 2013: 67.8 percent).
The group's research and development activities are mainly located at ad pepper media International N.V. itself (at the Hamburg location). Here, a major share of the developments for the administration and ad pepper media segments are either produced internally or commissioned externally and accompanied as appropriate. In the Webgains segment, research and development activities are performed on a decentralized basis within Webgains Ltd.
As of September 30, 2014, the ad pepper media group had 234 employees, as against a total of 266 employees at the end of the equivalent period in the previous year. The workforce of the ad pepper media group is assigned to the following segments:
| 9.30.2014 | 9.30.2013 | |
|---|---|---|
| Number | Number | |
| ad pepper media | 66 | 106 |
| Webgains | 92 | 90 |
| ad agents | 57 | 53 |
| Administration | 19 | 17 |
There have been no material changes in the opportunity and risk situation of ad pepper media International N.V. compared with the information provided in the Annual Report as of December 31, 2013. Reference is therefore made to the information presented in the management report for the 2013 financial year.
The operating business performance of the ad pepper media group fell short of our own expectations in the first nine months of the financial year. The company significantly reduced its losses in the third quarter. However, this development was largely influenced by one-off items resulting from the mediasquares sale. We are cautiously optimistic about our sales and margin performance in the final quarter ahead, traditionally the strongest period in the financial year. At the same time, we are subjecting our business to an ongoing cost efficiency program, one which may necessitate restructuring expenses in the fourth quarter. Overall, we are thus confident that the upward trend that began in our key profitability figures in the third quarter might continue. By contrast, we only expect our new product initiatives in the field of data-driven business models to generate any notable sales from the first quarter of 2015 onwards.
| Q3 2014 EUR 000s |
Q3 2013 EUR 000s |
1.1.2014- 9.30.2014 EUR 000s |
1.1.2013- 9.30.2013 EUR 000s |
|
|---|---|---|---|---|
| Revenues | 11,639 | 11,290 | 33,890 | 36,434 |
| Cost of sales | -7,541 | -6,595 | -21,932 | -20,642 |
| Gross profit | 4,098 | 4,695 | 11,958 | 15,792 |
| Selling and marketing expenses | -3,162 | -3,494 | -9,513 | -11,232 |
| General and administrative expenses | -1,984 | -2,232 | -5,806 | -6,705 |
| Other operating income | 676 | 649 | 1,201 | 1,214 |
| Other operating expenses | -283 | -248 | -736 | -512 |
| Gain on sale of shares in associates and other investments | 0 | 259 | 0 | 358 |
| Earnings/loss before interest and taxes | -655 | -371 | -2,896 | -1,085 |
| Financial income | 76 | 118 | 556 | 338 |
| Financial expenses | -53 | -10 | -105 | -56 |
| Earnings/loss before taxes | -632 | -263 | -2,445 | -803 |
| Income taxes | 26 | 590 | 19 | 500 |
| Net income/loss | -606 | 327 | -2,426 | -303 |
| Attributable to shareholders of the parent company | -612 | 296 | -2,468 | -399 |
| Attributable to non-controlling interests | 6 | 31 | 42 | 96 |
| Basic earnings per share on net income for the year attributable to shareholders of the parent company |
-0.03 | 0.01 | -0.12 | -0.02 |
| Diluted earnings per share on net income for the year attributable to shareholders of the parent company |
-0.03 | 0.01 | -0.12 | -0.02 |
| Q3 2014 No. of shares |
Q3 2013 No. of shares |
1.1.2014- 9.30.2014 No. of shares |
1.1.2013- 9.30.2013 No. of shares |
|
| Weighted average number of shares outstanding (basic) | 21,240,708 | 21,240,708 | 21,240,708 | 21,240,708 |
| Weighted average number of shares outstanding (diluted) | 21,360,608 | 21,272,996 | 21,295,389 | 21,240,708 |
| Q3 2014 | Q3 2013 | 1.1.2014- | 1.1.2013- | |
|---|---|---|---|---|
