11 88 0 Solutions AG — Earnings Release 2010

Mar 30, 2011

News Details

Corporate | 30 March 2011 08:15

Fiscal year 2010 telegate AG: dividend proposal of EUR 0.50

telegate AG / Key word(s): Final Results/Dividend

30.03.2011 / 08:15

• Company transformation is reflected in the business figures 2010
• Profit guidance 2010 was reached: EBITDA before non-recurring items of EUR 23.2 m

• Outlook: declining revenues and earnings expected for 2011,

  stabilization of profits in sight for 2012

Planegg-Martinsried near Munich, March 30, 2011 – telegate AG draws a balance for the annual year 2010, which was affected again by a transformation process of the business model. According to final figures, group revenues amounted to a total of EUR 124.6 m compared to EUR 133.1 m in the previous year. As expected, revenues in the classic DA business decreased by approx. 14 percent from EUR 108.6 m to EUR 93.6 m, whereas revenues with advertising offers for SMEs in the business sector Media showed a dynamic growth of 27 percent from EUR 24.5 m to EUR 31.0 m. The positive development of the transformation process is also confirmed by the share in group revenues of the promising business sector Media: it increased from 18 percent in the annual year 2009 to 25 percent now. This share in revenues already amounted to 28 percent in the fourth quarter of 2010.

Earnings: different margins of the business sectors affect the profit trend

The profit trend of the fiscal year 2010 was affected by a declining contribution to earnings of the DA business with a strong margin, which could not be compensated yet by the growing Media business with a weaker margin. According to final figures, this results in annual group results before amortization and depreciation, interest and tax (EBITDA) before non-recurring items in the amount of EUR 23.2 m compared to EUR 33.0 m in the previous year. EBITDA after non-recurring items for 2010 amount to EUR 22.1 m compared to EUR 32.4 m in 2009. Costs for capacity adjustments were incurred in German Call Centers in the amount of EUR 1.1 m. Non-recurring items of the previous year included EUR 2.3 m for capacity adjustments and the integration of telegate MEDIA AG as well as income in the amount of EUR 1.7 m for a settlement with a supplier. The company achieved its year-end profit guidance also due to an accompanying cost discipline through out all structural cost sectors, which provided EBITDA before non-recurring items in the amount of EUR 23 m – EUR 27 m. This guidance still included a contribution to earnings of the Italy business which was sold in 2010.

Annual group results after taxes in the amount of EUR 7.3 m and EUR 0.35 per share respectively did not reach the previous year's figure of EUR 16.1 m and EUR 0.76 per share respectively. This is attributable to the operating earnings trend on the one hand and an extraordinary value adjustment not affecting liquidity in the customer base of the business sector Media on the other hand. In accordance with the profit trend, the company's Management Board and Supervisory Board propose to the Shareholders' Meeting to distribute a dividend to the shareholders in the amount of EUR 0.50 per share. In relation to the balance sheet date, this corresponds to a dividend yield above average of approx. 7 percent.

Segments: Germany largely in line with the group trend, Spain with a growth of earnings

The allocation of the revenues at a segment level shows an advancing focus of the company on the German core market: the share in revenues of the international business decreased from 21 percent in 2009 to 9 percent in 2010 due to the sale of the Italian business.

Total revenues in the segment Germany/Austria amounted to EUR 113.6 m compared to EUR 121.7 m. Here, Media revenues showed a development analogous to group revenues and increased by 27 percent to EUR 31.0 m. However, this positive trend was not sufficient to compensate the significantly declining revenues (due to market factors) of the business sector DA solutions, that moved back by 15 percent to EUR 82.7 m. The segment EBITDA Germany/Austria significantly declined from EUR 31.9 m to EUR 20.8 m compared to the previous year due do margin shifts. On the other hand, the segment Spain almost maintained its revenues in the amount of EUR 11.0 m in 2010 at the previous year's level by higher revenues per call and slightly increased EBITDA to EUR 1.4 m compared to EUR 1.0 m in the previous year, in spite of a still challenging market environment.

Financial situation: a higher equity ratio and an unchanged high net liquidity

in spite of a distribution in the amount of EUR 29.7 m in 2010

Regardless of a dividend distribution and a share buyback program carried out in 2010, the quality of the balance sheet of the telegate group, which is free from debt, remains solid. Thus, the equity ratio increased from 56.7 percent in the previous year to 58.7 percent now. The decline in liquid assets as of the balance sheet date from EUR 59.9 m to EUR 48.8 m as of December 31, 2010 is primarily attributable to the share buyback program and also the operating profit trend, the inflow of funds by the sale of the Italian subsidiary and the dividend distribution.

Outlook: focus on sales efficiency and customer loyalty

The focus of the company's strategy in the annual year 2011 is still a change from an internationally oriented DA provider to an expert for Local search and SME marketing with a focus on Germany. The company's Management Board is reduced within the course of this transformation process. Dr. Paolo Gonano, previously responsible for the international business of the telegate group, will leave the management by March 31, 2011. Dr. Andreas Albath, CEO of the Management Board, and Ralf Grüßhaber, CFO, who also resumes the responsibility for the business in Spain, will remain in telegate AG's Management Board.

Overall, the management again forecasts a decline in revenues of the telegate group as well as still opposite trends in the business sectors DA solutions and Media. The operational focus in the classic DA business is to open up mobile phone numbers for the 11 88 0 DA in an economic way. telegate will continue to work on an expansion of the range of products and reach for advertising customers in the business sector Media. The company expects that it will continue to benefit from this dynamically and also from the fundamental structural change in the local advertising market towards digital media. Thus, the company expects to record a two-digit growth again.

In terms of profits, the company expects a declining profit level compared to the annual year 2010. The reason is that the DA business with a strong margin and still higher revenues continues to show a declining development and the Media sector cannot generate comparable margins yet. In total, the company forecasts earnings within a range of approx. EUR 13 m to EUR 18 m in the annual year 2011, based on EBITDA before non-recurring items – compared to approx. EUR 23 m in 2010. This is to be achieved by a higher sales performance and an improved customer loyalty, in particular. For this purpose, telegate will adhere unchanged to its strict cost discipline. The company expects a stabilization of profits in 2012.

Note:

telegate AG's annual report for the annual year 2010 is available for download at http://www.telegate.com > Investor Relations. Furthermore, a video interview with Dr. Andreas Albath, CEO, is also available here for viewing.

Business figures telegate AG, January – December of the corresponding annual year	2010	2009	+/-  in percent
Group revenues	124.6	133.1	-6.4
Revenues – business sector DA solutions	93.6	108.6	-13.8
Revenues – business sector Media	31.0	24.5	+26.7
EBITDA before non-recurring items	23.2	** 33.0**	-29.7
Annual net income after taxes of continuing operations	5.0	** 18.6**	-73.1
Dividend proposal (in EUR)	0.50	0.70	—–
Free cash flow before M&A	13.1	19.6	– 33.3
Liquid assets (as of December 31)	48.8	59.9	– 18.6
Number of employees (headcount as of December 31)	1,951	2,890	– 32.5

All figures stated in million EUR, group figures refer to continued operations;

number of employees 2009 including Italian business

**

Contact:**

Joerg Kiveris

telegate AG

Head of Public Relations Department

Fraunhofer Str. 12a

82152 Planegg-Martinsried near Munich

Phone: +49 (89) 895-4118 8

Fax: +49 (89) – 895-4118 9

E-mail: presse@telegate.com

http://www.telegate.com

http://twitter.com/telegate

http://www.youtube.com/telegateAG

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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
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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117495  30.03.2011