11 88 0 Solutions AG — Interim / Quarterly Report 2007

May 30, 2007

Geschäftsbericht 2006 3-Months Report 2007

Letter from the Management Board

Dear shareholders,

in the current fiscal year telegate is consistently using the growth potential offered by the extension of the product portfolio for private and business customers and the expansion into foreign markets. The first quarter of 2007 sees telegate's earnings on a clearly positive path. With available liquidity topping nearly 29 million Euro and an equity ratio of 53 percent, we enjoy a solid financial platform from which to develop the operative business still further.

The business segment Germany/Austria has its sight firmly set on extending the directory assistance business across all media channels. Thus, the '11 88 0 multi-channel directory assistance' has been extended by a whole host of hitherto unique product innovations at the start of 2007. One major beneficiary of this extension has been the Internet directory assistance11880.com. Its new features include, among other things, the dynamic integration of maps and aerial views with commercial queries. As part of a test trial for Local Search, the inner city of Munich can now be navigated and surveyed on a virtual walk around town. Commercial entities are now offered the chance to supplement their Internet-based business advertisements with video entries. This is telegate's reaction to the current market trend, which sees the classic yellow-pages business with classified advertisements placed by commercial enterprises in hardcopy books increasingly migrate to new media and the Internet. Over the last few months telegate has brought together an efficient and potent sales team to market the Internet-based commercial advertising. We are thus developing and tapping new sources of revenues and are thereby underlining its innovative leadership.

Also in other markets, telegate has managed to develop its business successfully. The market position in Italy was positive in the first quarter of 2007. Together with its main shareholder Seat Pagine Gialle, telegate today provides directory assistance close to half of that market.

In Spain, the partnership with QDQ, the leading national alternative yellow-pages provider, will soon bear fruit. As part of the cooperation, the service portfolio of our '11811' brand will be extensively expanded, above all in the growth market of the Internet. Parallel to this, QDQ integrates the services of the '11811' into the own marketing portfolio. The mutual objective is to provide consumers with multi-media directory assistance services in premium quality and simultaneously offer innovative advertising means to business customers. We are well on the way to further strengthen our market position in Spain as leading information service provider.

In France the company has to proof its metal in an extremely competitive market environment and further sharpen the profile of the '118 000' directory assistance number. With such strong partners as SFR and Bouygues Telecom, telegate is endowed with a differentiating feature that sets it apart from the competitors. The objective is to secure profitability while reaping the full potential of that market for the telegate Group.

After the first months of fiscal 2007, we remain excellently positioned and equipped for the future. Product innovations, the extension of the multi-channel business and cooperations with strong partners all form the corresponding basis. Following this positive first quarter, telegate's management maintains its estimate for EBITDA close to 50 million Euro.

The Management Board

Key Financial Figures

in m Euro	Q1 2007	Q1 2006		Variance in Percent
Revenues & profit
Revenues	44.0	47.2	-3.2	-6.8%
Revenues, adjusted1	44.0	37.7	6.3	16.7%
EBITDA2	11.0	0.3	10.7	-
Operating income / loss (EBIT)	9.1	-1.3	10.4	-
Net income	7.3	-2.4	9.7	-
Balance Sheet
Balance sheet total	131.1	147.4	-16.3	-11.1%
Cash & cash equivalents	28.5	47.5	-19.0	-40.0%
Equity	69.9	67.3	2.6	3.9%
Equity ratio	53.3%	45.7%	7.6%	16.6%
Cash Flow
Operating cash flow	10.1	-2.1	12.2	-
Investments	-0.9	-2.0	1.1	-55.0%
Free Cash Flow	9.2	-4.1	13.3	-
KPI telegate share
Earnings per share (in Euro)	0.35	-0.12	0.5	-
3 Share price (in Euro)	18.75	20.00	-1.3	-6.3%
Market capitalization	393.5	419.7	-26.2	-6.3%
Employees
Number of employees 4	3,248	2,833	415	14.6%

1 adjusted by SFR & Bouygues Telecom outsourcing business operated at no margin

2The EBITDA is defined as earnings before depreciation, interests and taxes within telegate Group.