| EUR 000s | EUR 000s | 9.30.2014 EUR 000s |
9.30.2013 EUR 000s |
|
| Net income/loss | -606 | 327 | -2,426 | -303 |
| Items that may be reclassified subsequently to profit or loss: | ||||
| Currency translation differences | -4 | 39 | 23 | -1 |
| Revaluation of available-for-sale securities | -188 | 358 | 64 | 419 |
| Realized gains/losses from available-for-sale securities | 48 | 0 | -195 | 0 |
| Revaluation of investments in equity instruments available-for-sale | 469 | -150 | 521 | -97 |
| Income tax recognized directly in equity | 0 | 0 | 0 | 0 |
| Total income and expense recognized directly in equity, net of tax |
325 | 247 | 413 | 321 |
| Total income and expense recognized in equity | -281 | 574 | -2,013 | 18 |
| Attributable to non-controlling interests | 6 | 31 | 42 | 96 |
| Attributable to shareholders of the parent company | -287 | 543 | -2.055 | -78 |
The total income and expense recognized directly in equity and the corresponding income taxes are as follows:
| Q3 2014 | Q3 2013 | 1.1.2014-9.30.2014 | 1.1.2013-9.30.2013 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR 000s | EUR 000s | EUR 000s | EUR 000s | |||||||||
| before income taxes |
income taxes |
after income taxes |
before income taxes |
income taxes |
after income taxes |
before income taxes |
income taxes |
after income taxes |
before income taxes |
income taxes |
after income taxes |
|
| Currency translation differences (incl. non-controlling interests) |
-4 | 0 | -4 | 39 | 0 | 39 | 23 | 0 | 23 | -1 | 0 | -1 |
| Revaluation of available-for-sale securities | -188 | 0 | -188 | 358 | 0 | 358 | 64 | 0 | 64 | 419 | 0 | 419 |
| Realized gains/losses from available-for-sale securities |
48 | 0 | 48 | 0 | 0 | 0 | -195 | 0 | -195 | 0 | 0 | 0 |
| Revaluation of investments in equity instruments available-for-sale |
469 | 0 | 469 | -150 | 0 | -150 | 521 | 0 | 521 | -97 | 0 | -97 |
| Total income and expense recognized directly in equity |
325 | 0 | 325 | 247 | 0 | 247 | 413 | 0 | 413 | 321 | 0 | 321 |
| Assets | September 30, 2014 | December 31, 2013 |
|---|---|---|
| EUR 000s | EUR 000s | |
| Non-current assets | ||
| Goodwill | 24 | 24 |
| Intangible assets | 317 | 261 |
| Property, plant and equipment | 228 | 221 |
| Securities at fair value through profit and loss | 3,373 | 3,490 |
| Securities available-for-sale | 2,465 | 5,326 |
| Investments in equity instruments available-for-sale | 5,220 | 4,503 |
| Other financial assets | 1,480 | 1,630 |
| Deferred tax assets | 35 | 35 |
| Total non-current assets | 13,142 | 15,490 |
| Current assets | ||
| Trade receivables | 6,331 | 7,071 |
| Income tax receivables | 329 | 187 |
| Prepaid expenses and other current assets | 462 | 428 |
| Other financial assets | 187 | 200 |
| Cash and cash equivalents | 12,950 | 12,886 |
| Total current assets | 20,259 | 20,772 |
| Total assets | 33,401 | 36,262 |
| Equity and liabilities | September 30, 2014 | December 31, 2013 |
|---|---|---|
| EUR 000s | EUR 000s | |
| Equity attributable to shareholders of the parent company | ||
| Issued capital* | 1,150 | 1,150 |
| Reserves | 66,336 | 66,254 |
| Treasury shares | -3,281 | -3,281 |
| Accumulated deficit | -43,254 | -40,786 |
| Accumulated other comprehensive gains/losses | 1,415 | 1,002 |
| Total | 22,366 | 24,339 |
| Non-controlling interests | 328 | 236 |
| Total equity | 22,694 | 24,575 |
| Current liabilities | ||
| Trade payables | 7,766 | 7,962 |
| Other current liabilities | 600 | 721 |
| Other financial liabilities | 2,274 | 2,869 |
| Income tax liabilities | 67 | 135 |
| Total current liabilities | 10,707 | 11,687 |
| Total liabilities | 10,707 | 11,687 |
| Total equity and liabilities | 33,401 | 36,262 |
* The issued capital consists of shares with a nominal value of EUR 0.05 each. The authorized capital amounts 23,429,708 shares, of which 23,000,000 are issued and 21,240,708 shares were floating at September 30, 2014 (December 31, 2013: 21,240,708).
