Annual Report
2019
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 010111010101010101010011010010010101010101010101111110001110001010100101011010101010101010111111000111000101010101010101010101010101010101001 01010111010101110001101001001010101010101010100111000111000101010101010101010101010101010101001 010111010101110001101001001010101010101010110101010 0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 0101110101010101010100110100100101010101010101011111100011100010101010 4
5
6
Overview
Key Figures for the Group
Letter from the Management Board
Consolidated Management Report and Group Management Report
9
13
20
22
The Intershop Group
The 2019 fiscal year
Remuneration report
Report on opportunities and risks
28 Disclosures in Accordance with Section 289a (1) HGB and Section 315a (1) HGB Plus
Explanatory Report as per sec. 176 para. 1 s. 1 AktG
29
Corporate Governance Declaration in Accordance with Section 289f of the HGB
or, respectively, sec. 315d HGB
29 Dependent Company Report
29
Report on Expected Developments
Consolidated Financial Statements
33
34
35
36
Consolidated Balance Sheet
Consolidated Statement of Comprehensive Income
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders´ Equity
Notes to the Consolidated Financial Statements
38 General Disclosures
42
Accounting Policies
60 Notes to the Individual Items of the Statement of Comprehensive Income
65 Notes to the Cash Flow Statement
66 Other Disclosures
75
76
Responsibility statement
Auditor’s Report, Group
Financial Statements
85
86
Balance Sheet INTERSHOP Communications Aktiengesellschaft
Statement of Operations of INTERSHOP Communications Aktiengesellschaft
87 Notes to the Financial Statements INTERSHOP Communications Aktiengesellschaft
97
Auditor’s Report, INTERSHOP Communications Aktiengesellschaft
105 Report of the Supervisory Board
109 Corporate Governance Report
114
Intershop Shares
115 Shareholder structure
116 Financial Calendar 2020
Cloud
order entry
13 .1
EUR million
(in 2019)
Revenue
31.6
EUR million
(in 2019)
Cash and Cash
Equivalents
7.7
EUR million
(as of 12/31/2019)
Employees
314
(as of 12/31/2019)
Equity ratio
57%
(as of 12/31/2019)
Balance Sheet total
27.6
EUR million
(as of 12/31/2019)
EBIT
(6.5)
EUR million
(in 2019)
Overview
Annual Report 2019
4
01010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 010111010101010101010011010010010101010101010101111110001110001010 in EUR thousand
Revenues
Revenues
Software and Cloud Revenues
Services Revenues
Revenues Europe
Revenues USA
Revenues Asia/Pacific
Cloud order entry
Earnings
Cost of revenues
Gross profit
Gross margin
Operating expenses, operating income
Research and development
Sales and marketing
General and administrative
Other operating income
Other operating expenses
thereof restructuring costs
EBIT
EBIT before restructuring costs
EBIT margin
EBIT margin before restructuring costs
EBITDA
EBITDA margin
Net result
Earnings per share (EUR)
Net Assets
Shareholders´equity
Equity ratio
Balance sheet total
Noncurrent assets
Current assets
Noncurrent liabilities
Current liabilities
Financial Position
Cash and cash equivalents
Net cash operating activities
Depreciation and amortization
Net cash used in investing activities
Net cash provided by financing activities
Employees
* taking into account the new accounting standard IFRS 16
2019*
2018
Change
31,620
17,072
14,548
20,741
6,248
4,631
13,137
20,556
11,064
35%
17,533
4,557
8,760
3,373
(269)
1,112
825
(6,469)
(5,644)
-20%
-18%
(2,323)
-7%
(6,774)
(0,17)
15,731
57%
27,626
13,007
14,619
516
11,379
7,731
(1,815)
4,146
(3,354)
5,520
314
31,199
15,967
15,232
22,883
3,822
4,494
7,227
19,278
11,921
38%
17,836
4,663
9,627
3,526
(205)
225
0
(5,915)
(5,915)
-19%
-19%
(3,704)
-12%
(6,742)
(0,20)
13,646
60%
22,657
10,350
12,307
1,693
7,318
7,224
(4,142)
2,211
(2,867)
5,351
339
1%
7%
-4%
-9%
63%
3%
82%
7%
-7%
-2%
-2%
-9%
-4%
31%
++
-9%
5%
37%
0%
15%
15%
22%
26%
19%
-70%
55%
7%
56%
88%
-17%
3%
-7%
Key Figures for the Group
Annual Report 2019
5
5
Annual Report 2019
Letter from the Management
Dear stockholders and business partners,
After about two years, the transformation of our business model is virtually complete. Transitio-
ning from a license to a cloud business is a feat that we faced willingly to make Intershop sustain-
able in the future. We had planned considerably more for the past business year than we accom-
plished, but the implementation process proved more time-consuming than expected. Successful
transactions with our cloud product portfolio were offset by some setbacks in the acquisition of new
customers. Therefore, we were forced to revise our ambitious operating targets for 2019 and 2020
this past October.
Nonetheless, the progress made is clearly a step in the right direction; now more than ever, we are
convinced that our „Lighthouse Strategy“ developed together with the Supervisory Board, focusing
on Cloud First and Focus on B2B Customers, was the right strategy to pursue; it is merely the im-
plementation that is slightly less dynamic than planned originally. Regardless, we have already
made great achievements, acquiring 23 new customers, increasing the incoming orders in the
cloud business by 82% to EUR 13.1 million and annually recurring cloud revenues by 32% to EUR
6.8 million, as well as increasing the percentage share of the cloud business in the total revenue
from 17% to 20%. Furthermore, we were able to achieve slight growth in the consolidated revenue.
This makes us optimistic, and it is our goal to once again generate a positive operating result and
slightly increasing revenue by way of the restructuring for 2020 that was initiated in the fall.
Our main focus continues to be the consistent expansion of the cloud business and in particular
the B2B sector. This is also reflected in the market expectations of the analysts. Forrester Research
anticipates for the U.S. B2B commerce market alone annual growth of 10% to then USD 1.8 trillion
over the next four years. The German market is smaller, however, according to the market resear-
chers at IFH Cologne, it is growing even faster at 15% annually. The numbers are examples of the
fact that Intershop operates in a global growing market driven by digitization. Technologically, we
are already on par with the large IT companies with our B2B solution. With our transition towards
a cloud provider and a streamlined cost structure, we have now laid the foundation for a full-force
offense this year and for a sustainable efficient growth based on recurring revenues.
We thank you for your trust.
Best regards,
Dr. Jochen Wiechen
Markus Klahn
Annual Report 2019
6
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010 h e n / CEO
c
Dr. J o c h e n W i e
O
n / C O
h
s Kla
u
k
r
a
M
Management Board
Annual Report 2019
7
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 010111010101010101010011010010010101010101010101111110001110001010100101011010101010101010111111000111000101010101010101010101010101010101001 01010111010101110001101001001010101010101010100111000111000101010101010101010101010101010101001 010111010101110001101001001010101010101010110101010 2019
9
The Intershop Group
13 The 2019 fiscal year
20 Remuneration report
22 Report on opportunities and risks
28 Disclosures in Accordance with
Section 289a (1) HGB and Section 315a (1) HGB
29 Corporate Governance Declaration in
Accordance with Section 289f of the HGB
29 Dependent Company Report
29 Report on Expected Developments
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010
Consolidated
Management Report and
Group Management Report
The Intershop Group
Group structure and business activities
The Intershop Group1 is a globally oriented provider of integrated Enterprise solutions for omni-
channel commerce. At the center of its service range is the Intershop Commerce software, which
was brought to the market in 1996 as the world‘s first standard software for electronic commerce.
Intershop‘s business model includes the orchestration of the entire omni-channel commerce
process chain from the design of the online channels to implementation of the software platform
and coordination of delivery of goods, i.e., fulfillment. Intershop‘s business activities are divided into
the two main business segments „Software and Cloud“ and „Service“. The license revenues and
the associated maintenance revenues, and the cloud and subscription revenues are included in
„Software and Cloud“ revenues. Over 300 customers worldwide put their trust in Intershop when it
comes to their digital sales and distribution to business and end customers. Based on its expertise
of more than 25 years in software development for the e-Commerce business, Intershop has an
extraordinarily powerful and scalable platform for online business activities. The Company is con-
tinuously improving the software and is systematically expanding and supplementing its range of
services. The customers include both large corporations such as HP, BMW, Würth and Deutsche
Telekom, but also medium-size companies. Intershop operates in Europe, the United States and in
the Asia Pacific region (mainly Australia). In the 2019 fiscal year, revenue with European customers
totaled around 65% of the total revenues.
INTERSHOP Communications AG, which is domiciled in Jena, is the parent company of the Intershop
Group. As of the reporting date of December 31, 2019, it directly holds 100% of the shares in Intershop
Communications Inc., San Francisco, USA, Intershop Communications Australia Pty Ltd., Melbourne,
Australia, Intershop Communications Asia Ltd., Hong Kong, China, Intershop Communications SARL,
Paris, France, Intershop Communications Ltd., Romsey, United Kingdom and two non-operating
companies. In Germany, INTERSHOP Communications AG has branches in Nuremberg, Hamburg,
Frankfurt am Main, Boeblingen and Ilmenau. Moreover, the Company has sales representations in
the Netherlands and Denmark.
1 „Intershop“, the „Company“
9
Annual Report 20190101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010 Strategic orientation and business objectives
The Intershop strategy continues to focus on the consistent expansion of the cloud business and the
B2B market. With this strategic course, Intershop considers itself in an optimum position to exhaust
the growth potentials in the future global market of omni-channel solution providers. Intershop‘s
medium-term goal is to become well-established as the leading provider of a digital B2B commerce
platform for SMEs and, at the same time, generate sustainable efficient growth. In the prior year,
Intershop completed its transition to a cloud provider. A large number of customers are now using
the Intershop cloud solution. In the coming year, the Company is primarily focusing on further in-
creasing the number of cloud orders while operating as cost-efficiently as possible. Intershop plans
to generate a positive result once again in 2020 at a slight growth rate in total revenues.
Cloud transformation sets
path for positive growth
2020
Year of acceleration
slight sales growth and positive EBIT
2019
Year of implementation
slight sales growth
negative EBIT in the mid single-
digit million euro range
Further increase in order intake and ARR
Increase margin through efficiency
enhancement
Further increase share of cloud revenues
Cloud transformation completed
Migration of numerous customers to the cloud solution
Cost structure adjusted
Expanding the cloud business in partnership with Microsoft
Since 2018, Intershop has been pursuing a “Cloud First” strategy defining the focus of the activities
and whose key focus is the cloud approach, both for investments in research and develop-
ment and in marketing and sales. The decision to switch from a license to a cloud provider is
based on the increasing willingness of companies to use cloud-based systems and programs.
This growing market acceptance is the result of strategic advantages such as availability, security
due to automatic updates, and resource efficiency. At the same time, the pressure on small and me-
dium-sized companies to establish or expand their own digital distribution channels is mounting.
The advantage of the Intershop Commerce Suite is that due to its high scalability it can be used in
a wide range of solution variants for all sales and company sizes, from a standard cloud to a highly
customized on-premise installation.
10
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report The expansion of the cloud business is closely linked to the strategic partnership with Microsoft
started in 2016, which has been intensified gradually over the past three years. Intershop is
supported by a team at the corporate headquarters in Redmond, and the commerce solution has
become an integral part of the Microsoft Azure Cloud solution portfolio. The collaboration combines
the high degree of flexibility of the Intershop Commerce platform with the efficiency of Microsoft’s
Azure cloud platform. In addition, the Intershop Commerce Suite will be embedded in Microsoft’s all-
in-one offering for business applications, Dynamics 365. The global partnership enables Intershop
to approach new customers and market segments and to advise companies on their digital transfor-
mation far more comprehensively than before and assist them in digitizing or reforming their sales.
Focusing on the B2B market
Over the past years, Intershop has established itself as one of the leading technological omni-
channel solution providers. The biggest opportunities here are in B2B commerce due to the size of
the target market and the number of customers who can be contacted, as well as the high skills and
performance of the Company in this segment. This is because B2B wholesale is faced with the great
challenge of digitizing its sales channels quickly and professionally in order to assert itself against
new competitors and business models. Since Intershop has extensive experience and prominent
B2B customers already, the Company has a know-how advantage for building a strong market
position in this sector. Even in terms of technology, the Intershop platform is ideally suitable for use
in the B2B market as regularly confirmed in the assessments of renowned analysts. For example,
Forrester Research ranked the Intershop solution as the world’s best B2B solution for the first time
in fall of 2018.
Sales priorities
Intershop’s sales activities focus on the developed e-Commerce markets in Europe, North America
and in the Asia Pacific region, where there is high revenue potential. Major focus in this respect will
be given to the established Intershop markets Germany, Benelux countries, Scandinavia, France, the
UK, Australia, and the United States. In these markets, Intershop either has its own local subsidiary
or has flexible sales units and a corresponding partner network. Intershop will focus its distribution
efforts on the expansion of the partnership business in the DACH segment in 2020. In general, the
mission is to fully focus on the cloud activities also in the partner network. The main benefit offered
by the partner network consists of an optimized customer approach and increased scalability in
the area of distribution activities. The cooperation with partners combines Intershop’s know-how
and experience with the specific knowledge of the companies in the partner network. In addition
to providing the appropriate shop software solutions, Intershop also supports its partners in the
high-quality implementation of their shops.
11
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Control System
The Company will continue to focus primarily on increasing revenues and thus gaining additional
market share in a very competitive and dynamic market. This is the reason why all management
levels are monitoring the development of revenues over time. Sales performance is also used as
an early indicator for liquidity developments, since cash and cash equivalents will rise or fall in line
with declining or increasing sales. In this way, liquidity developments can be managed early on by
cost adjustment measures, for example. The most important performance indicators in terms of
managing profitability are the gross result (total revenues less cost of revenues) and the associated
gross margin (gross profit compared to revenues), which the Company intends to increase in the
long term in order to generate a higher profit margin. In addition, other important performance
indicators include earnings before interest and taxes (EBIT). The control system remains unchanged
from the prior year.
Research and Development
The research and development activities (R&D) of Intershop focus on the consistent further develop-
ment of the Intershop commerce platform. Within the existing product cycles, the Company consis-
tently provides technical updates as well as innovative functions and expansions. In addition, major
platform releases are developed on a regular basis that comprise significant function upgrades and
thus support companies comprehensively in the digital transformation of their business processes.
Intershop has an efficient and experienced development team. Many existing Commerce-as-a-
Service customers were successfully migrated to the latest version of Intershop’s Commerce Solution
7.10 in the past fiscal year. The development team consistently worked on the next platform release
which is to be launched in 2020. Another important aspect of the development activities in the
reporting period was the further development of the Intershop Progressive Web App (PWA). PWA
means a website which combines the benefits of a web application with those of a mobile appli-
cation. This includes, for example, the local storage of data and automated updating. Intershop’s
PWA offers a rapid modern web interface as well as customized front-end functionalities. In order
to consistently drive the enhancement, Intershop’s PWA was released as an open-source project for
community development after multiple optimization measures in November 2019.
R&D expenditures (expenses and investments) in the 2019 fiscal year amounted to EUR 7.0 million,
a decline of around 2% compared to the prior year. R&D expenses also fell by 2% to EUR 4.6 million
(2018: EUR 4.7 million), taking into account the capitalization of software development costs. This
accounts for 14% of the sales (2018: 15%).
12
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report The 2019 fiscal year
Overall Economy and Industry
The global economic growth in 2019, according to the International Monetary Fund (IMF) at 2.9%
was less than the growth in the previous years. The emerging and developing countries continue to
experience the largest growth rates and increased their economic output in the previous year by
a total of 3.7%. The economy in the industrialized countries grew by 1.7%, while the U.S. economy
grew by 2.3% in 2019. In Europe, the economy grew by 1.2%. Germany experienced economic
growth of 0.5%, according to the IMF.
The dynamic growth in online trade continued in the reporting period. According to estimates of
the market research company eMarketer, the global B2C e-Commerce sales grew in 2019 by an
estimated 20.7% to a market volume of USD 3.5 trillion. According to the German e-Commerce and
Distance Selling Trade Association (Bundesverband E-Commerce und Versandhandel e.V.; bevh),
Germany once again experienced double-digit growth to a volume of EUR 72.6 billion (11.6%). What
is significantly larger than the B2C market is the B2B e-Commerce market. According to a study
published by the Institute for Trade Research Cologne (IFH Köln) in May 2019, the online B2B trade
volume in Germany alone has increased every year since 2012 by approx. 15%. As for the U.S. B2B
e-Commerce market, Forrester estimates an average annual growth rate of 10% during 2019 and
2023 to a market volume of USD 1.8 trillion.
The increasing digitalization in various business segments and sectors as well as the growing
demand for cloud-based enterprise applications continue to provide strong momentum. According
to estimates by the IT analyst company Gartner, expenses in the enterprise software market grew
by 8.5% in 2019. The growth in the IT services segment of 3.6% is also mainly due to the cloud
transition, as the Company is focusing more on cloud services instead of its own IT structures.
In Germany, according to Bitkom, the software sector is also the largest growth driver. In the prior
year, the German market grew in this sector by 6.3%.
Business performance during the 2019 fiscal year
The development of the Intershop Group during the reporting period was marked by the strategic
transition from the license to the cloud business. In this regard, major progress has been made.
Nonetheless, the cloud business results were not as high as originally expected.
Cloud transition completed – growth slower than expected
Intershop’s complete Commerce-as-a-Service solution (CaaS) offers a comprehensive and efficient
standard cloud solution. In 2019, incoming cloud orders increased by 82% to EUR 13.1 million
(prior year: EUR 7.2 million). The share of cloud revenue amounted to 20% in the reporting period
(prior year: 17%). The new annually recurring revenues (new ARR) based on the incoming cloud
orders increased to EUR 2.6 million (prior year: EUR 1.7 million).
13
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Intershop acquired 23 new customers (prior year: 15 new customers). Overall, however, the
earnings were significantly lower than the Company’s ambitious plans. The original budgets included
incoming orders of EUR 22 million, new ARR of EUR 6 million, and 50 new customers. Intershop
revised its operating cloud targets for the first half of 2019 and expected incoming cloud orders of
EUR 17 million, a new ARR of EUR 5 million, as well as 40 new customers. In its interim report for
the first nine months of 2019, Intershop decreased the expected incoming cloud orders to EUR 13
million, the new ARR to EUR 2.5 million, and the number of new customers to 25. The reasons for the
delays in the cloud conversion during the 2019 fiscal year are setbacks in the competition for new
customers as well as other capacities tied up to meet the obligations to existing license customers
with updates and patches and to support them in system adjustments. At the same time, existing
cloud customers continue to be served, which temporarily results in additional expenses until
Intershop has achieved the desired level of automation for all its customers. The lack of momentum
resulted in Intershop having to revise its sales and earnings targets for 2019 on October 15, 2019.
On October 28, 2019, the Management Board and the Supervisory Board of INTERSHOP Commu-
nications AG resolved to implement a program to restructure the Company which comprises (i)
various cost reduction measures; (ii) the proposal of a simplified decrease in capital at an extraordi-
nary Stockholders’ Meeting; and (iii) the planning of financial measures for 2020. The program serves
the purpose of completing the transition to a cloud provider and forms the basis for the future
business. The costs arising from the implementation of the program totaled EUR 0.8 million. At the
same time, Intershop expects to cut costs by about EUR 4 million annually. On December 20, 2019,
the extraordinary Stockholders’ Meeting passed a resolution on the simplified decrease in capital
at a ratio of 3:1 to compensate losses and other impairment losses. The capital decrease became
legally effective upon its entry in the commercial register on February 4, 2020. The technical imple-
mentation of the combination of shares occurred on February 14, 2020. The restructuring program
also includes measures regarding operating excellence such as the identification of weaknesses
in the distribution activities and the improvement of lead generation by initiating corresponding
operating measures.
Earnings, financial and asset position
Actual development of key financial figures compared to the original forecast
The business development in 2019 was not satisfactory due to the fact that Intershop was not able
to meet its targets. Intershop reported by ad hoc announcement on October 15, 2019 that the
Group will not reach its annual forecast for 2019 or 2020, respectively. Although revenue increased
and earnings improved during the first three quarters of 2019, there is not enough momentum,
especially for incoming cloud orders, to reach the projected sales targets for 2019 and 2020. Based
on these estimations, Intershop revised its forecast and expected a slight revenue growth for the
whole of 2019 compared to the prior year (previous sales increase of more than 10%) and a negative
operating result (EBIT) in the mid-single-digit million euro range (previously slightly negative EBIT).
Given an increase in the total revenues by 1% to EUR 31.6 million and an EBIT of EUR -6.5 million, the
actual development was within these revised projections. The development of the profit situation is
discussed in detail in the sections below.
14
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Revenue Development
Intershop generated revenues of EUR 31.6 million in the 2019 fiscal year, a 1% increase compared
to the prior year’s revenue of EUR 31.2 million. Thus, the shifts in revenues resulting from the tran-
sition to the cloud have already been compensated in part. Throughout the year, the revenues
could be increase from one quarter to the next. Hence, the revenues in the fourth quarter of 2019
exceeded those of the same quarter in the prior year and the first quarter of 2019 by 13%. This
consistent increase is mainly based on the positive development of the cloud revenues within the
software and cloud segment.
During the reporting period, cloud and subscription revenues rose by 18% to EUR 6.4 million (2018:
EUR 5.4 million). The incoming orders in the cloud segment rose by 82% to EUR 13.1 million (2018:
EUR 7.2 million); of this amount, EUR 11.6 million are attributable to new customers and EUR 1.5
million to existing customers. The cloud ARR (annually recurring revenue) increased by 32% to EUR
6.8 million at the end of December 2019 (December 31, 2018: EUR 5.1 million). The new ARR (new
annually recurring revenue) increased to EUR 2.6 million (2018: EUR 1.7 million). The net new ARR
(new ARR less ARR for cancellations) totaled EUR 1.7 million (2018: EUR 1.4 million). Cloud revenues
accounted for 20% of total sales and thus increased over the prior year (2018: 17%).
Cloud business development
Cloud Revenue
Cloud Revenue
Cloud Revenue in %
Cloud Revenue in %
of total revenue
of total revenue
in EUR million
Cloud order entry
New ARR
Net New ARR
ARR
4.5
4.5
13%
13%
2017
2.1
0.6
0.7
3.7
ARR development in 2019
C A G R + 1 9 %
C A G R + 1 9 %
5.4
5.4
6.4
6.4
17%
17%
20%
20%
2018
7.2
1.7
1.4
5.1
in EUR million
ARR end of 2018
New ARR new customers
New ARR existing customers
New ARR total
churn
Net New ARR
ARR end of 2019
2019
13.1
2.6
1.7
6.8
5.1
1.9
0.7
2.6
(0.9)
1.7
6.8
15
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report
License revenue increased by 8% to EUR 2.6 million (prior year: EUR 2.4 million). At EUR 8.1 million, the
revenues resulting from maintenance remained at the prior year’s level. The service revenues declined
compared to the prior year to EUR 14.5 million, which is a decline of 4% (prior year: EUR 15.2 million).
This is the result of smaller project business, while the 2018 revenues included a large project.
The following overview shows the development of revenues:
in EUR thousand
2019
2018
Change
Software and Cloud Revenues
Licenses and Maintenance
Licenses
Maintenance
Cloud and Subscription
Service Revenue
Revenues total
17,072
15,967
10,689
10,548
2,638
8,051
6,383
2,434
8,114
5,419
14,548
15,232
31,620
31,199
7%
1%
8%
-1%
18%
-4%
1%
The European market remains the most important business region with a share of 65% in the total
revenue (2018: 73%). Sales in this region decreased by 9% to EUR 20.7 million (prior year: EUR 22.9
million), primarily as a result of declining service revenues (-22% to EUR 8.9 million). By contrast,
cloud revenues increased by 12% to EUR 2.8 million. The revenues generated on the U.S. market
experienced a positive trend and increased by 63% to EUR 6.2 million (prior year: EUR 3.8 million),
in particular due to increasing service revenues (+97% to EUR 3.6 million EUR) and cloud revenues
(+53% to EUR 1.8 million). The U.S. revenue share rose to 20% (2018: 12%). Growth was also expe-
rienced in the Asia Pacific region. Revenues increased by 3% to EUR 4.6 million (prior year: EUR 4.5
million). The revenue share was 15% as in the prior year.
Revenues of INTERSHOP Communications AG as a single entity reported under German commercial
law decreased by 15% to EUR 23.0 million (2018: EUR 27.1 million). The decline is the result of the
service revenues declining by 28% to EUR 10.7 million (2018: EUR 14.9 million). Software and cloud
revenues amounted to EUR 12.3 million and thus basically remained at the prior year’s level (2018:
EUR 12.2 million).
Earnings Development
The most important financial figures in the group result are shown in the overview below:
in EUR thousand
Revenue
Costs
EBIT
EBIT-Margin
EBITDA
EBITDA-Margin
Earnings after tax
2019
31,620
38,089
(6,469)
-20%
(2,323)
-7%
(6,774)
2018
31,199
37,114
(5,915)
-19%
(3,704)
-12%
(6,742)
16
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report The 2019 fiscal year was marked by adverse result effects due to the slow growth momentum. In
the 2019 reporting period, the Intershop Group reported overall gross profits of EUR 11.1 million, a
decline of 7% compared to the prior-year figure of EUR 11.9 million. The gross margin decreased by
3 percentage points to 35%. Operating expenses decreased by 2% to EUR 17.5 million. Marketing
and sales costs fell by 9% to EUR 8.8 million. Research and development costs decreased by 2%
to EUR 4.6 million. Administrative expenses fell by 4% to EUR 3.4 million. Other operating costs
increased from EUR 0.2 million to EUR 1.1 million due to the restructuring expenses in the amount
of EUR 0.8 million incurred in 2019. The total costs (cost of sales and operating expenses/income)
increased by 3% to EUR 38.1 million (2018: EUR 37.1 million).
