11880 : Annual Report 2020 (English Version)

March 30, 2021 at 04:29 am EDT

ANNUAL REPORT 2020

Financial Key Figures

Financial key ﬁgures of 11 88 0 Solutions-Group at a glance

in EUR million	12M 2020	12M 2019	Variance absolute	Variance in percent
Revenues and earnings 11 88 0 Solutions-Group
Revenues	50.8	47.7	3.1	6.6 %
EBITDA1	3.0	2.8	0.2	7.8 %
Net loss	-2.3	-3.2	0.9	27.2 %
Details Segmente
Revenues Digital	38.3	34.6	3.6	10.5 %
EBITDA1 Digital	2.8	2.4	0.3	18.3 %
Revenues Directory Assistance	12.5	13.0	-0.5	-3.8 %
EBITDA1 Directory Assistance	0.2	0.4	-0.2	-51.9 %
Statement of ﬁnancial position2
Total assets	31.4	27.3	4.0	14.8 %
Cash and cash equivalents3	3.7	4.7	-1.1	-22.7 %
Equity	9.8	7.4	2.4	32.4 %
Equity ratio	31.1 %	27.1 %	4.0	14.8 %
Cash Flow
Cash Flow from operating activities	2.5	4.4	-1.9	-43.9 %
Cash Flow from investment activities	-3.6	-3.2	-0.4	-12.1 %
Cash Flow from ﬁnancing activities	-0.1	2.1	-2.1	>-100.0 %
Net Cash Flow4	-1.2	2.1	-3.3	>-100.0 %
Key ﬁgures for the 11 88 0 share
Earnings per share (in EUR)	-0.1	-0.2	0.1	50.0 %
Share price at year-end (in EUR)5	1.56	1.56
Market capitalisation at year-end	38.9	32.8	6.1	18.5 %
Other KPIs
Digital cancellation rate (in percent)6	26.0	28.0	-2.0	-7.1 %
Revenue per call (in EUR)	4.17	3.71	0.46	12.4 %
Number of employees7 group	608	554	54	9.7 %

1 Earnings before interest, tax, depreciation and amortisation
2 Comparison value as of 31, December 2019
3 Portfolio of cash and cash equivalents as well as ﬁnancial assets at fair value through proﬁt or loss
4 Operating cash ﬂow plus cash ﬂow from investing activities minus interest expenses, adjusted for the changes in ﬁnancial assets at fair value through proﬁt or loss
5 Xetra-closing prices as of last trading day
6 For further information, see non-ﬁnancial key ﬁgures under Group Management Report

7 Headcounts as of 31 Deccember 2020 closing date (excluding the Managment Board, trainees and dormant employment contracts)

For mathematical reasons, rounding diﬀerences amounting to +/- one unit (€, % etc.) may occur. In favour of a correct mathematical presentation, such diﬀerences are consciously accepted.

Content 5

About us

Letter of the Management Board .................................................................................... 06

Report of the Supervisory Board ..................................................................................... 08

11 88 0 Solutions AG on the capital market ....................................................................... 12

Corporate Social Responsibility

Description of the business model of 11 88 0 Solutions AG ................................................... 16

Environmental matters ................................................................................................. 16

Employee matters ........................................................................................................ 17

Social matters ............................................................................................................ 18

Respect for human rights .............................................................................................. 18

Anti-corruption matters ................................................................................................ 18

Group Management Report

Fundamental infomation about the group ........................................................................ 22

Macroeconomic and sector-speciﬁc environment ............................................................... 24

Course of business ....................................................................................................... 25

Financial situation ....................................................................................................... 26

Research and development ............................................................................................ 29

Employees ................................................................................................................. 29

Opportunity and risk management .................................................................................. 30

Report on expected developments .................................................................................. 39 Disclosures pursuant to section 315a HGB and explanatory report

in accordance with section 176 (1) sentence 1 AktG ............................................................. 40

Statement and report on corporate governance ................................................................. 41

Remuneration system ................................................................................................... 41

Responsibility statement .............................................................................................. 48

Consolidated Financial Statements

Consolidated Statement of Financial Position (IFRS) .......................................................... 52

Consolidated Income Statement (IFRS) ........................................................................... 54

Consolidated Statement of Comprehensive Income (IFRS) ................................................... 55

Consolidated Statement of Shareholders Equity (IFRS) ....................................................... 56

Consolidated Statement of Cash Flows (IFRS) .................................................................... 58

Notes to the consolidated ﬁnancial statements of 11 88 0 Solutions AG for ﬁnancial year 2020 ... 60

Independent auditor's report ........................................................................................ 126

Corporate Information ................................................................................................. 132

Forward-looking statements ........................................................................................ 133

Corporate Structure 11 88 0 Solutions-Group ..................................................................... 134

Financial Calendar 2021 ............................................................................................... 135

Imprint ..................................................................................................................... 135

Letter of the Management Board

Dear Shareholders, Customers and Friends of 11 88 0 Solutions AG,

The coronavirus pandemic set the agenda for the economy during the 2020 ﬁnancial year. Our company deliveredabove-average per-formance during this challenging period, recording a sharp rise in the number of paying customers in the Digital business for the fourth year in a row. In 2020 our customer base grew by 5,775 pay-ing customers to reach 44,441 as of 31 December 2020, while the revenue generated by our company increased to EUR 50.8 million.

Even from a strategic perspective, we refused to let ourselves be in-timidated by the pandemic in 2020 and created another important foundation for the future growth of our company by acquiring on-line marketing agency FAIRRANK GmbH. FAIRRANK is undoubtedly an excellent ﬁt for 11 88 0 Solutions AG as there are no overlaps and plenty of synergies. We began the integration process immediately after the acquisition and were able to implement more steps than planned by the end of 2020.

In November, just ten weeks after the FAIRRANK acquisition, we rolled out our ﬁrst joint product with MEIN SEO. This marks the start of a whole series of new products that combine the expertise of both companies to oﬀer intelligent solutions to a broader cus-tomer target group.

In our Digital business, we focused on enhancing the user-friend-liness and eﬃciency of our products and services in 2020. As a result, we were also able to increase traﬃc to our portals in a year dominated by coronavirus. werkenntdenBESTEN.de and wirﬁndendeinenJOB.de generated particular interest among consumers during the pandemic, with the number of reviews on werkenntdenBESTEN.de, our search engine for online reviews, passing the 100 million mark in June.

2020 was also a successful year from a customer perspective, as the coronavirus crisis showed smaller and medium-sized compa-nies that were previously not professionally represented online that an attractive online presence is essential. Compared to many other companies, we were able to grow further in 2020 as retailersand service providers were placed under even greater pressure to move their business online in order to continue operating.

We signiﬁcantly improved the quality of our service in the Direc-tory Assistance business by using an innovative AI solution that analyses the mood of callers to our call centre and signals to our employees the best way to conduct the conversation. Thanks in no small part to this pleasant and productive approach to com-munication, satisfaction with our telephone services is very high among both our directory assistance customers and the customers in our call centre third-party business.

We also agreed an important collaboration in the Directory Assis-tance business in the spring of 2020, taking care of all incoming call services for the FRED 11811 directory assistance service from May onwards. FRED 11811 is operated by various publishers of the DasÖrtliche and DasTelefonbuch telephone directories, which are in publisher GbRs (partnerships under German civil law) with DTM Deutsche TeleMedien GmbH. This collaboration enabled us to in-crease our monthly directory assistance call volumes by around ﬁve percent.

In the Digital business, we also formally agreed important collabo-rations with restaurant portal speisekarte.de and small and medi-um-sized business portals DS Digitale Seiten and marktplatz-mittel-stand in order to oﬀer our corporate customers additional valuable online marketing opportunities. With the help of our partner Micro-soft, we have been able to oﬀer our customers signiﬁcant help with their administrative tasks since the start of the 2020 ﬁnancial year. All 11800.com customers who have ordered one of our four website products have access to the complete Microsoft Oﬃce 365 package, which even includes an email solution.

Collaborations, meaningful additions to our business units via mergers and acquisitions and the continuous optimisation of our processes and products are the three pillars driving the successful growth of our company. The capital increase from authorised capital

in return for cash and non-cash contributions carried out in 2020 formed another important part of this growth strategy, as united vertical media GmbH oﬀered FAIRRANK GmbH as a non-cash contri-bution as part of this initiative. The subscription oﬀer for the capital increase was signiﬁcantly oversubscribed, which showed us that our company and 11880 Solutions shares were once again attracting interest from investors and private shareholders after the restructu-ring of the company that began in 2015.

We will continue to pursue a path based on the aforementioned three pillars in 2021. Our clear goal for the medium term is to be-come number one at providing eﬃcient online marketing for small and medium-sized enterprises in Germany. Our employees and I do everything in our power to achieve this every day. Time and time again, it brings me pleasure to see everyone pulling together and working towards our goals with plenty of creativity and enthusiasm.

I would like to express my sincere thanks to you, our valued share-holders, for placing your trust in us and supporting our strategy. I am conﬁdent that we will be able to present rising customer and revenue ﬁgures and several new products to you over the coming ﬁnancial year.

Sincerely,

Christian Maar

Chief Executive Oﬃcer

Essen, 23 March 2021

1 January 2020 to 31 December 2020

Report of the Supervisory Board

for the ﬁnancial year from

Like that of every other company around the world, 11 88 0 Solutions AG's 2020 ﬁnancial year was dominated by the coronavi-rus pandemic. However, the Company came through the crisis rela-tively well despite challenging circumstances, once again recording growth both inside and outside the operating business. At the end of August 2020, 11880 Solutions AG acquired Cologne-based on-line marketing agency FAIRRANK GmbH as part of a capital increase from authorised capital in return for cash and non-cash contributi-ons, thus creating an important platform for faster growth. In what has been an eventful 2020 ﬁnancial year, the Supervisory Board of 11880 Solutions AG monitored the Management Board's business activities in compliance with its legal advisory and supervisory func-tion and was on hand at all times to oﬀer advice.

Supervisory Board activities in the 2020 ﬁnancial year

In the 2020 ﬁnancial year, the Supervisory Board of 11880 Solutions AG carried out its duties, as provided by law and the Company's Articles of Association. Four regular meetings were held during the reporting period in addition to three extraordina-ry Supervisory Board meetings.

The Supervisory Board seamlessly monitored CEO Christian Maar's management of 11 88 0 Solutions AG. To do this, it was kept conti-nually and extensively informed about general business develop-ments, relevant ﬁnancial ﬁgures, coronavirus-related issues and potential risks. The Supervisory Board was also on hand to advise the Management Board, who kept the Supervisory Board informed about ﬁnancial developments and discussed all strategic and com-mercial business decisions with them, while the Supervisory Board also met regularly without the Management Board.

In addition to the eﬃcient development of the product portfolio and the ongoing reorganisation of the internal IT infrastructure,the Company also reached important milestones on the path to faster successful growth with an acquisition and new collaborati-ons during the 2020 ﬁnancial year. 11880 Solutions AG is striving to signiﬁcantly enhance its market position as an all-round online marketing services provider for small and medium-sized enterprises in Germany.

In its second division, the Directory Assistance segment, 11880 Solutions AG agreed a collaboration with the FRED 11811 telepho-ne directory service in May 2020, increasing incoming directory assistance call volumes by ﬁve percent. In the call centre third-party business, the Company once again positioned itself as a high-quality provider of call centre services by expanding existing customer orders during the past ﬁnancial year.

On 26 August, 2020, the Company's Management Board adopted a resolution, approved by the Supervisory Board, to implement a capital increase from authorised capital in return for cash and non-cash contributions by issuing up to 3,893,000 new shares carrying pre-emption rights. The subscription ratio was 27 to 5 and the sub-scription price was set at EUR 1.25. The main shareholder united vertical media GmbH (uvm) exercised all of its pre-emption rights and subscribed 2,813,747 new shares, paying for 2,707,200 new shares by way of a non-cash contribution by contributing Colog-ne-based FAIRRANK GmbH and by making an additional cash con-tribution of EUR 106,547. An internationally recognised auditing ﬁrm has issued a fairness opinion conﬁrming that the subscription ratio in connection with the non-cash contribution of the FAIR-RANK equity interest was appropriate. The rights oﬀering, which ended on 10 September 2020, was signiﬁcantly oversubscribed; all 3,893,000 new shares were issued. The acquisition of FAIRRANK GmbH complements the strategic business model and accelerates the growth of 11 88 0 Solutions AG.

The Company's Supervisory Board continually supervised the ac-counting and ﬁnancial reporting process and the eﬃciency of the internal control and risk management system during the 2020 ﬁnancial year. The Supervisory Board also addressed the eﬀecti-veness of compliance processes within the Company and pending legal disputes as well as associated potential risks. After carefully reviewing the auditor's independence and qualiﬁcations, the ser-vices provided to date and the audit fee, the Supervisory Board commissioned PricewaterhouseCoopers GmbH, Wirtschaftsprü-fungsgesellschaft, Essen, to audit the 2020 consolidated ﬁnancial statements.

Organisation of the Supervisory Board's work

A reliable ﬂow of information helps the Supervisory Board of 11 88 0 Solutions AG to perform its duties constructively. To do this, it ob-tains regular reports from the Audit Committee, the Nomination Committee and the Personnel Committee. The Audit Committee's duties include monitoring the accounting, internal control system and audit of the ﬁnancial statements. It also prepares Superviso-ry Board resolutions and identiﬁes current issues for discussion. Within the context of monitoring the auditor's independence, the Supervisory Board of 11880 Solutions AG had an approval process developed in 2016 that ensures the release of permissible non-audit services by the auditor in accordance with EU Regulation 537/2014, which took eﬀect on 17 June 2016.

Composition and personnel of the Supervisory Board

The formation of the Supervisory Board of 11880 Solutions AG is based on the provisions of Sections 96 (1), 101 (1) AktG in conjunction with Sections 1 (1) and 4 of the German One-Third Employee Participation Act (Drittelbeteiligungsgesetz). Pur-suant to Item 4.1 (1) of the Articles of Association of 11880 Solutions AG, the Supervisory Board comprises four members elected by the Annual General Meeting and two elected by emp-loyees. The stated objective of the Supervisory Board is to focus on eﬀectively supporting the Company in its quest to become Germany's leading provider of online marketing services for small and medium-sized enterprises. When determining the composition of the Supervisory Board, the members' professio-nal expertise in business and the digital industry are taken into account accordingly.

In the 2020 ﬁnancial year, the Supervisory Board of 11880 Solutions AG comprised the following members: Dr. Michael Wies-brock (Chairman), Michael Amtmann (Deputy Chairman), HelmarHipp, Ralf Ruhrmann, Sandy Jurkschat and Leonard Kiedrowski. The other members of the Audit Committee chaired by Dr. Michael Wiesbrock were Ralf Ruhrmann and Sandy Jurkschat. The Nomina-tion Committee members were Dr. Michael Wiesbrock and Helmar Hipp. The Personnel Committee comprised Dr. Michael Wiesbrock and Michael Amtmann.

Meetings and attendance

The Supervisory Board held four regular meetings in the 2020 ﬁnancial year, one in each quarter, with some held virtually due to the pandemic. All members of the Supervisory Board took part in all of the meetings. The Supervisory Board also held two ex-traordinary meetings during the 2020 ﬁnancial year.

Members participated fully in the ﬁrst extraordinary Supervisory Board meeting in mid-August. The Management Board informed the Supervisory Board about the synergies and potential arising from the merger of 11880.com and FAIRRANK GmbH as well as the planned parameters of the deal, taking into account key elements of the fairness opinion. Management Board remuneration issues were discussed as an additional agenda item.

