ANNUAL
REPORT
CONTENT
01 Letter from the Board of Directors
7
02 Report of the Supervisory Board
11
03 Remuneration Report
17
04 Report of the Board of Directors
23
04.1 Governance
25
Our Governance Structure
27
Comply or Explain
31
Decree Article 10 Takeover Directive (Besluit Artikel 10 Overnamerichtlijn)
33
04.2 The ad pepper Share
37
04.3 Business Activity
41
Disclaimer regarding Forward-looking Statements
43
The ad pepper Group
43
Segments of the ad pepper Group
45
Employees and Values
48
04.4 Economic Development
49
Macroeconomic Framework
51
Presentation of Earnings Position
52
Presentation of Financial and Net Asset Position
53
04.5 Risk Report
55
Foreword
57
Risk Classification
57
Operational risk
57
Strategic risk
60
Financial risk
61
Compliance risk
64
Risk Appetite
66
Evaluation of Risk Management System Effectiveness
67
Opportunities and Outlook
68
04.6 Responsibility Statement
69
05 Consolidated Financial Statements
73
06 Notes to the Consolidated Financial Statements
85
07 Statutory Financial
127
08 Other Information
143
09 At a Glance
155
10 Glossary
161
KEY FIGURES AT A GLANCE
2022
2021
Gross sales¹ (kEUR)
98,229
111,593
Revenue
24,868
27,646
Gross profit (kEUR)
23,704
26,587
Gross margin (percent) in relation to gross sales
24.1
23.8
Gross margin (percent) in relation to revenue
95.3
96.2
EBITDA² (kEUR)
1,275
4,378
EBIT³ (Operating profit) (kEUR)
187
3,194
EBT4 (Income before taxes) (kEUR)
56
3,156
Net income (kEUR)
-250
2,564
Earnings per share (basic, EUR)
-0.04
0.08
Total assets (kEUR)
43,954
46,352
Shareholders‘ equity (kEUR)
15,666
16,756*
Equity ratio5 (percent)
35.6
36.2*
Liquid funds6 (kEUR)
23,084
23,761
Number of employees (as at 31 December)
249
249
1
Gross sales represent the total amount billed and billable to clients by the Group, net
3
EBIT (earnings before interest and taxes) is an alternative performance measure and
of discounts, VAT and other sales-related taxes. Disclosure of gross sales information
serves to present a Company’s performance while eliminating the effects of differences
is not required under IFRS; however, it is voluntarily disclosed from 1 January 2018
among local taxation systems and different financing activities.
onwards in the Consolidated Income Statement since management has concluded that
the information is useful for users of the financial statements. Please refer to Note [6].
4
Earnings before Tax.
2
EBITDA is an alternative performance measure. It is defined as earnings before
5
Shareholders’ Equity/Total Assets.
interest, taxes, depreciation and impairment losses/loss reversals on property, plant
and equipment, impairment losses on goodwill, and amortisation and impairment
6
Liquid funds is an alternative performance measure and includes cash
& cash
losses/loss reversals on other intangible assets. This performance measure neutralises
equivalents and listed debt and marketable securities and securities and deposits with
the effects of the financial result along with distortions of operational performance
maturity over three months.
that result from divergent depreciation and amortisation methods and the exercise of
measurement discretion. EBITDA is EBIT plus the amortisation of intangible assets and
the depreciation of property, plant and equipment, plus impairment losses and minus
impairment loss reversals, recognised in profit or loss during the reporting period.
2022
2021
*
Restated values acc. to IAS 8. For further information please refer to Note [2] of the
Cash and cash equivalents
17,008
20,704
Disclosure Notes.
Listed debt and marketable securities
6,076
3,057
Liquid funds
23,084
23,761
2022
2021
EBIT
187
3,194
Depreciation & Amortisation
1,088
1,184
EBITDA
1,275
4,378
2022
2021
2022
2021
2022
2021
Gross sales
EBITDA
Liquid funds
01
«
LETTER FROM THE
BOARD OF DIRECTORS
01
LETTER FROM BOARD OF DIRECTORS
DEAR STAKEHOLDERS,
The past financial year was not an easy one for us, as our Company – like many other market participants – was affected by macroeconomic
headwinds, inflation and geopolitical tension. The sharp rise in inflation along with increasing interest rates have dampened consumer confidence
and spending in Europe throughout the year. The increase in prices, especially for energy and food, had already been evident before the war in
Ukraine and had a substantial impact on consumer behaviour in 2022. This was compounded by bottlenecks due to disruptions in the supply chains,
also caused by the COVID-19 pandemic, which were a further source of uncertainty and economic weakness. Despite all this, we have successfully
navigated our Company through unprecedented challenges, and although we have not met our financial targets, we have successfully sharpened our
profile as one of the leading performance marketing companies in Europe.
Overall, despite a superb final sprint in the fourth quarter, the Group’s financial performance was not at the level we were aiming for: gross sales
came in at EUR 98,229k, and revenue at EUR 24,868k representing a decline of 12 percent and 10 percent respectively, thus ending the past financial
year substantially lower than the previous one, which had been positively impacted by lock-downs and stay-at-home restrictions due to COVID-19.
In-line with the top-line performance, our EBITDA also fell short compared to prior-year. In 2022, EBITDA amounts to EUR 1,275k (2021: EUR 4,378k).
Mixed development of the three operating segments and strong Q4
If we look at the performance of the individual segments, we see a mixed picture: while the Webgains segment and the ad pepper segment
generated revenues of EUR 13,227k and EUR 2,924k, which represents a year-on-year decline of 14.9 percent and 25.7 percent respectively, the
ad agents segment achieved revenues of EUR 8,718k, which is equivalent to 6.7 percent growth versus the previous year and thus once again set
a record in terms of revenue. The main reason for the weaker performance of Webgains and ad pepper is, as mentioned before, the high revenue
level achieved in the previous year, which saw unprecedented growth in e-commerce spending due to pandemic restrictions in various jurisdictions.
In addition, Webgains has its main market in the UK, which was at the centre stage of the cost-of-living crisis and the resulting decline in consumer
confidence and therefore in e-commerce spending as well. In contrast to this development, ad agents successfully managed to manoeuvre the
company through this difficult environment and – thanks to its stable client base – posted its highest revenue level since the inception of the
company. However, in the final quarter of the 2022 financial year, the Group achieved revenue of EUR 7,184k, which is roughly in line with the
revenue level achieved in the prior-year period (Q4 2021: EUR 7,242k). This is a strong result given the pandemic-driven high revenue levels in the
prior year and the challenging current market environment. The positive development was driven by a robust demand in the e-commerce space during
so-called Cyberweek (Webgains segment) on the one hand and the strong performance of the ad agents segment on the other, which recorded the
highest quarterly revenue since inception of the Company.
9
01
LETTER FROM BOARD OF DIRECTORS
Strong balance sheet and fnancial resources
Our balance sheet is strong, and our financial resources are substantial: our cash balances are at a comfortable level and still well above the EUR
20 million mark. Our equity ratio is at a solid 35.6 percent, and the Company continues to have no external debt. This sets us apart from many of
our peers. We plan to continue financing our growth from our cash reserves and operating cash flow in the next financial year. Based on the strong
balance sheet and the financial expectations for 2023, we therefore believe it is justified to assume that the Company’s continued existence as a
going concern is assured. We carefully review acquisitions and are more inclined to pursue them if they offer potential synergies.
In financial year 2022, the Group’s headcount stood at 249 employees, which is the same level as per end of the previous year. While the majority
of new hires can be attributed to ad agents, ad pepper and Webgains ended the year with a slightly lower headcount compared to the end of
2021. Despite all this, the health and safety of our employees was again our top priority in the past financial year. It continued to be of paramount
importance that our employees can perform their work safely and have the opportunity to work from home where possible. We would like to take this
opportunity to thank you, our stakeholders and shareholders, for your perseverance and patience. A very special thank you goes to our employees
and their families who have actively supported us and are highly motivated in their commitment to the future of the ad pepper Group. Our thanks
also go to the Supervisory Board for the steady and constructive support provided. And despite significantly lower profitability levels compared to the
previous year, we can be proud of what we have achieved, and this would not have been possible without our many long-standing and new clients,
for whom we give our best every day. Thank you for the trust you have placed in us and for our excellent working relationships.
Yours faithfully,
The Board of Directors
ad pepper media International N.V.
Dr Jens Körner, CEO
Nuremberg, 7 April 2023
02
«
REPORT OF THE
SUPERVISORY BOARD
02
REPORT OF THE SUPERVISORY BOARD
DEAR SHAREHOLDERS,
In the 2022 financial year, the Supervisory Board performed its duties pursuant to the law and the Articles of Association. It advised the Board of Directors
on a regular basis, monitored the Board of Directors in its management of the business, and was involved in decisions of key importance for the Company
and the Group.
Meetings in 2022
The Supervisory Board held four meetings in 2022. Moreover, we collectively and individually interacted with the CEO and with the senior management
outside the formal Supervisory Board meetings. The Chairman of the Supervisory Board and the CEO met regularly for bilateral discussions virtually
and in person about the progress of the Company on a variety of matters. The Supervisory Board meetings were well attended in 2022 with an
attendance rate of 100 percent of each Supervisory Board member. Due to COVID-19, meetings were partly held virtually. On 30 November 2022 the
audit committee reported to the Supervisory Board on the functioning, and the development of, the relationship with the external auditor. The Board
of Directors kept the Supervisory Board informed about the status of discussions around the development and implementation of the strategy for
2022 and beyond. The Supervisory Board discussed the status of the implementation with the Board of Directors in its meetings and also discussed
it with the senior management regularly, e.g. after a meeting of the Supervisory Board. The Supervisory Board discussed the manner in which the
Board of Directors implemented the long-term value creation strategy, i.e. improving our financial performance, and the principal risks associated
with it and hence complied with 1.1.3 of the Dutch Corporate Governance Code (“Code”). The Supervisory Board approved the financial plan for 2022
and discussed (potential) acquisitions and disposals with the Board of Directors. Topics discussed included annual and interim results, business
implications of the COVID-19 pandemic and the normalisation of long-term trends, technological developments, the organisation of sales and
marketing activities, Corporate Governance, investor relations, compensation and human resources. The Supervisory Board also met and engaged
Ernst & Young Accountants LLP, appointed as independent auditor for the financial year 2022 by the Extraordinary General Meeting of Shareholders
(the “General Meeting”) held on 19 July 2022 and discussed the outcome of the 2021 audit procedures on 25 March 2022.
In addition, the Supervisory Board discussed the general and financial risks of the business and the findings of an assessment of the internal risk
management and control systems. Consistent with the requirements of the Dutch Corporate Governance Code, the work of the Supervisory Board and
of the Board of Directors, as well as the work of the individual members of both boards, was discussed in the absence of the members of the Board
of Directors.
The evaluation of the Supervisory Board is carried out by following a detailed questionnaire. The review and discussion included reviews of the
composition and expertise of the Supervisory Board, its time management, its effectiveness, its dynamics and succession planning, as well as its
organisation and meeting procedures, provision of information and performance of the Chairman and the individual members. The evaluation has
shown that the Supervisory Board is functioning well and will continue to also regularly discuss its own effectiveness and value for the Company. The
evaluation of the Board of Directors is based on an individual evaluation and discussion of its strength and weaknesses among the members of the
Supervisory Board, including core abilities, risk assessment, business culture and human resources management.
Also in the past financial year, the Supervisory Board decided to be informed in greater detail by the management of each business unit (who
attended the meetings of the Supervisory Board in rotating order) – among other things – about technical matters, clients, market trends and, once a
year, by a Dutch law firm about the requirements of the Dutch Corporate Governance Code.
Remuneration of the Board of Directors (see Remuneration Report)
On the basis of the Company’s Articles of Association in their currently valid version, the compensation paid to members of the Board of Directors is
determined by the General Meeting following submission of corresponding proposals by the Supervisory Board. The Board of Directors’ compensation
consists of fixed and variable components. Variable compensation consists of annual performance-based payments (bonus), as well as long-term
incentives such as stock options. The fixed compensation component is regularly determined in January/February of each year with retrospective effect
13
02
REPORT OF THE SUPERVISORY BOARD
as of 1 January of the respective year. The variable compensation component is pegged to previously agreed and measurable targets which can be
controlled. The target is the consolidated EBITDA budgeted for the following year. Members of the Board of Directors do not receive any guaranteed
minimum bonus payments. Variable bonuses are usually paid during the first quarter following publication of the consolidated annual results.
In 2000, the ad pepper Group introduced a long-term incentive model in the form of stock option plans for employees in key positions, including
members of the Board of Directors. Company stock options become exercisable once ad pepper’s share price exceeds specified threshold, but only
vest one year after issue. Option plan tranches were issued to members of the Board of Directors in 2000, 2001, 2002, 2003, 2008, 2013, 2017 and
2020. The ad pepper Group has no pension obligations to members of the Board of Directors.
The total sum and structure of the Board of Directors’ compensation are designed to enable the Company to attract and retain suitably qualified
executives. The compensation structure, pension scheme payments, and other financial obligations are designed to promote the Company’s medium
to long-term interests. The details of the compensation structure disclosed in this Annual Report reflect the size of the Company and take into
consideration the fact that the Board of Directors currently consists of only one member (see Note 39). Consequently, the Supervisory Board did not
conduct a scenario analysis whereby different performance assumptions and corporate actions were examined. The compensation policy is expected
to remain largely unchanged in 2023.
Composition of the Supervisory Board
The profile and composition of the Supervisory Board as a whole must be aligned with the profile and strategy of the Company. The Supervisory
Board strives for a balanced distribution of specific expertise in relation to the business activities, strategy and long-term goals of the Company.
Each member of the Supervisory Board must be capable of assessing the broad outline of the Supervisory Board’s overall policy objectives. Given the
size of the Company, the profile of the Supervisory Board provides, that the Supervisory Board, shall at least have three members. Since the General
Meeting of Shareholders which was held on 19 May 2020, where Mrs Dagmar Bottenbruch was elected as an additional member of the Supervisory
Board, the Supervisory Board consists of four members. One Supervisory Board member holds long-term share positions. The current composition of
the Supervisory Board is as follows:
• Michael Oschmann (male, born 1969; German citizen)
Supervisory Board Chairman throughout the entire financial year up to and including 31 December 2022
Graduate in Business Administration, Managing Director of Telefonbuchverlag Hans Müller GmbH & Co. KG, Nuremberg
Supervisory Board member since 10 January 2000; appointed until General Meeting 2025
• Thomas Bauer (male, born 1963; German citizen)
Supervisory Board member throughout the entire financial year up to and including 31 December 2022
CEO of Apotheker Walter Bouhon GmbH, Managing Director of Thomas Bauer GmbH, Nuremberg
Supervisory Board member since 20 March 2013; appointed until General Meeting 2023
• Dr Stephan Roppel (male, born 1964; German citizen)
Supervisory Board member throughout the entire financial year up to and including 31 December 2022
Managing Director of baby-walz GmbH, Munich
Supervisory Board member since 20 March 2013; appointed until General Meeting 2024
• Dagmar Bottenbruch (female, born 1960; German and US citizen)
Supervisory Board member from 19 May 2020 up to and including 31 December 2020
Managing Director of Silicon Valley Bank AG Frankfurt/Main
Supervisory Board member since 19 May 2020; appointed until General Meeting 2024
The required Dutch gender diversity quota of 30 percent within the Supervisory Board is currently not met. In case of new appointments, the required
quota will be taken into consideration.
14
02
REPORT OF THE SUPERVISORY BOARD
The Supervisory Board is a separate corporate body that is independent of the Board of Directors. Its independent character is also reflected in
the requirement that members of the Supervisory Board can be neither a member of the Board of Directors nor an employee of the Company. In
accordance with best practice provision 2.1.10 of the Dutch Corporate Governance Code, the Supervisory Board declares that the independence
requirements in best practice provisions 2.1.7 to 2.1.9 have been fulfilled, except that one of its members, Michael Oschmann, is not independent
pursuant to best practice provision 2.1.8 vii. because he is Director of EMA Electronic Media Advertising International B.V., which holds more than
10 percent of the Company’s share capital. On 30 March 2018, the Supervisory Board formed an audit committee currently consisting of Michael
Oschmann, Dr Stephan Roppel and Thomas Bauer (Chairman). The Supervisory Board is aware of the fact that the ad pepper Group does not yet have
an internal audit function and has discussed this with the Board of Directors. The Supervisory Board came to the conclusion that due to the size of
the Company and the size of the Supervisory Board, the Company currently does not need an internal audit function, which may change in the future,
however, depending on further Company growth. The Supervisory Board annually considers the need to establish an internal audit function.
Unqualifed independent auditor’s report on the Consolidated Financial Statements
The independent auditor Ernst & Young Accountants LLP audited the Consolidated Financial Statements of ad pepper media International N.V. for the
2022 financial year and issued an unqualified independent auditor’s report.
The Consolidated Financial Statements, the Report of the Board of Directors and the independent auditor’s report were made available to the
Supervisory Board for review. Meetings were held between the Company’s audit committee and the auditor, who presented their audit plan, key
findings of their audit and answered related questions. The Supervisory Board acknowledged and approved the findings of the audit. The Supervisory
Board acknowledged and approved the audit results.
On 7 April 2023, the Supervisory Board discussed and approved the Consolidated Financial Statements prepared by the Board of Directors for the
2022 financial year.
15
02
REPORT OF THE SUPERVISORY BOARD
Corporate Governance
ad pepper media International N.V. is a Company under Dutch law with subsidiaries in various countries. All business activities are performed in
accordance with Dutch Company law and German capital market law, in particular the German Securities Trading Act (WpHG). Common shares are
admitted to trading on the Prime Standard of Frankfurt Stock Exchange. The Supervisory Board is committed to increasing shareholder value in the
interests of all shareholders and has always set the highest standards for the Company’s Corporate Governance principles. Although, consistent
with its proprietary guidelines, the Company basically applies the requirements laid down in the Dutch Corporate Governance Code, deviations may
nevertheless result on account of the legal requirements applicable to the ad pepper Group. In the Governance section of this Annual Report, the
ad pepper Group reports in detail on compliance with the Dutch Corporate Governance Code.
The Supervisory Board has played a key role in supporting ad pepper Group’s growth strategy during the year, as defined by the Board of Directors.
We have assisted in evaluating acquisitions and refining the long-term value creation strategy. On behalf of the Supervisory Board, I would like to
express our appreciation to all of the employees of ad pepper for their efforts and achievements throughout 2022.
For the Supervisory Board
Michael Oschmann,
Supervisory Board Chairman
Nuremberg, 7 April 2023
03
«
REMUNERATION
REPORT
03
REMUNERATION REPORT
General
The remuneration system is based on three pillars: firstly, a periodically
paid remuneration designed to attract, retain and motivate the members
The Supervisory Board carefully studied the Dutch Act aimed to
of the Board of Directors as top-tier managers of an international
implement the Shareholder Rights Directive, as adopted by the
company in a fast-moving commercial environment. Secondly, a clear
Dutch Senate in November 2019, to identify any potential gap in
performance-based remuneration and a highly detailed assessment
our remuneration policy. The current remuneration policy has been
based on ambitious internal financial targets ensure the focus is on
accepted during the 2020 General Meeting.
the Company’s goal of profitable growth on a long-term basis. Thirdly,
a stock option-based remuneration system that promotes a strong,
The Supervisory Board is also mindful of the recommended changes
long-term equity culture and, in this way, helps align the interests of
to remuneration disclosure that form part of the Guidelines to the
shareholders, management and other stakeholders.
Shareholder Rights Directive. These changes are intended to drive
greater transparency and consistency of reporting regarding executive
The present remuneration policy also takes account of the identity,
remuneration and may result in further updates to our remuneration
mission and values of the Company and public support, by designing
disclosure in the Remuneration Report once the Guidelines are
the policy and its implementation in such a way that the members of
finalised. During the 2022 General Meeting, the Remuneration Report
the Board of Directors receive a remuneration that is in accordance with
received a positive advisory vote of 98.98 percent. No questions were
the identity of the Company, with the main focus being the creation of
raised concerning its contents and none of our shareholders expressed
long-term value for all stakeholders involved in the Company. In doing
any concern about the clarity or transparency of the Remuneration
so, an explicit focus is placed on the social context and the society
Report. Based on the positive advisory vote and the absence of any
of which the Company is a part, taking into account the required
shareholder feedback, we have not proposed any changes to the
competitiveness of the Company.
structure and contents of the Remuneration Report this year.
Periodically paid fxed remuneration (base salary)
The 2022 remuneration report will be submitted to the 2023 General
Meeting for their advisory vote.
The members of the Board of Directors receive a fixed base salary,
In the absence of a remuneration committee, the Supervisory Board
which is payable in twelve equal monthly instalments. The fixed
remuneration is determined by the Supervisory Board, usually within
in its entirety evaluates the remuneration policy on a routine basis to
review its efficiency and effectiveness in supporting ad pepper’s long-
the first three months of each calendar year and with retrospective
term strategy compared to relevant market practices and adjusts if and
effect as of 1 January of that year. The fixed remuneration is typically
where appropriate. On an annual basis, the Supervisory Board sets the
increased in line with the inflation rate, but the Supervisory Board may
performance targets for the members of the Board of Directors, reviews
decide otherwise.
their performance against these predetermined targets and determines
the remuneration and benefits in line with contractual terms. The
Performance-based variable remuneration (bonus)
structure of the remuneration package for the Board members is
designed to balance incentives for short-term operating performance
with incentives for long-term sustainable value creation while taking
The bonus payment for the members of the Board of Directors is
into account the interests of shareholders and other stakeholders.
determined by the Supervisory Board. Consistent with the Board of
The remuneration policy is clear and understandable, focuses on long-
Directors remuneration policy, the Supervisory Board can choose from a
number of financial as well as non-financial targets to use as measure
term value creation for the Group, and takes into account the internal
pay ratios within the Company. The full policy can be found on the
for performance-based variable remuneration. For 2022, in-line with
Company’s website.
the service agreement entered into with the Board of Directors, the
Supervisory Board decided to use earnings before interest, taxation,
depreciation and amortisation (EBITDA) as sole measure. By using
EBITDA, the Supervisory Board has now opted for a key performance
indicator (KPI) that more closely reflects the Company’s ability to
generate operating cash flows.
19
03
REMUNERATION REPORT
Severance payment
The performance-based variable remuneration consists of two parts;
a lump-sum part in the range of EUR 70k – EUR 110k based on the
If the current CEO‘s service agreement is terminated by the Company
Company reaching the pre-set EBITDA target and a variable part,
which is a percentage of EBITDA (starting from the first EUR). The pre-
without cause, the CEO is entitled to receive 75 percent of the base
set EBITDA target for 2022 was missed and, as a result, based on the
salary (i.e. without any performance-related components to which
performance in 2022, only the variable part was awarded, amounting to
he would be entitled for the remainder of the term of his service
EUR 25k (i.e. 2 percent of EBITDA).
agreement). No severance payment shall be made if the service
agreement is terminated early at the initiative of the CEO, or in the event
The remuneration of the Board of Directors complied with the
of seriously culpable or negligent behaviour on the part of the CEO.
remuneration policy.
In line with the Dutch Corporate Governance Code, the members of the
Board of Directors are appointed for a period of four years. The CEO’s
Medium- and long-term performance-related
current term ends on 31 December 2026.
variable remuneration (stock options)
Change of control
The Company aims for a business policy which takes into account
the interests of the shareholders and its other stakeholders. The
Company wishes to promote commitment of the members of the
In the event of a change of control, the CEO has the option of
Board of Directors to build the shareholders’ value on a long-term
extraordinary termination of his employment contract for a period of
basis. The Company may therefore introduce one or more stock option
12 months after the change of control takes effect. In the event of
plans for the members of the Board of Directors, which may or may
extraordinary termination of his contract, the CEO is entitled to receive
not be linked to the performance of the Company. The exercise price
payment of compensation amounting to his respective annual target
of the stock options, the number of stock options and the other terms
income through to the end of the contractually agreed term, amounting
and conditions shall be laid down in the stock option plans. No stock
to a minimum of 150 percent of his current annual target income. A
options were granted in 2022.
change of control in this respect arises when a shareholder gains
control over the Company as defined by Paragraph 29 of the German
Securities Acquisition and Takeover Act (WpÜG), i.e. acquisition of at
Other benefts
least 30 percent of the voting rights in the Company.
The Company shall indemnify each (former) member of the Board of
Loans
Directors who was or is involved, or threatens to become involved,
in his/her capacity as (former) member of the Board of Directors, as a
party to any past, present or anticipated future actions or proceedings
Members of the Board of Directors and Supervisory Board have not
of any nature whatsoever, against all conceivable financial loss or harm
been granted any loans.
that he/she has in fact and in all reasonableness suffered in connection
with the actions or proceedings. In addition, the Company has taken
Clawback Provisions
out insurance cover for them, such as personal accident insurance and
directors and officers (D&O) insurance.
Performance-based variable remuneration is subject to claw back
Other benefits may include but are not limited to life insurance, disability
provisions pursuant to Dutch law.
insurance, long-term health care insurance, company vehicle (with the tax
on the pecuniary benefit from personal use being payable by the member
concerned), cell phone usage and contributions to private pensions The
ad pepper Group has no pension obligations towards members of the
Board of Directors.
20
03
REMUNERATION REPORT
Total Director’s remuneration,
Five-Year Comparison
broken down into its various components
Annual change
J. Körner,
J. Körner,
2018
2019
2020
2021 2022 2022
CEO (2022)
CEO (2021)
vs
vs
vs
vs vs
2017
2018
2019
2020 2021 kEUR
kEUR
kEUR
Director’s
Fixed remuneration
remuneration
Base salary
291
288
J. Körner,
Fees
0
0
CEO
-59% +226% +29%
-18% -48%
333
Other benefits¹
17
3
Remuneration
of the
Variable remuneration
Supervisory
On-year variable
25
164
Board
0%
0% -8.33% +9.10% +0%
24
Multi-year variable²
0
183
Company's
Extraordinary items
0
0
performance
Pension expenses
0
0
EBITDA
-39% +158% +87%
-33% -71% 1,275
Total remuneration
333
638
Proportion of fxed and
variable remuneration3
92%/8%
45%/55%
Year
2017 2018 2019 2020 2021 2022
1
Contributions to private pension plan and health insurance.
2
Board of Directors holds SOP which are measured at the end of each reporting period at
Average
the fair value, see also Note [38].
3
Lower share of 2022 variable remuneration is driven by the 71 percent decrease of
employee
EBITDA, see also table “Five-year comparison”.
remuneration
61
56
69
66
55
54
Ratio CEO
The amounts shown in the tables are those recognised in profit or loss
and average
during the reporting period. Income resulting from the share-based
employee
7.4
3.3
8.6
11.7
11.8
6.2
payments is due to the decreased fair value of the cash-settled stock
option plan and the corresponding adjustment of the liability through
Employees of
profit or loss.
the company*
10
11
11
13
12
15
*ad pepper media International N.V.
The average employee remuneration is obtained by dividing the total
personnel expenses as stated in the notes of the respective Company’s
Annual Report (after subtracting the CEO’s remuneration) by the
reported average number of Full Time Equivalents (“FTE”) (minus one).
21
03
REMUNERATION REPORT
Remuneration in Share Options to Board of Directors and members of Supervisory Board
The main conditions of stock option plans
Information regarding the reported financial year
Plan
Grant date
Share
Exercise
Number
Number
Number
Number
Number
options
price (EUR)
of options
of options
of options
of options of options
granted
outstanding
awarded
forfeited
exercised outstanding
01/01/2022
2022
2022
2022
31/12/2022
Board of
Directors
J. Körner
BoD 2020
10/2020
250,000
3.50
187,500
0
187,500
0
0
Supervisory
Board
S. Roppel
SB 2017
04/2017
10,000
1.9751
5,000
0
0
0
5,000
The options granted under the SB 2017 and BoD 2017 plan expire 7 years after granting. The options grant the right to purchase shares at the exercise
price (EUR 1.9751). These options may be exercised over a period of four years at 25 percent each year, but at the earliest one year after being granted.
The options forfeit, if the holder terminates his employment contract with the Company for whatever reason, or if the employment contract is expiring
and will not be prolonged by the parties. The options also forfeit, if the Company terminates the employment contract for an important reason or if a
member of the Supervisory Board resigns. The options granted under the BoD 2020 plan expire 7 years after granting. The options grant the right to
purchase shares at the exercise price (EUR 3.50). These options may be exercised over a period of four years at 25 percent each year, but at the earliest
one year after being granted. The options forfeit if the Company terminates the employment contract for an important reason.
In the financial year 2022, a total of 233,325 shares of the Company have been repurchased (2021: 461,384) and 0 shares (2021: 32,400 shares) have
been issued in relation to exercise of the aforementioned rights.
Supervisory Board Compensation
2022
2021
EUR
EUR
Michael Oschmann
6,000
6,000
Thomas Bauer
6,000
6,000
Dr Stephan Roppel
6,000
6,000
Dagmar Bottenbruch
6,000
6,000
Total remuneration for members of the Supervisory Board amounted to EUR 24k in the past financial year (2021: EUR 24k).
22
04
«
REPORT OF THE
BOARD OF DIRECTORS
«
GOVERNANCE
04.1
GOVERNANCE
OUR GOVERNANCE STRUCTURE
Members of the Board of Directors are appointed by the General
Meeting, subject to the right of the Supervisory Board to make a binding
nomination to appoint a Board of Directors member in accordance with
the relevant best practice provisions of the Dutch Civil Code and the
Corporate information
articles of association (the “Articles of Association”). Since 28 February
2017, the Company’s Board of Directors consists of one “Director”
ad pepper media International N.V. is a “naamloze vennootschap”
(Chairman of the Board of Directors and CEO). The CEO has powers to
(N.V.), a Dutch limited liability Company, and is the parent Company
represent the Company. However, in addition to the cases that legally
of the ad pepper Group (the “Group”). The Company’s registered office
require the approval of the Supervisory Board, certain resolutions of
address is Frankenstrasse 150C, 90461 Nuremberg, Germany. Its
the Board of Directors as laid out in the rules governing the internal
registration number with the Dutch trade register is 27182121.
organisation of the Board of Directors also require approval of the
Supervisory Board. Resolutions of the Board of Directors that require
The Company’s Corporate Governance structure is based on the
the approval of the Supervisory Board are only adopted after the
requirements of Dutch corporate law, the Dutch Act on Financial
Supervisory Board has given its approval to such proposed resolution.
Supervision and the Dutch Corporate Governance Code (the “Code”).
Dutch law provides that a member of the Board of Directors of a Dutch
The Company has a two-tier board structure consisting of a Board of
public limited liability Company may not participate in the adoption
Directors and a Supervisory Board. It is in the interest of the Group and
of resolutions (including deliberations in respect hereof) if he or she
all of its stakeholders that there is a clear division of responsibilities
has a direct or indirect personal interest conflicting with the interests
between the Board of Directors, the Supervisory Board and the General
of that Company or its enterprise. Pursuant to the Board of Directors
Meeting in a well-functioning system of checks and balances.
by-laws, each member of the Board of Directors must immediately
report any (potential) personal conflict of interest to the Supervisory
In this section, we address our overall Corporate Governance, and
Board and to the other members of the Board of Directors and must
provide information on our compliance with the best practice provisions
provide all information relevant to the conflict. The Board of Directors
of the Code. Occasional deviations from the Code are explained and
by-laws provide detailed rules under which circumstances a conflict of
information on the reasons for any such deviations are provided at
interest of a member of the Board of Directors exists and determines
the end of this section. In the event of any substantial changes to the
that the Board of Directors member may not be present at the meeting
Corporate Governance structure of the Company and its compliance with
discussing such matters. During 2022, no conflicts of interest were
the Code, the shareholders shall be informed at the General Meeting.
reported. There were furthermore no transactions as referred to in the
best practice provisions 2.7.4 and 2.7.5.
Board of Directors
Supervisory Board
The Board of Directors is entrusted with the management of the
Company, which means that, among other responsibilities, it defines
The Supervisory Board should supervise the policies carried out by
the strategic direction, establishes the policies, and manages the
the Board of Directors and the general affairs of the Company and its
Company’s day-to-day operations under the supervision of the
affiliated enterprise. In doing so, the Supervisory Board should also focus
Supervisory Board. The members of the Board of Directors collectively
on the effectiveness of the Company’s internal risk management and
manage the Company and are accountable to the Supervisory Board
control systems and the integrity and quality of the financial reporting.
and to the General Meeting. In performing its duties, the Board of
It offers advice to the Board of Directors. In discharging its duties, the
Directors is guided by the interests of the Company and its enterprise.