| 1.1.2014-9.30.2014 | 1.1.2013-9.30.2013 | |
|---|---|---|
| EUR 000s | EUR 000s | |
| Net income/loss | -2,426 | -303 |
| Adjustments to reconcile net income for the year to net cash flow used in/provided by operating activities: |
||
| Depreciation and amortisation | 154 | 214 |
| Gain/loss on sale of fixed assets | -403 | 11 |
| Share-based compensation | 82 | 13 |
| Gain/loss on sale of securities | -294 | -155 |
| Other financial income and financial expenses | -157 | -127 |
| Income taxes | -19 | -500 |
| Gain on sale of shares in associates and other investments | 0 | -358 |
| Other non-cash expenses and income | 66 | 136 |
| Gross cash flow | -2,997 | -1,069 |
| Change in trade receivables | 489 | 2,293 |
| Change in other assets | -88 | -114 |
| Change in trade payables | -11 | -1,961 |
| Change in other liabilities | -721 | -2,261 |
| Income taxes received | 0 | 686 |
| Income taxes paid | -184 | -308 |
| Interest received | 240 | 273 |
| Interest paid | -115 | -210 |
| Net cash flow from/used in operating activities | -3,387 | -2,671 |
| 1.1.2014-9.30.2014 | 1.1.2013-9.30.2013 | |
|---|---|---|
| EUR 000s | EUR 000s | |
| Additions to intangible assets and property, plant and equipment | -232 | -197 |
| Proceeds from sale of intangible assets and property, plant and equipment |
418 | 0 |
| Loans granted | 0 | -50 |
| Proceeds from sale of other investments | 0 | 523 |
| Proceeds from transactions with non-controlling interests | 50 | 0 |
| Repayment of loans granted | 46 | 563 |
| Proceeds from sale/maturity of securities | 10,122 | 9,822 |
| Purchase of securities | -6,976 | -10,854 |
| Net cash flow from/used in investing activities | 3,428 | -193 |
| Dividends to non-controlling interests | 0 | -95 |
| Net cash flow from/used in financing activities | 0 | -95 |
| Effect of exchange rates on cash and cash equivalents | 23 | -1 |
| Cash-effective decrease/increase in cash and cash equivalents | 41 | -2,959 |
| Cash and cash equivalents at beginning of period | 12,886 | 12,587 |
| Cash and cash equivalents at end of period | 12,950 | 9,627 |
| Balance at January 1, 2013 |
Total income and expense recognized in equity |
Share based payment |
Purchase of treasury shares |
Issuance of shares |
Divi dends |
Transac tions with non controlling interests |
Balance at September 30, 2013 |
|
|---|---|---|---|---|---|---|---|---|
| Issued capital | ||||||||
| Number of shares | 23,000,000 | 23,000,000 | ||||||
| Issued capital (EUR 000s) | 1,150 | 1,150 | ||||||
| Reserves | ||||||||
| For employee stock option plans (EUR 000s) |
2,421 | 13 | 2,434 | |||||
| From contributions of shareholders of ad pepper media International N.V. (EUR 000s) |
63,782 | 63,782 | ||||||
| Treasury shares | ||||||||
| Number of shares | 1,759,292 | 1,759,292 | ||||||
| Treasury shares at cost (EUR 000s) | -3,281 | -3,281 | ||||||
| Accumulated deficit (EUR 000s) | -45,754 | -399 | -46,153 | |||||
| Accumulated other comprehensive income/losses |
||||||||
| Currency translation differences (EUR 000s) |
-1,384 | -1 | -1,385 | |||||