Overall, the operating result (EBIT) for the past fiscal year amounted to EUR -6.5 million (prior year:
EUR -5.9 million). The EBIT before restructuring costs totaled EUR -5.7 million. Depreciation increased
from EUR 2.2 million to EUR 4.1 million. The increase is mainly due to the first-time application of
IFRS 16 (EUR 1.7 million - please refer to the comments in the notes to the consolidated financial
statements). The operating result before depreciation and amortization (EBITDA) amounted to EUR
-2.3 million (2019, excl. IFRS 16: EUR -4.0 million; 2018: EUR -3.7 million). The financial result was EUR
-0.2 million (prior year: EUR -0.1 million). Income tax amounted to EUR 0.1 million (2018: EUR 0.7
million). The result for the period after tax was EUR -6.8 million (2018: EUR -6.7 million), which corre-
sponds to earnings per share of EUR -0.17 (2018: EUR -0.20).
INTERSHOP Communications AG as a single entity increased the net loss for the year under commer-
cial law from EUR 4.3 million in the prior year to EUR 11.7 million. The main reasons were the decline
in overall performance (revenues and inventory changes) as well as higher depreciation and amor-
tization. Amortization increased from EUR 1.6 million to EUR 2.4 million, particularly due to higher
amortization on internally generated software. The amortization of financial assets totaled EUR 4.0
million (prior year: EUR 0 million) and results from impairment losses on the carrying amount of
the investment in the U.S. subsidiary. We refer to the comments in the notes to the financial state-
ments of INTERSHOP Communications AG. Material expenses decreased from EUR 3.3 million in
the prior year to EUR 2.4 million, mainly due to the decline in expenses for purchased services.
Personnel costs decreased slightly by EUR 0.3 million to EUR 18.1 million. The other capitalized own
work, which includes the capitalization of the software development costs, totaled EUR 2.1 million
and thus remained at the prior year’s level. Other operating expenses increased by 13% to EUR
10.7 million due to various one-time circumstances. Other operating income remained at the prior
year’s level at EUR 0.4 million. Other interest income of EUR 0.2 million resulted mainly from affiliat-
ed companies. Overall, the unappropriated retained losses increased to EUR 27.6 million after prior
reversal of the capital reserve in full in the amount of EUR 9.6 million.
Presentation of the Net Assets and Financial Position
As at December 31, 2019, the balance sheet total of the Intershop Group amounted to EUR
27.6 million (December 31, 2018: EUR 22.7 million). This represents an increase of 22%
compared to the prior year’s reporting date. On the asset side, non-current assets increased
by 26% to EUR 13.0 million, in particular due to the addition of rights of use in accordance
with IFRS 16 amounting to EUR 1.8 million. Current assets increased by 19% to EUR 14.6
million, mainly due to the increase in trade receivables (+39% to EUR 5.5 million) and in cash
and cash equivalents (+7% to EUR 7.7 million).
17
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report On the liabilities side, equity increased by 15% to EUR 15.7 million compared to year-end 2019
(December 31, 2018: EUR 13.6 million). The reasons were two capital increases performed
in the 2019 fiscal year (we refer to the comments in the notes to the consolidated financial
statements). Non-current liabilities decreased by 73% to EUR 0.5 million, primarily due to
scheduled loan repayments in the amount of EUR 1.3 million. Current liabilities rose by 56%
to EUR 11.4 million. This is primarily the result of the first-time disclosure of lease liabilities
pursuant to IFRS 16 in the amount of EUR 1.7 million due to higher deferred revenue as well
as increased current liabilities. The equity ratio was 57% at the end of the year (December
31, 2019, excl. IFRS 16: 61%; December 31, 2018: 60%). Overall, Intershop continues to have
a solid net assets and financial position.
Group Balance key figures
December 31, 2019
Assets
Liabilities
Intangible assets
Cash and
cash equivalents
Right of use
Other Assets
9.9
7.7
1.8
8.3
15.7
Shareholders' euqity
1.6
1.8
8.7
Liabilities to banks
Leasing liabilities
Other Liabilities
27.6
27.6
Equity ratio: 57%
in EUR million
Cash flow from operating activities improved in the reporting period to EUR -1.8 million after EUR -4.1
million in the same period of the prior year, which is primarily the result of higher liabilities and higher
deferred revenue comprising prepayments made by customers. Adjusted by the IFRS 16 effects, the
cash flow from operating activities amounts to EUR -3.5 million. The cash outflow for investing activities
totaled EUR 3.4 million and thus exceeded previous year’s cash flow of EUR 2.9 million due to the allo-
cation of EUR 0.6 million to the cash and cash equivalents with a restriction on disposal, which is to be
used as a rental deposit for the new offices to be set up at the company’s headquarters. The payments
for investments in intangible assets at EUR 2.5 million remained at previous year’s level. The cash inflow
from financing activities totaled approx. EUR 5.5 million in the 2019 fiscal year (prior year: cash inflow in
the amount of EUR 5.4 million). The cash inflow is mainly attributable to the two cash capital increases.
Cash was spent on the repayment of loans in the amount of approx. EUR 1.5 million and prepaid lease
obligations pursuant to IFRS 16 in the amount of EUR 1.7 million. Adjusted by the IFRS 16 effect, the cash
flow from financing activities increased to EUR 7.2 million. Overall, cash and cash equivalents increased
in 2019 to EUR 7.7 million after EUR 7.2 million at the end of 2018.
The total assets of the single entity in the financial statements under German commercial law decreased
by 6% from EUR 26.2 million to EUR 24.6 million. On the assets side, the non-current assets decreased
from EUR 14.8 million to EUR 11.1 million. The change is primarily the result of a decrease in financial
assets due to impairment losses on the carrying amount of the investment in the U.S. subsidiary.
18
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Financial assets thus decreased from EUR 9.2 million to EUR 5.1 million. Internally generated software
increased from EUR 5.0 million to EUR 5.4 million. Current assets increased by EUR 1.8 million to EUR 12.5
million. The increase is the result of the increase in unfinished services by EUR +0.3 million, the increase
in trade receivables (EUR +0.7 million), and receivables from affiliated companies (EUR +0.2 million),
as well as the increase in cash and cash equivalents. The cash and cash equivalents increased from EUR
4.9 million to EUR 5.6 million due to two capital increases. On the liabilities side, equity decreased by
16% to EUR 15.0 million. The subscribed capital increased from EUR 34.9 million to EUR 42.6 million as
a result of two cash capital increases. This was offset by the reversal of the capital reserve in full for the
purpose of (partial) compensation of the unappropriated retained losses. The capital reserve totaled
EUR 8.6 million at the prior year’s balance sheet date. The balance sheet loss totaled EUR 27.6 million
as at December 31, 2019 (December 31, 2018: EUR 25.5 million). At the end of October, a provision
recorded for the restructuring program in the amount of EUR 1 million and the result for the first nine
months of 2019 as per the provisions of the German Commercial Code (HGB) resulted in a loss of half
of the share capital of INTERSHOP Communications AG (single entity) within the meaning of Sec. 92
(1) AktG. The provisions increased from EUR 2.1 million to EUR 2.5 million. Liabilities decreased from
EUR 5.0 million to EUR 4.6 million. Liabilities to banks decreased by 49% to EUR 1.5 million due to the
scheduled repayment of the two loans. The deferred income increased from EUR 1.2 million to EUR
2.4 million, in particular due to higher prepayments made by customers for maintenance agreements.
Employees
As of December 31, 2019, Intershop had a total of 314 employees worldwide (prior year: EUR 339
employees). The following overview shows the development of employee figures during the fiscal year:
Employees by department*
12/31/2019
12/31/2018
Technical Departments (Service Functions and Research Development)
Sales and marketing
General administration
* based on full time staff, including students and trainees
243
39
32
314
251
51
37
339
At the balance sheet date, the number of employees in the European branch offices was 261 and
thus accounted for 83% of the total work force (prior year: 291 employees and 86% in the total work
force). The U.S. subsidiary with 19 employees accounted for around 6% of the work force (prior year:
18 employees and 5% of the total work force). The number of employees in the Asia Pacific region
increased from 30 to 34; the percentage share thus increased to 11% (prior year: 9%).
AG as a single entity had 281 employees at the balance sheet date (December 31, 2018: 288
employees).
Management Board and Supervisory Board
No personnel-related changes occurred in the committees of INTERSHOP Communications AG during
the 2019 fiscal year.
19
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Remuneration report
Remuneration of the Management Board
The compensation of the Management Board comprises fixed and variable components. The fixed
components comprise the fixed salary and additional benefits such as the non-cash benefit resulting
from the use of a company car and are paid monthly. The variable, annually recurring remuneration
is based on various annual and multi-annual quantitative targets, the assessment of which is based
on the degree of achievement of the target. Approximately 1/3 of the total remuneration is variable.
Of the variable remuneration, 55% of the remuneration depends on the achievement of long-term
objectives and 45% on the achievement of short-term objectives. The Group EBIT, revenue and the
share price form the assessment basis for the quantitative objectives.
Total remuneration paid to the Management Board for its activities in the 2019 fiscal year amounted
to EUR 485 thousand (2018: EUR 598 thousand), of which EUR 485 thousand (2018: EUR 561
thousand) relate to fixed compensation and EUR 0 thousand (2018: EUR 37 thousand) to variable
components. The fixed remuneration components include EUR 460 thousand for the fixed salary
component and EUR 25 thousand for additional benefits (2018: EUR 525 thousand for fixed salary
and EUR 36 thousand for additional benefits).
The remuneration of the Management Board members is as follows:
in EUR thousand
Dr. Jochen Wiechen
Markus Klahn (since 04/09/2018)
Axel Köhler (until 08/16/2018)
Fixed
Remuneration
Variable
Remuneration
Total
Remuneration
2019
2018
2019
2018
2019
2018
265
220
-
485
266
160
135
561
0
0
-
0
0
37
0
37
265
220
-
485
266
197
135
598
Stock options were not granted to the members of the Management Board. Membership on
the Management Board ends in the event of the Company’s reorganization (merger, split-up, or
change in legal form). By way of compensation, the Management Board member then receives
a severance payment amounting to twelve months’ salary; if the remaining term of the Manage-
ment Board member’s contract is less than one year, the severance payment is reduced accord-
ingly. The members of the Management Board agreed to a non-compete agreement, which stip-
ulates that the Company is to pay compensation for one year. The compensation includes 75%
of the last remuneration received, excluding additional benefits. The compensation is not paid
if Intershop foregoes the non-compete agreement within a specified period. In the event of
illness, the Management Board agreements include an entitlement to continued payment of
the fixed basic salary for a period of six months up to a maximum period until the end of the
contract duration. In the event of the death of a member of the Management Board, the surviving
dependents are entitled to the monthly fixed basic salary for the month in which the death
occurs, as well as for the following six months. No member of the Management Board has been
promised further benefits in the event of the termination of his employment with the Company.
20
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report
No loans or similar benefits were granted to members of the Management Board. No member of
the Management Board received any benefits from third parties during the fiscal year that were
promised or granted because of his position as a member of the Management Board.
Remuneration of the Supervisory Board
The remuneration of the Supervisory Board comprises fixed and variable components. The fixed
remuneration is comprised of an annual fixed remuneration of EUR 12,500, as well as an atten-
dance allowance of EUR 2,500 per meeting or EUR 500 if a telephone conference is held in place of
a meeting. In addition, the members of the Supervisory Board receive a performance-related remu-
neration, as long as the result of the operating activities (EBIT) reported in the approved consolidat-
ed financial statements of the Company for the fiscal year concerned was positive and the estab-
lished quantitative goals were reached: EUR 5,000 are granted, respectively if a) the EBIT of the prior
year is achieved, b) the EBIT increased by more than 10% compared to the prior year, c) the EBIT
increased by more than 20% compared to the prior year, and d) there was an increase in revenue
of more than 20% compared to the prior year. The chairman of the Supervisory Board receives
twice the amount of the fixed and variable remuneration. Supervisory Board members who belong
to the Supervisory Board for only part of the fiscal year receive remuneration proportionate to the
duration of their position. Expenses incurred by the members of Supervisory Board in the perfor-
mance of their duties are reimbursed by the Company.
For the 2019 financial year, members of the Supervisory Board were entitled to a total remunera-
tion of EUR 154 thousand (2018: EUR 152 thousand), which consists entirely of fixed compensation.
There was no entitlement to variable compensation for 2018 and 2019. The fixed remuneration
consists of EUR 50 thousand (2018: EUR 50 thousand) in fixed remuneration and EUR 104 thousand
(2018: EUR 102 thousand) for meetings.
The remuneration of the Supervisory Board members is as follows:
in TEUR
Christian Oecking
Ulrich Prädel
Univ.-Prof. Dr. Louis Velthuis
Fixed
Remuneration
Variable
Remuneration
Total
Remuneration
2019
2018
2019
2018
2019
2018
77
38.5
38.5
154
77
39
36
152
0
0
0
0
0
0
0
0
77
38.5
38.5
154
77
39
36
152
21
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report
Report on opportunities and risks
Risk management system
Intershop operates in a dynamic market characterized by continuous changes and a wide range
of associated business environment risks, which makes it harder to plan and results in deviations
from the forecasts. At the same time, the Company faces risks arising from operating policies, the
Company’s structure, and the organization of internal processes that could endanger the Company’s
goals. Intershop is committed to the goal of protecting the property of its stockholders and safe-
guarding its continued existence as the basis of its business activity. The Management Board has
formally adopted a risk policy designed to promptly identify unknown risks (early warning function)
and to manage risks. This policy describes and defines the methods and processes used in risk
management throughout the Company. Intershop is supported by specialized external advisors in
the further development of the risk management system. A risk manual describing the risk man-
agement system was created, which is reviewed and updated on a regular basis. Risks are defined
as possible deviations from planned targets and include both positive deviations (opportunities)
and negative deviations (threats). The risk management system focuses on potentially particular-
ly serious negative deviations that could impact the Company’s development and sharply reduce
equity and cash position. The Management Board has appointed a Risk Manager who provides
quarterly information about the Company’s risk situation. Above and beyond this, risk management
organization is decentralized. The divisional managers in the individual business areas are respon-
sible for identifying and mitigating the risks in their divisions. In the case of significant risks and
risks that pose a particular threat to the Company’s continued existence, the divisional managers
are required to provide the Management Board with immediate and detailed information. Flat hi-
erarchies, short communication channels, and a culture of open communication also ensure that
important risk information reaches the Management Board without delay. The Management Board
informs the Supervisory Board at least once a quarter, but usually more often, about important
developments at the Company.
The operational risk management process encompasses risk identification, risk assessment, risk
aggregation, and risk mitigation. Strategic, operating and financial risks are assessed. To identify
risks, the environment and the defined risk fields and risks within it are continuously monitored
by risk owners (usually the Intershop divisional managers), to which clearly defined business areas
and all possible risks arising from those areas are assigned at an operational level. In addition, a
risk inventory is completed once a year (with quarterly updates), in which the relevance score and
risk owners are determined, previously identified risks are reviewed and new risks are identified.
In financial control, a deviation analysis is performed so as to identify deviations from targets. This
involves the use of the financial accounting and controlling software from SAP and the consolidation
and controlling software from LucaNet. As part of risk identification, the effect of operational and
financial risks on the current financial year are quantified as best as possible (extent of damage and
probability of occurrence) and assigned a relevance class. The effect of strategic risks over three
years is taken into account and the risk is assigned a relevance class.
22
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report The identified risks are categorized as follows:
Categorization of the extent of damage:
Economic shareholders‘ equity
< 2.5%
< 7.5%
not material
minor
< 25%
high
< 100%
critical
> 100%
existential
Relevance class 1
Relevance class 2
Relevance class 3
Relevance class 4
Relevance class 5
Categorization of the probability of occurrence:
≤ 5%
≤ 25%
≤ 50%
highly unlikely
unlikely
possible
≤ 95%
likely
> 95%
very likely
The consolidated management report focuses on significant risks and rewards. The economic share-
holders’ equity comprised shareholders’ equity less goodwill. Intershop’s total risk exposure is deter-
mined by aggregating the risks (Monte-Carlo-Simulation). In order to do this, the software Strategie
Navigator is used. Intershop applies risk mitigation measures that, depending on the point in time
involved, reduce the probability of occurrence or lessen the impact.
As part of its risk inventories in all departments of the Company, Intershop has identified all risks
that could influence the Company’s development. All Intershop products are offered in all segment
regions and are therefore subject to the same kinds of risks. In addition to specific individual risks
and opportunities, Intershop’s risk management also takes general risks (such as sales and cost fluc-
tuations) into account that may have adverse (risks) or positive (rewards) effects on the earnings and
financial position.
Strategic risks
Intershop is one of the leading providers of innovative and comprehensive solutions for omni-chan-
nel commerce in a highly dynamic market. Intershop’s primary strategic objective is to turn the
Company from an exclusive technology provider into an integrated provider of omni-channel
commerce solutions. The ongoing transition from a license provider to a provider of Commerce-as-
a-Service via the cloud goes hand in hand with the “cloud first” strategy.
Intershop’s target market is undergoing constant change due to factors such as technological
progress, changes in the companies’ IT landscape, consolidation of provider landscape associat-
ed with new competitors or new strategies and behavior patterns of the players in e-Commerce. In
principle, there is a risk that Intershop offers products and services that do not reflect the needs of
customers or market expectations. If the Company is not successful in monitoring the target markets
adequately, sizing up the competition and providing new innovative product and solution-oriented
strategies, this could lead to a negative sales trend because customers will turn to the competition,
23
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report making it more difficult to acquire new customers. Intershop counters this risk through continu-
ous market monitoring and analysis of customer requirements together with customers, partners,
and market analysts. Therefore, customer and partner feedback is regularly incorporated in the
new product versions. In addition, discussions are held with industry analysts such as Forrester.
Intershop estimates that these risks could have a strong impact; however no or only weak indicators
of occurrence can currently be identified.
There is a general risk that the Intershop software is partially or entirely displaced by new tech-
nologies. Depending on the degree and pace of the change, this can lead to Intershop no longer
being able to sell its current products and having to replace all or some of them with new products.
Intershop regards this risk as high. However, there is currently no identifiable development that
challenges e-Commerce or today’s products. The risk is also mitigated by the Synaptic Commerce®
approach including the transfer of technologies identified as relevant to the product portfolio, short
product release cycles, rapid software development, as well as regular market and competition ob-
servations.
The popularity of the brand is a paramount factor for the distribution of the Intershop products.
There is a risk that a decline in brand popularity results in potential customers not being aware of
Intershop as a solution partner and the acquisition of new partners and employees is made more
difficult. If the Company is not able to increase the visibility of the Intershop brand, in particular given
the negative trends in the results over the last two years, this might result in a decline in revenues
and adverse effects on public perception. Intershop regards this risk as high. This risk is mitigated
by way of various measures to increase brand popularity, which is an integral part of the marketing
strategy. For example, the Company intends to expand the online marketing measures or establish
and strengthen the employer branding.
With regard to the Intershop software, there is the risk of product defects, which is typical of
software. Due to development flaws, a product might be defective and, especially in terms of product
safety, might not meet the requirements of the customer or market. Product defects could lead to
potential or actual impairment of operations for customers and, with serious defects, acceptance
of Intershop’s products could be considerably diminished. For Intershop, this could result in claims
for damages, costs for possible legal disputes, and additional costs in order to rectify defects. In
addition, a decline in revenue might occur. Intershop considers this risk to be minor. However, an
extensive quality assurance process with a designated security code officer and a documented es-
calation process minimize the risk of occurrence.
The risk generally exists that technical concepts of Intershop products are accessed by unauthorized
third parties or competitors. The outflow of information may enable competitors to offer competing
products or to alienate customers. Furthermore, new competitors can appear on the market and
poach existing or potential new customers. Intershop estimates that these risks could have a minor
impact that is minimized by technical and organizational measures, as well as market and compet-
itor monitoring.
24
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report The performance and expertise of the employees and management personnel are key to the
Company’s success. There is also the risk, especially with employees in key positions, that if employees
switch to a competitor, the specific knowledge of the employee will be used there. Furthermore, it is
generally more difficult to replace these employees. The loss of key personnel could have a negative
impact on Intershop’s competitiveness and economic development and result in additional replace-
ment costs. Intershop considers the key position risk to be minor. These risks are counteracted
using a state-of-the-art personnel management system with individual measures for personnel de-
velopment together with an open company culture and flat hierarchies. Intershop has also set up a
professional development program that includes the promotion of key persons.
Operational risks
Business processes at Intershop are based on information technologies. This means that there
is a typical inherent risk of data loss. The loss of sensitive data could lead to competitive disad-
vantages or a weaker market position. Intershop regards this risk as minor. The risk is mitigated
with information security measures, data backup processes as well as security policies and security
processes that are continuously further developed, which is why its occurrence is considered to be
very unlikely.
Specialized and standardized contracts and GTC are used for the sale of Intershop products. It
is possible for deviations from these contracts to occur, for example, at the customer’s request.
In these cases, there is a risk that the modified provision has adverse effects for Intershop. The
risk is considered a possible minor risk. It is minimized by having legal advisors review agreements
deviating from the standard template or the standard GTC.
The complexity of the e-Commerce processes leads to various mutual dependencies. There is the
risk of the process chain or parts thereof failing which leads to a loss of revenue for customers.
For Intershop, this can lead to a loss in sales, claims for damages, high legal fees, and additional
expenses to eliminate the process error. The risk is regarded as insignificant but it occurrence is
likely. It is monitored by detailed process documentation and specifications, insurance policies as
well as limitation of liability.
Financial risks
Third parties could accuse Intershop of infringement of intellectual property rights, such as patents
or copyrights, and claim compensation for damages or also attempt to restrict the sale of Intershop
software. This especially applies to the countries, in which software process patents exist. The risk is
regarded as a potentially minor risk. In order to minimize the risk, Intershop verifies compliance of
the licensing terms of third parties in the development process.
A large portion of revenues is generated from consulting services, which are primarily provided
in the context of projects. In this regard, customer loyalty is a very important factor. To be able to
ensure customer loyalty, it is important to provide the quality the customer demands for projects,
while at the same time keeping an eye on the costs and time. If this is not successful, this affects
the Company’s reputation and results in higher project costs. Future contracts may be lost, projects
25
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report may be canceled prematurely, or the profit margin on projects permanently reduced. Intershop
regards this risk as minor. In order to respond to this risk, personnel planning software and project
analysis tools are used, and regular project meetings document the current status of projects, and,
if necessary and useful, employees in the development segment provide support. Furthermore,
projects and customer satisfaction are monitored on an ongoing basis. The risk occurring is consid-
ered possible.
At the balance sheet date, Intershop has a good liquidity position, with liquidity of EUR 7.7 million.
Two bank loans totaling EUR 1.55 million did not result in an interest risk at the balance sheet date
since the interest rates for the loans are fixed over the term of the loan. The liquidity risk as a result
of the repayment of the financial liabilities is regarded as minor since repayments have been fixed at
annual or monthly installments over a fixed term. In addition, the Company has the option to make
annual additional payments on one of the loans without incurring a early repayment penalty. The
loan agreement includes provisions which enable the banks to modify the terms and conditions or
demand repayment of the loan under certain circumstances. Its activities abroad are exposed to
the currency risk since revenues are generated in U.S. and Australian dollars. Measures to hedge
currency risks are taken on a case-by-case basis. There is also a default risk. In order to at least
minimize the risk of default, Intershop regularly performs credit checks of customers. In case of
larger contracts, this risk is also minimized by agreements on advance payments or partial payments
based on the percentage of completion of the contract. Here, reference is also made to the consol-
idated financial statements, section “Information on financial instruments”. These risks are regarded
as insignificant but their occurrence is likely.
Intershop is a defendant in various legal proceedings arising from the normal course of business.
The Management Board does not currently expect that the Company will incur any major financial
obligations resulting from current litigation beyond the litigation stated in the consolidated financial
statements. These risks are also secured by way of insurance policies and provisions as a preven-
tative measure. Reference is made to the consolidated financial statements, section “Litigation/
contingent liabilities”.
Opportunities
Intershop operates in a very dynamic and rapidly growing market environment for e-Commerce
platforms with increasing company density. On this market, new opportunities can present them-
selves at any time. A major driver of the sustained growth of the Company is to identify those oppor-
tunities and take advantage of them without incurring unnecessary risks. Hence, at Intershop the
opportunity and risk management are closely interlinked. The rewards management is part of the
strategic planning process at Intershop; here, internal and external potentials that might positive-
ly affect the further development and value added for Intershop are evaluated on a regular basis.
The following opportunities shall be highlighted: Intershop sees an important strategic opportuni-
ty in the existing and developing partnership with Microsoft since higher revenues are expected in
the medium and long term due to better visibility on the market. Furthermore, Intershop sees the
strong strategic opportunity to achieve additional growth potential from strategic M&A options in
the course of market consolidation. There is also the strong but unlikely possibility that unforeseen,
extraordinary income is generated from audits conducted by Intershop if customers violate license
terms or use Intershop products without authorization.
26
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Overall risk position
The overall risk position refers to the sum total of all the individual risks to which Intershop is
exposed. There are no apparent risks endangering the Company’s continuation. The overall risk
position has improved compared to the previous year.
Description of the key characteristics of the internal control and
risk management system with regard to the consolidated financial
reporting process
Intershop’s internal control system includes the policies, procedures, and measures introduced by
the Management Board to enable the organizational implementation of its decisions so as to ensure
the effectiveness, cost-effectiveness, and propriety of financial reporting as well as adherence to the
applicable legal provisions. The Intershop Group is divided according to Management Board areas,
whose various departments report to the Management Board member responsible in each case.
The departments are divided into a number of cost and profit centers, each with its own department
head. The department heads are accountable either for revenue and costs or just for costs.
The business ordering and approval processes, including authorizations and threshold values, are
set out in the authorization directive (“Global Authorization Policy”) introduced by the Management
Board, which is reviewed and, when necessary, updated on a regular basis. The authorization directive
includes three fields of regulation: the procurement of goods and services, offers to and agreements
with customers, as well as personnel matters. Defined processes must be adhered to before actions
are carried out. If, for example, goods are ordered or services are requested, or if existing contracts
are amended or canceled, authorizations in the form of signatures must be obtained. The extent of
the authorizations required depends on the type of contract involved and the volume of the order.
Information on finances and the impact on the balance sheet, as well as on the budget must be
provided, and alternatives (e.g., offers from other suppliers or service providers) must be explained.
