11 88 0 Solutions AG — Earnings Release 2011

Aug 11, 2011

News Details

Corporate | 11 August 2011 08:15

Half-year figures telegate AG: progress with the company transformation – profit guidance according to plan

telegate AG / Key word(s): Half Year Results/Interim Report

11.08.2011 / 08:15

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– Revenues of the business sector Media increased by 23 percent compared to the previous year

– EBITDA before non-recurring items in the amount of EUR 7.2 m within the range of the profit guidance for the full year 2011 and, as expected, significantly below the previous year's level.

Planegg-Martinsried near Munich, August 11, 2011 – Business figures of telegate AG for the first half-year 2011 met the management's expectations. The objective to press ahead with the digital transformation of the business model from a pure telephone DA provider to a Local Search and marketing specialist for SMEs was still in the focus of the company's strategy. Here, telegate AG showed progress: revenues of the business sector Media increased by 23 percent from EUR 14.0 m to EUR 17.2 m compared to the same period of the previous year. Thus, this business sector already contributes to 31 percent of group revenues. This share only amounted to 23 percent in the same period of the previous year.

It should be noted that the company changed the revenue recognition of the business sector Media as of June 30, 2011. Revenues were previously realized in accordance with IAS 18.21 in connection with IAS 18.14 (c) according to the stage of completion determined on a cost base. IAS 18.24 (b) is applied starting with these financial statements, whereas the stage of completion by reference of performance is determined for revenue recognition. This results in marginally lower revenues in both the reporting and the previous year's period.

Group revenues in the amount of EUR 55.9 m in the first half-year 2011 were approx. 9 percent below the previous year's figure of EUR 61.3 m. Revenues of the segment Germany/Austria in the amount of EUR 51.2 m (approx. 92 percent of group revenues) and of the segment Spain in the amount of EUR 4.7 m (approx. 8 percent of group revenues) contributed to this revenue trend. The decline in group revenues was within the trend of previous periods and still caused by a decrease of revenues in the classic telephone DA business. Thus, revenues of the business sector DA solutions amounted to EUR 34.0 m in the first half-year 2011 compared to EUR 41.7 m in the same period of the previous year.

Earnings situation: increase in efficiency in the business sector Media

Group earnings before interest, taxes, depreciation and amortization (EBITDA) before non-recurring items in the amount of EUR 7.2 m were significantly below the previous year's level of EUR 11.0 m. However, earnings are according to plan with regard to the year-end projection.

Earnings trend at group level is still affected by a significant decline in earnings of the highly profitable DA business. This decline could not yet be compensated by the Media business in the first half of the fiscal year by an improvement of the contribution margin and reduction of the contribution to losses respectively.

Non-recurring items in the amount of EUR 1.1 m in the first half-year 2011 primarily related to capacity adjustments in Germany and Spain. Earnings after taxes decreased significantly from EUR 7.9 m to EUR 2.2 m due to declining operating earnings, in particular. In addition, the previous year period did include an income from discontinued operations (sale of Italian subsidiary) in an amount of EUR 2.4 m.

Net liquidity and financial position: still a solid balance sheet quality

and availability of liquid funds

The telegate group (free from debt) can still show a very solid balance sheet quality and availability of liquid funds after the first six months of the fiscal year 2011. The company's equity ratio amounts to 51.7 percent as of June 30, 2011. The decline compared to the same period of the previous year (59.1 percent) particularly results from a share repurchase program performed at the end of 2010 and a dividend payment made in June. Liquid assets including short-term investments amounted to EUR 37.4 m as of June 30, 2011 and thus decreased compared to the previous year (EUR 49.2 m). This is primarily based on the share repurchase program with a volume of EUR 14.9 m.

The company expects positive effects on the net liquidity position from the current decisions on the data cost reclamation claims actions against Deutsche Telekom AG by mid-2012 at the latest: subject to the decisions becoming res judicata – and taking an advance payment made by Deutsche Telekom AG and tax expenditure into account – telegate expects another inflow of liquidity in the amount of approx. EUR 50 m net from reclamation claims.

**Outlook: focus on sales efficiency, customer retention

and profitability in the Media sector**

As expected, the trend of the first six months of the fiscal year showed that an improvement of earnings of the Media sector cannot compensate a decline in the classic DA business yet. Accordingly, the company's management communicated a full year profit guidance of an EBITDA before non-recurring items of EUR 13 m to EUR 18 m in spring 2011 compared to approx. EUR 23 m in the fiscal year 2010. The company expects to achieve this target after the results of the first half of the fiscal year.

Measures and activities in the business sector Media are still a focus during the remaining months of the fiscal year. Here, a main focus is still on the expansion of a sustainable existing customer management, enlargement of product range and improvement of sales efficiency. Thus, profitability shall be improved at group level together with a reduction of structural costs. The company expects a stabilization of earnings in 2012 for the first time after four declining fiscal years due to the success of these measures.

Business figures telegate AG, 1 st half-year	2011	2010	+/- in %
Group revenues	55.9	61.3	-8.9
Revenues business sector DA solutions	38.7	47.3	-18.4
Revenues business sector Media	17.2	14.0	+23.1
EBITDA before non-recurring items	7.2	11.0	-34.5
Annual net income after taxes of continuing operations	2.2	5.5	-59.6
Free cash flow before M&A and short-term fixed deposit investments	-2.6	-0.6	-312.0
Liquid assets + short-term fixed deposit investments (as of June 30)	37.4	49.2	-24.0
Number of employees (headcount as of June 30)	1,837	1,980	-7.2

All figures stated in EUR m; group figures concern continuing operations.*

Note:

The interim report of telegate AG on the first half-year of the fiscal year 2011 is available for download at: http://www.telegate.com .> Investor Relations. Furthermore, a five-minute video interview with Ralf Gruesshaber, CFO of telegate AG, is also available.

Contact:

Jörg Kiveris

telegate AG

Head of Public Relations Department

Fraunhofer Str. 12a

82152 Planegg-Martinsried

Tel.: 089/ 8954-1188

Fax: 089/ 8954-1189

E-Mail: presse@telegate.com

End of Corporate News

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Language:	English
Company:	telegate AG
	Fraunhofer Str. 12a
	82152 Planegg-Martinsried
	Germany
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
Listed:	Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart

End of News	DGAP News-Service

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