Supervisory Board has regard for the interests of the Company and the
The Board of Directors follows its own rules determined in the profile
business enterprise connected with it. The Supervisory Board meets at
of the Board of Directors, which defines responsibilities, competencies
least four times a year and whenever a majority of its board members
and decision-making processes.
or its Chairman considers this to be necessary. Resolutions of the
Supervisory Board may, instead of at a meeting, be passed in writing
The Board of Directors provides the Supervisory Board with information
– including by telegram, facsimile or telex transmission, or in the form
in a timely manner and, if necessary, consults with the Supervisory
of a message transmitted by any accepted means of communication
Board on important matters and submits certain important decisions to
and received or capable of being produced in writing – provided that
the Supervisory Board for approval.
all Supervisory Board members are familiar with the resolution to be
passed and none of them objects to this decision-making process.
27
04.1
GOVERNANCE
The Supervisory Board passes its resolutions, inside as well as outside
Furthermore, General Meetings shall be held in the event referred to in
meetings, with an absolute majority of the votes of all the members
Article 2:108a of the Dutch Civil Code and as often as a member of the
of the Supervisory Board in office. In the event of an equal division of
Board of Directors or a Supervisory Board member considers it necessary.
votes, the Chairman of the Supervisory Board has the casting vote.
The resolutions proposed in the agenda were adopted at the General
The Chairman of the Supervisory Board determines the agenda and
Meeting of ad pepper media International N.V. held in Amsterdam on
chairs the meetings of the Supervisory Board, monitors the proper
17 May 2022. In all, 10,044,579 voting rights, or 46.72 percent of the
functioning of the Supervisory Board, arranges for the adequate
issued share capital and 49.58 percent of all shares with voting rights
provision of information to the members of the Supervisory Board and
were represented at the General Meeting.
acts on behalf of the Supervisory Board as the main contact for the
Board of Directors. Important topics and upcoming decisions are also
Alongside the presentation of the annual financial statements for the
dealt with in regular discussions and meetings between the Chairman
2021 financial year, key agenda items also included the discharge of
of the Supervisory Board and the CEO. The Chairman of the Supervisory
the members of management and the Supervisory Board, the adoption
Board informs the other members of the Supervisory Board regularly
of the amendments to the Company’s Articles of Association Board of
on the outcome of his discussions and meetings. He also initiates the
Directors as well as the authorisation to buy back treasury stock.
evaluation of the functioning of the Supervisory Board and the Board
of Directors. All members have had sufficient time available for their
On 17 July 2022 an Extraordinary General Meeting (EGM) had to be
duties relating to their membership of the Supervisory Board. Their
held in order to re-elect Ernst & Young Accountants LLP as the auditor
availability for ad hoc calls, prompt response on emails and the fact
for the 2022 financial year. A total of 10,307,216 voting rights, or 47.94
that the members prepared the meetings well, regardless of their
percent of the issued share capital and 50.88 percent of all shares with
attendance at the meetings, and actively participated in the meeting
voting rights were represented at the EGM.
discussions, demonstrate that they were all able to devote adequate
attention to the Company.
Proposed appropriation of the
result for the fnancial year 2022
On 10 December 2019, the Supervisory Board formed an audit
committee currently consisting of Michael Oschmann, Dr Stephan
The Board of Directors, with the approval of the Supervisory Board,
Roppel and Thomas Bauer (Chairman). No changes occurred in the year
under review.
proposes to allocate the result for the financial year 2022 amounting to
EUR -893k to the accumulated deficit without payment of dividend. The
financial statements reflect this proposal.
General Meeting
Long-term value creation
At least one General Meeting shall be held each year, at the latest
six months after the close of the financial year. The agenda and the
explanatory notes to the agenda are published in advance and posted
By bringing together three individual, strong segments in the area of
on the Company’s corporate website. The explanatory notes to the
performance marketing – each focused on advising, supporting and
agenda contain all relevant information with respect to the proposed
enabling its clients in their digital marketing strategy – and further
resolutions. All resolutions are made on the basis of the “one share,
developing these assets into relevant players, the Company focusses on
one vote” principle. The General Meeting reviews the Annual Report
above market average organic growth of these existing business lines
and decides on adoption of the financial statements and the dividend
and expanding the footprint of new services and products offered by
proposal, as well as on the discharge of the members of the Supervisory
those segments. At the same time, the Company strives to strengthen its
Board and the Board of Directors. The Board of Directors may add other
operational and financial position, i.e. growing both top-line revenue and
items to the agenda of the General Meeting.
EBITDA as well as generating positive operating cash flows each year.
As mentioned above, macroeconomic headwinds resulted in declining
The Board of Directors shall be obliged to convene a General Meeting
revenues and lower profitability in the past financial year. However, we
if one or more of the persons with meeting rights who alone or jointly
successfully navigated our Company through another unprecedented
represent(s) at least 10 percent of the issued share capital request(s)
financial year, and although we did not meet our financial targets, we
this in writing, stating the issues to be discussed. An extraordinary
successfully sharpened our profile as one of the leading performance
General Meeting may be convened by the Supervisory Board or the
marketing companies in Europe and therefore believe that 2022 has also
Board of Directors if deemed necessary.
contributed to the Company´s long-term value target.
28
04.1
GOVERNANCE
Diversity
Insider trading policy
We aim for diversity at every level. We do not see diversity as
The ad pepper Group has a strict Code of Conduct on insider trading.
merely a matter of gender or ethnicity but also of personality, skills
The insider trading policy with regard to inside information and
and knowledge. We need men and women, people from different
securities trading was adopted by the Board of Directors. This policy
backgrounds and cultures. The ad pepper Group values this diversity
is publicly available on the Company’s website. In accordance with
and believes it contributes positively to the way we evaluate situations
applicable law and regulations (including the EU Market Abuse
and make decisions. The more we utilise the differences between
Regulation), the Company maintains insider lists and exercises controls
us and the more we can cooperate and learn from each other, the
around the dissemination and disclosure of potentially price-sensitive
stronger we will be as a company that serves a highly diverse society
information. Transactions in the Company’s shares carried out by the
and stakeholders. The Supervisory Board and the Board of Directors
Board of Directors and the Supervisory Board members (including their
are fully aware that both boards currently lack gender diversity; we
closely associated persons) are as and when required notified to the
do not have an even distribution of seats between men and women
Dutch Authority for the Financial Markets (AFM), in accordance with
and we do not have a diversity policy. We will take greater board-level
the applicable provisions of the EU Market Abuse Regulation.
gender diversity into account for future appointments, as required by
law, without compromising our commitment to hiring the best qualified
Substantial shareholdings
individuals for positions. In any future vacancies that arise, however,
gender diversity will subsist to be one of the criteria in the selection
process, and the Company shall continue to strive towards achieving a
Shareholders owning 3 percent or more of the issued share capital of
diverse composition of its boards within the coming years.
a listed company (a substantial shareholding or short position) must
report this to the AFM as soon as this threshold is reached or exceeded.
In the Netherlands, an important milestone was reached on 1 January
Subsequently, notifications to the AFM must be made as soon as a
2022. With effect from this date, new legislation became effective
substantial shareholding or short position reaches, exceeds or falls
to achieve a more balanced ratio of seats between men and women
below set thresholds. The thresholds are 3 percent, 5 percent, 10
on the supervisory boards of publicly traded companies and large
percent, 15 percent, 20 percent, 25 percent, 30 percent, 40 percent, 50
companies. While the obligations arising from the legislation applies
percent, 60 percent, 75 percent and 95 percent of the company’s issued
to large companies only (and the Company did not fall under the
share capital. Shareholder’s disclosures can be inspected in the register
respective criteria in the past financial year) and the Supervisory Board
kept by the AFM, and for the ad pepper Group the shareholdings as at
had only one female member in the financial year under review, we
31 December 2022 are also disclosed on page 34 of this Annual Report.
take good note of the recent changes to the Code and aim for a higher
share of female members in the Company`s key roles. For instance, the
Publication requirements under German law
Company`s so-called Executive team, which consists of employees in
key positions across all segments, already today consists of 40 percent
female members and we aim to hold this threshold and strive to
In accordance with Section 26 (1) of the German Securities Trading Act
increase it (e.g. to 50 percent) in the long-term.
(“Wertpapierhandelsgesetz”), the Company, in its capacity as a so-
called domestic issuer (“Inlandsemittent”) under the German Securities
Trading Act, must publish any shareholding notifications under Dutch
Conficts of interest
law immediately, but no later than three trading days after receiving
them, via qualified media outlets. The Company must also transmit the
Under the criteria set out in the Dutch Corporate Governance Code,
notice to the German Federal Financial Supervisory Authority (BaFin)
three of the four current members of the Company’s Supervisory Board
and to the German Company Register (“Unternehmensregister”).
count as independent. Michael Oschmann, Supervisory Board Chairman
of the Group, is not counted as independent in this respect as he is
Managing Director of EMA Electronic Media Advertising International
B.V., which holds more than 10 percent of the Company’s share capital.
During 2022 no conflicts of interest were reported.
29
04.1
GOVERNANCE
Internal audit function
The Company has implemented a risk management and internal controls
designed to provide reasonable assurance that strategic objectives
The Supervisory Board annually reviews the need to establish an
are met by creating focus, integrating management control over the
internal audit function and following these discussions makes a
Company’s operations, ensuring compliance with applicable laws and
recommendation to the Board of Directors. Considering the current
regulations and by safeguarding its assets and the reliability of its
size of the operations of the Company and taking into account its risk
financial reporting and its disclosures. The Company’s risk management
profile, the Supervisory Board advised to the Board of Directors that
approach is embedded in its periodic business planning and review cycle
it does not yet deem it necessary to create an internal audit function.
and forms an integral part of business management.
With respect to financial reporting a structured self-assessment and
Auditor
monitoring process is used Company-wide to assess, document, review
and monitor compliance with internal control over financial reporting.
The independent auditor is appointed by the General Meeting. The
Supervisory Board can nominate a candidate for this appointment, for
It should be noted that the above does not imply that these systems and
which purpose the Board of Directors advises the Supervisory Board.
procedures provide certainty as to the realisation of operational and
The compensation of the independent auditor and any commissioning
financial business objectives, nor can they prevent all misstatements,
of the external auditor must be approved by the Supervisory Board
inaccuracies, errors, fraud and non-compliance with rules and regulations.
following consultation with the Board of Directors. The independent
auditor is required to attend the General Meeting and the Supervisory
Remuneration Policy
Board meeting at which the independent auditor’s report on its audit of
(see also chapter Remuneration Report)
the financial statements is discussed.
General
Statement by the Board of Directors
(Dutch Corporate Governance Code)
The remuneration and the contracts between the Company and the
members of its Board of Directors are determined by the Supervisory
For the purpose of complying with best practice provision 1.4.3 of the
Board within the scope of the remuneration policy that has been
Code the Board of Directors believes that, to the best of its knowledge:
adopted by the General Meeting.
• the Company’s internal risk management and control organisation
The objective of the remuneration policy is to attract, retain and
provides reasonable assurance that its financial reporting does not
motivate the members of the Board of Directors as top-tier managers
contain any errors of material importance;
of an international Company in a fast-moving commercial environment,
• the internal risk management and control processes in relation to
while protecting and promoting the objectives of the Company and
financial reporting functioned properly in 2022;
shareholders’ value.
• the report provides sufficient insights into failings, if any (no failings
in 2022), in the effectiveness of the internal risk management and
The remuneration for the members of the Board of Directors may
control systems;
consist of the following items:
• the aforementioned systems provide reasonable assurance that the
financial reporting does not contain any material inaccuracies;
• Periodically paid remuneration (fixed base salary)
• based on the strong balance sheet it is justified that the financial
• Short-term performance-related variable remuneration (bonus)
reporting is prepared on a going concern basis; and
• Medium- and long-term performance-related
• the report states those material risks and uncertainties that are
variable remuneration (stock options)
relevant to the expectation of the Company’s continuity for the
• Other benefits
period of twelve months after the preparation of the report.
The Board of Directors is responsible for the establishment and
adequate functioning of a system of governance, risk management and
internal controls in the Company. It reports on and is accountable for
internal risk management and control systems to the Supervisory Board
and its Audit Committee.
30
04.1
GOVERNANCE
Periodically paid fxed remuneration (base salary)
Other benefts
The base salary of the members of the Board of Directors is determined
The Company shall indemnify each (former) member of the Board of
on an annual basis by the Supervisory Board. The fixed remuneration
Directors who was or is involved, or threatens to become involved, in
is determined by the Supervisory Board, usually within the first three
his/her capacity as (former) member of the Board of Directors, as a
months of each calendar year and with retrospective effect as of 1
party to any past, present or anticipated future actions or proceedings
January of that year. The fixed remuneration is typically increased in line
of any nature whatsoever, against all conceivable financial loss or harm
with the inflation rate, but the Supervisory Board may decide otherwise.
that he/she has in fact and in all reasonableness suffered in connection
with the actions or proceedings.
Short-term performance-related variable remuneration (bonus)
Other benefits may include but are not limited to life insurance,
disability insurance, long-term health care insurance, Company vehicle
Due to the business environment of the Company, it is difficult to link the
and cell phone usage.
variable remuneration to previously determined and influenceable long-
term targets. The short-term variable remuneration for members of the
In general, the Company, its subsidiaries and the companies whose
Board of Directors should in principle consist of an annual performance-
financial details are consolidated by the Company shall not grant
related bonus. The bonus is determined by the Supervisory Board on the
loans, advances or guarantees to members of the Board of Directors,
basis of measurable and controllable targets such as the Company’s
but the Supervisory Board may resolve that the Company shall do so
income before taxation (i.e. EBITDA to be more precise) or other financial
if the Supervisory Board deems that the granting of loans, advances or
or operational targets, as determined by the Supervisory Board.
guarantees is in the interest of the Company.
During 2022, the Company was in compliance with the remuneration
Medium- and long-term performance-related
policy.
variable remuneration (stock options)
The Company aims for a business policy which takes into account the
interests of the shareholders and its other stakeholders. The Company
COMPLY OR EXPLAIN
wishes to promote commitment of the members of the Board of
Directors to build the shareholders’ value on a long-term basis. The
Company may therefore introduce one or more stock option plans
for the members of the Board of Directors, which may or may not be
Introduction
linked to the performance of the Company. The exercise price of the
stock options, the number of stock options and the other terms and
The Corporate Governance structure and compliance with the Code is
conditions shall be laid down in the stock option plans.
the joint responsibility of the Board of Directors and the Supervisory
Board. They are accountable for this responsibility to the General
Meeting. We continue to seek ways to improve our Corporate
Remuneration payable in instalments
Governance by measuring it against international best practice. The
Code was last amended on 8 December 2016. The new Code took
The members of the Board of Directors have entered into part-time
effect on 1 January 2017 and can be found at www.mccg.nl.
employment contracts with the Company. Upon dismissal of a member
of the Board of Directors, the Company is in principle obliged to pay
Non-application of specific best practice provisions is not per se
his/her fixed and variable salary and other benefits for the remaining
considered objectionable by the Code and may well be justified because
term of the contract, but the Supervisory Board is authorised to deviate
of particular circumstances relevant to a company. In accordance with
from this principle.
Dutch law, we disclose in our Report of the Board of Directors the
application of the Code’s best practice provisions. To the extent that we
do not apply certain best practice provisions, we state the reasons. We
take a positive view of the Code and apply most of the best practice
provisions.
31
04.1
GOVERNANCE
The following provides an overview of exceptions that we have identified:
Principle 2.3 Organisation of the Supervisory Board and reports
Principle 1.3 Internal audit function
If the Supervisory Board considers it necessary, it can, according to
the Company’s Articles of Association, install committees from among
Given the size of the Company and its risk profile, the Company does not
its members, such as an audit committee, remuneration committee,
have an internal audit function of its own. Nevertheless, the Board of
and a selection and appointment committee and shall draw up a set
Directors and the Supervisory Board may implement internal audits on a
of regulations for each committee. The Supervisory Board consists
case-by-case decision using internal and external resources. This has not
of four members. The Company decided to not form a remuneration
occurred during 2022. The Company thus does not fully comply with best
committee and a selection and appointment committee, and it is instead
practice provisions 1.3.1, 1.3.2, 1.3.3, 1.3.4, 1.3.5 and 1.3.6 of the Code.
the collegiate responsibility of the Supervisory Board to prepare the
decision-making of the Supervisory Board and perform the tasks of these
committees as set out in the Code, unless stated otherwise herein.
Principle 2.1 Composition and size
The Company does therefore not fully comply with best practice
provisions 2.3.2, 2.3.3, 2.3.4 and 2.3.5. The Supervisory Board, due to
Provision 2.1.1. states that the Supervisory Board should strive for a diverse
its size, did not nominate a vice-chairman and does therefore not fully
composition with respect to nationality, age, gender, and educational
comply with best practice provisions 2.3.6 and 2.3.7.
and work background and should define specific targets to achieve this.
The Supervisory Board believes that both the Board of Directors and the
Supervisory Board are and will be composed in such a manner that the
Principle 2.4 Decision-making and functioning
combination of experience, expertise and independence of its members
satisfies the requirements set out in its profile. We believe that the
Due to its size, the Supervisory Board did not nominate a vice-chairman
composition of our boards allows them to properly and effectively carry
and does therefore not fully comply with best practice provision 2.4.3.
out their duties. Our focus for new board members is on experience and
education instead of explicit gender, age or nationality diversity targets.
We therefore do not comply with best practice provision 2.1.5 of the Code.
Principle 2.6 Misconduct and irregularities
Finally, Michael Oschmann, Chairman of the Supervisory Board of the
Group, cannot be regarded as independent as he is Managing Director of
The Company has no plans to establish “whistleblower” guidelines
EMA Electronic Media Advertising International B.V. This company holds
governing the reporting of misconduct by Company employees. Given
more than 10 percent of the Company’s share capital.
the Company’s small size, there are short lines of communication and
the Board of Directors is highly involved in the day-to-day business
and employees already have the possibility of reporting suspected
Principle 2.2 Appointment, succession and evaluation
irregularities at the Company on a general, operational and informal
level without jeopardising their legal position. The Company
Members of the Supervisory Board are appointed for a term of four
therefore does not fully comply with best practice provision 2.6.1.
years and can be reappointed. The Company has adopted a policy of
However, a Code of Conduct, setting out business principles for our
remaining open to the possibility that a Supervisory Board member will
employees and rules of conduct, was adopted in 2007 which allows
be reappointed after the maximum term contained in provision 2.2.2
for the possibility of anonymously reporting concerns about actual or
due to his or her great knowledge of the Company and high level of
suspected non-compliance with the Company’s standards stipulated
involvement. In addition, the Supervisory Board will retire by rotation
in its Code of Conduct.
and may be reappointed in order to ensure that the lowest possible
number of Supervisory Board members retire from the Board at the
same time. The latter is not posted on the Company’s website. The
Company therefore does not comply with best practice provisions 2.2.2
and 2.2.4. The Company does not have a selection and appointment
committee and does not comply with provision 2.2.5. As the Supervisory
Board currently has just four members, the number of committees must
be reduced to the minimum required.
32
04.1
GOVERNANCE
Principle 3.1 Remuneration policy – Board of Directors
Principle 3.4. Accountability for implementation
of remuneration policy
In deviation of best practice provision 3.1.2 of the Code, options
granted to members of the Board of Directors under stock option plan
The existing contract with the Board of Directors does not contain any
do not contain performance conditions and can be partly exercised after
extraordinary elements; the remuneration essentially consists of fixed
a period of one year. Although deviating from the Code, the Company
and variable remuneration. In the event of more complex contracts
believes that the structure of the stock option plans serves its purpose
being concluded in the future, the Company will consider publishing a
to retain members of the Board of Directors and to align the interests of
disclosure on its website.
shareholders, management, Board of Directors and other stakeholders.
In addition, the Supervisory Board did not conduct scenario analyses
Principle 4.2 Provision of information
whereby the impact of different performance assumptions and
corporate actions on variable remuneration of the Board of Directors
was examined. The Supervisory Board concluded this is not necessary
While the Company focusses on the corporate calendar that covers
due to the simple structure of variable compensation.
all publication dates and planned conferences and will update
investor presentations posted on the Company’s website whenever
new information is available so that no single investor can gain an
Principle 3.2.1 Remuneration committee’s proposal
information advantage, due to the size of the Company and owing
to the large number of meetings not every single meeting with or
A remuneration policy has been implemented and approved by the
presentation to analysts, investors and institutional investors can be
General Meeting. However, given the size of the Company and the
made available to follow in real time. The Company also does not post
Supervisory Board, a remuneration committee has not been and is not
a policy on bilateral contacts with the shareholders on its website. This
intended to be established.
is in deviation from best practice provisions 4.2.2 and 4.2.3.
Principle 3.2.3 Severance payments
DECREE ARTICLE 10 TAKEOVER
The compensation paid in the event of dismissal of Mr Körner may
exceed one year’s salary, however, severance pay will not be awarded if
DIRECTIVE (BESLUIT ARTIKEL 10
the agreement is terminated early at the initiative of the Board member,
OVERNAMERICHTLIJN)
or in the event of seriously culpable or negligent behaviour on the part
of the member of the Board of Directors. In the event of his contract
being terminated without cause as defined by the applicable law, the
Company would remain obliged to compensate such member for the
Introduction
remaining term of his employment agreement. The Company believes
that the contractual arrangement is well justified due to the long tenure
In accordance with Article 10 of the Takeover Directive (Dertiende
of this board member. The Company does therefore not comply with
Richtlijn), companies with securities that are admitted to trading on
best practice provision 3.2.3. See also page 35 “Payments to employees
a regulated market are obliged to disclose certain information in their
on termination of employment in connection with a public takeover bid”.
board reports. This obligation has been implemented in Dutch law
through Decree Article 10 Takeover Directive. The Group must disclose
certain information that might be relevant for companies considering
Principle 3.3 Remuneration Supervisory Board
making a public offer with respect to the Group. The information that
the Group is required to disclose, including a corresponding explanatory
Supervisory Board members have been granted stock options. The
section, is presented below.
Company does not comply with best practice provision 3.3.2 of the Code
and deems this appropriate given the size of the Group and long-term
involvement of the members of the Supervisory Board. Furthermore, the
grant of 10,000 SOP for two Supervisory Board members is regarded to
be more symbolic rather than part of a regular remuneration.
33
04.1
GOVERNANCE
Capital structure
Appointment and dismissal
of members of the Board of Directors
The Company has only one class of shares (ordinary shares) which carry
equal rights. As at 31 December 2022, the issued share capital amounts
The members of the Board of Directors are appointed on the basis
to EUR 1,075,000 and is divided into 21,500,000 common bearer shares
of a binding nomination by the Supervisory Board. Where no binding
with a nominal value of EUR 0.05 each.
nominations have been made, the General Meeting is free to select.
The General Meeting may at any time resolve that the list of candidates
is not binding by adopting a resolution passed with an absolute
Obligation of shareholders to
majority of the votes cast, representing more than one-third of the
disclose share ownership
issued capital. If at least an absolute majority of the valid votes cast
supports the resolution to render the nomination non-binding, but the
The AFM has to be notified of major shareholdings in respect of the
required quorum of one-third of the issued capital is not represented,
Company in accordance with the Financial Market Supervision Act
then this resolution may nevertheless be adopted at a second meeting
(Wet op het financieel toezicht) and the Ordinance to Disclose Major
to be convened. At such meeting, the resolution may then be adopted
Shareholdings and Capital Investments in Institutions Issuing Securities
with at least an absolute majority of the valid votes cast, but without
(Besluit melding zeggenschap en kapitaalbelang in uitgevende
any quorum requirement.
instellingen).
The General Meeting may at any time suspend or dismiss any member
Due to the listing of the shares on the German Frankfurt Stock
of the Board of Directors. The Supervisory Board is entitled to suspend
Exchange, the Company must also in its capacity as a so-called
any member of the Board of Directors and is obliged to notify the
domestic issuer (“Inlandsemittent”) under the German Securities
member of the Board of Directors in writing and without delay of
Trading Act publish any shareholding notifications under Dutch law
this suspension, stating the reasons for such move. Furthermore, the
immediately, but no later than three trading days after receiving them,
Supervisory Board is then obliged to convene a General Meeting to
via qualified media outlets in accordance with Section 26 (1) of the
pass a resolution either on lifting the suspension of the member of the
German Securities Trading Act (“Wertpapierhandelsgesetz”). The
Board of Directors or on the member’s dismissal.
Company must also transmit the notice to the German Federal Financial
Supervisory Authority (BaFin) and to the German Company Register
Shareholders’ agreement on limitations
(“Unternehmensregister”).
on exercise of voting rights
Michael Oschmann, Supervisory Board Chairman of the Group, holds
more than 10 percent of the Company’s share capital via EMA Electronic
Each share issued by the Company entitles its bearer to one vote. There
Media Advertising International B.V. and Euro Serve Media GmbH.
are no special statutory rights attached to the shares of the Company
and no restrictions on the voting rights of the Company’s shares exist.
Share ownership as at 31 December 2022:
There is also no employee participation in capital that does not allow
employees to directly exercise their controlling rights. As far as is
known to the Group, there is no agreement involving a shareholder of
Shares
Shares
the Group that could lead to any restriction on the transferability of
shares or of voting rights on shares.
Number
Percentage
EMA Electronic Media
Advertising International B.V.*
9,486,402
44.12
Treasury stock
1,242,128
5.78
Euro Serve Media GmbH*
556,163
2.59
Subtotal
11,284,693
52.49
Free float
10,215,307
47.51
Total
21,500,000
100
*As reported to the Company.
34
04.1
GOVERNANCE
Appointment and suspension of
Payments to employees on termination
Supervisory Board members
of employment in connection with
a public takeover bid
The General Meeting appoints Supervisory Board members and
is entitled at any time to suspend or dismiss any Supervisory Board
In the event of a change of control, there is the option of extraordinary
member. The appointment, dismissal, or suspension of a Supervisory
termination for Mr Körner 12 months after the change of control takes
Board member is decided by the General Meeting by way of an absolute
effect. In the event of extraordinary termination of his contract, Mr
majority of votes cast. The Supervisory Board consists of no fewer than
Körner is entitled to receive payment of compensation amounting to his
respective annual target income through to the end of the contractually
three members, including a Chairman, who will retire by rotation as
defined in writing by the Supervisory Board and may be reappointed
agreed term, amounting to a minimum of 150 percent of his current
in line with the respective legal requirements. In principle, the lowest
annual target income. A change of control in this respect arises when
possible number of Supervisory Board members should retire from the
a shareholder gains control over the Company as defined by Paragraph
Board at the same time.
29 of the German Securities Acquisition and Takeover Act (WpÜG), i.e.
acquisition of at least 30 percent of the voting rights in the Company.
Amendments to Articles of Association
In 2000, the ad pepper Group introduced a long-term incentive model in
the form of stock option plans for employees in key positions, including
The Articles of Association may only be amended by a resolution of the
members of the Board of Directors.
General Meeting in response to a proposal submitted by the Board of
Directors with the approval of the Supervisory Board. Where the Board
of Directors has not submitted any such proposal, any resolution to
amend the Articles of Association may only be adopted with a majority
of at least two-thirds of the votes validly cast in a meeting in which at
least three quarters of the issued share capital is represented.
Buyback of treasury stock by the Company
On 18 May 2021, the General Meeting authorised the Board of Directors
for a period of 18 months to buy back stock shares up to a maximum
amount of 50 percent of the share capital outstanding at that time. The
purchase price per share must amount to no less than 80 percent and
no more than 120 percent of the opening share price on the date of the
respective buyback. The Board of Directors has passed a resolution on
2 August 2021 to make partly use of the authorisation of the Annual
General Shareholders’ Meeting by repurchasing up to a maximum of
500,000 of its own shares for a total maximum amount of up to EUR
3,000,000. The share buyback took place between 1 September 2021
and 21 February 2022. The total number of shares purchased under the
share buyback program amounts to 500,000 shares (thereof 233,325
shares in 2022) at an average price of EUR 5.3638.
The authorisation to buy back shares was renewed on the General
Meeting which took place on 17 May 2022. As of the date of this
report, the Board of Directors did not make use of this authorisation.
35
04.1
GOVERNANCE
36
«
THE AD PEPPER SHARE
04.2
THE AD PEPPER SHARE
THE AD PEPPER SHARE
Capital structure
The Company’s shares are traded on the Prime Standard of the Frankfurt Stock Exchange under the symbol “APM” and the ISIN code NL0000238145.
The issued capital of ad pepper media International N.V. as at 31 December 2022 amounts to EUR 1,075,000 and is divided into 21,500,000 common
bearer shares with a nominal value of EUR 0.05 each. As of 31 December 2022, the Company held 1,242,128 own shares (2021: 1,008,803).
The authorised share capital of the Company amounts to EUR 4,000,000, divided into 80,000,000 shares, with a par value of EUR 0.05 each. The
Board of Directors is authorised, upon approval by the Supervisory Board, to issue shares until 16 May 2027, or to grant rights to subscribe for shares
until the issued share capital amounts to EUR 2,000,000. No changes in share capital occurred during the year under review.
Share price performance in past 12 months (Xetra)
6.5
5.94
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
January
February
March
April
May
June
Ju
39
04.2
THE AD PEPPER SHARE
General Meeting
2022
2021
Key share fgures
The resolutions proposed in the agenda were adopted at the General
Outstanding shares*
20,257,872
20,491,197
Meeting of ad pepper media International N.V. held in Amsterdam on
17 May 2022. In all, 10,044,579 voting rights, or 46.72 percent of the
Market capitalisation (in EUR)
40.85m
127.7m
issued share capital and 49.58 percent of all shares with voting rights
Year end (in EUR)
1.90
5.94
were represented at the General Meeting.
Year high (in EUR)
5.94
6.82
Alongside the presentation of the annual financial statements for the
Year low (in EUR)
1.53
4.65
2021 financial year, key agenda items also included the discharge of
the members of management and the Supervisory Board, the adoption
*Total number of issued shares less own shares.
of the amendments to the Company’s Articles of Association as well as
the authorisation to buy back treasury stock.
The ad pepper share started the year with a share price of EUR 5.90
and reached an annual high of EUR 5.94 on 04.01.2022. The closing
price at year end was EUR 1.90 and thus already above the annual low
of EUR 1.53.
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.53
1.0
uly
August
September
October
November
December
January
40
«
BUSINESS ACTIVITY
04.3
BUSINESS ACTIVITY
DISCLAIMER REGARDING
The ad pepper Group focuses on long-term value creation through
organic growth in its existing businesses, while also evaluating
FORWARD-LOOKING
inorganic growth opportunities through value-accretive acquisitions.
STATEMENTS
The Group is divided into three reporting segments, which work
in close cooperation with the holding company and operate
independently in the marketplace: ad pepper (performance marketing
company), ad agents (digital marketing agency) and Webgains
This report of the Board of Directors includes forward-looking
(affiliate marketing network). The holding company assumes
statements that are based on management estimations, which are
responsibility for the transfer of know-how between the segments,
valid at the time when this management report was prepared. Such
the strategic focus, as well as financing and liquidity as part of the
statements relate to future periods, or are characterised by terms
overall governance and administration of the Group. The ad pepper
such as “expect”, “forecast”, “predict”, “intend”, “plan”, “estimate”
Group’s overall strategy is to support and strengthen each segment
and “anticipate”. Forward-looking statements can entail risks and
individually, as each business has its own distinctive culture, clients,
uncertainties. Many such risks and uncertainties are determined
product range and regional focus. All three business segments offer
by factors that cannot be influenced by the ad pepper Group. As
their clients performance-based solutions. This means that the
a consequence, actual results may differ significantly from those
advertiser only pays if there are measurable results (completion of
described below.
specific actions). The most common models in performance-based
marketing are: CPM (cost-per-mile), CPC (cost-per-click), CPL (cost-
per-lead) and CPA (cost-per-acquisition).