No orders or commissions may be placed until the relevant departments, department heads, and/
or Management Board members have given their approval as required by the policy. In addition to
the authorization directive, Intershop has additional guidelines for various areas, such as travel cost
guidelines, cell phone guidelines and company car guidelines. These are also reviewed and adjusted
accordingly on a regular basis. Management Board meetings, which take place at least once a week,
discuss and monitor topics such as third-party commissions, among other things.
Accounting processes are entered in the respective individual financial statements for the subsid-
iaries in the Group’s central SAP system. The consolidation and preparation of Intershop’s con-
solidated financial statements is done centrally using the LucaNet consolidation software, on the
basis of the individual financial statements entered in SAP. The Group’s accounting policies take into
account the requirements of the IFRSs, HGB (German Commercial Code), AktG (German Stock Cor-
poration Act), and the German principles of proper accounting. When preparing the consolidated
financial statements, internal controls are carried out in compliance with the dual control system to
ensure the reliability of the single-entity financial statements used as a basis and of the consolidated
27
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report financial statements. The Group’s controlling will prepare a detailed analysis every month to show
the development of the Group, the single entities, as well as the cost and profit centers. Impairment
testing of cash generating units is performed centrally at Group level to ensure the use of uniform
evaluation criteria. The preparation and compilation of the data used to prepare the notes to the
financial statements and the management report is also performed by the Group’s controlling at
Group level, and these are checked by the Finance department.
Disclosures in Accordance with Section
289a (1) HGB and Section 315a (1) HGB Plus
Explanatory Report as per sec. 176 para. 1 s. 1 AktG
On the balance sheet date, the Company’s subscribed capital amounted to EUR 42,582,492,
composed of 42,582,492 no-par value bearer shares. Each share has a notional value of EUR 1.
There are no restrictions affecting the voting rights or transferability of the shares.
At the balance sheet date, Shareholder Value Beteiligungen AG holds 18.39% and Shareholder Value
Management AG 15.44% in the Company’s capital stock. In total, both companies together hold
33.83% of the voting rights (balanced voting rights behavior) in accordance with Sec. 33 et seq. WpHG.
INTERSHOP Communications AG has not been informed of any other direct or indirect share capital
holdings that exceed 10% of the voting rights as of the balance sheet date. There are no shares
with special rights conveying powers of control, especially rights of appointment to the Supervisory
Board. Also, there are no employee stock option plans, meaning that employees do not have an
interest in the capital without being able to exercise their control rights directly at the same time.
The appointment and dismissal of the Management Board is governed by sections 84 and 85 of the
German Stock Corporation Act (AktG) and Article 6 of the Articles of Association of the Company.
According to the Articles of Association, the Management Board consists of one or more persons.
The number of members of the Management Board is determined by the Supervisory Board.
Amendments to the Articles of Association are made in accordance with section 179 and following
of the AktG and Article 28 of the Articles of Association. Under the terms of the latter, the Super-
visory Board has the power to resolve changes to the Articles of Association that affect only their
wording and also, in particular, changes to the provisions governing the share capital corresponding
to the respective amounts of capital increases from conditional capital and authorized capital, and
of capital reductions resulting from the retirement of shares.
For information on the powers of the Management Board relating to the issuance of shares, please
refer to the section entitled “Equity” in the notes to the consolidated financial statements, and to the
notes to the financial statements of INTERSHOP Communications AG. The Company has not entered
into any significant binding agreements that are conditional on a change in control as a result of a
takeover bid. In addition, the Company has not entered into any binding compensation agreements
with the members of the Management Board or with employees in the event of a takeover bid.
28
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Corporate Governance Declaration in Accordance with
Section 289f of the HGB or, respectively, sec. 315d HGB
On February 5, 2020, the Management Board and Supervisory Board issued a Corporate
Governance Declaration in accordance with section 289f and 315d of the HGB and, together with
the Corporate Governance Report, have made it publicly accessible on the Company’s website at
http://www.intershop.com/corporate-governance-declaration.
Dependent Company Report
As a purely precautionary measure, pursuant to section 312 of the German Stock Corporation
Act (AktG), the Management Board of INTERSHOP Communications Aktiengesellschaft prepared a
report for fiscal year 2019 on the relationships with affiliated companies. This report also describes
the relationships with Shareholder Value Management AG and Shareholder Value Beteiligungen AG.
Shareholder Value Management AG and Shareholder Value Beteiligungen AG held 86.26% of the
votes present at the Annual Stockholders’ Meeting on May 29, 2019 and 66.23% at the extraordinary
Stockholders’ Meeting on December 20, 2019, and thus held a majority of the votes. As a precau-
tionary measure, the Management Board therefore assumes that there is currently a dependency
relationship with these companies. However, the Management Board is aware that this assessment
depends on uncertainties, in particular the prognosis for future majorities at stockholders’ meetings,
which cannot be reliably predicted. The dependency report was issued as a precautionary measure.
It contains the following final statement:
“With respect to the legal transactions outlined in the report on relationships with affiliated
companies, INTERSHOP Communications Aktiengesellschaft received commensurate consider-
ation for each legal transaction based on the circumstances that were known to us at the time the
legal transactions or measures were undertaken, and has not been disadvantaged by the taking or
omission of measures.”
Report on Expected Developments
Environment
According to the latest forecast of the IMF in January 2020, the global economy is expected to ex-
perience stronger growth of 3.3% again this year. In the emerging and developing countries, the
increase in economic output will therefore amount to 4.4%. An increase of 1.6% is expected in the
industrialized countries; an increase of 1.3% is expected throughout the Eurozone and growth of
1.1% is forecast for the German economy.
The e-Commerce market will continue to grow significantly in the years to come. In the B2C
segment, eMarketer estimates growth to be about 19%. For 2020, the German E-Commerce and
Distance Selling Trade Association expects a further increase in online sales by about 10%. The
digital transformation of the economy poses major challenges for the B2B commerce as well.
29
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report The 2019 Intershop E-Commerce Report confirms just how significant the impact of distribution and
service digitization of B2B companies is. Almost 8 out of 10 respondents believe that organizations
will disappear within the next five years if they do not digitalize.
In the global IT markets, the U.S. analyst company Gartner expects an additional considerable
increase in investments by 10.5% in the enterprise software market in 2020. The key driver of the
software market is the introduction of software-as-a-service (SaaS) solutions. The global market
for IT services will also benefit from high investment growth (+5.0%). The current Bitkom market
forecast for the German market expects growth of 6.4% for 2020 in the software segment and 2.4%
in the market for IT services.
Company outlook
The underlying conditions in the B2C and B2B e-Commerce markets continue to be positive, and
more and more companies of all sizes are using cloud solutions instead of their own IT infrastruc-
tures and resources. The transition process from a license provider to a provider of Commerce-as-
a-Service solutions via the cloud, which was initiated in 2018, is based on this trend and forms the
basis for the future development of the Company.
Major progress was made in the fiscal year and the transition was completed. However, since the
ambitious growth targets were not realized to the intended extent, Intershop initiated a restructur-
ing program in fall of 2019. The objective of the program is to accelerate the growth of the cloud
solution business and once again experience efficient growth as early as in the 2020 fiscal year.
The key elements are an adjustment of the cost structure of the cloud business model and measures
for optimized operations. For this purpose, weaknesses in sales and distribution have been identi-
fied and corresponding operating measures have been initiated. The goal is more efficient lead gen-
eration, consistent focus on the B2B segment, and stronger involvement of distribution partners.
Furthermore, on December 20, 2019, the extraordinary Stockholders’ Meeting passed a resolu-
tion on the simplified decrease in capital which was implemented in early 2020. Further financing
of Intershop is to be primarily sourced from operating business activities. At the same time, the
Company has various options both in respect of debt and equity.
The main focus in 2020 will be the consistent expansion of the cloud business while achieving cost
efficiency to the largest extent possible. According to the budgets, the incoming cloud orders are
to be increased to EUR 14 million, and net new ARR of EUR 4.3 million are to be generated. Overall,
Intershop expects a significant increase in cloud and subscription sales in the 2020 fiscal year.
However, in the maintenance and licenses segment, a slight decline in the revenues is budgeted as
a result of the transition in the business model. In the service segment, the expansion of the cloud
customer basis is expected to result in a slight increase in revenues. In this regard, growth will be
expected in all three target regions (Europe, United States, and Asia Pacific).
30
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report Statement on business developments for 2020
Based on the assumptions for the respective business segments, Intershop expects a slight increase
in Group sales for the 2020 fiscal year. With a slight improvement in the gross profit and gross
margin, a slightly positive operating result (EBIT) is projected.
Jena, February 25, 2020
The Management Board of INTERSHOP Communications Aktiengesellschaft
Dr. Jochen Wiechen
Markus Klahn
31
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Management Report and Group Management Report 2019
33 Consolidated Balance Sheet
34 Consolidated Statement of Comprehensive Income
35 Consolidated Statement of Cash Flows
36 Consolidated Statement of Shareholders´ Equity
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 010111010101110001101001001010101010101010111111000111000101010101010101010101010101010101a01010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010101010101010101010101010101 Consolidated Financial Statements
Consolidated Balance Sheet
in EUR thousand
Note No. December 31, 2019* December 31, 2018
ASSETS
Noncurrent assets
Intangible assets
Property, plant and equipment
Rights of use IFRS 16
Other noncurrent assets
Restricted cash
Deferred tax assets
Current assets
Trade receivables
Other receivables and other assets
Cash and cash equivalents
TOTAL ASSETS
SHAREHOLDERS´ EQUITY AND LIABILITIES
Shareholders´ equity
Subscribed capital
Capital reserve
Other reserves
Noncurrent liabilities
Liabilities to banks
Leasing liabilities IFRS 16
Deferred revenue
Current liabilities
Other current provisions
Liabilities to banks
Trade accounts payable
Income tax liabilities
Leasing liabilities IFRS 16
Other current liabilities
Deferred revenue
TOTAL SHAREHOLDERS´ EQUITY AND LIABILITIES
* taking into account the new accounting standard IFRS 16
(1)
(2)
(3)
(5)
(6)
(21)
(4)
(5)
(6)
(7)
(7.1)
(7.2)
(9)
(3)
(11)
(12)
(9)
(8)
(21)
(3)
(10)
(11)
9,908
608
1,763
17
635
76
9,599
658
0
26
0
67
13,007
10,350
5,528
1,360
7,731
14,619
27,626
42,582
1,082
(27,933)
15,731
250
207
0
457
428
1,301
1,656
62
1,583
3,089
3,319
11,438
27,626
3,977
1,106
7,224
12,307
22,657
34,852
9,738
(30,944)
13,646
1,547
0
146
1,693
261
1,500
1,525
27
0
2,268
1,737
7,318
22,657
33
Annual Report 20190101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010 Consolidated Statement of Comprehensive Income
in EUR thousand
Revenues
Software and Cloud Revenues
Service Revenues
Cost of revenues
Cost of revenues - Software and Cloud
Cost of revenues - Services
Gross profit
Operating expenses, operating income
Research and development
Sales and marketing
General and administrative
Other operating income
Other operating expenses
Result from operating activities
Interest income
Interest expense
Financial result
Earnings before tax
Income taxes
Earnings after tax
Note No.
January 1 to December 31,
2018
2019*
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(20)
17,072
14,548
31,620
(7,557)
(12,999)
(20,556)
15,967
15,232
31,199
(6,874)
(12,404)
(19,278)
11,064
11,921
(4,557)
(8,760)
(3,373)
269
(1,112)
(17,533)
(4,663)
(9,627)
(3,526)
205
(225)
(17,836)
(6,469)
(5,915)
15
(176)
(161)
12
(158)
(146)
(6,630)
(6,061)
(21)
(144)
(681)
(6,774)
(6,742)
Other comprehensive income
Exchange differences on translating foreign operations
Other comprehensive income from exchange differences
142
142
-42
-42
Total comprehensive income
(6,632)
(6,784)
Earnings per share (EUR, basic,diluted)
(22)
(0.17)
(0.20)
* taking into account the new accounting standard IFRS 16
34
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Financial Statements Consolidated Statement of Cash Flows
in EUR thousand
CASH FLOWS FROM OPERATING ACTIVITIES
Earnings before tax
Adjustments to reconcile net profit/loss
to cash used in operating activities
Financial result
Depreciation and amortization
Other noncash expenses and income
Changes in operating assets and liabilities
Accounts receivable
Other assets
Liabilities and provisions
Deferred revenue
Net cash provided by (used in) operating activities
before income tax and interest
Interest received
Interest paid
Income taxes received
Income taxes paid
Note No.
January 1 to December 31,
2018
2019*
(6,630)
(6,061)
161
4,146
113
(1,633)
(243)
1,060
1,414
146
2,211
0
1,220
(417)
(649)
(4)
(1,612)
(3,554)
15
(103)
0
(115)
12
(286)
3
(317)
Net cash provided by (used in) operating activities
(1,815)
(4,142)
CASH FLOWS FROM INVESTING ACTIVITIES
Restricted cash
Payments for investments in intangible assets
Proceeds on disposal of equipment
Purchases of property and equipment
(635)
(2,478)
2
(243)
0
(2,520)
3
(350)
Net cash provided by (used in) investing activities
(3,354)
(2,867)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from loan
Repayments of loans
Cash received for unregistered stock
Expenses of cash received for unregistered stock
Payments for leasing liabilities
Net cash provided by (used in) financing activities
Effect of change in exchange rates on cash
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
(6)
Cash and cash equivalents, end of period
* taking into account the new accounting standard IFRS 16
0
(1,500)
8,813
(97)
(1,696)
5,520
156
507
7,224
7,731
1,500
(1,250)
5,133
(32)
0
5,351
(67)
(1,725)
8,949
7,224
35
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Consolidated Financial Statements Consolidated Financial Statements
Consolidated Statement of Shareholders´ Equity
Other reserves
in EUR thousand
Common shares
(Number shares)
Subscribed
capital
Capital
reserve
Conversion
reserve
Cumulative
profit/loss
Cumulative
currency differences
Total share-
holders´equity
Balance January 1, 2019
34,851,831
34,851
9,738
(93)
(32,827)
Total comprehensive income
Issue of new shares
7,730,661
7,731
986
Reclassification
(9,642)
(6,774)
9,642
1,977
142
13,646
(6,632)
8,717
0
Balance December 31, 2019
42,582,492
42,582
1,082
(93)
(29,959)
2,119
15,731
Balance January 1, 2018
31,683,484
31,683
7,806
(93)
(26,085)
Total comprehensive income
(6,742)
Issue of new shares
3,168,347
3,168
1,932
2,019
(42)
15,330
(6,784)
5,100
Balance December 31, 2018
34,851,831
34,851
9,738
(93)
(32,827)
1,977
13,646
Annual Report 2019
36
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 2019
38 General Disclosures
42 Accounting Policies
60 Notes to the Individual Items of the
Statement of Comprehensive Income
65 Notes to the Cash Flow Statement
66 Other Disclosures
75 Responsibility statement
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010
Notes to the
Consolidated Financial Statements
General Disclosures
The Company
INTERSHOP Communications AG (“Intershop”, the “Company”, the “Intershop Group” or the “Group”)
is an Aktiengesellschaft (German stock corporation) under German law. The Company’s registered
office is at Intershop Tower, Leutragraben 1 in 07743 Jena, Germany. The Company is listed on the
German stock exchange in Frankfurt and is included in the Prime Standard. INTERSHOP Communi-
cations AG is entered in the commercial register of the Jena Local Court under number HRB 209419.
Intershop is a leading independent provider of omni-channel commerce solutions. Intershop offers
high-performance packaged software for internet sales, complemented by all necessary services.
Intershop also acts as a business process outsourcing provider, covering all aspects of online
retailing up to fulfillment.
The Company has prepared its consolidated financial statements assuming the Company’s
continued operations. As of December 31, 2019, the Company had cash and cash equivalents of
EUR 7.7 million (December 31, 2018: EUR 7.2 million). The equity ratio as of the balance sheet date
was 57% (previous year: 60%). The Company‘s financial liabilities to banks totaled EUR 1.6 million on
the balance sheet date (prior year: EUR 3.0 million). We refer to the statements in the Group Man-
agement Report.
Accounting principles (compliance statement)
In fiscal year 2019, INTERSHOP Communications AG prepared its consolidated financial statements
in accordance with the International Financial Reporting Standards (IFRSs) issued by the Internation-
al Accounting Standards Board (IASB), and in accordance with the provisions required to be applied
under section 315e(1) of the Handelsgesetzbuch (HGB – German Commercial Code).
The consolidated financial statements of the Company for 2019 (January 1, 2019 to December 31,
2019) were prepared in accordance with the International Financial Reporting Standards (IFRSs)
valid at the balance sheet date, which include standards (IFRS, IAS) adopted by IASB, and the Inter-
pretations (IFRIC, SIC) issued by the International Financial Reporting Interpretations Committee
(IFRIC IC), as adopted by the EU.
The 2019 fiscal year was the first year in which the adoption of the following financial reporting
standards and interpretations became mandatory:
• IFRS 16 “Leases”
• IFRIC 23 “Accounting tax risk positions”
• Improvements to IFRSs 2015-2017: Amendments of IFRS 3, IFRS 11, IAS 12, and IAS 23
• Amendments of IFRS 9 “Prepayment features with negative compensation”
38
Annual Report 20190101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010 In these consolidated financial statements, IFRS 16 is applied for the first time; thus, the Company had
to change its accounting methods as a result of adopting IFRS 16. For the first-time application of IFRS
16, Intershop used the modified retrospective transition method; the Company was not required to
reassess leases within the meaning of IFRS 16 that already existed before January 1, 2019. The impact
of the first-time adoption of IFRS 16 is outlined in the section entitled “Changes in material accounting
methods” in the chapter “Accounting policies”.
IFRIC 23, the improvements to IFRSs 2015-2017, as well as the amendments of IFRS 9 have no signifi-
cant impact on the Company‘s consolidated financial statements.
The International Accounting Standards Board (IASB) has also issued the following Standards, Inter-
pretations, and amendments to existing Standards whose application is not yet mandatory, or which
the European Union has not fully adopted in European law. The Company has decided not to adopt
these Standards prior to their effective date and this is also not planned for the future:
IFRS
IFRS
IFRS 3
Change
Revision of the references to the framework concept
in the IFRS standards
Amendments of IFRS 3 "Definition of a business"
IAS 1 and IAS 8
Amendments of IAS 1 and IAS 8 - Definition of material
IFRS 17
Insurance agreements
Amendment for
fiscal year as of
01/01/2020
01/01/2020
01/01/2020
01/01/2021
The amended standards will have no material impact on the Company‘s consolidated financial state-
ments.
Financial reporting for fiscal year 2019 has been prepared in accordance with the Standards and
Interpretations required to be applied and gives a true and fair view of the net assets, financial
position, and results of operations of the Intershop Group.
Assets and liabilities are generally measured at cumulative historical cost or the lower market value
as required.
The consolidated financial statements have been prepared in euros. Unless stated otherwise, all
amounts are given as thousands of euros (EUR thousand). Figures are rounded to the nearest
thousand and totals may not sum due to rounding.
The fiscal year of INTERSHOP Communications AG and its consolidated subsidiaries is the calendar
year. The income statement has been prepared using the cost of sales method. The balance sheet
is organized in accordance with the maturity of the assets and debt. Assets and debt are considered
current if they are due, or are supposed to be sold, within one year.
On February 25, 2020, the Management Board of INTERSHOP Communications AG authorized the
submission of these IFRS consolidated financial statements to the Supervisory Board.
39
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Estimates and assumptions
Preparation of the consolidated financial statements requires management to make estimates and as-
sumptions that affect the amounts reported in the consolidated financial statements and the accom-
panying notes. Estimates are based on past experience and other knowledge of transactions to be
accounted for. Actual results may differ from these estimates. As a result, estimates and the assumptions
on which they are based are regularly reviewed and assessed for their potential effects on the Company‘s
financial reporting. Provisions are recognized and measured on the basis of financial estimates and data,
as well as on the basis of historical data and circumstances known at the balance sheet date. It must
be probable that the obligation to a third party will have to be settled. The actual obligation may differ
from the amounts of the provisions. A corresponding adjustment in the carrying amounts of assets and
liabilities would occur within the next fiscal year. In particular, estimates are required to recognize and
measure provisions for legal costs and litigation risks, guarantee provisions, and provisions for income
taxes, as well as to assess the need for and measurement of impairment losses and valuation allow-
ances. In fiscal year 2019, other provisions amounted to a total of EUR 428 thousand (previous year:
EUR 261 thousand). The corresponding expense entries were recognized in the Consolidated Statement
of Comprehensive Income under general administration costs and cost of revenues. Goodwill is tested
for impairment using the test described in the section entitled „Impairment of assets.“ No impairments
were necessary in fiscal years 2018 and 2019. Please refer to the chapter entitled „Accounting policies“
for information on estimating revenues. An estimate for the degree of completion of contracts for
fixed-price projects is required when determining revenues for services.
Basis of consolidation
As of December 31, 2019, the companies included in consolidation consisted of, apart from the
parent company, the subsidiaries Intershop Communications, Inc., Intershop Communications
Australia Pty Ltd., Intershop Communications Asia Limited, The Bakery GmbH, Intershop Commu-
nications Ventures GmbH, Intershop Communications SARL and Intershop Communications LTD.
The following list shows the subsidiaries of Intershop Communications AG and the Company’s re-
spective interest as of December 31, 2019:
Interest
in %
Equity*
in EUR thousand
Annual result**
in EUR thousand
Intershop Communications, Inc.,
San Francisco, USA
Intershop Communications Australia Pty Ltd.,
Melbourne, Australia
Intershop Communications Asia Limited,
Hong Kong, China
Intershop Communications SARL, Paris, France
Intershop Communications LTD, Romsey,
United Kingdom
The Bakery GmbH, Berlin, Germany
Intershop Communications Ventures GmbH,
Jena, Germany
100
100
100
100
100
100
100
(714)
1,238
152
339
(211)
(4,037)
(1,381)
* Equity as of December 31, 2019 is translated at the exchange rate as of the reporting date
** Net income/loss for fiscal year 2019 is translated at the average annual rate
198
154
88
17
(114)
(48)
(18)
40
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 The subsidiary Intershop Communications LTD in the UK utilized the provision for an exemption
from the audit of the annual financial statements pursuant to 479A of the Companies Act 2006.
Consolidation methods
The consolidated financial statements comprise the financial statements of INTERSHOP Communi-
cations AG as the parent and those of all entities that it controls (German and foreign subsidiaries).
INTERSHOP Communications AG controls the consolidated subsidiaries by holding the majority of
the voting rights. Due to its control, INTERSHOP Communications AG has influence on the amount of
the subsidiaries‘ yields and is subject to fluctuating yields from its investment. A company is included
in the consolidated financial statements from the date on which control passes to the Intershop
Group. Deconsolidation usually occurs on the date control passes to a third party or on the date the
subsidiary is liquidated.
Subsidiaries:
Acquisition accounting for companies acquired from third parties is performed as of the date of
acquisition using the purchase method of accounting. Under this method, the assets acquired and
liabilities assumed are measured at their acquisition-date fair value. Any remaining positive differ-
ence between acquisition price and fair value is capitalized as goodwill. Any negative difference is
immediately recognized as an expense. Transaction costs are recognized as expense. In subse-
quent periods, hidden reserves and liabilities realized at the time of initial consolidation are carried,
written down or reversed in accordance to the treatment of the corresponding assets and liabilities.
Goodwill will be reviewed for impairment at least once a year during subsequent reporting periods
and, in case of impairment, an unscheduled write-down to the lower fair value is made. Expense
and revenues as well as receivables and liabilities between consolidated companies are eliminated.
Foreign currency translation
Monetary items denominated in foreign currency in the local-currency single-entity financial state-
ments of the consolidated companies are measured at the closing rate. Translation differences are
recognized in income.
The functional currency for it’s the subsidiaries is the local currency of the country in which the sub-
sidiary is based. The Company‘s functional currency is the euro. The financial statements of subsid-
iaries outside the euro zone are translated using the modified closing rate method. Since from a
financial, economic, and organizational perspective, the subsidiaries conduct their business inde-
pendently, the functional currency is always the same as the Company’s local currency. Assets and
liabilities are translated using the closing rate at the balance sheet date; income and expenses are
translated at the average exchange rate for the year. The difference resulting from currency trans-
lation is taken directly to equity and reported separately in equity under other reserves (cumulative
currency translation differences). Currency translation differences are reversed to income when a
subsidiary is deconsolidated.
Transactions in foreign currencies are translated at the exchange rate prevailing at the date of
each transaction. Nonmonetary items denominated in foreign currency are measured at histori-
cal exchange rates. Differences in exchange rates between the date of a transaction denominated
41
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
in a foreign currency and the date at which it is either settled or translated are recognized in the
statement of comprehensive income and are shown in “other operating income“ or “other operating
expenses.” Currency gains and losses were EUR -116 thousands (2018: EUR -79 thousands).
The following table shows the significant exchange rates used for foreign currency translation:
Country
Currency
Closing rate
Average rate for the year
1 EUR = Dec. 31, 2019 Dec. 31, 2018
United States
Australia
Hong Kong
United Kingdom
USD
AUD
HKD
GBP
1.12
1.56
8.75
0.85
1.15
1.62
8.97
0.89
2019
1.12
1.61
8.78
0.88
2018
1.18
1.58
9.26
0.89
Accounting Policies
The accounting policies are applied uniformly throughout the Intershop Group and to all periods
reported in the consolidated financial statements.
Changes in material accounting methods
For the first-time application of IFRS 16, Intershop used the transition method, in which the Company
was not required to reassess leases within the meaning of IFRS 16 that already existed before
January 1, 2019 (modified retrospective method). The comparative figures of the prior-year periods
were not adjusted. With the first-time application of IFRS 16, the Company recognized lease liabili-
ties for leases previously classified as operating leases under IAS 17. Lease liabilities were assessed
at the present value of the remaining lease payments discounted at the incremental borrowing
rate. Lease payments include fixed payments or graduated rents. Up to now, Intershop only had
operating leases, mainly for leased office space (particularly rental obligations for the building of the
company headquarters in Jena) and leased vehicles. The average remaining lease term is 2 years,
extension options have not been considered. The discounting of lease payments for leased office
space resulted in a weighted average incremental borrowing rate of 2.85% and for leased vehicles
of 2.45%. Intershop has made use of the exemptions for short-term leases (up to 12 months) and
leases for low-value assets provided in the standard. Payments are recognized as an expense on a
straight-line basis.
