Figure s stat ed in mill. E UR	2009	2010	2011
Reven ue	98.7	98.3	84.5
Busin ess S olutio ns	48.2	44.8	41.6
Whole sale	34.4	38.7	30.6
New B usine ss	16.1	14.8	12.3
Gross profi t	22.7	22.9	24.6
Busin ess S olutio ns	17.9	17.5	18.7
Whole sale	1.2	1.3	1.4
New B usine ss	3.6	4.1	4.5
EBITD A	4.9	4.9	7.1
In % o f reve nue	5.0 %	5.0 %	8.4 %
EBIT	-2.2	1.5	3.1
In % o f reve nue	-2.2 %	1.5 %	3.7 %
Conso lidate d profi t	-2.2	0.1	1.1
e 1 (in Earnin r shar EUR ) gs pe	-0.57	0.02	0.29
Balan ce sh eet to tal	52.7	48.8	45.4
Equity	19.6	20.0	21.4
In % o f the b alanc e she l et tota	37.2 %	41.0 %	47.1 %
Numb er of s hares as of 12/31 (Outs tandin g sha res)	3,752 ,500	3,752 ,500	3,752 ,500
Net fi n ancia l liabil ities	9.9	7.1	3.0
As a multip le of E BITDA	2.0	1.5	0.4
Emplo as of 12/31 yees	193	184 2	189 2

Key performance indicators

1) both undiluted and diluted

2) without minority companies (synergyPLUS GmbH, mvneco GmbH)

3) with consideration of the interest payment after tax shield

Corporate profi le

As a telecommunications company active throughout Germany, ecotel communication ag has specialised in three business areas.

In the core segment of Business Solutions ecotel provides approximately 20,000 business customers with an integrated product portfolio consisting of voice, data and mobile communications solutions. These solutions include convergent bundled projects, broadband data connections based on DSL and Ethernet connections that are available throughout Germany, the scalable networking of enterprise locations (VPNs) and housing and hosting services.

In the second business area, Wholesale Solutions, the ecotel Group markets preliminary products to other telecommunications enterprises. Simultaneously, in this area the Company achieves high traffi c volumes and thus a deepening of the value creation for the core unit, Business Solutions. In addition to the international wholesale voice business of ecotel, mvneco GmbH is also included in this segment.

New high-growth business sectors and niches of the operatively autonomous subsidiaries and holdings are handled in the New Business area. In addition to the easybell GmbH, which is aligned to the private customer business, nacamar GmbH, is focussed on the new media business and is also part of this autonomous business unit.

EBITDA in mill. EUR 1042 2007 2008 2009 2010 20117.19.26.04.94.9

The corporate group, with its main offi ce in Düsseldorf, currently has about 210 employees,

including subsidiaries and holdings.

01 Corporate profi le
02 Forward of the management board
04 ecotel introduces itself20 The ecotel stock
38 Supplementary report
39 Risk report
44 Outlook report

CON	TENT S	CO	NSO LIDA TED FINA NCIA L STA TEM ENT
01	Corp profi le orate	46	Cons olida ted b alanc e she et
02	Forw ard o f the nt bo ard mana geme	48	Cons olida ted s f com prehe nsive inco tatem ent o me
04	l intro duce s itse lf ecote	49	Grou h fl ow state ment p cas
20	The e cotel stock	50	f Gro Deve lopm ent o uity up eq
		52	e fi na Notes to th ncial state ment
CON	SOLI DATE D MA NAG EME NT R EPO RT		of ec otel c unica tion a omm g
22	Busin nd ge neral cond itions ess a	100	f the Audit opin ion o statu tory a udito r
35	Earn ings, fi nan cial a nd as sets posit ion	101	Corp orate gove rnanc e
38	Supp leme ntary rt repo	104	rt of t Repo he su pervi board sory
39	Risk t repor
44	Outlo ok re port	108	Gloss ary
45	Decla ration of th e leg al rep tative resen	110	Finan cial c alend ar
	s	110	Ackn owled nts geme