All members of the Supervisory Board took part in the second extraordinary Supervisory Board meeting at the end of August 2020, with resolutions passed by telephone. Supervisory Board member Michael Amtmann is also Managing Director of uvm. In light of this, Michael Amtmann abstained from voting on the Supervisory Board resolution to approve the implementation of a capital increase using Authorised Capital 2018/II with pre-emption rights in return for cash and non-cash contributions (Resolution 1) due to a potential conﬂict of interest. Michael Amtmann also refrained from voting on the second resolution to approve the signing of a contribution agreement with uvm (Resolution 2) based on the exclusion of voting rights set out in Section 111b (2) of the German Stock Corporation Act (AktG). As the contribution of shares in FAIRRANK GmbH by uvm consti-tutes a transaction with a related party of 11880 Solutions AG as deﬁned by Section 111a (1) AktG - uvm holds approximately 72.30% of the Company's shares - the Management Board requi-red the approval of the Supervisory Board to sign the contribu-tion agreement with uvm in accordance with Section 111b (1) AktG. In addition, 11 88 0 Solutions AG is a listed company, and the contribution of shares by uvm exceeds the threshold to be considered for related party transactions pursuant to Section 111b (1) AktG.

All members of the Supervisory Board took part in the third ex-traordinary Supervisory Board meeting in September 2020, with resolutions again passed by telephone. Michael Amtmann ab-stained from voting on the decision to approve the speciﬁcation of details for the capital increase from Authorised Capital 2018/ II as well as the associated amendment to the Articles of Asso-ciation due to a potential conﬂict of interest.

The Audit Committee met four times during the 2020 ﬁnancial year.

Corporate governance and remuneration of the Management Board

Following comprehensive changes to the German Corporate Governance Code (GCGC) on 16 December 2019, the declaration of compliance of 11 88 0 Solutions AG dated 01 June 2019 was modi-ﬁed to reﬂect the new legal and factual regulatory framework for the management and supervision of a company.

The Management Board and Supervisory Board of 11 88 0 Solutions AG declare that they comply with all of the principles, recommen-dations and proposals of the GCGC published in the Federal Gazette on 20 March 2020.

Any deviations in the interests of the Company have been dis-closed in the joint declaration of compliance dated 17 December 2020, which can be viewed at any time on the Company's website atwww.11880.com. For further information on the implementation of the recommendations and proposals of the German Corporate Governance Code and a detailed report on the remuneration sys-tem for members of the Management Board we refer to the notes to the Group management report (see page 42 et seq.).

section 315a German Commercial Code (HGB) based on the Inter-national Financial Reporting Standards (IFRSs) applicable in the European Union (EU).

An unqualiﬁed auditor's report was issued for the annual ﬁ-nancial statements, the management report, the consolida-ted ﬁnancial statements and the Group management report as of 31 December 2020. The annual ﬁnancial statements and the management report according to German commercial law, the consolidated ﬁnancial statements and the management report according to IFRSs, and the auditor's reports were discussed in detail with the auditor in the Audit Committee and forwarded to all members of the Supervisory Board in due time. The auditor participated in the concluding discussion of the Company's an-nual ﬁnancial statements at the Supervisory Board meeting held virtually on 29 March 2021, explaining the process of the audit and being available to provide additional information during the discussion.

The Supervisory Board examined the annual ﬁnancial statements and the management report of 11 88 0 Solutions AG in detail. The Supervisory Board agreed with the auditor's ﬁndings. The Supervi-sory Board approves the management report presented by the Ma-nagement Board and the 2020 annual ﬁnancial statements of the Company, which are hereby adopted. The Supervisory Board also examined the IFRS consolidated ﬁnancial statements of 11880 Solutions AG and the Group management report in detail. The Supervisory Board agreed with the auditor's ﬁndings. It appro-ves the Group management report presented by the Management Board and the 2020 consolidated ﬁnancial statements of 11880 Solutions AG.

Audit of the 2020 annual and consolidated ﬁnancial statements

Based on a resolution adopted by the Annual General Meeting on 18 June 2020, the Supervisory Board commissioned Pricewater-houseCoopers GmbH, Wirtschaftsprüfungsgesellschaft, Essen, to audit the ﬁnancial statements. The Company's annual ﬁnan-cial statements in accordance with German commercial law, the management report, the IFRS consolidated ﬁnancial statements and the Group management report for the 2020 ﬁnancial year were audited by PricewaterhouseCoopers GmbH, Wirtschafts-prüfungsgesellschaft, Essen. The consolidated ﬁnancial state-ments for the period from 1 January to 31 December 2020 and the Group management report were prepared in accordance with

Risk early warning system

In accordance with Section 91 (2) German Stock Corporation Act, the Management Board of 11880 Solutions AG established a mo-nitoring system to identify potential risks to the Company and its subsidiaries at an early stage. The result of the auditor's audit showed that the Management Board fulﬁlled all of its duties as required under Section 91 (2) German Stock Corporation Act. The Supervisory Board agrees with the auditor's report.

Corporate social responsibilty

The Supervisory Board dealt extensively with the sustainability re-port (see page 16 et seq.) of 11 88 0 Solutions AG, examined it in detail and approved it unanimously.

Closing declaration

We approve the ﬁndings of the auditors, PricewaterhouseCoopers, and raise no objection after our own examinations of the annual ﬁnancial statements, management report, consolidated ﬁnancial statements and Group management report of 11880 Solutions AG. We accept the 2020 annual ﬁnancial statements prepared by the Management Board, which are hereby adopted. We also accept the 2020 IFRS consolidated ﬁnancial statements prepared by the Ma-nagement Board.

On behalf of the entire Supervisory Board, I would like to thank Christian Maar and all employees of 11 88 0 Solutions AG for their eﬀorts and dedication in what has been a very challenging 2020 ﬁnancial year. Thanks to the performance of the Management Board and the entire team, the Company has succeeded in recor-ding growth, even during the pandemic.

Essen, March 2021

Dr. Michael Wiesbrock

Chairman of the Supervisory Board

11 88 0 Solutions AG on the capital market

Shareholder structure on 31 December 2020

2020 was a year that the world will not forget in a long time. Having been regarded as a manageable problem at the start of the year, the coronavirus pandemic spread over the next few months to become the most serious crisis since the Second World War and one that will continue to have a major impact in 2021. However, the global equity market crash that was initially expected failed to materialise, and the stocks of digital companies in particular rallied spectacularly in the second half of the year, with investors primarily focusing on major international players. According to experts, economic uncer-tainty and persistently low interest rates will continue to ensure that investing in equities remains an attractive investment model.

The shares of 11 88 0 Solutions AG remained stable during the 2020 ﬁnancial year. There was a high degree of uncertainty in the Ger-man equity market at the start of the ﬁrst lockdown in Germany. During this period, our company's share price dropped to an an-nual low of EUR 1.09 on 18 March 2020. The share price stabilised a few weeks later and primarily moved between EUR 1.30 and EUR 1.40 until the end of the year. Investors followed the recommenda-tions of several experts to buy 11 88 0 shares at the end of the year, sending the price to an annual high of EUR 1.63 on 21 December 2020 and a year-end closing price of EUR 1.56, which is where it began the 2020 ﬁnancial year.

The shareholder structure of 11 88 0 Solutions AG changed slightly in the 2020 ﬁnancial year compared with the previous year.

On 26 August, 2020, the Management Board of 11880 Solutions AG adopted a resolution, approved by the Supervisory Board, to implement a capital increase from authorised capital in return for

cash and non-cash contributions by issuing 3,893,000 new shares carrying pre-emption rights. The subscription ratio was 27 to 5. The main shareholder united vertical media GmbH made its con-tribution for 2,707,200 new shares by contributing Cologne-based FAIRRANK GmbH as non-cash contribution and by making an addi-tional cash contribution for 106,547 new shares. The subscription price per share was EUR 1.25 and the subscription period ran from 27 August to 10 September 2020. The rights oﬀering was signiﬁ-cantly oversubscribed after the deadline.

Investor relations activities

The Management Board and commercial directors of 11 88 0 Solutions AG held a conference call with analysts and investors on the publication of the annual ﬁnancial statements for 2019 and an-other for the publication of each of the quarterly results during the 2020 ﬁnancial year. The Company's business performance, ﬁnancial ﬁgures and future strategy were presented on these conference calls and then discussed in detail in a Q&A session.

The Annual General Meeting was held virtually on 18 June 2020. All agenda items were approved with a signiﬁcant majority of 99.98 percent or 99.99 percent.

The Management Board and IR team remained in regular contact with investors and private shareholders throughout the 2020 ﬁnan-cial year, answering questions and discussing business development in regular one-on-one discussions.

On 16 and 17 November 2020, Chief Executive Oﬃcer Christian Maar and commercial director Dr. Michael Nerger presented 11 88 0

Solutions AG at the Deutsche Börse Equity Forum. In addition to the company presentation, they also held numerous one-on-one discussions with interested investors during the forum, which was held virtually for the ﬁrst time.

Analysts at Mainz-based Solventis AG continued to monitor the performance of 11880 Solutions shares and published three re-search updates during the 2020 ﬁnancial year. After issuing a price target of EUR 1.80 per share in their updates on the ﬁrst-quarterand half-year ﬁgures for 2020, the research analysts raised their price target by EUR 0.10 to EUR 1.90 following the publication of the nine-month ﬁgures. They justiﬁed this change by citing the Company's positive operating performance as well as the impro-ved revenue forecast and additional prospects associated with the acquisition of FAIRRANK GmbH.

The baseline study and all subsequent updates can be found on thewww.11880.com website.

11 88 0 Solutions share in comparison with the TecDAX and DAX 01.01.2020 - 31.12.2020

01/2020 02/2020 03/2020 04/2020 05/2020 06/2020 07/2020 08/2020 09/2020 10/2020 11/2020 12/2020

DAX

TecDAX

11 88 0 Solutions

Key ﬁgures for the 11 88 0 share	2015	2016	2017	2018	2019	2020
Number of shares	pcs.	19,111,091	19,111,091	19,111,091	19,111,091	21,022,200	24,915,200
Share in capital	EUR	19,111,091	19,111,091	19,111,091	19,111,091	21,022,200	24,915,200
Share price at year-end	EUR	1.15	0.68	0.874	1.00	1.56	1.56
Highest share price1	EUR	3.35	1.17	1.283	1.285	1.895	1.63
Lowest share price1	EUR	1.13	0.68	0.422	0.946	0.962	1.09
Market capitalisation at year-end	M EUR	22.0	13.0	16.7	19.0	32.8	38.9
Earnings per share	EUR	-0.49	-0.77	-0.50	-0.16	-0.16	-0.10
Dividend or proposed dividend per share	EUR	0.00	0.00	0.00	0.00	0.00	0.00
Dividend yield2	%	0.0	0.0	0.0	0.0	0.0	0.0

1 Xetra closing prices
2 based on the respective Xetra closing price

Content Corporate Social Responsibility 15

Corporate Social Responsibility

Description of the business model of 11 88 0 Solutions AG .................................................... 16

Environmental matters .................................................................................................. 16

Employee matters ......................................................................................................... 17

Social matters ............................................................................................................. 18

Respect for human rights ............................................................................................... 18

Anti-corruption matters ................................................................................................. 18

Corporate Social Responsibility (CSR)

1. Description of the business model of 11 88 0 Solutions AG

2. Environmental matters

For more than two decades, the Company's oﬄine and online brands 11880* and 11880.com have been synonymous with fast and reliable results when searching for private individuals and local and nationwide providers across all sectors. FAIR-RANK GmbH, acquired in ﬁnancial year 2020, is an online mar-keting agency that supports clients from various industries in search engine marketing, and in developing and implementing their online presences and social media campaigns.

With Germany's second-largest directory assistance service under the number 11880*, 11880 Solutions AG oﬀers personal-ised support in ﬁnding an individual, company or information. Our experienced staﬀ also makes their telephone expertise avai-lable to other companies, taking calls and introducing customer service initiatives in the ﬁrst and second-level support on behalf of major corporate clients operating across Germany.

Protecting our planet is an important part of our company's sus-tainability eﬀorts. We contribute to the conservation of our en-vironment by focusing on and continually optimising our energy and resource eﬃciency both in our internal processes and in part-nership with our customers and suppliers.

11 88 0 Solutions AG has been pursuing a green IT strategy since the end of 2017. Newly deﬁned processes and mechanisms have enabled the Company to continuously and transparently moni-tor its energy consumption since then. First, the Company in-troduced a printer concept across all of its sites based on the energy-eﬃcient use of only a few multifunction printers. New management software and FollowMe printing help to avoid any unnecessary or duplicate printouts. This innovative concept has signiﬁcantly reduced not only energy consumption but also paper and toner use.

The 11880.com online business directory and the app of the same name provide targeted information and put customers in touch with suitable providers in their preferred region. 11880.com brings consumers and suppliers together quickly and eﬃcient-ly via specialist portals for the 20 most searched-for sectors. As small and medium-sized companies can reach their custo-mers without advertising wastage via 11880.com, they use the platform and its specialist portals to market their oﬀering. The 11880.com portfolio oﬀers a variety of products, from a listing service on the largest search engines to professional homepages and search engine campaigns, in order to optimise marketing for small and medium-sized enterprises in Germany. This oﬀe-ring is supplemented by a secretarial service that is particularly popular among small companies without a back oﬃce function. With the werkenntdenBESTEN.de meta search engine, 11880 Solutions AG oﬀers companies a unique opportunity to eﬀecti-vely manage their reviews, while corporate clients can use the wirﬁndenDeinenJOB.de job portal to ﬁnd suitable employees. Both portals are very popular and are growing continuously in terms of usage and content.

Two years ago, 11 88 0 Solutions AG built a new data centre infras-tructure at its headquarters in Essen that is more powerful and has a smaller footprint. But the biggest beneﬁt is a signiﬁcant reduc-tion in annual energy and cooling costs. 11880 Solutions AG is making a substantial contribution to protecting our environment with its new IT infrastructure, reduced energy use and signiﬁcant-ly lower electrical waste production.

At the Rostock and Neubrandenburg sites, power consumption is continuously monitored and optimised both in technical areas and on oﬃce levels using special power distribution units for individual devices, with employees being able to see how much electricity is being consumed. In Rostock, air conditioning systems containing environmentally harmful coolants are also being dismantled.

Cologne-based online marketing agency FAIRRANK GmbH, which was acquired in August 2020 and is expected to be fully integrated into the operations of the 11880 Solutions Group by the end of 2021 at the latest, is being gradually connected to the green IT infrastructure of the Group's Essen headquarters. The contracts of

both companies are being interconnected as eﬀectively as possible in order to reduce costs and minimise administrative expenses. To oﬀer employees who travel long distances to work the opportunity to save on travel costs while simultaneously protecting the envi-ronment, all FAIRRANK employees have been integrated into the eﬃcient virtual environment of 11880 Solutions AG, which ena-bles them to work from home whenever they need to.

When selecting company cars, 11880 Solutions AG makes sure that only environmentally friendly vehicles with the lowest fuel consumption from well-known manufacturers are chosen. When leases expire, hybrid or electric vehicles are now the preferred choice. In 2021, fast-charging columns will be installed in the un-derground parking garage at the Essen headquarters.

Employees without company cars are primarily booked on train journeys for business trips. Employees at our four sites hold con-ferences and meetings via telephone and video conferencing as often as possible.

11 88 0 Solutions AG oﬀers all of its employees the option to lease a bicycle cheaply to enable them to travel to work in the most en-vironmentally-friendly way possible.

