11 88 0 Solutions AG — Earnings Release 2008

Oct 29, 2008

News Details

Corporate | 29 October 2008 08:49

9 month results for telegate AG: upward trend continues

telegate AG / Quarter Results/Development of Sales

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• Slight increase in sales for first 9 months of the year;
Q3 sales +6 percent
• Media segment generates 9 percent of total sales
• EBITDA before one-time effects at EUR 32.2 million (+5%)

Munich, October 29, 2008 – telegate AG's sales and profit situation
developed positively during the first nine months of fiscal 2008. Revenues
for the 'local search' specialist increased slightly, while EBITDA
(earnings before interest, taxes, depreciation, and amortization) was
stabilized around the previous year's level. The Management Board is
confirming its EBITDA forecast before one-time effects for the full fiscal
year, which it recently increased to EUR 35-40 million.

Sales: intense growth in advertising sales

At EUR 133.3 million, consolidated revenue for the first nine months of
2008 was slightly ahead of the previous year's level of EUR 131.5 million.
The recently-established Media segment made the greatest contribution to
revenue growth. Revenue from advertising sales business has risen during
the period under review – pushed by the telegate Media AG (former klickTel
AG, consolidated on April, 1st) – from EUR 1.8 million in 2007 to the
current level of EUR 12.4 million, and thus now accounts for 9 percent of
the group's total revenue. The core business of directory assistance
solutions contributed EUR 120.9 million, compared with EUR 129.7 million
the previous year. At EUR 46.8 million or +6%, telegate group's sales
growth was higher during the third quarter of 2008 than during the first
nine months of the fiscal year.

Profitability: EBITDA almost reaches previous year's level

Postponement of advertising expenses and a one-time effect resulting from a
successful lawsuit against Deutsche Telekom AG for repayment of excessive
data costs had a positive impact on the telegate group's profitability.
EBITDA for the first nine months of the current fiscal year was EUR 35.5
million and thus, only slightly behind the previous year's level of EUR
36.3 million. Adjusted for one-time factors – a one-off payment of EUR 5.5
million resulting from the data cost lawsuit and non-recurring expenses of
EUR 2.3 million associated with the integration of telegate Media AG –
EBITDA for the telegate group was EUR 32.2 million and thus EUR 1.5 million
higher than the adjusted figure same time last year.

Net income fell, mainly as a result of increased income tax, from EUR 25.3
million the previous year to its current EUR 20.3 million or EUR 0.96 per
share.

Net assets and financial situation: good liquidity position built upon

With no outstanding financial liabilities, telegate group was able to
maintain its traditionally solid balance sheet structure, in spite of the
acquisition of telegate Media AG. For example, the equity ratio as of
September 30 was 50.4 percent, compared to 53.0 percent on the same date
last year. Furthermore the free cash flow of the third quarter developed
very pleasantly – also thanks to the last instance ruling concerning data
litigation in the amount of EUR 5.5 million which was liquidity-related in
the third quarter. The net liquidity of EUR 53.0 million as of the
reference date for the period under review remained at almost exactly the
same level as the previous year. After the outflow of cash and cash
equivalents for the purchase of telegate Media AG and the dividend payment
last quarter, this figure had fallen to EUR 38.1 million as of June 30,
2008.

Sales revenue up 7 percent in the primary segment of Germany/Austria

During the first nine months of the fiscal year revenue in Germany/Austria
rose by a considerable 7 percent, up from EUR 85.3 million to EUR 91.5
million. The development in advertising sales business was particularly
successful. Whereas advertising sales revenue of EUR 1.8 million was
recorded last year, this figure had already reached EUR 12.2 million for
the first nine months of 2008. Revenue contributed by telegate's new media
business to the total revenue in this Segment was 13.4 percent. EBITDA
before one-time effects was 7.9 percent lower compared with last year, from
EUR 34.1 million in 2007 to its current level of EUR 31.6 million. Adjusted
for one-time effects, this figure remained virtually constant at EUR 28.3
million (EUR 28.5 million in 2007).

The fall in revenue for France for the first nine months of 2008 from EUR
16.5 million to EUR 11.3 million reflects both the decline in the directory
assistance market and the competitive environment in this segment, which
remains challenging. At the same time, '118 000' managed to almost
stabilize its call volumes since the beginning of the year. On the other
hand, telegate is also focusing in this segment on transforming its
business model by developing user-oriented services and expanding
advertising sales business in conjunction with its sales partner Comareg.
Due to the queries to telegate’s DA services both from voice and online
sources '118 000' has reinforced its position as third largest provider in
the market. Good progress has also been made with telegate's objective of
making its segment France profitable: by considerably improving the gross
profit margin and reducing its advertising spend, EBITDA for the first 9
months of the year improved from EUR -3.0 million to EUR -0.1 million.

Revenue in the segment Italy/Spain continued upward trend, rising yet again
this quarter to EUR 10.6 million. Total revenue after the first nine months
of 2008 was EUR 30.5 million, compared to EUR 29.7 million last year. As a
result of changes in employment legislation and an associated increase in
personnel costs in Italy, EBITDA during the period under review decreased
to EUR 4.0 million compared to EUR 5.2 million last year. On the other hand
EBITDA for the segment during the third quarter, rising from EUR 1.7
million to EUR 2.1 million.

Outlook for 2008: establishing the new brand 'telegate Media'

In Germany, the focus for the remaining months of fiscal 2008 is on
launching the new brand 'telegate MEDIA', which is aimed at small and
medium-sized enterprises. telegate AG's objective is to fully exploit the
potential of the local search market, and to increase revenues
significantly for the Media segment in the medium term.

In light of the encouraging development during the first nine months of
2008 and the expectation of a positive result for the year as a whole,
telegate AG's management is confirming its increased EBITDA forecast in the
upper range of EUR 35 to 40 million. This forecast does not take account of
the one-time effects of the integration of telegate Media AG and the data
cost lawsuit.

In the opinion of telegate AG's Management Board, the effects of the
ongoing crisis in global financial markets on the development of the real
economy can’t be quantified at this point in time.

telegate AG
Joerg Kiveris
Head of Public Relations Department
Germany
Fraunhofer Str. 12a
82152 München-Martinsried
Tel.: +49-89/8954-1188
Fax: +49-89/8954-1189
E-Mail: presse@telegate.com

29.10.2008 Financial News transmitted by DGAP

Language: English
Issuer: telegate AG
Fraunhofer Str. 12a
82152 München-Martinsried
Deutschland
Phone: +49 089 - 89 54 0
Fax: +49 089 - 89 54 10 10
E-mail: info@telegate.de
Internet: www.telegate.com
ISIN: DE0005118806
WKN: 511880
Indices: Prime All Share
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Hannover, Düsseldorf, Hamburg, München, Stuttgart

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