The ad pepper Group also offers a broad range of services, such as
THE AD PEPPER GROUP
consulting and the development of strategies for the use of digital
technologies, the design, implementation and execution of digital
marketing and communication solutions as well as consulting on
ad pepper media International N.V. is the holding company of one
digital media strategies and digital media technologies and tools. The
of Europe’s leading international performance marketing groups.
ever-increasing importance of digital processes for businesses leads
Founded in 1999, the ad pepper Group is one of the pioneers in the
to an increase in the corresponding budgets, and the vast amounts
online marketing business. With eleven offices in Germany, Italy,
of data thus generated require thorough analysis (preferably in real
France, Spain, Switzerland, the United Kingdom and the Netherlands,
time). To be successful in the field of digital marketing, companies
the ad pepper Group develops performance marketing solutions for
therefore need to develop competencies that go beyond an effective
its customers around the world.
allocation of digital media spend across multiple channels and
managing the respective campaigns. And they need help to achieve
The ad pepper Group operates in the highly dynamic digital commerce
this. It is therefore not surprising that – in some areas of our business
market, which is characterised by dynamic growth in both consumer
– the ad pepper Group is competing more and more with well-known
and advertising expenditure. Channels such as social media, search,
strategy and IT consultancies that offer consulting services in the
video and mobile – to name just a few – continue to expand their
digital marketing space.
market share.
The ad pepper Group provides services to for large corporations
and major SMEs based in Europe and abroad. Our clients operate
primarily in the “Trade & Consumer Goods“, “Financial Services“,
“Telecommunications & Technology“ and “Transport and Tourism“
sectors. The ad pepper Group strives for long-term client relationships
and has been working with some of its clients for more than a decade.
43
04.3
BUSINESS ACTIVITY
Digital performance
marketing
Lead generation
Digital marketing agency
Audience targeting
Germany / Switzerland
Germany / Spain
Affliate network
UK / Germany / France / Spain / Italy / Netherlands
44
04.3
BUSINESS ACTIVITY
SEGMENTS OF THE
strategies for their budget. Taking local conditions into account, ad
pepper is able to optimise campaigns for the target markets. Whether
AD PEPPER GROUP
working with an agency or a direct client, the aim is always to deliver
the best possible result. What sets ad pepper apart from its competitors?
Many years of experience – and iLead. This unique platform enables
the agency to generate customised campaigns that are adapted to
ad pepper
the specific markets of their clients in next to no time. And the iLead
platform was developed in-house. With the help of iLead, over 30,000
The Group’s success story began with ad pepper in 1999. As a leading
campaigns have been successfully launched and managed worldwide
performance marketing company, ad pepper specialises in lead
and millions of qualified leads have been generated.
generation and targeting specific audiences. ad pepper works with its
clients to develop online marketing strategies for over 50 countries
Offces: Nuremberg / Madrid
worldwide and uses the latest technologies for each project. Whether at
the local, national or international level, ad pepper helps its customers
meet their goals by developing the most efficient online marketing
Iñigo Abrisqueta
Susanne Pilz
Chief Executive Officer
Managing Director
ad pepper Spain
ad pepper Germany
45
04.3
BUSINESS ACTIVITY
Webgains
The current strategy focuses on a service-oriented and performance-
differentiated approach. By investing in talent and technology,
Webgains has been part of the ad pepper Group since 2006. Today,
Webgains has created the optimum blend of human and artificial
the registered and approved affiliate network serves over 1,800 clients
intelligence. High-tech advances make it easy to quickly roll out
worldwide, from start-ups to global brands, in more than 170 global
scalable, international campaigns. Meanwhile, customers can count on
markets. When it comes to designing local and international campaigns,
outstanding data security at all times and benefit from near real-time
Webgains not only benefits from its strong publisher network, but also
performance reporting.
from the extensive experience of over 100 highly motivated experts
with excellent market knowledge, which they continuously develop.
Offces: Nuremberg / Madrid / Munich /
Bristol / London / Paris / Milan / Amsterdam
Thanks to partnerships with over 250,000 publishers, Webgains’
clients have access to one of the world’s leading, performance affiliate
marketing networks, offering the widest possible reach. Furthermore,
Webgains has recently launched the Affiliate Discovery product to
create smarter connections.
Richard Dennys
Ami Spencer
Chief Executive Officer
Chief Operating Officer
Webgains
Webgains
46
04.3
BUSINESS ACTIVITY
ad agents
As a full-service performance marketing agency, ad agents has a sixth
sense for trends, extensive experience and transparent reporting
ad agents joined the ad pepper Group in 2007. Today, it is one of
structures. They advise and support national and international
Germany’s most successful online and performance marketing
companies from virtually every industry who partner with ad agents to
agencies – and for a good reason. Their strategies are as unique
create exceptional and successful performance marketing campaigns.
as their personalised consulting and support services, which are
always optimised to suit the situation and the specific requirements
Exceptional quality always pays off: ad agents is a certified Google
of ad agents’ clients. ad agents maintains an overview of the entire
Premier Partner, Microsoft Advertising Elite Agency as well as a
digital advertising market and adapts its comprehensive service
Facebook Marketing Partner and maintains strong partnerships with
portfolio accordingly, thus supporting its clients with planning
leading-edge technology providers.
and implementing efficient and effective online and performance
marketing strategies. ad agents’ digital marketing experts always
find the perfect strategy to increase our clients’ brand awareness and
Offces: Herrenberg / Pontresina
sales – across all digital channels and on all devices.
Dirk Lajosbanyai
Wolfgang Schilling
Managing Director
Managing Director
ad agents
ad agents
47
04.3
BUSINESS ACTIVITY
EMPLOYEES AND VALUES
In our Code of Conduct, ad pepper defined a set of joined, equally
important values that best express our focus on service/product
leadership through innovation, long-term value creation and the
creation of a fair, inspiring work environment for all our employees:
As per end of 2022, the ad pepper Group kept its overall headcount
stable. A total of 249 employees work in the three business segments
• Respect for people. We respect people, honour diversity, and treat
at December 2022 which is equal to the figure at the end of December
each other fairly. These are the cornerstones of our culture and key
2021. In the course of the second half of 2022, we adjusted the
to our ability to work successfully as a global team.
headcount to the current revenue levels per business segment. While
• Integrity. We operate with the highest standards of honesty and
ad agents saw a significant increase in headcount, the number of
responsibility – as individuals and as a corporation – to be a role
employees at both ad pepper and Webgains was reduced over the
model through our business practices, community involvement and
course of the year. Many of our employees have again opted to work
environmental stewardship.
remotely in 2022.
• Our customers’ success. We ensure our customers’
continuous success by forging deep relationships founded on our
commitment to meeting their diverse technology needs and a
Number of employees
31/12/22
31/12/21
shared passion for excellence.
• Initiative and accountability. We deliver on our promises to our
Number
Number
customers, stakeholders, and to each other by taking risks, seeking
ad pepper
21
27
proactive solutions, and assuming ownership of the results.
Webgains
104
115
The Board of Directors promotes and applies these values thoroughly
ad agents
106
91
in all personnel related processes such as hiring, promotions and the
Administration
18
16
review of employee performance.
To the best of our knowledge, we have not identified any incidences of
ad pepper Group’s employees are the key to the Company’s success. ad
non-compliance to local law.
pepper strives to attract, develop and retain qualified and motivated
people in a professional, safe and healthy work environment. ad pepper
complies with all local laws relating to working hours, vacation laws
and occupational health laws, also taking into account the psychosocial
work environment. Regular team activities as well as physical activity
are encouraged.
48
«
ECONOMIC
DEVELOPMENT
04.4
ECONOMIC DEVELOPMENT
Online advertising market
MACROECONOMIC
FRAMEWORK
The record levels in the online advertising market that we saw in 2021,
when people spent a lot of time at home due to the COVID-19 pandemic,
have returned to normal in 2022. As a result, growth of digital advertising
The global fight against inflation, Russia’s war in Ukraine, and a
spend has slowed significantly – and the first three quarters of 2022 were
resurgence of COVID-19 in China weighed on global economic activity
very much characterised by this decline. However, the fourth quarter then
in 2022, and the first two factors will – according to the International
saw a significant upward trend. Amidst a challenging market environment
Monetary Fund‘s (IMF) World Economic Outlook dated January 2023
due to Russia’s continued war in Ukraine, associated energy uncertainty
(see also IMF‘s website for more details) – continue to do so in 2023.
and price increases, advertisers took advantage of the Black Friday and
Despite these headwinds, real GDP was surprisingly strong in the third
Christmas season to run extensive digital advertising campaigns.
quarter of 2022 in numerous economies, including the United States,
the euro area, and major emerging market and developing economies.
According to the latest data, digital ad spending in the US is expected to
The sources of these surprises were in many cases domestic: stronger-
reach USD 239.89 billion in 2022. This represents a 13.6 percent increase
than-expected private consumption and investment amid tight labour
over 2021 (US digital ad spending in 2021: USD 211.20 billion). And over
markets and greater-than-anticipated fiscal support. Households
the next few years, US ad spending on digital channels is forecast to
spent more to satisfy pent-up demand, particularly on services, partly
continue its upward trajectory. Despite concerns about the economy and
by drawing down their stock of savings as economies reopened.
thousands of layoffs at media and technology companies, ad spending
Business investment rose to meet demand. On the supply side, easing
in 2023 is expected to increase both in the US and globally, albeit not at
bottlenecks and declining transportation costs reduced pressures
the same rate as in recent years following the 2021 and 2022 pandemic.
on input prices and allowed for a rebound in previously constrained
sectors, such as the car industry. Energy markets have adjusted faster
Globally, digital ad spend grew 8.6 percent overall in 2022, according
than expected to the shock from Russia’s invasion of Ukraine. However,
to a recent report by Insider Intelligence. In 2023, growth is expected to
this uptick is estimated to have faded in most – though not all – major
amount to 10.5 percent year-on-year. This slower new normal compared
economies in the fourth quarter of 2022.
to the pandemic year of 2021 will still see annual growth in the high
single to double digits in the coming years. Total media ad spending
is growing steadily, and the share that digital advertising has of this is
2023 outlook for the ad pepper Group’s
expected to increase to above 70 percent from 2025 (see below graph).
core markets: euro area and UK
Source: Oberlo, eMarketer
Growth in the euro area is projected by the IMF to bottom out at 0.7
percent in 2023 before rising to 1.6 percent in 2024. The 0.2 percentage
Digital Ad spending Worldwide, 2021 - 2026
point upward revision to the previous IMF-forecast for 2023 reflects
(billions, % change, and % of total media ad spending)
the effects of faster rate hikes by the European Central Bank and
eroding real incomes, offset by the carryover from the 2022 outturn,
lower wholesale energy prices, and additional announcements of
$835.82
fiscal purchasing power support in the form of energy price controls
$765.98
$695.96
and cash transfers.
$626.86
$567.49
$522.50
72.5%
71.1%
Growth in the United Kingdom is projected to contract by -0.6 percent
69.2%
67.4%
65.2%
63.1%
in 2023, a 0.9 percentage point downward revision from October,
29.5%
reflecting tighter fiscal and monetary policies and financial conditions
and still-high energy retail prices weighing on household budgets.
11.0%
10.5%
10.1%
8.6%
9.1%
2021
2022
2023
2024
2025
2026
Digital ad spending
% change
% of total media ad spending
Note: includes advertising that appears on desktop and laptop computers as well as mobile
phones, tablets, and other internet-connected devices, and includes all the various formats of
advertising on those platforms; excludes SMS, MMS and P2P messaging-based advertising.
Source: eMarketer, Oct 2022
51
04.4
ECONOMIC DEVELOPMENT
PRESENTATION OF
Webgains on the other hand saw stagnant operating expenses while
ad pepper and admin segment experienced lower operating cost
EARNINGS POSITION
compared to 2021, largely in-line with the development in headcount.
Development in gross sales, revenue and gross proft
EBIT, EBITDA and EBT
The ad pepper Group achieved gross sales of EUR 98,229k in the
The Group’s earnings before interest and taxes (EBIT) amounted to EUR
2022 financial year (2021: EUR 111,593k), equivalent to year-on-year
187k in the past financial year (2021: EUR 3,194k). Earnings before
decline of -12.0 percent. Revenue amounted to EUR 24,868k in 2022
taxes (EBT) amounted to EUR 56k (2021: EUR 3,156k). Earnings before
(2021: EUR 27,646k). Gross profit – alongside revenue our second most
interest, taxes, depreciation and amortisation (EBITDA) at the Group
important key figure – showed a group-wide decline of -10.8 percent
came to EUR 1,275k in the past financial year (2021: EUR 4,378k).
and amounted to EUR 23,704k in 2022 (2021: EUR 26,587k).
Looking at the individual segment, ad agent’s EBITDA fell by around
While ad agents could achieve positive growth rates, the decline in
21.1 percent to EUR 1,358k (2021: EUR 1,722k), largely due to the
top-line is due to the Webgains and ad pepper segment: Webgains saw
continued hiring during the past business year as mentioned above.
revenue decline of -14.9 percent to EUR 13,227k (2021: EUR 15,542k)
EBITDA margin of the ad agents segment amounted to 15.6 percent
while this segments’ gross profit came to EUR 12,496k in the past
(2021: 21.1 percent).
financial year (2021: EUR 14,987k), equivalent to a decline of -16,6
percent. Main reason for the decline was the high level of revenue in
Moving on to the next segment, Webgains achieved an EBITDA of EUR
the previous year in connection with lock-down measures during the
871k and thus significantly lower than the previous year (2021: EUR
COVID-19 pandemic, as outlined earlier.
3,474k). Webgains therefore fell short of the results achieved in the
previous year, which was still affected by lock-downs and COVID-19
The ad pepper segment reported a decline in revenue to EUR 2,924k
restrictions. EBITDA margin of the Webgains segment for 2022 was 6.6
(2021: EUR 3,937k). Gross profit was lower too compared to last year
percent (in relation to revenue) (2021: 22.3 percent).
with EUR 2,592k (2021: EUR 3,524k). The reduced booking volume of
a major client during 2022 is the main reason for this development. In
The third operating segment, ad pepper, achieved an EBITDA of EUR
addition, supply-chain issues in the automotive sector dampened the
-108k (2021: EUR 604k). The EBITDA achieved in 2022 is a reflection
need for digital advertising services from this industry particularly in
of a business year which saw budget cuts of companies active in
the business year under review (and beyond).
particular in the automotive industry, as described above. In addition,
the reduced EBITDA-level is a reflection of the reduced booking volume
ad agents, as stated above, once again positioned itself as a full-service
of a major client, as outlined above.
digital agency with increased business activity in all areas. Revenue
increased by EUR 550k or 6.7 percent to EUR 8,717k (2021: EUR 8,167k).
In terms of gross profit EUR 8,375k for the 2022 financial year is posted
in the ad agents segment. This corresponds to an increase of 7.9
percent compared with the previous year (2021: EUR 7,762k) and thus
once again outpaced the growth of the other segments.
Development in operating expenses
Operating expenses at the ad pepper Group increased by 0.5 percent to
EUR 23,517k (2021: EUR 23,393k). Operating cost at ad pepper Group
largely consist of employment cost typically amounting to around 75
percent of total cost. As a consequence, while operating cost could be
kept more or less stable for the entire Group, on segment level it was
ad agents which actually saw an increase in operating expenses due to
continued hiring throughout the year.
52
04.4
ECONOMIC DEVELOPMENT
Balance sheet structure
PRESENTATION OF FINANCIAL
AND NET ASSET POSITION
Total assets decreased by EUR 2,398k to EUR 43,954k (31 December
2021: EUR 46,352k). Current assets increased by EUR 1,016k to EUR
41,769k (31 December 2021: EUR 40,753k) and non-current assets
Cash fow
decreased by EUR 3,414k to EUR 2,185k (31 December 2021: EUR
5,599k). Right-of-use assets for capitalised leasing contracts for offices
The gross cash flow amounted to EUR 545k (2021: EUR 2,581k) while
and vehicles amount to EUR 1,318k (31 December 2021: EUR 1,177k).
a figure of EUR 1,931k (2021: EUR 2,208k) was reported for cash flow
Cash and cash equivalents amount to EUR 17,008k (31 December 2021:
from operations. The lower gross inflow of funds is particularly due to
EUR 20,704k), investments in listed equity instruments amount to
the decrease in net income for the period. Because of stable changes
EUR 0k (31 December 2021: EUR 2,050k) and in listed debt securities
in trade receivables and trade payables the operational cash flow
amount to EUR 991k (31 December 2021: EUR 1,007k). Trade receivables
was on equal level. The net cash flow from investing activities came
decreased by EUR 1,751k to EUR 17,568k (31 December 2021: EUR
to EUR -3,281k in the past financial year (2021: EUR -2,241k), mainly
19,319k). Deposits with maturity over three months amount to EUR
for investments made in listed marketable and debt securities as well
5,085k (31 December 2021: EUR 0k)
as investments in short term deposits. The cash flow from financing
activities amounted to EUR -2,356k in 2022, as against EUR -3,829k in
On the equity and liabilities side, the Company’s equity showed a
the 2021 financial year. It included outgoing cash of EUR -539k (2021:
decrease of EUR 1,090k to EUR 15,666k (31 December 2021: EUR
EUR -583k) occurred for dividends paid to non-controlling interests,
16,756k*) which corresponds to an equity ratio of 35.6 percent (2021:
cash outflow for share buyback of EUR -1,232k (2021: EUR -2,576k) as
36.2 percent). Trade payables increased by EUR 589k to EUR 20,836k
well as lease payments of EUR -585k (2021: EUR -757k).
(31 December 2021: EUR 20,247k). Long-term liabilities amount to EUR
840k (31 December 2021: EUR 946k) and consists of lease liabilities for
capitalised right-of-use asset. Current liabilities amount to EUR 27,449k
(31 December 2021: EUR 28,650k). Of these, EUR 2,495k (2021: EUR
3,332k) relate to the written put option over the non-controlling interest
in ad pepper media Spain S.A. and Webgains S.A. Further EUR 523k (31
December 2021: EUR 505k) relate to the lease liability for capitalised
right-of-use assets. Liability for cash settled stock option plan amounts
to EUR 0k (31 December 2021: EUR 155k).
The ad pepper Group was internally financed as of the balance sheet
date. Its liquid funds (including current securities and deposits) totalled
EUR 23,084k at the end of December 2022 (31 December 2021: EUR
23,761k). The Company still has no external debt.
*Restated values acc. to IAS 8. For further information please refer to Note [2] of the
Disclosure Notes.
53
04.4
ECONOMIC DEVELOPMENT
54
«
RISK REPORT
04.5
RISK REPORT
FOREWORD
All identified risks are evaluated based on their likelihood of occurring
and their potential impact (estimated in monetary terms) in disrupting
our progress toward achieving our business objectives. The overall
risk management goal is to identify risks that could significantly
The German Corporate Sector Supervision and Transparency Act and
threaten our success and to allow management sufficient opportunity
the Dutch Corporate Governance Code lay down key requirements and
to successfully implement mitigation actions. The results of the risk
obligations regarding risk management and control systems. In line
assessment and any updates are reported to the Supervisory Board
with these requirements applicable in Germany and the Netherlands,
on a regular basis. A detailed review of all underlying business risks
the ad pepper Group operates a comprehensive and adequate risk
is completed every year. At least once a year, the Supervisory Board
management system. The regulations require the Board of Directors
discusses the corporate strategy and business risks as well as the
to ensure that the Company complies with all applicable laws and
results of an assessment by the Board of Directors of the structure
requirements, and to report to the Supervisory Board regularly on the
and operations of the internal risk management and control systems,
internal risk management and control systems. The risk management
including any significant changes.
system at the ad pepper Group identifies significant risks which could
have adverse implications for the Company. These risks are quantified
In addition to the dedicated risk management system outlined above,
and evaluated in terms of their potential implications. Finally, suitable
the following elements also serve to identify risks within the Group:
measures are identified in order to counteract the identified risks.
• Operational planning, including updated intra-year forecasts
• Quarterly financial statements
Internal risk management and control system
• Monthly and quarterly reporting by subsidiaries
(comparing target and actual results) to the Group
The ad pepper Group is managed by a Board of Directors and
Supervisory Board appointed by the General Meeting. The Supervisory
Board responsibility is the oversight of the risk management system.
Consistent with the requirements of the Dutch Corporate Governance
Code, the Company has established a procedure for reporting actual
RISK CLASSIFICATION
or suspected irregularities within the Company and its affiliated
enterprises. In addition, the Board of Directors has developed and
implemented strategies, controls and mitigation measures to identify
current and developing risks as part of the risk management system.
Risks are classified as operational, strategic, financial risks, compliance
Risk management policies and procedures are embodied in our
and assessed according to their probability of occurrence and their
Corporate Governance, Code of Conduct, and financial reporting
potential financial impact. The major risks for each classification are
controls and procedures. A variety of functional experts evaluate
described below:
these business risks and aim to mitigate and manage these risks on an
ongoing basis.
Identified risks are divided into four types:
OPERATIONAL RISK
• Catastrophic (loss of ability to achieve business objectives,
e.g. worst-case scenario)
• Major (reduced ability to achieve business objectives)
Infrastructure risk
• Moderate (disruption to normal planning with a limited effect
on achievement of business strategy and objectives)
Our products and services are dependent on users having access to the
• Low (no material impact on the achievement
internet and in some cases also require substantial bandwidth. This
of business strategy and objectives)
access is at present made available by companies that have significant
and growing influence on the market for broadband and internet
access, such as telephone companies, cable companies, and mobile
communication providers. Some of these providers could start adopting
measures to interrupt or impair user access to certain products, or they
57
04.5
RISK REPORT
could increase the costs of user access to such products by limiting or
Furthermore, financial or other difficulties on the part of our providers
forbidding the use of their infrastructure for our products and services,
could have an adverse impact on our business. We have witnessed
or they could charge us or our users higher fees. In addition, it cannot be
interruptions and delays in these services and in these the availability
excluded that the side effects of the war in Ukraine could impair a proper
of IT infrastructure and expect these in future, too. Faults, interruptions
functioning of the internet infrastructure in the European continent.
or delays in conjunction with these technologies and information
services could harm our relations with users, adversely affect our
This could lead to a loss of members in our advertising network as well
brand, and expose us to liability risks.
as advertising customers, and ultimately to increasing costs. This could
impair our ability to win new users and advertising customers and
Finally, our systems are extremely dependent upon power supply. In the
thereby adversely affect our revenues and our growth. The availability
case of major power outage (which cannot be excluded also in the light
of our products and services is dependent on the uninterrupted
of the current energy crisis), we would have to resort to emergency
operation of our IT and communication systems. Any damage to or
power units. It may happen that such emergency power units do not
failure in our systems could interrupt our services, which could reduce
work correctly and that they are insufficient in the case of a major
our revenues and profits, and damage our brand. Our systems could
power outage.
be damaged by flood, fire, power outage, telecommunication failure,
computer viruses, terrorist attacks, attacks from cybercriminals,
Technology risk
attacks preventing computers from accessing services, and other forms
of attack on our systems. Our data centres could become the target
of intrusion, sabotage or wilful vandalism, or they could be affected
It is conceivable that technologies will be developed that block or
by faults occurring as a result of financial difficulties on the part of
suppress the display of our advertising on the internet. Most of our
revenues are generated in such a manner that advertising customers
operators of data centres. Not all our systems are fully redundant and
our natural disaster recovery plans cannot account for all eventualities.
pay for their advertising to appear on websites. Technologies designed
Natural disasters of this kind or operators of facilities we use deciding
to block or suppress internet advertising could thus have an adverse
to shut down for financial reasons without reasonable notice and/or
effect on our operating results. For instance, major players in the market
other unexpected problems at our data centres could lead to prolonged
such as the mobile operators or the providers of application ecosystems
interruptions to our services.
such as Apple and Google may decide to introduce ad blockers to their
systems or to the mostly used internet surfing browsers. These could
In order to be successful, our network infrastructure must be efficient
seriously obstruct the delivery of advertisements to users and thus
and reliable. The higher the user frequency and the complexity of
harm the business of the ad pepper Group.
our products and services, the more CPU performance we will need.
We have invested heavily in acquiring and leasing data centres and
In general, the market for internet advertising is characterised by
equipment and updating our technology and the infrastructure of our
rapid technological change, developing industry standards, frequent
network in order to cope with growing traffic and the launch of new
introduction of new products and services, and changing customer
products and services, and we expect to continue doing so. These
behaviour. The introduction of new products and services, and the
investments are costly and complex and can lead to efficiency losses
emergence of new industry standards can render existing products
or downtime. If we fail to expand successfully or if efficiency losses
and services obsolete and impossible to sell or require unexpected
or downtime occur, the quality of our products and services as well as
investment in new technology. Our success will depend on our ability
customer satisfaction could suffer. This could damage our reputation
to adapt to rapid technological changes, to improve existing solutions,
and result in a loss of existing and potential customers, advertising
and to develop and launch a host of new solutions in order to meet our
clients, and members of our network. Cost increases, a lower frequency
customers’ and partners’ continuously changing demands. Advertising
of use on the part of our partners in the advertising network, failure
customers, for instance, are increasingly demanding online advertising
to adapt to new technologies, or changed business requirements could
networks and advertising that go beyond pure stills, integrating “rich
adversely affect our revenue and financial strength.
media”, such as audio and video, interactivity and methods for more
accurately targeted consumer contacts and behaviours.
We also use other IT suppliers, including data centres and broadband
providers. Any disturbance in network access or colocation services
by these providers, or their inability to process current or larger data
volumes could seriously damage our business.
58
04.5
RISK REPORT
Our systems do not support all types of advertising formats. Equally,
Cyber incidents, in general, may cause disruption and impact business
certain website operators within our network do not accept all of
operations, potentially resulting in financial losses, impediments of
the advertising formats offered by us. Moreover, a further increase
trading, violations of applicable privacy and other laws, regulatory
in fast and powerful internet access could generate new products
fines, penalties, reputational damage, reimbursement of other
and services which are only possible with increasing bandwidth. If
compensation costs, or additional compliance cost.
we fail to successfully adapt to such developments, there is a risk
that we could lose customers and/or parts of the advertising space
The Group may be subject to fraudulent and malicious activities
marketed by us. We procure most of the software used at our Company
undertaken by persons seeking to use its platforms to divert or
externally and we plan to continue buying technologies from third-
artificially inflate the buyer purchases through its platform, mainly
party suppliers in future as well. We cannot definitively say whether
through fraudulently generated advertising impressions, leads, and
such technologies will continue to be available in future either at all
other user behaviours overstating the actual performance. As we
or on commercially reasonable terms. It is also possible that the trend
do not own content, we rely in part on publishers for controls with
towards marketing online advertising space via automated so-called
respect to such activities. If fraudulent or other malicious activity is
ad exchanges will intensify further. By establishing and optimising
perpetrated by others, and the Group fails to detect or prevent it, the
demand-side platforms (DSPs) and/or supply-side platforms (SSPs),
affected advertisers may experience or perceive a reduced return on
online networks such as the ad pepper Group may in future lose further
their investment resulting in dissatisfaction with the Group’s solution,
relevance or even lose the basis of their business operations. We
refusal to pay, refund demands or loss of confidence of advertisers or
may also encounter problems which delay or prevent the successful
publishers and ultimately withdrawal of future business.
design, development, introduction, or marketing of new solutions. Any
solutions or improvements newly developed by us will have to fulfil the
Intellectual property rights risk
requirements of our present customers and prospective clients, and
there is a risk that these will not meet with the desired acceptance on
the market. If we fail to keep pace with technological developments
Our patents, trademarks, business secrets, copyrights, and other
and the launch of new industry standards at a reasonable cost, there
intellectual property rights constitute important assets for us. Various
is a risk that our expenditure will increase and that we will lose
events beyond our control constitute a potential risk for our intellectual
customers and advertising space.
property rights. The same applies to our products and services.
The number of people accessing the internet using devices other than
Effective protection of intellectual property may not be available in
PCs, including mobile phones, PDAs and e-mail assistants, as well as TV
every country where our products and services are distributed or
receivers, has grown dramatically in recent years. If we do not succeed
offered via the internet. Furthermore, the efforts which we have made
in future in securing an appropriate number of users of alternative
to protect our property rights may be insufficient or ineffective. Any
devices and gaining the loyalty of these users through our products and
significant impairment of our intellectual property rights can adversely
services, or if we are too slow in developing products and technologies
affect our business or our competitiveness. Moreover, the protection
compatible with communication devices other than PCs, we will miss
of our intellectual property rights is costly and time-consuming. Any
out on an increasingly important share of the market for online services.
increase in the unauthorised use of our intellectual property could
lead to increased administrative costs and work, and adversely affect
our results. Although we aim to obtain protection for our intellectual
Cybercrime, hacking, identity theft and risk of fraud
property, it is conceivable that we may not be able to adequately
protect some of our innovations. In view of the often-considerable
Increasing international networking and the related possibility of
costs of patent and/or intellectual property protection, we may refrain
IT system abuse are resulting in cybercrime risks for the ad pepper
from protecting certain innovations and/or intellectual property which
Group, such as the failure of central IT systems, the disclosure or loss
could prove to be important at a later date.
of the data integrity of confidential data from business activities, the
manipulation of IT systems in process control, or an increased burden
It is also possible that the scope of patent and/or intellectual property
or adverse impact on IT systems as a result of virus attacks. In addition,
protection could turn out to be insufficient or that a previously
complications with the changeover of IT systems could negatively
granted patent is deemed to be invalid or non-enforceable. As our
impact the earnings situation.
Company grows, there is a growing probability that lawsuits related to
intellectual property issues will be filed against us.
59
04.5
RISK REPORT
Our products, services, and technologies may fail to fulfil the demands
The ad pepper Group continues to closely monitor the development
of third parties, and irrespective of their validity, defending such claims
around COVID-19. The wellbeing of our employees and partners is
can be time-consuming and costly, whether in or out of court. In the
our highest priority in this situation. Since early March 2020 we
event that claims against us are successfully upheld, we may have to
have encouraged all employees to work from home and continued
pay significant damages, or discontinue services or practices, which
encouraging those employees to work from home at least 2-3 days a
may result in be violations of third-party rights. We may also need to
week in 2022 which works out well given the nature of our business.
obtain licenses to continue our existing business operations; this may
For the current business year 2023, we do not expect major disruptions
also involve considerable additional costs.
caused by COVID-19 in that respect.
Market risk
STRATEGIC RISK
Our offering for advertisers and web publishers on the internet covers
products and services where pricing is largely based on cost per action
(CPA), cost per lead (CPL), cost per download (CPD), cost per thousand
impressions (CPM), or cost per click (CPC). Every field of our business
Personnel risk
is exposed to strong competition, mainly from large media and/or
performance (digital) agencies or other advertising and affiliate networks
Our future success is to a significant degree dependent on the continued
offering similar online services and products. Beside this group of
service of the (single) member of our Board of Directors and of the
companies, we also compete with search engine providers, social media
directors of our major segments. If we lose the service of such persons,
channels and marketplaces, such as Google, Facebook and Amazon,
we may not be able to recruit suitable or qualified replacements and
as well as large ad exchanges, i.e. marketplaces in which advertising
may incur additional expenses to recruit and train new staff, which
space is auctioned in real time, similar to other market exchanges. Apart
could severely disrupt our business and growth.
from this, we also compete with traditional advertising channels, such
as direct marketing, TV, radio, cable, and print media, which are all
In general, highly qualified employees and management staff form
striving to win a share of the total advertising budget for themselves.
the basis of any company’s long-term economic success. Retaining
key-employees at the Company on a long-term basis is a factor of
Many existing and potential advertisers have competitive advantages
the utmost importance for the ad pepper Group, as is attracting new,
over our Company due to such factors as longer company histories,
highly qualified employees. Any departure of large numbers of these
higher public awareness levels, larger customer bases, better access
employees over a short period and subsequent inability to find adequate
to popular websites and significantly larger resources in terms of staff,
replacements may inhibit the Company’s business performance.
finance, equipment, sales and marketing. These companies use their
Specifically, the Company cannot guarantee that it will be able to
experience and resources in competition with us in different ways, such
retain key top performers in the event of any further intensification in
as pursuing more active M&A strategies, investing more in research
the competition for highly qualified employees, especially in the IT and
and development, or competing more aggressively for advertising
internet sectors.
customers and websites. If our competitors succeed in offering similar
or better services or more relevant advertising, this could lead to a
A lack of qualified and motivated personnel could negatively impact our
significant loss of advertisers and web publishers and hence adversely
development and growth, increase our costs and harm our reputation.
affect our revenues.
We face competition for qualified personnel, for example those in IT and
marketing positions. In addition, to attract or retain qualified personnel,
Likewise, there is a risk to the Group’s business (or parts thereof) if any
we might have to offer more competitive compensation packages and
or all of Google, Amazon, Facebook, Apple and other relevant players
other benefits, which could lead to higher personnel costs.
