DGAP-News: ecotel communication ag: ecotel presents half-year figures: Growth of gross profit and EBITDA

• Gross profit increases in 1st half year by 6% to EUR 16.3 million (previous year: EUR 15.4 million)
• EBITDA increases in 1st half year by 28% to EUR 4.6 million (without IFRS 16 effect: EUR 3.9 million)
• B2B revenue declines slightly in 1st half year to EUR 23.4 million (previous year: EUR 23.8 million)
• easybell revenue increases by 13 % to EUR 8.8 million (previous year: EUR 7.8 million)

Düsseldorf, 8 August 2019
ecotel Business Customers: Conversion from ISDN to All-IP enters final stage
The focus of financial year 2019 is clearly on the conversion from ISDN to All-IP in the ecotel Business Customers segment. This is also the reason for the slight decrease in revenue of EUR 0.4 million to EUR 23.4 million in the first half year 2019. The new NGN products in the revenue at the end of the 1st half year already constituted 45 % of the total relevant revenue, and almost 50 % of the gross profit was from voice connections. More than half of all minutes are now generated on the basis of the new All-IP technology. Taking into account the successfully concluded migration contracts that are already being implemented technologically, the process of transformation from conventional ISDN-based products to All-IP products is in the final stage. The added value of these products has resulted in stable gross profit of EUR 5.8 million despite the slight decline in revenue.

easybell: Increase in revenue and gross profit
Revenue in the easybell segment totalled EUR 8.8 million (previous year: EUR 7.8 million) in the first half year 2019. The continued focus on scalable SIP products for small business customers and router leasing transactions continued to have a positive effect, more than compensating for the expected decline in call-by-call transactions. Gross profit in this segment increased to EUR 3.9 million (previous year: EUR 3.2 million).

nacamar and ecotel Wholesale develop as planned
Revenue in the nacamar segment in the first half year 2019 increased slightly to EUR 1.0 million, while gross profit remained unchanged at EUR 0.5 million. The Wholesale segment achieved revenue of EUR 7.8 million in the first half year 2019 as planned (previous year: EUR 9.6 million).
 
Increases in consolidated gross profit and EBITDA and effects of IFRS 16
Consolidated gross profit increased in the first half year 2019 to EUR 16.3 million (previous year: EUR 15.4 million). Higher value creation in the growing NGN product groups, both in the ecotel Business Customers segment and in the easybell segment, had positive effects.

First-time application of the new IFRS 16 accounting standard »Leasing Relations« - obligatory as of 1 January 2019 - had substantial effects on ecotel's earnings and assets situation. Long-term leasing payments (essentially for office rent and the computer centre) are no longer reported directly as expenses, but are instead split up into an interest share affecting net income and a repayment share not affecting net income. In addition, the leasing contracts must be reported as rights of use and depreciated over the scheduled leasing term.

This change in accounting had a positive effect of EUR 0.7 million on ecotel's EBITDA in the first half year 2019. Altogether, EBITDA increased by EUR 1.0 million to EUR 4.6 million.

Consolidated profit and EPS virtually unchanged
Depreciations totalled EUR 3.6 million (previous year: EUR 2.6 million) in the first half year 2019. The accounting change in IFRS 16 resulted in an increase of EUR 0.6 million in this area. These changes decreased the financial result by EUR 0.1 million, for a total of EUR -0.1 million (previous year: EUR 0.0 million). After deducting taxes and the shares of other shareholders, ecotel achieved a consolidated surplus of EUR 0.1 million (previous year: EUR 0.3 million) in the first half year 2019. This corresponds to earnings per share of EUR 0.02 (previous year: EUR 0.07).

The overall results of the first half year 2019 were positive. The ISDN conversion is now entering the final phase, and ecotel will benefit financially from the added value. Now it is necessary to concentrate on the remaining customer relationships, which will result in new investments, commitment of resources and focussing on customer and product groups in the ecotel Business Customers segment.

The Management Board is convinced that ecotel remains on the right path, and therefore reconfirms the forecast for 2019. Accordingly, the Management Board expects revenue in the core segment ecotel Business Customers in a corridor of EUR 48 to 50 million, in the easybell segment from EUR 15 to 17 million, and in the nacamar segment from EUR 2 to 3 million.

After EBITDA of EUR 7.5 million in 2018, EBITDA is expected to continue increasing in 2019, and will be in a corridor of EUR 8 to 9 million, taking into account the positive effects of the first-time application of the IFRS 16 leasing standard on EBITDA. In view of the currently planned business activities for 2019 ecotel expects significant negative effects from EBITDA in 2019 due to the regulations of IFRS 15, which were already applied in 2018. According to current estimations, these two opposing effects will virtually cancel each other out, so that the planned and forecast increase in EBITDA will result essentially from improvement of the business activities.

About ecotel communication ag:
The ecotel Group (hereinafter »ecotel«) is a group of companies operating throughout Germany since 1998 that specialises in the marketing of information and telecommunications solutions for different target groups. The parent company is ecotel communication ag with headquarters in Düsseldorf (hereinafter »ecotel ag«). Including its subsidiaries and holdings, the group has a total of about 300 employees. Currently the ecotel Group provides more than 50,000 customers nationwide with about 14,000 data connections and more than 80,000 voice connections.

Note:
This publication is not an offer for the sale nor an invitation for the purchase or subscription of securities. This publication is not a securities brochure. This publication and the information contained therein are not intended for direct or indirect dissemination to or within the United States of America, Canada, Australia or Japan.
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