3XETRA-closing prices as of last trading day in 1st quarter

4Headcount as of March 31

Management Report

Overview on first quarter 2007

In the current fiscal year telegate is consistently using the growth potential offered by the extension of the product portfolio for private and business customers and the expansion into foreign markets. Following completion of the investment phase that had been initiated in 2005 and which led to a short-term dip of profitability until the middle of 2006, telegate was back on a positive earnings path in the first quarter of 2007. While operating earnings (EBIT) for the first quarter of 2006 had been negative at -1.3 million Euro, EBIT in the quarter under review was markedly up at 9.1 million Euro. This improvement of profitability was also evident in the Free Cash Flow, which increase from -4.0 million Euro to plus 9.2 million Euro.

In summary therefore one can truly say that telegate finds itself excellently positioned and equipped for the future. Product innovations, the cooperation with strong partners as well as significant improvements in the key financial figures all form the corresponding basis. As a consequence, telegate's management can confirm its earnings forecast of around 50 million Euro EBITDA for fiscal year 2007 already after completion of the first quarter.

Financial situation

Earnings situation

At 44.0 million Euro, Group revenues for the first quarter of 2007 are below the last year's figure of 47.2 million Euro. However, the figure for the prior year included outsourcing revenues made with the French mobile phone operators SFR and Bouygues Telecom over 9.5 million Euro. If the figures are adjusted by this extraordinary effect, revenues would have risen from 37.7 million Euro to 44.0 million Euro, which would have meant an increase of 16.7 percent.

The gross profit margin was substantially up from 47.6 percent to 58.6 percent, which was mainly due to the expiration of the outsourcing business with SFR and Bouygues Telecom.

The investment phase that had been completed in fiscal year 2006, is now making a positive contribution to operative earnings (EBIT) in the first quarter of 2007. Thus, while operating earnings (EBIT) for the first quarter of 2006 had been negative at -1.3 million Euro, which was in the main due to the expenditures made toward building and strengthening the brand of our French directory assistance service, the EBIT in the quarter under review was markedly up at plus 9.1 million Euro. Concurrent to this, the period's net income after taxes rose from last year's figure of -2.4 million Euro to presently 7.3 million Euro.

Net assets and financial situation

Balance Sheet

As of reporting date (March 31, 2007), the balance sheet total of telegate Group amounted to 131.1 million Euro and was thus 5.3 million Euro higher than on December 31, 2006 (125.8 million Euro.). The increase on the asset side is essentially the result of two contrary effects. Liquid assets rose strength of a significantly better profitability. On the other hand, trade accounts receivables were lower as a result of an overall lower sales volume. The latter was essentially due to the termination of the outsourcing contracts concluded between telegate' French segment and SFR and Bouygues Telecom, which had become effective on April 3, 2006, as well as other effects as of reporting date. The rise on the liabilities and shareholders' equity side of the balance sheet is also the result of contrary movements. Thus, trade accounts payable were reduced in line with the, compared to last year, lower business expenses, while the Group's equity increased as a result of the net income recorded for the period. The equity ratio of telegate Group as of March 31, 2007 stands at 53.3 percent (December 31, 2006: 49.7 percent).

Cash Flow & financing

Given the substantially improved profitability in the period under review, the operating cash flow (outflow and inflow of funds from going concern) was up in line with plan, totaling 10.1 million Euro (previous year: -2.1 million Euro).

Due to the scheduled cut in capital expenditures and an improved profitability, the Free Cash Flow comes to 9.2 million Euro, while the year-on-year comparison showed a minus of -4.0 million Euro for the same period the year before.

Investments

The total volume of investments in the period under review came to 0.7 million Euro (previous year: 2.0 million Euro). Capital expenditures in properties and equipment and intangible assets were made, above all, for the renewal of the call center technology as well as for investments in replacements and maintenance.