42
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
The following table shows the reconciliation to the lease liabilities in accordance with IFRS 16 as of
January 1, 2019 (in EUR thousand):
Obligations from operating leases as of December 31, 2018
Short-term leases that are recognized as an expense on a straight-line basis
Leases of low-value assets that are recognized as an expense on a straight-line basis
Payments for non-leasing components
Adjustment due to different estimates of contract terms
Effect of discounting
Other
Lease liabilities recognized on January 1, 2019
4,510
(270)
(60)
(982)
315
(106)
(37)
3,370
The first-time application of IFRS 16 resulted in the following effects as of January 1, 2019: The cap-
italization of the rights of use increased fixed assets by EUR 3,370 thousand as of January 1, 2019
(thereof EUR 3,262 thousand for leased office space and EUR 108 thousand for leased vehicles) and
in return liabilities due to the booking of lease liabilities by EUR 3,370 thousand (thereof for leased
office space EUR 3,262 thousand and EUR 108 thousand for leased vehicles).
Intangible assets
Purchased intangible assets, such as software and patentsare capitalized at cost. Intangible assets
with finite useful lives are measured at cost less accumulated amortization, taking into account ac-
cumulated impairment losses and reversals of impairment losses, and are written down using the
straight-line method. Their useful lives are generally between 2 and 3 years. Intangible assets with
an indefinite useful life, such as goodwill, are measured at cost less accumulated impairment losses
and tested for impairment both annually and when there are indications of impairment. Please refer
to the section entitled “Impairment of assets”.
Goodwill
In accordance with IFRS 3, goodwill resulting from consolidation is the excess of the cost of a business
combination over the Group’s interest in the fair value of the identifiable assets and liabilities and
contingent liabilities of a subsidiary, associate, or joint venture at the date of acquisition. Goodwill
is recognized as an asset and tested for impairment at least once a year in accordance with IAS 36.
Goodwill is tested for impairment on the basis of cash-generating units. For this purpose, goodwill is
allocated to cash-generating units generating benefits from the corresponding synergies. An impair-
ment loss is recognized if the recoverable amount of the cash-generating unit, which is the higher
of fair value less costs to sell and value in use, is lower than its carrying amount (for further details,
see the section entitled “Impairment of assets”). Impairment losses are immediately recognized in
the income statement and not reversed in subsequent periods.
43
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Software development costs
Development costs for newly developed (software) products are capitalized at cost in accordance
with IAS 38 if the following criteria are met: the technical feasibility, the intention for own use or
for sale, a guarantee of the marketability of the newly developed products, the future benefits, the
availability of sufficient technology, finances and other resources, as well as a clear allocation of
expenses. Capitalization of software development costs generally begins when the technological
feasibility of the product is established; which the Company defines with the compilation of the
software functionalities considered as marketable to so-called PSIs (Potential Shippable Increment)
and the definition of the EPICs (Features). Capitalized software development costs include direct
staff costs for employees, ancillary staff costs, directly attributable payments for third-party services,
and an appropriate percentage of reasonably identifiable overhead costs. The relevant amount is
amortized using the unit of production method over the planned useful life of three years beginning
from the time when the software release concerned is made available to customers. The capitalized
costs are subject to the impairment test. Research costs may not be capitalized in accordance with
IAS 38 and are therefore recognized directly as an expense in the income statement.
Property, plant, and equipment
Property, plant, and equipment is measured at historical cost less accumulated depreciation, taking
into account accumulated impairment losses and reversals of impairment losses. Depreciation is
computed using the straight-line method over the estimated useful lives of the assets. Depreciation
is based primarily on the following useful lives:
Computer equipment
Office furniture/ Presentation equipment
3 years
4-5 years
Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease terms
or their estimated useful lives. When items of property, plant, and equipment are decommissioned,
sold, or abandoned, the gain or loss from the difference between the sale proceeds and the carrying
amount is reported in “other operating income“ or “other operating expenses”.
Impairment of assets
For property, plant, and equipment and intangible assets with finite lives an estimate is made at
each balance sheet date to establish whether there are any indications that the assets in question
may be impaired in accordance with IAS 36, Impairment of Assets.
If such indications exist, the recoverable amount of the asset is determined so that the impairment
loss can be calculated. The recoverable amount is the higher of fair value less costs to sell and value
in use. The fair value less costs to sell is defined as the amount that could be generated by the sale
of an asset in an arm‘s length transaction between willing parties. The value in use is determined
on the basis of discounted future cash flows using a market rate of interest that reflects the risks
of the asset that are not yet included in the estimated future cash flows. If the recoverable amount
of an asset is lower than its carrying amount, the asset must be written down to its recoverable
amount. Impairment losses are recognized immediately in profit or loss. No extraordinary write-
44
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 downs were applied in years 2018 and 2019. In the case of reversals of impairment losses in a sub-
sequent period, the carrying amount of the asset is adjusted to reflect the identified recoverable
amount; however, the value of the asset may only be increased to the carrying amount that would
have arisen if no impairment loss had previously been charged. Reversals of impairment losses must
be recognized immediately in profit or loss. No such reversals were performed in 2018 and 2019.
An annual impairment test is performed for goodwill and not yet amortized software development
costs.
The goodwill impairment test is to be performed on cash generating units. The goodwill impair-
ment test is to be performed on the cash generating unit to which goodwill is allocated. Goodwill
comprises the intellectual property incorporated in the software obtained from previous acqui-
sitions (net carrying amount at December 31, 2019: EUR 4,473 thousand). For the goodwill the
relevant cash-generating unit is the Europe segment. In a first step, the carrying amount of the
cash-generating unit is compared with the recoverable amount of the Company at the balance
sheet date. The recoverable amount in this context is defined as the minimum of the value in use
and the stock price or the fair market value less selling costs, respectively Secondly, the impairment
write-down required is determined, but only if the value in use or market value is less than the
carrying amount. To determine the value in use of the cash-generating unit, the net cash flows for
the period from 2020 to 2023 and a „perpetual annuity“ (without growth rate) for the period after
and including 2024 were identified. The calculations are based on the corporate planning for the
period from 2020 to 2023 approved by Intershop‘s management. This plan reflects the transition
to the cloud business in that the license revenues will reduce over time and the cloud revenues will
experience strong growth and the share of cloud sales of the total revenue will increase each year.
An annual growth of the total revenue between 9% and 10% over the planning period is expected.
In the budgeted period, the Group expects increasing gross margins and positive EBIT margins that
will grow over time. The increase in revenues and the improved margin will result in the increased
inflow of cash of the CGU during the planning period. When determining the value in use, present
values were calculated on the basis of a discount rate after tax of 8.45% (WACC) (WACC before tax:
12.34%). No impairment losses on goodwill were reported in 2018 and 2019; impairment losses on
goodwill are not reversed (no appreciation). A change in the discount rate by one percentage point
or a reduction in cash flows by up to 50% compared to the budget would not have any effect on the
result of the test.
Leases
As described in the chapter entitled „Changes in material accounting methods,“ Intershop changed
its accounting method for the recognition of leases. Up until then, pursuant to IAS 17, the Company
recorded only those operating leases where the lease payments were expensed over the term of
the lease using the straight-line method. According to IFRS 16, the lessee must recognize assets (for
the right of use) and the corresponding lease obligation in lease agreements with a term exceeding
12 months. Assets and liabilities arising from leases are initially measured at present value. Lease
payments are discounted at the rate implicit in the lease if such rate can be readily determined.
Otherwise, the lessee shall use their incremental borrowing rate. Intershop is the lessee in leases
of rented office space, vehicles, as well as office equipment and supplies such as copying machines.
The Company applies the exemption rule to short-term leases with a term that does not exceed 12
months and to low-value leases; the Company expenses such items over the term of the item using
the straight-line method.
45
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Financial instruments
Financial assets and financial liabilities, which include trade receivables and liabilities, cash and cash
equivalents and restricted cash, are recognized in the balance sheet at the date when the Group
becomes a party to the contractual provisions of the financial instrument. Financial assets are clas-
sified and measured based on the business model operated and the structure of the cash flows. A
financial asset is initially measured as „at amortized cost,“ „at fair value through other comprehen-
sive income,“ or „at fair value through profit or loss.“ Intershop‘s current financial assets measured
at amortized cost include trade receivables, cash and cash equivalents and other assets. Financial
liabilities at amortized cost comprise liabilities to banks in the form of interest-bearing bank loans,
trade payables, leasing liabilities and other current liabilities. At the balance sheet date, Intershop
had no financial instruments measured „at fair value through other comprehensive income“ or „at
fair value through profit or loss“ according to IFRS 9. Intershop derecognizes financial assets if the
payment has been received or if the receivable cannot be collected. Financial liabilities are derecog-
nized if the contractual obligations have been met, rescinded or expired.
Trade receivables, other receivables and other assets
Trade receivables are reported at fair value, which usually corresponds to cost, at the date of rec-
ognition. They are subsequently measured at amortized cost net of any valuation allowances. Re-
ceivables from the sale of software licenses are recognized only when a contract has been signed
with the customer, any right of return granted to the customer has expired, the software has been
made available according to the contract, and it is more probable than not that the receivable will be
collected. The trade receivables also include revenue from contracts as set forth in IFRS 15 resulting
from fixed-price projects.
Trade receivables are recognized at their principal amount, which equals fair value at the time of
collection. Receivables with longer maturities (> 1 year) are discounted using market interest rates.
Other receivables and other assets are recognized at amortized cost. All identifiable risks of default
are taken into account by deducting appropriate allowances.
The Company makes judgments as to its ability to collect outstanding receivables and recognizes
allowances for the portion of receivables where collection becomes doubtful. Allowances are recog-
nized based on a specific review of all significant outstanding invoices. For those invoices not specif-
ically reviewed, allowances are recognized at differing rates, based on the age of the receivable. In
determining these percentages, Intershop analyzes its collection experience and current economic
trends. If the historical data the Company uses to calculate the allowances recognized for doubtful
accounts does not reflect the future ability to collect outstanding receivables, additional allowanc-
es for doubtful accounts may be needed and the future results of operations could be materially
affected.
46
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Cash and cash equivalents
Cash and cash equivalents include cash on hand, checks, and unrestricted deposits with banks that
have an original maturity of up to 90 days and are recognized at nominal value. Restricted cash is
reported separately (see the section entitled „Cash and cash equivalents“).
Other provisions and contingent liabilities
According to IAS 37, provisions are recognized for obligations to third parties if they have arisen
from a past event, an outflow of resources is probable, and the amount can be reliably estimated.
Provisions that do not lead to an outflow of resources in the subsequent year are recognized at the
settlement value, discounted to the balance sheet date using market interest rates. The settlement
value includes expected cost increases. Rights of recourse are not deducted from provisions.
Contingent liabilities are firstly possible obligations whose existence will be confirmed only by the
occurrence or nonoccurrence of one or more uncertain future events not wholly within the control
of the entity. Secondly, they are existing obligations where it is not probable that they will lead to an
outflow of resources, or the outflow cannot be reliably quantified. According to IAS 37, contingent
liabilities are not recognized in the balance sheet.
Trade accounts payable
Trade accounts payable are accounted at their amortized cost. Trade accounts payable are classi-
fied into current and noncurrent trade accounts payable. Trade accounts payable within one year
are current liabilities, and trade accounts payable after one year are noncurrent liabilities.
Liabilities to banks
When they are first recognized, liabilities to banks are entered at the fair value less transaction costs.
They are subsequently measured at amortized cost using the effective interest method.
Revenues
Intershop‘s revenues include revenues generated from the sale of software licenses and the corre-
sponding maintenance services, as well as revenues from providing cloud services and rendering
consulting services. Intershop records sales revenues at the date at which the obligation to perform
has been fulfilled. This requires a valid agreement including identifiable service obligations and
agreed-upon payment terms, as well as the likelihood that the agreed-upon consideration will be
obtained. The revenues correspond to the transaction price to which Intershop is entitled as per the
terms and conditions of the respective agreement. Revenues from variable components are only
recorded if it is highly likely that they will not be reversed in the future. There are no significant un-
certainties with regard to the revenues.
47
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
Licenses and Maintenance Revenues
Revenues from licenses are recorded at the date at which the software is handed over to the
customer and thus the customer has access to the software. The customer is granted a right of
use in the software not limited in time. Fees for the software licenses are typically billed after the
contract is executed and the software is handed over. On a case-by-case basis, payment plans are
agreed upon with customers.
When selling software licenses, maintenance contracts are usually entered into for a period of at
least one year. Revenues from maintenance are recognized ratably over the period in which the
services are provided. The purchase price stipulated in the respective agreement is allocated to the
individual service obligations based on their individual selling price. In general, invoices are issued on
an annual basis. The prepayments constitute contractual obligations and are disclosed in deferred
revenues. In principle, there is no obligation to accept returns and grant refunds or any warranties
from maintenance agreements.
Cloud and Subscription Revenues
Intershop offers its customers Commerce-as-a-Service solutions (CaaS solution) as a comprehensive
and efficient standard cloud solution or the commerce solution for operating the Intershop software
in a cloud environment. These revenues include the following services: (1) contractually agreed-up-
on use of the CaaS solution limited in time with hosting in a dedicated Azure Cloud environment
that is operated, maintained and secured by Intershop or (2) contractually agreed-upon use of the
Intershop license limited in time with or without hosting in a dedicated cloud environment.
Intershop agrees on a regular, fixed fee for these services with its customers for a certain period of
time, which is usually invoiced each month or annually in advance. Prepayments are disclosed under
deferred revenue. Revenues are recognized on a prorated basis over the period of use and result
in regularly recurring revenue. Transaction-based and revenue-based fees as well as set-up services
are also generally agreed upon; the revenues are recognized when they are recorded (date-based).
The purchase price stipulated in the respective agreement is allocated to the individual service obli-
gations based on their individual selling price.
Service Revenues
Intershop offers its customers various services in the course of implementation of the Intershop
software. Daily rates and the schedule for these project services are contractually agreed with the
customer. Intershop records the revenues from the rendering of the services over the period in which
the services are rendered. Revenues and expenses from fixed-price agreements are recognized based
on the percentage of completion. The determination of the amount of revenues to be recognized is
partly based upon the use of estimates. The Company estimates the percentage of completion on
contracts with fixed or “not to exceed” fees on a monthly basis, utilizing hours incurred to date as a per-
centage of total estimated hours to complete the project. If Intershop does not have a sufficient basis to
measure progress towards completion, revenue is recognized when the Company receives final accep-
tance from the customer. When total cost estimates exceed the contractually agreed upon revenues,
Intershop sets aside valuation allowances or reserves for the estimated losses, using cost estimates that
are based upon an average burdened daily rate and all expenses applicable to the organization deliver-
ing the services. The complexity of the estimation process and issues related to the assumptions, risks,
and uncertainties inherent in the application of the percentage-of-completion method of accounting
48
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 affect the amounts of revenues and related expenses reported in the Company’s consolidated financial
statements. A number of internal and external factors can affect Intershop’s estimates, including costs
for employees, utilization and efficiency variances, and specification and testing requirement changes.
Cost of revenues
The cost of revenues includes the costs incurred in generating revenues. They include in particular
all costs for maintenance, cloud and services. The cost of revenues for licenses also includes the
amortization of capitalized software development costs.
Cost of debt
Interest expenses are recognized in the period in which they arise.
Income taxes
In accordance with IAS 12, deferred taxes are recognized for all temporary differences between the
carrying amount of assets and liabilities in the IFRS balance sheet and their tax base at the balance
sheet date using the balance sheet liability method. Deferred tax assets are recognized for all de-
ductible temporary differences, unused tax loss carryforwards, and unused tax credits to the extent
that it is probable that taxable income will be available against which the deductible temporary dif-
ferences and the unused tax loss carryforwards and tax credits can be utilized.
Deferred taxes are measured at the tax rates that have been enacted or substantively enacted for
the period in which an asset is realized or a liability settled. The effect of changes in the tax rate on
deferred taxes is recognized as of the effective date of the legal changes.
Operating segments
The segments have been presented in accordance with IFRS 8, Operating Segments. The structure
and content of segment reporting reflects the internal reports provided to management. An
operating segment is a component of an entity that engages in business activities from which it may
earn revenues and incur expenses, whose results are regularly reviewed by management, and for
which financial information is available. An operating segment becomes a reportable segment if it
can be identified and exceeds certain quantitative thresholds. Expenses are generally allocated on
the basis of the percentage revenue breakdown.
Earnings per share
The basic net loss per share is determined in accordance with IAS 33, Earnings per Share for all periods
presented. Basic net loss per share is computed using the weighted average number of outstanding
shares of common shares. The diluted net loss per share is computed using the weighted average
number of ordinary shares outstanding and, in the case of dilution, the ordinary shares outstanding
and the potential number of ordinary shares from options and warrants to purchase such shares using
the treasury stock method. All potential ordinary shares have been excluded from the computation of
the diluted net loss per share because the effect would be antidilutive.
49
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Notes to the Individual Balance Sheet Items
(1) Intangible assets
in EUR thousand
Costs of purchase
Software/ other
intangible assets
Internally
developed
software
Goodwill
Total
Balance at January 1, 2018
1,885
24,497
24,097
50,479
Additions
Disposals
Currency translation differences
31
(11)
0
2,522
(6,039)
0
0
0
0
2,553
(6,050)
0
Balance at December 31, 2018
1,905
20,980
24,097
46,982
Additions
Disposals
Currency translation differences
57
(2)
0
2,452
0
0
0
0
0
2,509
(2)
0
Balance at December 31, 2019
1,960
23,432
24,097
49,489
Amortization, write-downs, and impairment losses
Balance at January 1, 2018
1,870
20,052
19,624
41,546
Additions
Disposals
Currency translation differences
17
(12)
0
1,870
(6,038)
0
0
0
0
1,887
(6,050)
0
Balance at December 31, 2019
1,875
15,884
19,624
37,383
Additions
Disposals
Currency translation differences
44
(2)
0
2,156
0
0
0
0
0
2,200
(2)
0
Balance at December 31, 2019
1,917
18,040
19,624
39,581
Net carrying amount at
December 31, 2018
Net carrying amount at
December 31, 2019
30
43
5,096
4,473
9,599
5,392
4,473
9,908
“Internally developed software” includes capitalized software development costs for continued
development of Intershop’s software. Of the amortization, write-downs and impairment losses
on intangible assets recognized in the Statement of Comprehensive Income, EUR 2,168 thousand
(2018: EUR 1,876 thousand) are included in the cost of revenues, EUR 6 thousand (2018: EUR
8 thousand) in research and development expenses as well as EUR 26 thousand (2018: EUR
3 thousand) in general and administrative costs. With the exception of goodwill there are no intan-
gible assets with indefinite useful lives.
50
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
Computer
equipment
Office and
operating
equipment
Leasehold
improve-
ments
Total
(2) Property, plant, and equipment
in EUR thousand
Costs of purchase
Balance at January 1, 2018
Additions
Disposals
Currency translation differences
Balance at December 31, 2018
Additions
Disposals
Currency translation differences
Balance at December 31, 2019
2,724
236
(104)
(2)
2,854
186
(198)
5
2,847
Depreciation, write-downs, and impairment losses
Balance at January 1, 2018
Additions
Disposals
Currency translation differences
Balance at December 31, 2018
Additions
Disposals
Currency translation differences
Balance at December 31, 2019
Net carrying amount at
December 31, 2018
Net carrying amount at
December 31, 2019
2,171
229
(101)
(1)
2,298
256
(197)
4
2,361
556
486
1,094
114
(152)
(2)
1,054
64
(123)
2
997
1,010
95
(151)
(2)
952
37
(116)
2
875
102
122
281
4,099
0
0
(1)
280
0
0
1
350
(256)
(5)
4,188
250
(321)
8
281
4,125
281
3,462
0
0
(1)
280
0
0
1
324
(252)
(4)
3,530
293
(313)
7
281
3,517
0
0
658
608
Of depreciation, write-downs and impairment losses on property, plant and equipment recog-
nized in the Statement of Comprehensive Income, EUR 88 thousand (2018: EUR 103 thousand) are
included in the cost of revenues, EUR 72 thousand (2018: EUR 89 thousand) in research and devel-
opment expenses, EUR 44 thousand (2018: EUR 58 thousand) in marketing and sales expenses as
well as EUR 89 thousand (2018: EUR 74 thousand) in general and administrative expenses.
51
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
(3) Leases
The items disclosed in the balance sheet relating to leases are as follows:
Rights of use
in EUR thousand
Balance at Jan. 1, 2019
(first-time adoption)*
Additions
Disposals
Depreciation, write-downs, and
impairment losses
Currency translation differences
Balance at Dec. 31, 2019
Office space
Vehicles
3,262
0
0
(1,582)
10
1,690
108
36
0
(71)
0
73
Total
3,370
36
0
(1,653)
10
1,763
* for details on the computation, please see the chapter entitled „Changes in material accounting methods“
Lease liabilities
in EUR thousand
Non-current
Current
2019
207
1,583
1,790
The following amounts were recorded relating to leases through profit and loss:
in EUR thousand
Depreciation on rights of use
Interest expenses from lease liabilities
Expenses for short-term leases
Expenses for leases for a low-value asset
Income from subleasing of rights of use
2019
1,653
70
282
39
(399)
1,645
The cash paid for leases totaled EUR 1,696 thousand in 2019; this amount includes interest in the
amount of EUR 70 thousand.
In December 2020, the Company plans to move into new business premises at the headquarters
in an office building that is currently being built. The new lease was concluded in August 2017 and
has a term of ten years from the move-in date. The contractually agreed lease payments excluding
utilities total EUR 9.7 million over the lease term.
52
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 (4) Trade receivables
The trade receivables at the balance sheet date include receivables from rendering services and
cloud services as well as the sale of software licenses amounting to EUR 5,528 thousand (2018:
EUR 3,977 thousand) which fall due within one year (current assets). EUR 92 thousand (2018: EUR
0 thousand) of this amount relates to receivables from fixed-price projects (contract assets). Of the
trade receivables, total receivables of EUR 3,568 thousand (2018: EUR 3,318 thousand) are not yet
due. The following table shows the maturity structure of the trade receivables that are not yet due:
in EUR thousand
Due within 30 days
Due within 31 and 60 days
Due within 61 days and 1 year
Dec. 31, 2019
Dec. 31, 2018
1,579
1,333
655
3,568
1,148
1,743
427
3,318
As of December 31, 2019, trade receivables of EUR 1,960 thousand were past due but were not
impaired (December 31, 2018: EUR 331 thousand). The following table shows the maturity structure
of receivables that are past due but not impaired:
in EUR thousand
Up to 30 days past due
31 to 60 days past due
61 to 90 days past due
Over 90 days past due
Dec. 31, 2019
Dec. 31, 2018
1,349
252
221
138
1,960
153
32
146
0
331
Itemized allowances are typically recorded after 90 days. No valuation adjustments were recorded
for fixed-price projects. As regards the trade receivables due or not yet due at the balance sheet
date, it is not expected that the customers will fail to fulfill their payment obligations. Overdue,
non-impaired receivables as at December 31, 2019 were collected primarily in January 2020. Receiv-
ables overdue for more than 90 days in the amount of EUR 138 thousand were paid in January 2020.
53
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 As of December 31, 2019, impairment losses amounting to EUR 15 thousand (2018: EUR 15 thousand)
have been recognized in operating result. Impairments changed as follows:
in EUR thousand
Balance at beginning of year
Impairment of receivables
Amounts derecognized due to uncollectibility
Amounts received during the fiscal year
on receivables written off
Reversals of impairments
Balance at end of year
2019
15
51
0
(15)
0
51
2019
5
15
0
(5)
0
15
(5) Other receivables and other assets
Other noncurrent assets in the amount of EUR 17 thousand (2018: EUR 26 thousand) comprise
rental security deposits.
Other current receivables and current assets include the following items:
in EUR thousand
Prepayments
Other tax receivables from sales tax
Other
Dec. 31, 2019
Dec. 31, 2018
1,229
30
101
1,360
827
183
96
1,106
(6) Cash and cash equivalents
Cash and cash equivalents include current cash and cash equivalents (EUR 7,731 thousand)
as well as non-current restricted cash (EUR 635 thousand). Cash and cash equivalents include
balances at various credit institutions that are available at any time, as well as cash on hand
and checks. The non-current restricted cash results from a rental deposit for the new office
space at the Company‘s headquarters.
54
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 (7) Equity
The development of INTERSHOP Communications AG‘s equity is shown in the statement of equity.
Subscribed capital
As at December 31, 2019, the subscribed capital amounts to EUR 42,582,492 and is divided into
42,582,492 no-par value bearer shares, all of which have been paid in full. There are no restrictions
on the voting rights. As at December 31, 2018, the subscribed capital amounted to EUR 34,851,831.
The change of a total of EUR 7,730,661 is attributable to the issuance of new shares from the Autho-
rized Capital in the course of two capital increases and are as follows:
in EUR
Balance at January 1
Capital increases from authorized capital
Balance at December 31
Capital decrease
2019
34,851,831
7,730,661
42,582,492
2018
31,683,484
3,168,347
34,851,831
On October 28, 2019, the Management Board of INTERSHOP Communications AG announced the
loss of half of the Company‘s share capital as required by Sec. 92(1) German Stock Corporation Act
(Aktiengesetz; AktG) and convened an extraordinary Stockholders‘ Meeting. At the Stockholders‘ Meet-
ing on December 20, 2019, it was resolved that losses and other impairment losses shall be com-
pensated by way of a simplified capital decrease at a ratio of 3:1 to the amount of EUR 14,194,164,
which did not become legally effective until registration in the commercial register in the new 2020
fiscal year on February 4, 2020. Technical implementation of the combination of shares occurred on
February 14, 2020 after close of trading at the Frankfurt Stock Exchange.
