11 88 0 Solutions AG — Earnings Release 2009

Nov 9, 2009

News Details

Corporate | 9 November 2009 08:15

9-months results telegate AG: further progress in the transformation of the company

telegate AG / Quarter Results/Change in Forecast

09.11.2009

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* Group sales decline slightly
* Business sector Media with still increasing sales in the third quarter
* Profit guidance (EBITDA before non-recurring items) for 2009
of EUR 32 m to EUR 37 m specified to EUR 34 m to EUR 37 m.

Munich, November 9, 2009 - The business figures of the telegate group were
within expectations after the first nine months of the fiscal year.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
before non-recurring items of EUR 28.3 m were, as forecasted, slightly
behind the previous year. The company's management is optimistic to achieve
the objectives for the full year due to the previous trend of profitability
and now specifies the profit guidance to EUR 34 m to EUR 37 m even after
deconsolidation of the French subsidiary.

The telegate group generated sales in the amount of EUR 117.2 m during the
first nine months of the fiscal year 2009, compared to EUR 121.9 m in the
previous year. The business sector media increased its sales by approx. 44
percent to EUR 17.7 m, compared to the previous year. Furthermore the media
business achieved the highest sales of the fiscal year in the third
quarter. Thus, the business sector Media already generates approx. 15
percent of group sales across the group. This share was 10 percent at the
end of the previous fiscal year. However, it shall be taken into
consideration here that telegate MEDIA AG (formerly klickTel AG) was not
consolidated before the second quarter 2008. Adjusted by this effect, group
sales of the media sector showed an organic growth which increased by more
than 10 percent. The decline of group sales is primarily due to the
significant decline of the classic telephone directory assistance business
in all markets, which currently could yet not be fully compensated by the
growth of sales in the media business.

Earning numbers: within the expected target range

The 9-months-EBITDA of the telegate group amounted to EUR 28.1 m, compared
to EUR 35.3 m in the previous year. This development is primarily
attributable to the decline of the classic directory assistance business
with a strong margin. However, non-recurring items are included in the
EBITDA of both periods: Non-recurring expenses of EUR 2.3 m for the
integration of telegate MEDIA AG as well as non-recurring income of EUR 5.5
m from successful data cost repayment lawsuits in 2008. Non-recurring
expenses of a total of EUR 1.9 m for the merger of German call centers and
completion of the integration of telegate MEDIA AG were accrued in 2009 as
well as non-recurring income of EUR 1.7 m as a result of a settlement with
Deutsche Telekom AG regarding invoicing issues.

EBITDA adjusted by these non-recurring effects in the amount of EUR 28.3 m
slightly fell short of the EUR 32.1 m of the previous year. Net earnings
after taxes decreased from EUR 20.3 m and EUR 0.96 per share respectively
in the previous year to now EUR 12.5 m and EUR 0.59 per share. This was
primarily due to extraordinary depreciations and by approx. EUR 2.9 m in
connection with the sale of the French subsidiary, in particular.

Cash flow and financial position: liquid assets increase further

The company's financial position continues to be extremely solid and showed
a positive development in the third quarter, in spite of the difficult
economic environment. Thus, the equity ratio increased from 50.4 percent as
of September 30, 2008 to now 51.1 percent (December 31, 2008: 52.7
percent). Furthermore, the telegate group has free liquid assets at its
disposal in the amount of more than EUR 60 m by the period's closing date,
compared to approx. EUR 51 m by June 30, 2009. Thus, the free cash flow in
the first nine months amounted to EUR 20.6 m. Taking into account the
dividend payment of approx. EUR 14.9 m and the interest income, cash flow
amounted to EUR 7.3 m.

Segments: Germany made considerable progress, foreign subsidiaries were
noticeably affected by the difficult environment

The transformation process of telegate AG from a telephone directory
assistance specialist to a local search expert continues to progress
successfully in the core segment Germany/Austria. The Media-sector achieved
a growth of sales on a 9-months basis of approx. 44 percent from EUR 12.2 m
to now EUR 17.6 m - both due to a very dynamic organic growth and the
contribution of telegate MEDIA AG (first consolidation 2nd quarter 2008).
The share of the media business in segment sales continued to increase
within the fiscal year from approx.15 percent at the end of the previous
fiscal year to now more than 19 percent. At third quarter level a growth of
12 percent can also be shown compared to the corresponding quarter of the
previous year.

Sales in the classic directory assistance business decreased compared to
the previous year from EUR 79.2 m to EUR 74.6 m. Against expectations,
sales decrease was kept within a certain limit due to operative measures,
e. g. the further expansion of high-quality Comfort Services. This results
in an overall slight increase of the segment sales from EUR 91.5 m to EUR
92.2 m. EBITDA of the segment before non-recurring items decreased from EUR
28.4 m in the previous year to now EUR 25.9 m. This was primarily caused by
the decline of the high-margin directory assistance business.

During the first nine months of the fiscal year 2009 the segment France
generated sales in the amount of EUR 9.4 m, compared to EUR 11.4 m in the
previous year. Business development was influenced by an extremely
competitive environment for the classic directory assistance business. But
the segment raised its profitability: the 9-months-EBITDA increased from
EUR -0.1 m in the previous year to now EUR 0.6 m. In accordance with the
requirements of the accounting standard IFRS the French subsidiary is shown
in the present consolidated financial statements as 'discontinued
operations'. Background is the sale contract signed by telegate AG on
October 1, 2009. Closing and thus the execution of the sale also took place
in the meantime on November 2, 2009.

telegate is challenged with particularly difficult overall economic
conditions in the markets Italy and Spain. The call volume in both
countries still declines sharply, which is reflected in a decline in sales
of the segment from EUR 30.5 m to EUR 24.9 m in the first three quarters of
the fiscal year. In spite of cost optimizations - capacity adjustments,
expansion of offshoring and reduction of advertising spendings, in
particular - EBITDA significantly fell short in the first nine months 2009
to EUR 2.5 m. Last year's figure was EUR 4.0 m.

Outlook

In the course of the business development during the first nine months, the
management of telegate AG continues to assume for the full year to achieve
an EBITDA before non-recurring items in the range of EUR 34 m to EUR 37 m,
compared to EUR 39.4 m in the fiscal year 2008. It should be taken into
consideration here that the previous profit guidance for 2009 amounted to
EUR 32 m to EUR 37 m and the new expected profit no longer includes the
earnings of the segment France due to the sale in the meantime.

The trend of profitability is still affected by the decline of the
profitable classic directory assistance business. This can only be partly
compensated by the growing media business. Taking this in consideration,
telegate AG will even more focus on the development of further product
innovations for the stationary and mobile internet during the remaining
months of the fiscal year and is determined to make use of the
opportunities of the media business in Germany.

Contact:
Joerg Kiveris
telegate AG
Head of Public Relations Department
Germany
Fraunhofer Str. 12a
82152 Planegg-Martinsried
Tel.: 089/ 8954-1188
Fax: 089/ 8954-1189
E-Mail: presse@telegate.com

09.11.2009 Financial News distributed by DGAP. Media archive at www.dgap-medientreff.de and www.dgap.de

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Language: English
Company: telegate AG
Fraunhofer Str. 12a
82152 Planegg-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, Düsseldorf, Hannover, München, Hamburg, Stuttgart

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