Segment report

Germany/Austria

In the segment Germany/Austria, telegate continues unwavering to focus attention on its premium claim and to anchor itself as leading partner for the business customer sector. Here telegate had been able to score important points especially with the Internet directory assistance 11880.com. At the start of January 2007 a cooperation with hotel.de was agreed, that sees all contract hotels of the booking services being stored as business entry with the 11880.com site in the future and directly available for reservation via this directory assistance platform. These contract hotels are now presented on all 11880-channels as part of the multi-channel strategy, allowing both, the business clients of hotel.de as well as the customers of the 11880.com site to benefit from this cooperation. The first quarter of 2007 also witnessed the launch of new innovative services for the Internet-based directory assistance. Part of these services includes the dynamic connection of maps and aerial views with commercial queries, as well as supplementing the Internetbased commercial advertisements with video entries. This is telegate's response to the current market trend that sees the classic yellow pages advertisement business shift more and more into the new media and the Internet.

As a result of this business sector strategy the revenues for the segment Germany/Austria stabilized in the first quarter of 2007 at 28.5 million Euro and thus nearly reached the level of last year (28.6 million Euro).

Because of substantially lower marketing expenses, the earnings before interest, taxes and depreciation (EBITDA) went up from 9.3 million Euro to 11.0 million Euro over the reporting period.

France

The French segment generated sales in the first quarter 2007 of 5.9 million Euro. Though this is distinctly below the sales recorded the year before at 11.2 million Euro. In account must be taken the fact that the figure for the prior year included outsourcing sales with the mobile phone operators SFR and Bouygues Telecom over 9.5 million Euro. These were sales that had no effect on earnings. Already prior to the final liberalization of the French directory assistance market on April 3, 2006, telegate had processed the entire directory assistance volume of both companies. Adjusted by this effect, the segment's revenues more than tripled to 5.9 million Euro (adjusted figure for the year before: 1.7 million Euro).

The main focus of attention in the French segment continues to be on building a sustainable profitable directory assistance business.

During the first quarter of 2007, telegate has made vital progress on this path toward profitability. With advertisement costs substantially cut and profit margin improved, earnings before interest, taxes, depreciation and amortization (EBITDA) came to - 2.4 million Euro, while the same figure for the period of the prior year had registered a minus of -10.1 million Euro.

Italy/Spain

The economic development seen in Italy and Spain during the first quarter of 2007 was very gratifying. The segment's revenues climbed by 28.0 percent from 7.5 million Euro to 9.6 million Euro. Parallel to this, the profitability (earnings before interest, taxes, depreciation and amortization) in the period under review more than doubled to 2.4 million Euro (previous year: 1.0 million Euro).

This exceedingly positive financial development is demonstrated by the successful performance of telegate Italia S.r.L. during the first quarter of 2007, which together with Seat Pagine Gialle S.p.A., now covers well over 40 percent of the Italian directory assistance market. The figures also reflect the positive development in Spain. Here both, sales as well as earnings, recorded growth in the yearon-year comparison. Another important foundation for the further extension of business in Spain was laid by the cooperation with QDQ Media SAU – Spain's leading alternative yellow pages provider. As part of the cooperation, the service portfolio of the Spanish subsidiary will be expanded, above all in the growth market of the Internet. Parallel to this, QDQ integrates the services of the "11 8 11" into its own marketing portfolio. This cooperation means that telegate's multi-channel strategy will also be realized in the Spanish directory assistance market.

Employees

As of March 31, 2007 telegate Group had 3,248 employees (headcount) on its books, which increases the number of employees against the same date last year by 14.6 percent. This increase was above all driven by the expansion of the foreign business divisions.