| Unrealized gains/(losses) from available for-sale securities (EUR 000s) |
-2,028 | 419 | -1,609 | |||||
| Unrealized gains/(losses) from invest ments in equity instruments available for-sale (EUR 000s) |
3,274 | -97 | 3,177 | |||||
| Equity attributable to shareholders of the parent company (EUR 000s) |
18,180 | -78 | 13 | 0 | 0 | 0 | 0 | 18,115 |
| Non-controlling interests (EUR 000s) | 265 | 96 | -95 | 266 | ||||
| Total equity (EUR 000s) | 18,445 | 18 | 13 | 0 | 0 | -95 | 0 | 18,381 |
| Balance at January 1, 2014 |
Total income and expense recognized in equity |
Share based payment |
Purchase of treasury shares |
Issuance of shares |
Divi dends |
Transac tions with non controlling interests |
Balance at September 30, 2014 |
|
|---|---|---|---|---|---|---|---|---|
| Issued capital | ||||||||
| Number of shares | 23,000,000 | 23,000,000 | ||||||
| Issued capital (EUR 000s) | 1,150 | 1,150 | ||||||
| Reserves | ||||||||
| For employee stock option plans (EUR 000s) |
2,472 | 82 | 2,554 | |||||
| From contributions of shareholders of ad pepper media International N.V. (EUR 000s) |
63,782 | 63,782 | ||||||
| Treasury shares | ||||||||
| Number of shares | 1,759,292 | 1,759,292 | ||||||
| Treasury shares at cost (EUR 000s) | -3,281 | -3,281 | ||||||
| Accumulated deficit (EUR 000s) | -40,786 | -2,468 | -43,254 | |||||
| Accumulated other comprehensive income/losses |
||||||||
| Currency translation differences (EUR 000s) |
-909 | 23 | -886 | |||||
| Unrealized gains/(losses) from available for-sale securities (EUR 000s) |
-1,168 | -131 | -1,299 | |||||
| Unrealized gains/(losses) from invest ments in equity instruments available for-sale (EUR 000s) |
3,079 | 521 | 3,600 | |||||
| Equity attributable to shareholders of the parent company (EUR 000s) |
24,339 | -2,055 | 82 | 0 | 0 | 0 | 0 | 22,366 |
| Non-controlling interests (EUR 000s) | 236 | 42 | 50 | 328 | ||||
| Total equity (EUR 000s) | 24,575 | -2,013 | 82 | 0 | 0 | 0 | 50 | 22,694 |
| Q1-Q3 2014 | ad pepper | Webgains | ad agents | Admin | Consolidation | group |
|---|---|---|---|---|---|---|
| media EUR 000s |
EUR 000s | EUR 000s | EUR 000s | EUR 000s | EUR 000s | |
| Total Revenues | 7,305 | 21,495 | 5,124 | 199 | -233 | 33,890 |
| thereof external | 7,279 | 21,487 | 5,124 | 0 | 0 | 33,890 |
| thereof intersegment | 26 | 8 | 0 | 199 | -233 | 0 |
| Expenses and other income | -8,442 | -21,852 | -5,147 | -1,544 | 199 | -36,786 |
| thereof amortisation and depreciation | -17 | -54 | -48 | -35 | 0 | -154 |
| thereof other non-cash income | 0 | 186 | 0 | 0 | 0 | 186 |
| thereof other non-cash expenses | -40 | -307 | -4 | -82 | 0 | -433 |
| EBITDA | -1,120 | -304 | 26 | -1,311 | -34 | -2,743 |
| EBIT | -1,137 | -358 | -22 | -1,345 | -34 | -2,896 |
| Financial income | 2 | 2 | 0 | 562 | -10 | 556 |
| Financial expenses | -7 | -3 | -2 | -103 | 10 | -105 |
| Income taxes | 19 | |||||
| Net income for the period | -2,426 | |||||
| Q1-Q3 2013 | ad pepper | Webgains | ad agents | Admin | Consolidation | group |
|---|---|---|---|---|---|---|
| media EUR 000s |