Authorized capital
As at December 31, 2019, the Company had Authorized Capital in the amount of EUR 8,625,817
(December 31, 2018: EUR 12,667,653) for the issuance of 8,625,817 new non-par bearer shares
(December 31, 2018: 12,667,653 shares). According to the INTERSHOP Communications AG’s
Articles of Association, the Management Board is authorized, subject to approval by the Supervisory
Board, to increase the capital stock by issuing new common shares as follows:
• Up to a total of EUR 8,625,817 by issuing up to 8,625,817 new bearer shares against cash con-
tributions and/or contributions in kind (Authorized Capital I/2019). The Management Board’s
authorization is valid until June 7, 2024. The Management Board is authorized, subject to approval
of the Supervisory Board, to exclude the stockholders‘ subscription rights in certain cases.
The Annual Stockholders‘ Meeting on May 29, 2019 resolved to cancel Authorized Capital I/2016
in the amount of EUR 3,167,653 and Authorized Capital II/2018 in the amount of EUR 5,143,522
and to create a new Authorized Capital I/2019 in the amount of EUR 12,000,000. The new
Approved Capital I/2019 was entered in the Commercial Register on June 7, 2019. The Autho-
rized Capital I decreased to EUR 8,625,817 due to a cash capital increase in the amount of
EUR 3,374,183 in July 2019.
55
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Conditional capital
As of the balance sheet date, the Company did not have any conditional capital.
Capital increases in the 2019 fiscal year
During the 2019 fiscal year, the Company implemented two capital increase by utilizing the Authorized
Capital. The Management Board of INTERSHOP Communications AG, with the consent of the Supervi-
sory Board, resolved on January 9, 2019 to increase the capital, making partial use of the Authorized
Capital II/2018 with subscription rights for shareholders at a ratio of 8:1 at a subscription price of
EUR 1.14. The capital increase with subscription rights was successful and a total of 4,356,478 new
shares were allocated. The capital increase became effective upon registration in the Register of
Companies (Handelsregister) at the Jena Local Court (Amtsgericht) on February 14, 2019. At said date,
the subscribed capital increased by EUR 4,356,478 to EUR 39,208,309. The issued shares include the
same rights as the other issued shares. Intershop received cash and cash equivalents of EUR 4,966
thousand as a result of the capital increase. The transaction costs amounted to EUR 70 thousand.
The Authorized Capital II/2018 decreased by EUR 4,356,478 from EUR 9,500,000 to EUR 5,143,522.
On June 25, 2019, the Management Board of the Company, with the consent of the Supervisory
Board, resolved a cash capital increase utilizing authorized capital (Authorized Capital I/2019),
excluding the subscription right of shareholders pursuant to Sec. 186(3) s. 4 German Stock
Corporation Act (Aktiengesetz; AktG), by issuing 3,374,183 new no-par value bearer shares at a price
close to the stock price. The issuance amount for the new shares amounted to EUR 1.14. The
new shares were subscribed by three institutional investors, Shareholder Value Beteiligungen AG,
Shareholder Value Management AG and AXXION S.A. on behalf of several fund clients. The capital
increase was entered in the commercial register on July 5, 2019. The share capital increased from
EUR 39,208,309 to EUR 42,582,492. The issued shares include the same rights as the other issued
shares. The Company received cash and cash equivalents of EUR 3,847 thousand as a result of the
capital increase. The transaction costs amounted to EUR 27 thousand.
Capital increase in the 2018 financial year
During the 2018 financial year, the Company implemented a capital increase by utilizing the Autho-
rized Capital I. Against cash contributions and exclusive of the subscription rights of shareholders,
3,168,347 new no-par value bearer shares were issued at a price of EUR 1.62 per new share. The
new shares were subscribed by three institutional investors, AXXION S.A. on behalf of several fund
clients, Shareholder Value Beteiligungen AG, and Shareholder Value Management AG. This event
was recorded in the Register of Companies (Handelsregister) on May 15, 2018. The issued shares
include the same rights as the other issued shares. Intershop received cash and cash equivalents of
EUR 5,133 thousand as a result of the capital increase. The transaction costs amounted to EUR 32
thousand. No capital increases were implemented in the previous year.
(7.1) Capital reserve
The capital reserve includes expenses from stock options from previous years as well as amounts
in excess of the par value generated from the issue of shares, less the transaction costs for capital
increases. As in the separate financial statements of INTERSHOP Communications AG, the capital
reserve was liquidated in the amount of EUR 9,642 thousand to compensate the balance sheet loss.
Please see Statement of Change in Equity for details.
56
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
(7.2) Other reserves
Other reserves include a conversion reserve, reserves from cumulative gains/losses, and cumulative
currency translation differences. The conversion reserve includes the expense from stock options
that related to the first-time adoption of IFRSs. The reserve from cumulative currency translation
differences shows the differences that result from the translation of the financial statements of sub-
sidiaries into euros.
(8) Trade accounts payable
Trade accounts payable comprise unsettled liabilities relating to the delivery of goods and services
and amounted to EUR 1,656 thousand (2018: EUR 1,525 thousand).
(9) Liabilities to banks
Liabilities to banks are broken down as follows:
in EUR thousand
Dec. 31, 2019
Dec. 31, 2018
Liabilities to banks - noncurrent
Liabilities to banks - current
250
1,301
1,551
1,547
1,500
3,047
In the 2018 financial year, Intershop entered into an unsecured loan agreement with Commerzbank
AG in the amount of EUR 1,500 thousand over a period of three years with a fixed interest rate of
2.85% p.a. and a constant monthly repayment rate.
In the 2015 financial year, the Company entered into a loan agreement in the amount of EUR 6,000
thousand with Sparkasse Jena-Saale-Holzland. The term of the loan is six years, with a fixed interest
rate of 4.5% p.a. over the entire term. The contractually agreed repayment amount is EUR 1,000
thousand annually. It was also agreed that annual unscheduled payments would not incur a prepay-
ment penalty. In the 2016 fiscal year, a special repayment in the amount of EUR 1,200 thousand was
made from the pledged portion of the loan. The loan is secured with an indemnity bond covering
80% of the loan amount from the state of Thuringia, and the approval of a distribution license for
the Intershop software.
57
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
(10) Other liabilities
Other liabilities consist only of current liabilities and comprise:
in EUR thousand
Liabilities to employees
Liabilities from outstanding vacation entitlement
Other VAT and wage tax liabilities
Liabilities from advance payments received
Liabilities to the Occupational Health and Safety Agency
Other liabilities relating to social security benefits
Miscellaneous other liabilities
Dec. 31, 2019
Dec. 31, 2018
1,031
645
742
150
105
63
353
906
620
325
10
106
65
236
3,089
2,268
Liabilities to employees mainly include liabilities from commissions and performance-based remu-
neration and obligations under the restructuring program in 2019 (EUR 420 thousand).
The item „liabilities from prepayments“ are contractual obligations as defined in IFRS 15 compris-
ing prepayments (EUR 116 thousand) and prepayments received for fixed-price projects (EUR
34 thousand). As at December 31, 2018, the amount of EUR 10 thousand included in this amount
was recorded as revenues in the 2019 fiscal year (2018: EUR 229 thousand). As permitted under
IFRS 15, no disclosures regarding remaining service obligations with an expected original term
not to exceed one year are made. The other liabilities include refund obligations in the amount of
EUR 107 thousand.
(11) Deferred revenue
Deferred revenue relates to prepayments by customers, primarily in the form of revenue
from maintenance agreements and are deemed contractual obligations as defined in IFRS 15.
Deferred revenue is reversed and revenue is recognized in the period in which the service
was provided by Intershop. In the case of current deferred revenue, reversal and recognition
take place within a year. The amount of EUR 1,737 thousand included in the current deferred
revenue as at December 31, 2018 was recorded as revenues in the 2019 fiscal year (2018: EUR
1,670 thousand). As permitted under IFRS 15, no additional disclosures regarding remaining
service obligations are made due to the fact that the disclosed service obligations are expected
to be due originally within one year.
58
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 (12) Other provisions
Other current provisions amounted to EUR 428 thousand (2018: EUR 261 thousand).
The following table shows the development of other current provisions:
in EUR thousand
Guarantee
Other
Balance at January 1, 2019
Additions
Utilization
Reversal
Currency adjustments
Balance at December 31, 2019
179
144
(179)
0
1
145
82
284
(82)
(1)
0
283
The other accrued liabilities primarily relate to impending losses from projects.
Total
261
428
(261)
(1)
1
428
59
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Notes to the Individual Items
of the Statement of Comprehensive Income
(13) Revenues
The Company generated revenues from software licenses and the corresponding maintenance
services, as well as from providing cloud services and consulting services. Revenues of EUR 31,620
thousand (2018: EUR 31,199 thousand) are divided into software and cloud revenues and service
revenues as follows:
in EUR thousand
Licenses
Maintenance
Cloud and Subscription
Software and Cloud Revenues
Service Revenues
Total Revenues
2019
2,638
8,051
6,383
17,072
14,548
31,620
2018
2,434
8,114
5,419
15,967
15,232
31,199
The breakdown of the recognized revenue into categories corresponds to the representation
in segment reporting. We refer to Chapter „Segment reporting“ in Section „Other disclosures“.
Revenues are recognized for licenses at a specific point in time, and for all other revenues over a
specific period of time.
(14) Cost of revenues
Cost of revenues is divided into cost of product revenues and cost of service revenues analogous to
revenues; these costs are broken down as follows:
in EUR thousand
Licenses
Maintenance
Cloud and Subscription
Cost of revenues - Software and Cloud
Cost of revenues - Services
Total cost of revenues
2019
2,175
1,485
3,897
7,557
12,999
20,556
2018
2,010
1,473
3,391
6,874
12,404
19,278
The cost of revenues for licenses primarily include the amortization of software development costs.
60
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 (15) Research and development expenses
Research and development expenses comprise all expenses attributable to R&D activities, with
personnel expenses accounting for the majority of this item. Research and development costs
decreased by 2% from EUR 4,663 thousand to EUR 4,557 thousand and account for 14% of the
revenue (2018: 15%).
(16) Sales and marketing expenses
Sales and marketing expenses consist mainly of personnel costs for sales and marketing employees,
sales commissions, expenditures for sales partners, and costs associated with advertising and exhi-
bitions for various trade shows. Selling and marketing expenses decreased by 9% from EUR 9,627
thousand to EUR 8,760 thousand, primarily due to decreased personnel expenses. The share of
sales and marketing expenses to total revenue was 28% (2018: 31%).
(17) General and administrative expenses
General and administrative expenses mainly comprise personnel and non-personnel expenses as
well as depreciation and amortization that relates to administration. They include the cost of investor
relations activities and expenses relating to the Stockholders‘ Meeting, as well as all legal expenses.
General administrative costs fell by 4% from EUR 3,526 thousand to EUR 3,373 thousand. As in the
prior year, the share of general administrative costs in total revenues was 11%.
(18) Other operating income
Other operating income is composed of the following items:
in EUR thousand
Income from currency translation gains
Gains from the disposal of fixed assets
Miscellaneous
2019
74
3
192
269
2018
73
3
129
205
Income from currency gains of EUR 74 thousand is attributable to financial instruments.
61
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 (19) Other operating expenses
Other operating expenses relate to the following items:
in EUR thousand
Restructuring costs
Currency translation losses
Expenses from defaults on receivables
Other taxes
Miscellaneous
2019
825
190
67
1
29
1,112
2018
0
151
0
1
73
225
The restructuring costs primarily comprise personnel expenses. Expenses from currency transla-
tion losses of EUR 153 thousand were attributable to financial instruments.
(20) Interest income and Interest expenses
Interest income of EUR 15 thousand (2018: EUR 12 thousand) consists primarily of interest on bank
balances. Interest expenses amounted to EUR 176 thousand (2018: EUR 158 thousand), and are
mainly the result of interest expenses for liabilities to banks for the 2019 fiscal year in the amount of
EUR 106 thousand and interest expenses from leases in the amount of EUR 70 thousand.
(21) Income taxes
Income tax liabilities on the balance sheet date amounted to EUR 62 thousand (2018: EUR 27 thousand)
and foreign income taxes for the year 2019.
The Company recognizes and measures income taxes using the balance sheet liability method in accor-
dance with IAS 12. Deferred taxes are calculated at the respective national income tax rates. The calcu-
lation of deferred taxes for the domestic companies for December 31, 2019 was based on a corporate
income tax rate of 15% (2018: 15%) plus the solidarity surcharge of 5.5% (2018: 5.5%) and an effective
expected trade tax rate of 15.691% (2018: 15.691%).
The Group‘s income taxes are broken down as follows:
in EUR thousand
Current taxes
Abroad
Germany
Deferred taxes
Abroad
Germany
2019
2018
147
2
(5)
0
144
107
8
(10)
576
681
62
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
The Group tax rate of 31.517% applicable in fiscal year 2019 (2018: 31.517%) was multiplied by IFRS
earnings before taxes to calculate the expected tax expense. Tax rates in a bandwidth from 16% to
30% were taken into account for the foreign subsidiaries.
The tax rate reconciliation contains the following details:
in EUR thousand
IFRS pretax income
Corporate tax rate
Expected tax expense/ tax income
Effects of changes in tax rates and different rates of
foreign taxation
Effects of non-recognition of deferred taxes or utilization
of tax losses
Permanent effects, tax refunds
Taxes of prior years
Income taxes
The components of the deferred tax assets were as follows:
in EUR thousand
Taxes on eligible loss carryforwards
Inventories
Provisions/Liabilities
Leasing liabilities
Deferred tax assets
Offset
Deferred tax assets after offset
Intangible assets
Receivables
Liabilities
Right of use IFRS 16
Deferred tax liabilities
Offset
Deferred tax liabilities after offset
Net deferred tax assets
2019
(6,630)
31.517%
(2,089)
2018
(6,061)
31.517%
(1,910)
49
2,197
70
(83)
144
2019
1,559
103
176
482
2,396
(2,320)
76
1,699
92
54
475
2,320
(2,320)
0
76
23
2,513
70
(15)
681
2018
1,583
0
91
0
1,674
(1,607)
67
1,606
0
1
0
1,607
(1,607)
0
67
63
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Deferred tax assets are recognized for temporary differences and for tax loss carryforwards in the
amount of the expected reduction in tax expense in subsequent fiscal years to the extent that it is
probable that they will be used. As at December 31, 2019, deferred tax assets were only recognized
in accordance with IAS 12.35 in the amount of taxable profit from temporary differences that will be
available in the future. Deferred taxes on balance sheet differences, with the exception of deferred
tax liabilities on intangible assets, are short-term deferred taxes that reverse in the following year.
Deferred tax liabilities on intangible assets are realized over a depreciation period of three years.
Deferred taxes on loss carryforwards are basically to be regarded as long-term. Deferred tax liabili-
ties for withholding taxes on capital for subsidiaries were not recognized.
For the year ended December 31, 2019, the Company had net loss carryforwards for tax reporting
purposes in various tax jurisdictions as follows:
in EUR thousand
U.S. Federal
U.S. State
German corporate income tax
German municipal trade tax
Other
2019
66,271
38,097
308,598
298,178
148
2018
103,185
36,759
301,393
286,199
116
U.S. federal and state net operating loss carryforwards expire in various fiscal periods through
2037. The change in loss carryforwards in the United States is mainly the result of the expiration
of U.S. federal taxes in 2019, currency translation, and ongoing use. Deferred taxes on foreign loss
carryforwards were not recognized. With regard to the remaining German loss carryforwards, no
deferred tax assets were recorded for income tax purposes in the amount of EUR 303,588 thousand
(2018: EUR 296,261 thousand) and for trade taxes in the amount of EUR 293,296 thousand
(2018: EUR 281,284 thousand).
(22) Earnings per share
The calculation of basic and diluted earnings per share is based on the following data:
in EUR thousand
2019
2018
Basis for calculating basic and diluted earnings per share
(earnings after tax)
Weighted average number of ordinary shares
(in thousand)
Earnings per share (basic/diluted) (in EUR)
(6,774)
(6,742)
40,338
(0.17)
33,673
(0.20)
If the diluted earnings reduce the loss per share or increase earnings per share, an adjustment is
made to the amount of basic earnings per share (antidilutive effect) in accordance with IAS 33.43.
64
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Notes to the Cash Flow Statement
Cash comprises exclusively the cash and cash equivalents reported in the balance sheet. In the
cash flow statement, cash flows are classified into net cash provided by/used in operating, investing,
and financing activities. Cash flows from operating activities are calculated on the basis of earnings
before tax, adjusted for noncash income and expenses, and of the changes in operating assets and
liabilities compared with last year‘s balance sheet.
Cash outflow from operating activities totaled EUR 1,815 thousand in 2019, compared to cash
outflow in 2018 in the amount of EUR 4,142 thousand, which is primarily the result of higher liabili-
ties and higher deferred revenue comprising prepayments made by customers. Cash outflow from
investment activities increased from EUR 2,867 thousand in the prior year to EUR 3,354 thousand
due to additional restricted cash of EUR 635 thousand relating to a rental deposit for the new
office space at the Company‘s headquarters. The payments for investments in intangible assets
were at the prior year‘s level totaling EUR 2,478 thousand (2018: EUR 2,520 thousand). Cash flow
from financing activities was EUR 5,520 thousand (2018: EUR 5,351 thousand). The cash inflow is
mainly attributable to the two cash capital increases in the total amount of EUR 8,813 thousand
(2018: EUR 5,133 thousand). Cash outflows resulted from the repayment of loans in the amount of
EUR 1,500 thousand (2018: EUR 1,250 thousand) as well as cash paid for lease liabilities under IFRS
16 in the amount of EUR 1,696 thousand. The payments for lease liabilities include interest in the
amount of EUR 70 thousand. In total, there was a net inflow of EUR 507 thousand in the 2019 fiscal
year compared to a cash outflow of EUR 1,725 thousand in the prior year. As at the balance sheet
date, Intershop had freely available cash and cash equivalents of EUR 7,731 thousand (December
31, 2018: EUR 7,224 thousand).
The changes in the balance sheet items used to determine the cash flow statement are not imme-
diately evident from the balance sheet because effects from currency translation and from changes
in the basis of consolidation do not impact cash and are eliminated.
65
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
Other Disclosures
Segment reporting
Segment reporting as of December 31, 2019
in EUR thousand
Europe
USA
Asia/
Pacific
Consoli-
dation
Group
Revenues from external
customers
Software and Cloud Revenues
11,821
2,653
2,598
Licenses and Maintenance
Licenses
Maintenance
Cloud and Subscription
Service Revenue
Total revenues from external
customers
Intersegment revenues
Total revenues
Cost of revenues
Gross profit
Operating expenses, operating
income
0
0
0
0
0
0
0
17,072
10,689
2,638
8,051
6,383
14,548
31,620
5
(1,488)
0
4,636
(1,488)
31,620
9,052
2,303
6,749
2,769
8,920
903
335
568
1,750
3,595
734
0
734
1,864
2,033
20,741
6,248
4,631
1,483
22,224
13,485
7,256
0
6,248
4,070
2,178
11,501
3,472
3,001
1,630
2,560
(930)
Result from operating activities
(4,245)
(1,294)
Financial result
Earnings before tax
Income taxes
Earnings after tax
Assets
18,123
5,470
4,033
Depreciation and amortization
2,720
821
605
0
0
0
0
0
0
20,556
11,064
17,533
(6,469)
(161)
(6,630)
(144)
(6,774)
27,626
4,146
66
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
Segment reporting as of December 31, 2018
in EUR thousand
Europe
USA
Asia/
Pacific
Consoli-
dation
Group
Revenues from external customers
Software and Cloud Revenues
11,498
1,999
2,470
Licenses and Maintenance
Licenses
Maintenance
Cloud and Subscription
Service Revenue
Total revenues from external
customers
9,016
2,204
6,812
2,482
11,385
854
224
630
1,145
1,823
22,883
3,822
Intersegment revenues
Total revenues
Cost of revenues
Gross profit
Operating expenses,
operating income
49
22,932
14,131
8,752
13,074
Result from operating activities
(4,322)
0
3,822
2,371
1,451
2,194
(743)
678
6
672
1,792
2,024
4,494
139
4,633
2,776
1,718
2,568
(850)
Financial result
Earnings before tax
Income taxes
Earnings after tax
Assets
Depreciation and amortization
16,607
1,621
2,787
272
3,263
318
0
0
0
0
0
0
0
(188)
(188)
0
0
0
0
0
0
15,967
10,548
2,434
8,114
5,419
15,232
31,199
0
31,199
19,278
11,921
17,836
(5,915)
(146)
(6,061)
(681)
(6,742)
22,657
2,211
The segment reporting is prepared in accordance with IFRS 8, Operating Segments. Segmentation
reflects the internal management and reporting by the Company’s management. The operating
segments were determined mainly by the different geographical regions in which business activities
take place. In this context, Intershop distinguishes between the Europe, USA, and Asia-Pacific
segments. The business segments that must be reported generated their revenues on the one hand
from software and cloud revenues, which also include the sale of software licenses and associated
maintenance and cloud and subscription revenues. On the other hand, they generate revenues
from consulting and training services.
67
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
The operating segments are broken down as follows:
The segment “Europe” includes the sales activities of INTERSHOP Communications AG, Intershop
Communications LTD and Intershop Communications SARL. The segment “USA” includes the sales
activities of Intershop Communications Inc. mainly in North America as well as the sales activities
of INTERSHOP Communications AG in this region. The segment “Asia/Pacific” includes the sales ac-
tivities of the Group in that region, including the sales activities of INTERSHOP Communications
Australia Pty Ltd. and Intershop Communications Asia Limited. The segment “Consolidation” includes
all transactions in the individual segments.
Notes to the content of the individual line items:
• Revenues from external customers represent revenues from the segments with third parties
outside the Group.
• Intersegment revenues include revenues from intersegment relationships. These revenues are
recognized in the same way as those from external third parties.
• The cost of revenues comprises the costs attributed to each operating segment for generating
its revenues.
• Gross profit, which is calculated as the difference between segment revenues and the cost of
revenues, is the first assessment level for management decisions.
• Operating expenses and income comprise research and development expenses, sales and marketing
costs, general and administrative expenses, and other operating expenses and income that are at-
tributable to the relevant segments. Other operating expenses and income also include the effects
of one-time expenses such as restructuring costs in 2019, and currency losses and gains.
• The result from operating activities (EBIT), which is the gross profit or loss less operating expenses
and income, forms the basis for assessing the performance of the segments.
• Interest income and income taxes are not allocated to the segments as the relevant transactions
are managed by the Group.
• Segment assets comprise the Intershop Group’s noncurrent and current assets that are
allocated to the respective segment on the basis of the percentage revenue breakdown. No
other measurement of segment assets is used.
• Depreciation and amortization relates to the depreciation and amortization of the segment
assets allocated to the individual regions.
• In 2018 and 2019, there were no significant non-cash income and expenses.
All amounts reported in the “Group” column in the segment reporting reflect the Group figures from
the statement of comprehensive income or the balance sheet. Adding together the amounts for the
operating segments produces the Group figures after elimination of the interim segment revenues.
The Company is domiciled in Germany. Revenues from external customers that were generated in
Germany amounted to EUR 9,805 thousand (2018: EUR 12,190 thousand). Revenues of EUR 21,815
thousand (2018: EUR 19,009 thousand) were recorded from external customers in other countries.
The amount of EUR 5,527 thousand of the revenues relates to customers in the United States (2018:
EUR 3,205 thousand). During the fiscal year, there were no relations with individual customers
whose percentage of total sales was at least 10% of the total group revenues. Revenue of EUR
3,594 thousand was generated from a single customer in the Europe segment. Total noncurrent
assets excluding deferred taxes amounted to EUR 12,608 thousand (2018: EUR 10,215 thousand) in
Germany and EUR 324 thousand (2018: EUR 68 thousand) in other countries.
68
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Litigations/contingent liabilities
The Company is a defendant in a few legal proceedings arising from the ordinary course of business.
Defeat in these proceedings could adversely affect the Company‘s earnings position. All legal fees
arising from a defeat in court are expenses when and if it is more likely than not that a payment
obligation exists and they can be estimated reliably. Although the outcome of these actions cannot
be forecast with certainty, the Company believes that the outcome of the actions will not have any
material effects on its net assets and results of operations.
The Company is asserting claims for payment from a contractual agreement with a customer from
the year 2013. The receivables were fully removed from the books in previous years. The contrac-
tual partner has filed a counter-claim. The Company is defending itself against this claim and is of
the opinion that the claims asserted by the contractual partner in the counter-claim do not have
any merits and, moreover, the amount is not justified. No provisions were recognized for these pro-
ceedings since the Company deems it highly unlikely that any expenses will be incurred in the future.
Financial instrument disclosures
Intershop is exposed to certain risks with regard to its assets, liabilities, and transactions, in partic-
ular liquidity and default risk. The Company’s risk management system is explained in detail in the
management report.
The Company manages its capital structure with the aim of achieving its corporate goals through
financial flexibility. The Group‘s overall strategy is unchanged compared to the prior year. The equity
ratio has reduced by three percentage points compared to the prior year in particular due to the
change in the accounting methods upon adoption of IFRS 16. In total, the capital structure has
changed as follows:
in EUR thousand
Equity
Liabilities to banks
Trade accounts payable
Leasing liabilities
Other liabilities
Equity ratio
Dec. 31, 2019
Dec. 31, 2018
15,731
13,646
1,551
1,656
1,790
6,898
57%
3,047
1,525
0
4,439
60%
as a % of
previous year
15%
-49%
9%
-
55%
The equity ratio is the ratio of equity to total assets.
69
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
Categories of financial instrument
The following table shows the classification of financial instruments required by IFRS 7 as well as the
fair values of the financial instruments that are recognized in the balance sheet at amortized cost
and their carrying amounts:
in EUR thousand
Measurement
Measured at amortized cost
Financial assets
Other noncurrent assets
Trade receivables
Restricted cash
Cash and cash equivalents
Financial liabilities
Trade payables
Liabilities to banks
Leasing liabilities
Current liabilities
Carrying amount aggregated by measurement category
Financial assets measured at amortized cost
Financial liabilities measured at amortized cost
Net gain/loss per measurement category
Financial assets measured at amortized cost
Financial liabilities measured at amortized cost
Dec. 31, 2019
Dec. 31, 2018
Carrying amount
Carrying amount
18
5,528
635
7,731
1,656
1,551
1,790
1,185
2019
13,912
6,182
2019
(96)
(176)
26
3,977
0
7,224
1,525
3,047
0
1,058
2018
11,227
5,630
2018
(3)
(159)
During the reporting year, there was no regrouping between the categories. With regard to the
existing financial instruments, with the exception of liabilities to banks and leasing liabilities, the
contractual maturities of most of the existing financial instruments are within one year of the
balance sheet date. Therefore their book values on the balance sheet date correspond to the fair
values. With regard to the liabilities to banks, the fair values are calculated as the present values of
the payments associated with the liabilities, using market interest rates (on December 31, 2019:
EUR 1,592 thousand). The calculation of the fair value of the financial liability for the purpose of
providing information in the Notes was performed on the basis of Level 2 of the Fair Value Hierarchy
(recognized DCF measurement method, using observable market parameters, in particular market
interest rates).
