11 88 0 Solutions AG — Earnings Release 2008

May 7, 2008

News Details

Corporate | 7 May 2008 08:30

telegate AG: telegate starts fiscal year 2008 in line with guidance – Transformation of business model well on track

telegate AG / Quarter Results

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During the first quarter of 2008 telegate made good progress with the
strategic repositioning of its business. A vital contribution toward this
end was the complete takeover of a majority of shares in klickTel AG that
had been announced in February 2008 and finalized per April 1, 2008. The
integration of the two companies is making good and gratifying progress and
amply underlines telegate's drive in the planned transformation from a
directory assistance to a leading 'Local Search' provider as well as the
associated growth perspectives for the Group.

Financial result

The capital expenditures made toward the operative repositioning of the
business are reflected in the key financial figures as already communicated
for the current fiscal year 2008. Consolidated earnings before interest,
taxes, depreciation and amortization (EBITDA) of telegate Group came to 8.6
million Euro in the first quarter 2008 and were thus below the
corresponding quarterly figure of the record year 2007
(Q1 2007: 11.0 million Euro). Adjusted by the one-time expenses for the
acquisition and integration of klickTel AG (Q1 2008: 0.5 million Euro) as
well as the one-time income received in connection with the data cost
litigation (Q1 2007: 0.9 million Euro), EBITDA for the first quarter 2008
totaled 9.1 million Euro (Q1 2007: 10.1 million Euro). The net income for
the reporting period came to 5.8 million Euro (Q1 2007:
7.3 million Euro). This downward development was mainly due to the
contraction of the classic core business in Germany and France, above all
in the fixed network sector with its strong margin. At the same time, lower
advertisement expenses in these two markets had made a positive
contribution to earnings.

The income generated from the business with advertisement entries more than
doubled in comparison with the same period of last year, even though it
could not fully compensate the decrease in the classic core business of
telegate Group. All in all, the Group generated first quarter sales of 39.7
million Euro (Q1 2007; 44.0 million Euro).

The contributions of klickTel AG will be consolidated into the Group
earnings of telegate AG from the second quarter onward, as the transaction
was completed per April 1, 2008.

As of March 31, 2008, telegate held cash and cash equivalents of
67.0 million Euro (Q1 2007: 28.5 million Euro) and was thus invested with
an excellent financial platform. At the end of the first quarter, the
company's equity ratio stood at 57.4 percent (Q1 2007: 53.4 percent).

Segment review

During the first quarter of 2008 telegate was able to master well the
expected challenges in the respective markets of all three business
segments. Even though sales revenues in the segment Germany/Austria
declined by 9 percent to 25.9 million Euro compared with the same period of
the previous year, the growth sectors of added-value DA services and
advertisement entries continued to record a significant upward trend. In
addition, a more efficient advertisement strategy enabled the company to
cut expenses for this sector substantially. Thus, earnings before interest,
taxes, depreciation and amortization (EBITDA) for the first quarter of 2008
totaled 8.1 million Euro. (Q1 2007: 11.0 million Euro).

In the segment Italy/Spain the company managed to strengthen its market
position still further as marginally higher sales revenue of 9.8 million
Euro show (Q1 2007: 9.6 million Euro). However, earnings were temporarily
down due to advertisement costs climbing against the last year, so that
EBITDA closed out at 0.6 million Euro (Q1 2007: 2.4 million Euro). For the
coming quarters the company expects to see more or less stable earnings for
this segment and in line with last year.

Further capital expenditures into the product portfolio were also made in
France. Here the focus was on further developing the Internet offer as well
as preparing the business with advertisement sales. With sales down to 4.0
million Euro (Q1 2007: 5.9 million Euro) EBITDA came to
-0.2 million Euro, which was a significantly better result than for the
same period of last year (Q1 2007: -2.4 million Euro).

Outlook 2008

telegate will not be able to repeat the 2007 record level in fiscal year
2008. The transformation of the business model will necessitate further
capital expenditures into product development and marketing of
advertisement. At the same time, the declining call volumes will bring down
income from the classic Voice Directory Assistance business despite its
great profitability. The company reckons that this will have a significant
effect on earnings (EBITDA) in the current fiscal year 2008. The sales
revenues from the sale of advertisement entries are envisaged to make a
significant contribution toward earnings (EBITDA), however, so that they
will level out above 40 million Euro over the mid-term. Over the long term,
the transformation of the business model will allow the company to secure
its growth dynamic and profitability.

Claudia Strixner
telegate AG
Head of Public Relations
Fraunhofer Str. 12a
82152 München-Martinsried
Phone: 089/ 8954-1188
Fax: 089/ 8954-1189
e-mail: presse@telegate.com

07.05.2008 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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