The Company works closely with Microsoft and was invited to par-ticipate in the "Get to Green" competition for Microsoft partners during the 2020 ﬁnancial year. The sustainability competition crow-ned its winners by planting trees in Uganda, Burkina Faso and Brazil. 11 88 0 Solutions AG performed very well in the competition and was presented with the title of "Microsoft Sustainability Champion". One hundred trees were planted on behalf of 11880 Solutions AG in re-cognition of the Company's commitment to the initiative.

3. Employee matters

11880 Solutions AG is committed to the fundamental rights of its employees. The prohibition of discrimination and right to equaltreatment are particularly important to the Company, as are the right to collective bargaining and freedom of association.

As part of its commitment to the Diversity Charter, the Compa-ny participated in its eighth Diversity Day in May 2020. All em-ployees supported cultural diversity in internal communications and employee development by taking part in special activities organised by the Human Resources department.

The diversity of all our employees and their various skills and ta-lents opens up opportunities for innovative and creative solutions. We appreciate all employees regardless of their gender or gender identity, nationality, ethnic background, religion or belief, disabi-lity, age, sexual orientation and identity. We are striving to create a climate of acceptance and mutual trust each and every day.

Working hours and working-time models play a key role at our call centres, where our employees process directory assistance calls and handle customer service calls for small and medium-sized companies. In order to achieve the best possible work-life balance when carrying out call centre activities, we oﬀer employees an op-timal duty roster that is particularly helpful for single parents and employees who care for underage children or family members. The responsible planners are required to take employees' preferred du-ties into account and implement these wherever these preferences ﬁt with the needs of customers and the interests of the Company.

All of the Company's employees have the option of working from home and are equipped accordingly to take into account the tech-nical and data protection requirements of 11 88 0 Solutions AG.

Our employees receive regular training to enhance their product knowledge and telephone skills. To make telephone conversations as pleasant as possible, we introduced innovative software in our Direc-tory Assistance business that uses a caller's tone of voice to signal what mood they are in and how the employee can oﬀer them the best possible service. This investment has created an even more pleasant

working atmosphere for our staﬀ. Customer satisfaction has risen by 56 percent since the software solution was introduced. Almost 80 percent of our employees now rate their work as signiﬁcantly more enjoyable and motivating.

promote human rights. We feel unconditionally committed to the promotion of human rights and sustainable development.

6. Anti-corruption matters

Management regularly organise health days, joint sports events and celebrations at all of our locations. Only a few employee events were held during the 2020 ﬁnancial year as a result of the pandemic. Management surprised their employees with small cu-linary delights more frequently to thank them for their day-to-day commitment in a challenging year.

11880 Solutions AG pursues a zero-tolerance policy to corrup-tion, competition law breaches and other violations of applicable law. As soon as there are even indications of potential cases of this kind, the Company reacts strictly and emphatically. One im-portant element of integrity is the observance of laws and inter-nal company regulations.

Many years ago, 11 88 0 Solutions AG engaged instant counselling ﬁrm Talingo EAP, now part of INSITE-Interventions GmbH, to oﬀer the opportunity of telephone counselling to all employees and their relatives. This professional counselling service can be used at any time free of charge in the event of money, family or addic-tion problems as well as symptoms of exhaustion.

Our company has not signed a collective wage agreement. We cul-tivate a cooperative working style with employee representatives and involve all elected bodies according to the provisions of the Works Council Constitution Act governing codetermination.

We have always paid our employees in accordance with minimum wage guidelines and beyond. Even before the statutory minimum wage was introduced, 11880 Solutions AG had decided not to take high-risk variable salary components into account when calculating the minimum wage even though the ruling subsequently handed down by the German Federal Labour Court would allow such an approach.

Speciﬁc measures include a comprehensive Code of Conduct issued by the Management Board that can be accessed by all employees on the Company's intranet, where the issue is handled in detail under its own section entitled "Corruption and bribery".

All department heads are members of a special Compliance Com-mittee that meets regularly, monitors the Company's compliance management system, develops optimisations and advises the Ma-nagement Board on all compliance issues. 11 88 0 Solutions AG's compliance management system includes wide-ranging measures and processes and provides regular online and oﬄine training for employees on compliance, the GDPR and the German General Non-Discrimination Act. Other guidelines such as operating procedures and signature and purchasing guidelines are key elements of this compliance management system, which has already been the sub-ject of an external audit. The ﬁndings of the audit certiﬁed the high level of eﬀectiveness of the system and required only a few marginal improvements that were implemented immediately.

As a socially responsible company, we regularly support cultural and social activities. We want to protect values, promote crea-tivity, improve cross-cultural understanding and stimulate pro-gress. As they do every year, employees at our sites in Essen and Rostock packed and donated presents for the Essen parents' ini-tiative supporting children with cancer and children of the Ros-tock food bank for Christmas 2020. Employees in Rostock also made a donation of EUR 500.00.

4. Social matters

5. Respect for human rights

Our business activities have a direct and indirect impact on many people. We are therefore aware of our responsibility to respect and

In the event of suspected corruption, the suspicion is extensi-vely and consistently investigated followed up and the internal investigation documented in detail in the system. Appropriate sanctions are imposed immediately if required.

Our company's compliance management system has always been supplemented by an eﬀective and tight risk and opportunity ma-nagement system. For 11880 Solutions AG, "risk" means both the danger of potential losses and of lost proﬁts. Both can be triggered by internal or external factors. Our company's risk management system contains the entirety of all organisational regulations and measures for identifying and dealing with risks associated with the Company's business activities.

* €1.99/min. from a German landline. Mobile prices may vary where applicable.

Content Group Management Report 21

Group Management Report

Fundamental infomation about the group ......................................................................... 22

Macroeconomic and sector-speciﬁc environment ................................................................ 24

Course of business ........................................................................................................ 25

Financial situation ........................................................................................................ 26

Research and development ............................................................................................. 29

Employees .................................................................................................................. 29

Opportunity and risk management ................................................................................... 30

Report on expected developments ................................................................................... 39

Disclosures pursuant to section 315a HGB and explanatory report

in accordance with section 176 (1) sentence 1 AktG ............................................................ 40

Statement and report on corporate governance .................................................................. 41

Remuneration system .................................................................................................... 41

Responsibility statement ............................................................................................... 48

Group Management Report of 11 88 0 Solutions AG for the 2020 ﬁnancial year

1. Fundamental information about the Group

For the purpose of internal reporting and management control, the 11 88 0 Solutions Group divides its activities into two opera-ting segments: Digital und Directory Assistance.

In the Digital segment the 11880 Solutions Group oﬀers online packages to give small and medium-sized enterprises (SMEs) an extensive and eﬃcient online presence. In addition to an entry in the 11880.com classiﬁed directory and an appropriate 11880 specialist portal, these packages include listing services in addi-tional directory portals, Google Ads and Microsoft Advertising, the production of websites or a telephone secretarial service. We are also oﬀering packages for active review management via our search engine for online reviews werkenntdenBESTEN.de. In addition, the wirﬁndendeinenJOB.de job portal was launched back in 2019. The integration of FAIRRANK GmbH and Seitwert GmbH into the 11 88 0 Group, has enabled the Group to oﬀer the core services of search engine optimisation (SEO), online adver-tising, usability optimisations and website analyses. For larger companies, the 11 88 0 Solutions Group also oﬀers stand-alone or network solutions for access to the latest digital telephone book and yellow pages database.

In its second division, the Directory Assistance segment, the 11 88 0 Solutions Group primarily oﬀers directory assistance ser-vices. Consumers can call a service number to receive telephone numbers and addresses in Germany and worldwide via telephone, email or text in addition to other information on timetables and ﬂight schedules, share prices, movie schedules, hotel reservati-ons and much more. Callers can also be connected directly to the desired subscribers upon request. 11880 Solutions Group emp-loyees in this division also provide customer services as part of the call centre third-party business.

Basis of presentation

In its Digital and Directory Assistance operating segments, the 11 88 0 Solutions Group uses a system of key ﬁgures for control purposes that are relevant to decision-making. In order to re-spond quickly to new developments and changes in its operating business, the Group makes use of daily reporting instruments in all business units. In the ﬁnancial area these include mainly the key performance indicators revenues, proﬁtability (EBITDA) and cash holdings. All of the key ﬁgures mentioned are determined and managed at Group level.

Diﬀerent key ﬁgures are used for non-ﬁnancial performance: In the Digital segment, the new and existing customer development as well as the churn rate are used as non-ﬁnancial key ﬁgures. These key ﬁ-gures make it possible to assess the level of customer loyalty and customer satisfaction. In the Directory Assistance, the non-ﬁnancial key ﬁgures "call volume" and "revenue per call" play a central role.

Financial key ﬁgures

Revenue

Consolidated revenue is one of the main key performance indica-tors. Consolidated revenue consists of revenue from the Digital and Directory Assistance segments.

Within the Digital segment, revenues for the media business are generated through business with new customers and existing cus-tomers. The basis for sustainable revenue growth is an eﬃcient sales team in new customer business and a focus in customer re-tention management on customer loyalty especially by oﬀering products optimised for customers. The software solutions business also oﬀers digital telephone books and yellow pages on CD-ROM and as an intranet solution, as well as database solutions. The ac-

quisition of FAIRRANK GmbH and Seitwert GmbH has enabled the Group to serve medium-sized enterprise customers with solutions, especially in the area of search engine optimisation and search en-gine advertising (SEA).

In the Directory Assistance segment, revenue in both the traditio-nal business and the new call centre third-party business is essen-tially determined as the product of call volume, call duration and price per minute. The call volume is made up of calls from landli-nes and the networks of the mobile phone operators, where the rates may vary depending on the network operator and the call centre third-party business customer.

Proﬁtability (EBITDA):

The main key ﬁgure used by the Company to control proﬁtability is EBITDA (earnings before interest, taxes, depreciation and amorti-sation). The 11 88 0 Solutions Group uses this key indicator to con-trol the proﬁtability of the Group.

Cash holdings

Analysing this indicator makes it possible to evaluate the Compa-ny's ﬁnancial health, among others. This information enables the 11 88 0 Solutions Group to assess, manage and optimise its ﬁnan-cial position and net assets.

Cash holdings is the sum total of cash and cash equivalents and ﬁnancial assets available for sale short-term.

Non-ﬁnancial key ﬁgures

The development of new and existing customers as well as the churn rate as key ﬁgures measuring customer loyalty and sa-tisfaction in the Digital segment

A high level of customer loyalty and satisfaction is of particular importance for the development of the Digital segment. This ba-sically involves making use of a customer support concept to es-tablish a long and sustainable relationship between customers and the Company. This secures future revenues and increases the proﬁtability of the Digital segment.

The quantiﬁable parameters relating to customer loyalty and sa-tisfaction include the churn rate (customer migration rate) and the change in the number of new and existing customers.

Until the 2019 ﬁnancial year, the churn rate was deﬁned as a per-centage that represents the number of customers in the periodwho do not extend their contracts in relation to the number of existing customers in the same prior-year period. Due to system changes resulting in improved control options for management, starting with the 2020 ﬁnancial year the churn rate has been deﬁ-ned as the sum of all terminations in the ﬁnancial year calculated on the average customer base.

Call volume and revenue per call in the Directory Assistance segment

The reason for the continuous decline in the market for directory assistance observable for many years now is the change in consu-mer usage behaviour towards the digital acquisition of informa-tion. This makes it even more important for the 11880 Solutions Group to make an accurate prediction of the development of call volume. In the Company's view, the 11 88 0 Solutions Group has an eﬃcient reporting system, proven forecast models and many years of experience. This provides a basis for the eﬃcient planning of re-quired personnel capacity for the call centres. Revenue per call is another important performance indicator that has a direct impact on the development of revenue in this segment.

Employee satisfaction

Our employees make a major contribution to the Company's long-term success. We want to attract and retain talented individuals and help them to continue developing. To do this, we create a working environment that inspires creativity and loyalty. The Ma-nagement Board believes that this environment is rooted in an open management culture that is based on mutual trust, respect and commitment.

The 11880 Solutions Group can rely on its dedicated staﬀ. We believe that the staﬀ's commitment is evident from their en-thusiasm for their work, motivation and overall attachment to our Company. We are striving to keep the employee commitment identiﬁed in the 2020 employee survey at a high level and increa-se it even further where possible. The Happy Employee Index, our measure of employee satisfaction drawn from the Group-wide employee survey in 2020, remained at a very strong 1.9 (on a scale from 1.0 = strongly agree to 5.0 = strongly disagree). Due to the pandemic, the workforce participation rate was 55% this year (2019: 80%).

In the wake of the reorganisation measures and site concentra-tion carried out since 2016, the employee survey is and remains an established feedback tool in enabling employees to help actively

shape their working environment. The results of the employee sur-vey are incorporated into the further development of our strategy. The next employee survey will be conducted in 2021 and will for the ﬁrst time include the staﬀ of FAIRRANK GmbH.

2. Macroeconomic and sector-speciﬁc environment

Macroeconomic environment

Global gross domestic product (GDP) fell by 3.6% in the 2020 ﬁ-nancial year, well below the 2.6% growth achieved in the previous year. The coronavirus pandemic in particular had a ﬁrm grip on the global economy. GDP slumped by almost 10% in the ﬁrst half of 2020 compared to the end of 2019 before growing again in the summer in line with the easing of infection prevention measures. Companies were able to increase production again based on fac-tors including the signiﬁcant rise in consumer spending during this period. The retail sector recorded particularly strong growth, with the shift towards online retail accelerating markedly in 2020. Further economic development is vitally dependent upon the assumed progress of the pandemic and measures to tackle it. Based on the restrictive infection control measures set to conti-nue until March 2021 and the way in which these measures limit mobility, as well as the sharp increase in economic activity from the summer half-year onwards, particularly in the euro zone and the USA, it is assumed that GDP will grow by 5.8% in 2021 and 4.2% in 2022.

Real GDP in the euro zone is expected to decline by 7.4% this year, indicating a considerable loss of economic momentum compared to the previous year. GDP in this region had already fallen by 3.7% year-on-year in the ﬁrst quarter of 2020. Economic output then slumped by 11.7% in the second quarter due to the drastic mea-sures introduced in most member states to tackle the coronavirus pandemic. This dramatic decline was only partially oﬀset in the third quarter with a 12.5% increase in economic performance. Ta-king into account the restrictive coronavirus measures imposed in autumn 2020, a further 3% drop in GDP is expected for the fourth quarter. Economic activity is only likely to gather signiﬁcant pace when restrictions are gradually eased from March 2021 onwards. The economic recovery is expected to continue in the second half of 2021, taking into account the easing of infection prevention measures due mainly to the vaccination of the population by the end of 2021. GDP is therefore expected to increase by 5.1% in the euro zone in 2021. A rise of 4.1% is anticipated for 2022, primar-ily due to the closure of open output gaps.