(i) cease to be a market leader in the online advertising industry, (ii)
were subject to adverse publicity or action impeding its provision of
We try to mitigate this risk through personnel development programmes
advertising services and infrastructure, (iii) were to cease to regard the
in the respective segments as well as incentive systems. Supporting this
Group as a preferred partner, (iv) were to expand their operations such
is an established, thorough annual review process from which we derive
that it competed directly with the Group, or (v) otherwise cease to be
individually tailored and future-variable qualification programmes as
available as a technology provider to the Group.
well as performance-related remuneration systems.
60
04.5
RISK REPORT
Platform technology risk
Moreover, Google blocked third party cookies in Chrome in 2022. As a
result, third-party cookies became sometimes unusable for advertising
The Group’s revenue growth depends partly on the ability to develop a
measurement and many forms of third-party data already challenged
by GDPR since May 2018, will cease to exist. While we expect the vast
reliable, scalable, secure, high-performance technology infrastructure that
majority of our services and products to be unaffected, it can therefore
can efficiently handle increased usage globally. The platforms are scalable
not be excluded, that some of our business activities will not work
in principle. However, only the actual future expansion of the business
beyond the coming years. Unless we adapt to these changes, these
will prove whether there is enough business available and the platforms
businesses will be negatively affected.
scales well enough to cover the fixed cost base that has been built.
Inability to develop a scalable platform may have significantly adverse
The possibility of in-house handling of advertising network functions can
consequences for our revenue as well as our asset and finance position.
represent a possible risk for the ad pepper Group both at the level of
the attractiveness of its offering vis-à-vis advertisers as well as to its
negotiating power vis-à-vis the providers of online advertising inventory.
FINANCIAL RISK
Online advertising markets are characterised by rapid technological
change, the establishment of new industry standards, regular launches of
new products and services, and rapidly changing customer requirements.
The introduction of new products and services based on innovative
Low proftability
technologies and the resultant establishment of new industry standards
could mean that our existing products and services become obsolete
We are exposed to risks that could prevent us from generating net
and unsellable, thus forcing us to make unforeseen and unplanned
profits in the future. These risks depend on several factors, including
investments. Insufficient flexibility in adapting to these changes can have
our ability to:
adverse effects on our revenue, finance and asset position.
• maintain and expand our existing advertising space on
In general, we expect our sales growth to decline over the course of
websites of publishers and affiliates, owners of e-mail lists
time as a result of base effects and increasingly tough competition. We
and newsletter publishers
also expect growing pressure on our operating margins as a result of
• maintain and increase the number of advertising customers
increasingly tough competition and a general increase in expenditure
who use our products and services
in other areas of our business. Furthermore, the margin could fall as a
• increase the number of products and services we offer
result of our Company having to pay a higher share of our advertising
• adjust to changes in needs and habits of online advertising
revenue to our website partners within our website portfolio and/or
customers, also with a view to the technologies in demand
affiliate network.
on the market
• respond to challenges resulting from the large and
growing number of competitors in the industry
Dependency risk
• adapt to legal or regulatory changes with a view to the internet as
far as these concern data privacy, use, advertising, and trade
The ad pepper Group and its segments have significant customer
• achieve sales targets for partners with whom
concentration, in terms of both advertisers and publishers (website
we have agreed minimum guarantees
owners), so economic difficulties or changes in the purchasing policies
• generate revenue from services in which we have
or patterns of its key customers could have a significant impact on
invested significant time and resources
the ad pepper Group’s business and operating results. While the
• give priority to long-term goals over
concentration of our business on a relatively small number of customers
short-term results when necessary
may provide certain benefits to us, such as potentially more efficient
• adapt to technological changes designed to obfuscate
handling/decreased cost of sales, this concentration may expose the
or block online advertising on desktop PCs or mobile devices
ad pepper Group to a material adverse effect if one or more of our large
• adapt to changes in the competitive environment
customers were to significantly reduce their business with us for any
• achieve sufficient profitability and reputation in the market on
reason, or to favour competitors or new entrants. Customers do not
the basis of our investments in new technologies and related
make binding long-term commitments to the ad pepper Group regarding
products/services.
booking volumes and could seek to materially change the terms of their
business relationship at any time. Any such change could significantly
harm the ad pepper Group’s business and operating results.
61
04.5
RISK REPORT
Energy supply and infation risk
Should we fail to successfully handle these risks and uncertainties, this
could have significantly adverse consequences for our revenue as well
With the escalation of the Ukraine War, Europe already experiences an
as our asset and finance position, see also Note [40].
interruption in the flow of Russian gas supplies. It is important to note
that the natural gas supply constraints will also adversely affect the
Risks of our M&A strategy
European electricity markets. Accordingly, a shortage of available gas
will result in a loss of electricity production. Undoubtedly, some of the
Historically, part of our Company’s growth has resulted from mergers
loss will be replaced by bringing some coal-fired generation back online
and acquisitions, and we will continue to consider acquisitions in
and also extending the decommissioning dates for certain nuclear
future as well. Furthermore, we will continually review our portfolio
plants. Nevertheless, the end result will be a tight electricity market.
of shareholdings to assess whether Company acquisitions might be
appropriate. Every acquisition or sale can have material consequences
Our systems are hosted on servers which are powered by electricity.
for our revenue and financial position. Furthermore, the integration of
We cannot exclude that rising electricity costs may erode our margins.
an acquired business or technology can cause unforeseen operational
Likewise, rising energy costs could further dampen consumer confidence
problems, expenditure, and risks. Areas in which we may face risks in
and demand and therefore have a detrimental effect on e-commerce
this context include:
transactions and thus our revenues. In addition, power outages could
result in the temporary unavailability of critical infrastructure and our
• implementation or modification of controls,
ability to generate revenues via the internet which could therefore have a
processes, and strategies of acquired businesses
significantly negative impact on our financial performance and cash flow.
• diversion of management attention away
from other business matters
Inflation remains a major preoccupation. Even without the war in
• overvaluation of businesses acquired, acceptance of the
Ukraine, catch-up effects from the pandemic came and will come up
acquired business‘s products and services by our customers
against tight labour markets and – as can already be observed in the
• cultural problems associated with the integration of the staff
United States – set in motion a spiral of rising wages and prices. This
of acquired businesses into our Group
poses a potential risk for our financial performance should we not be
• continued employment of staff companies which we acquire
able to pass on those (higher) cost to our customers.
• integration of the accounting, management, and information
systems as well as of the human resources administration and
Currency risk
other administration systems of acquired businesses.
The integration of companies, products and personnel can constitute
Since the ad pepper Group conducts a significant share of its business
a considerable burden to our management and our internal resources.
outside the euro area, exchange rate fluctuations can have a significant
impact on results. Currency risks from financial instruments can impact
Acquisitions of foreign companies, in particular, are subject to additional
risks. These include risks associated with integrating companies with
accounts receivable, accounts payable, as well as cash and cash
different cultures and languages, exchange rate risks, and other country-
equivalents in a currency other than a Company’s functional currency.
specific economic, political and legal risks. In view of the number
For the ad pepper Group, the currency risk from financial instruments is
of acquisitions which we have completed in past years, the different
particularly relevant for GBP and, to a lesser extent, USD. No financial
customers and technological functionalities of the products and services
instruments are used to hedge currency risks.
acquired, future acquisitions may pose significantly bigger challenges
with respect to products, sales, marketing, customer support, research
Tax risk
and development, buildings, information systems, accounting, human
resources and other integration aspects, and may delay or threaten the
complete integration of the businesses acquired.
Our future income tax payments may be adversely affected by lower-
than-expected profits in jurisdictions with lower tax rates and higher
profits in jurisdictions with higher tax rates. If the valuation of our
Likewise, divestment of companies and/or businesses can lead to
liability vis-à-vis the buyer, or additional expenses, for instance through
deferred tax receivables and payables changes this could also mean
indemnity clauses and guarantee commitments or long-term supply
additional tax expenditure.
contracts.
62
04.5
RISK REPORT
Working capital risk
The determination our tax provisions and other tax liabilities worldwide
is a highly complex process, and in many instances the final amount of
The Group’s operating results and cash flow vary from quarter to
tax to be paid is uncertain. Although we consider our estimates to be
realistic, the actual tax result can differ from the amounts shown in our
quarter due to the seasonal nature of advertising spending. In contrast
financial statements and significantly influence our financial results in
to the higher advertising budgets spent during the fourth quarter, the
the period or periods to which such tax assessment applies. Our tax
third quarter of the calendar year is typically the slowest in terms
liability forecast can be examined by the responsible tax authorities
of advertising spend (summer quarter). This affects the Group’s
at any time. Any negative outcome of such an examination can have
operating results, cash flow and cash requirements. In addition, digital
an adverse effect on our financial, revenue, and asset situation. All
advertising spend is volatile and unpredictable. In periods of lower
of our tax positions are subject to changes in tax laws, regulations,
advertising spending this may have a material adverse effect on the
jurisdiction as well as tax-related accounting standards and their
Group’s revenue. Similarly, if faced with spikes in advertising spend
interpretations.
and traffic, the Group’s platforms must be able to support increased
traffic volumes and variety of advertising formats whilst maintaining
a stable and effective infrastructure and reliable service to customers.
New accounting standards
This flexibility and stability require significant investments in both the
Company’s organisation and technology, which increase the cost base.
The International Accounting Standards Board (IASB) or other
organisations may publish new or revised directives, interpretations, or
Capital risk
other guidelines which could influence International Financial Reporting
Standards (IFRS). As a result, it may happen that an accounting rule is
The price of our share at times experienced considerable fluctuation
adopted for which no rules previously existed, or that an accounting
rule previously open for interpretation is declared to be generally
since its initial listing and will continue remain volatile in the future.
valid or is applied in a specific manner. It is also conceivable that valid
The share price may move rapidly in response to factors beyond our
methods may be replaced entirely. Such IFRS-related changes can
control, including:
have a significant impact on our finance, revenue and asset positions.
Moreover, inability to adopt new accounting standards in time may
• fluctuations in our quarterly results or in
severely damage our reputation.
the results of our competitors
• announcements of Company sales and takeovers, new products,
major contracts, business relationships or provision of capital
Liquidity and cash fow risk
• recommendations by equity analysts or changed profit expectations
• publication of profits inconsistent with analysts’ expectations
All of the Company’s liquid funds and short-term marketable securities are
• number of shares outstanding
essentially managed by financial institutions. Based on the development
• share sales by us or our shareholders
of our business, the liquidity of ad pepper media International N.V. can
• short-selling, hedging or other derivative transactions with shares
at present be regarded as secure and, despite future investment in new
companies, sufficient to meet all future payment obligations. A decline
The stock market in general and the market for technology companies
in liquid funds may arise if further investments are required in the future.
in particular have witnessed extreme share price and trading volume
The Company is dependent upon its customers’ payment discipline. Our
fluctuations often unrelated or disproportionate to the operational
receivables are typically unsecured and result from sales which are
performance of these companies. These general market and industry
predominantly generated with customers based in Europe. The Company
factors can seriously damage the price of our share irrespective of our
checks its customers’ creditworthiness on an ongoing basis and has
actual performance.
made provisions for potential cases of default. Negative developments
on the capital markets can restrict our ability to obtain financing. Past
Lower (or volatile) share prices may lead to an inability to attract strong
economic and financial crisis led to certain restrictions on the availability
long-term investors and limit our ability to raise new equity and attract
of corporate finance and created a scenario such as that outlined above.
key personnel.
Looking ahead, it is not possible to completely exclude future restrictions
on our liquidity situation, especially in the case of a return to a scenario
described above. Should one or more financial institution go bankrupt in
such a scenario, this may have severe consequences for the Company’s
assets and financial position.
63
04.5
RISK REPORT
Data risk
In the past, lawsuits have been filed against such companies after
times of high price fluctuations on the overall market or in individual
Websites usually install small files with an ID to identify a user, generally
shares. In the event that such lawsuits are filed against us, this could
lead to significant costs and distract management time and resources.
called “cookies”, on a device. Cookies usually collect information about
users so that websites can adapt their contents to user needs.
As of 31 December 2022, EMA Electronic Media Advertising
International B.V., one of the Company’s founding shareholders,
The internet user’s browser software forwards the cookie information
owns shares representing around 44 percent of the share capital and
to the website. Our business depends on the use of cookies to track the
typically more than 80 percent of the voting rights at the General
traffic of internet users on the websites of our advertising customers,
Meeting. For the foreseeable future, EMA Electronic Media Advertising
and to monitor and prevent fraud in our networks. Most of the latest
International B.V. will therefore continue to have significant influence
internet browsers enable internet users to change their browser
on the management and on all matters requiring approval by the
settings to prevent the storage of cookies on their hard disks. internet
shareholders, including the election of board members, important
users can also remove cookies from their hard disks at any time.
Company transactions, such as mergers or the sale of the Company as
a whole or in part. This concentration of control limits our shareholders’
According to the General Data Protection Regulation (“GDPR”), which
ability to influence Company matters and affects the liquidity of the ad
came into effect in May 2018 in Europe, and to the EU Privacy and
pepper share traded on the stock exchange. In view of this, we may
Electronic Communications Directive, consent of data subjects is
implement measures that our shareholders do not deem expedient.
required for storing information like cookies for tracking or targeting
This in turn may have a lasting negative impact on our share price.
purposes on an end-user’s device and for further processing of end
user’s data. Therefore, the effectiveness of our technology may be
impaired by regulations limiting or prohibiting the use of cookies and
cookie consent of data subjects. On the basis of the requirements set
up by data privacy regulators, software manufacturers may provide
COMPLIANCE RISK
new internet browsers bearing default settings where cookies are not
accepted and the user has to actively change such settings to accept
cookies (“privacy by default“). If the use or effect of cookies were
restricted, we would have to switch to other technologies in order to
Governance risk
collect geographic or behaviour-related information.
Besides operational and fiscal risks, our business activity harbours
Although such technologies exist, they are far less effective than
a wide range of legal risks. Legal disputes, authority fines and other
cookies. We would have to develop or buy new technologies in order
proceedings may cause considerable damage to our business, our
to prevent fraud in our networks. Replacing cookies could become time-
reputation or our brands, and entail high costs. We are subject to a
consuming and requires considerable investment. Their development
variety of laws and regulations, many of which are not yet firmly
could turn out to be economically pointless or it may not be possible to
established or are still developing. This includes wide-reaching
implement them early enough in order to prevent the loss of customers
legislation covering consumer protection, data protection, e-commerce
or advertising space. The use of cookie technology or a comparable
and competition. Antitrust and competition claims or investigations
technology to collect information about internet usage patterns may
may also require changes to our business operations. Any such risks
lead to lawsuits or investigations in future. Many jurisdictions have
are counteracted by internal and external law experts who thoroughly
detailed provisions concerning both the collection of personal data and
examine all contractual and regulatory matters. We endeavour to fulfil
the use of such data for direct marketing campaigns.
our obligations through constant monitoring and by avoiding conflicts
arising from the violation of third-party rights or breach of regulatory
Since 1 December 2021 the Telecommunications Telemedia Data
provisions. No substantial litigation risks currently exist within the
Protection Act (Telekommunikation-Telemedien-Datenschutz-Gesetz,
ad pepper Group.
TTDSG) is applicable replacing the data protection requirements in the
Telemedia Act. The TTDSG introduces a strict cookie opt-in requirement
very much in line with the preconditions in the EU Privacy and Electronic
Communications Directive. Prior to this the German High Court has
outlined in 2020 consent requirements for storing cookies on devices
following a decision of the European Court of Justice on this issue.
64
04.5
RISK REPORT
According to these decisions, companies need consent for storing
Moreover, GDPR not only imposes new compliance obligations
cookies on user devices irrespective whether this Cookie-ID is personal
regarding the handling of personal data, it has also significantly
data or not. These verdicts are the main reason why the German
increased financial penalties for non-compliance. Failure to comply
legislator has introduced a strict consent requirement for storing data
with GDPR may lead to regulatory enforcement proceedings, which
in an end-user’s device. All in all, this leads to stricter data protection
can result in monetary penalties of up to 20 percent of worldwide
requirements that may have a negative impact on our business model.
revenue, orders to discontinue certain data processing operations,
Namely, the upcoming European ePrivacy-Regulation may introduce
private lawsuits, or reputational damage. If any person, including any
stricter requirements. If adopted, such regulations would have a
of our employees, negligently disregards or intentionally breaches
thorough impact on our business model.
our established controls with respect to client or ad pepper data,
or otherwise mismanages or misappropriates that data, we could
We depend on an easy way to transfer personal data from the EU to
be subject to significant litigation, monetary damages, regulatory
UK. At the end of June 2021, the European Commissions adopted an
enforcement proceedings, fines and/or criminal prosecution in one or
adequacy decision for the United Kingdom under GDPR. This decision
more jurisdictions. These monetary damages may not be subject to
facilitates a data transfer between EU and UK. Otherwise, our clients
contractual limit of liability or exclusion of consequential or indirect
will have to agree on Standard Contractual Clauses to legalise a data
damages and could be substantial. Our liability insurance may not
transfer to UK. The duration of this decision is limited to four years. As
cover us against claims related to security breaches, cyber-attacks or
the UK-Government has already announced to review the UK-GDRP and
other breaches.
to lower burdens for companies it is yet unclear whether this adequacy
decision has a bright future. In 2024 the European Commission will
Violations of other legal requirements
start reviewing UK’s laws and systems for protecting personal data and
decide whether to extend the adequacy decision for another four years.
The aim of compliance is to ensure irreproachable business conduct
Although we abide by the applicable laws in the different jurisdictions,
at all times and in all respects. Any failure to fulfil legal requirements
we cannot rule out the possibility that changes in legislation may have
and report obligations, any violation of the Corporate Governance
significant repercussions for our business models and revenues. Any
Code or insufficient management transparency may pose a risk to the
litigation or governmental action against us could become costly and
required compliance. For this reason, the ad pepper Group established
time-consuming, or compel us to change our business practice and
a Group-wide Code of Conduct as well as an insider trading policy,
divert management attention away from other business fields.
which provides for the safety and support of employees in various
professional situations. Despite comprehensive measures taken within
The regulatory environment in Europe is ever changing. With the
the realignment of the compliance programme and our compliance
GDPR, which came into effect in May 2018 in Europe, as well as
organisation, it is impossible for us to protect us against all risks.
the EU e-commerce Directive, compliance obligations and financial
penalties for non-compliance are increasing significantly and could
More generally, from time to time we are or may become involved in
potentially harm our business. The ad pepper Group has set up working
private actions, investigations and various other legal proceedings by
groups in close cooperation with its external data protection officer
employees, suppliers, competitors, government agencies or others.
to continuously identify adjustment needs to ensure compliance with
Failure to comply with laws and regulations can damage our reputation
GDPR requirements. Nevertheless, the security measures which have
and have negative financial and operational consequences.
been or will be implemented may not be effective, and ad pepper’s
systems may be vulnerable to theft, loss, damage or interruption
from a number of potential sources or events, including unauthorised
access or security breaches, cyber-attacks, computer viruses, power
loss, or other disruptive events. The ad pepper Group may not have the
resources or technical sophistication to anticipate or prevent rapidly
evolving forms of cyber-attacks.
65
04.5
RISK REPORT
RISK APPETITE
The ad pepper Group has a track record of identifying market changes
early and investing into winning products and services ahead of time.
We will, however, not pursue growth at all costs and expect sufficient
margins. We will primarily pursue organic growth strategies to meet
This section highlights those risks that the Group is willing to take, as
our growth objectives. We aim for sufficient operating margins whilst
well as those that are unacceptable. It includes a series of risk assertions
protecting the long-term viability of the Group. In general, management’s
which are aligned to our strategy, together with the risk parameters
risk appetite in this field is moderate.
within which we expect to work. The Group operates in markets with high
growth potential that are subject to volatility and intense competition.
In the field of financial risks, management addresses the low profitability
We will pursue ambitious growth targets and we are willing to accept
risk mainly through transparency and the permanent review process in
certain levels of risk to increase the likelihood of achieving or exceeding
connection with monthly results, forecasting and budgeting. In the event
our strategic objectives, subject to the parameters below.
of M&A, a dedicated programme management team will be established
for the accelerating shareholder value creation transformation. Through
The Board’s appetite for risk varies depending on the risk type. The Group
strong due diligence processes and closely managed integration
measures risk by estimating the potential for loss of profit, staff turnover
processes, we seek to reduce the probability of M&A-related risk.
and reputational damage. The Board has a low tolerance for finance-
Currency risks, on the other hand, are sought to be minimised through
and compliance-related risk. Conversely, it has a higher tolerance for
natural hedging by increasing the Company’s cost base in EUR. As far as
operational and strategic risk.
political instability, in general, is concerned, the breadth of our service
portfolio and our geographic reach help to mitigate our exposure to
Operational risks are managed through the ongoing budgeting,
any particular localised risk. We monitor proposed changes in taxation
forecasting and reporting process as well as training activities to
legislation and new accounting standards to ensure these are taken into
constantly improve and update employees’ skills. Infrastructure risks
account when we consider our future business plans. We try to manage
are mitigated by regular backups, redundant server structures and
the working capital risk by increasing and diversifying our client base in a
moving to the cloud. To reduce fraud risk, anti-fraud teams are tasked
way, which allows us to become less dependent on fourth quarter gross
with identifying unusual patterns, ideally in the design phase of
sales. While the Group continues to be independent on external funding,
advertising campaigns.
the risk of not finding these funds is not regarded as imminent. Matters
of substantial significance are also reviewed with the Supervisory Board
The cost of these measures and control systems must be commensurate
through the two-tier board structure. Management realises that the
with the benefits achieved. Management generally considers the
expansion of the business does require some risk taking and evaluates its
likelihood of risks in the operational and technology area as moderate
risk appetite as medium. Management therefore estimates this overall
while evaluating the financial impact of each event depending on the
financial risk to be low.
specific risk field. Management’s risk appetite in this field is moderate and
we seek to mitigate risks through contracts, service level agreements,
As far as compliance risks are concerned as the Group is growing in a
insurance and cooperation with established partners.
complex and rapidly changing environment and is in an ongoing process
of establishing and improving its processes, regulatory violations may
As far as strategic risks are concerned, we try to mitigate the personnel
occur. Management’s risk appetite is generally low and matters of
risk by providing attractive remuneration package, creation of a positive
substantial significance are also reviewed with the Supervisory Board
working environment and structured individual development plan. We
through the two-tier board structure. The ad pepper Group is committed
try to manage the dependency risks and platform risks by building and
to complying with the laws and regulations of the countries in which
maintaining customer relationships. We develop online advertising
we operate. However, with the General Data Protection Regulation and
strategies and regularly monitor progress for existing clients and identify
ePrivacy Regulation, compliance obligations and financial penalties for
and build relationships with new customers.
noncompliance are increasing significantly. Should the risk materialise,
it would have a very high, potentially critical impact. We mitigate the
In general, management addresses market risks by actively monitoring
risk by working with well-established external partners such as tax, legal
the developments and evaluating the actual exposure to these risks.
and audit advisors in all countries we are operating, as well as building
This includes participation in industry events, gaining information from
in-house capabilities through training and qualification measures for
analysts and research firms as well as creating business cases for new
existing staff.
product developments.
66
04.5
RISK REPORT
EVALUATION OF RISK
The following overview table shows a summary of risk type and
respective risk appetite:
MANAGEMENT SYSTEM
EFFECTIVENESS
Risk category
Risk
Appetite
Operational risk Infrastructure risk
Moderate
The ad pepper Group’s long-term strategy is focused on creating value
for our shareholders and stakeholders through profitable growth. In
Technology risk
Moderate
implementing this strategy, the Company has evaluated the relevant
Cybercrime, hacking, identity
Low
operational, strategic, financial and compliance risks as well as the
theft and risk of fraud
risks and opportunities of future market trends for e-commerce in
Intellectual property rights risk Low
general and for digital advertising providers in particular. The Board
of Directors is responsible for identifying and managing risks with
Strategic risk
Personnel risk
Low
appropriate measures. Significant issues are also reviewed with
Market risk
Low
the Supervisory Board through the two-tier board structure. Internal
Dependency risk
Moderate
controls have a high priority and are continuously assessed and further
improved. Separation between executive and controlling functions and
Platform risk
Moderate
compliance with directives and operating instructions are an integral
Financial risk
Low profitability
Low
part of the internal control system and no risk with a significant impact
Risks of our M&A strategy
Low
were identified. The risk management and internal control systems,
however, do not provide absolute assurance that errors, fraud losses,
Energy supply risk
Low
or unlawful acts will not occur. During the 2022 financial year, no
Currency risk
Moderate
significant shortcomings were found in the internal risk management
Tax risk
Low
and control system, and no risk with a significant impact were
identified. From a current perspective, we foresee no risks that, even in
New accounting standards
Low
conjunction with other risks, could threaten the continued existence of
Liquidity and cash flow risks
Low
the ad pepper Group. Please also refer to the disclosure on page 118 in
Working capital risk
Moderate
the Consolidated Financial Statements.
Capital risk
Low
We are convinced that risk management has to be part of the mindset
Compliance risk Governance risk
Low
and working methods of our staff, and retaining control is of prime
Data risk
Low
importance to us. The Company continued to work on optimising its risk
management and internal control systems in 2022 while acknowledging
Violations of other legal
Low
requirements
that such systems cannot offer absolute assurance against errors
of material importance. The Board of Directors is conscious that
the Company does not yet have an internal audit function and has
discussed this with the Supervisory Board. After an in-depth discussion
the Board of Directors and the Supervisory Board concluded that
the Company does not currently require an internal audit function,
although this may change in future depending on further Company
growth. From its evaluations, the Board of Directors concludes that
the risk management system as well as the control of the business
processes and the internal control within the Company are sufficient,
professional, appropriate and effective. The Board of Directors is of
the opinion that the risk management system with its controls and
processes provides an adequate level of assurance on the reliability
of financial information and control information in accordance with
relevant laws and regulations.
67
04.5
RISK REPORT
In the past financial year, the ad pepper Group and its external data
privacy officer worked closely to ensure fulfilment of the obligations
imposed by the European legislator through the GDPR. Regular
meetings were held and results presented to the Board of Directors as
well as the Supervisory Board.
The ad pepper Group operates an information protection management
system based on ISO 27001 comprising security guidelines as well
as organisational and technical measures to prevent and address IT
security incidents. Also in 2022, ad pepper Group also implemented
regular cyber security awareness trainings for all Group staff due to
higher frequency of so-called fake-president-fraud attempts. The Group
repeatedly pointed out that no employees, including Board of Directors
members, are allowed to ask for payments/money transfers via email
and nobody in the Group is allowed to circumvent the four-eyes-
principle. As mistakes are always possible, the Company is aware that
there is a risk that an employee might execute a payment within the
maximum available overdraft limit.
OPPORTUNITIES AND OUTLOOK
In 2022, the ad pepper Group achieved revenues substantially below
the previous year along with a satisfying level of profitability. We
generated consolidated revenue of EUR 24,868k and EBITDA of EUR
1,275k. Despite a very challenging market environment due to high
inflation and geopolitical conflicts thanks to the hard work of around
250 staff members we achieved a respectable result in terms of
revenue and profitability, although it failed to achieve our goals we set
ourselves at the beginning of the business year 2022.
While forecasting is more challenging than ever, in the light of the
ongoing digital transformation which is affecting all areas of our
everyday lives, we are optimistic to return to a growth path for the
entire group again in the business year ahead. For our organic growth
strategy, no additional financing is needed given the strong balance
sheet. We will continue to hire new staff, invest in new products and
technology (especially in connection with our AI strategy), services and
markets. We will concentrate on lucrative customer groups, as well as
on broadening and diversifying these customer groups, which was key
also in the past financial year.
68
«
RESPONSIBILITY
STATEMENT
04.6
RESPONSIBILITY STATEMENT
RESPONSIBILITY STATEMENT
In accordance with the EU Transparency Directive, as incorporated
in Chapter 5.1A of the Dutch Financial Supervision Act (Wet op het
financieel toezicht), the Board of Directors declares that, to the best of
its knowledge:
• The Consolidated Financial Statements for the year ended
31 December 2022 give a true and fair view of the assets,
liabilities, financial position and profit or loss of ad pepper media
International N.V. and its consolidated companies.
• The report of the Board of Directors gives a true and fair view of the
position as of the balance sheet date and the state of affairs during
the 2022 financial year of ad pepper media International N.V. and
its affiliated companies, of which the data has been included in the
Consolidated Financial Statements.
• The report of the Board of Directors describes the principal risks
that ad pepper media International N.V. faces.
Board of Directors
ad pepper media International N.V.
Dr Jens Körner, CEO
Nuremberg, 7 April 2023
71
04.6
RESPONSIBILITY STATEMENT
72
05
«
CONSOLIDATED
FINANCIAL STATEMENTS
05 CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
1ꢀ/ꢀ1 -
1ꢀ/ꢀ1 -
31ꢀ/ꢀ12ꢀ/ꢀ2022
31ꢀ/ꢀ12ꢀ/ꢀ2021
Note
kEUR
kEUR
Gross sales1
[6]
Media cost2
-73,361
-83,947
[8]
Revenue
[5]
Cost of sales
-1,164
-1,059
[8]
Gross profit
Selling and marketing expenses
-16,638
-15,739
[9]
General and administrative expenses
-7,164
-7,707
[10]
Other operating income
[11]
Other operating expenses
-651
-477
[12]
Operating profit
Financial income
[13]
Financial expenses
-192
-116
[13]
Income before taxes
Income taxes
-306
-592
[14]
Net income
-250
attributable to shareholders of the parent company
-893
attributable to non-controlling interests
Basic earnings per share on net income for the year
attributable to shareholders of the parent company
-0.04
[15]
Diluted earnings per share on net income for the year
attributable to shareholders of the parent company
-0.04
[15]
Weighted average number of shares outstanding (basic)
20,278,249
20,735,183
[15]
Weighted average number of shares outstanding (diluted)
20,278,249
20,977,243
[15]
1
Gross sales represent the total amount billed and billable to clients by the Group, net of discounts, VAT and other sales-
related taxes. Disclosure of gross revenue information is not required under IFRS; however, it is voluntarily disclosed from 1
January 2018 onwards in the Consolidated Income Statement as management has concluded that the information is useful
for users of the financial statements. Please refer to Note [6].