Planegg-Martinsried, 30. April 2007 The Management Board

Consolidated Statements of Operations (IFRS)

	3-Months Report (unaudited)
in TEUR (except of per share data)	Q1 2007	Q1 2006
Revenues	43,967	47,237
Cost of revenues	-18,060	-24,760
Gross Profit (excl. depreciation & amortization)	25,907	22,477
Advertising costs	-8,018	-16,119
Personnel costs (only administration & marketing)	-4,566	-3,954
Depreciation & amortization	-1,928	-1,573
Other administrative expenses	-2,437	-2,130
Other operating income	124	6
Total operating costs	-16,825	-23,770
Operating income / loss	9,082	-1,293
Interest income	283	487
Income / loss from financial assets & marketable securities	-	-124
Gain / loss on foreign currency translation	1	-3
Financial income	284	360
Income / loss before income tax	9,366	-933
Income tax	-2,116	-1,498
Net income / - loss	7,250	-2,431
Basic & dilutive earnings per share	0.35	-0.12

See accompanying notes to the consolidated financial statements.

Consolidated Balance Sheets (IFRS)

Assets in TEUR	Mar 31, 2007	Dec 31, 2006	Mar 31, 2006
Current assets
Cash & cash equivalents	28,538	18,653	47,483
Trade accounts receivable	57,999	62,407	62,710
Prepaid expenses & other current assets	9,787	8,870	7,420
Total current assets	96,324	89,930	117,613
Non-current assets
Goodwill, net	2,829	2,829	2,571
Intangible assets	11,409	11,991	4,807
Property & equipment	12,707	13,213	13,580
Available-for-sale securities	38	38	41
Other non-current receivables	40	37	21
Deferred tax assets	7,742	7,742	8,759
Total non-current assets	34,765	35,850	29,779
Total assets	131,089	125,780	147,392
Liabilities & shareholders' equity in TEUR	Mar 31, 2007	Dec 31, 2006	Mar 31, 2006
Current liabilities
Trade accounts payable	27,503	29,471	38,422
Accrued liabilities	19,808	20,775	26,532
Provisions	8,466	8,557	12,796
Other current liabilities	3,377	2,423	350
Total current liabilities	59,154	61,226	78,100
Non-current liabilities
Provisions	478	562	1,313
Defined benefit liabilities	44	40	24
Other non-current liabilities	652	594	433
Deferred tax liabilities	818	818	225
Total non-current liabilities	1,992	2,014	1,995
Total liabilities	61,146	63,240	80,095
Equity
Share capital	20,987	20,987	20,987
Additional paid-in capital	28,097	27,944	27,472
Other revenue reserves	21,256	21,256	10,400
Net earnings	-397	-7,647	8,438
Total shareholders' equity	69,943	62,540	67,297
Total liabilities & shareholders' equity	131,089	125,780	147,392

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Cash Flows (IFRS)

in TEUR	Mar 31, 2007	Mar 31, 2006
Cash flows from operating activities
Income before income tax	9,366	-933
Adjustments for:
Depreciation & amortization	1,928	1,573
Gain / loss on disposal of property & equipment	3	-10
Gain / loss from government grants	-14	-7
Interest income / expense	-283	-488
Income / loss on foreign currency translation	-1	4
Valuation allowance for trade accounts receivable	37	94
Other non-cash expenses	276	60
Changes in non-current provisions	-82	-1,110
Operating income / loss in operating assets & liabilities	11,230	-817
Changes in operating assets and liabilities:
Trade accounts receivable	4,372	-10,572
Prepaid expenses & other assets	-1,168	-1,499
Trade accounts payable	-1,940	11,029
Current provisions	-91	298
Accrued expenses & other liabilities	-802	-16
Income taxes paid	-1,453	-480
Cash used in / provided by operating activities	10,148	-2,057
Cash flows from investing activities
Capitalized intangible assets	-287	-550
Purchase of property & equipment	-590	-1,440
Proceeds from the sale of property & equipment	1	30
Cash used in investing activities	-876	-1,960
Cash flows from financing activities
Proceeds from government grants	565	9
Cash paid of restricted cash accounts	-9	-4
Interest received	87	139
Interest paid	-30	-
Cash provided by financing activities	613	144
Increase / decrease in cash & cash equivalents	9,885	-3,873
Cash & cash equivalents at beginning of reporting period	18,653	51,356
Cash & cash equivalents at end of reporting period	28,538	47,483

See accompanying notes to the consolidated financial statements.

