11 88 0 Solutions AG — Earnings Release 2012

May 3, 2012

News Details

Media | 3 May 2012 08:00

telegate AG: quarterly figures: profit and revenues according to plan

telegate AG / Key word(s): Finance/

03.05.2012 / 08:00

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Quarterly figures telegate AG: profit and revenues according to plan

• Company transformation is progressing well: Media business generates 35 percent of group revenues with improved profit situation
• EBITDA before non-recurring items of EUR 2.7 m in line with the annual guidance

Planegg-Martinsried, May 03, 2012 – In the first quarter of 2012 telegate AG is right on track for the current fiscal year. Group earnings (EBITDA) before non-recurring items of EUR 2.7 m are in line with the profit guidance for the year 2012. The advertising sales business continues to show a positive development: with an improved profit situation, the young business sector generated revenues in the amount of EUR 8.9 m in the reporting period and thus contributes to the share of revenues in group revenues of 35 percent (same period of the previous year: 30 percent). In total, revenues of the telegate group amount to EUR 25.2 m (same period of the previous year: EUR 28.2 m). The expected decline in revenues is due to the current company transformation. Overall, the segment Germany/Austria contributes EUR 23.4 m (93 percent) to group revenues. Spain with EUR 1.7 m has a share in this development of seven percent.

Revenues of the business sector Media continued to increase by five percent in the first quarter 2012. Background is the company's strategic focus on customer satisfaction and retention for the benefit of a long-term margin improvement. The company – as announced – has initiated several fundamental process changes and measures to increase customer loyalty in the first quarter 2012. As a result, churn rates shall be reduced and contract periods extended and thus a positive contribution margin shall be generated in the long term. There already have been initial positive results.

The continuing negative demand trend in the classic DA market results in an overall declining revenues trend of the group. Thus, the proceeds of the business sector DA solutions amount to EUR 16.3 m in the reporting period compared to EUR 19.7 m in the same period of the previous year. Furthermore, the challenging overall economic development had an adverse effect on the revenues trend in the segment Spain.

**Profit situation: company transformation with improved profitability of the Media business

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The continuous growth of the Media business in Germany as well as measures initiated to improve customer loyalty show initial positive signals: the EBITDA before non-recurring items of the business sector Media was improved by EUR 0.7 m to EUR -2.9 m in the reporting period compared to the same period of the previous year (+ 18 percent). However as expected, this was not sufficient yet to compensate the declining profit situation of the DA business with a stronger margin. Therefore, group EBITDA before non-recurring items in the amount of EUR 2.7 m is below the previous year's value of EUR 3.7 m – but in line with the profit guidance 2012. As expected, non-recurring items accrued in the amount of EUR 0.8 m in the first quarter 2012 for capacity adjustments in particular in the administration sector (previous year: EUR 0.3 m). On a segment level, Germany/Austria contributed EUR 2.6 m to earnings (previous year: EUR 3.6 m) and Spain EUR 0.12 m (previous year: EUR 0.07 m). In this segment there are positive effects on the cost of revenues due to the closure of the own Call Center and relocation of the operative sector to an Outsourcer.

Earnings after taxes amounted to EUR 0.2 m in the reporting period compared to EUR 1.3 m in the previous year. Correspondingly, this results in earnings per share of EUR 0.01 compared to

EUR 0.07 in the previous year.

In spite of slightly declining earnings, the balance sheet quality of the debt-free company remains very solid. Cash and cash equivalents amount to EUR 37.6 m in the first quarter 2012 compared to EUR 47.4 m in the same period of the previous year. The decline is primarily due to the dividend payment in the amount of EUR 9.6 m in June 2011. In the first quarter, where usually the lowest liquid assets are generated due to seasonal effects, telegate recorded a slightly negative net cash flow* in the amount of EUR -1.5 m. This ratio amounted to EUR -1.4 m in the previous year.

**Outlook: operational focus on improvement of customer loyalty

**

Business development of telegate AG in 2012 will presumably be affected again by a slight growth of the Media business and a declining trend of the classic, strong margin DA business. The profit situation of the Media business shall be improved significantly by the implementation of additional cost reduction measures, improved sales efficiency and reduction of the churn rates of existing customers. The company expects that the initiated measures will result in visible changes of the margin situation in the course of the year. Based on the financial figures of the first quarter 2012, telegate AG still proceeds with a profit guidance – based on EBITDA before non-recurring items – of EUR 10-12 m for the full year 2012. Furthermore, the company expects to generate a positive net cash flow both in the annual year 2012 and subsequent years.

Possible income from payments by Deutsche Telekom AG to telegate AG and its subsidiaries datagate GmbH and telegate MEDIA AG resulting from the data cost reclamation claims are not considered in this scenario. The Higher Regional Court Duesseldorf (OLG) sentenced Deutsche Telekom AG in three part actions to repay a total of approx. EUR 96 m. The former monopolist has filed an appeal for non-admission of an appeal with the Federal High Court of Justice. A judicial decision by the BGH (Federal High Court of Justice) can be expected within the next months.

Business figures of telegate AG, January – March of the corrensponding annual year	2012	2011	+/- in percent
Group revenues	25.2	28.2	-11
Revenues business sector DA solutions	16.3	19.7	-18
Revenues business sector Media	8.9	8.5	+5
EBITDA before non-recurring items	2.7	3.7	-26
Annual net income after taxes from continuing operations	0.2	1.3	-87
Net cash flow*	-1.5	-1.4	– 8
Liquid asset + short-term deposit investments (by March 31)	37.6	47.4	-21
Number of employees (headcount by March 31)	1,431	1,847	– 23

All figures stated in m of EUR

*) Operating cash flow + cash flow from investing activities +/- interest income/expenses

About telegate AG:

telegate AG has developed in Germany from a telephone DA specialist to an information and Internet service specialist during the previous years. The users of telegate media channels can find comprehensive information on Local search via the brands 11 88 0 and klickTel. telegate provides information with a total of approx. 300 m Local search requests p. a. for trades and services of companies as well as individual contact data. telegate media channels include the Internet portals 11880.com and klicktel.de with already more than 1.2 m downloads of mobile Smartphone Apps, Software products for the individual and business úsers as well as the telephone DA

11 88 0. According to GfK market research, 11 88 0 is the most known telephone number in Germany with an unaided brand awareness of approx. 54 percent. In addition, the users can also find information on Local search on the digital information platforms of partners like Vodafone and Nokia.

In order to be easier to find in the digital word, the company offers Internet services and advertising services for small and medium-sized enterprises (SMEs). telegate supports businesses to build a website with permanent maintenance. In addition, telegate helps SMEs to increase their presence and searchability in the digital media. The Internet service specialist markets SMEs in search engines as well as via online yellow pages on own search media with great reach. telegate, as 'Google AdWords Premium-SME-Partner', develops trade-specific campaigns for the search engine marketing of companies and implements those campaigns.

Contact:

Susanne Seign

Senior Communication Specialist

telegate AG

Germany

Fraunhofer Str. 12a

82152 Planegg-Martinsried

Phone: +49 (89) 8954-1181

Fax: +49 (89) 8954-1189

E-mail: presse@telegate.com

http://www.telegate.com

End of Media Release

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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
Indices:	Prime All Share
Listed:	Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart

End of News	DGAP-Media

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167782  03.05.2012