EUR 000s | EUR 000s | EUR 000s | EUR 000s | EUR 000s | |
| Total Revenues | 13,620 | 17,702 | 5,162 | 419 | -469 | 36,434 |
| thereof external | 13,584 | 17,689 | 5,161 | 0 | 0 | 36,434 |
| thereof intersegment | 36 | 13 | 1 | 419 | -469 | 0 |
| Expenses and other income | -14,762 | -17,628 | -4,817 | -731 | 419 | -37,519 |
| thereof amortisation and depreciation | -94 | -35 | -46 | -39 | 0 | -214 |
| thereof other non-cash income | 0 | 357 | 0 | 0 | 0 | 357 |
| thereof other non-cash expenses | -79 | -169 | -4 | -20 | -20 | -292 |
| EBITDA | -1,048 | 109 | 391 | -273 | -50 | -871 |
| EBIT | -1,142 | 74 | 345 | -312 | -50 | -1,085 |
| Financial income | 12 | 2 | 1 | 339 | -16 | 338 |
| Financial expenses | -12 | -4 | 0 | -56 | 16 | -56 |
| Income taxes | 500 | |||||
| Net income for the period | -303 | |||||
The current condensed interim consolidated financial statements of ad pepper media International N.V. were prepared according to the provisions of the International Financial Reporting Standards (IFRS) as applicable on the closing date, and are presented in euros. The comparative figures from the previous year were determined according to the same principles and adjusted where necessary. The quarter-end financial statements meet the requirements of IAS 34. The condensed consolidated interim financial statements do not include all of the information required for the full annual financial statements and should therefore be read in conjunction with the consolidated annual report for the year ended December 31, 2013.
The consolidated interim financial statements as of September 30, 2014 were authorized for issue by the Board of Directors on October 28, 2014.
The accounting principles applied to these quarter-end financial statements do not materially differ from the principles as applied to the Annual Report as per December 31, 2013.
Since that time IFRIC 21 "Levies" has been adopted. This interpretation is not expected to have an impact on the consolidated financial statements.
The entities included in consolidation are as follows:
| Entity | 9.30.2014 | 12.31.2013 |
|---|---|---|
| Percent | Percent | |
| ad pepper media GmbH, Nuremberg, Germany |
100 | 100 |
| ad pepper media Benelux B.V., Amsterdam, the Netherlands |
100* | 100 |
| ad pepper media Denmark A/S, Copenhagen, Denmark |
100 | 100 |
| ad pepper media UK Ltd, London, United Kingdom |
100 | 100 |
| ad pepper media France S.A.R.L., Paris, France |
100 | 100 |
| ad pepper media Spain S.A., Madrid, Spain |
65** | 100 |
| ad pepper media USA LLC, New York, USA |
100 | 100 |
| Webgains Ltd, London, United Kingdom |
100 | 100 |
| Globase International ApS, Copenhagen, Denmark |
100 | 100 |
| ad agents GmbH, Herrenberg, Germany |
60 | 60 |
* in liquidation
** ad pepper media International N.V. sold, effective January 31, 2014 a non-controlling interest of 35 percent of the fully consolidated entity ad pepper media Spain S.A. to its Managing Director.
Reference is basically made to the comments on the results of operations, financial position and net assets in the Interim Management Report.