GDP growth in Germany weakened from 0.6% in the previous year to 5.1% on average in the 2020 ﬁnancial year. The German eco-nomy recovered surprisingly quickly from the spring shutdown during the third quarter, when GDP increased by 8.5% compared to the previous quarter, its strongest rise since quarterly records began in 1970. Although there was a particularly sharp increase in value creation in areas of the economy that suﬀered most under government measures to limit the spread of infection, most no-tably the hospitality industry and service providers in the arts, entertainment and recreation sectors, the recovery in the manu-facturing sector was also above average. However, as the slump in the ﬁrst two quarters combined was 11.5%, economic output was still lower in the third quarter than it was before the crisis started. As a result, production capacity utilisation in October was more than three percentage points below the long-term average. Nevertheless, the overall assessment of the latest trend in key economic indicators suggests that the latest shutdown in autumn 2020 temporarily halted the economic recovery and that GDP is likely to have contracted further in the fourth quarter. However, this decline is very unevenly distributed across diﬀerent areas of the economy. While value creation in hospitality and among other service providers is set to record a double-digit slump, the manufacturing sector is continuing its recovery. Global industry has therefore remained intact so far, as demonstrated by the re-cent rise in incoming orders. As a result, investments and exports are expected to increase further in the fourth quarter as consumer spending in private households shrinks. The fact that this decline is not even more marked is due to the increase in VAT in January 2021, which is expected to have resulted in noticeable advance purchases at the end of the year. Assuming the lifting of all coro-navirus restrictions in summer 2021 due to sustained vaccine suc-cess among other factors, price-adjusted GDP is likely to increase by 4.2% in 2021. Economic output is set to rise by 2.5% in 2022.

The aforementioned data is taken from the ifo Economic Forecast for Winter 2020, ifo Schnelldienst 2020, December Special Edi-tion, 16 December 2020.

Sector-speciﬁc environment

In the second half of 2019, the Circle of Online Marketers (On-line-Vermarkterkreis - OVK) within the German Digital Media As-sociation (Bundesverband Digitale Wirtschaft e.V. - BVDW) worked with experts from market research ﬁrm Statista to develop a new model for calculating the size of the display advertising market in Germany.

Digital advertising is now one of the most central and essential communication channels. The importance of this market has been demonstrated by its dynamic growth in recent years and has now been conﬁrmed by its very robust performance even amid the COVID-19 pandemic in 2020.

The digital advertising market proved its resilience during the re-cent crisis by more than oﬀsetting the slump in revenue from the second quarter - which was primarily attributable to budget cuts to advertisers' branding campaigns - with three positive develop-ments. First, advertising revenues in the e-commerce sector rose due to the increased need for online retailing triggered by COVID restrictions. Content placed on mobile devices was another positi-ve driver of additional advertising revenue. Revenues in the digi-tal advertising market will ultimately return to the previous year's level during the summer months of this year immediately follo-wing the coronavirus lockdown. In contrast to many other areas of the economy, no long-term negative impact is expected; instead, a clear return to the growth of recent years can be assumed.

According to OVK and Statista, digital advertising revenues in Germany reached approximately EUR 3.613 billion in 2019. Taking into account the eﬀects of the coronavirus crisis in particular, di-gital advertising investments are predicted to total EUR 3.922 bil-lion in 2020, resulting in annual growth of around EUR 300 million or 8.6% between 2019 and 2020. Stable annual growth is gene-rally apparent across all quarters from 2018 to 2020.

In terms of the trend for each individual quarter, data shows that revenue has risen steadily across almost all quarters from 2018 to 2020. The impact of coronavirus is clear in the second quarter of 2020 in particular. The forecast assumes that the pandemic will still have a slight impact on the third quarter of the year. In the last quarter of 2020, however, revenue growth is likely to be able to match the growth rates recorded at the start of the year.

3. Course of business

As in every other company around the world, the COVID-19 pan-demic and resulting restrictions on everyday life dominated the 2020 ﬁnancial year for 11 88 0 Solutions AG. Compared to many other businesses, however, our company was among those that beneﬁted from the surge in digitalisation caused by the coro-navirus crisis, with our base of paying customers in the Digital business rising by a further 5,775 new customers in 2020. Manycompanies who had never marketed their products and services online before became aware during the various lockdown peri-ods that a professional online presence is crucial for business success.

In the Digital business, the Company focused on optimising and expanding its product portfolio by teaming up with partners in 2020. We agreed collaborations with restaurant portal Spei-sekarte.de and small and medium-sized business portals DS Digitale Seiten and marktplatz-mittelstand to oﬀer our custo-mers additional opportunities for comprehensive sector-speciﬁc online marketing. We incorporated the full Microsoft Oﬃce 365 package from our partner Microsoft into our product oﬀering to provide our corporate customers with enhanced support for their administrative tasks.

During the 2020 ﬁnancial year, our search engine for online re-views, werkenntdenBESTEN.de, was completely redesigned to optimise the user experience and more clearly emphasise the site's beneﬁts for business owners. In mid-2020, the number of published online reviews passed the 100 million mark.

To further accelerate the expansion of the customer base in the Digital business that the Company has already spent many years striving for, 11880 Solutions AG acquired Cologne-based on-line marketing agency FAIRRANK GmbH on 26 August 2020. By acquiring an agency that has been serving primarily medium-si-zed enterprises for 16 years, the transaction expanded 11880 Solutions AG's customer structure as intended. Joint marketing to both smaller and now larger companies has the potential to accelerate the Company's growth in the future. Aside from its own products, the increased strength of the Company also oﬀers advantages in its partnership with search engine giants Google and Microsoft. The process of integrating FAIRRANK GmbH into 11880 Solutions AG began immediately after acquisition and should be completed by the end of 2021 at the latest.

FAIRRANK GmbH was acquired with eﬀect from 21 September 2020 by way of a contribution in kind as part of a capital increase from authorised capital in return for cash and non-cash contri-butions based on a resolution adopted by the Management Board and approved by the Supervisory Board on 26 August 2020, by issuing up to 3,893,000 new shares carrying pre-emption rights. The main shareholder united vertical media GmbH, the previous owner of FAIRRANK GmbH, made its contribution for 2,707,200

new shares by contributing the online agency as non-cash con-tribution and by making an additional cash contribution for 106,547 new shares. The subscription price per share was EUR 1.25. The rights oﬀering was signiﬁcantly oversubscribed so that all 3,893,000 new shares were issued.

ciation and amortisation within selling and distribution costs amounting to EUR 3.7 million (previous year: EUR 2.6 million) as well as depreciation and amortisation reported within general administrative expenses of EUR 0.7 million (previous year: EUR 0.7 million).

In the Directory Assistance segment, which continues to decline in line with the market, 11880 Solutions AG has been working since May 2020 with the FRED 11811 directory assistance service, which is operated by various publishers of the DasÖrtliche and DasTelefonbuch telephone directories. 11880 employees ans-wer calls to the number 11811 and provide customers with the information they require. This collaboration enables us to in-crease annual call volumes in the Directory Assistance segment by around ﬁve percent. In the call centre third-party business, where 11880 employees process customer service calls on be-half of larger companies, we were able to further expand the scope of several existing contracts.

The essential and very extensive reorganisation of the Compa-ny's IT and CRM systems that began during the 2019 ﬁnancial year made excellent progress in 2020 and should be successfully com-pleted by mid-2021. This will enable us to serve our corporate customers in the Digital business, whose numbers are rising by several thousand each year, even more rapidly and transparently.

Consolidated revenues increased by 7% compared to the prior-year period. The actual revenue volume of EUR 50.8 million sits comfortably within the range of EUR 47.8 million to EUR 51.0 million projected at the start of the year. The share of FAIRRANK GmbH and Seitwert GmbH in the 2020 revenue amounted to EUR 1.3 million. In August 2020, this original guidance was adjus-ted to a range of EUR 48.5 million to EUR 52.5 million in an ad hoc announcement due to the acquisition of Fairrank GmbH and Seitwert GmbH. We also met this amended forecast range.

Group EBITDA improved by EUR 0.2 million compared to the previous year to EUR 3.0 million, thus comfortably reaching the range of EUR 1.7 million to EUR 3.2 million anticipated at the start of the year.

The consolidated EBITDA for the ﬁnancial year of EUR 3.0 million (previous year: EUR 2.8 million) results from the operating result of EUR -2.7 million (previous year: EUR -2.1 million) plus depre-ciation and amortisation reported within the cost of revenues totalling EUR 1.3 million (previous year: EUR 1.6 million), depre-

Cash and cash equivalents and available for sale ﬁnancial as-sets decreased by EUR 1.0 million to EUR 3.7 million in the last ﬁnancial year (previous year: EUR 4.7 million; cash ﬂow pre-vious year: EUR +2.1 million). For the 2020 ﬁnancial year, the Company forecast cash holdings of between EUR 1.6 million and EUR 2.8 million. In its ad hoc announcement of 10 September 2020 on the complete implementation of the cash and non-cash capital increase, 11 88 0 Solutions AG pointed out that as a result of the capital increase, the Company will have additional cash in the amount of EUR 1.4 million from the net proceeds of the issue.

In 2020, the average churn rate in the Digital segment based on the new calculation method described above was 26%. The Company had planned to at least stabilise or slightly improve the ﬁgure for the 2019 ﬁnancial year, which based on the new calcu-lation method was an average of 28%. The customer portfolio was expected to increase again considerably in 2020, and the Company succeeded in adding 5,775 new customers, thus slightly exceeding expectations.

The negative trend in caller volume in the traditional business of Directory Assistance segment continued as expected. The Group expected the decline in call volume in 2020 to match that of the previous year (2019: 22%). The call volume actually declined by 21% in 2020. Revenue per call again increased by another 2% in 2020, which means that the anticipated slight increase was achieved.

4. Financial situation

Results of operations

Consolidated revenues in the 2020 ﬁnancial year were EUR 50.8 million, compared to EUR 47.7 million in the previous year. This represents revenue growth of 7% (previous year: 11%). The increa-se was due on the one hand to the successful acquisition of new customers and sales to existing customers, and on the other hand to the acquisition of FAIRRANK GmbH and Seitwert GmbH, whose share of revenues amounted to EUR 1.3 million.

The corresponding cost of revenues in the 2020 ﬁnancial year total-led EUR 29.2 million (previous year: EUR 27.3 million). This amount represents an increase of around 7% compared to the previous year. The share of cost of revenues attributable to FAIRRANK GmbH and Seitwert GmbH, the companies acquired in September, was EUR 1.1 million. In addition to the signiﬁcant proportion of cost of reve-nues added by newly acquired companies FAIRRANK and Seitwert, this rise is also attributable to higher costs associated with the de-velopment and introduction of a new, non-capitalisable CRM system compared to the previous year. Other internal development activi-ties were lower as a result of this, which meant that capitalisation was signiﬁcantly reduced compared to the previous year. There was also a sharp increase in variable line costs caused by taking on FRED 11811's directory assistance business from May 2020 onwards.

Selling and distribution costs grew by 11% from EUR 14.5 million in the previous year to EUR 16.1 million (previous year: 20% increa-se). The increase is primarily attributable to higher depreciation of customer contracts in line with the increased level of customer contracts capitalised due to the positive business performance of the Digital segment. Losses on receivables increased year-on-year in line with these higher incoming orders on the revenue side and the need for loss allowances on a case-by-case basis. FAIRRANK GmbH and Seitwert GmbH accounted for EUR 0.3 million of selling and distribution costs.

The general administrative expenses in the amount of EUR 8.1 mil-lion (previous year: EUR 8.0 million) primarily include the costs of corporate services such as ﬁnance, legal, human resources, tech-nology, costs of the Management Board and infrastructure costs of these units. General administrative expenses mainly consist of costs for consultancy (at prior-year level), personnel (EUR 0.1 million lower than in the previous year), maintenance (EUR 0.2 million higher than in the previous year) and depreciation and amortisation (at prior-year level). The share of general adminis-trative expenses contributed by FAIRRANK GmbH and Seitwert GmbH, which were consolidated for the ﬁrst time in the 2020 ﬁ-nancial year, amounted to EUR 0.2 million.

the previous year's ﬁgure of EUR 2.8 million. FAIRRANK GmbH and Seitwert GmbH accounted for EUR -0.2 million of EBITDA.

Net ﬁnancial income in 2020 ended the year with net expenses of EUR 0.3 million, compared with EUR 0.2 million in the previous year.

In 2020, the Group incurred a positive net income tax expense of EUR 0.6 million (previous year: expense of EUR -0.8 million). The main reason for this development is the increase in tax loss carryforwards.

The net income/loss for the period amounted to EUR -2.3 mil-lion compared to EUR -3.2 million in the previous year. FAIRRANK GmbH and Seitwert GmbH accounted for EUR -0.3 million of this ﬁgure.

Segment report

Revenues in the Digital segment rose by EUR 3.7 million from EUR 34.6 million in the previous year to EUR 38.3 million. EBITDA of EUR 2.8 million was an improvement on the previous year (EUR 2.4 mil-lion). Both FAIRRANK GmbH and Seitwert GmbH were allocated to the Digital segment, with the two companies accounting for EUR 1.3 million of revenue and EUR -0.2 million of EBITDA.

The degression rate of call revenues in the traditional directory as-sistance business fell slightly on a percentage basis to 21% in 2020, down from 22% in the previous year. In the ﬁnancial year ended, revenues in the Directory Assistance segment amounted to EUR 12.5 million, down only 4% compared with the previous year due to the call centre third-party business (previous year: EUR 13.0 million). EBITDA of EUR 0.2 million as of the reporting date is below the pre-vious year's level of EUR 0.4 million.

Net assets and ﬁnancial position Capital expenditures

The total investments in intangible assets and property and equip-ment due to the reporting date were EUR 4.5 million (previous year: EUR 4.4 million).

Other operating expenses, after deduction of other operating in-come, amounted to EUR 0.01 million in 2020 (previous year EUR 0.02 million).

Consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) of EUR 3.0 million was slightly higher than

In the Digital segment, the Company mainly invested in internal-ly generated intangible assets in order to make 11 88 0's product portfolio competitive. The additions to capitalised costs to obtain a contract (commissions) in the amount of EUR 3.8 million in line with the positive business trend are another key item in the Digital segment.

Only insigniﬁcant investments were made for the Directory Assis-tance segment.

As in the previous year, the 11880 Solutions Group as of 31 De-cember 2020 had no noteworthy open obligations from capital expenditures which will be incurred in ﬁnancial year 2021.

se of EUR 4.1 million primarily resulted from the recognition of goodwill totalling EUR 3.3 million from the initial consolidation of FAIRRANK GmbH and Seitwert GmbH. Contractual relationships with customers totalling EUR 0.4 million were also identiﬁed as of the takeover date that were reported with a residual value of EUR 0.3 million as of the reporting date.

Statement of ﬁnancial position

As of the reporting date, total assets including FAIRRANK GmbH and Seitwert GmbH, which were consolidated for the ﬁrst time in ﬁnancial year 2020, amounted to EUR 31.4 million, up by EUR 4.0 million compared to prior-year ﬁgure of EUR 27.3 million.

Assets

On the assets side of the statement of ﬁnancial position, cur-rent assets decreased marginally from EUR 14.2 million to EUR 14.1 million. There were oﬀsetting eﬀects from the reduction in cash by EUR 1.1 million and the increase in trade accounts receivable, by EUR 0.9 million. The reduction in cash is primar-ily attributable to planned investments in the new CRM system. EUR 0.6 million in cash was added by initial consolidations. The EUR 0.9 million increase in trade accounts receivable from EUR 8.7 million in the previous year to EUR 9.6 million in the 2020 ﬁnancial year was mainly due to ongoing customer and revenue growth in the Digital segment. A receivables portfolio of EUR 0.2 million was also incorporated from initial consolidations. As of 31 December 2020, the 11 88 0 Solutions Group had unchan-ged investments in short-term money market and bond funds that were reported as ﬁnancial assets measured at fair value. The fair value of these investments remained unchanged at EUR 0.6 million compared with the previous year. Other current assets of EUR 0.7 million increased slightly by EUR 0.1 million compared to the previous year.

The Company had unutilised overdraft facilities of EUR 1.0 million (previous year: EUR 1.0 million ) with ﬁnancial institutions at its disposal as of 31 December 2020.