2
Media cost relates to payments made to suppliers of ad inventory (commonly referred to as media buys and
publishers). Disclosure of media cost information is not required under IFRS; however, it is voluntarily disclosed from 1
January 2018 onwards in the Consolidated Income Statement as management has concluded that the information is useful
for users of the financial statements. Please refer to Note [8]
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
1ꢀ/ꢀ1 - 31ꢀ/ꢀ12ꢀ/ꢀ2022 1ꢀ/ꢀ1 - 31ꢀ/ꢀ12ꢀ/ꢀ2021
kEUR
kEUR
Net income
-250
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Currency translation differences
Revaluation of listed debt securities
-15
-6
Other comprehensive income, net of tax
Total comprehensive income
-237
Attributable to non-controlling interests
Attributable to shareholders of the parent company
-899
CONSOLIDATED STATEMENT OF FINANCIAL POSITION – ASSETS
31ꢀ/ꢀ12ꢀ/ꢀ2022
31ꢀ/ꢀ12ꢀ/ꢀ2021
(Restated)
Note
kEUR
kEUR
Non-current assets
[16],
Intangible assets
[17]
Property, plant and equipment
[17]
Right-of-use assets
[42]
Listed debt and marketable securities
[18]
Other financial assets
[19]
Deferred tax assets
Total non-current assets
Current assets
Securities and deposits with maturity over three months
[20]
Trade receivables
[21]
Other receivables
[22]
Income tax receivables
[23]
Other financial assets
[24]
Cash and cash equivalents
[25]
Total current assets
Total assets
CONSOLIDATED STATEMENT OF FINANCIAL POSITION – EQUITY AND LIABILITIES
31ꢀ/ꢀ12ꢀ/ꢀ2022
31ꢀ/ꢀ12ꢀ/ꢀ2021
(Restated)
Note
kEUR
kEUR
Equity attributable to shareholders of the parent company
Issued capital
[26]
Share premium
[27]
Reserves
-50,367
-49,059
[28]
Total
Non-controlling interests
[29]
Total equity
Non-current liabilities
Deferred tax liabilities
[14]
Other liabilities
[30], [42]
Total non-current liabilities
Current liabilities
Trade payables
[31]
Contract liabilities
[32]
Other liabilities
[33], [41]
Other financial liabilities
[34], [42]
Income tax liabilities
[14]
Total current liabilities
Total liabilities
Total equity and liabilities
CONSOLIDATED STATEMENT OF CASH FLOWS
1ꢀ/ꢀ1 - 31ꢀ/ꢀ12ꢀ/ꢀ2022 1ꢀ/ꢀ1 - 31ꢀ/ꢀ12ꢀ/ꢀ2021
Note
kEUR
kEUR
Net income
-250
Adjustments for:
Depreciation and amortisation
[16], [17], [42]
Gainꢀ/ꢀloss on sale of fixed assets
-10
[11], [12]
Share-based compensation
-76
[39]
Gainꢀ/ꢀloss on sale of securities and other investments (after bank
charges)
[13,[18],[20]
Other financial income and financial expenses
Income taxes
[14]
Income from the release of accrued liabilities
-1,094
-982
[11], [38]
Other non-cash expenses and income
-195
Cash settlement of stock option plans
-981
[39]
Gross cash flow
Change in trade receivables
[12] [21]
Change in other assets
-21
-82
Change in trade payables
[31]
Change in other liabilities
-391
-472
Income taxes received
Income taxes paid
-1,073
-931
Interest received
Interest paid
-77
-116
1ꢀ/ꢀ1 - 31ꢀ/ꢀ12ꢀ/ꢀ2022 1ꢀ/ꢀ1 - 31ꢀ/ꢀ12ꢀ/ꢀ2021
Note
kEUR
kEUR
Net cash flow fromꢀ/ꢀused in operating activities
Purchase of intangible assets and property, plant and equipment
-219
-299
[16], [17]
Proceeds from sale of intangible assets and property, plant and
equipment
Proceeds from sale of securities
Purchase of securities
-5,000
-1,999
Net cash flow fromꢀ/ꢀused in investing activities
-3,281
-2,241
Issuance of shares
Payment of lease liabilities
-585
-757
[42]
Purchase of treasury shares
-1,232
-2,576
Dividends to non-controlling interests
-539
-583
[29]
Net cash flow fromꢀ/ꢀused in financing activities
-2,356
-3,829
Net decreaseꢀ/ꢀincrease in cash and cash equivalents
-3,706
-3,862
Cash and cash equivalents at beginning of period
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at end of period
[25]
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 2022
NCI
Balanc Profi
Other
Total
Share
Divide
Purch
Cash
Issua
Balanc
put
e at t for
compreh
compreh
-
nds
ase of
settle
nce
e at
liabi
1ꢀ/ꢀ1ꢀ/ꢀ2
the
ensive
ensive
-base
treas
ment
of
31ꢀ/ꢀ12ꢀ
lity
022
peri
income
income
d
ury
of
share
/ꢀ2022
od
paym
share
SOP's
s
ent
s
N
ot
e
Issued
[2
capital
6]
(kEUR)
Share
premiu
[2
m
7]
(kEUR)
Reserve
[2
s
8]
Treasu
ry
reserv
e
(kEUR)
-4,906
-1,232
-6,138
For
emplo
yee
[39
stock
]
option
plans
(kEUR)
Accum
ulated
deficit
(kEUR)
-43,017
-893
-893
-43,910
Curren
cy
transla
tion
basis
of
-1,162
-1,153
prepar
ation
differe
nces
(kEUR)
Revalu
ation
of
listed
[20
debt
]
securiti
es
(kEUR)
-15
-15
-3
Other
reserve
s
-2,812
-2,070
(kEUR)
Subtotal
reserves
(kEUR)
-49,058
-893
-6
-899
-1,232
-50,367
Equity
attribut
able to
sharehol
ders
of the
parent
compan
y (kEUR)
-6
-899
-1,232
Non-
control
ling
[29
interes
]
ts
(kEUR)
-539
Total
equity
(kEUR)
-237
-539
-1,232
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 2021
NCI
Balanc Prof
Other
Total Share Divide Purch
Cash Issua
Balance
put
e at
it comprehe comprehe
-
nds ase of settlem
nce
at
liabil
1ꢀ/ꢀ1ꢀ/ꢀ2
for
nsive
nsive based
treasu
ent of
of
31ꢀ/ꢀ12ꢀ/ꢀ
ity
021
the
income
income paym
ry
SOP's share
2021
peri
ent
share
s
od
s
(Restate
d)
No
te
Issued
[26
capital
]
(kEUR)
Share
[27
premium
]
(kEUR)
[28
Reserves
]
Treasury
reserve
(kEUR)
-2,417
-2,576
-4,906
For
employe
e stock
[39]
option
plans
(kEUR)
Accumul
ated
deficit
(kEUR)
-44,106
-636
-43,017
Currency
translati
on
differenc
es
(kEUR)
-1,398
-1,162
Revaluati
[18]
on of
-6
-6
listed
debt
securitie
s (kEUR)
Other
-2,812
reserves
(kEUR)
-2,352
-460
Subtotal
reserves
(kEUR)
-47,592
-2,576
-636
-49,058
Equity
attributab
le to
sharehold
ers
of the
parent
company
(kEUR)
-2,576
-636
Non-
controlli
ng
[29]
interests
(kEUR)
-583
-60
Total
equity
(kEUR)
-583 -2,576
-636
06 NOTES TO THE CONSOLIDATED -FINANCIAL STATEMENTS
The ad pepper Group is an international provider of interactive products and services for websites and advertisers. The Company currently markets campaigns and websites worldwide and operates from eleven offices in Europe. The ad pepper Group uses state-of-the-art technology to link thousands of small, medium and large websites to form a top-quality advertising network with global reach and a precise focus on its target groups. In addition to a regional, national and international marketing presence, website partners receive a large number of other important products and services such as traffic analysis and performance optimisation, provided by the ad pepper media Group in a localised form.
ACCOUNTING PRINCIPLES [2]
The Consolidated Financial Statements have been prepared on a historical cost basis, except for employee benefit liabilities and current investments in securities, which have been measured at fair value.
The Consolidated Financial Statements are
presented in EUR. All values are rounded up or down to the nearest thousand euro (kEUR) or million euro (mEUR) except
where indicated otherwise. Due to rounding, individual figures may not add up exactly to the totals stated.
Based on the requirements of the Dutch Civil Code, a full Annual Report comprises reports from the Board of Directors and the Supervisory Board, Consolidated Financial Statements, Company Financial Statements and other information. This report includes the reports from the Board of Directors and the Supervisory Board, Consolidated Financial Statements, Company Financial Statements and other information.
Statement of compliance
The Consolidated and Company Financial Statements of ad pepper media International N.V. and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), in conjunction with Part 9 of Book 2 of the Dutch Civil Code. The same accounting principles may be applied in the Company’s Financial Statement and the Consolidated Financial Statements. If the accounting principles of the Company’s Financial Statements differ from the accounting principles applied in the Consolidated Financial Statements, this is disclosed.
1
In doing so, all identifiable assets, liabilities and contingent liabilities are recognised at fair value and measured accordingly in the consolidated balance sheet. Following adjustments to the fair values of assets acquired and liabilities assumed, any resulting positive difference is capitalised in the balance sheet as goodwill. Situations in which the fair value of net assets is greater than the purchase price paid result in a negative difference. In the event that such difference remains following reassessment of the allocation of the purchase price or determining the fair value of acquired assets, liabilities and contingent liabilities, this is recognised immediately as income. The proportion of assets, liabilities and contingent liabilities of the subsidiary applicable to non-controlling interest is also recognised at fair value. All intra-group balances, transactions, income and expenses, and profits and losses resulting from intra-group transactions that are recognised in assets are eliminated in full.
Consolidated Group
The subsidiaries included in consolidation are as follows:
| Entity | 31/12/2022 | 31/12/2021 |
| Share in percent | Share in percent | |
| ad pepper media GmbH, | ||
| Nuremberg, Germany | 100 | 100 |
| ad pepper media France S.A.R.L., | ||
| Paris, France | 100 | 100 |
| ad pepper media USA LLC, | ||
| New York, USA | 100 | 100 |
| ad pepper media Spain S.A., | ||
| Madrid, Spain | 65 | 65 |
| Webgains S.L., | ||
| Madrid, Spain | 65 | 65 |
| Webgains Ltd., | ||
| London, United Kingdom | 100 | 100 |
| ad agents GmbH, | ||
| Herrenberg, Germany | 60 | 60 |
| ad agents AG, | ||
| Pontresina, Switzerland | 60 | 60 |
| Webgains Italy S.r.l. SB, | 100 | 100 |
2
| Milan, Italy | ||
| Webgains GmbH, | ||
| Nuremberg, Germany | 100 | 100 |
| Webgains B.V., | ||
| Amsterdam, Netherlands | 100 | 0 |
Changes in accounting policies and estimates
Restatement of the Consolidated Statement of Financial Position and Consolidated Statement of Changes in Equity for the year ended 31 December 2021 and as per 1 January 2021 according to IAS 8
The Consolidated Statement of Financial Position and Consolidated Statement of Changes in Equity for the year ended 31 December 2021 and as per 1 January 2021 have been restated from the Consolidated Statements previously reported. As explained in Note [2] Accounting principles “current financial liability”, the Company’s balance sheet includes a current liability for a written put option, which was omitted from the 2021 and previous years’ financial statements. The written put/call option is part of the sale contract of the 35 % non-controlling interest in ad pepper media Spain S.A. closed in 2014, which resulted in the accounting of non-controlling interest, but not in recording of financial liability for the written option since 2017 when it was exercisable for the first time.
Therefore, the restatement has the effect of a reduction of the equity by:
•
Reclassification of non-controlling interest considering ad pepper media S.A. and Webgains Spain S.L. into current financial liability
•
Reduction of other reserves by the remaining amount of the current financial liability
The brought forward current liabilities as at 1 January 2021 have been increased by 2,811,580 EUR with a corresponding decrease in the brought forward non-controlling interest by EUR 459,670 and other reserves by EUR 2,351,910. The restated balance sheet for the year ended 31 December 2021 includes an increase in current financial liability of EUR 520,271 EUR, compared to the adjusted balance sheet per 1 January 2021, with a corresponding reduction of the non- controlling interest by EUR 60,295 and a reduction of other reserves by EUR 459,976.
The overall effect of the above is to increase current financial liability as at 31 December 2021 by EUR 3,331,851 with a corresponding reduction in non-controlling interest by EUR 519,965 and other reserves by EUR 2,811,886.
Summary of new accounting policies
The accounting policies adopted in the preparation of the Group’s annual Consolidated Financial Statements are consistent with those followed in the preparation of the Group’s annual Consolidated Financial Statements for the year ended 31 December 2021 except for the adoption of new standards effective as of 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
Several amendments and interpretations apply for the first time in 2022, but do not have an impact on the Consolidated Financial Statements of the Group.
The following further amendments, improvements and interpretations to existing standards require first-time application in the financial year beginning 1 January 2022:
•
Amendments to IFRS 16 “COVID-19-Related Rent Concessions beyond 30 June 2021“: The original amendment was issued on 28 May 2020 and was intended to apply until 30 June 2021, but the IASB extended the period of application of the practical expedient to 30 June 2022. This amendment does not have an impact on the Group.
•
Amendments to IFRS 3 Business Combinations (updating a reference without significant changes to its requirements); IAS 16 Property, Plant and Equipment (changes regarding proceeds from items produced), IAS 37
3
Provisions, Contingent Liabilities and Contingent Assets (changes regarding costs a company should include as the cost of fulfilling an onerous contract) and Annual Improvements 2018-2020. These amendments do not have an impact on the Group.
New amendments and interpretations requiring application in financial years beginning 1 January 2023:
•
IFRS 17 Insurance contracts: The standard was issued on 18 May 2017 and is not expected to have an impact on the Group.
•
Amendments to IFRS 17 Insurance contracts: These amendments were issued on 25 June 2021 and 9 December 2021 and are not expected to have an impact on the Group.
•
Amendments to IAS 12 Income Taxes (Deferred Tax related to Asset and Liabilities arising from a Single Transaction): The amendment was issued on 7 May 2021 and is not expected to have an impact on the Group.
•
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors, Definition of Accounting Estimates: The amendments were issued on 12 February 2021 and are to replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. The new definition is not expected to have an impact on the Group.
New amendments and interpretations requiring application in financial years beginning 1 January 2024:
•
Amendments to IFRS 16 Leases: This amendment specifies requirements for seller-lessees to measure the lease liability in a sale & leaseback transaction. It is not expected to have an impact on the Group.
•
Amendment to IAS 1 Presentation of Financial Statements- Classification of Liabilities into current and non- current. This amendment should clarify the criteria for the classification of a liability as either current or non- current. The proposed amendments intend to
a) Clarify that the classification is based on the entity’s rights at the end of the reporting period, and b) Make clear the link between the settlement of the liability and the outflow of resources from the entity.
The Group is evaluating the impact of this amendment on the Consolidated Financial Statements.
Significant accounting judgements, estimates and assumptions
In the application of the Group’s accounting policies, which are described below in Note [3], the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Judgements, estimates and assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date have been applied in particular to the assessment of revenue from contracts with customers (Note [5]), accrued liabilities for outstanding affiliate payments (Note [30]), incremental borrowing rates of right-of-use liabilities (Note [41]), the provision for expected credit losses of trade receivables (Note [40]), share based payments (Note [38]) and on the measurement of deferred tax assets on losses carried forward (Note [14]).
A) Judgements
Preparing the financial statements in accordance with the IFRS requires the Group management to make judgements in respect to the recognised amounts of revenue in all three operational segments. The Company assesses its revenue arrangement in its business units against specific criteria in order to determine if it is acting as principal or agent. The factors specified by IFRS 15 indicate that the Group does not control services before they are transferred to customers. Therefore, the Group determined that it is an agent in all its customer contracts and is recognising its revenue on a net basis, consequently excluding media cost owed to delivery partners from revenue and cost of sales respectively.
4
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Accrued liabilities
In measuring accrued liabilities for affiliate credits not yet disbursed in the Webgains segment, reference has been made to assumptions determined with the assistance of various controlling and reporting tools. Based on various evaluations, the ad pepper Group assesses the disbursement of credits for confirmed transactions that have not been called up more than one year after the closure of the programme as well as of credits of inactive publishers as unlikely and has reduced the accrued liability by the resultant amounts.
The provision for expected credit losses of trade receivables
An impairment analysis is performed at each reporting date using a matrix to calculate expected credit losses (ECL) for trade receivables. The provision is initially based on the Group’s historical observed default rates and potentially adjusted with forward-looking information. At every reporting date, the historical observed default rates are updated, changes in the forward-looking estimates and evidence for impairment are analysed.
Share based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield, and assumptions about them. For the measurement of the fair value of equity-settled transactions with employees at the grant date, the Group uses a Monte Carlo simulation model. For cash-settled share-based payment transactions, which have been reclassified from equity-settled stock options, the liability must be remeasured at the end of each reporting period up to the date of settlement, with any changes in fair value recognised in profit or loss. The assumptions and models used for estimating fair value for share-based payment and cash-settled transactions are disclosed in Note [38].
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available, against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies. Further information is presented in the note on incomes taxes (Note [14]).
Leases – Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease contracts for offices and cars. Therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group “would have to pay”, which requires estimation when no observable rates are available. The Group estimates the IBR using the market interest rate provided by its bank.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [3]
Foreign currency translation
The Consolidated Financial Statements are presented in EUR, which is the Company’s functional and presentation currency. Each entity in the Group determines its own functional currency, and items included in the financial statements of each entity are measured using that functional currency.
Transactions of foreign currencies are initially recorded at the functional currency rate applicable at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange applicable at the balance sheet date. All differences are applied as either profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate applicable on the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate applicable on the date when the fair value was determined.
As at the reporting date, the assets and liabilities of those subsidiaries that have a functional currency other than the EUR are translated into the presentation currency of ad pepper media International N.V. (EUR) at the rate of exchange applicable at the balance sheet date, and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising from the translation are applied directly to other comprehensive income. On
5
disposal of a foreign entity, the deferred cumulative amount recognised in other comprehensive income relating to that particular foreign operation is recognised in the income statement.
The significant foreign currency exchange rates developed as follows:
| Foreign currency | Closing | Closing | Average | Average |
| per EUR 1 | rate | rate | rate | rate |
| 31/12/22 | 31/12/21 | 2022 | 2021 | |
| USD | 1.0648 | 1.334 | 1.0527 | 1.1886 |
| GBP | 0.8855 | 0.8393 | 0.8514 | 0.8776 |
| CHF | 0.9840 | 1.0363 | 1.1901 | 1.2278 |
Property, plant and equipment
Property, plant and equipment are stated at historical cost, excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated impairment in value. Subsequent costs are included in the asset’s carrying value or recognised as separate asset, as appropriate, only when it is probable that future economic benefits associated with the line item will flow to the Group and the cost of the item can be reliably measured. Depreciation is calculated on a straight- line basis over the useful life of the assets. The estimated useful lives of the assets are between three and ten years. An item recorded under property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. All intangible assets have finite lives and are amortised using the straight-line method over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least at each financial year-end. Gains or losses arising from derecognising an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
•
Office space 1 to 5 years
•
Vehicles 3 years
6
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. The Group’s lease liabilities are included in other long-term and short-term other financial liabilities.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of office space and cars (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be of low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.
Research and development costs
Research costs are expensed as incurred. An intangible asset resulting from the development of an individual project is only capitalised when it cumulatively meets the criteria for recognition stipulated in IAS 38. During the period of development, the asset is tested for impairment annually. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that a non-monetary asset (property, plant and equipment; intangible assets, right-of-use assets) may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of the fair value of the asset or cash-generating unit less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. The valuation model is based on a discounted cash flow method.
Impairment losses are recognised in the income statement in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of the recoverable amount.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset is increased to its recoverable amount. This increased amount shall not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised on the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. Impairment losses recognised for goodwill are not reversed for subsequent increases in its recoverable amount.
7
Other receivables
Other receivables consist mainly of advance payments. Upon initial recognition, other receivables are measured at fair value. Subsequently, they are measured at amortised cost, after deduction of any write-downs. A write-down is applied when objective indications suggest that the receivable may not be fully collectible.
Financial assets within the scope of IFRS 9 Financial Instruments are classified and subsequently measured at fair value through profit or loss, amortised cost, or fair value through OCI, as appropriate. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are “solely payments of principal and interest (SPPI)” on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
For purposes of subsequent measurement, financial assets are classified in four categories:
•
Financial assets at amortised cost (debt instruments)
•
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
•
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
•
Financial assets at fair value through profit or loss
Currently the most relevant to the group categories are:
•
Financial assets at amortised cost (debt instrument), which includes trade receivables
•
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through other comprehensive income are carried in the statement of financial position at fair value with net changes in fair value recognised in the other comprehensive income. This category includes listed debt investments.
A financial asset is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:
•
The rights to receive cash flows from the asset have expired
or
•
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
8
Fair value
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis or other valuation models. If the fair value of an unquoted equity instrument cannot be measured reliably, it is carried at cost.
Impairment of financial assets carried at amortised cost
The Group recognises an allowance for expected credit losses (ECL) for all debt instruments not held at fair value through profit or loss. For trade receivables and contract assets, the Group applies a simplified approach in calculating ECL in line with IFRS 9. A default on receivables expected over the respective term (stage 2 of the impairment model) is determined for trade accounts receivable based on historical default rates for a respective customer portfolio, adjusted for forward- looking factors specific to the debtors and the economic environment, based on segment and geographic allocation.
When actions such as insolvency or comparable proceedings have been initiated or other substantial indications that receivables are impaired become apparent like a deterioration of the payment behaviour, the receivables are individually tested for impairment (stage 3 of the impairment model). All receivables more than 90 days overdue are tested for impairment. Impaired debts are written off when they are deemed uncollectable. In the reporting year, bad debt allowance on trade receivables was applied at a rate of 50 percent after 120 days overdue, 75 percent after 240 days overdue, and 100 percent after one year overdue. However, in certain cases the Group may also consider a financial asset to be uncollectable when external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full, before taking into account any credit enhancements held by the Group.
The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in profit or loss. If the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the recognition of impairment, the impairment loss previously recognised is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
Treasury shares
The Group’s own equity instruments that are repurchased (treasury shares) are deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue, or cancellation of the Group’s own equity instruments.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and in hand. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation although the respective due date or amount is still uncertain. If the effect of the time value of money is material, long-term provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Accrued liabilities are obligations to pay for goods or services received or delivered that have neither been paid, nor invoiced by the suppliers. Even though estimates are occasionally required to determine the amount or timing of accrued liabilities, the degree of uncertainty is generally much lower than for provisions. Accrued liabilities are recognised under trade payables.
Contract liabilities
9
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract.
Current financial liabilities
Current financial liabilities are liabilities, that must be settled in cash or other financial assets. Based on their nature, financial liabilities are measured at amortised costs and are derecognised upon settlement or cancellation.
The Company accounts for a written call/put option over the 35 % non-controlling interest in ad pepper media Spain S.A. by considering a financial liability with the present value of the exercise price of the option. The Company assessed that the prerequisites for the transfer of the shares are fulfilled at the balance sheet date and therefore assumes the exercise of the put option by the holder in the exercise window during the coming financial year, classifying the liability as current. The attributable changes in the value of the financial liability are recognized in the equity component “other reserves”.
Share-based payment transactions
Equity-settled transactions
Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (“equity-settled transactions”). The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by an external value using an appropriate pricing model, further details of which are given in Note [40]. The cost of equity-settled transactions (remuneration cost) is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the “vesting date”).
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (further details are provided in Note [15].
Cash-settled transactions
A liability is recognised for the fair value of cash-settled transactions. The fair value is measured at modification date and at each subsequent reporting date up to and including the settlement date, with changes recognised in employee benefits expense in profit or loss.
Revenue from contracts with customers
The Group is in the business of providing performance marketing services, in which third parties provide services to its customers. When another party provides goods or services to its customers, the Group determines whether it is a principal or an agent in these transactions by evaluating the nature of its promise to the customer. The Company has concluded that it is acting as an agent in all of its revenue arrangements, as its role is restricted to arranging a third party that supplies ad inventory to deliver the ad to the end customer. Consequently, the Group records revenue at the net amount that it retains for its services, which is limited to campaign management, while media cost for ad inventory used is excluded from the revenue definition. For further explanations, please refer to Note [2].
Revenue from contracts with customers is recognised when the service is rendered. Depending on the requirements of the specific product, this usually occurs when successful transactions result from user action (CPA), ad impressions are generated (CPC) or personal data is provided (CPL). Gross sales represent the total amount billed and billable to clients by the Group, net of discounts, VAT and other sales-related taxes. Disclosure of gross sales information is not required under IFRS, however, it is voluntarily disclosed in the Consolidated Income Statement, as management has concluded that the information is useful for users of the financial statements.
As all performance obligations have an original expected duration of less than one year and meet the requirement of the right to invoice practical expedient in IFRS 15.B16, the Company does not disclose the amount of the remaining performance obligations.
Rendering of services
Webgains
Revenue in this segment is generated by placing the merchant’s advertising on publishers’ websites (affiliate marketing). By using the Webgains technology platform, appropriate publishers are selected for placement of the advertisements on websites likely to drive traffic back to the merchant’s website and consequently enhance the merchant’s transaction values.
10
The merchant pays us on a cost-per-action basis (CPA), which means that the merchant only pays when successful transactions result from the traffic. The price billed to the merchant consists of an override and a commission. The override is considered the amount the Group is entitled to for its services.
The commission is the amount paid to our publishers and is excluded under IFRS 15 from the revenue definition. Consequently, commission to publishers is also not included in the Group’s cost of sales. The contractual agreement provides the customer with a recall period, where every occurred transaction can be cancelled within a certain period.
Depending on the industry the transaction occurred in, the recall periods range from 30 days in the fashion and beauty industry up to 360 days for insurance, travel and mobile sales. Based on historical data, the Group calculates at year-end the amount to be recognised as return assets and refund liabilities for transactions in the recall period.
ad pepper
Revenue in the ad pepper segment is generated by marketing internet advertising space. Advertising customers book units (ad impressions, ad clicks, registrations, mail-outs, transactions) via the Company, and these are then supplied over a period defined by the customer. ad pepper customers pay us on the basis of cost per click (CPC), cost per lead (CPL) or cost per impression (CPM). All of the three billing methods consist of media costs owed to ad pepper’s delivery partners and a service charge as an amount levied by the Group for its services. The media cost is the amount paid to the delivery partners and is excluded under IFRS 15 from the revenue definition. Consequently, media costs are also not included in the Group’s cost of sales.
In cases in which the campaign starts before the balance sheet date and lasts beyond this date, revenue is accounted proportionately based on the stage of completion at the end of the reporting period. Stage of completion is determined as the proportion of the costs incurred until the end of the reporting period in the total costs of the campaign, which can be reliably estimated.
ad agents
Revenue in the ad agents segment is mainly generated by providing search engine advertising. In these contractual agreements with clients where search engine providers are contracted by ad agents, and on its behalf the amounts billed to customers consist of media costs owed by ad agents to the search engine providers and a fee as a percentage of the media cost, the Group levies for its services. In other contractual arrangements, the search engine provider enters a direct contractual agreement with ad agents’ client, so that media costs are not invoiced by ad agents but are charged from search engine provider to client directly. In this case, the amount billed to the customer consists only of the fee as a percentage of the media cost.
In both cases, the Group is only entitled to the service charge as a percentage of the media budget. Media costs billed to clients and owed to search engine providers for indirect billing agreements do not constitute revenue according to IFRS 15 and are consequently excluded from cost of sales.
Interest income
Interest income is recognised as it accrues using the effective interest rate method.
Current income tax
Current taxes are determined on the basis of annual earnings with due reference to national tax rates and tax legislation in the various tax jurisdictions valid as of the balance sheet date. Current income tax relating to items recognised directly in other comprehensive income is only recognised there and not in the income statement.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences, except for goodwill, whereon the recognition is not permitted. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
11
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised directly in other comprehensive income is only recognised there and not in the income statement. Deferred income tax assets and deferred income tax liabilities are offset if there is a legally enforceable right to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
BUSINESS COMBINATIONS [4]
As in 2021, no business combinations occurred in the 2022 financial year.
Disaggregated revenue information
The following is a breakdown of the Group’s revenue from contracts with customers, which is based on the invoicing country:
| For the year ended 31 December 2022 | ||||
| Segments | ad pepper | Webgains | ad agents | Total |
| kEUR | kEUR | kEUR | kEUR | |
| Geographical markets | ||||
| Germany | 1,546 | 2,815 | 7,044 | 11,405 |
| United Kingdom | 0 | 7,824 | 0 | 7,824 |
| Spain | 1,378 | 1,714 | 0 | 3,092 |
| Other* | 0 | 874 | 1,673 | 2,547 |
| Revenue | 2,924 | 13,227 | 8,717 | 24,868 |
12
| For the year ended 31 December 2021 | ||||
| Segments | ad pepper | Webgains | ad agents | Total |
| kEUR | kEUR | kEUR | kEUR | |
| Geographical markets | ||||
| Germany | 2,262 | 2,648 | 7,197 | 12,107 |
| United Kingdom | 0 | 10,480 | 0 | 10,480 |
| Spain | 1,675 | 1,775 | 0 | 3,450 |
| Other* | 0 | 639 | 970 | 1,609 |
| Revenue | 3,937 | 15,542 | 8,167 | 27,646 |
*includes Switzerland, France, Italy and the Netherlands.
Contract balances
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Contract liabilities | 465 | 446 |
Contract liabilities include short-term advances received from customers during 2022 to render SEA (Search Engine Advertising) services in the ad agents segment.
Performance obligations
Information about the Group’s performance obligations is summarised below:
ad pepper
Service orders received from clients in accordance with framework agreements are generally short term in nature. The performance obligation is satisfied over time and usually occurs when the user provides personal data or when an impression is generated on the user’s device. Revenue therefore accrues each time the ad is displayed or personal data is entered by the user. Clients are invoiced monthly for the service delivered during the month based on the agreed transaction price multiplied by the delivered amounts. Payment is generally due within 14 days of invoicing.
As all ads are placed on third-party ad inventory properties, the Group has no control over the advertising inventory before it is transferred to its customers, with the Group acting as an agent in all contractual arrangements.
ad agents
Service orders received from clients in accordance with annual framework agreements are generally short term in nature. The performance obligation resulting from each service order is satisfied over time and occurs when the user clicks on the phrase created and placed by ad agents on search engines. The customer pays on a CPC basis, which means that the customer pays ad agents only when a user clicks on the ad in the search engine. Clients are invoiced monthly for the services provided during the month as a percentage fee of the media budget used during the month or in case of indirect billing contracts as media budget used for third-party delivery partners plus a percentage fee of the media budget. The payments are due within 0 to 90 days from invoicing.
13
As all ads are placed on third-party ad inventory properties, the Group has no control over the advertising inventory before it is transferred to our customers, with the Group acting as an agent in all contractual arrangements.
Webgains
The performance obligation is satisfied over time and occurs when successful transactions result from traffic. Contracts with clients are generally concluded for periods of 12 months or less. The invoicing is transaction-based and is carried out monthly.
The contract provides the customer with a recall period, in which any transaction can be cancelled within a certain period. Depending on the industry, the recall periods range from 30 days in the fashion and beauty industry and up to 360 days for insurance, travel and mobile sales. Based on historical data, at year-end the Group calculates the amount to be recognised as return assets and refund liabilities for transactions in the recall period. As at 31 December 2022 and 31 December 2021, the Group’s calculation resulted in amounts that have no material impact on the revenue recognised in the financial year.
As all performance obligations have an original expected duration of less than one year and meet the requirement of the right to invoice practical expedient in IFRS 15.B16, the Company does not disclose the amount of the remaining performance obligations.
IFRS 8 requires entities to report financial and descriptive information on their reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity for which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance.
Generally, financial information must be reported on the same basis as it is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. Financial information reported to the Group’s chief operating decision-maker for the purposes of resource allocation and assessment of segment performance is focused on the category Segment profit, reflecting the EBIT (Earnings before interest and taxes) or EBITDA (Earnings before interest, taxes, depreciation and amortisation) earned by each segment as stipulated by the IFRS.
This is the measure reported to the chief operating decision-maker for the purposes of resource allocation and assessment of segment performance. The basis of accounting for intersegment transactions is the “dealing at arm’s length” principle.
