DGAP-News: ecotel communication ag: Positive start of year 2019 for ecotel: continued growth of gross profit and EBITDA

• Gross profit increases by 8 % to EUR 8.2 million (previous year: EUR 7.6 million)
• EBITDA increases by 33 % to EUR 2.4 million (without IFRS 16 effect: EUR 2.1 million)
• B2B revenue stable at EUR 11.9 million
• easybell revenue increases by 7 % to EUR 4.3 million (previous year: EUR 4.0 million)
• Free cash flow and net financial assets both positive at EUR 0.2 million

Düsseldorf, 09 May 2019
ecotel Business Customers: ISDN to All-IP transformation continues to gain momentum
With revenue of EUR 11.9 million (previous year: EUR 11.9 million) the ecotel Business Customers segment developed as planned. The year 2019 is marked by the continuing All-IP transformation in the German telecommunications market. The focus of this segment in 2019 is therefore clearly on the successful migration of existing ISDN customers. In the first quarter 2019 the share of new NGN products in the revenue made up 36 % of the total relevant revenue, but 49 % of gross profit was already achieved with voice connections. Including additional existing product change orders, new All-IP orders with new contract terms have been successfully concluded for nearly 50 % of the voice revenue. Higher value creation in the NGN product groups had a positive effect on gross profit throughout the B2B sector, with an increase of EUR 0.1 million to EUR 5.9 million (previous year: EUR 5.8 million).

easybell: Orientation toward small business customers and router leasing transactions spurs development
Revenue in the easybell segment totalled EUR 4.3 million (previous year: EUR 4.0 million) in the first quarter 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 1.9 million (previous year: EUR 1.5 million).

nacamar and ecotel Wholesale develop as planned
Revenue in the nacamar segment remained constant at EUR 0.5 million, while revenue in the ecotel Wholesale segment decreased slightly as planned to EUR 2.9 million (previous year: EUR 3.2 million). Gross profit in this two segments remained virtually unchanged compared to the previous year, at EUR 0.3 million and EUR 0.1 million, respectively.

Increases in consolidated gross profit and EBITDA and effects of IFRS 16
Consolidated gross profit increased in the first quarter 2019 to EUR 8.2 million (previous year: EUR 7.6 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 »Leases « - 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 0.3 million on ecotel's EBITDA in the first quarter 2019. Altogether, EBITDA increased by EUR 0.6 million to EUR 2.4 million.

Consolidated profit and EPS virtually unchanged
Depreciations totalled EUR 1.8 million (previous year: EUR 1.3 million) in the first quarter 2019. The accounting change in IFRS 16 resulted in an increase of EUR 0.3 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 0.1 million) in the first quarter 2019. This corresponds to earnings per share of EUR 0.03 (previous year: EUR 0.04).

Altogether, ecotel has gotten off to a good start in 2019. The ISDN migration is fully under way and ecotel is doing everything possible to take advantage of this market opportunity by providing a comprehensive NGN product pallet for virtually all business customer requirements. That means investments, commitment of resources and also focussing on customer and product groups. Of course, this will temporarily slow down the growth of revenue for the ecotel Business Customers segment, but will also result in higher value creation and a »fresh customer base« with new contract terms.

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 10,000 data connections and more than 80,000 voice connections.

Note:
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