Equity and liabilities

On the liabilities side, current liabilities increased by EUR 1.6 million to EUR 14.3 million (previous year: EUR 12.7 million). Accrued current liabilities as of the reporting date amounted to EUR 5.5 million (previous year: EUR 4.8 million) and mainly include amounts for obligations to employees and outstanding invoices. This increase was primarily due to the acquisition of accrued liabilities totalling EUR 0.4 million as part of the ini-tial consolidation as well a EUR 0.1 million year-on-year rise in liabilities for holiday accruals and a EUR 0.1 million increase as part of the bonus payments for 2020. Other current liabilities of EUR 6.5 million (previous year: EUR 5.1 million) increased by EUR 1.4 million. This rise was mainly attributable to a EUR 1.1 million year-on-year increase in contractual liabilities in line with the sharp improvement in sales performance in the Digital segment. EUR 0.2 million in other current liabilities were also incorpora-ted as part of initial consolidations. Current lease liabilities rose slightly by EUR 0.1 million compared with the previous year.

Non-current liabilities of EUR 7.4 million increased by EUR 0.1 million compared with the previous year (EUR 7.3 million). This rise was primarily due to the incorporation of the following ba-lance sheet items as part of initial consolidation: EUR 0.7 million from non-current loan liabilities, EUR 0.4 million from non-cur-rent lease liabilities and EUR 0.1 million from deferred tax liabi-lities. In contrast, deferred tax liabilities and leasing liabilities of the original Group companies decreased by EUR 1.3 million compared to the previous year. In addition, non-current provisi-ons in the Group increased by EUR 0.2 million and provisions for pensions by EUR 0.1 million compared to the previous year.

As of the reporting date, liquid assets and securities (money mar-ket and bond funds) were exclusively kept with renowned German ﬁnancial institutions which are classiﬁed as investment grade by international rating ﬁrms.

As of the reporting date, the Group had non-current assets worth EUR 17.3 million (previous year: EUR 13.2 million). The increa-

Equity increased by EUR 2.4 million year-on-year to EUR 9.8 million (previous year: EUR 7.4 million). As part of the capital increase in return for cash and non-cash contributions in Sep-tember of the ﬁnancial year under review, subscribed capital rose by EUR 3.9 million and capital reserves increased by EUR 0.9 mil-lion. At the same time, equity fell as a result of the net loss for the period of EUR -2.3 million in the ﬁnancial year under review

including FAIRRANK GmbH and Seitwert GmbH. In addition, the actuarial losses reported in other components of equity rose by EUR -0.1 million year-on-year to EUR -0.4 million.

Cash ﬂow & ﬁnancing

The 11880 Solutions Group's ﬁnancial management ensures that the Group is at all times able to meet its payment obligations and to generate an adequate return from the investment of excess liquidity.

The portfolio of cash and cash equivalents as well as ﬁnancial as-sets available for sale amounted to EUR 3.7 million (previous year: EUR 4.7 million) as of December 31 2020. This ﬁgure includes cash and cash equivalents subject to drawing restrictions totalling EUR 0.1 million at the reporting date (previous year: EUR 0.1 million). Financial assets measured at fair value can be sold short-term and are available to the Company with no restrictions.

5. Research and development

During the year, the Group was again able to meet its ﬁnancing needs through own funds.

When investing liquidity, the 11880 Solutions Group pursues as conservative an investment approach as possible in order to mi-nimise the risk of losses. Funds are invested short-term in money market or bond funds.

Cash ﬂows from operations in the past ﬁnancial year showed in-ﬂows of EUR 2.5 million compared to EUR 4.4 million in the pre-vious year. The acquired companies FAIRRANK GmbH and Seitwert GmbH resulted in a cash outﬂow of EUR 0.3 million. The change was mainly attributable to an increase in trade accounts receivable due to the very good business performance and a decrease in trade ac-counts payable.

Cash outﬂows from investing activities at the 31 December 2020 reporting date amounted to EUR 3.6 million (previous year: cash outﬂow of EUR 3.2 million). The cash ﬂows from investing activities in the previous year included the sale of money market funds and bond funds in the amount of EUR 1.2 million. No sales were made in the reporting year. Adjusted for these items, cash ﬂows from in-vesting activities remained steady at EUR -3.6 million in 2020 (pre-vious year: EUR -4.4 million). Cash ﬂows from investing activities of EUR 0.9 million represent the cash inﬂows from the acquisition of FAIRRANK GmbH and Seitwert GmbH.

Cash ﬂows from ﬁnancing activities amounted to EUR -0.1 million (previous year: EUR 2.1 million). The capital increase implemented in the 2020 ﬁnancial year resulted in a cash inﬂow that was EUR 2.1 million lower than the capital increase in the previous year.

Cash ﬂows amounted to EUR -1.2 million as of the reporting date (previous year: EUR 2.1 million adjusted for the sale of money mar-ket and bond funds).

As a service provider, the 11 88 0 Solutions Group does not carry out basic research in the original sense, and therefore no re-search costs were incurred. However, the Company did recognise development costs for internal software generation that serve to generate revenue in the Digital and Directory Assistance seg-ments. The 11880 Solutions Group's in-house development de-partment based in Essen was responsible for this again in 2020. The range of services in this area included mainly the programm-ing of applications, the development and maintenance of the klicktel.de, 11880.com and werkenntdenBESTEN.de specialist portals and online directories, and the development of user interfaces in voice-based directory assistance. The total amount recognised for internally generated intangible assets in relation to the service ranges described above was EUR 0.3 million in the past ﬁnancial year (previous year: EUR 0.8 million). Amortization of capitalised development costs in the reporting period amoun-ted to EUR 0.8 million (previous year: EUR 1.0 million).

6. Employees

The development into a digital group with a focus on a compe-titive product portfolio is sustainable and positive following the change in strategy initiated in 2015.

Our workforce plays a vital role in the transformation of our group, which is why it is important for us to have the right employees in the right roles and to support their continued development in a targeted manner.

Digitalisation will completely reshape our lives and thus our work too. We are already seeing new forms of collaboration, innovative business models and a greater degree of automation of activities. As a result, it is essential for us to equip our senior executives and employees with digital skills. Ultimately, they provide the foun-dation for our success - both now and in the future. This means

that we need to ensure that we are an attractive employer for ta-lented individuals and create working environments and use tech-nology that enable us to connect with each other. The COVID-19 pandemic has signiﬁcantly accelerated virtual networking, espe-cially in 2020. Management is also set to change. It will become more participatory and virtual. Decisions will need to be made even more quickly in future. Overall, digitalisation oﬀers fantas-tic opportunities and possibilities for eﬃcient and eﬀective colla-boration that we want to best as eﬀectively as possible.

As of 31 December 2020 the 11 88 0 Solutions Group had 608 em-ployees Group-wide as deﬁned by Section 267 of the HGB (head-count; excluding the Management Board, trainees and dormant employment contracts), 54 more than a year ago (previous year: 554). Of these, 52 employees were taken over as part of the initial consolidation of FAIRRANK GmbH.

The 11 88 0 Group and its Group companies are not bound by col-lective bargaining agreements, as there is no collective agree-ment for the call centre industry. The collaboration with those representing the interests of employees in the 11 88 0 Group fully and transparently implements the regulations of section 87 (10) and (11) of the German Works Constitution Act (BetrVG).

As the industry association and interest group for the call cen-tre industry, the Call Center Verband Deutschland e.V. (CCV), of which we are a member, follows the latest political and parlia-mentary developments and legislative procedures relating to sec-tor-speciﬁc issues.

7. Opportunity and risk management

General information

The market environment and legal and regulatory framework of the 11880 Solutions Group is constantly changing. 11880 is also continuing to develop its business activities, the markets and customer groups it serves and, last but not least, by intro-ducing new collaboration models and making acquisitions. This regularly creates new opportunities and risks, while the absolute and relative extent of already-known opportunities and risks can also change.

As a result, being able to recognise, assess and manage all op-portunities and risks relevant to the Company at an early stage with the help of an eﬀective risk and opportunity managementsystem that is constantly improving in line with market dynamics is a high priority for the 11880 Solutions Group. This helps to ensure the continued existence of the Company, supports the strategic development of the Group and promotes responsible corporate behaviour.

Risks are events or developments triggered by internal or exter-nal factors that could have a negative impact on expected ﬁnan-cial developments and thus result in a negative deviation from planning (budget) or the achievement of strategic goals.

Opportunities are events or developments triggered by internal or external factors that could have a positive impact on expected ﬁnancial developments and the achievement of the Company's strategic goals.

The 11880 Solutions Group's risk management system contains the entirety of all organisational regulations and measures for identifying and dealing with opportunities and risks associated with the Company's business activities. The 11880 Solutions Group's risk management system is used for the early recogni-tion, assessment and control of internal and external risks and opportunities. As an inherent part of the risk management sys-tem, the risk early warning system is designed to identify mate-rial risks, particularly going-concern risks, in a timely manner in order to introduce appropriate countermeasures.

The risk management system of the 11 88 0 Solutions Group com-bines the Group's established risk management subsystems into an integrated, company-wide system, taking into account cor-porate objectives, vision, strategy and corporate culture. Full responsibility for the Group's risk management system lies with the Management Board of 11 88 0 Solutions AG.

Controlling / Operational areas

Compliance Committee /

Operational areasAccounting / IT / Operational areasControlling / Operational areas

• Ongoing reporting on key KPIs
• Budget
• Forecast
• Target/actual analyses
• Investment controlling
• Performance management
• Special analyses

• Guidelines/ Regulations
• Risk and fraud prevention
• Process optimisation
• Fraud prevention
• Data protection
• Sanctions

The 11880 Solutions Group's opportunity and risk management system is reviewed for its eﬃciency and ﬁtness for purpose on a quarterly basis in cooperation with those responsible for each cor-porate division. The Management Board is regularly informed of the risk situation in the 11880 Solutions Group. In addition, the Supervisory Board, particularly the Audit Committee, monitors the risk management system.

• Accounting-related ICS
• Document management system
• Four-eyes principle
• Process documentation
• Plausibility analyses
• IT systems
• Audit guidelines
• Policy competencies

• Risk identiﬁcation
• Risk assessment
• Risk control
• Risk monitoring
• Risk avoidance
• Risk management process
• Risk reportpresentations, the development of ﬁnancial and non-ﬁnancial key performance indicators (KPIs) is processed and analysed in relation to both the latest developments as well as the developments fore-cast as part of the planning process. The reports presented to the Management Board and executives from each segment include de-tailed monthly reports prepared by the Group's controlling depart-ment in close cooperation with specialist departments.

In addition to the Group-level assessment, the Digital and Directory Assistance segments are monitored at segment level.

Performance management

The early warning system established within the Company is based on diﬀerentiated, high-quality planning for each individual corpo-rate division and corresponding reporting in the form of ongoing variance analysis.

The 11 88 0 Solutions Group's opportunity and risk management sys-tem is anchored in its strategic development and is integrated in all further planning processes. For example, all business activities are reviewed and assessed for opportunities and risks at annual plan-ning meetings. Objectives are then set on this basis (particularly revenue and earnings targets) and their achievement is monitored and analysed continually by the persons responsible for planning in the Group's controlling department. As part of the monthly results

The Group's controlling department also leads weekly sales mee-tings that discuss the latest sales performance, initiatives and environment (e.g. in relation to the availability of data, the per-formance and availability of the IT systems required) in each indi-vidual business unit. In addition to executives from the individual sales units, the Management Board and executives from control-ling, IT, product management and data/BI also play an integral part in these regular meetings. As well as enabling interdiscipli-nary, crossfunctional performance management, including taking into account segment interdependencies and corresponding de-viation analysis, this also allows management to discuss and initi-ate important operational and strategic measures directly.

The Management Board reports to the Supervisory Board on the latest developments, key ﬁgures and opportunities and risks iden-tiﬁed in the form of a monthly meeting, with the Group's control-ling department also closely involved in preparations for this.

Compliance management

In simple terms, the term compliance is another word for "con-formity with the law". It means ensuring that the Company, its corporate bodies and employees observe all statutory provisions and internal guidelines and rules.

Compliance also involves creating organisational arrangements and measures within the Company that ensure that it adheres to these statutory provisions and internal guidelines and rules. All of these organisational measures, rules and processes to ensure compliance are referred to as the "compliance system".

The Company has had a Compliance Committee since 2010 to ensure responsible handling of any risks and compliance with all mandatory statutory requirements and internal regulations. This Committee advises the Management Board on all matters of compliance and continually reviews and reﬁnes the compliance system. These include suggestions on risk and fraud prevention, process improvements and possible sanctions as well as initiating and monitoring internal guidelines (e.g. the Purchasing Policy for the 11 88 0 Group). The Compliance Committee meets several times a year, and holds extraordinary meetings to address speci-ﬁc and/or time-critical questions and issues as required.

Regular compliance work focuses on operational and organisatio-nal measures within its sales processes. The sales processes and contract completions of internal sales staﬀ and external sales partners are constantly monitored to ensure compliance with statutory regulations and internal provisions. The commission model and resulting monthly sales commission are monitored by the Group's controlling department on a monthly basis and ana-lysed with regard to mathematical accuracy, fraud prevention and compatibility with incentives. The sales team, the Group's control-ling department and the Works Council work closely together to make any adjustments to the commission model.

In connection with the entry into force of the General Data Protec-tion Regulation (GDPR) in May 2018 and the EU Payment Services Directive (PSD II) in January 2018, the Company introduced rele-vant legal requirements.

Internal control system and internal audit

Since the parent company 11880 Solutions AG is a publicly tra-ded company as deﬁned by section 264d HGB, the main features of the internal control and risk management system (ICS), both in respect of the ﬁnancial reporting processes of the consolida-

ted companies and in respect of the Group's ﬁnancial reporting process, must be described pursuant to section 315 (4) HGB.

There is no legal deﬁnition of the internal control and risk ma-nagement system with respect to the accounting process and the consolidated accounting process. 11880 Solutions AG under-stands the internal control and risk management system to be a comprehensive system and bases it on the deﬁnitions provided by the Institut der Wirtschaftsprüfer in Deutschland e. V. (Insti-tute of Public Auditors in Germany, IDA), Düsseldorf, for the in-ternal control system relevant to the ﬁnancial reporting system (IDW PS 261 new version subsection 19 et seq.) and for the risk management system (IDW PS 340, subsection 4).

Accordingly, an internal control system comprises those princip-les, procedures and measures that the management employs in a company with the aim of implementing its organisational decisi-ons for the purpose of:

• Ensuring the eﬀectiveness and proﬁtability of the Company's business (which includes protecting its assets, as well as pre-venting and detecting any impairment of its assets);
• Ensuring that both the internal and the external ﬁnancial re-porting processes are proper and reliable; and
• Ensuring compliance with all statutory requirements applica-ble to the Company.

The risk management system comprises the totality of all organi-sational regulations and measures serving to detect and handle risks arising from entrepreneurial activity.

With respect to the accounting process, the Group has implemen-ted the following structures and processes:

Full responsibility for the 11880 Solutions Group's ICS lies with the Management Board of 11 88 0 Solutions AG. All of the Group's strategic business areas are integrated via a speciﬁcally deﬁned management and reporting organisation. Meetings held once every two weeks with the department and division heads are held for this purpose to discuss all relevant key performance indicators of the operating business.