14
| Financial year 2022 | ad | Webgains | ad | Admin | Intersegment | Group |
| pepper | agents | elimination | ||||
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Gross sales* | 6,066 | 64,009 | 28,155 | 243 | -244 | 98,229 |
| Thereof external | 6,066 | 64,009 | 28,154 | 0 | 0 | 98,229 |
| Thereof intersegment | 0 | 0 | 1 | 243 | -244 | 0 |
| Revenue | 2,924 | 13,227 | 8,718 | 243 | -244 | 24,868 |
| Thereof external | 2,924 | 13,227 | 8,717 | 0 | 0 | 24,868 |
| Thereof intersegment | 0 | 0 | 1 | 243 | -244 | 0 |
| Gross profit | 2,592 | 12,496 | 8,375 | 243 | -1 | 23,704 |
| Expenses (including cost | ||||||
| of sales) | ||||||
| and other income | ||||||
| -3,172 | -12,801 | -7,634 | -1,317 | 243 | -24,681 | |
| Thereof amortisation and | ||||||
| depreciation | -140 | -445 | -273 | -230 | 0 | -1,088 |
| Thereof other non-cash | ||||||
| expenses | -7 | -483 | 0 | -55 | 0 | -545 |
| Thereof other non-cash | ||||||
| income | 209 | 984 | 7 | 53 | 0 | 1,254 |
| EBITDA | -108 | 871 | 1,358 | -845 | -1 | 1,275 |
| Operating profit | -248 | 425 | 1,085 | -1,074 | -1 | 187 |
| Financial income | 0 | 16 | 0 | 60 | -15 | 62 |
| Financial expenses | -7 | -31 | -17 | -152 | 15 | -192 |
| Income taxes | -99 | -27 | -180 | 0 | 0 | -306 |
| Net income for the year | -355 | 386 | 888 | -1,166 | -1 | -250 |
15
| Financial year 2021 | ad pepper | Webgains | ad agents | Admin | Intersegment | Group |
| elimination | ||||||
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Gross sales* | 7,983 | 77,723 | 25,893 | 319 | -325 | 111,593 |
| Thereof external | 7,979 | 77,722 | 25,892 | 0 | 0 | 111,593 |
| Thereof intersegment | 4 | 1 | 1 | 319 | -325 | 0 |
| Revenue | 3,941 | 15,542 | 8,168 | 319 | -324 | 27,646 |
| Thereof external | 3,937 | 15,542 | 8,167 | 0 | 0 | 27,646 |
| Thereof intersegment | 4 | 0 | 1 | 319 | -324 | 0 |
| Gross profit | 3,524 | 14,987 | 7,762 | 319 | -5 | 26,587 |
| Expenses (including cost of | ||||||
| sales) | ||||||
| and other income | ||||||
| -3,473 | -12,615 | -6,693 | -1,990 | 319 | -24,452 | |
| Thereof amortisation and | ||||||
| depreciation | -136 | -547 | -247 | -254 | 0 | -1,184 |
| Thereof other non-cash | ||||||
| expenses | -5 | -222 | 0 | 0 | 0 | -227 |
| Thereof other non-cash | ||||||
| income | 475 | 857 | 9 | 64 | 0 | 1,405 |
| EBITDA | 604 | 3,474 | 1,722 | -1,417 | -5 | 4,378 |
| Operating profit | 468 | 2,927 | 1,475 | -1,671 | -5 | 3,194 |
| Financial income | 0 | 6 | 0 | 74 | -2 | 78 |
| Financial expenses | -8 | -28 | -17 | -65 | 2 | -116 |
| Income taxes | -155 | -111 | -326 | 0 | 0 | -592 |
| Net income for the year | 305 | 2,794 | 1,132 | -1,662 | -5 | 2,564 |
*Gross sales represent the total amount billed and billable to clients by the Group, net of discounts, VAT and other sales- related taxes. Disclosure of gross revenue information is not required under IFRS; however, it is voluntarily disclosed from 1 January 2018 onwards in the Consolidated Income Statement since management has concluded that the information is useful for users of the financial statements
16
Geographical information
The Group operates in three principal geographical areas – the United Kingdom, Germany and Spain. The Group also operates in Switzerland, France, Italy and the Netherlands, which are grouped in the table below under “other”. The Group’s revenue from continuing operations from external customers and information about its non-current assets by geographical location are detailed below whereby non-current assets are shown exclusive of financial instruments:
| Revenue from | Non-current assets | |||
| external customers | ||||
| Year | Year | 2022 | 2021 | |
| ended | ended | |||
| 2022 | 2021 | |||
| kEUR | kEUR | kEUR | kEUR | |
| Germany | 11,405 | 12,107 | 775 | 1,161 |
| United Kingdom | 7,824 | 10,480 | 795 | 600 |
| Spain | 3,092 | 3,450 | 244 | 302 |
| Other | 2,547 | 1,609 | 108 | 88 |
| 24,868 | 27,646 | 1,922 | 2,151 | |
Total
NOTES TO THE INCOME STATEMENT [7]
The income statement was prepared using the function of expense method. The expenses include personnel expenses of EUR 17,533k (2021: EUR 16,553k) as well as depreciation and amortisation of EUR 1,088k (2021: EUR 1,184k), thereof EUR 570k (2021: EUR 698k) depreciation on right-of-use assets. Amortisation of intangible assets is included in selling expenses EUR 312k (2021: EUR 287k) and administration expenses EUR 35k (2021: EUR 26k). The personnel expenses include the employer’s contribution to state pension schemes amounting to EUR 1,003k (2021: EUR 955k), which must be disclosed as employer’s contribution to a defined contribution plan.
MEDIA COST AND COST OF SALES [8]
| Media cost | 2022 | 2021 |
| kEUR | kEUR | |
| ad pepper | 3,142 | 4,043 |
| ad agents | 19,437 | 17,725 |
| Webgains | 50,782 | 62,179 |
| Total media cost | 73,361 | 83,947 |
| COS | 1,164 | 1,059 |
| Total | 74,525 | 85,006 |
17
SELLING AND MARKETING EXPENSES [9]
This item comprises all costs associated with attracting customers and orders. The expenses are broken down as follows:
| 2022 | 2021 | |
| kEUR | kEUR | |
| Personnel costs | 13,165 | 11,869 |
| Facility costs | 96 | 85 |
| Advertising and sales promotion | 337 | 370 |
| Professional and other services | 1,236 | 1,809 |
| General operating costs | ||
| (communication, travel, other | ||
| supplies) | 1,475 | 1,319 |
| Other | 329 | 287 |
| 16,638 | 15,739 |
Total
18
GENERAL AND ADMINISTRATIVE EXPENSES [10]
The expenses are broken down as follows:
| 2022 | 2021 | |
| kEUR | kEUR | |
| Personnel costs | 4,369 | 4,684 |
| Depreciation on right-of-use | ||
| assets | 548 | 674 |
| Other facility costs | 559 | 714 |
| Professional and other services | 947 | 938 |
| General operating costs | ||
| (communication, travel, other | ||
| supplies) | 689 | 657 |
| Other | 52 | 40 |
| 7,164 | 7,707 |
Total
OTHER OPERATING INCOME [11]
Other operating income consists of the following:
| 2022 | 2021 | |
| kEUR | kEUR | |
| Gains on sale of property, plant | ||
| and equipment | 0 | 57 |
| Income from the release | ||
| of accrued liabilities | 894 | 449 |
| Other | 42 | 24 |
| 937 | 530 |
Total
Income from the release of accrued liabilities includes an amount of EUR 735k (2021: EUR 276k) relating to reversals of non-disbursed affiliate credits in the Webgains segment that the ad pepper Group believes are unlikely to be paid out and reversals of EUR 159k in connection with time-barred claims (2021: EUR 173k).
19
OTHER OPERATING EXPENSES [12]
Other operating expenses consist of the following:
| 2022 | 2021 | |
| kEUR | kEUR | |
| Losses on sale of property, plant | 54 | 0 |
| and equipment | ||
| Foreign exchange losses | 35 | 189 |
| Expected credit losses | ||
| on trade receivables | 448 | 227 |
| Other | 114 | 61 |
| Total | 651 | 477 |
FINANCIAL RESULT, NET [13]
Net financial result consists of the following:
| 2022 | 2021 | |
| kEUR | kEUR | |
| Interest income | 62 | 27 |
| Unrealized gains from securities | ||
| measured at” fair value through | ||
| profit or loss“ | 0 | 51 |
| 62 | 78 | |
| Interest expenses | -40 | -81 |
| Interest on lease liabilities | -33 | -35 |
| Losses from sale of securities | -115 | 0 |
| Other | -4 | 0 |
| -192 | -116 | |
| -130 | -38 |
Financial income
Financial expenses
Net financial result
20
| Income tax expenses | 2022 | 2021 |
| kEUR | kEUR | |
| Current income tax expenses | -464 | -545 |
| Deferred income tax | ||
| income/(expense) | 158 | -47 |
| Total | -306 | -592 |
The current income taxes reported relate to the taxes paid or payable by individual local entities. The calculation of the deferred taxes was based on the country-specific tax rates. Due to the existing unused tax losses in ad pepper media International N.V., ad pepper media France S.A.R.L. and ad pepper media USA LLC, deferred tax assets of EUR 10,551k (2021: EUR 9,925k) were calculated on the basis of the unused tax losses of EUR 34,416k (2021: EUR 32,301k). Deferred tax assets from unused tax losses were recorded to the extent that it is probable that future taxable profit is available against which they can be utilised within a foreseeable planning period.
Thus, an amount of deferred tax assets of EUR 76k (2021: EUR 0k) has been recognised for the tax loss carry forwards. All of the available tax loss carry forwards are non-expiring. The deferred tax asset for the tax loss carry forward is calculated with the local substantially enacted future tax rate on the budgeted taxable income for the following financial year.
In addition to the unused tax losses, the following significant deferred tax liabilities result from temporary differences:
| Deferred tax liabilities | 2022 | 2021 |
| kEUR | kEUR | |
| Other | 0 | 81 |
| Total | 0 | 81 |
Changes in deferred tax liabilities on temporary differences recognised in profit or loss amount to EUR 79k (2021: EUR 47k). The change in deferred tax assets on temporary differences recognised in profit or loss amounts to EUR 3k (2021: EUR 0k). Deferred tax assets and liabilities are netted if the Company has the legally enforceable right to set off current tax assets against current tax liabilities and if they relate to the same tax authorities and the same taxable entity. As a result, deferred tax assets of EUR 79k (2021: EUR 0k) and deferred tax liabilities of EUR 0k (2021: EUR 81k) were recognised in the statement of financial position. Deferred tax assets and liabilities are classified as non-current. Deferred tax assets of EUR 0k (2021: EUR 0k) on tax losses are recognised for companies with a history of losses. No deferred tax liabilities were recognised as of 31 December 2022 (2021: EUR 0k) for taxes on non-distributed profits of subsidiaries. If deferred taxes were to be recognised for these temporary differences, only the source tax rates applicable in each case, where appropriate taking into account the German tax of 5 percent on the distributed dividends, would have to be applied for the computation.
ad pepper media International N.V. has its tax domicile in Germany and forms a fiscal unity with ad pepper media GmbH and Webgains GmbH. The reconciliation between expected income tax expense and actual income tax expense based on the German statutory tax rate (combined corporate income tax and trade tax on income) of 32.17 percent (2021: 32.17 percent) is as follows:
| 2022 | 2021 |
21
| kEUR | kEUR | |
| Expected income tax | 28 | -1,015 |
| Effect of lower tax rate | ||
| in other jurisdiction | 184 | 373 |
| Tax-free gains | 4 | 5 |
| Prior year income tax | -7 | 178 |
| Gains on databases sold | ||
| intercompany | -53 | 0 |
| Amortization on databases sold | ||
| intercompany | 18 | 0 |
| Utilisation of previously | ||
| unrecognised tax losses | 48 | 86 |
| Current year tax losses | ||
| not recognised | -524 | -337 |
| Non-taxable stock option | ||
| income/(expense) | -27 | 135 |
| Deferred taxes on losses prior | ||
| year | 76 | 0 |
| Non-tax-deductible | ||
| expenses and other | -53 | -17 |
| -306 | -592 |
Actual income tax expenses
EARNINGS PER SHARE [15]
Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
22
The income and share data used in the computations of basic and diluted earnings per share are as follows:
| 2022 | 2021 | |
| Net income/(loss) attributable to | ||
| shareholders of the parent | ||
| company in kEUR | -893 | 1,725 |
| Number of shares at the | ||
| beginning of the period | 20,491,197 | 20,920,181 |
| Number of shares at | ||
| the end of the period | 20,257,872 | 20,491,197 |
| Weighted average number | ||
| of shares outstanding (basic) | 20,278,249 | 20,735,183 |
| Basic earnings per share in EUR | -0.04 | 0.08 |
| Weighted average number | ||
| of shares outstanding (diluted) | 20,278,249 | 20,977,243 |
| Diluted earnings per share in EUR | -0.04 | 0.08 |
The weighted average number of shares outstanding in 2022 was calculated on a daily basis. In 2022, the options granted resulted in no dilution (2021: 242,060 shares). No new shares in ad pepper media International N.V. were admitted for trading on the Frankfurt Stock Exchange in 2022 (2021: 0 shares). In September 2021, the Company started a share repurchase programme, which was concluded on 21 February 2022. During this time 500,000 shares with a value of EUR 2,682k were acquired (2021: 461,384 shares).
No treasury shares (2021: 32,400 shares) were sold in connection with the exercise of employee stock options. Diluted earnings per share are computed based on the weighted average number of ordinary shares outstanding, including the dilutive effect of shares to be issued in the future under certain arrangements such as option plans.
NON-CURRENT ASSETS
In 2022 and 2021, no software IT solutions were developed in-house for the Company’s own use, and therefore none were capitalised. Expenses were related to maintenance. Additions mainly relate to an amount of EUR 68k in connection with the purchase of additional software for operational and administrative purposes. Software and databases are amortised over a useful life of three to five years. Trademarks are amortised over a useful life of 12 years.
23
MOVEMENT SCHEDULE OF INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT [17]
| Accumulated | ||||||||||||
| Historical cost | depreciation/amortisation/impairment | Book value | ||||||||||
| Financia | Balan | Addit | Dispo | Excha | Balance | Balanc | Deprecia | Dispo | Excha | Balance | Financi | Previou |
| l year | ce at | ions | sals | nge | at | e at | tion/ | sals | nge | at | al year | s |
| 2022 | 1/1/ | differe | 31/12/ | 1/1/ | amortisa | differe | 31/12/ | 31/12/ | year | |||
| 2022 | nces | 2022 | 2022 | tion | nces | 2022 | 2022 | 31/12/ | ||||
| 2021 | ||||||||||||
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Intangib | ||||||||||||
| le | ||||||||||||
| assets | ||||||||||||
| Softwa | ||||||||||||
| re | 3,030 | 108 | 0 | -57 | 3,081 | -2,404 | -347 | 0 | 42 | -2,709 | 372 | 626 |
| Brands | ||||||||||||
| and | ||||||||||||
| custo | ||||||||||||
| mer | ||||||||||||
| bases | 644 | 0 | 0 | 0 | 644 | -642 | 0 | 0 | 0 | -642 | 2 | 2 |
| Total | 3,674 | 108 | 0 | -57 | 3,725 | -3,046 | -347 | 0 | 42 | -3,351 | 374 | 628 |
| Propert | ||||||||||||
| y, plant | ||||||||||||
| and | ||||||||||||
| equipm | ||||||||||||
| ent | ||||||||||||
| Other | ||||||||||||
| equip | ||||||||||||
| ment, | ||||||||||||
| operat | ||||||||||||
| ional | ||||||||||||
| and | ||||||||||||
| office | ||||||||||||
| equip | ||||||||||||
| ment | 1,562 | 111 | -512 | -33 | 1,128 | -1,216 | -168 | 459 | 27 | -898 | 230 | 346 |
| Total | 5,236 | 219 | -512 | -90 | 4,853 | -4,262 | -515 | 459 | 69 | -4,249 | 604 | 974 |
24
| Accumulated | ||||||||||||
| Historical cost | depreciation/amortisation/impairment | Book value | ||||||||||
| Financia | Balan | Addit | Dispo | Excha | Balance | Balanc | Deprecia | Dispo | Excha | Balance | Financi | Previou |
| l year | ce at | ions | sals | nge | at | e at | tion/ | sals | nge | at | al year | s |
| 2021 | 1/1/ | differe | 31/12/ | 1/1/ | amortisa | differe | 31/12/ | 31/12/ | year | |||
| 2021 | nces | 2021 | 2021 | tion | nces | 2021 | 2021 | 31/12/ | ||||
| 2020 | ||||||||||||
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Intangib | ||||||||||||
| le | ||||||||||||
| assets | ||||||||||||
| Softwa | ||||||||||||
| re | 2,786 | 178 | 0 | 66 | 3,030 | -2,052 | -312 | 0 | -40 | -2,404 | 626 | 734 |
| Brands | ||||||||||||
| and | ||||||||||||
| custo | ||||||||||||
| mer | ||||||||||||
| bases | 644 | 0 | 0 | 0 | 644 | -641 | -1 | 0 | 0 | -642 | 2 | 3 |
| Total | 3,430 | 178 | 0 | 66 | 3,674 | -2,693 | -313 | 0 | -40 | -3,046 | 628 | 737 |
| Propert | ||||||||||||
| y, plant | ||||||||||||
| and | ||||||||||||
| equipm | ||||||||||||
| ent | ||||||||||||
| Other | ||||||||||||
| equip | ||||||||||||
| ment, | ||||||||||||
| operat | ||||||||||||
| ional | ||||||||||||
| and | ||||||||||||
| office | ||||||||||||
| equip | ||||||||||||
| ment | 1,441 | 121 | -39 | 39 | 1,562 | -1,029 | -176 | 0 | -11 | -1,216 | 346 | 412 |
| Total | 4,871 | 299 | -39 | 105 | 5,236 | -3,722 | -489 | 0 | -51 | -4,262 | 974 | 1,149 |
25
NON-CURRENT SECURITIES [18]
Overview about debt and marketable securities:
| 2022 | Debt | Marketable | Total |
| securities | securities | ||
| kEUR | kEUR | kEUR | |
| Book value 1/1 | 1,007 | 2,050 | 3,057 |
| Reclassification into | |||
| current securities | -1,007 | 0 | -1,007 |
| Purchase | 0 | 0 | 0 |
| Sale | 0 | -1,935 | -1,935 |
| Realised gains / losses (- | |||
| ) | 0 | -115 | -115 |
| Unrealised gains/losses | |||
| (-) | 0 | 0 | 0 |
| Book value 31/12 | 0 | 0 | 0 |
| 2021 | Debt Marketable | Total | |
| securities | securities | ||
| kEUR | kEUR | kEUR | |
| Book value 1/1 | 1,012 | 0 | 1,012 |
| Purchase | 0 | 1,999 | 1,999 |
| Unrealised gains/losses | |||
| (-) | -5 | 51 | 46 |
| Book value 31/12 | 1,007 | 2,050 | 3,057 |
26
| Securities classified at | ||
| “fair value through profit or loss” | ||
| 2022 | 2021 | |
| kEUR | kEUR | |
| Book value 1/1 | 2,050 | 0 |
| Purchase | 0 | 1,999 |
| Sale | -1,935 | 0 |
| Realized gains / | ||
| /losses (-) | ||
| recognised in profit | ||
| or loss | -115 | 51 |
| 0 | 2,050 | |
Book value 31/12
OTHER FINANCIAL ASSETS [19]
Other financial assets consist of the following and are measured at amortised cost:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Deposits | 184 | 391 |
| 184 | 391 |
Total
The maturities of the other financial assets as at the end of the period are as follows:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Due in between one and five | ||
| years | 184 | 391 |
| Due in more than five years | 0 | 0 |
| 184 | 391 |
Total
27
CURRENT ASSETS
CURRENT SECURITIES [20]
Overview about current securities:
| 2022 | Debt | Deposits | Total |
| securities | |||
| kEUR | kEUR | kEUR | |
| Book value 1/1 | 0 | 0 | 0 |
| Reclassification into | |||
| current securities | 1,007 | 85 | 1,092 |
| Purchase | 0 | 5,000 | 5,000 |
| Sale | 0 | 0 | 0 |
| Realised gains / losses (- | |||
| ) | 0 | 0 | 0 |
| Unrealised gains/losses | |||
| (-) | -16 | 0 | -16 |
| Book value 31/12 | 991 | 5,085 | 6,076 |
| Securities classified at “fair value | ||
| through other comprehensive | ||
| income” | ||
| 2022 | 2021 | |
| kEUR | kEUR | |
| Book value 1/1 | 0 | 0 |
| Reclassification into | ||
| current securities | 1,007 | |
| Purchase | 0 | 0 |
| Unrealised gains/losses (-) | ||
| recognised in other | ||
| comprehensive income | -16 | 0 |
28
TRADE RECEIVABLES [21]
Trade receivables are initially measured at fair value and subsequently carried at amortised cost. Trade receivables consist of the following:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Trade receivables, gross | 18,481 | 19,851 |
| Provision | -913 | -532 |
| Trade receivables, net | 17,568 | 19,319 |
Trade receivables are only due from third-party customers, are non-interest bearing and generally have a term of 0 to 90 days.
The provision is calculated on the basis of all information available to the Company and includes all expected credit losses on receivables as of 31 December 2022. For further information, please refer to Notes [3] and [41].
As at 31 December 2022, all campaigns were billed to the extent that revenue was recognised. Consequently, the amount of contract assets is nil.
OTHER RECEIVABLES [22]
Other receivables consist of the following:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Value-added tax receivables | 67 | 129 |
| Prepayments | 242 | 269 |
| 309 | 398 |
Total
INCOME TAX RECEIVABLES [23]
Income tax receivables include tax prepayments on capital gains of EUR 549k (2021: EUR 306k).
29
OTHER CURRENT FINANCIAL ASSETS [24]
Other current financial assets consist of the following:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Bonus payments from delivery | ||
| partners | 109 | 0 |
| Rental deposits* | 98 | 0 |
| Other | 51 | 26 |
| Total | 258 | 26 |
*reclassified from non-current into current financial assets
CASH AND CASH EQUIVALENTS [25]
This item includes cash at banks and cash in hand. For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash at banks and on hand of EUR 17,008k (2021: EUR 20,704k).
EQUITY
ISSUED CAPITAL [26]
No new shares in ad pepper media International N.V. were admitted for trading on the Frankfurt Stock Exchange in 2022 (2021: 0 shares). The issued capital of ad pepper media International N.V. comprises 21,500,000 (2021: 21,500,000) bearer shares each with a nominal value of EUR 0.05 and is fully paid in.
SHARE PREMIUM [27]
The capital reserve mainly comprises the premium paid upon share issues.
Reserves include treasury reserves with a value of EUR -6,138k (2021: EUR -4,906k).
Under the shareholder resolution of 18 May 2021, the ad pepper Group was authorised to repurchase treasury stock of up to 50 percent of the issued capital within the following 18 months. The Company made partial use of this authorisation on 2 August 2021 to repurchase up to a maximum of 500,000 of its own shares for a total maximum amount of up to EUR 3,000,000.
The share buy-back took place between 1 September 2021 and 21 February 2022. As a consequence, as of 31 December 2022, 500,000 shares with a value of EUR 2,681,816 were repurchased under this buy-back programme.
As of 31 December 2022, the Company held 1,242,128 treasury shares (2021: 1,008,803) at a nominal value of EUR 0.05 each, which equals 5.78 percent (2021: 4.69 percent) of the share capital. According to a shareholder resolution, those shares can only be used for a stock option plan (“SOP”) or the cancellation of shares. No shares were sold under the
30
employee stock option plan (2021: 32,400 shares), no cash settlements of equity settled stock option plans occurred (2021: 135,000 shares).
The number of shares issued and outstanding as at 31 December 2022 totalled 20,257,872 (2021: 20,491,197). Each share has a nominal value of EUR 0.05.
Reserves include also the expenses incurred for stock option plans amounting to EUR 2,906k (2021: EUR 2,827k) and the currency translation reserve amounting to EUR -1,153k (2021: EUR -1,162k).
The authorised share capital of the Company amounts to EUR 4,000,000, divided into 80,000,000 shares with a par value of EUR 0.05 each. The Board of Directors is authorised, upon approval by the Supervisory Board, to issue shares until 16 May 2027, or to grant rights to subscribe for shares until the issued share capital amounts to EUR 2,000,000.
Other comprehensive income
The total other comprehensive income recognised directly in equity and the corresponding income taxes are as follows:
| 2022 | Before Income | After | |
| income | taxes | income | |
| taxes | taxes | ||
| Currency translation | |||
| differences | 28 | 0 | 28 |
| Revaluation of listed | |||
| debt securities | -15 | 0 | -15 |
| Total other | |||
| comprehensive income | 13 | 0 | 13 |
| 2021 | Before Income | After | |
| income | taxes | income | |
| taxes | taxes | ||
| Currency translation | |||
| differences | 236 | 0 | 236 |
| Revaluation of listed | |||
| debt securities | -6 | 0 | -6 |
| Total other | |||
| comprehensive income | 230 | 0 | 230 |
31
NON-CONTROLLING INTERESTS [29]
Non-controlling interests comprise non-controlling interests in the following subsidiaries as at 31 December 2022 and 2021.
| Location | non-controlling interest | |
| in percent | ||
| ad pepper media Spain S.A. | Madrid / Spain | 35 |
| Webgains S.L. | Madrid / Spain | 35 |
| Ad agents GmbH | Herrenberg / Germany | 40 |
| Pontresina / | ||
| Ad agents AG | Switzerland | 40 |
These result from the acquisition of 60 percent of the shares in ad agents GmbH and from the sale of a 35 percent share in ad pepper media Spain S.A. in recent years. Webgains S.L. and ad agents AG has been incorporated in 2020. The net income/loss for the year is allocated proportionately to the non-controlling interests. In 2022, non-controlling interests in ad pepper media Spain S.A. received a dividend payment of EUR 379k (2021: EUR 323k), while non-controlling interests of ad agents GmbH received a dividend in 2022 of EUR 160k (2021: EUR 260k).
Summarised financial information in respect of ad pepper media’s subsidiaries that have material non-controlling interest as at 31 December 2022, reflecting 100 percent of the underlying subsidiary’s relevant figures, is set out on the following page:
32
| ad agents GmbH | ad agents AG | ad pepper media Spain | Webgains S.L | |||||
| S.A. | ||||||||
| 31/12/22 | 31/12/21 | 31/12/22 | 31/12/21 | 31/12/22 | 31/12/21 | 31/12/22 | 31/12/21 | |
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Non-current | ||||||||
| assets | 395 | 515 | 136 | 4 | 80 | 74 | 207 | 276 |
| Current | ||||||||
| assets | 6,861 | 4,557 | 2,135 | 1,115 | 1,098 | 1,465 | 1,816 | 2,139 |
| 7,255 | 5,072 | 2,271 | 1,119 | 1,178 | 1,539 | 2,023 | 2,415 | |
| Non-current | ||||||||
| liabilities | 788 | 120 | 0 | 0 | 2 | 2 | 130 | 197 |
| Current | ||||||||
| liabilities | 5,095 | 3,280 | 703 | 396 | 542 | 712 | 1,313 | 1,556 |
| 5,883 | 3,400 | 703 | 396 | 544 | 714 | 1,443 | 1,754 | |
| 1,372 | 1,672 | 1,567 | 722 | 635 | 825 | 579 | 661 | |
| Equity | ||||||||
| attributable | ||||||||
| to | ||||||||
| owners of | ||||||||
| the | ||||||||
| Company | 823 | 1,003 | 940 | 433 | 635 | 825 | 579 | 661 |
| Non- | ||||||||
| controlling | ||||||||
| interests after | ||||||||
| reclassification | ||||||||
| into current | ||||||||
| liabilities in | ||||||||
| conjunction | ||||||||
| with put | ||||||||
| option | 549 | 668 | 627 | 289 | 0* | 0* | 0* | 0* |
| *Non- | ||||||||
| controlling | 40 | 35 | ||||||
| interests in | 40 | 35 | ||||||
| percent | 40 | 40 | 35 | 35 | ||||
Total assets
Total
liabilities
Net assets
*after reclassification into current financial liabilities. For further information on the written put option please refer to Note [2] and Note [34].
33
| ad agents GmbH | ad agents AG | ad pepper media Spain | Webgains S.L | |||||
| S.A. | ||||||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Revenue | 7,046 | 7,197 | 1,673 | 970 | 1,378 | 1,675 | 1,175 1,265 | |
| Expenses | 6,945 | 6,667 | 897 | 336 | 1,110 | 1,211 | 632 | 633 |
| Net profit/(loss) for | ||||||||
| the year | 101 | 529 | 776 | 634 | 268 | 464 | 543 | 631 |
| Profit attributable | ||||||||
| to owners of the | ||||||||
| Company | 61 | 318 | 465 | 380 | 173 | 302 | 353 | 410 |
| Profit attributable | ||||||||
| to | ||||||||
| non-controlling | ||||||||
| interests | 40 | 211 | 310 | 254 | 93 | 162 | 190 | 221 |
| Other | ||||||||
| comprehensive | ||||||||
| income | ||||||||
| attributable to | ||||||||
| owners of the | ||||||||
| Company | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other | ||||||||
| comprehensive | ||||||||
| income | ||||||||
| attributable to | ||||||||
| non-controlling | ||||||||
| interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | ||||||||
| comprehensive | ||||||||
| income/loss for the | ||||||||
| year | 101 | 529 | 776 | 634 | 268 | 464 | 543 | 631 |
| Net cash | ||||||||
| inflow/(outflow) | ||||||||
| from operating | ||||||||
| activities | 1,731 | 884 | 1,023 | 738 | 328 | 585 | 508 | 1,000 |
| Net cash | ||||||||
| inflow/(outflow) | ||||||||
| from investing | ||||||||
| activities | -50 | -41 | -2 | 0 | -40 | -3 | 0 | 0 |
34
| Net cash | ||||||||
| inflow/(outflow) | ||||||||
| from financing | ||||||||
| activities | -561 | -814 | 0 | 0 | -467 | -935 | -692 | -108 |
| Total net cash | ||||||||
| inflow/(outflow) | 1,120 | 29 | 1,021 | 738 | -179 | -353 | -184 | 892 |
NON-CURRENT LIABILITIES
OTHER LONG-TERM LIABILITIES [30]
Other long-term liabilities consist of the following:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Employee benefits liability | 0 | 157 |
| Lease liability | 840 | 708 |
| 840 | 865 |
Total
The employee benefits liability relates to the obligation resulting from the cash-settled stock option plans. The decrease was a non-cash change due to a cancellation of the stock option plan. For further details on cash-settled stock option plans, please refer to Note [39]. During the year, lease liabilities including interests were paid for an amount of EUR 585k (2021: EUR 792k). Please refer to Note [42] for cash flow and non-cash-flow changes. Reductions in other long-term liabilities resulted in cash-flow changes.
The maturities of the other long-term liabilities as of the end of the period are as follows:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Due in between one and five | ||
| years | 840 | 865 |
| Due in more than five years | 0 | 0 |
| 840 | 865 |
Total
CURRENT LIABILITIES
TRADE PAYABLES [31]
Trade payables include accrued liabilities and are recognised at amortised cost. Accrued liabilities for affiliate credits not yet disbursed in the Webgains segment amount to EUR 15,207k (2021: EUR 16,015k).
35
CONTRACT LIABILITIES [32]
Contract liabilities consist of short-term advances for search engine advertising services from clients in the ad agents segment.
| 2022 | 2021 | |
| kEUR | kEUR | |
| At 1 January | 446 | 273 |
| Deferred during the year | 519 | 613 |
| Recognised as revenue | ||
| during the year | -509 | -440 |
| Exchange differences | 9 | 0 |
| 465 | 446 |
At 31 December
OTHER LIABILITIES [33]
Other liabilities consist of the following:
| 31/12/22 | 31/12/21 | |
| kEUR | kEUR | |
| Value-added tax liabilities | 1,416 | 1,725 |
| Liabilities for payroll tax and | ||
| social security contributions | 377 | 392 |
| Employee holiday accrual | 178 | 169 |
| Other | 260 | 0 |
| 2,231 | 2,286 |
Total
OTHER FINANCIAL LIABILITIES [34]
Other financial liabilities consist of the following:
| 31/12/22 | 31/12/21 | |
| Restated* |
36
| kEUR | kEUR | |
| Liability for written put option | 2,495 | 3,332 |
| Bonuses and commissions | 317 | 618 |
| Accrued liabilities for | ||
| outstanding invoices | 213 | 474 |
| Current lease liabilities | 523 | 505 |
| Other | 3 | 12 |
| 3,551 | 4,941 |
Total
* For further details on the restatement please refer to Note [2} Accounting Principles
RELATED PARTY DISCLOSURES [35]
Pursuant to the IAS 24 definition, the Board of Directors and members of the Supervisory Board have been identified as related parties. The compensation paid to all members of these boards is based exclusively on their functions as individuals in key positions. Further information about the compensation paid to these individuals can be found in Note [40]. All entities over which the Supervisory Board Chairman Michael Oschmann has significant influence are considered as related parties to the Company.
| Sales to | Amounts owed | |||
| related parties | by related | |||
| parties* | ||||
| Entity with significant | 2022 | 2021 | 2022 | 2021 |
| influence over the Group: | ||||
| Sellwerk GmbH & Co. KG | 144 | 0 | 79 | 0 |
*The amounts are classified as trade receivables (Note [21]).
Terms and conditions of transactions with related parties
The sales to related parties are made on terms equivalent to those that prevail in at arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free, and settlement occurs in cash. As at 31 December 2022, the Group recognised no provision for expected credit losses in respect of amounts owed by related parties.
LITIGATION AND CLAIMS [36]
Neither the ultimate parent nor any of its subsidiaries are involved in any material litigation with third parties.