70
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
Non-payment risks
The Company is exposed to a potential default risk mainly from its trade receivables. The Company
applies the simplified approach according to IFRS 9 to measure the expected credit losses; as a
result, the credit losses expected over the term for all trade receivables will be used. The expected
credit losses were measured by summarizing the trade receivables based on common credit risk
criteria and days in arrears. The Company expects a loss rate of almost 0% since the average default
on receivables over the last four years totaled 0.4% of the receivables. The Company performs
ongoing creditworthiness checks on its customers. The default risk with regard to trade receivables
is also mitigated by the fact that the Company has a broad customer base. In addition, the Company
does not demand collateral for its receivables. In the case of larger contracts, this risk is reduced
by agreements on advance payments or partial payments based on the stage of completion of the
contract. Appropriate allowances are also recognized. The value adjustments are particularly due
to late payments or problems with the customer‘s creditworthiness as well as legal disputes with
the customer. The value adjustment is measured based on the assessment and evaluation of the
chances of success. The Company’s cash and cash equivalents are largely invested with German,
U.S. American banks and Australian banks in secure investments. There is no significant default
risk here. The Company regularly monitors current and future returns. The maximum default risk
relating to financial assets is their carrying amounts in the balance sheet.
Liquidity risk
The Company monitors the liquidity risk with regularly updated short- and medium-term financial
planning activities. Intershop has two bank loans. Of the bank loan taken up in the 2018 fiscal year
of EUR 1,500 thousand, EUR 750 thousand has so far been paid when due. Of the bank loan taken
out in the 2015 fiscal year in the amount of EUR 6,000 thousand, a total of EUR 5,200 thousand
has been repaid so far, of which EUR 4,000 thousand was scheduled repayment and EUR 1,200
thousand unscheduled repayment. The cash in banking accounts totaled EUR 7,731 thousand at
the balance sheet date.
The change in financial liabilities in connection with financing activities is as follows:
in EUR thousand
Liabilities to
banks - noncurrent
Liabilities to
banks - current
Total
Dec. 31,
2018
Cash-effective
change
Non-cash
effective change
(reclassifications)
Non-cash
effective change
(interest effects)
Dec. 31,
2019
1,547
1,500
3,047
0
(1,300)
3
250
(1,602)
(1,602)
1,300
0
103
106
1,301
1,551
71
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 The following table shows the future undiscounted cash flows of financial liabilities that will affect the
Company‘s future liquidity situation:
Financial liabilities
(in EUR thousand)
Carrying
amount at
Dec. 31, 2018
Cash flow
in 2019
Carrying
amount at
Dec. 31, 2019
Cash flow
in 2020
Cash flow
after 2020
Non-current
liabilities to banks
Current liabilities
to banks
Trade accounts
payable
Leasing liabilities
Other current
liabilities
Interest rate risk
1,547
0
250
0
252
1,500
1,602
1,301
1,339
1,525
1,525
-
-
1,656
1,790
1,656
1,609
1,058
1,058
1,185
1,185
0
0
209
0
An interest rate risk could arise from a change in market interest rates for medium- or long-term
liabilities. Intershop does not incur an interest risk since the Company has two bank loans each with
a fixed interest rate over the term of the loan.
Currency risk
Certain transactions in the Intershop Group are denominated in foreign currencies. This leads to
risks from exchange rate fluctuations. If required, Intershop hedges invoices in foreign currencies
with currency options. As of the balance sheet date, there were no currency options. Intershop is
primarily exposed to exchange rate risk relating to the U.S. dollar, British pound and the Australian
dollar. The carrying amount of the Group’s monetary assets and liabilities denominated in these cur-
rencies was as follows at the balance sheet date:
in EUR thousand
in USD
In GBP
Assets
Liabilities
2019
2018
2019
2018
430
7
478
0
423
103
406
165
The following table shows the sensitivity of a 10% rise or fall in the euro against the two currencies
from the Group’s perspective. The sensitivity analysis merely comprises outstanding monetary items
denominated in foreign currency and adjusts their translation at the end of the period to reflect a
10% change in the exchange rates.
Earnings after tax
USD
Earnings after tax
GBP
In EUR thousand
2019
2018
2019
2018
Change due to 10% appreciation of the euro
Change due to 10% depreciation of the euro
0
0
(5)
7
9
(11)
15
(18)
72
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Related party disclosures
Intershop maintained business relationships with the consolidated subsidiaries. Shareholder Value
Management AG together with Shareholder Value Beteiligungen AG held a total of 33.83% of the
shares in the Company at the balance sheet date. We refer to the management report, section „Dis-
closures pursuant to sec. 289a (1) HGB and sec. 315a (1) HGB together with the explanatory report
pursuant to sec. 176 (1) sentence 1 of the Stock Corporations Act“. As in the prior year, there were
no business relationships with these companies in the 2019 fiscal year.
With respect to the remuneration for Management Board and Supervisory Board members, please
refer also to the remuneration report in the management report.
Disclosure requirements under German law
Members of the executive bodies
The Management Board comprised in 2019 the following members:
Name
Dr. Jochen Wiechen
Markus Klahn
Function
CEO
Member of the
Management Board
Term of office
since 08/01/2013
(CEO since 09/01/2015)
since 04/09/2018
The Supervisory Board comprised the following members in 2019:
Name
Christian Oecking
Ulrich Prädel
Function
Chairman of the
Supervisory Board
Term of Office
since 06/02/2016
Vice Chairman of the
Supervisory Board
since 12/01/2016
(Vice Chairman since 12/16/2016)
Univ.-Prof. Dr. Louis Velthuis
Member of the
Supervisory Board
since 06/02/2016
Total remuneration paid to the Management Board for its activities in the 2019 financial year
amounted to EUR 485 thousand (2018: EUR 598 thousand), of which EUR 485 thousand (2018:
EUR 561 thousand) relate to fixed remuneration and EUR 0 thousand (2018: EUR 37 thousand) to
variable components. For the 2019 fiscal year, the members of the Supervisory Board were entitled
to a total remuneration of EUR 154 thousand (2018: EUR 152 thousand), which consists entirely of
fixed remuneration. The payments of the Management Board and Supervisory Board consist ex-
clusively of benefits due in the short term. The particulars regarding the remuneration of the Man-
agement Boards and Supervisory Boards are outlined in the remuneration reports as part of the
combined Group management report and management report of INTERSHOP Communications AG.
73
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Directors‘ holdings and Securities transactions subject to reporting requirements
As of December 31, 2019, the following members of the Company‘s executive bodies held Intershop
ordinary bearer shares:
Name
Christian Oecking
Ulrich Prädel
Function
Chairman of the Supervisory Board
Vice Chairman of the Supervisory Board
Univ.-Prof. Dr. Louis Velthuis
Member of the Supervisory Board
Dr. Jochen Wiechen
CEO of the Management Board
Markus Klahn
Member of the Management Board
Shares
40,272
12,686
16,799
127,983
34,099
In the fiscal year 2019, the members of the company‘s executive bodies made the following purchases
of Intershop ordinary bearer shares.
Name
Date
transaction
Amount
Total value (EUR)
Type of
20,272
23,110
Christian Oecking
02/14/2019
Ulrich Prädel
02/14/2019
Univ.-Prof. Dr. Louis Velthuis
02/14/2019
Dr. Jochen Wiechen
02/14/2019
Exercised sub-
scription rights
Exercised sub-
scription rights
Exercised sub-
scription rights
Exercised sub-
scription rights
4,686
6,799
17,983
Dr. Jochen Wiechen
10/30/2019
Acquisition
20,000
Markus Klahn
02/14/2019
Exercised sub-
scription rights
3,788
5,342
7,751
20,501
14,469
4,318
Employees
During the fiscal year 2019, Intershop Group had an average of 335 full-time employees, of whom
333 were salaried employees and 2 members of the executive bodies (2018: 337 full-time employees,
of whom 335 were salaried employees and 2 members of the executive bodies).
Personnel expenses and cost of materials
Personnel expenses totaled EUR 23,468 thousand (2018: EUR 23,644 thousand); of which EUR
20,198 thousand relate to wages and salaries (2018: EUR 20,512 thousand) and EUR 3,270
thousand to social security contributions (2018: EUR 3,132 thousand). Material expenses totaled
EUR 4,545 thousand (2018: EUR 4,769 thousand); of which EUR 4,425 thousand relate to expenses
for purchased services (2018: EUR 4,632 thousand).
Auditor´s fees
The fees incurred for the services rendered by the auditor for the 2019 fiscal year were comprised
of EUR 96 thousand for audit services (2018: EUR 151 thousand), EUR 10 thousand for tax advisory
services (2018: EUR 9 thousand) and EUR 0 thousand for other services (2018: EUR 1 thousand).
74
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Events subsequent to the balance sheet date
The legal and binding resolution by the extraordinary Stockholders‘ Meeting on December 20, 2019 on
the simplified capital decrease at a ratio of 3:1 was registered in the commercial register on February 4,
2020 and thus become legally effective. The Company‘s capital stock is currently effectively decreased to
EUR 14,194,164. The technical implementation of the combination of shares occurred on February 14,
2020 after close of trading at the Frankfurt Stock Exchange.
There have been no other significant reportable events after the balance sheet date.
Declaration of Conformity
The Company has issued a declaration of conformity as required by section 161 of the Aktieng-
esetz by the annual deadline on December 19, 2019, and made this declaration permanently
available to its stockholders at https://www.intershop.com/investors-corporate-governance.
Responsibility statement
To the best of our knowledge, and in accordance with the applicable reporting principles, the con-
solidated financial statements give a true and fair view of the assets, liabilities, financial position and
profit or loss of the group, and the group management report includes a fair review of the develop-
ment and performance of the business and the position of the group, together with a description of
the principal opportunities and risks associated with the expected development of the group for the
remaining months of the financial year.
Jena, February 25, 2020
The Management Board of INTERSHOP Communications Aktiengesellschaft
Dr. Jochen Wiechen
Markus Klahn
75
Annual Report 2019Notes to the Consolidated Financial Statements0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
Independent Auditor’s Report
To INTERSHOP Communications Aktiengesellschaft, Jena
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND OF THE GROUP MANAGEMENT REPORT
Audit Opinions
We have audited the consolidated financial statements of INTERSHOP Communications Aktiengesell-
schaft, Jena, and its subsidiaries (the Group), which comprise the consolidated statement of financial
position as at December 31, 2019, and the consolidated statement of comprehensive income, con-
solidated statement of profit or loss, consolidated statement of changes in equity and consolida-
ted statement of cash flows for the financial year from January 1 to December 31, 2019, and notes
to the consolidated financial statements, including a summary of significant accounting policies. In
addition, we have audited the group management report of INTERSHOP Communications Aktien-
gesellschaft, which is combined with the Company’s management report, for the financial year from
January 1 to December 31, 2019. We have not audited the content of those parts of the group ma-
nagement report listed in the „Other Information“ section of our auditor‘s report in accordance with
the German legal requirements.
In our opinion, on the basis of the knowledge obtained in the audit,
•
the accompanying consolidated financial statements comply, in all material respects, with
the IFRSs as adopted by the EU, and the additional requirements of German commercial law
pursuant to [§ [Article] 315e Abs. [paragraph] 1 HGB [Handelsgesetzbuch: German Commerci-
al Code] ] § 315e Abs. 1 HGB, and, in compliance with these requirements, give a true and fair
view of the assets, liabilities, and financial position of the Group as at December 31, 2019, and
of its financial performance for the financial year from January 1 to December 31, 2019, and
•
the accompanying group management report as a whole provides an appropriate view of the
Group’s position. In all material respects, this group management report is consistent with
the consolidated financial statements, complies with German legal requirements and appro-
priately presents the opportunities and risks of future development. Our audit opinion on the
group management report does not cover the content of those parts of the group manage-
ment report listed in the „Other Information“ section of our auditor’s report.
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that our audit has not led to any reser-
vations relating to the legal compliance of the consolidated financial statements and of the group
management report.
76
Annual Report 2019Independent Auditor’s Report0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 Basis for the Audit Opinions
We conducted our audit of the consolidated financial statements and of the group management
report in accordance with § 317 HGB and the EU Audit Regulation (No. 537/2014, referred to sub-
sequently as “EU Audit Regulation”) and in compliance with German Generally Accepted Standards
for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public
Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are
further described in the “Auditor‘s Responsibilities for the Audit of the Annual Financial Statements
and of the Management Report” section of our auditor’s report. We are independent of the group
entities in accordance with the requirements of European law and German commercial and profes-
sional law, and we have fulfilled our other German professional responsibilities in accordance with
these requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulati-
on, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU
Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinions on the consolidated financial statements and on the group
management report.
Key Audit Matters in the Audit of the Consolidated Financial Statements
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements for the financial year from January 1 to December 31,
2019. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our audit opinion thereon; we do not provide a separate audit
opinion on these matters.
In our view, the matters of most significance in our audit were as follows:
❶ Recoverability of goodwill
❷ Recognition and measurement of internally generated intangible assets
❸ Revenue recognition and allocation of revenue to correct periods
Our presentation of these key audit matters has been structured in each case as follows:
① Matter and issue
② Audit approach and findings
③ Reference to further information
Hereinafter we present the key audit matters:
❶ Recoverability of goodwill
① Goodwill amounting in total to EUR 4,473 thousand (representing 16% of total assets and 28% of
equity) is reported under the „Intangible assets“ balance sheet item in INTERSHOP Communica-
tions Aktiengesellschaft‘s consolidated financial statements. Goodwill is tested for impairment by
the Company once a year or when there are indications of impairment to determine any possible
need for write-downs. Impairment testing is carried out at the level of the cash-generating unit
to which the relevant goodwill has been allocated. The carrying amount of the cash-generating
unit, including goodwill, is compared with the corresponding recoverable amount in the context
of the impairment test. The calculation of the recoverable amount generally employs the value
in use. The present value of the future cash flows from the cash-generating unit normally serves
as the basis of valuation. The present values are calculated using discounted cash flow models.
77
Annual Report 2019Independent Auditor’s Report0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 For this purpose, the medium-term business plan adopted by the Group forms the starting point
for future projections. Expectations relating to future market developments and assumptions
about the development of macroeconomic factors are also taken into account. The discount
rate used is the weighted average cost of capital for the cash-generating unit. The impairment
test determined that no write-downs were necessary. The outcome of this valuation exercise
is dependent to a large extent on the estimates made by the executive directors with respect
to the future cash inflows from the cash-generating unit, the discount rate used, and other as-
sumptions, and is therefore subject to considerable uncertainty. Against this background and
due to the complex nature of the valuation, this matter was of particular significance in the
context of our audit.
② As part of our audit, we reviewed the methodology employed for the purposes of performing the
impairment test, among other things. After matching the future cash inflows used for the calcu-
lation against the medium-term business plan adopted by the Group, we assessed the approp-
riateness of the calculation, in particular by reconciling it with general and sector-specific market
expectations. In the knowledge that even relatively small changes in the discount rate applied
can have a material impact on the value of the entity calculated using this method, we focused
our testing in particular on the parameters used to determine the discount rate applied, and
verified the calculation procedure. We reproduced the sensitivity analyses performed by the
Company, in order to reflect the uncertainty inherent in the projections. Taking into account
the information available, we determined that the carrying amount of the cash-generating unit,
including the allocated goodwill, were adequately covered by the discounted future net cash
inflows. Overall, the measurement inputs and assumptions used by the executive directors are
in line with our expectations and are also within the ranges considered by us to be reasonable.
③ The Company’s disclosures about impairment testing and the balance sheet item „Intangible
assets“ are contained in the section “Accounting and measurement methods” and section (1)
„Intangible assets“ of the notes to the consolidated financial statements.
❷ Recognition and measurement of internally generated intangible assets
①
Internally generated intangible assets (software) amounting in total to EUR 5,392 thousand
(representing 20% of total assets and 34% of equity) is reported under the „Intangible assets“
balance sheet item in INTERSHOP Communications Aktiengesellschaft‘s consolidated financial
statements. These internally generated intangible assets are internally developed Intershop
software solutions which are recognized in accordance with the provisions of IAS 38. The eligi-
bility of internally generated product development expenses for capitalization depends on the
criteria set out in IAS 38.57, i.e., the the technical feasibility of completing the intangible asset so
that it will be available for use or sale, its intention to complete the intangible asset, its ability to
use or sell the intangible asset, how the intangible asset will generate probable future economic
benefits, the availability of adequate technical, financial and other resources to complete the
development and the company‘s its ability to measure reliably the expenditure attributable to
the intangible asset during its development. Internally generated intangible assets are initially
recognized at cost. They are subsequently measured using the cost model. In our view, this
matter was of particular importance for our audit because the capitalization and amortization
of development costs are based to a large extent on estimates and assumptions made by the
executive directors and are therefore subject to corresponding uncertainties.
78
Annual Report 2019Independent Auditor’s Report0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 ② As part of our audit, we reviewed, among other things, the internal processes and controls for
recording tax matters as well as the methodology adopted for the determination, accounting
treatment and measurement of deferred taxes. Moreover, we evaluated the capitalization re-
quirements for individual projects on a sample basis, using the criteria set out in IAS 38.57. We
assessed the amount of the intangible assets capitalized and the recoverability of the develop-
ment expenditure on the basis of supporting evidence made available to us. In so doing, we
also inspected project records in order to verify the respective percentage of completion. In
this connection, we also assessed the recoverability of the intangible assets based on internal
projections as to future usability and evaluated the appropriateness of the underlying estimates
and assumptions. Based on our audit procedures, we satisfied ourselves that the measurement
parameters and assumptions used by the by the executive directors were justified and adequa-
tely documented.
③ The Company‘s disclosures on the „Intangible assets“ balance sheet item are contained in the
sections entitled „Accounting policies“ and „(1) Intangible assets“ in the notes to the consolida-
ted financial statements.
❸ Revenue recognition and allocation of revenue to correct periods
① Revenue amounting to EUR 31,620 thousand is reported in the consolidated statement of com-
prehensive income in the consolidated financial statements of INTERSHOP Communications
Aktiengesellschaft. The company recognizes revenue from the sale and temporary granting of
licenses, the provision and running of systems for online-commerce as standardized service
(CaaS), the provision of installation services and advice, maintenance and operation of online
shops on behalf of customers in return for a sales- or transaction-based fee.
The recognition of revenue from the sale of licenses depends on the existence of a binding con-
tractual arrangement, the transfer of material rights to the customer. Proceeds from services
are realized as at the date the services are rendered, while maintenance revenue, revenue from
the provision and running of systems for online-commerce as standardized service (CaaS) and
proceeds from the temporary granting of licenses is realized over the performance period. These
various services rendered by the company can be the object of agreements with customers,
either individually or in various constellations.
In light of the complexity of the customer agreements underpinning revenue recognition, these
significant items are subject to particular risk. Against this background, the correct revenue re-
cognition in connection with the group-wide application of the new accounting standard IFRS
15 is considered to be complex and is based in some respects on estimates, assumptions and
discretion used by the executive directors, with the result that this matter was of particular im-
portance for our audit.
② As part of our audit, we assessed, among other things, the correct presentation of revenue in the
consolidated financial statements on the basis of the accounting policies applied by INTERSHOP
Communications Aktiengesellschaft in relation to the recognition of software revenue in accor-
dance with the relevant IFRSs, in particular the IFRS 15.
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Annual Report 2019Independent Auditor’s Report0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000
To do so, we first identified the material controls implemented by the Group to ensure the
correct identification of contracts, individual service obligations and the recognition of revenue,
assessed their appropriateness and tested their effectiveness with respect to avoiding and/or
identifying errors. Moreover, we assessed during our audit the consequences from the initial ap-
plication of IFRS 15. We have assessed the design of the processes set up to account for transac-
tions compliant to IFRS 15. In addition we have tested in detail material transactions, as well as
further transactions on a test basis, in light of contracts, identification of service obligations and
have assessed whether those services have been rendered over a period or at a point of time
and which fees have been collected.
In this connection, we also assessed the appropriateness and mathematical accuracy of indi-
vidual assumptions made by the executive directors when determining the fee to be allocated
to the respective individual service obligations under multiple-component contracts, as well as
the accounting treatment applied. Based on our audit procedures, we satisfied ourselves that
the estimates and assumptions relating to revenue recognition made by the executive directors
were adequately documented and justified.
③ The Company‘s disclosures on revenue recognition are contained in sections „(11) Accrued
revenue“ and „(13) Revenue“ of the notes to the consolidated financial statements.
Other Information
The executive directors are responsible for the other information. The other information comprises
the following non-audited parts of the group management report:
•
the statement on corporate governance pursuant to § 289f HGB and § 315d HGB included in a
separate section of the group management report
•
the corporate governance report pursuant to No. 3.10 of the German Corporate Governance
Code
The other information comprises further the remaining parts of the annual report – excluding
cross-references to external information – with the exception of the audited consolidated financial
statements, the audited group management report and our auditor‘s report.
Our audit opinions on the consolidated financial statements and on the group management report
do not cover the other information, and consequently we do not express an audit opinion or any
other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the other information and, in so doing, to
consider whether the other information
•
is materially inconsistent with the consolidated financial statements, with the group manage-
ment report or our knowledge obtained in the audit, or
• otherwise appears to be materially misstated.
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Responsibilities of the Executive Directors and the Supervisory Board for the Consolidated
Financial Statements and the Group Management Report
The executive directors are responsible for the preparation of the consolidated financial statements
that comply, in all material respects, with IFRSs as adopted by the EU and the additional require-
ments of German commercial law pursuant to § 315e Abs. 1 HGB and that the consolidated financial
statements, in compliance with these requirements, give a true and fair view of the assets, liabilities,
financial position, and financial performance of the Group. In addition the executive directors are
responsible for such internal control as they have determined necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, the executive directors are responsible for
assessing the Group’s ability to continue as a going concern. They also have the responsibility for
disclosing, as applicable, matters related to going concern. In addition, they are responsible for
financial reporting based on the going concern basis of accounting unless there is an intention to
liquidate the Group or to cease operations, or there is no realistic alternative but to do so.
Furthermore, the executive directors are responsible for the preparation of the group manage-
ment report that, as a whole, provides an appropriate view of the Group’s position and is, in all
material respects, consistent with the consolidated financial statements, complies with German
legal requirements, and appropriately presents the opportunities and risks of future development.
In addition, the executive directors are responsible for such arrangements and measures (systems)
as they have considered necessary to enable the preparation of a group management report that is
in accordance with the applicable German legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the group management report.
The supervisory board is responsible for overseeing the Group’s financial reporting process for the
preparation of the consolidated financial statements and of the group management report.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and of the
Group Management Report
Our objectives are to obtain reasonable assurance about whether the consolidated financial state-
ments as a whole are free from material misstatement, whether due to fraud or error, and whether
the group management report as a whole provides an appropriate view of the Group’s position and,
in all material respects, is consistent with the consolidated financial statements and the knowledge
obtained in the audit, complies with the German legal requirements and appropriately presents the
opportunities and risks of future development, as well as to issue an auditor’s report that includes
our audit opinions on the consolidated financial statements and on the group management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally
Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprü-
fer (IDW) will always detect a material misstatement. 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 consolidated financial sta-
tements and this group management report.
81
Annual Report 2019Independent Auditor’s Report0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 We exercise professional judgment and maintain professional skepticism during the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements
and of the group management report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropri-
ate to provide a basis for our audit opinions. 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.
• Obtain an understanding of internal control relevant to the audit of the consolidated financial
statements and of arrangements and measures (systems) relevant to the audit of the group ma-
nagement report in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an audit opinion on the effectiveness of these systems.
•
Evaluate the appropriateness of accounting policies used by the executive directors and the
reasonableness of estimates made by the executive directors and related disclosures.
• Conclude on the appropriateness of the executive directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in the auditor’s report to the related disclosures in the consolidated financial statem-
ents and in the group management report or, if such disclosures are inadequate, to modify our
respective audit opinions. 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 the Group to cease
to be able to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial state-
ments, including the disclosures, and whether the consolidated financial statements present
the underlying transactions and events in a manner that the consolidated financial statements
give a true and fair view of the assets, liabilities, financial position and financial performance of
the Group in compliance with IFRSs as adopted by the EU and the additional requirements of
German commercial law pursuant to § 315e Abs. 1 HGB.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express audit opinions on the consolidated financial
statements and on the group management report. We are responsible for the direction, super-
vision and performance of the group audit. We remain solely responsible for our audit opinions.
•
Evaluate the consistency of the group management report with the consolidated financial state-
ments, its conformity with German law, and the view of the Group’s position it provides.
• Perform audit procedures on the prospective information presented by the executive directors
in the group management report. On the basis of sufficient appropriate audit evidence we
evaluate, in particular, the significant assumptions used by the executive directors as a basis for
the prospective information, and evaluate the proper derivation of the prospective information
from these assumptions. We do not express a separate audit opinion on the prospective in-
formation and on the assumptions used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective information.
82
Annual Report 2019Independent Auditor’s Report0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000 We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the
relevant independence requirements, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, the
related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter.
Other legal and regulatory Requirements
Further Information pursuant to Article 10 of the EU Audit Regulation
We were elected as group auditor by the annual general meeting on May 29, 2019. We were engaged
by the supervisory board on December 19, 2019. We have been the group auditor of INTERSHOP
Communications Aktiengesellschaft, Jena, without interruption since financial year 2007.
We declare that the audit opinions expressed in this auditor’s report are consistent with the addi-
tional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form
audit report).
German Public Auditor responsible for the engagement
The German Public Auditor responsible for the engagement is Andreas Kremser.