The departments and divisions involved in the accounting process are appropriately equipped, both in terms of quantity and quality. Accounting data that has been received or passed on is regularly reviewed for completeness and correctness. Dedicated software

performs programmed plausibility checks using a document ma-nagement system, for example. Information relevant to the ﬁ-nancial reporting process is continuously exchanged between the commercial director and the Head of Accounting and communica-ted to the CFO in regularly scheduled meetings.

The dual control principle is also applied for important transac-tions, such as orders as well as invoice control and the approval of payment runs, for example. Conﬁrmations of review and payment instructions must be signed and dated.

Invoices received are also submitted to the relevant departments in line with the dual control principle by means of a document management system to ensure that these are factually and math-ematically correct. This principle states that no single person alone may be responsible for all process steps. Instead, suﬃcient-ly qualiﬁed individuals must be involved in the process in order to recognise and remedy possible deviations and control weaknesses. Speciﬁcally, this means that the party placing the order must pro-vide a signature to conﬁrm that the goods were received or the service was rendered according to the order speciﬁcations.

personnel, the use of appropriate software and clear legal and in-ternal company speciﬁcations form the basis for a proper, uniform and continuous accounting process. The clear deﬁnition of areas of responsibility, as well as various control and review mechanisms, as described in more detail above, make it possible to ensure cor-rect and responsible accounting. Speciﬁcally, this ensures that business transactions can be recorded, processed, documented and recognised immediately and correctly in the accounts in ac-cordance with legal requirements and internal guidelines. At the same time, it ensures that assets and liabilities are appropriately recognised, reported and measured in the annual and consolida-ted ﬁnancial statements, and that reliable and relevant informa-tion is provided promptly and in full.

Risk management system

The risk management system of the 11 88 0 Solutions Group is ope-rationally managed by the commercial director also responsible for risk controlling in their role as the Head of Controlling, under the overall organisational responsibility of the Management Board. As part of the Group's management system, the Group's controlling department primarily has the following responsibilities:

Orders must be checked immediately and passed on to the super-visor or cost centre manager along with a cost centre account number so that payment can be authorised. As a ﬁnal means to ensure correctness, two authorised signatories with power of at-torney release payment.

In addition to the ICS in the individual subsidiaries, these levels of control are also implemented at group level. Group-wide con-trols are managed by centralised entities such as Finance, Per-sonnel or the Legal Aﬀairs department, and are also documented centrally. A typical example of this is the centralised manage-ment and control of outgoing payments.

The ICS is supported by IT systems, for example SAP, that are re-gularly checked for their eﬃciency. IT systems used in accoun-ting are standard software to the extent possible. These systems are protected against unauthorised access by appropriate secu-rity and authorisation concepts.

• Conceptually designing and developing a risk management sys-tem that is structurally consistent and binding for all corporate divisions, in close cooperation with the Management Board.
• Organising, initiating and coordinating the regular recognition, assessment and communication of risks by the risk managers.
• Supporting risk managers with the assessment of identiﬁed risks and the plausibility of assessment results.
• Critically reviewing the risk managers' assessments of risks in individual areas of responsibility.
• Monitoring statutory risk management regulations and ad-justing processes, templates and methods where appropriate.
• Monitoring the crossfunctional consistency of risk assess-ments and analysing (potential) crossfunctional interdepen-dencies of individual risks.
• Aggregating the 11 88 0 Solutions Group's risks across all de-partments and risk types.
• Preparing and coordinating the risk report with the Manage-ment Board.

The aim of the internal control and risk management system with respect to the accounting process, the main features of which are described above, is to ensure that business facts are consistently recorded, processed and recognised correctly in the accounting and incorporated in the external ﬁnancial reporting. The right

The executives below the Management Board are considered as direct risk managers. They are responsible for identifying, as-sessing, managing, monitoring, documenting and communica-ting signiﬁcant risks as well as the measures introduced to redu-ce risks in their respective departments. The executives in each

department are supported by the area controllers responsible for their business segment. The risk managers are responsible for communicating risks to the risk controlling team at speciﬁc intervals (regularly when preparing the budget and forecasts as well as ad hoc if new risks are identiﬁed or if known risks mate-rially increase).

The risk report is prepared by the Group's controlling department based on the risks recorded by the risk managers and reported to risk controlling, and is coordinated with the Management Board, which in turn reports to the Supervisory Board, as part of budget planning and rolling forecasts. Where signiﬁcant risks or even those jeopardising the continued existence of the Group are identiﬁed, these are immediately and directly reported to the Management Board regardless of ongoing budget or forecasting processes. This ad hoc reporting obligation is also manifested in the Group's risk management manual.

The following risk types are diﬀerentiated within the risk manage-ment system of the 11 88 0 Solutions Group:

• Market risks
• Financial and liquidity risks
• Personnel risks
• Litigation risks
• Regulatory risks
• Legal risks
• Technology risks

The chosen diﬀerentiation between types of risk helps the Group to identify and investigate risks systematically. Based on the pre-deﬁned structure, risk managers are required not to limit the risk inventory to the types of risks typically found in their departments but must also selectively and systematically focus their analysis on risk types that are less common for their departments.

Individual risks are assessed in a multi-stage process.

terms of their potential signiﬁcance and discussed in the relevant corporate bodies and reports where necessary.

iii. For each risk, measures are developed to prevent or re-duce the risk, and the resulting reduction in the poten-tial amount of damage, or the remaining amount of damage after the measures are taken, is calculated (net calculation).
iv. Taking into account the probability of occurrence for the net risks, the risk is then assessed in the form of the pro-bability-weighted EBITDA risk in the budget.

The assessed risks are then categorised according to their risk level in order to present the overall risk. The Group currently diﬀerentia-tes between the categories of "signiﬁcant" (risk > EUR 1.0 million), "moderate" (from EUR 0.5 to 1.0 million), "low" (EUR 0.1 to 0.5 million) and "very low" (< EUR 0.1 million) with regard to risk level.

Overall summary of the current risk position

The assessment of the overall risk position of 11 88 0 Solutions Group is the result of the consolidated analysis of all material in-dividual risks. Although new risks were added as a result of the coronavirus pandemic, in connection with the ongoing integra-tion of FAIRRANK GmbH after its acquisition in 2020, and due to changes to the regulatory environment compared to the previous year, the extent of risks already recognised was reduced due to the implementation of relevant measures and/or new insight and experiences.

Overall, the 11 88 0 Solutions Group has only been moderately af-fected by the negative impact of the coronavirus pandemic so far compared to other sectors due to its diversiﬁed customer base and target group as well as a business model largely focused on the di-gitalisation of small and medium-sized businesses. The measures introduced since the outbreak of the pandemic are taking eﬀect, and the simulations conducted since Q2 2020 to predict the scope of the coronavirus pandemic's potential eﬀects have so far proven to be accurate overall.

i. First, the risks are recorded and described in the abstract.
ii. Building on this, the amount of damage that would re-sult if the risk were to occur if no risk mitigation mea-sures were taken (gross risk) is assessed. The eﬀect on earnings (EBITDA) during the budget year is used as a benchmark for this. If it is not possible or not yet possi-ble to quantify isolated risks, these risks are assessed in

Despite the additional market risks caused by the global corona-virus pandemic, the overall risk position remains largely unchan-ged overall compared to the previous year. From the Management Board's perspective, there were no risks either as of the reporting date or at the time the ﬁnancial statements were prepared that, severally or together, could threaten the continued existence of the Group or the subsidiaries included in consolidation as going concerns.

As in the previous year, while the risks that currently exist are re-garded as manageable, their occurrence (like the opportunities that generally correspond with them) could aﬀect our ability to meet our approved budget. However, it is not currently possible to conclusively assess whether and to what extent the corona-virus lockdown, which was still ongoing at the time the ﬁnancial statements were prepared, could have a more pronounced impact than before on the business activities of the 11880 Solutions Group, in particular on the acceptance of products and services oﬀered on the market as well as the creditworthiness of existing customers. This applies to both the risks to the 11 88 0 Solutions Group associated with the pandemic as well as the potential op-portunities that could result from the increasing trend towards digitalisation.

The following overview shows the current assessments of the se-verity of the individual risk types and a comparison with the as-sessment of risk severity made in the previous year's annual ﬁnan-cial statements.

CORPORATE RISKS	CURRENT RISK PROFILE	RISK PROFILE PREVIOUS YEAR
Market risks	Signiﬁcant	Signiﬁcant
Financial and liquidity risks	Low	Low
Personnel risks	Low	Low
Process risks	Low	Low
Regulatory risks	Very low	Very low
Legal risks	Very low	Very low
Technology risks	Very low	Very low

Appropriate risk management measures are also designed to fur-ther reduce the probability of occurrence and the eﬀect on ear-nings in the event of occurrence. In addition, we do not expect all individual risks to occur simultaneously, if at all, due to the heterogeneous nature of these risks.

Presentation of fundamental opportunities and signiﬁcant in-dividual risks

For classiﬁcation purposes and to improve the comprehensibility of the key individual risks presented below, we will ﬁrst provide a brief overview of the latest market developments in the Directory

Assistance and Digital segments and material opportunities wit-hin these segments. This is followed by the results of the assess-ment of individual risks: Based on the risk assessment conducted, none of the individual risks outlined below are classiﬁed as being in the "signiﬁcant" or "moderate" cluster with regard to their level of risk. In fact, based on the risk assessments currently available for each individual risk, all individual risks are classiﬁed in the "low" or "very low" risk level clusters.

Market development, risks and opportunities in the Digital segment

This segment relevant to the Group is still expected to see dyna-mic market growth in the coming years, and current trends, par-ticularly the trend towards the digitalisation of our (potential) customers' business models, are expected to continue. This trend could even be reinforced due to factors such as the coronavirus pandemic, creating additional opportunities for the 11 88 0 Group.

With a high number of commercial search queries again in ﬁnan-cial year 2020, the 11880 Solutions Group has secured an excel-lent position for itself in this market with its 11880.com online directory and the complementary specialist portals.

This large number of search queries and the leads generated from these in a commercial environment are key assets for the 11880 Solutions Group when selling online ad products to SMEs. With its products for website creation, the sale of prominently-placed ad-vertisements and the adoption of search engine optimisation mea-sures, the 11 88 0 Solutions Group has established itself as one of the leading providers of all-in-one services for regional online ad-vertising targeting SMEs in Germany in terms of customer ﬁgures. Further operational opportunities arise from boosting producti-vity of sales in the digital business by employing more eﬃcient tools. Conversely, should sales productivity perform less well than expected, this would constitute a risk.

Should the Group exceed the expected guidance regarding custo-mer satisfaction and therefore customer loyalty, this would trans-late into positive eﬀects for the development of revenue and ear-nings. Conversely, there is a corresponding risk if the churn rate is higher than forecast.

The acquisition of FAIRRANK GmbH presents an additional oppor-tunity to focus increasingly on serving larger medium-sized ent-erprises with individual product oﬀerings and thus substantially expand the 11 88 0 Group's business model and relevant market.

Market development, risks and opportunities in the Directory Assistance (DA) segment

Due to the shift in media usage from traditional media to digital media, the traditional directory assistance market has been on the decline for years. The resulting downward trend in call volume has been accounted for in the budget planning for 2021 and subse-quent forecast years. However, there is a chance - albeit a small one - that the market will shrink to a lesser degree than projected.

Due to the steady decline in call volume in the traditional direc-tory assistance business (branded DA), both opportunities and risks in terms of absolute revenue and earnings eﬀects continue to taper oﬀ gradually.

The third-party business within the Directory Assistance segment referred to as Call Center Services (CCS) has grown considerably in recent years and is being driven forward in a focused manner with innovative approaches and very high-quality service. This presents additional opportunities for future development. The potential risks here primarily concern the loss of existing major CCS customers. At present, there are no speciﬁc indications that such risks have a high probability of occurrence. This risk is also declining gradually due to the increasing duration of our success-ful collaborations with major customers.

Due to structural process and organisational changes, customer base management in the Digital segment has shown continued im-provement over the last few years. Increased customer satisfaction and its eﬀects on customer loyalty has enabled successive reducti-ons to the churn rate in recent years. Due to risks associated with the coronavirus pandemic in relation to the creditworthiness of existing customers and their willingness to extend contracts, a slightly hig-her customer loss has been assumed for the 2021 ﬁnancial year as part of the budget planning process than in the 2020 ﬁnancial year.

The key individual risks are outlined in brief below. First, it should be noted that all individual risks are in the "low" or "very low" risk clusters in their own right. Individual risks with a risk level of less than EUR 50 thousand are only mentioned if they relate to FAIRRANK GmbH, which we acquired in 2020.

Market risks

At present, the most signiﬁcant individual risk is the potential im-pact on revenue and earnings that may arise for the 11880 Group

as a result of the coronavirus pandemic. In particular, these risks result from the fact that sales performance in new customer busi-ness could decline in several sectors or contract extensions and upselling initiatives among existing customers could be less suc-cessful than planned. There is also the risk of an increase in co-ronavirus-related insolvencies or business shutdowns among the Group's existing customers, which would then have an indirect negative impact on the churn rate in the 11 88 0 Solutions Group's Digital segment. As it is not currently possible to reliably determi-ne the level and probability of occurrence of these coronavirus-re-lated risks, the Group's risk management eﬀorts place a particular focus on analysing the corresponding key ﬁgures and leading indi-cators on an ongoing basis.

In the Digital segment, products are sold in outbound. This sales channel is in line with current legislation. However, there is the risk that legislators could restrict telephone contacts to corporate cus-tomers in future. This would inevitably have a negative impact on opportunities to acquire new customers and thus on revenue and margins in this segment. The 11880 Solutions Group's legal depart-ment is closely involved with this subject and is working on counte-racting this risk by developing comprehensive measures to increase legal certainty. In addition, this risk is countered by actively obtai-ning "opt-ins"; that is, gaining consent from potential customers to contact them.

There is a risk of an increase in the churn rate for media products in the Digital segment if we are unable to meet customer expectations about the products on oﬀer. To reduce this risk, the 11880 Solutions Group introduced comprehensive and professional customer commu-nications to improve the transparency surrounding the performance of its products. The Group is also working consistently to steadily improve the quality and customer beneﬁt of its products and is intro-ducing comprehensive quality controls. Intensive product training courses for sales employees and analysis of sales negotiations also help to minimise this risk.

corresponding development of key account management (KAM), it may also be necessary to purchase a larger quantity of leads on the external market, at least temporarily.

The signiﬁcant risks in the Directory Assistance segment primar-ily result from price and call volume risks. There is a risk here of increased price competition in the market for traditional direc-tory assistance services or an acceleration in the decline in volu-mes that has been observable for many years now. However, the greatest individual market-related risk in this segment is the risk of losing major customers in the Directory Assistance segment's call centre third-party business. Appropriate customer retention measures are being implemented to counteract this risk. Sales activities aimed at acquiring new customers in CCS are also being continuously expanded.

As in the previous year, market risks are considered signiﬁcant overall.

Financial and liquidity risks

The Group is constantly optimising its funding base and limits its ﬁnancial risk with the aim of safeguarding the Group's ﬁnancial independence. The ﬁnancial risks are part of the risk manage-ment system and are also monitored by way of rolling monthly ﬁnance planning and ﬁnancial analysis within the context of li-quidity management. In 2020, the Group continued to initiate suitable countermeasures in the form of structural measures and sustainable cost discipline and implemented a system aimed at continually monitoring outgoing and incoming payments.

As of 31 December 2020, the 11880 Solutions Group had cash and cash equivalents and short-term money market and bond funds of EUR 3.7 million (previous year: EUR 4.7 million) at its disposal to ﬁnance its further business activities. The 11880 Solutions Group also has an overdraft facility with ﬁnancial in-stitutions of EUR 1.0 million (previous year: EUR 1.0 million).