Consolidated Statement of Shareholders' Equity (IFRS)

in TEUR	Share capital	Additional paid-in capital	Other revenue reserves	Net earnings	Total equity
Balance at Jan 1, 2006	20,987	27,411	10,400	10,869	69,667
Comprehensive loss	-	-	-	-2,431	-2,431
Stock option plan	-	60	-	-	60
Balance at Mar 31, 2006	20,987	27,471	10,400	8,438	67,296
Balance at Jan 1, 2007	20,987	27,944	21,256	-7,647	62,540
Comprehensive income	-	-	-	7,250	7,250
Stock option plan	-	153	-	-	153
Balance at Mar 31, 2007	20,987	28,097	21,256	-397	69,943

See accompanying notes to the consolidated financial statement.

Segment Report (IFRS)

The Company operates in three segments, each of which are strategic business that are separately managed. The Company views its business in three segments which are primarily determined by their geographic region.

Managment's dominant measurements are consistent with the Company's consolidated financial statement and, accordingly, are reported on the same basis herein. Intersegment revenues are generally accounted for at amounts comparable to sales to unaffiliated customers and are eliminated in consolidation.

in TEUR	Germany/ Austria	Italy/ Spain	France	Total
Mar 31, 2007
Total segment revenues	28,897	9,574	5,906	44,377
Intersegment revenues	410	-	-	410
External revenues	28,487	9,574	5,906	43,967
Depreciation & amortization	1,297	425	206	1,928
Operating Income	9,695	1,982	-2,595	9,082
EBITDA	10,991	2,407	-2,388	11,010
Mar 31, 2006
Total segment revenues	28,706	7,460	11,167	47,333
Intersegment revenues	96	-	-	96
External revenues	28,610	7,460	11,167	47,237
Depreciation & amortization	990	445	138	1,573
Operating Income	8,345	593	-10,231	-1,293
EBITDA	9,335	1,038	-10,093	280

See accompanying notes to the consolidated financial statement.

Notes to the Consolidated Financial Statements

1. Basis of presentation

The telegate-Group's core operating activities comprises the provision of directory enquiries and call completion services. In addition the Company is marketing its own call centre competency and is offering a broad spectrum of services for partners from many industries in domestic and foreign countries.

The Consolidated Financial Statement of telegate AG and the subsidiaries consolidated in the Financial Statement has been prepared as of March 31, 2007, in compliance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB).

This interim financial report has been prepared in compliance with IAS 34 "Interim Financial Reporting". Furthermore, all International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC–formerly SIC) that were mandatory applicable per March 31, 2007 were complied with.

The Consolidated Financial Statements of telegate (the Group / telegate Group / the Company) are expressed in Euro. All values are rounded to the nearest thousand (TEUR) except when otherwise indicated.

The Consolidated Annual Financial Statements and the Management Report prepared as of December 31, 2006, are submitted to the operator of the Electronic Federal Gazette ("Betreiber des elektronischen Bundesanzeiger") and published in the Federal Gazette electronically ("eBAnz").

2. Summary of Significant Accounting Policies

The accounting policies adopted in the preparation of this interim Consolidated Financial Statements are consistent with those followed in the preparation for the Group's annual Consolidated Financial Statements for the year ended December 31, 2006, except of the following, in 2007 issued and by telegate adopted regulations:

On March 29, 2007, the IASB issued a revised IAS 23 Borrowing Costs. The main change from the previous version is the removal of the option of immediately recognising as an expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale. An entity is, therefore, required to capitalise borrowing costs as part of the cost of such assets. The revised Standard applies to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after January 1, 2009. Earlier application is permitted.

The adoption of this new regulations did not affect the Group results or financial position.