The following one-off items affecting the income statement occurred in the period under review:
Financial result includes net realized gains from the sale of securities of EUR 294k (Q1-Q3 2013: EUR 152k) and unrealized net valuation gains/losses of EUR -11k (Q1-Q3 2013: EUR 0k).
The sale of our sales house business operated under the mediasquares brand generated a profit of EUR 400k. This has been recognized under other operating income.
The following one-off items affecting the balance sheet occurred in the period under review:
Other financial liabilities decreased by EUR 595k. This was mainly due to payments of variable remuneration elements in the first quarter of 2014.
Trade receivables decreased by EUR 740k, while trade payables fell slightly by EUR 196k. This was due to the lower volume of sales in the first nine months of 2014 compared with the first nine months of 2013.
Of available-for-sale investments in equity instruments, an amount of EUR 4,943k relates to the 4.46 percent minority stake held in Brand Affinity Technologies (BAT) Inc. (December 31, 2013: EUR 4,503k). A further amount of EUR 277k (December 31, 2013: EUR 0k) corresponds to a 0.55 percent minority stake in Veritone Inc. resulting from the conversion of a bridge loan granted to BAT Inc. in 2013. The loan amount outstanding as of the conversion date in August 2014 totaled USD 258k. The stake in Veritone Inc. was written up by EUR 69k in connection with second-round financing in August 2014. This write-up has been recognized directly in equity within accumulated other comprehensive income.
Upon preparation of the interim financial statements, the group examined in detail whether there was any impairment of the investment held in Brand Affinity Technologies Inc. This company is currently undergoing reorganization, as a result of which all forecasts involve great uncertainty. Its business performance and all changes of a legal and economic nature remain subject to the strictest monitoring.
IFRS 8 requires an entity to report financial and descriptive information about its so-called "reportable segments". Reportable segments are either operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity, about which separate financial information is available, that is evaluated regularly by the chief operating decision maker for the purpose of resource allocation and assessing performance.
Generally, financial information is required to be reported on the same basis as is used internally to evaluate the operating segments (management approach). The information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance is focused on the category of services delivered. For this reason, the group reports segment information for the operating segments of "ad pepper media" (lead, mail, display), "Webgains" (affiliate marketing) and "ad agents" (SEA/SEO) and for the non-operating "Admin" (administration) segment.
The accounting policies of the reportable segments corresponds to the group's accounting policies described in note [2] of the consolidated annual report for the year ended December 31, 2013.
The segment result is measured by EBIT and EBITDA for each seg-
ment without differences to IFRS. The segment result thus calculated is reported to the chief operating decision maker for the purpose of resource allocation and assessing segment performance.
The "dealing at arm's length" principle forms the basis of accounting for intersegment transaction.
The Group operates in four principal geographical areas: Germany, Scandinavia, Spain and the United Kingdom. The operating business in the Netherlands was discontinued as of June 30, 2013. Figures for "Scandinavia" of the corresponding period of the previous year include activities of Emediate ApS which have been sold as per November 1, 2013. The group's revenue from the continued operations of the group from business with external customers and information about the segments' assets are detailed below according to geographical location. Long-term assets do not include financial instruments or deferred tax assets:
| Revenue from external customers |
Non-current assets |
|||
|---|---|---|---|---|
| Q1-Q3 2014 |
Q1-Q3 2013 |
9.30. 2014 |
9.30. 2013 |
|
| EUR 000s | EUR 000s | EUR 000s | EUR 000s | |
| The Netherlands | 0 | 191 | 0 | 0 |
| Germany | 10,490 | 12,181 | 381 | 288 |
| Scandinavia | 1,730 | 6,543 | 1 | 155 |
| United Kingdom | 16,658 | 12,805 | 171 | 45 |
| Spain | 2,223 | 1,960 | 3 | 3 |
| Other | 2,789 | 2,754 | 13 | 2 |
| Total | 33,890 | 36,434 | 569 | 493 |
Disclosure information according to IFRS 8.34 is not relevant as there is no dependency on major customers.