CONTINGENT LIABILITIES AND OTHER FINANCIAL OBLIGATIONS [37]
ad pepper media International N.V. has provided guarantees for all outstanding liabilities of its subsidiary, ad pepper media GmbH (register number: HRB 16494) as at 31 December 2022, until these are satisfied in full. As a result, the individual local statutory accounts of ad pepper media GmbH are exempt from audit under the requirements of Section. 264 para. 3 of the
37
German Commercial Code (HGB). As at 31 December 2022, ad pepper media GmbH’s outstanding liabilities amounted to EUR 613k (2021: EUR 1,860k).
ad pepper media International N.V. has provided guarantees for all outstanding liabilities of its subsidiary, ad agents GmbH (register number: HRB 16494) as at 31 December 2022, until these are satisfied in full. As a result, the individual local statutory accounts of ad agents GmbH are exempt from audit under the requirements of Section 264 para. 3 of the German Commercial Code (HGB). As at 31 December 2022, ad agents GmbH’s outstanding liabilities amounted to EUR 6,432k (2021: EUR 4,069k).
ad pepper media International N.V. has provided guarantees for all outstanding liabilities of its subsidiary Webgains GmbH (registered number: HRB 37198) that existed as at 31 December 2022, until these are satisfied in full. As a result, the individual local statutory accounts of Webgains GmbH are exempt from audit under the requirements of Section 264 Para. 3 German Commercial Code (HGB). As at 31 December 2022, the outstanding liabilities of Webgains GmbH amount to EUR 4,261k (2021: EUR 4,407k).
Other financial obligations mainly result from short-term office leases and office equipment.
The future minimum payment obligations resulting from the contracts in place as at 31 December 2022 are as follows:
| < 1 year | > 1 year | > 5 years | Total | |
| to 5 | ||||
| years | ||||
| kEUR | kEUR | kEUR | kEUR | |
| Other financial | ||||
| obligations | 411 | 6 | 0 | 417 |
ADDITIONAL CASH FLOW INFORMATION [38]
The following information is provided to supplement the statement of cash flows: Other non-cash expenses and income comprises expenses for allocation to and income from the release of valuation allowances on trade receivables and expenses from writing down receivables. This item also includes write-downs of affiliate credits not yet disbursed and reversals of time-barred claims.
Options granted under the Ongoing SOP are subject to the following provisions:
An employee equity-participation programme involving 30,000 options was launched for Supervisory Board members (“Executive SOP 2017 SB”). The plan retains the Company the right to fulfil its commitment to transfer shares by paying to the beneficiary a cash amount equal to the difference between the issue price and the average closing price on Xetra during the last ten trading days before exercising the option. The valuation was carried out by simulation (Monte Carlo method). The volatility was calculated from the development of the Company's share price between 1 February 2011 and 28 February 2017. The shares may be exercised over a period of four years, but at the earliest one year after being granted. The fair value of the individual tranches at the time of granting is between EUR 0.390 and EUR 0.654 per issued option. The maximum cost of the programme over the entire period is EUR 16k.
An employee equity-participation programme involving 250,000 options was launched for the members of the Board of Directors in 2020 (“SOP 2020 BoD”). The plan retains the Company the right to fulfil its commitment to transfer shares by paying to the beneficiary a cash amount equal to the difference between the issue price and the average closing price on Xetra during the last ten trading days before exercising the option. The valuation was carried out by simulation (Monte Carlo method). The volatility was calculated from the development of the Company's share price between 1 October 2014 and 30 September 2020. The options may be exercised over a period of four years at 25 percent each year, but at the earliest one year after being granted. The fair value of the individual tranches at the time of granting is between EUR 0.735 and EUR 1,223 per issued option. The maximum cost of the programme over the entire period is EUR 250k.
38
In October 2021 after the first vested tranche was settled in cash, this plan was reclassified from an equity-settled into a cash- settled option plan. At modification date the Company recognised a liability for employee benefits based on the fair value of the cash-settled award, posting the corresponding debit of EUR 155k as equity. The liability for the cash-settled SOP is measured at the end of each reporting period until settled, at the fair value. The original terms and conditions of Executive SOP 2020 BoD have not changed. At 1 December 2022 the remaining 187,500 options have been waived by the holder for no consideration. The carrying amount of the liability relating to the cash-settled SOP 2020 BoD has been released and amounts at 31 December 2022 to EUR 0k (2021: EUR -155k).
An employee equity-participation programme involving 440,000 options was launched for executive employees in 2020 (“SOP 2020 BoD”). The plan retains the Company the right to fulfil its commitment to transfer shares by paying to the beneficiary a cash amount equal to the difference between the issue price and the average closing price on Xetra during the last ten trading days before exercising the option. The valuation was carried out by simulation (Monte Carlo method). The volatility was calculated from the development of the Company's share price between 1 October 2014 and 30 September 2020. The options may be exercised over a period of four years at 25 percent each year, but at the earliest one year after being granted. The fair value of the individual tranches at the time of granting is between EUR 0.735 and EUR 1,223 per issued option. The maximum cost of the programme over the entire period is EUR 441k.
| SOP | SOP | SOP | |
| 2017 | 2020 | 2020 | |
| (BoD, | (BoD) | (MD) | |
| MD, SB) | |||
| Share price when | |||
| granted, in EUR | 1.94 | 3.56 | 3.56 |
| Date of grant | 11/4/17 | 2/10/20 | 2/10/20 |
| Exercise price, in EUR | 1.9751 | 3.50 | 3.50 |
| Risk-free interest | |||
| rate, | |||
| in percent | -0.36 | -0.72 | -0.72 |
| Estimated term, | |||
| in years | 7 | 7 | 7 |
| Future dividend, | |||
| in EUR | 0.05 | 0.05 | 0.05 |
| Estimated volatility, | |||
| in percent | 51 | 48 | 48 |
The average share price during 2022 was EUR 2.90 (2021: EUR 5.74).
The personnel expense recognised for employee services received during the year is shown in the following table:
| 2022 | 2021 | |
| Expense arising from equity-settled share-based payment transactions | 174 | 165 |
| Expense/(income) arising from the measurement of the liability for cash-settled share- | ||
| based payment transactions | -250 | 206 |
39
| Total expense/(income) arising from share-based payment transactions | -76 | 371 |
The following table shows the changes in the options during the financial year 2022:
| 2022 | 2021 | Weighted | Weighted | |
| average | average | |||
| exercise price | exercise price | |||
| 2022 | 2021 | |||
| Options outstanding at the beginning of the financial year | 617,500 | 922,400 | 3.49 | 3.14 |
| Options granted during the financial year | 0 | 0 | 0 | 0 |
| Options forfeited during the financial year | 0 | 0 | 0 | 0 |
| Options exercised during the financial year | 0 | -304,900 | 0 | 2.42 |
| Options cancelled during the financial year | -187,500 | 0 | 3.50 | 0 |
| Options outstanding at the end of the financial year | 430,000 | 617,500 | 3.48 | 3.49 |
| Exercisable options as of 31 December | 0 | 100,000 | 0 | 3.42 |
| Range of exercise prices of outstanding options as of 31 | ||||
| December | 1.9751-3.50 | 1.9751-3.50 | 0 | 0 |
The weighted exercise price of stock options exercised during 2022 amounts to EUR 0 (2021: EUR 2.42). All outstanding stock option programmes have an expiration date. For the remaining stock option programme, the average remaining contractual life amounts to 4 years.
TOTAL REMUNERATION OF KEY MANAGEMENT [40]
| 2022 | 2021 | |
| kEUR | kEUR | |
| Short-term employee benefits | 316 | 452 |
| Post-employment benefits | ||
| (pensions and health insurance) | 17 | 3 |
| Stock options | 0 | 183 |
| 333 | 638 |
Total remuneration
of key management
The amounts shown in the table above are recognised as expenses during the reporting period. Income resulting from the share-based payments is due to the decreased fair value of the cash settled stock option plan and the corresponding
40
adjustment of the liability through profit or loss. Options to purchase shares of the Company held by the members of the Board of Directors have the following expiration dates and exercise prices:
41
| Expiration | Exercise | 31/12/22 | 31/12/21 | |
| price | ||||
| EUR | Number | Number | ||
| SOP | ||||
| 2020 BoD | 0 | 187,500 |
FINANCIAL INSTRUMENTS [41]
The classes of financial instruments within the meaning of IFRS 7.6 are defined in accordance with the categories of financial instruments in IFRS 9. IFRS 9 contains three categories for classifying financial assets: “measured at amortised cost”, “measured at fair value through profit or loss” and “measured at fair value through other comprehensive income.”
1. Capital risk management
The Group manages its capital with the aim of optimising returns on investments in business entities by optimising the debt equity ratio and maximising its shareholder value by maintaining a high credit rating and a good equity ratio. At the same time, the Group ensures that entities can operate under the going concern assumption. The capital structure of the Group consists of liabilities other than borrowings, cash and cash equivalents, securities measured at fair value through other comprehensive income and marketable instruments at fair value through profit or loss, and the equity attributable to the parent company’s shareholders, consisting of issued shares in circulation, the capital reserve, retained earnings brought forward and other equity items.
Net indebtedness
The Group manages its capital structure and makes adjustments to it that take into account changes in the general economic environment. In order to maintain or adjust the capital structure, the Group can make dividend payments or pay back capital to the shareholders, issue new shares or buy back its own shares. No changes in the objectives, guidelines and procedures were made as at 31 December 2022 compared to 31 December 2021. Negative net indebtedness means that the Group is debt-free. Net indebtedness at the end of the year was as follows:
| 31/12/22 | 31/12/21 | |
| Restated* | ||
| kEUR | kEUR | |
| Current and non-current | ||
| financial liabilities | 25,227 | 25,896 |
| Cash and cash equivalents | -17,008 | -20,704 |
| Listed debt and marketable | ||
| securities | -6,076 | -3,057 |
| 2,144 | 2,135 | |
| Equity per balance sheet including | ||
| non-controlling interest | 15,666 | 16,756 |
| 14 | 13 |
Net liabilities
Net indebtedness, in percent
* For further details on the restatement please refer to Note [2] Accounting Principles
42
Carrying amount per category of financial instruments:
| Financial assets | 31/12/22 | 31/12/21 |
| kEUR | kEUR | |
| Debt instruments at amortised cost | 40,102 | 40,440 |
| Debt instruments at fair value | ||
| through other comprehensive | ||
| income and marketable | ||
| instruments at fair value through | ||
| profit or loss | 991 | 3,057 |
| Total | 41,093 | 43,497 |
Debt instruments at amortised cost include trade receivables (Note [20]), other non-current financial assets (Note [19]), deposits presented in current financial assets (Note [24]) and cash and cash equivalents (Note [25]). Debt instruments at fair value through other comprehensive income include current investments in listed debt instruments (Note [20]). Fair values of these instruments were determined by reference to published price quotations in an active market.
| Financial liabilities | 31/12/22 | 31/12/21 |
| Restated* | ||
| kEUR | kEUR | |
| Other financial liabilities | ||
| measured at amortised cost | 25,227 | 25,896 |
| Total | 25,227 | 25,896 |
* For further details on the restatement please refer to Note [2] Accounting Principles
Other financial liabilities measured at amortised cost include lease liabilities (Note [42], trade payables (Note [31]) and other financial liabilities (Note [34]).
43
Due to the short-term maturities of cash and cash equivalents, trade receivables and payables, current financial assets and liabilities, their respective fair values approximate their carrying amounts. The fair values of non-current financial liabilities consisting exclusively of lease liabilities are based on carrying amounts, which are a reasonable approximation of fair value.
Hierarchical classification of fair values of financial instruments pursuant to IFRS 7 as at 31 December 2022:
| Fair Value | Level 1 | Level 2 | Level 3 | |
| 31/12/22 | ||||
| Financial assets at | ||||
| fair value through | ||||
| other | ||||
| comprehensive | ||||
| income | 991 | 991 | 0 | 0 |
Net gains and losses per category of financial instruments (IFRS 7.20 (a)):
| Financial assets | 31/12/22 | 31/12/21 |
| kEUR | kEUR | |
| At fair value through profit and loss | ||
| Unrealised gains | 0 | 51 |
| Realized losses | -115 | 0 |
| Total | -115 | 51 |
| At fair value through other | ||
| comprehensive income | ||
| Unrealised gains/losses (-) | -16 | -5 |
| Total | -16 | -5 |
Unrealised losses result from the fair value changes of debt securities classified at fair value through other comprehensive income and realized losses result from the sale of debt securities classified at fair value through profit and loss.
Interest income and expenses per category of financial instruments (IFRS 7.20 (b)):
| Financial assets | 31/12/22 | 31/12/21 |
| kEUR | kEUR | |
| Measured at amortised cost | 1 | -76 |
| Measured at fair value through | ||
| other comprehensive income | 3 | 2 |
44
| Measured at fair value | ||
| through profit or loss | 18 | 65 |
4. Objectives of financial risk management
The main financial liabilities used by the Group comprise trade payables and lease liabilities. The primary purpose of these financial liabilities is to finance the Group’s business activities. The Group has various financial assets, such as trade receivables, cash and securities.
Group management monitors and manages the financial risks of the Group. These risks include the market risk (including exchange rate risks, interest rate-related fair value risks and price risks), the credit risk, the liquidity risk and interest rate- related cash flow risks. In addition, the management decides on the utilisation of derivative and non-derivative financial transactions and the investment of surplus liquidity in securities. The Group does not enter into any contracts with or deal in financial instruments, including derivative financial instruments, for speculative purposes.
5. Market risk
The Group’s activities expose it primarily to financial risks from changes in exchange rates (see 6. below) and interest rates (see 7. below). Market risk positions are determined by means of sensitivity analysis. As no further investments in listed debt instruments are held by the Group, the market risk exposure in conjunction with interest rate risk of the Group decreased significantly. The nature and means of risk management and assessment, however, remain unchanged.
6. Foreign currency risk management
Certain transactions in the Group are denominated in foreign currencies. This can result in risk from fluctuations in exchange rate. The carrying amounts of the monetary assets and liabilities of the Group denominated in foreign currencies are as follows:
| Financial assets | 31/12/22 | 31/12/21 |
| kEUR | kEUR | |
| USD | 326 | 316 |
| GBP | 10,599 | 14,032 |
| CHF | 2,135 | 0 |
| Total | 13,060 | 14,348 |
| Financial liabilities | 31/12/22 | 31/12/21 |
| kEUR | kEUR | |
| USD | 0 | 13 |
| GBP | 1,835 | 11,358 |
| CHF | 882 | 0 |
| Total | 2,717 | 11,371 |
45
Foreign currency sensitivity analysis
The Group is primarily exposed to exchange rate risk from the currencies USD and GBP. The following table shows the sensitivity from the point of view of the Group, assuming a 10 percent rise or fall in the EUR against the respective foreign currency. The 10 percent shift represents management’s assessment with regards to a reasonable possible change in the exchange rate. The sensitivity analysis only includes outstanding monetary positions denominated in foreign currency and adjusts their translation at the end of the period to reflect a 10 percent change in the exchange rates.
| Effect of USD | Effect of USD | Effect of GBP | Effect of GBP | Total | Total | |
| +10% | +10% | +10% | +10% | |||
| 31/12/22 | 31/12/21 | 31/12/22 | 31/12/21 | 31/12/22 | 31/12/21 | |
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Net income for the year | -98 | -64 | 0 | -90 | -98 | -154 |
| Effect of USD - | Effect of USD - | Effect of GBP | Effect of GBP | Total | Total | |
| 10% | 10% | -10% | -10% | |||
| 31/12/22 | 31/12/21 | 31/12/22 | 31/12/21 | 31/12/22 | 31/12/21 | |
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Net income for the year | 119 | 78 | 0 | 109 | 119 | 187 |
7. Interest rate risk management
Interest rate sensitivity analysis
The sensitivity analyses described below were determined on the basis of the interest rate risk exposure for non-derivative financial instruments on the balance sheet date.
In 2022, an increase or decrease in the interest rate of 50 basis points, which was assumed by the management for the interest rate risk, would have increased/decreased the other comprehensive income of the Group by EUR 2k (2021: EUR 7k).
8. Credit risk management
Credit risk is the risk of loss for the Group should contractual parties not meet their contractual obligations. Business relationships are only entered into with creditworthy counterparties, and, where appropriate, the Group obtains collateral to reduce the risk of loss due to the non-fulfilment of obligations. The Group only enters into business relationships with entities that are rated “investment grade” or above. If such information is not available, the Group makes use of other available financial information and its own trading records in order to evaluate its major customers. The risk exposure of the Group and the credit ratings are continuously monitored. The Group has trade receivables with a large number of customers spread over various sectors and geographical territories. Continuous credit assessments are carried out with regard to the financial condition of the receivables.
An impairment analysis is performed at each reporting date to measure expected credit losses. The provision rates are based on days past due for every single customer, reflecting reasonable and supportable information that is available at the reporting date about past events and current conditions and customer-specific, forward-looking information from the client-facing account manager. If a customer defaults, all outstanding amounts relating to that counterparty are subject to an allowance calculation. The default is primarily determined on the basis of individual assessment – prompted by noticeable changes in payment behaviour, or application for bankruptcy. Individual assessment is generally supported by the information provided by the client-facing account manager.
46
Generally, trade receivables are considered at 100 percent in the credit loss allowance if they are past due for more than one year. Trade receivables are written off and derecognised if there is good reason to assume that the outstanding amount is unrecoverable in part or in whole, for example after completion of insolvency proceedings.
The Group is not exposed to any significant credit risks relating to a single contractual party or group of contractual parties with similar characteristics. The reported carrying amount reflects the maximum credit risk of the Group. The Group defines contractual parties as those with similar characteristics if they are related parties. The concentration of credit risk from customer relationships did not exceed 6.3 percent (2021: 3.3 percent) of the financial gross asset values at any time during the reporting period. The carrying amount of the financial assets included in the Consolidated Financial Statements less any impairment losses represents the Group’s maximum credit risk. Any collateral is ignored. There are no credit derivatives for hedging outstanding amounts from customers, nor have there been.
The expected loss rates (stage 2 of the impairment model) amount to 0 percent for the segments ad agents and ad pepper media. The expected loss rate for the Webgains segment is 0.5 percent. The Company abstains from disclosing an ECL table, as the application of the expected loss rates results in immaterial amounts for the Group. The Company tests for impairment (stage 3 of the impairment model) if there are substantial indications that receivables may be uncollectable, e.g. deterioration of payment behaviour or initiation of insolvency proceedings. An account of individual value adjustments is only maintained for trade receivables.
The reconciliation of changes in the loss allowance is as follows:
| Loss allowance | 2022 | 2021 |
| kEUR | kEUR | |
| Balance at beginning of year | 532 | 501 |
| Allowances in the period | ||
| Additions | 764 | 428 |
| Reversals | -349 | -181 |
| Consumption | -34 | -216 |
| Balance at end of period | 913 | 532 |
The analysis shows that allowances were set up on a gross receivables amount of EUR 1,127k (2021: EUR 655k). For all other financial assets, no material credit losses are anticipated despite trade receivables that are subject to the impairment model acc. to IFRS 9.5.5.
The Group monitors the risk of liquidity shortage on a continuous basis with the help of a liquidity planning tool. This tool takes into account the maturities of financial investments and financial assets (e.g., receivables, other financial assets) and expected cash flow from operating activities. The Group’s aim is to maintain a balance between continuous coverage of funding needs and the necessity of flexibility.
The maturities of the financial liabilities of the Group as at 31 December 2022 are presented below. The information is based on contractual, undiscounted payments.
| Financial liabilities 31/12/22 | < 1 mth. | > 1 mth., | 3 mth. to 1 | 1 to 5 years | > 5 years | Total |
| < 3 mth. | year | |||||
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR |
47
| Lease liabilities | 45 | 83 | 395 | 720 | 0 | 1,243 |
| Trade payables | 20,570 | 267 | 0 | 0 | 0 | 20,836 |
| Other financial liabilities | ||||||
| measured at amortised cost | 299 | 157 | 2,571 | 0 | 0 | 3,028 |
| 20,914 | 507 | 2,966 | 720 | 0 | 25,107 |
Total
The lease liabilities disclosed in the above table are the gross amounts.
| Financial liabilities 31/12/21 | < 1 mth. | > 1 mth., | 3 mth. to 1 | 1 to 5 years | > 5 years | Total |
| Restated* | < 3 mth. | year | ||||
| kEUR | kEUR | kEUR | kEUR | kEUR | kEUR | |
| Lease payables | 42 | 85 | 369 | 741 | 0 | 1,237 |
| Trade payables | 19,737 | 510 | 0 | 0 | 0 | 20,247 |
| Other financial liabilities | ||||||
| measured at amortised cost | 823 | 565 | 3,332 | 221 | 0 | 4,941 |
| Total | 20,602 | 1,160 | 3,701 | 962 | 0 | 26,425 |
* For further details on the restatement please refer to Note [2] Accounting Principles
The Group has lease contracts for office space (lease terms between 1 and 5 years) and cars (3 years). The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. There are several lease contracts that include extension and termination options, which are further discussed below.
The Group also has certain leases with terms of 12 months or less. The Group applies the “short-term lease” recognition exemptions.
48
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
| Right-of-use assets | Lease | |||
| liabilitie | ||||
| s | ||||
| Office | Cars | Total | ||
| space | ||||
| kEUR | kEUR | kEUR | kEUR | |
| As at | ||||
| 1 January 2022 | 2,937 | 238 | 3,175 | 1,213 |
| Additions | 882 | 101 | 983 | 983 |
| Disposal | -1,601 | -86 | -1,687 | -280 |
| Exchange rate | ||||
| difference | 0 | 0 | 0 | -3 |
| Subtotal | 2,218 | 253 | 2,471 | 1,913 |
| Depreciation | ||||
| expense as at | ||||
| 1 January 2022 | -1,840 | -158 | -1,998 | |
| Depreciation | ||||
| expense | -506 | -65 | -571 | |
| Disposal | 1,331 | 84 | 1,415 | |
| Exchange rate | ||||
| difference | 0 | 0 | 0 | |
| Depreciation | ||||
| expense as at | ||||
| 31 December | ||||
| 2022 | -1,015 | -138 | -1,153 | |
| Payments | -585 | |||
| Interest | ||||
| expense | 33 | |||
| As at | ||||
| 31 December | ||||
| 2022 | 1,204 | 114 | 1,318 | 1,361 |
49
The amounts recognised in profit or loss, are as follows:
| 2022 | 2021 | |
| kEUR | kEUR | |
| Depreciation expenses | ||
| of right-of-use assets | 570 | 698 |
| Interest expense on lease liabilities | 33 | 35 |
| Expense relating to short-term | ||
| leases (included in administrative | ||
| expense) | 263 | 63 |
| 866 | 796 |
Total amount recognised
in profit or loss
Rental agreements for the office leases in Nuremberg, Herrenberg and Madrid contain extension options on automatic annual renewal terms. Due to uncertainties these options have not been executed so far. Therefore, these options are not considered in the valuation process. There are no purchase options or restrictions imposed by lease arrangements.
EVENTS AFTER THE BALANCE SHEET DATE [43]
Up until the day of authorisation for issuance, there were no events that would have exerted substantial influence on the financial position or results of operations as at 31 December 2022.
APPLICATION OF SEC 264 PARA. 3 OF GERMAN COMMERCIAL CODE (HBG) [44]
The following German subsidiaries in the legal form of capital corporation as defined in Section. 264a made use of the exemption clause included in Section 264 para. 3 of the German Commercial Code:
•
ad pepper media GmbH, Nuremberg
•
Webgains GmbH, Nuremberg
•
ad agents GmbH, Herrenberg
Nuremberg, 7 April 2023
The Board of Directors of ad pepper media International N.V. comprised the following members in the financial year 2022:
Dr Jens Körner,
CEO
Nuremberg, Germany
The Supervisory Board of ad pepper media International N.V. in the financial year 2022 consisted of:
Michael Oschmann (Chairman)
Thomas Bauer
Dr Stephan Roppel
Dagmar Bottenbruch
50
«
STATUTORY FINANCIAL
07
STATUTORY FINANCIAL
STATEMENTS AND NOTES OF THE HOLDING
COMPANY AD PEPPER MEDIA INTERNATIONAL N.V.
(THE “HOLDING COMPANY”)
BALANCE SHEET OF THE HOLDING COMPANY
(AFTER PROFIT APPRIOPRIATION) – ASSETS
31/12/22
31/12/21
(Restated)
Note
kEUR
kEUR
Non-current assets
Intangible fixed assets
67
136
[3]
Tangible fixed assets
289
373
[4]
Financial fixed assets
6,588
9,525
[5]
Total non-current assets
6,944
10,035
Current assets
Marketable securities
991
0
[6]
Receivables due from subsidiaries
1,107
2,482
[7]
Prepaid expenses and other current assets
305
253
[8]
Cash and cash equivalents
8,691
7,951
[9]
Total current assets
11,094
10,686
Total assets
18,038
20,721
129
07
STATUTORY FINANCIAL
BALANCE SHEET OF THE HOLDING COMPANY
(AFTER PROFIT APPRIOPRIATION) – EQUITY AND LIABILITIES
31/12/22
31/12/21
(Restated)
Note
kEUR
kEUR
Equity attributable to shareholders of the parent company
Issued capital
1,075
1,075
[10]
Share premium
63,782
63,782
[10]
Other reserves
-50,368
-49,059
[10]
Total equity
14,490
15,798
Non-current liabilities
120
360
[11]
Provisions
315
269
[12]
Current liabilities
3,114
4,294
[13]
Total liabilities
3,549
4,923
Total equity and liabilities
18,038
20,721
130
07
STATUTORY FINANCIAL
PROFIT OR LOSS ACCOUNT OF THE HOLDING COMPANY
1/1 - 31/12/22
1/1 - 31/12/21
Note
kEUR
kEUR
Revenue*
243
319
Other operating income
1,013
1,846
[15]
Selling and marketing expenses
-787
-824
General and administrative expenses
-1,682
-1,740
Other operating expenses
-20
-37
Earnings before interest and tax (EBIT)
-1,233
-436
Interest income
60
73
Interest expenses
-152
-65
Loss before taxes
-1,325
-427
Share in result of subsidiaries and participations
432
2,153
Net result for the year
-893
1,725
*Revenue relates solely to license fee charged to subsidiaries.
131
07
STATUTORY FINANCIAL
NOTES TO THE STATUTORY
Current financial liabilities have been accounted for a written put
option over the non-controlling interest in ad pepper media Spain
FINANCIAL STATEMENTS OF
S.A. and reflect in analogy to the consolidated financial statements an
THE HOLDING COMPANY
increase of the net asset value of the subsidiary to 100 %.
Unrealised gains on transactions between the Holding Company and its
investments in consolidated subsidiaries are eliminated in full, based on
[1] Basis of preparation and
the consolidation principles. The Holding Company Financial Statements
signifcant accounting policies
are presented in EUR, which is the Holding Company’s functional
currency. The amounts are in thousands of EUR (rounded to the nearest
The Company Financial Statements for ad pepper media International
thousand), unless otherwise stated. There have been no changes to
N.V. (Commercial Register No. 27182121) have been prepared in
the accounting policies of the Holding Company. Due to rounding up or
accordance with the statutory provisions of Part 9, Book 2 of the Dutch
down, individual figures may not add up exactly to the totals stated.
Civil Code. In accordance with subsection 8 of section 362, Book 2 of
the Dutch Civil Code, the same accounting principles may be applied
in the Company’s financial statement and the consolidated financial
[2] Changes in Accounting policies
statements. The Holding Company’s financial data is included in
the Consolidated Financial Statements. The notes to the Company’s
Restatement of the Balance Sheet of the Holding Company and
balance sheet and income statement are limited to items that differ
Shareholder’s Equity in Note [10] for the year ended 31 December
from the corresponding items in the Consolidated Financial Statements
2021 and as per 1 January 2021 according to IAS 8
and that are of material significance.
The Balance Sheet of the Holding Company and the Shareholder’s Equity
The Holding Company applies the acquisition method to account for
in Note [10] for the year ended 31 December 2021 and as per 1 January
acquiring subsidiaries, consistent with the approach identified in the
2021 have been restated from the previously reported. As stated in Note
Consolidated Financial Statements. The consideration transferred for
[1], Company’s balance sheet includes a current liability for a written put
the acquisition of a subsidiary is the fair value of assets transferred
option, which was omitted from the 2021 and previous years’ financial
to the Holding Company, liabilities incurred to the former owners of
statements. The written put/call option is part of the sale contract of
the acquired company, and the equity interests issued by the Holding
the 35 percent non-controlling interest in ad pepper media Spain S.A.
Company. The consideration transferred includes the fair value of any
closed in 2014, which did not result in recording of financial liability for
asset or liability resulting from a contingent consideration arrangement.
the written option since 2017, when the option was exercisable for the
Identifiable assets acquired and liabilities and contingent liabilities
first time.
assumed in an acquisition are measured initially at their fair values at
the acquisition date, and are subsumed in the net asset value of the
Therefore, the restatement has the effect of:
investment in consolidated subsidiaries. Acquisition-related costs are
expensed as incurred.
a) Increase in the net asset value considering ad pepper media Spain
S.A. and Webgains S.L. to 100 percent with a corresponding increase
Investments in consolidated subsidiaries are measured at net asset
in current financial liability
value. Net asset value is based on the measurement of assets, provisions
b) Decrease in other reserves and a corresponding increase in current
and liabilities, and determination of profit based on the principles applied
financial liability by the remaining amount.
in the Consolidated Financial Statements. If the valuation of a subsidiary
based on the net asset value is negative, it will be stated at nil. If and
The brought forward current liabilities as at 1 January 2021 have been
insofar as the Holding Company has the firm intention of enabling the
increased by EUR 2,811,580 with a corresponding increase in the
participation to settle its debts, a provision is recognised for this. When
brought forward net asset value of the subsidiary by EUR 459,670 and a
the Holding Company ceases to have control over a subsidiary, any
decrease in other reserves by EUR 2,351,910.
retained interest is remeasured to fair value, with the change in carrying
amount to be accounted for in the income statement. When parts of
The restated balance sheet for the year ended 31 December 2021
investments in consolidated subsidiaries are bought or sold, and such
includes an increase in current financial liability of EUR 520,271
transaction does not result in the loss of control, the difference between
compared to the adjusted balance sheet per 1 January 2021, with a
the consideration paid or received and the carrying amount of the net
corresponding increase of the net asset value of the subsidiary by EUR
assets acquired or sold is directly recognised in equity.
60,295 and a reduction of other reserves by EUR 459,976.
132
07
STATUTORY FINANCIAL
[4] Tangible fxed assets
The overall effect of the above is to increase current financial liability as
at 31 December 2021 by EUR 3,331,851 with a corresponding increase
in the net asset value of the subsidiary by EUR 519,965 and decrease in
Tangible fixed assets can be specified as follows:
other reserves by EUR 2,811,886.
31/12/22
31/12/21
[3] Intangible fxed assets
kEUR
kEUR
Tangible fixed assets
52
60
Trade- Software
Total
Right-of-use assets
237
313
marks
Total
289
373
kEUR
kEUR
kEUR
Book value at 1/1/21
3
240
243
Additions
0
0
0
Disposals
0
0
0
Tangible fxed assets
2022
2021
Amortisation
-1
-106
-107
kEUR
kEUR
Book value at 31/12/21
3
133
136
Book value at 1/1
60
79
Purchase value
644
1,726
2,370
Additions
13
4
Accumulated amortisation
-641
-1,593
-2,234
Disposals
0
0
Book value at 1/1/22
3
133
136
Depreciation
-21
-23
Additions
0
12
12
Book value at 31/12
52
60
Disposals
0
0
0
Purchase value
293
280
Amortisation
-1
-80
-81
Accumulated depreciation
-241
-220
Book value at 31/12/22
2
65
67
Book value at 31/12
52
60
Purchase value
643
1,738
2,381
Accumulated amortisation
-641
-1,673
-2,314
Book value at 31/12/22
2
65
67
Right-of-use assets
2022
2021
Intangible assets are amortised over a useful life of three years.
kEUR
kEUR
Book value at 1/1
313
424
Additions
198
6
Disposals
-158
0
Depreciation
-116
-117
Book value at 31/12
237
313
Purchase value
342
658
Accumulated depreciation
-105
-345
Book value at 31/12
237
313
133
07
STATUTORY FINANCIAL
The Group recognises right-of-use assets at the commencement date of
The movements during the year are as follows:
the lease (i.e., the date the underlying asset is available for use). Right-
of-use assets are measured at cost, less any accumulated depreciation
Subsidiary companies
and impairment losses, and adjusted for any re-measurement of lease
liabilities. The cost of right-of-use assets includes the amount of lease
Invest-
Loans Financial
Total
ments
assets
liabilities recognised, initial direct costs incurred and lease payments
including
made at or before the commencement date, less any lease incentives
invest-
ments
received. Unless the Group is reasonably certain to obtain ownership of
the leased asset at the end of the lease term, the capitalised right-of-
kEUR
kEUR
kEUR
kEUR
use assets are depreciated on a straight-line basis over the shorter of
Book value at
their estimated useful lives and the lease term. Right-of-use assets are
1/1/21 (Restated)
6,875
100
119
7,094
subject to impairment.