3. Changes in the scope of consolidation

Compared to December 31, 2006, the scope of consolidation has not changed in 2007.

4. Presenting the Consolidated Income Statement in the conventional cost of sales format

IAS 1.88 permits a company to prepare its income statement in accordance with the nature of expense method or the cost of sales method. telegate has opted to apply the cost of sales method. The Company's method of presentation fulfils the minimum classification scheme as prescribed by IAS 1.81 and 1.82. Additional items can also be included in the classification to the extent these are required in order to shed further light on the enterprise's financial position (IAS 1.83).

External balance sheet readers arguably prefer presentation using the conventional costs of sales method. In order to cater for the needs of this group, the extended presentation used in the Consolidated Income Statement has been reconciled to the classification principles adopted in the conventional cost of sales method.

In the following the reconciliation of the results for the first 3 months of 2007 and 2006 respectively.

in TEUR	Extented costs of sales method Q1 2007	Reclassification	Cost of sales method (IAS 1.92) Q1 2007
Revenues	43,967	-	43,967
Cost of revenues	-18,060	-1,798	-19,858
Gross Profit (excl. depreciation & amortisation)	25,907	-1,798	24,109
Advertising costs	-8,018	-354	-8,372
Personnel costs (only administatration & marketing)	-4,566	4,566	-
Depreciation & amortization	-1,928	1,928	-
Other administrative expenses	-2,437	-4,342	-6,779
Other operating income	124	-	124
Total operating costs	-16,825	1,798	-15,027
Operating income	9,082	0	9,082
Interest income	283	-	283
Income / loss from financial assets & marketable securities	-	-	-
Income on foreign currency translation	1	-	1
Financial income	284	0	284
Loss before income tax	9,366	0	9,366
Income tax	-2,116	-	-2,116
Net income	7,250	0	7,250

The following reclassifications were made as at March 31, 2007 in order to present the figures in accordance with the conventional cost of sales method.

• 1. Reclassification of amortisation of financial investments and intangible assets, which had previously been reported separately, and which are now reported under cost of sales (1,798 TEUR) or general administrative costs (130 TEUR).
• 1. Allocation of staff costs between general administrative costs (4,212 TEUR) and selling costs (354 TEUR).

in TEUR	Extented costs of sales method Q1 2006	Reclassification	Cost of sales method (IAS 1.92) Q1 2006
Revenues	47,237	-	47,237
Cost of revenues	-24,760	-1,455	-26,215
Gross Profit (excl. depreciation & amortisation)	22,477	-1,455	21,022
Advertising costs	-16,119	-249	-16,368
Personnel costs (only administatration & marketing)	-3,954	3,954	-
Depreciation & amortization	-1,573	1,573	-
Other administrative expenses	-2,130	-3,823	-5,953
Other operating income	6	-	6
Total operating costs	-23,770	1,455	-22,315
Operating loss	-1,293	0	-1,293
Interest income	487	-	487
Loss from financial assets & marketable securities	-124	-	-124
Loss on foreign currency translation	-3	-	-3
Financial income	360	0	360
Loss before income tax	-933	0	-933
Income tax	-1,498	-	-1,498
Net loss	-2,431	0	-2,431

The following reclassifications were made as at March 31, 2006 in order to present the figures in accordance with the conventional cost of sales method.

• 1. Reclassification of amortisation of financial investments and intangible assets, which had previously been reported separately, and which are now reported under cost of revenues (1,455 TEUR) or general administrative costs (118 TEUR).
• 1. Allocation of staff costs between general administrative costs (3,705 TEUR) and selling costs (249 TEUR)

5. Corporate Governance Code

In June 2006, in accordance with Section 161 Corporation Act, the Managing Board and Supervisory Board mutually released their declaration on the recommendations of the Government Commission's German Corporate Governance Code. The exact wording is provided on the Company's website www.telegate.com.

Planegg-Martinsried, April 30, 2007

The Management Board

Corporate Structure of telegate Group

www.telegate.com