Erfurt, February 28, 2020
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
(sgd. Andreas Kremser)
Wirtschaftsprüfer
(sgd. ppa. Marcus Engelmann)
Wirtschaftsprüfer
(German Public Auditor)
(German Public Auditor)
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2019
85 Balance Sheet
INTERSHOP Communications Aktiengesellschaft
86 Statement of Operations of
INTERSHOP Communications Aktiengesellschaft
87 Notes to the Financial Statements
INTERSHOP Communications Aktiengesellschaft
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010
Financial Statements
Balance Sheet INTERSHOP Communications Aktiengesellschaft
in EUR
ASSETS
Fixed Assets
Intangible assets
Internally developed software
Purchased software licenses
Property and equipment
December 31, 2019 December 31,2018
5,390,613
42,656
4,998,398
29,263
Other facilities, furniture, and equipment
556,798
616,509
Financial Assets
Investments in affiliated companies
Current Assets
Inventories
Work in process
Payments on account
Receivables and other assets
Accounts receivable
Receivables from affiliated companies
Other assets
Cash-in-hand, bank balances
Prepaid expenses
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ Equity
Common stock
Capital reserves
Accumulated deficit
Accrued Liabilities
Other accrued liabilities
Liabilities
Bank loans
Customer advances
Trade payables
Payables to affiliated companies
Other liabilities
5,128,962
11,119,029
9,173,962
14,818,132
327,356
1,685
329,041
3,402,555
2,965,846
114,331
6,482,732
5,646,476
12,458,249
999,586
24,576,864
42,582,492
0
(27,552,620)
15,029,872
2,480,680
2,480,680
1,549,994
315,173
378,014
1,603,535
796,864
0
13,485
13,485
2,733,664
2,778,804
260,927
5,773,395
4,914,655
10,701,535
692,198
26,211,865
34,851,831
8,559,657
(25,494,788)
17,916,700
2,114,580
2,114,580
3,049,998
0
511,064
1,030,600
365,076
thereof from taxes: EUR 632,990 (prior year: EUR 230,963)
thereof from social security benefits: EUR 21,950
(prior year EUR 35.479)
Deferred income
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
4,643,580
2,422,732
24,576,864
4,956,738
1,223,847
26,211,865
85
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000101010 Financial Statements INTERSHOP Communications Aktiengesellschaft
Statement of Operations of
INTERSHOP Communications Aktiengesellschaft
in EUR
Revenues
January 1 to December 31,
2019
2018
22,991,385
27,142,256
Decrease or increase in inventories of work in progress
327,356
(1,262,267)
Other own work capitalized
Other operating income
Cost of Materials
Cost of purchased merchandise
Cost of purchased services
Personnel Costs
Salaries
Social security contribution
Depreciation and amortization
2,108,460
2,116,668
398,583
407,762
(104,535)
(137,361)
(2,308,558)
(3,133,562)
(15,458,510)
(15,793,191)
(2,650,866)
(2,589,753)
of intangible fixed assets and property and equipment
(2,365,838)
(1,566,343)
Other operating expenses
Other interest and similar income
(10,666,104)
(9,476,176)
164,203
167,083
thereof from affiliated companies: EUR 154,198 Euro
(prior year: EUR 160,853)
Write-downs of long-term financial assets and current securities
(4,045,000)
0
Interest and similar expenses
Taxes on income
(88,060)
(126,730)
(2,297)
(7,941)
Net loss after tax/Net loss income for the year
(11,699,781)
(4,259,555)
Accumulated deficit carried forward
Withdrawal from the capital reserve
Accumulated Deficit
(25,494,788)
(21,235,233)
9,641,949
0
(27,552,620)
(25,494,788)
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Notes to the Financial Statements
INTERSHOP Communications
Aktiengesellschaft
INTERSHOP Communications Aktiengesellschaft (“Intershop”) is an Aktiengesellschaft (German stock
corporation) under German law. The Company’s registered office is at Intershop Tower, Leutra-
graben 1 in 07743 Jena, Germany. INTERSHOP Communications AG is entered in the commercial
register of the Jena Local Court under number HRB 209419.
The annual financial statements of INTERSHOP Communications Aktiengesellschaft for fiscal year
2019 are prepared in accordance with the provisions of the HGB (German Commercial Code) and
the AktG (German Stock Corporation Act). The Company is a large listed corporation as defined
by sec. 267 (3) HGB. The fiscal year corresponds with the calendar year. The income statement is
prepared using total expenditure format.
Accounting Policies
The accounting policies presented below remained the same as in the prior year.
For internally generated internally developed Software, the capitalization option was exercised in
accordance with sec. 248 (2) HGB.
Internally generated intangible assets classified as development costs of newly developed software
products were measured at cost of production less depreciation. The cost of production includes
the compulsory parts according to sec. 255 (2) HGB. Capitalization of software development costs
generally begins when the technological feasibility of the product is established, which the Company
defines with the compilation of the software functionalities considered as marketable to so-called
PSIs (Potential Shippable Increment) and the definition of the EPICs (Features). The items were
written off over the intended estimated useful life of three years from the time when the software
was made available; the straight-line method was used. If required, impairment losses are recorded.
Acquired intangible fixed assets and property, plant and equipment are carried at cost, less scheduled,
straight-line depreciation and any required non-scheduled write-downs. Scheduled depreciation is
recorded over the expected useful lives of the assets, which are between two and five years.
Low-value assets are written off in full in the year in which they are acquired as long as the cost does
not exceed EUR 800.
Financial assets are entered at acquisition cost, reduced by the required value adjustments for im-
pairments that are expected to be of a permanent duration.
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Inventories (work in process) are measured at cost. In addition to direct materials and labor costs,
they include an appropriate share of the necessary indirect materials and labor costs. Payments
already received for these services are identified as payments received.
Prepayments, receivables and other assets are carried at their principal amounts, less any necessary
valuation allowances. Foreign currency receivables are measured at their historical rate prevailing at
the respective transaction date when added.
Cash is measured at its nominal value.
Prepaid expenses and deferred charges are measured using the portion of expenses or income
before the balance sheet date that represent expenses or income for a particular period after the
balance sheet date.
Common stock are stated at par value.
Accrued liabilities cover all recognizable risks and contingent liabilities and are measured in the
amount dictated by prudent business practice. They are measured at the settlement value deemed
necessary by prudent business practice. Price and cost increases have been accounted for in the
computation.
Liabilities are stated at their settlement value. Foreign currency payables are measured at their
historical rate prevailing at the respective transaction date when added. Payments received are
reported at face value.
Cash, current receivables and liabilities in a foreign currency were translated at the mean spot rate
at the balance sheet date.
Differences between trade balance and tax balance as well as accumulated deficits carried forward
result in deferred tax assets. Deferred taxes from temporary differences as specified in sec. 274
HGB resulted from the application of the tax rate of 31.517% on the intangible assets and the other
accrued liabilities. The Company did not make use of the option to account for the deferred tax
assets pursuant to section 274(1) sentence 2 of the HGB (German Commercial Code).
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Financial Statements INTERSHOP Communications Aktiengesellschaft
Notes to the items in the annual financial statements
Balance Sheet
Fixed assets changed as follows:
Intangible Assets
Internally
developed
Software
Purchased
Software
licenses
Tangible
Assets
Other
equipment,
operating
and office
equipment
Financial
Assets
Total
Shares in
affiliated
companies
7,134
2,452
0
1,904
57
(2)
3,970
210
(316)
41,504
54,512
0
0
2,719
(318)
9,586
1,959
3,864
41,504
56,913
In EUR thousand
Costs of purchase
Balance at
January 1, 2019
Additions
Disposals
Balance at
December 31, 2019
Depreciation, write-downs, and impairment losses
Balance at
January 1, 2019
Additions
Disposals
Balance at
December 31, 2019
Net carrying amount at
December 31, 2018
Net carrying amount at
December 31, 2019
2,136
2,059
0
1,875
44
(2)
3,353
263
(309)
32,330
39,694
4,045
6,411
0
(311)
4,195
1,917
3,307
36,375
45,794
4,998
5,391
29
42
617
557
9,174
14,818
5,129
11,119
The addition to internally generated software results from the first-time capitalization of software de-
velopment costs. Overall, development costs of EUR 7,009 thousand were incurred in the 2019 fiscal
year. The capitalization of the software development costs led to a restricted amount of EUR 5,391
thousand less deferred tax liabilities in the amount of EUR 1,699 thousand as set forth in Sec. 268
(8) HGB. Furthermore, deferred tax assets were recognized in the amount of EUR 1,699 thousand
which were offset against the deferred tax liabilities. The financial assets include the amount of
EUR 4,818 thousand attributable to Intershop Communications Inc on shares of which impairment
losses were recorded in the amount of EUR 4,045 thousand in 2019 to mark them down to the lower
fair market value. Such reduction of the carrying amount of the shares was required since, once
again, the operating result of Intershop Communications Inc. was below the budgeted figures. The
plans for the following years therefore required adjustments; the result in future years had to be
reduced. The shares were measured based on a business valuation performed by Intershop, using
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the discounted cash flow method. A perpetuity was determined to assess the future cash flows for
the years 2020 - 2023 and 2024 and after. An annual growth of the total revenue between 2% and
3% over the planning period was assumed. The gross margins and the operating result increased
slightly over time and, together with the increase in revenue, lead to slightly growing cash surpluses.
Receivables from affiliated companies in the amount of EUR 1,350 thousand (prior year: EUR 1,800
thousand) resulted from Group financing; EUR 600 thousand of these receivables fall due within
more than one year. The other receivables from affiliated companies relate to current business
service relationships. All other receivables and other assets have a remaining maturity of up to one
year, as in the prior year.
The share capital in the amount of EUR 42,582,492 (prior year: EUR 34,851,831) consists of 42,582,492
no-par value bearer shares. The increase in the share capital is the result of two capital increases.
On January 9, 2019, the Management Board, with the approval of the Supervisory Board, resolved to
increase the subscription right capital; it was registered in the commercial register on February 14,
2019. The share capital therefore increased from EUR 4,356,478 to EUR 39,208,309. Due to the cash
capital increase resolved by the Management Board on June 25, 2019 with the consent of the Super-
visory Board and registered in the commercial register on July 5, 2019, the share capital increased
by EUR 3,374,183 to EUR 42,582,492.
During the 2019 fiscal year, the capital reserve changed as follows (in EUR thousand):
Balance at December 31, 2018
Premium from cash capital increases
Offsetting against accumulated deficit
Balance at December 31, 2019
8,560
1,082
(9,642)
0
On October 28, 2019, the Management Board of INTERSHOP Communications AG announced the
loss of half of the Company‘s share capital as required by Sec. 92(1) German Stock Corporation
Act (Aktiengesetz; AktG) and convened an extraordinary Stockholders‘ Meeting. At the Stockhol-
ders‘ Meeting on December 20, 2019, it was resolved that losses and other impairment losses shall
be compensated by way of a simplified capital decrease at a ratio of 3:1 to the amount of EUR
14,194,164, which did not become legally effective until registration in the commercial register in the
new 2020 fiscal year on February 4, 2020. Technical implementation of the combination of shares
occurred on February 14, 2020 after close of trading at the Frankfurt Stock Exchange.
The capital reserve was liquidated in the amount of EUR 9,642 thousand in full for the (partial)
compensation of the accumulated deficit prior to the extraordinary Stockholders‘ Meeting being
convened. Liquidation was the prerequisite for the resolution proposal by the Management Board
and the Supervisory Board on a simplified capital decrease to be submitted to the extraordinary
Stockholders‘ Meeting.
The accumulated deficit contains a loss carryforward from prior years in the amount of EUR 25,495
thousand.
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The other provisions mainly relate to outstanding invoices (EUR 728 thousand, prior year: EUR 494
thousand), provisions for restructuring (EUR 420 thousand; prior year: EUR 0 thousand), variable re-
muneration components (EUR 286 thousand, prior year: EUR 358 thousand), as well as provisions
for holiday entitlements (EUR 296 thousand, prior year: EUR 292 thousand). The other provisions
relate to the costs of the financial statements and the Annual Stockholders‘ Meeting, remuneration
for the Supervisory Board, as well as imminent losses, and warranties.
Liabilities comprise the following:
in EUR thousand
Bank loans
Advance payments received
Accounts payable
Liabilities to affiliated companies
Other liabilities
Remaining
term of up to
one year
Remaining
term of more
than one year
1,300
315
378
1,604
797
4,394
250
-
-
-
250
Total
Dec. 31,
2019
1,550
315
378
1,604
797
4,644
Total
Dec. 31,
2018
3,050
0
511
1,031
365
4,957
In the prior year, the bank loans amounted to EUR 1,550 thousand with a remaining term of more
than one year. There are no liabilities with a remaining term of more than five years.
Of the Liabilities to banks, EUR 800 thousand, are secured with an indemnity bond covering 80%
of the loan amount from the state of Thuringia and the approval of a distribution license for the
Intershop software. Other liabilities mainly include liabilities from current payroll accounting and
sales tax. Receivables from affiliated companies relate to deliveries of goods and services, as in the
prior year.
Statement of Operations
The following table shows a breakdown of revenues by region:
in EUR thousand
Germany
Rest of Europe
Rest of the world excluding Europe
2019
10,035
10,935
2,020
22,991
2018
15,790
10,692
660
27,142
Revenues from software and cloud sales and from service sales are EUR 12,277 thousand (prior year:
EUR 12,202 thousand) and EUR 10,714 thousand (prior year: EUR 14,940 thousand) respectively.
Other operating income includes income from currency translation of EUR 29 thousand (prior year:
EUR 11 thousand). Of the other operating income, EUR 70 thousand is related to prior periods. They
are mainly the result of the reversal of provisions.
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Financial Statements INTERSHOP Communications Aktiengesellschaft
The impairment losses on financial assets pursuant to Sec. 253(3) HGB total EUR 4,045 thousand
(prior year: EUR 0). Other operating expenses include depreciation and amortization of receivables
from affiliated companies of EUR 513 thousand (prior year: EUR 63 thousand), as well as expenses
from currency translation of EUR 30 thousand (prior year: EUR 16 thousand).
Other Disclosures
Authorized capital
As at December 31, 2019, the Company had Authorized Capital in the amount of EUR 8,625,817
(December 31, 2018: EUR 12,667,653). According to the INTERSHOP Communications AG‘s Articles
of Association, the Management Board is authorized, subject to approval by the Supervisory Board,
to increase the capital stock by issuing new common shares as follows:
• Up to a total of EUR 8,625,817 by issuing up to 8,625,817 new bearer shares against cash
contributions and/or contributions in kind (Authorized Capital I/2019). The Management
Board’s authorization is valid until June 7, 2024. The Management Board is authorized,
subject to approval of the Supervisory Board, to exclude the stockholders‘ subscription
rights in certain cases.
The Annual Stockholders‘ Meeting on May 29, 2019 resolved to cancel Authorized Capital
I/2016 in the amount of EUR 3,167,653 and Authorized Capital II/2018 in the amount of EUR
5,143,522 and to create a new Authorized Capital I/2019 in the amount of EUR 12,000,000.
The new Approved Capital I/2019 was entered in the Commercial Register on June 7, 2019.
The Authorized Capital I decreased to EUR 8,625,817 due to a cash capital increase in the
amount of EUR 3,374,183 in July 2019.
Conditional capital
As of the balance sheet date, the Company did not have any conditional capital.
Voting rights notifications
In the 2019 financial year, the Company was given the following information about the shares in ac-
cordance with Sec. 33 (1) German Securities Trading Act (Wertpapierhandelsgesetz; WpHG), which it
announced according to Sec. 40 (1) WpHG: The voting rights notification published on February 5,
2019 shows that the voting rights share of Frankfurter Investmentgesellschaft with variable capital
(SICAV), Grevenmacher, Luxembourg, in the Company was 3.75% (1,307,695 voting rights) on January
31, 2019. On July 11, 2019, Frankfurter Investmentgesellschaft with variable capital (SICAV) totaled
5.47% of the voting rights (corresponds to 2,330,508 voting rights) in the Company as can be derived
from the voting rights notification published on July 17, 2019. Shareholder Value Management AG
and Shareholder Value Beteiligungen AG, each with their headquarters located in Frankfurt, held
a total of 30.60% of the voting rights in the Company on April 18, 2019 as can be derived from
the voting rights notifications published on April 25, 2019 (this equals 11,996,758 voting rights).
According to the voting rights notifications published on May 27, 2019, Shareholder Value Beteili-
gungen AG and Shareholder Value Management AG held a total of 31.90% of the Company’s voting
rights (12,506,271 voting rights) on May 22, 2019 as a result of the execution of the takeover offer
dated March 20, 2019.
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Financial Statements INTERSHOP Communications Aktiengesellschaft
Disclosures pursuant to section 285 No. 3 of the HGB, contingent liabilities and
other financial liabilities
Other financial obligations of EUR 14,868 thousand (prior year: EUR 16,730 thousand) exist from
rental agreements and from leasing agreements for vehicles and office equipment. The term of
the agreement or the earliest possible termination dates were used as a basis for the calculation.
The financial obligations under lease agreements essentially relate to the leases for the company‘s
business premises at the company headquarters. The lease agreement for the current business
premises expires at the end of December 2020. In December 2020, Intershop plans to move into
new business premises in an office building that is currently being built. The new lease agreement
was concluded in August 2017 and has a term of ten years from the move-in date. The rental and
leasing agreements contain the typical benefits and risks. The maturities of the other financial liabi-
lities are broken down as follows:
in EUR thousand
due 2020
2021 to 2024
after 2024
due
due
Total
Dec.31,2019
Total
Dec.31,2018
Rental agreements*
Leases
Total
*including ancillary rental expenses
2,075
79
2,154
5,114
36
5,150
7,564
14,753
16,498
0
115
232
7,564
14,868
16,730
The company has provided a guarantee for the subsidiary Intershop Communications LTD from the
UK according to sec. 479C of the Companies Act 2006 - exempting a subsidiary from an audit. Utili-
zation thereof is not expected.
Employees
The Company had an average of 276 employees during the 2019 fiscal year, including 24 students
(calculated on a full-time basis).
Executive bodies of the Company
The Supervisory Board comprised the following members in fiscal year 2019:
Christian Oecking
Chairman of the Supervisory Board since 06/02/2016
Senior Advisor
Further Supervisory Board mandate:
Hexaware Technologies, India (until June 2019)
Ulrich Prädel
Vice Chairman of the Supervisory Board since 12/16/2016
Member since 12/01/2016
Executive Advisor
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Univ.-Prof. Dr. Louis Velthuis
Member since 06/02/2016
Professor to the Chair for controlling at the Faculty of Law, Management and
Economics at the Johannes Gutenberg University in Mainz
Further Supervisory Board mandate:
SMT Scharf AG (Chairman)
The Management Board included the following persons:
Dr. Jochen Wiechen
Dipl.-Physiker
CEO
Responsibilities: technical departments, administrative departments,
including Finance and Communication
CEO of the Management Board since 09/01/2015
Member of the Management Board since 08/01/2013
Markus Klahn
COO
Responsibilities: Professional Services, Sales and Marketing
Member of the Management Board since 04/09/2018
Compensation of the members of the Management Board and the Supervisory Board
Total remuneration paid to the Management Board for its activities in the 2019 financial year
amounted to EUR 485 thousand (2018: EUR 598 thousand), of which EUR 485 thousand (2018:
EUR 561 thousand) relate to fixed remuneration and EUR 0 thousand (2018: EUR 37 thousand) to
variable components. For the 2019 fiscal year, the members of the Supervisory Board were entitled
to a total remuneration of EUR 154 thousand (2018: EUR 152 thousand), which consists entirely
of fixed remuneration. The payments of the Management Board and Supervisory Board consist
exclusively of benefits due in the short term. The particulars regarding the remuneration of the Ma-
nagement Boards and Supervisory Boards are outlined in the remuneration reports as part of the
combined Group management report and management report of INTERSHOP Communications AG.
Intershop Group
As a listed company, INTERSHOP Communications AG prepares consolidated financial statements in
accordance with IFRS and according to the provisions of section 315a of the HGB (German Commer-
cial Code). The consolidated financial statements will be submitted to the Bundesanzeiger (German
Federal Gazette). As of December 31, 2019, in addition to the ultimate parent company, the con-
solidated companies included the subsidiaries Intershop Communications, Inc., Intershop Commu-
nications Australia Pty Ltd., Intershop Communications Asia Limited, The Bakery GmbH, Intershop
Communications Ventures GmbH, Intershop Communications SARL and Intershop Communica-
tions LTD.
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The following list shows the subsidiaries of Intershop Communications AG and the Company‘s res-
pective interest as of December 31, 2019:
Interest
in %
Equity*
in EUR thousand
Annual result**
in EUR thousand
Intershop Communications, Inc.,
San Francisco, USA
Intershop Communications Australia Pty Ltd,
Melbourne, Australia
Intershop Communications Asia Limited,
Hong Kong, China
Intershop Communications SARL, Paris,
France
Intershop Communications LTD, Romsey,
United Kingdom
The Bakery GmbH, Berlin, Germany
Intershop Communications Ventures GmbH,
Jena, Germany
100
100
100
100
100
100
100
* Equity as of December 31, 2019 is translated at the exchange rate as of the reporting date
** Net income/loss for fiscal year 2019 is translated at the average annual rate
(714)
1,238
152
339
(211)
(4,037)
(1,381)
198
154
88
17
(114)
(48)
(18)
The expenses for auditors‘ fees have been omitted in accordance with Sec. 288 (2) s. 2 HGB in
conjunction with Sec. 285 (17) HGB and are disclosed in the notes to the Company‘s consolidated
financial statements. They primarily include services relating to the audit of the financial statements.
Declaration of Conformity in accordance with section 161 of the German Stock Corporation Act
The Company issued a declaration of conformity as required by section 161 of the Aktiengesetz
on December 19, 2019 and made this declaration publicly available on the Company’s website
at http://www.intershop.com/investors-corporate-governance.
Events subsequent to the balance sheet date
The legal and binding resolution by the extraordinary Stockholders‘ Meeting on December 20, 2019
on the simplified capital decrease at a ratio of 3:1 was registered in the commercial register on
February 4, 2020 and thus become legally effective. The Company‘s capital stock is currently effec-
tively decreased to EUR 14,194,164. The technical implementation of the combination of shares
occurred on February 14, 2020 after close of trading at the Frankfurt Stock Exchange.
There have been no other significant reportable events after the balance sheet date.
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Financial Statements INTERSHOP Communications Aktiengesellschaft
Appropriation of net income/loss
The Management Board of Intershop Communications AG proposes to carry forward the accumula-
ted deficit of EUR 27,552,620 to new account.
Responsibility statement
To the best of our knowledge, and in accordance with the applicable reporting principles, the
financial statements give a true and fair view of the assets, liabilities, financial position and profit or
loss of INTERSHOP Communications AG, and the management report includes a fair review of the
development and performance of the business and the position of the Company, together with a
description of the principal opportunities and risks associated with the expected development of
the Company for the remaining months of the financial year.
Jena, February 25, 2020
The Management Board of INTERSHOP Communications Aktiengesellschaft
Dr. Jochen Wiechen
Markus Klahn
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Independent Auditor’s Report
To INTERSHOP Communications Aktiengesellschaft, Jena
REPORT ON THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS
AND OF THE MANAGEMENT REPORT
Audit Opinions
We have audited the annual financial statements of INTERSHOP Communications Aktiengesell-
schaft, Jena, which comprise the balance sheet as at December 31, 2019, and the statement of
profit and loss for the financial year from January 1 to December 31, 2019, and notes to the financial
statements, including the recognition and measurement policies presented therein. In addition, we
have audited the management report of INTERSHOP Communications Aktiengesellschaft, which is
combined with the group management report, for the financial year from January 1 to December 31,
2019. We have not audited the content of those parts of the management report listed in the „Other
information“ section of our auditor‘s report in accordance with the German legal requirements.
In our opinion, on the basis of the knowledge obtained in the audit,
•
the accompanying annual financial statements comply, in all material respects, with the requi-
rements of German commercial law and give a true and fair view of the assets, liabilities and
financial position of the Company as at December 31, 2019 and of its financial performance
for the financial year from January 1 to December 31, 2019 in compliance with German Legally
Required Accounting Principles, and
•
the accompanying management report as a whole provides an appropriate view of the Company’s
position. In all material respects, this management report is consistent with the annual financial
statements, complies with German legal requirements and appropriately presents the oppor-
tunities and risks of future development. Our audit opinion on the management report does
not cover the content of those parts of the management report listed in the „Other information“
section of our auditor‘s report.
Pursuant to [§ [Article] 322 Abs. [paragraph] 3 Satz [sentence] 1 HGB [Handelsgesetzbuch: German
Commercial Code]], we declare that our audit has not led to any reservations relating to the legal
compliance of the annual financial statements and of the management report.
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We conducted our audit of the annual financial statements and of the management report in ac-
cordance with § 317 HGB and the EU Audit Regulation (No. 537/2014, referred to subsequently as
“EU Audit Regulation”) and in compliance with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). Our responsibilities under those requirements and principles are further described
in the “Auditor‘s Responsibilities for the Audit of the Annual Financial Statements and of the Manage-
ment Report” section of our auditor’s report. We are independent of the Company in accordance
with the requirements of European law and German commercial and professional law, and we have
fulfilled our other German professional responsibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we
have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions on the annual financial statements and the management report.
Key Audit Matters in the Audit of the Annual Financial Statements
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the annual financial statements for the financial year from January 1 to December 31,
2019. These matters were addressed in the context of our audit of the annual 9financial statements
as a whole, and in forming our audit opinion thereon; we do not provide a separate audit opinion
on these matters.
In our view, the matters of most significance in our audit were as follows:
❶ Recognition and measurement of internally generated intangible fixed assets
❷ Revenue recognition and allocation of revenue to correct periods
Our presentation of these key audit matters has been structured in each case as follows:
① Matter and issue
② Audit approach and findings
③ Reference to further information
Hereinafter we present the key audit matters:
❶ Recognition and measurement of internally generated intangible fixed assets
①
Internally generated intangible fixed assets amounting in total to EUR 5,391 thousand (repre-
senting 22% of total assets and 36% of equity) is reported under the „intangible fixed assets“
balance sheet item in INTERSHOP Communications Aktiengesellschaft‘s annual financial state-
ments. These internally generated intangible fixed assets are internally developed Intershop
software solutions. The recognition of an internally generated intangible fixed asset depends si-
gnificantly on the nature of the asset being such that it is highly probably that the intangible fixed
asset to be recognized will be created and it will be possible to reliably allocate the development
costs to the intangible fixed asset to be recognized. Internally generated intangible fixed assets
are measured at cost less amortization and impairment charges. In our view, this matter was of
particular importance for our audit since the capitalization of development costs is based to a
large extent on the executive directors‘ estimates and assumptions, and is therefore subject to
corresponding uncertainties.