Additions
0
400
0
400
The depreciation percentages used for tangible assets range from 12.5
Written put option
percent to 33.3 percent.
over the 35 %
non-controlling in-
terest in ad pepper
[5] Financial fxed assets
media Spain S.A.
and Webgains S.L.
56
0
0
56
Dividends and
31/12/22
31/12/21
repayments
-3,552
0
0
-3,552
(Restated)
Share of net profit
1,990
0
0
1,990
kEUR
kEUR
Investments in
Subsidiaries at net asset value
5,344
5,849
subsidiaries
20
0
0
20
Listed debt and marketable securities
0
3,057
Translation
Loans
1,210
500
adjustments
256
0
0
256
Other
34
119
Book value at
1/1/22 (Restated)
5,645
500
119
6,264
Total
6,588
9,525
Written put option
over the 35 % non-
controlling interest
Investments in subsidiary companies consist of the following:
in ad pepper
media Spain and
31/12/22
31/12/21
Webgains S.L.
-95
0
0
-95
Additions
0
1,000
0
1,000
kEUR
kEUR
Subsidiaries at net asset value
5,344
5,849
Dividends and
repayments
-949
-290
-85
-1,324
Provisions for subsidiaries
-315
-269
Share of net profit
116
0
0
116
Total
5,029
5,580
Investments in
subsidiaries
296
0
0
296
Translation
adjustments
16
0
0
16
Book value at
31/12/22
5,029
1,210
34
6,273
134
07
STATUTORY FINANCIAL
[6] Marketable securities
[7] Group companies
The receivables from Group companies mature within one year.
31/12/22
31/12/21
kEUR
kEUR
[8] Prepaid expenses and other current assets
Due within one year
991
0
Due within one and five years
0
1,007
31/12/22
31/12/21
Due in more than five years
0
0
Total
991
1,007
kEUR
kEUR
Income tax receivables
192
128
Other receivables
113
125
Securities measured at fair value
Total
305
253
through other comprehensive income
In the reporting period, no securities measured at fair value through other
comprehensive income were acquired (2021: EUR 0k). Unrealised losses
[9] Cash and cash equivalents
of EUR 15k (2021: unrealised gains of EUR 6k) were recognised in other
comprehensive income.
No restrictions on cash exist at balance sheet date.
Securities measured at fair value through proft or loss
In the reporting period, securities measured at fair value through profit
or loss were acquired for EUR 0k (2021: EUR 1,999k) and sold for EUR
1,935k. Realised losses of EUR 115k (2021: realised gains EUR 51k) were
recognised in profit or loss.
For further information on investments made please refer to Note [20] of
the Consolidated Financial Statements.
135
07
STATUTORY FINANCIAL
136
07
STATUTORY FINANCIAL
[10] Shareholders’ equity
Balance at 1/1/2022
Profit for the period
Other comprehensive
Total comprehensive
income
income
kEUR
kEUR
kEUR
kEUR
Issued capital
1,075
0
0
0
Share premium
63,782
0
0
0
Reserves
0
0
0
0
Treasury reserve
-4,906
0
0
0
For employee stock option plans
2,827
0
0
0
Accumulated deficit
-43,018
-893
0
-893
Currency translation basis
of preparation difference
-1,162
0
9
9
Revaluation of listed debt securities
12
0
-15
-15
Other reserves
-2,812
0
0
0
Subtotal reserves
-49,059
-893
-6
-899
Total Equity
15,798
-893
-6
-899
Balance at 1/1/2021
Profit for the period
Other comprehensive
Total comprehensive
(Restated)
income
income
kEUR
kEUR
kEUR
kEUR
Issued capital
1,075
0
0
0
Share premium
63,782
0
0
0
Reserves
0
0
0
Treasury reserve
-2,417
0
0
0
For employee stock option plans
2,663
0
0
0
Accumulated deficit
-44,107
1,725
0
1,725
Currency translation basis
of preparation differences
-1,398
0
236
236
Revaluation of listed debt securities
18
0
-6
-6
Other reserves
-2,352
0
0
0
Subtotal reserves
-47,593
1,725
230
1,955
Total Equity
17,264
1,725
230
1,955
137
07
STATUTORY FINANCIAL
Share-based payment
Purchase of treasury Cash settlement of SOP's
Issuance of shares
NCI put liability
Balance at 31/12/2022
shares
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
0
0
0
0
0
1,075
0
0
0
0
0
63,782
0
0
0
0
0
0
0
-1,232
0
0
0
-6,138
79
0
0
0
2,906
0
0
0
0
0
-43,911
0
0
0
0
0
-1,153
0
0
0
0
0
-3
0
0
0
0
742
-2,070
79
-1,232
0
0
742
-50,368
79
-1,232
0
0
742
14,489
Share-based payment
Purchase of treasury Cash settlement of SOP‘s
Issuance of shares
NCI put liability
Balance at 31/12/2021
shares
(Restated)
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
0
0
0
0
0
1,075
0
0
0
0
0
63,782
0
0
0
0
0
0
0
-2,576
87
0
-4,906
164
0
0
0
0
2,827
0
0
-636
0
0
-43,018
0
0
0
0
0
-1,162
0
0
0
0
0
12
0
0
0
0
-460
-2,812
164
-2,576
-636
87
-460
-49,059
164
-2,576
-636
87
-460
15,798
138
07
STATUTORY FINANCIAL
Issued capital
Proposed appropriation of the result for the
fnancial year 2022
At the end of 2022, the issued capital of ad pepper media International
N.V. comprises 21,500,000 (2021: 21,500,000) bearer shares with a
The Board of Directors, with the approval of the Supervisory Board,
nominal value of EUR 0.05 each.
proposes to allocate the result for the financial year 2022 amounting to
EUR -893k to the accumulated deficit without payment of dividend. The
financial statements reflect this proposal.
Additional paid-in capital
[11] Non-current liabilities
Proceeds from the issuance of shares increased the additional paid
in capital by the amount by which they exceeded the par value of
the shares. Furthermore, it also includes expenses incurred for stock
31/12/22
31/12/21
option plans.
kEUR
kEUR
Employee benefits liability
0
155
Treasury reserves
Lease liability
120
205
Purchase of treasury shares
Total
120
360
By a shareholders’ resolution dated 18 May 2021, the Board of
Directors was authorised to repurchase treasury stock of up to 50
percent of the issued capital within the following 18 months. The Board
The employee benefits liability relates to the obligation resulting from
of Directors made partial use of this authorisation on 2 August 2021 to
the cash-settled option plan. For further details on cash-settled stock
repurchase up to a maximum of 500,000 of its own shares for a total
option plans, please refer to Note [39] of the consolidated financial
maximum amount of up to EUR 3,000,000. The share buy-back took
statements.
place between 1 September 2021 and 21 February 2022. During this
time 500,000 shares with a value of EUR 2,681,816 were repurchased
[12] Provisions
under this buy-back programme.
Number of shares outstanding
31/12/22
31/12/21
The numbers of shares issued and outstanding as at 31 December 2022
totalled 20,257,872 (2021: 20,491,197). Each share has a nominal value
kEUR
kEUR
of EUR 0.05.
Subsidiaries
315
269
Total
315
269
Authorised capital
The authorised share capital of the Holding Company amounts to EUR
Provisions for subsidiaries relate to subsidiaries with a negative net
4,000,000, divided into 80,000,000 shares, with a par value of EUR
asset value. For further information please refer to Note [5].
0.05 each. The Board of Directors is authorised, upon approval by
the Supervisory Board, to issue shares until 16 May 2027, or to grant
rights to subscribe for shares until the issued share capital amounts to
EUR 2,000,000.
139
07
STATUTORY FINANCIAL
[13] Current liabilities
ad pepper media International N.V. has provided guarantees for all
outstanding liabilities of its subsidiary Webgains GmbH (registered
number: HRB 37198) that existed as at 31 December 2022, until these
31/12/22
31/12/21
are satisfied in full. As a result, the individual local statutory accounts
(Restated)
of Webgains GmbH are exempt from audit under the requirements of
Art. 264 Par. 3 German Commercial Code (HGB). As at 31 December
kEUR
kEUR
2022, the outstanding liabilities of Webgains GmbH amount to EUR
Written put option
2,496
3,332
4,261k (2021: EUR 4,407k).
Accrued expenses
9
234
The future minimum payment obligations resulting from the contracts
Other current liabilities
490
609
for short-term rent and other agreements in place as at 31 December
Lease liabilities
119
119
2022 are as follows:
Total
3,114
4,294
2022
2021
The put option liability relates to the obligation resulting from the
kEUR
kEUR
written put/call option over the 35 percent non-controlling interest
No later than 1 year
92
87
in ad pepper media Spain S.A with no termination date. The amount
Later than 1 year and no later
of the financial liability is the exercise price of the option based on a
than 5 years
0
4
contractually agreed EBIT multiple.
Later than 5 years
0
0
Other current liabilities comprise mainly VAT payables and bonus
accruals.
[15] Other operating income
[14] Contingent liabilities
Other operating income mainly includes management and shared
Contingent liabilities mainly result from rented offices and office
services charged to subsidiaries of EUR 926k (2021: EUR 1,103k) and
equipment. The rent deposit for the office facilities in Nuremberg,
other income resulting from the profit distribution agreement with the
which is carried at its nominal value of EUR 33k (2021: EUR 119k), is
subsidiary ad pepper media GmbH of EUR -631k (2021: EUR -163k) and
pledged as collateral for bank guarantees.
Webgains GmbH of EUR 568k (2021: EUR 906k).
ad pepper media International N.V. has provided guarantees for
all outstanding liabilities of its subsidiary ad pepper media GmbH
(registered number: HRB 16494) that existed as at 31 December 2022,
until these are satisfied in full. As a result, the individual local statutory
accounts of ad pepper media GmbH are exempt from audit under the
requirements of Section 264 Par. 3 German Commercial Code (HGB).
As at 31 December 2022, the outstanding liabilities of ad pepper media
GmbH amount to EUR 614k (2021: EUR 1,860k).
ad pepper media International N.V. has provided guarantees for all
outstanding liabilities of its subsidiary ad agents GmbH (registered
number: HRB 16494) that existed as at 31 December 2022, until these
are satisfied in full. As a result, the individual local statutory accounts
of ad agents GmbH are exempt from audit under the requirements of
Section 264 Par. 3 German Commercial Code (HGB). As at 31 December
2022, the outstanding liabilities of ad agents GmbH amount to EUR
6,432k (2021: EUR 4,069k).
140
07
STATUTORY FINANCIAL
[16] Employee information
[17] Information relating to the
Board of Directors and Supervisory Board
At the end of the financial year, the Holding Company employed 19
people (2021: 17). All employees are employed outside the Netherlands.
Associated
Shares
Stock
Shares
Stock
options
options
companies
2022
2021
2022
2022
2021
2021
kEUR
kEUR
EMA Electronic
Wages and salaries
1,094
1,116
Media Advertising
Int. B.V.
9,486,402
0
9,486,402
0
Stock option expenses/income
85
371
Euro Serve Media
Social security costs
212
196
GmbH
556,163
0
556,163
0
Other employment expenses
0
13
Total
1,391
1,696
The ultimate shareholders of both associated companies are Michael
and Constanze Oschmann.
These costs are included in the cost of sales, selling expenses, and
general and administrative expenses. Pension costs included in social
[18] Independent auditor’s fees
security costs amount to EUR 73k (2021: EUR 70k).
The average number of personnel employed during the year was:
Fee Ernst & Young Accountants LLP
2022
2021
2022
2021
kEUR
kEUR
Audit of financial statements
250
215
FTEs
FTEs
Other services
0
0
IT
4
2
Total
250
215
Marketing
1
1
Administration
14
14
Total
19
17
[19] Events after the balance sheet date
Up until the day of authorisation for issuance, there were no events
that would have exerted substantial influence on the net assets,
financial position or results of operations as at 31 December 2022.
141
07
STATUTORY FINANCIAL
The Board
Dr Jens Körner
(Chief Executive Officer)
Nuremberg, 7 April 2023
The Supervisory Board
Michael Oschmann
Thomas Bauer
Dr Stephan Roppel
Dagmar Bottenbruch
142
«
OTHER INFORMATION
08
OTHER INFORMATION
OTHER INFORMATION
Statutory arrangements for appropriation of results
According to Article 15 of the Holding Company‘s articles of association,
the Annual General Meeting of shareholders determines the
appropriation of the Holding Company‘s net result for the year and the
previous year.
Independent auditor’s report
The independent auditor’s report on these financial statements is
included on the following pages.
145
08
OTHER INFORMATION
146
08
OTHER INFORMATION
INDEPENDENT AUDITOR’S REPORT
To: the shareholders and supervisory board of ad pepper media International N.V.
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2022
INCLUDED IN THE ANNUAL REPORT
Our opinion
We have audited the financial statements 2022 of ad pepper media International N.V. based in Amsterdam.
The financial statements comprise the consolidated and statutory financial statements.
In our opinion:
• the accompanying consolidated financial statements give a true and fair view of the financial position of ad pepper media International N.V. as at
31 December 2022 and of its result and its cash flows for 2022 in accordance with International Financial Reporting Standards as adopted by the
European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code
• the accompanying statutory financial statements give a true and fair view of the financial position of ad pepper media International N.V. as at 31
December 2022 and of its result 2022 in accordance with Part 9 of Book 2 of the Dutch Civil Code
The consolidated financial statements comprise:
• the consolidated statement of financial position as at 31 December 2022
• the following statements for 2022: the consolidated income statement,
the consolidated statements of comprehensive income, changes in equity and cash flows
• the notes comprising a summary of the significant accounting policies and other explanatory information.
The statutory financial statements comprise:
• the statutory balance sheet as at 31 December 2022
• the statutory profit and loss account for 2022
• the notes comprising a summary of the accounting policies and other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are
further described in the Our responsibilities for the audit of the financial statements section of our report.
We are independent of ad pepper media International N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of
public-interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit firms supervision act), the “Verordening inzake de onafhankelijkheid
van accountants bij assurance-opdrachten” (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other
relevant independence regulations in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en beroepsregels accountants”
(VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
147
08
OTHER INFORMATION
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The
following information in support of our opinion and any findings were addressed in this context, and we do not provide a separate opinion or
conclusion on these matters.
Our understanding of the business
ad pepper media International N.V. is the head of a group of companies that provides online marketing services. We paid specific attention in our
audit to a number of areas driven by the operations of the group and our risk assessment.
We determined materiality and identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error in
order to design audit procedures responsive to those risks and to obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Materiality
Materiality
€ 240,000 (2021: € 276,000)
Benchmark applied
Approximately 1% of revenue
Explanation
We have applied this benchmark based on our professional judgement and taking into account the expectations of
users of the financial statements. Revenue was concluded to be the most appropriate measure as it is considered
to be reflective of the growth in, and development of, the company’s activities.
We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial
statements for qualitative reasons.
We agreed with the supervisory board that misstatements in excess of € 12,000, which are identified during the audit, would be reported to them, as
well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
ad pepper media International N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial
statements. While the entities in the group operate in various countries, their financial information is managed centrally. We have performed our
audit procedures over the financial information of all entities in the group on a consolidated basis.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this
respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk
profile of the group entities or operations. We have allocated all group entities a full scope audit. By performing the procedures mentioned above, we
have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion on the consolidated
financial statements
Teaming and use of specialists
We ensured that the audit team included the appropriate skills and competences which are needed for the audit of a listed client. We included
specialists in the areas of information technology and income tax.
148
08
OTHER INFORMATION
Our focus on fraud and non-compliance with laws and regulations
Our responsibility
Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to detect non-compliance with all laws
and regulations, it is our responsibility to obtain reasonable assurance that the financial statements, taken as a whole, are free from material
misstatement, whether caused by fraud or error. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Our audit response related to fraud risks
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an
understanding of the entity and its environment and the components of the system of internal control, including the risk assessment process and
management’s process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises
oversight, as well as the outcomes. We refer to section ‘04.5 Risk report’ for management’s risk assessment and section ‘02 Report of the supervisory
board’ in which the supervisory board reflects on this risk assessment.
We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as the code of conduct,
whistle blower procedures and incident registration. We evaluated the design and the implementation of internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets
and bribery and corruption in close co-operation with our forensic specialists. We evaluated whether these factors indicate that a risk of material
misstatement due to fraud is present.
We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any
findings were indicative of fraud or non-compliance.
As in all of our audits, we addressed the risks related to management override of controls. For these risks we have performed procedures among
others to evaluate key accounting estimates for management bias that may represent a risk of material misstatement due to fraud, in particular
relating to important judgment areas and significant accounting estimates as disclosed in note Significant accounting judgements, estimates and
assumptions to the financial statements. We have also used data analysis to identify and address high-risk journal entries and evaluated the
business rationale (or the lack thereof) of significant extraordinary transactions, including those with related parties.
The following fraud risks identified did require significant attention during our audit.
Presumed risks of fraud in revenue recognition
Fraud risk
We presumed that there are risks of fraud in revenue recognition. We evaluated that revenue for segments ad pepper,
Webgains and ad agents in particular give rise to such risks.
These revenues are disclosed in note 5 ‘Revenue from contracts with customers’. Management discusses the risks in
section ‘04.5 Risk report’.
Our audit
We describe the audit procedures responsive to the presumed risk of fraud in revenue recognition in the description of
approach
our audit approach for the key audit matter ‘Risk of inappropriate revenue recognition, including the risk of management
overriding revenue recognition controls’.
We considered available information and made enquiries of relevant executives, directors and the supervisory board.
The fraud risks we identified, enquiries and other available information did not lead to specific indications for fraud or suspected fraud potentially
materially impacting the view of the financial statements.
149
08
OTHER INFORMATION
Our audit response related to risks of non-compliance with laws and regulations
We performed appropriate audit procedures regarding compliance with the provisions of those laws and regulations that have a direct effect on
the determination of material amounts and disclosures in the financial statements. Furthermore, we assessed factors related to the risks of non-
compliance with laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general
industry experience, through discussions with the Board of Directors, reading minutes and inspection of other relevant documents regarding
compliance with laws and regulations and performing substantive tests of details of classes of transactions, account balances or disclosures.
We also inspected lawyers’ letters and correspondence with regulatory authorities and remained alert to any indication of (suspected) non-
compliance throughout the audit. Finally, we obtained written representations that all known instances of non-compliance with laws and regulations
have been disclosed to us.
Our audit response related to going concern
As disclosed in section ’01 Letter from the Board of Directors’ and in the management statements in section ‘04.1 Governance’ to the financial
statements, the financial statements have been prepared on a going concern basis. When preparing the financial statements, management made a
specific assessment of the company’s ability to continue as a going concern and to continue its operations for the foreseeable future.
We discussed and evaluated the specific assessment with management exercising professional judgment and maintaining professional skepticism. We
considered whether management’s going concern assessment, based on our knowledge and understanding obtained through our audit of the financial
statements or otherwise, contains all events or conditions that may cast significant doubt on the company’s ability to continue as a going concern.
Based on our procedures performed, we did not identify material uncertainties about going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause a company to cease to continue as a going concern.
150
08
OTHER INFORMATION
Our key audit matter
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have
communicated the key audit matter to the supervisory board. The key audit matter is not a comprehensive reflection of all matters discussed.
In comparison with previous year, our key audit matter did not change.
Risk of inappropriate revenue recognition, including the risk of management overriding revenue recognition controls
(see note 5 to the consolidated fnancial statements)
Risk
Recognizing revenue is a routine process for the company, with a high number of transactions during the year. Revenue is
an important performance indicator to the Board of Directors, the supervisory board as well as to other stakeholders and,
therefore, we believe it to be subject to a higher risk of manipulation. As a result, we consider this a key audit matter.
Our audit
We have analyzed the company’s revenue recognition policies and procedures for the various sources of revenue. We evaluat-
approach
ed the design and implementation of internal controls embedded in revenue recognition processes, including internal controls
related to IT processes relevant to revenue recognition for Webgains. In the latter IT specialists were involved as well.
We discussed with and challenged management in their evaluation of revenue arrangements and the related analysis of
recognizing revenue as principal or agent. We validated management’s analysis based on inspection and interpretation of
agreements with both customers and suppliers.
We applied a data-analytics driven audit approach to revenue in which we verified that revenue recognized during the year
subsequently resulted in cash receipt. We also performed testing of revenue related accounts such as trade receivables and
we tested appropriate cut-off of revenue between 2022 and 2023.
Finally, we used data analysis to identify and address high-risk journal entries and we performed procedures to evaluate key
accounting estimates for management bias in respect of revenue recognition.
Key observations We conclude that the revenue for 2022 has been appropriately recognized and disclosed in the financial statements.
151
08
OTHER INFORMATION
REPORT ON OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
The annual report contains other information in addition to the financial statements and our auditor’s report thereon. The other information also
includes the letter from the Board of Directors, the Report of the Supervisory Board, the Remuneration Report, the Report of the Board of Directors,
and other information.
Based on the following procedures performed, we conclude that the other information:
• Is consistent with the financial statements and does not contain material misstatements
• Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the Board of Directors report and the other information as
required by Part 9 of Book 2 of the Dutch Civil Code and as required by Sections 2:135b and 2:145 sub section 2 of the Dutch Civil Code for the
remuneration report.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise,
we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the
requirements of Part 9 of Book 2 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures
performed is substantially less than the scope of those performed in our audit of the financial statements.
Management is responsible for the preparation of the other information, including the Board of Directors report in accordance with Part 9 of Book 2 of
the Dutch Civil Code and other information required by Part 9 of Book 2 of the Dutch Civil Code. Management and the supervisory board are responsible
for ensuring that the remuneration report is drawn up and published in accordance with Sections 2:135b and 2:145 sub section 2 of the Dutch Civil Code.
REPORT ON OTHER LEGAL AND
REGULATORY REQUIREMENTS AND ESEF
Engagement
We were engaged by the supervisory board as auditor of ad pepper media International N.V. on 27 July 2018, as of the audit for the year 2018 and
have operated as statutory auditor since.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory
audit of public-interest entities.
Other non-prohibited services provided
Our services are only related to the audit of the financial statements.
152
08
OTHER INFORMATION
European Single Electronic Reporting Format (ESEF)
ad pepper media International N.V. has prepared the annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU)
2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the annual report, prepared in the XHTML format, including the partially marked-up consolidated financial statements, as included in
the reporting package by ad pepper media International N.V., complies in all material respects with the RTS on ESEF.
Management is responsible for preparing the annual report, including the financial statements, in accordance with the RTS on ESEF, whereby
management combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ’Assurance-opdrachten inzake het voldoen aan
de criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital
reporting). Our examination included amongst others:
• obtaining an understanding of the company’s financial reporting process, including the preparation of the reporting package
• identifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and designing and performing
further assurance procedures responsive to those risks to provide a basis for our opinion, including:
• obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance
document and the XBRL extension taxonomy files, has been prepared in accordance with the technical specifications as included in the RTS on ESEF
• examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-
ups have been applied and whether these are in accordance with the RTS on ESEF.
DESCRIPTION OF RESPONSIBILITIES REGARDING
THE FINANCIAL STATEMENTS
Responsibilities of management and the supervisory board for the fnancial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2
of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the
preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going
concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern
basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the
financial statements.
The supervisory board is responsible for overseeing the company’s financial reporting process.
153
08
OTHER INFORMATION
Our responsibilities for the audit of the fnancial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during
our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of
our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards
on Auditing, ethical requirements and independence requirements. The ‘Information in support of our opinion’ section above includes an informative
summary of our responsibilities and the work performed as the basis for our opinion.
Our audit further included among others:
• Performing audit procedures responsive to the risks identified, and obtaining audit evidence that is sufficient and appropriate to provide a basis for
our opinion
• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control
• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
management
• Evaluating the overall presentation, structure and content of the financial statements, including the disclosures
• Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation
Communication
We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant findings in internal control that we identify during our audit.
In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements
regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this
auditor’s report.
We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the supervisory board, we determine the key audit matters: those matters that were of most significance in the
audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.
Amsterdam, 7 April 2023
Ernst & Young Accountants LLP
G.M.J. Bloetjes
154
«
AT A GLANCE
09
AT A GLANCE
ADDRESSES
The ad pepper Group subsidiaries operate in the
following countries:
ad pepper media International N.V.
France
Group headquarters Nuremberg
Webgains France SARL
Frankenstrasse 150 C
21 Boulevard Haussmann
90461 Nuremberg
75009 Paris
GERMANY
FRANCE
Phone +49 (0) 911 929057-0
Germany
ad pepper media GmbH
Frankenstrasse 150 D
90461 Nuremberg
GERMANY
ad agents GmbH
Am Joachimsberg 10-12
71083 Herrenberg
GERMANY
Webgains GmbH
Frankenstrasse 150 C
90461 Nuremberg
GERMANY
Webgains GmbH
Frauenstraße 17
80469 München
GERMANY
157
09
AT A GLANCE
Spain
Netherlands
ad pepper media Spain S.A.
Webgains B.V.
Avenida Alberto Alcocer 46A, 1ºA
Concertgebouwplein 15 H,
28016 Madrid
1071LL
SPAIN
Amsterdam
NETHERLANDS
Webgains S.L.
Avenida Alberto Alcocer 46A, 4ºB
UK
28016 Madrid
SPAIN
Webgains Ltd
70 Colombo Street
Italy
London SE1 8DP
UNITED KINGDOM
Webgains Italy S.r.l. SB
Via San Giovanni Sul Muro, 18
Webgains Ltd
20121 Milan
The Quorum
ITALY
Bond Street
South Bristol BS1 3AE
UNITED KINGDOM
Switzerland
ad agents AG
Europaallee 41
8021 Zürich
SWITZERLAND
ad agents AG
Via Maistra 100
7504 Pontresina
SWITZERLAND
158
09
AT A GLANCE
DATES AND CONTACTS
Company calendar
All financial and press data relevant for the capital market at a glance:
Annual Report 2022
10 April 2023
Annual General Meeting
(Amsterdam, The Netherlands)
13 June 2023
Quarterly Report I/2023
26 May 2023
Quarterly Report II/2023
18 August 2023
Quarterly Report III/2023
17 November 2023
159
09
AT A GLANCE
Contact for investors
Disclaimer
Dr Jens Körner (CEO)
This Annual Report contains forward-looking statements which are
ad pepper media International N.V.
based on current assumptions and assessments made by the manage-
Frankenstrasse 150 C
ment of ad pepper media International N.V. These statements are not
90461 Nuremberg
to be understood as a guarantee that such expectations will in fact
GERMANY
materialise. Future developments and the results actually achieved by
ad pepper media International N.V. and its affiliated companies depend
Phone: +49 (0) 911 929057-0
upon a number of risks and uncertainties and may therefore deviate
Fax: +49 (0) 911 929057-157
significantly from the forward-looking statements. Several of these
E-mail: ir@adpepper.com
factors are beyond ad pepper media’s control and cannot be precisely
www.adpeppergroup.com
estimated in advance, such as the future economic environment and
the actions of competitors and other market players. There are no plans
to update the forward-looking statements nor does ad pepper media
Imprint
International N.V. undertake any separate obligation to do so.
Editorial responsibility:
Headquarters Nuremberg, Germany
ad pepper media International N.V.
Frankenstrasse 150 C
90461 Nuremberg
GERMANY
Phone: +49 (0) 911 929057-0
Fax: +49 (0) 911 929057-157
E-mail: info@adpepper.com
www.adpeppergroup.com
Prime Standard, Frankfurt Stock Exchange
Our 2022 Annual Report as well as the Interim Financial Reports for
2022 are available at www.adpeppergroup.com under:
ISIN: NL0000238145
HRB Nuremberg 17591
Investor relations / Publications / Financial reports.
VAT-ID-No.: DE 210757424
Board of Directors:
Dr Jens Körner, CEO
160
«
GLOSSARY
10
GLOSSARY
GLOSSARY
Affliate:
Website that adds banners/buttons/text links that link through to
merchant sites, in order to earn commission based on leads/sales
generated.
Non-IFRS fnancial measures
Affliate marketing:
EBIT:
Affiliate marketing is a form of internet advertising where-by online
Income before Interest and Tax.
vendors (merchants) place advertising banners on partner websites
(affiliates) in order to reach more customers. Whenever a user clicks
EBITDA:
on the banner and buys the product or carries out a pre-defined action,
Income before Interest, Tax, Depreciation and Amortisation.
the website operator who displayed the ad receives a commission. This
commission is based on the sales rate of the products and services
EBT:
referred by the affiliate.
Income before Tax.
Affliate network:
Equity ratio:
Affiliate networks facilitate cooperation between merchants and
Shareholders’ Equity/Total Assets.
affiliates, act as providers of technological and/or other services who
take over tracking and invoicing on behalf of affiliates and merchants.
Gross sales:
Also frequently known as affiliate platform.
Gross sales represent the total amount billed and billable to clients
by the Group, net of discounts, VAT and other sales-related taxes.
Audience targeting:
Disclosure of gross sales information is not required under IFRS;
Audience targeting is the ability to take your full audience of prospective
however, it is voluntarily disclosed from 1 January 2018 onwards in the
customers and segment it into groups based on different criteria,
Consolidated Income Statement since management has concluded that
including online behavioural characteristics, demographics, interests, and
the information is useful for users of the financial statements.
intent. Audience targeting helps more effectively deliver personalised
and optimised experiences based on customer needs and interests.
Liquid funds:
Cash & cash equivalents including listed debt securities.
Cookie:
Small text file used to enhance the user experience of websites by
Media cost:
storing settings entered on site, for instance a country selection on an
Media cost relate to payments made to suppliers of ad inventory
entry page. Used on most programs for tracking sales.
(commonly referred to as media buys and publishers). Disclosure
of media cost information is not required under IFRS; however, it is
CPA:
voluntarily disclosed from 1 January 2018 onwards in the Consolidated
Cost per acquisition – a billing method whereby the advertising
Income Statement as management has concluded that the information
customer only pays for their online ad when a user carries out a
is useful for users of the financial statements.
particular action that has been pre-defined by the advertiser (user
makes purchase or registers for a newsletter, for example). Also known
as pay per action.
Business terms
CPC:
Ad:
Cost per click – billing unit for online advertising. Costs are calculated
Short for advertisement in print or on TV or otherwise.
according to the number of times a user clicks on an ad (website
banner). Also known as pay per click.
Ad spending:
The amount of money spent on advertising for a product or activity.
CPL:
Cost per lead – fee per dataset. Also known as PPL (pay per lead).
Advertiser:
Advertisers/Merchants (providers and operators of the program)
CPM:
advertise their products and services on the affiliates’ websites and
Cost per mile – shows the costs per 1,000 ad views (see ad impression)
pay them a commission on sales generated.
for an advertising booking.
163
10
GLOSSARY
Display advertising:
Delivery of ads to the target group, avoidance of waste coverage, and
the efficient management of digital advertising activities in accordance
with customer-defined KPIs.
e-commerce:
The electronic commerce describes every type of transaction on the
internet. The most well-known type of e-commerce is online shopping,
although it is much more than marketing and sales online; various
online services, service and management of business transaction
processes are also part of e-commerce.
Lead:
A successfully established contact between a product or service
provider and a potential customer.
Lead generation:
A successfully established contact between a product or service
provider and a potential customer. A ‘qualified lead’ signifies that the
customer has confirmed interest, for example through registering for a
newsletter or submitting a contact form.
Performance marketing:
Online marketing tools used to calculate success rates. Search engine
marketing, affiliate marketing, and e-mail marketing all fall under
the category of performance marketing, as do banner ads, which are
delivered in a targeted manner with fees based on success rates (‘cost
per click,’ ‘cost per sale,’ ‘cost per lead’).
Publisher:
Website operators are generally known as publishers. They play a
particular role in affiliate marketing. This is where the publishers take
on the functions of distribution partners (affiliates).
ganisation being subject to fraudulent activity.
SEA:
Search Engine Advertising – Search engine marketing covers all
marketing activities related to search engines. This includes paid
keyword advertising, improved ranking within the search results, and
affiliate marketing.
SEO:
Includes all measures designed to feature websites as high as possible
on the result pages of search engines.
164
ad pepper media International N.V.
Frankenstrasse 150 C
90461 Nuremberg
GERMANY
www.adpeppergroup.com