The 11880 Solutions Group manages its sales activities respecti-vely customer contacts in the Digital segment mainly in outbound. There is the risk of a bottleneck in lead purchasing, which could arise due to higher lead purchasing costs or increased competi-tion. To minimise this risk, the 11880 Solutions Group is continu-ally optimising its campaign management and seeking to reduce the scope of the inorganic leads required by increasing organic traf-ﬁc. As part of the ongoing integration of FAIRRANK GmbH and the

A resolution passed by the Annual General Meeting on 18 June 2020 authorised the Management Board to increase share ca-pital by up to EUR 2,866,664 (Authorised Capital 2020). Taking into account the authorised capital of up to EUR 3,751,436 that was resolved by the 2018 Annual General Meeting and was still outstanding as of 31 December 2020 (Authorised Capital II), the Company has authorised capital totalling up to EUR 6,618,100 as of 31 December 2020. The Annual General Meeting on 18 June

2020 also decided to implement a conditional capital increase of up to EUR 2,000,000.00 (Conditional Capital 2020) to service bonds (convertible bonds and/or options or participation rights) that may be issued by 17 June 2025 in accordance with the aut-horising resolution under agenda item 8 letter (a) of the Annual General Meeting on 18 June 2020.

In addition, 11 88 0 Solutions AG's main shareholder, united ver-tical media GmbH, Nuremberg (uvm), made a binding commit-ment in July 2020 to provide the principal bank of Internet Ser-vices AG with EUR 2 million as security for a credit line of at least the same amount for the beneﬁt of 11880 Internet Services AG and for the purposes of ensuring liquidity. uvm provided this se-curity by pledging a time deposit account. According to the prin-cipal bank, the binding credit facility can be set up at any time without a longer lead time in line with the agreed framework conditions. However, to avoid unnecessary commitment inter-est, the credit facility based on the security from uvm should, if at all necessary, only be set up if a corresponding ﬁnancial requi-rement is more likely than not within the next six months. As part of the Group's short and medium-term liquidity management, the ﬁnancial requirements expected for the coming months are continuously monitored to ensure that any necessary measures can be implemented in a timely manner.

Excluding risks that are not currently discernible, management rates the risk of insolvency caused by illiquidity and thus the threat to its continued existence as extremely low.

The share purchase completed by united vertical media GmbH during the 2019 ﬁnancial year could mean that the tax loss carryforwards are not recoverable or are not fully recoverable. This would mean that the use of these tax loss carryforwards of 11 88 0 Internet Services AG would not be fully recognised by the tax authorities in future. To minimise this risk, the 11 88 0Group has commissioned a big-four auditing ﬁrm to prepare a suitable report in accordance with IDW S1 that is to be submitted to the tax authorities. Based on the latest ﬁndings of the ongoing pro-ject, the risk of a signiﬁcant loss of hidden reserves is now con-sidered to be low.

Personnel risks

There is a risk that insuﬃciently qualiﬁed employees could be hired in the sales department, which could cause us to fall short of targets. The Group primarily addresses this risk by working inten-sively with recruiters as well as by acquiring external call centre capacity and carrying out its recruitment eﬀorts across a broad geographical area. New sales approaches are also being tested, particularly in the form of home working opportunities to expand the potential employee base.

In addition to personnel risks in sales, there are also additional personnel risks in the other corporate divisions. Unplanned and exceptionally high ﬂuctuations in qualiﬁed employees would, in particular, lead to cost risks associated with the need to ﬁll vacan-cies and, where necessary, outsource work to external providers. Overall, this risk to the 11 88 0 Group, including FAIRRANK, is cur-rently classiﬁed as being "very low".

Litigation risks

The two signiﬁcant risks in the litigation risks category are that expenses for the FAIRRANK integration will exceed the amounts budgeted for 2021, and that any negative press will have an adver-se impact on sales contract conclusion rates.

There is a risk of sales employees becoming unsettled and acting cautiously in sales negotiations due to negative press on the sub-ject of selling techniques and product promises. This would result in lower contract conclusion rates in the new customer business. To prevent this, the Group has implemented a series of precauti-ons, which are also anchored within the structure of its corporate processes and organisation. The ﬁrst aim of these measures is to ensure that customer expectations are met, thus already mini-mising the risk of negative press. The key measures here are in-tensive and regular training for sales employees, comprehensive compliance management with consistent sanctions for breaches of statutory and internal requirements, and strict quality controls. On the other hand, these organisational measures are designed to equip sales employees with appropriate rules and lines of ar-gument in the event of actual individual cases of negative press, either justiﬁed or unjustiﬁed. Due to the measures outlined above, this risk is classiﬁed as "very low" overall.

A further litigation risk is that the ongoing integration process for FAIRRANK could be delayed if, for example, any technical or proce-dural restrictions identiﬁed are more signiﬁcant than is currently known and was assumed when preparing the budget. As a result, this risk could cause expenses, particularly those relating to the procurement of necessary consulting services, to exceed current expectations. This risk is currently classiﬁed as "low".

Regulatory risks

The business activities of the 11 88 0 Solutions Group depend to an extent on the decisions of legislators and regulatory authorities. Among others, these include regulations concerning the mandato-ry provision of subscriber data and obligations to announce prices for chargeable calls. As part of the amendment to the German Telecommunications Act (TKG) currently under discussion, some provisions deviating from those currently applicable are being di-scussed that could have a negative impact on the business model of the 11880 Solutions Group. The Group's legal department and specialist departments are working closely with associations and external advisors to exert an inﬂuence on these upcoming deci-sions by raising awareness of the relevant issues. Alternative sce-narios for areas such as the future procurement of subscriber data are also being developed in the event that the pending changes to regulatory requirements turn out to be to 11880's disadvantage. However, based on current estimates, the potential risks associa-ted with the new TKG regulations would not have a material nega-tive impact on the 11880 Group until 2022 at the earliest if ap-propriate transition periods are applied. In particular, repealing the currently applicable exemption for price announcements in the traditional directory assistance sector could cause an additio-nal signiﬁcant decline in call volumes in the directory assistance business from 2022 onwards that could only be partially oﬀset by price increases.

Another regulatory risk results from applicable regulations gover-ning speciﬁc advance payments currently made by Deutsche Tele-kom for 11 88 0 Group and numerous other companies, particularly those relating to setting up connections and switching transit ser-vices when setting up connections to directory assistance and va-lue-added services as part of existing NGN interconnections. Based on the agreements concluded with Deutsche Telekom (DTAG) via the VATM (Association of Telecommunications and Value-Added Services Providers), DTAG will provide the relevant services until the end of 2024, charging the current (regulated) fee until the end of 2022. 11880 Solutions AG is party to the agreements conclu-ded via the VATM, which entered into these agreements with DTAG on behalf of all acceding companies. Measures to reduce the risk for the as-yet-unregulated period from 2025 onwards are already being developed.

Legal and technology risks

As indications suggest that the legal risks identiﬁed would have very minor ﬁnancial eﬀects, either severally or together, no detai-led presentation of individual risks is provided. This applies analo-gously to the group of technology risks.

8. Report on expected developments

The statements made here are based on the 11880 Solutions Group's operations planning for the 2021 ﬁnancial year, as adop-ted by the Management Board and Supervisory Board in December 2020. The planning is based on the objectives of the Digital and Directory Assistance segments and of the Group. Planning for the 2021 ﬁnancial year is based on a corporate structure that includes FAIRRANK GmbH and Seitwert GmbH, the two companies acquired in September 2020. The business development at the beginning of the 2021 ﬁnancial year has so far conﬁrmed the plans made at that time.

Corporate strategy

In the 2021 ﬁnancial year, the 11 88 0 Solutions Group will conti-nue to pursue its successful strategy of recent years and will focus on collaborations, meaningful additions to its business units via mergers and acquisitions and the continuous optimisation of its processes and products.

This strategy is also supported by its majority shareholder, united vertical media GmbH.

Digital segment

In our Digital business, we focused on enhancing the user-friendliness and eﬃciency of our products and services in 2020. As a result, we were also able to increase traﬃc to our portals in a year dominated by coronavirus. werkenntdenBESTEN.de and wirﬁndendeinenJOB.de generated particular interest among consumers during the pandemic, with the number of reviews on werkenntdenBESTEN.de, our search engine for online reviews, passing the 100 million mark in June. The Company also focused on optimising and expanding its product portfolio by teaming up with partners.

In the area of new customer business, the Group will again be wor-king on a moderate increase in the 2021 ﬁnancial year.

The 11880 Solutions Group assumes that its business with exis-ting customers will achieve low levels of growth at best in 2021. In 2020, the average churn rate was 26%, thus remaining at the prior-year level, as planned. A slight increase in this key ﬁgure is expected for 2021.

The optimisations being implemented signiﬁcantly improve the online presence of portfolio customers. The slight increase in the customer portfolio should also serve as the basis for upselling and contract renewal revenue. Customer growth should, among other things, be ensured through the sale of sustainable pro-ducts with a focus on user-friendliness and eﬃciency.

Directory Assistance segment

In the Directory Assistance segment, the 11880 Solutions Group anticipates that the declining trend with respect to call volumes in Germany will also persist in 2021 and the rate of decline will be around 21%, as in the past ﬁnancial year 2020.

To partially oﬀset the eﬀects of this downturn in revenue, the Group continued to work on increasing revenue per call. In 2020, these eﬀorts resulted in an increase of just under 3% per call. The Group expects to be able to increase revenue per call by around 2% in 2021. In addition to further expanding the call centre third-par-ty business, the Company is continually reviewing - and in some cases also testing - new business models and collaboration op-tions in order to oﬀset decreases in business volume and ensure long-term success.

11880 Solutions-Group - Overall assessment of the Manage-ment Board

As a result of diﬀerent trends prevailing in the two segments, Digital and Directory Assistance, the Group continues to evolve into a digital company. The Group will continue to push its Digital segment in 2021. However, the Company is also working on long-term strategies and on further expanding its call centre third-par-ty business in the traditional Directory Assistance segment.

At Group level, the 11 88 0 Solutions Group expects to post reve-nues of EUR 54.8 million to EUR 60.6 million in 2021. In compari-son, revenues were generated in the amount of EUR 50.8 million in 2020. With respect to proﬁtability, the Group expects EBITDA in 2021 to be in the range of EUR 3.1 million to EUR 4.3 million. In comparison, the Company generated EBITDA in the amount of EUR 3.0 million in 2020.

The Group showed cash holdings and available-for-sale ﬁnancial assets of EUR 3.7 million in the ﬁnancial year ended.

The Company expects cash holdings at the end of 2021 to amount to EUR 1.5 million to EUR 2.3 million.

Finance strategy

The 11 88 0 Solutions Group's ﬁnance strategy aims to secure liqui-dity in the long term and to provide ﬁnancial support for develo-ping the digital business.

The decline in volumes in the Directory Assistance segment is in-creasing pressure to accelerate improvement in proﬁtability in the Digital segment and the call centre third-party business.

Appropriate strategic measures are improving the cost structure and thus the cash ﬂow suﬃciently to ensure the availability of adequate liquidity. At the same time, cooperation options are also being reviewed continually and the call centre business is expan-ded to avoid liquidity risks as much as possible.

9. Disclosures pursuant to section 315a HGB and explanatory report in accordance with section 176 (1) sentence 1 AktG

Composition of subscribed capital

As of 31 December 2020 11880 Solutions AG's subscribed capital was composed of 24,915,200 no-par value ordinary bearer shares (no-par value shares) (previous year: 21,022,200 shares). As of 31 December 2020, 24,915,200 of these shares were outstanding (previous year: 21,022,200 shares).

Restrictions aﬀecting voting rights and the transfer of shares

The Management Board of 11 88 0 Solutions AG is not aware of any restrictions pertaining to the share voting rights.

Holdings in the Company's capital of more than 10 percent of the voting rights

As of the reporting date, there were the following holdings in the Company's capital of more than 10% of the voting rights:

• united vertical media GmbH: 72.3 % (*)

(*) The percentage results from the latest WpHG notiﬁcations available to 11 88 0 Solutions AG and takes into account the capital increases implemented in Sep-tember 2019 and August 2020. As these notiﬁcations only have to be disclosed if shareholders exceed or fall below certain thresholds, it cannot be ruled out that the ownership ratios within the threshold intervals have changed since the latest notiﬁcation.

Shares with special rights conferring powers of control

There are no shares with special rights conveying powers of control.

Nature of voting control where employees have an equity inter-est and do not directly exercise their control rights

Employees who hold shares as part of a stock option plan may exercise control rights, like other shareholders, directly in accor-dance with legal requirements and the provisions of the Articles of Association.

Appointment and dismissal of members of the Management

Board

The Management Board of 11880 Solutions AG is comprised of at least one member. The appointment of deputy members of the Ma-nagement Board is permitted pursuant to Art. 3.1 (1) of the Artic-les of Association. The Supervisory Board determines the number, the appointment and the dismissal of the ordinary and the deputy members of the Management Board, and may also appoint a Ma-nagement Board chairman.

Amendment of the Articles of Association

Pursuant to section 179 AktG, amendments to the Articles of As-sociation shall be passed by resolutions of the Annual General Meeting. Pursuant to Art. 4.5 of the Articles of Association, the Supervisory Board is authorised to resolve amendments to the Ar-ticles of Association that only aﬀect the wording.

Authorisations of the Management Board, in particular per-taining to the possibility to issue or buy back shares

A resolution passed by the Annual General Meeting on 18 June 2020 authorised the Management Board to increase share capital by up to EUR 2,866,664 until 17 June 2025 (Authorised Capital 2020). Taking into account the authorised capital of up to EUR 3,751,436 that was resolved by the 2018 Annual General Meeting and is still outstanding until 31 December 2021 (Authorised Ca-pital II), the Company has authorised capital totalling up to EUR 6,618,100 as of 31 December 2020. The Annual General Meeting on 18 June 2020 also decided to implement a conditional capital increase of up to EUR 2,000,000.00 (Conditional Capital 2020) to service bonds (convertible bonds and/or options or participation rights) that may be issued by 17 June 2025.

Signiﬁcant agreements entered into by the Company providing for a change of control following a takeover bid

No signiﬁcant agreements exist as of 31 December 2020.

Compensation agreements for the event of a takeover bid 11 88 0 Solutions AG does not have any compensation agreementswith members of the Management Board or employees for the event of a takeover bid (change of control).

10. Statement and report on corporate governance

The statement on corporate governance (sections 289f, 315d HGB) contains elements such as the declaration of compliance pursuant to section 161 AktG, disclosures on corporate governance practi-ces, the description of the working practices of the Management Board and Supervisory Board and disclosures on the equal partici-pation of women and men (diversity).

All information can be found on the 11 88 0 Solutions AG website at:https://ir.11880.com/corporate-governance/ erklaerung-zur-unternehmensfuehrung.

11. Remuneration system

The remuneration report summarises the principles and methods used to determine the total remuneration of the member(s) of the Management Board of 11880 Solutions AG and explains the structure as well as the remuneration received by the Management Board member(s). Christian Maar was the sole member of the Ma-nagement Board in the 2020 ﬁnancial year. The principles and the amount of remuneration received by the members of the Supervi-sory Board are also described.