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recording intangible fixed assets as well as the methodology adopted for the determination, ac-
counting treatment and measurement of incurred development costs. Moreover, we evaluated
the capitalization requirements for individual projects on a sample basis. We assessed the
amount of the capitalized development costs and the recoverability of the intangible fixed assets
based on internal projections as to future usability and evaluated the appropriateness of the un-
derlying estimates and assumptions. Based on our audit procedures, we satisfied ourselves that
the estimates and assumptions made by the executive directors were justified and adequately
documented.
③ The Company‘s disclosures on internally generated intangible fixed assets are contained in the
balance sheet disclosures in the notes to the financial statements.
❷ Revenue recognition and allocation of revenue to correct periods
① Revenue amounting to EUR 22,991 thousand is reported in the income statement in the annual
financial statements of INTERSHOP Communications Aktiengesellschaft. The company reco-
gnizes revenue from the sale and temporary granting of licenses, the provision and running
of systems for online-commerce as standardized service (CaaS), the provision of installation
services and advice, maintenance and operation of online shops on behalf of customers in
return for a sales- or transaction-based fee. The recognition of revenue from the sale of licenses
depends in particular on the transfer of beneficial ownership to the purchaser. Proceeds from
services are recognized as at the date the services are rendered, while maintenance revenue
and revenue from the provision and running of systems for online-commerce as standardi-
zed service and proceeds from the temporary granting of licenses is recognized over the per-
formance period. These various services of the company can be the object of agreements
with customers, either individually or in various constellations. In light of the complexity of the
customer agreements underpinning revenue recognition, these significant items are subject to
particular risk. Against this background, the correct application of the accounting standards is
considered to be complex and is based in some respects on estimates and assumptions made
by management, with the result that this matter was of particular importance for our audit.
②
In the context of our audit with regard to the correct presentation of revenue in the annual
financial statements, we have assessed the accounting policies applied by NTERSHOP Com-
munications Aktiengesellschaft in relation to the recognition of software revenue against the
backdrop of German with commercial law.
To do so, we first identified the material controls implemented to ensure the correct identifica-
tion of contracts and individual services and the recognition of revenue, assessed their appro-
priateness and tested their effectiveness with respect to avoiding and/or identifying errors.
Moreover, we assessed in detail the recognition of individual material transactions, as well as
further transactions on a test basis, in light of contracts, proof of performance and payments, as
well as assessing in particular the proper allocation of such transactions to the correct periods.
In addition, we verified the consistency of the methods used by the Company to recognize
revenue.
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In this connection, we also reviewed the appropriateness of individual assumptions relating
to the allocation of portions of revenue to individual services in the case of contracts with
several primary services offered, and assessed their mathematical accuracy and the accounting
treatment used. Based on our audit procedures, we satisfied ourselves that the estimates and
assumptions relating to revenue recognition made by the executive directors were adequately
documented and justified.
③ The Company‘s disclosures on revenue recognition are contained in the income statement di-
sclosures in the notes to the financial statements and in the management report.
Other Information
The executive directors are responsible for the other information. The other information comprises
the following non-audited parts of the management report:
•
the statement on corporate governance pursuant to § 289f HGB and § 315d HGB included in a
separate section of the management report
•
the corporate governance report pursuant to No. 3.10 of the German Corporate Governance Code
The other information comprises further the remaining parts of the annual report – excluding
cross-references to external information – with the exception of the audited annual financial state-
ments, the audited management report and our auditor‘s report.
Our audit opinions on the annual financial statements and on the management report do not cover
the other information, and consequently we do not express an audit opinion or any other form of
assurance conclusion thereon.
In connection with our audit, our responsibility is to read the other information and, in so doing, to
consider whether the other information
•
is materially inconsistent with the annual financial statements, with the management report or
our knowledge obtained in the audit, orr
• otherwise appears to be materially misstated.
Responsibilities of the Executive Directors and the Supervisory Board for the Annual
Financial Statements and the Management Report
The executive directors are responsible for the preparation of the annual financial statements that
comply, in all material respects, with the requirements of German commercial law, and that the
annual financial statements give a true and fair view of the assets, liabilities, financial position and
financial performance of the Company in compliance with German Legally Required Accounting Prin-
ciples. In addition, the executive directors are responsible for such internal control as they, in accor-
dance with German Legally Required Accounting Principles, have determined necessary to enable
the preparation of annual financial statements that are free from material misstatement, whether
due to fraud or error.
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In preparing the annual financial statements, the executive directors are responsible for assessing
the Company’s ability to continue as a going concern. They also have the responsibility for disclo-
sing, as applicable, matters related to going concern. In addition, they are responsible for financial
reporting based on the going concern basis of accounting, provided no actual or legal circumstances
conflict therewith.
Furthermore, the executive directors are responsible for the preparation of the management report
that as a whole provides an appropriate view of the Company’s position and is, in all material respects,
consistent with the annual financial statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future development. In addition, the executive
directors are responsible for such arrangements and measures (systems) as they have considered
necessary to enable the preparation of a management report that is in accordance with the appli-
cable German legal requirements, and to be able to provide sufficient appropriate evidence for the
assertions in the management report.
The supervisory board is responsible for overseeing the Company’s financial reporting process for
the preparation of the annual financial statements and of the management report.
Auditor’s Responsibilities for the Audit of the Annual Financial Statements and of the
Management Report
Our objectives are to obtain reasonable assurance about whether the annual financial statements
as a whole are free from material misstatement, whether due to fraud or error, and whether the
management report as a whole provides an appropriate view of the Company’s position and, in all
material respects, is consistent with the annual financial statements and the knowledge obtained in
the audit, complies with the German legal requirements and appropriately presents the opportuni-
ties and risks of future development, as well as to issue an auditor’s report that includes our audit
opinions on the annual financial statements and on the management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Section 317 HGB and the EU Audit Regulation as well as German generally accepted
standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer
(Institute of Public Auditors in Germany) (IDW) will always detect a material misstatement. Misstate-
ments 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 annual financial statements and this management report.
We exercise professional judgment and maintain professional skepticism during the audit. We also:
•
Identify and assess the risks of material misstatement of the annual financial statements and of
the management report, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our audit opinions. 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, intenti-
onal omissions, misrepresentations, or the override of internal control.
101
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 0101110101011100001010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 01011101010101010101001101001001010101010101010111111000111000Annual Report 2019Independent Auditor’s Report • Obtain an understanding of internal control relevant to the audit of the annual financial state-
ments and of arrangements and measures (systems) relevant to the audit of the management
report in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an audit opinion on the effectiveness of these systems of the
Company.
•
Evaluate the appropriateness of accounting policies used by the executive directors and the
reasonableness of estimates made by the executive directors and related disclosures.
• Conclude on the appropriateness of the executive directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in the auditor’s report to the related disclosures in the annual financial state-
ments and in the management report or, if such disclosures are inadequate, to modify our res-
pective audit opinions. 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 the Company to cease
to be able to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the annual financial statements,
including the disclosures, and whether the annual financial statements present the underlying
transactions and events in a manner that the annual financial statements give a true and fair
view of the assets, liabilities, financial position and financial performance of the Company in
compliance with German Legally Required Accounting Principles.
•
Evaluate the consistency of the management report with the annual financial statements, its
conformity with German law, and the view of the Company’s position it provides.
• Perform audit procedures on the prospective information presented by the executive directors
in the management report. On the basis of sufficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used by the executive directors as a basis for the pro-
spective information, and evaluate the proper derivation of the prospective information from
these assumptions. We do not express a separate audit opinion on the prospective informati-
on and on the assumptions used as a basis. There is a substantial unavoidable risk that future
events will differ materially from the prospective information.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the
relevant independence requirements, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, the
related safeguards.
102
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that were of most significance in the audit of the annual financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter.
Other legal ans regulatory requirements
Further Information pursuant to Article 10 of the EU Audit Regulation
We were elected as auditor by the annual general meeting on May 29, 2019. We were engaged by
the supervisory board on December 19, 2019. We have been the auditor of INTERSHOP Communi-
cations Aktiengesellschaft, Jena, without interruption since financial year 2007.
We declare that the audit opinions expressed in this auditor’s report are consistent with the addi-
tional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form
audit report).
German public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is Andreas Kremser.
Erfurt, February 28, 2020
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
(sgd. Andreas Kremser)
Wirtschaftsprüfer
(sgd. ppa. Marcus Engelmann)
Wirtschaftsprüfer
(German Public Auditor)
(German Public Auditor)
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2019
106 Report of the Supervisory Board
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 0101110101010101010100110100100101010101010101011111100011100010101010 Report of the Supervisory Board
Dear stockholders,
Significant progress was made in the cloud business in the 2019 fiscal year; however Intershop
was not able to achieve its ambitious goals. We are convinced that, with the restructuring program
resolved in October 2019 and the measures already taken, we are well-positioned to generate
efficient growth once again in the 2020 fiscal year.
In the 2019 fiscal year, the Supervisory Board properly performed its assigned tasks as per the
applicable laws, the Articles of Association, as well as the by-laws. We consistently monitored and
supported the management of the business by the Management Board and were involved in all
corporate decisions of fundamental significance. The Management Board provided the Supervisory
Board with information regarding business development, significant business transactions, as well
as the most recent sales and earnings of the Company on a regular basis and in a timely and com-
prehensive manner, both verbally and in writing.
Supervisory Board meetings and content
In the 2019 fiscal year, the Supervisory Board met in ten meetings and seven telephone conferences.
The Supervisory Board was fully represented at all meetings. The Management Board attended the
meetings on a regular basis. The Supervisory Board discussed all topics relevant to Intershop, with
the focus of the meetings being on the current sales and earnings position with the Company‘s tran-
sition to the cloud business, as well as the financial situation of the Company.
In the meeting on February 1, 2019, the Management Board presented the preliminary results for
the 2018 fiscal year and the projected sales and earnings trends for the first quarter of 2019. The
Management Board advised the Supervisory Board of the status of the capital increase by way of
subscriptions rights. The Supervisory Board also approved the report on corporate governance.
In the meeting on March 15, 2019, the Supervisory Board discussed and approved the 2018 annual
and consolidated financial statements in the presence of the auditors. In addition, the risk manage-
ment and the 2018 risk report were discussed. The Management Board also presented the Super-
visory Board with the updated sales and results forecast for the first quarter of 2019 and the cash
development for 2019. The agenda for the 2019 Annual Stockholders‘ Meeting was discussed in the
meeting as well. In the meeting of the Supervisory Board on March 25/26, 2019, the Supervisory
Board discussed and resolved to issue a joint statement by the Management Board and the Super-
visory Board in accordance with Sec. 27 German Securities Takeover Act (Wertpapierübernahmege-
setz; WpÜG) regarding the takeover offer by Shareholder Value Beteiligungen AG and Shareholder
Value Management AG.
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The main focus of the meetings on May 3 and May 28, 2019 were the sales pipeline and the lead
generation process, as well as cost saving measures. The Management Board explained the forecast
for the second quarter and the 2019 fiscal year, together with potential measures to cut costs. In
their meeting on May 28, 2019, the Board also discussed the current status of the headquarter re-
location project, as well as matters for the Annual Stockholders‘ Meeting.
The main topics of the meetings on August 21 and September 18, 2019 were the economic develop-
ment in the second half of the year as well as the sales pipeline. The Management Board provided
the Supervisory Board with a comprehensive overview of potential cloud orders and presented risks
and rewards.
The 2020 budget was the main topic in the meeting on October 21/22. The Management Board
presented a detailed plan for 2020 and discussed it in detail with the Supervisory Board. The Man-
agement Board also reported on the forecast for the fourth quarter as well as the sales and profit
forecast for 2019.
The main topics of the meetings on November 18 and December 19, 2019 were the 2019 forecast,
the initiation and implementation of the restructuring measures, as well as the preparation of the
extraordinary Stockholders‘ Meeting. The Management Board also presented the medium-term
planning. In their December meeting, the Supervisory Board approved the 2020 budget as well as
the 2019 declaration of compliance.
In the teleconferences on January 7, January 9, April 11, June 14, June 25, July 19, and October 15,
2019, resolutions on increasing the capital and amending the Articles of Association were passed
and topics relating to the result and cash development were discussed.
In addition to the resolutions that were adopted at the meetings, the Board also adopted resolutions
(restructuring program, agenda, Annual Stockholders‘ Meeting) as part of a circulation procedure.
The Management Board submitted all transactions requiring Supervisory Board approval under its
Rules of Procedure to the Supervisory Board for approval. The Supervisory Board examined the
relevant draft resolutions in detail and took the appropriate decisions. Business transactions of
importance to the Company were discussed in detail and carefully monitored by the Supervisory
Board on the basis of Management Board reports. In addition to the Supervisory Board meetings,
the Supervisory Board was in regular contact with the Management Board and was informed of
the current developments at the Company, the risk situation and risk management, as well as the
related measures required.
No committees were established because the Supervisory Board only comprises three members.
Corporate Governance
Conflicts of interest by Supervisory Members in terms of para. 5.5 of the German Corporate Gov-
ernance Code, which must be immediately disclosed to the Supervisory Board and of which the
Annual Stockholders‘ Meeting must be informed, did not occur during the 2019 fiscal year.
106
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Management Board and Supervisory Board in December 19, 2019. The remuneration of the respec-
tive Supervisory Board members, individualized and broken down by component, is shown in the
consolidated Group management report and management report of INTERSHOP Communications AG.
Annual financial statements and consolidated financial statements,
dependent company report, annual audit
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, the auditor for the 2019 fiscal
year elected at the Annual Stockholder’s Meeting held on May 29, 2019 and engaged by the Super-
visory Board, thoroughly reviewed the annual financial statements, the consolidated financial state-
ments, the combined management report of INTERSHOP Communications AG and issued unqual-
ified audit opinions in each case.
In addition, the auditors reviewed the dependent company report prepared by the Company
pursuant to section 312 of the German Stock Corporation Act (AktG), reported on it pursuant to
section 313 (3) of the AktG, and issued the following unqualified audit opinion:
“Based on our audit and assessment in accordance with professional standards, we confirm that (1) the
actual disclosures contained in the report are correct, (2) the payments made by the Company in connec-
tion with transactions detailed in the report were not unreasonably high.”
Following its own thorough examination, in particular after inspecting the auditor’s reports, as well as
discussing the key points of the audit in detail with the auditor and the material findings of the audit,
the Supervisory Board did not raise any objections with respect to the financial statements or the
dependent company report. The Supervisory Board concurs with the result of the audit and the audit
of the dependent company report. The Supervisory Board does not raise any objections against the
declaration given by the Management Board at the end of the dependent company report and approved
the separate financial statements and consolidated financial statements prepared by the Management
Board at its meeting on March 16, 2020. The annual financial statements of INTERSHOP Communica-
tions AG were thus adopted. Since the Company did not generate retained earnings during the 2019
fiscal year, there was no need to examine a recommendation for the appropriation of profits.
The Supervisory Board would like to thank the stockholders for their confidence in Intershop and
the Management Board and all the employees of the Intershop Group for their commitment and
exceptional performance during the 2019 fiscal year.
Jena, March 2020
On behalf of the Supervisory Board
Christian Oecking
Chairman of the Supervisory Board
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2019
110 Corporate Governance Report with
Corporate Governance Declaration
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Corporate Governance Report with
Corporate Governance Declaration
The activities of the Management Board and Supervisory Board are determined by the principles of
responsible corporate governance. This report comprises the Corporate Governance Report as per
section 3.10 of the German Corporate Governance Code as well as the joint Corporate Governance
Declaration as set out in section 289f and section 315d HGB (German Commercial Code).
1. Declaration of the Management Board and Supervisory Board pursuant
to section 161 of the Aktiengesetz (AktG – German Stock Corporation Act)
The recommendations of the German Corporate Governance Code were largely complied with
in fiscal year 2019; any departures were explained in the Declaration of Conformity. The Super-
visory Board and the Management Board issued the following joint Declaration of Conformity
in accordance with section 161 of the Aktiengesetz (AktG – German Stock Corporation Act) on
December 19, 2019:
Since the declaration of conformity dated December 13, 2018 to the time of this declaration
INTERSHOP Communications AG has complied with the recommendations of the Government
Commission on the German Corporate Governance Code in the version dated February 7, 2017
(„Code“), with the following exceptions and will comply with them in the future with the following
exceptions:
a) The existing D&O insurance does not include a deductible for the members of the Supervi-
sory Board (section 3.8 of the Code) since the Company has not been offered a policy with
comparatively more favorable terms. Furthermore, the Management Board and Superviso-
ry Board hold the view that the members of the Supervisory Board also exercise their obli-
gations responsibly without a deductible.
b) The Management Board ensures that measures suitable for the risk profile of the company
are put into place; however, it does not have a stand-alone compliance system (Code
paragraph 4.1.3, sentence 2) as the company believes that the measures implemented
within the framework of the internal control and risk management system are sufficient
based on the size of the company. For this reason, a whistleblower system in accordance
with Code paragraph 4.1.3, sentence 3 will also not be set up by the company.
c)
In the remuneration reports, remuneration of the Management Board was continued and
will continue to be individualized and shown based on fixed and variable components in ac-
cordance with the applicable accounting standards under the German Commercial Code.
In the opinion of the Management Board and the Supervisory Board there is no require-
ment for an additional breakdown of remuneration components and costs or reporting of
the overall achievable variable remuneration pursuant to section 4.2.5 of the Code, since
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tion structure and amount, and the noting of merely a maximum and minimum amount of
variable remuneration in the required form - without the context of the underlying remun-
eration provisions - is misleading and can thus lead to incorrect conclusions.
d) Since the Supervisory Board has only three members, it does not constitute any commit-
tees (Code paragraph 5.3.1). The Supervisory Board has not determined a time limit for Su-
pervisory Board membership, a competency profile, or a required number of independent
Supervisory Board members in accordance with Code paragraph 5.4.1. The Supervisory
Board believes that a time limit for Supervisory Board membership would not be appropri-
ate since, in general, there is no necessary correlation between term of office, independen-
ce of the members of the Supervisory Board, and the occurrence of potential conflicts of
interest. Furthermore, due to the small number of Supervisory Board members, the Super-
visory Board believes that a precise definition of objectives and a competency profile would
limit the selection of suitable Supervisory Board members. The Supervisory Board would
like to be able to freely and flexibly decide on proposals for the composition of the Board in
each specific situation and, when making nominations, will take the length of service of the
Board members and their independence into account on a case-by-case basis. Currently,
all three Supervisory Board members are independent.
This declaration of conformity and all previous declarations have been made permanently
available on the Company’s website at http://www.intershop.com/investors-corporate-gover-
nance.
2. Corporate Governance Practices
The Company has not implemented any business practices exceeding the recommendations
of the German Corporate Governance Code, e.g. a company Code of Conduct. The Company
takes into consideration the suggestions of the Corporate Governance Code to the greatest
possible extent.
3. Information on the Management Board‘s and Supervisory Board‘s
principles of work, as well as their composition
In accordance with the fundamental principle of German company law, Intershop is subject to
the dual management system, which requires the separation of the management body (Ma-
nagement Board) and the supervisory body (Supervisory Board). Both bodies cooperate in the
management and supervision of the Company.
The Management Board is responsible for managing the Company with the goal of creating
sustainable value. The Management Board jointly develops the Company’s strategy and ensures
that it is implemented in consultation with the Supervisory Board. The Management Board
must manage the Company’s business in accordance with the law, the Articles of Association,
and the by-laws. The principle of joint responsibility applies; this means that the members of
the Management Board are jointly responsible for the management of the entire Company. The
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Board. In particular, these by-laws govern the adoption of resolutions and the allocation of res-
ponsibilities. The By-laws of the Management Board also include a list of transactions for which
the Management Board requires the Supervisory Board’s approval.
The Management Board currently comprises two members. There is a Chief Executive Officer
for the Management Board. The number of members of the Management Board is determined
by the Supervisory Board, which can also appoint a Chairman or a Spokesperson and Deputy
Chairman of the Management Board.
The Management Board provides the Supervisory Board with regular, timely, and comprehen-
sive information about all aspects of business development that are material for the Company,
significant transactions, and the current earnings situation, including the risk situation and risk
management. Where business developments deviate from earlier forecasts and targets, these
deviations are discussed and the reasons given in detail. The Management Board also reports
regularly on compliance, i.e., the measures taken to meet legal requirements and internal gui-
delines, which is also the responsibility of the Management Board.
The Supervisory Board advises the Management Board on the management of the Company
and monitors the Management Board’s activities. It appoints and dismisses the members of the
Management Board, resolves the compensation system for the Management Board members,
and sets their total compensation. It is involved in all decisions that are of fundamental import-
ance for the Company.
The Articles of Association stipulate that the Supervisory Board must comprise three members.
Its regular term of office is five years and ends at the Annual Stockholders’ Meeting that resolves
the approval of the Supervisory Board’s activities for the fourth fiscal year after the beginning
of its term of office. It must perform its duties in accordance with the provisions of the law, the
German Corporate Governance Code, the Articles of Association, and its By-laws. The Super-
visory Board must be consulted on all decisions of fundamental importance for the Company.
The By-laws of the Management Board therefore stipulate certain transactions – such as major
investment projects, acquisitions, and employment contracts above a certain amount – that
require the Supervisory Board’s approval. The Chairman of the Supervisory Board represents
the Supervisory Board externally and in dealings with the Management Board. He chairs the
Supervisory Board meetings. No committees were established because the Supervisory Board
only comprises three members. In addition to its reports at the Supervisory Board meetings,
the Management Board regularly informs the Supervisory Board about current key develop-
ments at the Company and the related measures required, as well as about the forecast for
future quarters.
D&O insurance has been taken out for all members of the Management Board and the Super-
visory Board; a deductible of 10% was agreed upon for Management Board members in accor-
dance with section 93(2) sentence 3 of the AktG.
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Pursuant to section 111 (5) of the AktG, the resolution of the Supervisory Board dated June 21,
2017 set the target figure of women on the Management Board and the Supervisory Board at
0% by June 30, 2021, which was achieved for the 2019 reporting year. However, the Supervisory
Board is endeavoring to give priority to women with the same qualifications in order to increase
the percentage of women on the Supervisory Board and the Management Board.
The target figure for women on the two executive tiers below the Management Board set by
the Management Board in accordance with section 76 (4) of the AktG was limited until June 30,
2021 at 26.92% by the resolution of June 21, 2017. The target figure of 26.92% was defined
according to the existing percentage of women as of June 2017. Since it would be inappropria-
te to consider and set target figures separately for each executive tier below the Management
Board, the Management Board decided to specify just one target figure for this executive tier.
The target figure was reached for INTERSHOP Communications AG at the end of 2019.
5. Further information – Corporate Governance Report
Since the Management Board and Supervisory Board have stated in their Declaration of Con-
formity that they will not follow the Code‘s recommendations on appointing members in terms
of the limit to be set for the length of membership, competency profile nor on appointing inde-
pendent members, information on implementing this objective in terms of section 5.4.1 of the
Code is also unnecessary in this report. However, it should be pointed out that the three Super-
visory Board members have been independent since the Annual Stockholder‘s Meeting in 2013.
There are no stock option plans; the only security-based incentive program is that one of the
many aims agreed with the members of the Management Board for their variable remuneration
takes into account price development of the Intershop shares.
The particulars regarding the remuneration of the Management Boards and Supervisory Boards
are outlined in the remuneration reports as part of the combined Group management report
and management report of INTERSHOP Communications AG.
Jena, February 5, 2020
INTERSHOP Communications AG
For the Management Board
For the Supervisory Board
Dr. Jochen Wiechen
Markus Klahn
Christian Oecking
Chairman of the Supervisory Board
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Stock Market Data,
Shareholder Structure
& Share
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 0101110101010101010100110100100101010101010101011111100011100010101010 Stock Market Data
Intershop Shares
* Basis: Xetra
** Basis: all stock exchanges
114
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Aktionärsstruktur
Shareholder structure
and share price
Shareholder Value Management AG /
Shareholder Value Beteiligungen AG
33.83%
Free Float
Shares
42.58
Mio.
51.10%
Axxion S.A.
9.60%
5.47%
Frankfurter
Investmentgesellschaft
with variable capital
as of December 2019
1.60
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
0.60
in EUR,
XETRA
Closing price
January 2019
December 2019
115
0101011010101010101010111111000111000101010101010101010101010101010101001 010101110101011100011010010010101010101010101010101011111000111000101010101010101010101010101010101001 01011101010111000110100100101010110101010101010101111110001110001010101010101010101010101010101010101 01010111010101110101101001001010101010101010100111010111000101010101010101010101010101010101001 010111010101010101010011010010010101010101010101111110001110001010100101011010101010101010111111000111000101010101010101010101010101010101001 01010111010101110001101001001010101010101010100111000111000101010101010101010101010101010101001 010111010101110001101001001010101010101010110101010 Finanzkalender 2019
Financial Calender 2020
The current financial calendar can be found at www.intershop.com/financial-calendar.
This annual report contains forward-looking statements regarding future events or the future financial and operational performance of
Intershop. Actual events or results may differ materially from the results presented in these forward-looking statements or from the results
expected according to these statements. Risks and uncertainties that could lead to such differences include Intershop‘s limited operating
history, the limited predictability of revenues and expenses, and potential fluctuations in revenues and operating results, significant depen-
dence on large individual customer orders, customer trends, the level of competition, seasonal fluctuations, risks relating to electronic se-
curity, possible state regulation, and the general economic situation.
Layout & Design: timespin Digital Communication GmbH., www.timespin.de
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INTERSHOP Communications AG
Investor Relations
Intershop Tower, D-07740 Jena
Phone: +49 3641 50 -1000
Fax:
+49 3641 50 -1309
Email: ir@ intershop.com
www.intershop.com/investors
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