By shareholders' resolution dated May 13, 2014 the Board of Directors was authorized to repurchase treasury stock of up to 50 percent of the issued capital within the following 18 months. As of September 30, 2014, ad pepper media International N.V. held 1,759,292 treasury stock (September 30, 2013: 1,759,292) at a nominal value of EUR 0.05 each, corresponding to 7.65 percent (September 30, 2013: 7.65 percent) of the share capital.
According to a shareholders' resolution, these shares can be used for stock option plans or acquisitions.
No treasury shares were sold during the first nine months 2014 (Q1-Q3 2013: 0). No shares were sold under the employee stock option plans and no cash settlements amounting for fully vested stock options occurred (Q1-Q3 2013: 0).
The number of shares issued and outstanding as of September 30, 2014 totals 21,240,708 (September 30, 2013: 21,240,708). Each share has a nominal value of EUR 0.05.
ad pepper media is engaged in the field of online advertising in the broadest sense. Due to the seasonal character of the advertising industry, with its traditional focus on expenditure in the 4th quarter, revenue and thus operating profit are generally higher in the second half of the year.
As of September 30, 2014, a total of 1,313,900 stock options exist under stock option plans. The exchange ratio for each of the stock options is one share per option. The exercise prices are in the range of EUR 0.665 to EUR 3.795.
The following table lists the individual holdings and option rights of the Supervisory and Board of Directors (directly and indirectly) as well as employees.
| Shares as of 9.30.2014 |
Options as of 9.30.2014 |
|
|---|---|---|
| Board of Directors | ||
| Dr. Ulrike Handel | 0 | 300,000 |
| Dr. Jens Körner | 0 | 210,000 |
| Former Board of Directors |
389,500 | |
| Supervisory Board | ||
| Michael Oschmann | 0 | 0 |
| Thomas Bauer | 0 | 0 |
| Eun-Kyung | 0 | 0 |
| Dr. Stephan Roppel | 0 | 0 |
| Associated companies | ||
| EMA B.V. | 9,486,402 | 0 |
| Euroserve Media GmbH | 436,963 | 0 |
| Employees | 414,400 |
There have been no material changes in transactions with related parties compared with the 2013 financial year.
Up until the day of authorization for issuance, no events took place which would have exerted substantial influence on the net assets, financial position or result of operations as per September 30, 2014.
Amsterdam/Nuremberg, October 28, 2014
Dr. Ulrike Handel, Dr. Jens Körner
All financial and press data relevant for the capital market at a glance:
| Quarterly report III/2014 | November 12, 2014 |
|---|---|
| Annual Report 2014 | March 23, 2015 |
| General Meeting of Shareholders' 2015 |
|
| (Amsterdam, the Netherlands) | May 21, 2015 |
Dr. Jens Körner (CFO) ad pepper media International N.V. Frankenstraße 150 C (FrankenCampus) D-90461 Nuremberg
Phone: +49 (0) 911 929057-0 Fax: +49 (0) 911 929057-157 E-mail: [email protected] www.adpeppergroup.com
Published by ad pepper media International N.V. Frankenstraße 150 C (FrankenCampus) D-90461 Nuremberg
Phone: +49 (0) 911 929057-0 Fax: +49 (0) 911 929057-157 E-mail: [email protected] www.adpeppergroup.com
Joint stock company (N.V.) Headquarters Amsterdam, The Netherlands Nuremberg office
Prime Standard, Frankfurt, ISIN: NL0000238145 HRB Nürnberg 17591 Ust-ID-Nr: DE 210757424
Board of Directors: Dr. Ulrike Handel, CEO Dr. Jens Körner, CFO
We will gladly send you our 2013 Annual Report as well as the interim financial reports for 2014 in German or English. These reports are also published as PDF files at www.adpeppergroup.com under: Investor relations/News & publications/Reports & publications
ad pepper media International N.V. Prins Bernhardplein 200 NL-1097JB Amsterdam www.adpeppergroup.com
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