As the regulations for preparing the remuneration report of 11 88 0 Solutions AG for the 2020 ﬁnancial year in accordance with Section 162 of the German Stock Corporation Act (AktG) do not yet apply, this remuneration report will be prepared based on the corre-sponding recommendations of the German Corporate Governance Code published on 24 April 2017 as amended on 7 February 2017, corrected by notice on 19 May 2017 ("GCGC 2017"), in compli-ance with the applicable provisions of HGB and IFRSs and using the reference tables provided for this purpose in GCGC 2017. As explained in the joint declaration of compliance with the German Corporate Governance Code dated 17 December 2020 made by the Management Board and Supervisory Board of 11 88 0 Solutions AG in accordance with Section 161 AktG ("Declaration of Complian-ce 2020"), the remuneration arrangements for the Management Board and Supervisory Board have deviated and will continue to deviate from the individual recommendations of GCGC 2017 and the current German Corporate Governance Code as amended on 16 December 2019, which was published in the German Federal Ga-

zette on 20 March 2020 ("GCGC 2019"). These deviations are listed once again in the remuneration report.

Principles of Management Board remuneration

The Supervisory Board advises and regularly reviews the struc-ture of the remuneration system for the Management Board and on the recommendation of the Personnel Committee de-termines the total remuneration of the individual Management Board member(s). The committee also regularly reviews the re-muneration system for the Management Board. In doing so, it makes vertical and horizontal remuneration comparisons.

The remuneration model for the Management Board should be attractive and appropriate to compete for highly qualiﬁed ma-nagement personnel. Criteria for the appropriateness of the re-muneration are in particular the responsibilities of the respecti-ve Management Board members, their personal performance, the performance of the Management Board, as well as the economic situation, the success and future prospects of the Company in comparison with other companies in its sector.

Remuneration system

GCGC 2017 recommended that the Chairman of the Supervisory Board inform the Annual General Meeting once about the princi-ples of the remuneration system and subsequently of any chan-ges thereto. GCGC 2019 no longer contains this recommendation. Deviating from this, the Chairman of the Supervisory Board of 11 88 0 Solutions AG informs the Annual General Meeting about the principles of the remuneration system each year at the re-gular Annual General Meeting in order to take into account the information requirements of new shareholders attending their ﬁrst Annual General Meeting.

General information on the components of Management Board remuneration

The total remuneration for the members of the Management Board of 11880 Solutions AG consists basically of monetary remunera-tion components, which are divided into non-performance-related and performance-related components. The performance-related components consist of ﬁxed remuneration components and fringe beneﬁts, and pension commitments. Performance-related compo-nents include variable remuneration components.

Fixed remuneration components

As a basic remuneration that is independent of annual perfor-mance, the ﬁxed portion is paid out as a monthly salary and isbased on an income plan stipulated by the Supervisory Board. It takes into consideration the Company's situation and medium-term objectives, as well as the criteria relevant pursuant to section 87 (1) AktG and the German Corporate Governance Code.

Variable remuneration components

Variable remuneration components have upper limits and consist of performance-related and qualitative components. The perfor-mance-related components have a multi-year orientation in order to take account of the sustainable development of the Company.

Other components of remuneration, fringe beneﬁts, obligati-ons or beneﬁts from third parties

If contractually agreed, other components of the total remune-ration of Management Board members are pension awards, other awards, especially in the event of termination of activity, fringe beneﬁts of all kinds and beneﬁts from third parties which were promised or granted in the ﬁnancial year with regard to Manage-ment Board work.

Management Board remuneration in 2020

Fixed and variable remuneration

In the 2020 ﬁnancial year, 11880 Solutions AG followed the recommendations of GCGC 2017 and, as of the date of the 2020 Declaration of Conformity, of GCGC 2019 with regard to the structure of Management Board remuneration, with the excep-tion of the deviations outlined below. The remuneration struc-ture continues to be focussed on the sustainable growth of the Company. Monetary remuneration components include ﬁxed and variable components, with variable components generally based on performance over several years and primarily designed to be forward-looking. In addition to the long-term incentive (LTI) agreed with the Management Board over a period of 3.0 years (2019 to 2021), variable remuneration components are in part invested in multi-year deferrals (phantom stocks) as goals are met.

The relevant share price of the phantom stocks at the time of the conversion is the arithmetic mean of the closing price in Xetra trading on the Frankfurt Stock Exchange on stock exchange trading days in the three months preceding the adoption of the annual ﬁnancial statements for the ﬁnancial year for which the targets were agreed.

Following a vesting period of two years after the conversion into the respective deferrals, the value of the phantom stocks is de-

termined and the deferral is paid out. The share price relevant for determining the value is the arithmetic mean of the closing price in Xetra trading on the Frankfurt Stock Exchange on stock exchange trading days in the three months preceding the ad-option of the annual ﬁnancial statements for the respective next ﬁnancial year but one. Any dividends distributed to share-holders during the vesting period are added to the value of the deferral thus determined. This results in the total value of the deferral to be paid out after the vesting period has expired. Ho-wever, independent of the share price performance and/or any dividends, the total value of the deferral may not exceed 120% of the starting value of the virtual shares calculated based on the arithmetic mean upon conversion into the deferral. If the total value of the deferral after the vesting period has expired is less than 50%, the deferral is not paid out and the retained performance bonus thus reduced to zero.

The variable remuneration granted in this way therefore deviates from the recommendation in Art. G.10 GCGC 2019, whereby the variable remuneration granted to the Management Board mem-ber should primarily be invested in shares or should be similarly share-based, and the Management Board member should only have access to the long-term variable components of their remu-neration after four years. However, the Supervisory Board does not believe that this provides the Management Board with any ad-ditional incentive when carrying out their role for the Company.

the entire previous contractual term in order to reﬂect typically

In addition, 11880 Solutions AG deviates from the recommen-dation in Art. G.8 GCGC 2019, which excludes any subsequent changes to targets or comparison parameters for variable remu-neration, in relation to the eﬀects of the COVID-19 pandemic to enable the Company to react quickly to changes in the market situation and the Company's business development.

There is also a deviation from the recommendation in Art. G.11 GCGC 2019, which states that the Supervisory Board should have the opportunity to take proper account of exceptional develop-ments and that variable remuneration should be withheld or can be reclaimed in justiﬁed cases. The director's contract of Christian Maar deviates from this, as the Supervisory Board considers the existing remuneration regulations to be suﬃcient to encourage the Management Board to act in the interests of the Company in the long term. The Company was also able to adjust the targets for variable remuneration in connection with the eﬀects of the COVID-19 pandemic, even without a corresponding basis in the director's contract.

Other components of remuneration, fringe beneﬁts, obligati-ons or beneﬁts from third parties

The German Corporate Governance Code recommended in Art. 4.2.3 (4) of GCGC 2017 that the severance payment cap should be calculated on the basis of the total remuneration paid for the pre-vious ﬁnancial year and, if appropriate, should take into account the expected total remuneration for the current ﬁnancial year. 11880 Solutions AG has deviated from this recommendation. However, 11880 Solutions AG does not deviate from the revised recommendation contained in Art. G.13 GCGC 2019.

In the director's contract of Christian Maar, reference is made to the variable remuneration of only the ﬁnancial year just ended and not also to that of the current ﬁnancial year in addition to a reference value formed from the average ﬁxed remuneration (i.e. average of the ﬁxed monthly salary paid until the ending date) in order to calculate the severance payment cap.

The Supervisory Board was and is of the opinion that the recom-mendation contained in Art. 4.2.3 GCGC 2017 to also refer to the current ﬁnancial year when measuring the severance payment cap has little practicality for the reference value related to the variable remuneration, because it is frequently diﬃcult to de-termine whether an interim or proportionate goal has been met. In contrast, for ﬁxed remuneration, the measurement is based not only on the average of the last ﬁnancial year, but also on

lower ﬁxed remuneration payments in previous years.

The exclusion of the current ﬁnancial year can in individual cases theoretically result in a higher severance payment amount thanthe remuneration to be realised until the end of the contractu-al term, because any reduction in the variable remuneration in the current year will not be factored in. Considering the diﬃcul-ty of determining the amount of variable remuneration for the current ﬁnancial year during the course of the year and in light of the lower amount of ﬁxed remuneration that ﬂows into the severance payment, the Company considered this theoretically possible deviation from Art. 4.2.3 (4) sentence 1 GCGC 2017 tobe justiﬁed.

For the existing Management Board contracts, the severance payment cap is equal to 18 times the average ﬁxed monthly re-muneration for the entire contract period (reference value I) and 18 times one-twelfth of the variable remuneration earned in the last ﬁnancial year (reference value II).

The severance payment amount is limited to a maximum of 18 times the applicable reference value in each case (severance cap).

If the remaining term of the contract is less than 18 months, the severance payment cap is limited to the number of months of the remaining term.

As in 2019, members of the Management Board did not receive any deﬁned contribution post-employment beneﬁts in 2020. There were no deﬁned beneﬁt pension obligations in accordance with IFRSs in 2020 (previous year: EUR 0 thousand). Details can be found in the notes accompanying the consolidated ﬁnancial state-ments in the section entitled "Pension obligations".

The current and former members of the Management Board were granted phantom stocks (deferrals) from both 2016 to 2020. De-tails can be found in the notes to the consolidated ﬁnancial state-ments under "Share-based payment".

No advances or loans were granted to the Management Board member during the reporting year.

The sole member of the Management Board received no payment or promises of payment from third parties in the past ﬁnancial year in respect of his activities as a member of the Management Board. No remuneration was or is paid for Management Board and Supervisory Board positions at the subsidiary 11880 Inter-net Services AG.

Remuneration of the Management Board

The beneﬁts granted to and received by the members of the Ma-nagement Board in the 2020 ﬁnancial year as deﬁned by GCGC 2017 were as follows:

Beneﬁts granted	Member of Management Board
in EUR thousand	2020	2019
Fixed remuneration	401	401
Fringe beneﬁts	35	34
Total	436	435
One-year variable remuneration (excluding deferral), bonus	106	106
(Minimal 0 to maximum 127)
Multi-year variable remuneration (deferral - 2 years)
2019	34	34
(Minimal 0 to maximum 41)
LTI (annual share, at least over 3 years)	200	400
(Minimal 0 to maximum 400)
Total	340	540
Total remuneration	776	975

Beneﬁts received	Member of Management Board
in EUR thousand	2020	2019
Fixed remuneration	401	401
Fringe beneﬁts	34	34
Total	435	435
One-year variable remuneration (excluding deferral), bonus	92	92
Multi-year variable remuneration (deferral - 2 years)	40	0
LTI (annual share, at least over 3 years)	0	0
Total	132	92
Service cost (deﬁned contribution pension fund)	0	0
Total remuneration	567	528

In accordance with Section 314 (1) no. 6a of the German Commer-cial Code (HGB), the Management Board was granted the follo-wing total remuneration in the 2020 ﬁnancial year:

Beneﬁts granted	Member of Management Board
in EUR thousand	2020	2019
Fixed remuneration	401	401
Fringe beneﬁts	34	34
Total - non-performance-related	435	435
One-year variable remuneration (excluding deferral), bonus	106	106
Multi-year variable remuneration (deferral - 2 years)
2019	34	34
LTI (annual share, at least over 3 years)	200	400
Total - performance-related	340	540
Total remuneration	775	975

A deferral of EUR 24 thousand was paid to former Management Board member Michael Geiger during the 2020 ﬁnancial year after the contractually agreed vesting period expired.

A two-stage severance provision applies if the Company revokes the appointment of a Management Board member prematurely, entitling both the Company and Management Board member to terminate the employment contract, or in the event of a termi-nation following a resignation for good cause. In the ﬁrst stage, the Management Board member receives a severance payment based on their previous average monthly ﬁxed salary in accor-dance with their employment contract. The average monthly ﬁxed salary (to be) paid until the termination date is used as Re-ference Value I. This reference value is multiplied by the number of months remaining on the employment contract (pro rata in the case of incomplete months) to determine Severance Payment I. If the employment relationship is terminated prematurely, the Management Board member also receives Severance Payment II if they have a claim to variable remuneration for the last ﬁnan-cial year completed before the termination of the employment contract in accordance with the aforementioned agreement. Re-ference Value II for Severance Payment II is equivalent to one-twelfth of the variable remuneration for the previous ﬁnancial year. This reference value is multiplied by the number of months remaining on the director's contract (pro rata in the case of in-complete months). An LTI bonus is not taken into account when calculating Reference Value II. The severance payment amount is limited to a maximum of 18 times the applicable reference value in each case (severance cap). The above provisions do not apply if the appointment is revoked in accordance with Section 84 (3) of the German Stock Corporation Act (AktG) for good cause at-tributable to the Management Board member. In this case, the Company is also entitled to terminate the employment contract for good cause. The Management Board member is not entitled to a severance payment in accordance with the above provisions in such cases. If the Management Board member resigns their position without good cause, the Company can extraordinarily terminate the employment contract. Similarly, the Management Board member is not entitled to a severance payment in such cases.

Contract terms

The Supervisory Board of the Company on 29 June 2018 adop-ted a resolution to reappoint Mr. Maar as a member of the Ma-nagement Board with eﬀect from 1 January 2019 until 31 March 2022. The employment contract was amended accordingly.

Remuneration of the Supervisory Board

The remuneration of the Supervisory Board is regulated in Art. 4.6 of the Articles of Association. It is based on the duties and

responsibilities of the Supervisory Board members. The remu-neration regulation was modiﬁed when the amendment of the Articles of Association adopted at the Annual General Meeting on 24 June 2015 became eﬀective.

No advances or loans were granted to any members of the Supervi-sory Board during the reporting year.

Essen, 23 March 2021

Each member of the Supervisory Board received a ﬁxed annu-al remuneration of EUR 15 thousand (previous year: EUR 15 thousand), in addition to reimbursement for any expenses. The remuneration is payable in each case after the Annual General Meeting that resolves upon formally approving of the actions of the Supervisory Board for the ﬁnancial year ended. The re-muneration for the Chairman of the Supervisory Board increa-sed to triple this amount and that of the Deputy Chairman to 1.5 times this amount. Members of the Supervisory Board who had only served on the Supervisory Board for part of the ﬁnan-cial year received a pro-rated remuneration, based on length of service on the Supervisory Board. If a Supervisory Board member had not participated in at least 75% of the Supervisory Board meetings in a ﬁnancial year, the member's remuneration was reduced by 50%.

In addition to the basic remuneration, members of a Supervisory Board committee were paid an annual lump sum of EUR 1 thou-sand. The remuneration of committee chairs increased to double this amount. This payment was subject to the requirement that the committee has convened during the ﬁnancial year and that the respective committee member has actually attended at least one of the committee meetings.

Art. 5.4.6. (3) of GCGC 2017 recommended an individualised breakdown of Supervisory Board remuneration. This recommenda-tion is no longer included in GCGC 2019; from the ﬁnancial year 2021, disclosures on Supervisory Board compensation will be made in accordance with section 162 of the German Stock Corpo-ration Act (AktG). However, 11 88 0 Solutions AG below shows the total remuneration for the Supervisory Board as a whole and for committee activities. An individualised breakdown is not provided, as the Company believes that this is of no relevance to the capital market. The Supervisory Board members received remuneration totalling EUR 141 thousand in the 2020 ﬁnancial year (previous year: EUR 125 thousand).

No members of the Supervisory Board received any additional remuneration or beneﬁts in the ﬁnancial year for services perso-nally rendered, in particular for consultancy and agency services.

The Management Board

Christian Maar

Responsibility statement

"To the best of our knowledge, and in accordance with the appli-cable reporting principles, the consolidated 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 development and performance of the business and the position of the Group, together with a description of the material opportunities and risks associated with the expected development of the Group."

Essen, 23 March 2021

The Management Board

Christian Maar

Content Consolidated Financial Statements