Index

Essen tial ca sh fl o w dat a	Figure s stat ed in mill. E UR	2009	2010	2011
Cash and c ash e quiva lents as of	3,5	7,1	6,1
Cash fl ow f urrent ting a rom c opera	6,1	5,3	6,3
Cash fl ow f rom in vestm ent ac tivity	-3,6	-1,8	-1,6
Cash fl ow f rom fi nanci tivities ng ac		1,1	-4,5	-4,5
Cash as of 12/31 and c ash e quiva lents		7,1	6,1	6,2
w 3 Free C ashfl o	3,0	4,0	4,9

Forward of the management board

Dear Shareholders,

The fi nancial year 2011 was an extremely successful year for ecotel – with new historic best marks in free cash fl ow, as well as a virtually debt-free balance sheet based on net fi nancial liabilities. In addition, for the most part ecotel was able to achieve its operative goals for 2011. In spite of the expected decline in revenues, to EUR 84.5 million, the Group was able to increase gross profi ts relative to the comparable period of the previous year by 7 %, from EUR 22.9 million to EUR 24.6 million. Compared with the previous year the gross profi t margin increased from 23 % to 29 %.

EBITDA increased in 2011 by 45 %, from EUR 4.9 million to EUR 7.1 million as compared to the previous year. This corresponds to an EBITDA margin of 8.3 % (previous year: 5.0 %). EBIT was EUR 3.1 million, after EUR 1.5 million in the previous year. This represents an increase of 106 %. The 2011 consolidated net income after minority interests was EUR 1.1 million, after EUR 0.1 million in the previous year. This corresponds to earnings per share of EUR 0.29 (previous year: EUR 0.02). Without deferred taxes, due to the utilisation of taxable losses carried forward, the result would have been EUR 0.43.

The Group was able to further reduce net fi nancial liabilities as scheduled, which at the end of 2011, were only EUR 3.0 million (previous year: EUR 7.1 million). Taking into account the equity capital character of the KfW subordinate tranche (EUR 2.5 million), the net fi nancial obligations totalled EUR 0.5 million, this represents a decrease of EUR 4.1 million in comparison with the previous year. The equity ratio improved from 41 % to 47 %.

An overview of the most important events in 2011 is provided below.

On February 24, 2011 the German Federal Network Agency (BNezA) announced its fi nal rate approvals for mobile termination fees, which will remain in effect until November 30, 2012. The resulting halving of mobile termination fees for 2011 was one essential driver for the increase of ecotel's gross profi t last year.

Continuation of the IT system consolidation, as well as commissioning of the automated provisioning interface with Vodafone will result in more effi cient order processing. Moreover, currently more and more processes are being executed paperless. The increased effi ciency on the system side went hand-in-hand with a new order management system to improve customer satisfaction. The complete activation process (order check, order confi rmation, schedule confi rmation, quality call, fi rst invoice check) for new products and the associated communication between ecotel and the end customer occurs via fi xed contact persons (Contract Ownership).

In 2011 easybell GmbH successfully established additional business areas. Among other things, easybell started to market an additional call-by-call number (01041). The unbundled voice and DSL products met with strong demand. New products, such as the VDSL package offered since the end of 2011 complete the offering. In addition, the German Institute for Service Quality (Deutsche Institut für Service-Qualität) recognised easybell, along with Kabel Deutschland and Netcologne, as Germany's best Internet service providers in 2011.

Moreover the company made continued progress with the planned consolidation of the subsidiaries. In October 2011, ecotel sold the 51 percent stake in toBEmobile GmbH. In December 2011 the remaining shares (11 %) were sold two PPRO GmbH. In November 2011 ecotel also sold the i-cube business activities, subsequently purchased the outstanding shares of i-cube GmbH, and the merged the company with ecotel.

ecotel was also able to successfully progress with the marketing of full access lines in the business customer segment in 2011. At the end of 2011 more than 13,000 full access orders were already active and relevant to sales.

For the current fi nancial year the Company continues to pursue the goal of reducing net fi nancial liabilities to zero EUR. Possible special effects, such as buybacks of shares, payment of dividends, or additional investments that depart from the current budget are not included in this planning.

In 2011 ecotel was able to report signifi cant successes in the marketing of VPN and data products. Among other things, 135 new broadband Ethernet lines and 250 SHDSL lines were marketed. In addition, ecotel was able to win a large order from ING DiBa for connecting more than 1,200 ATMs. Left to right Bernhard Seidl, Peter Zils, Achim Theis

On the basis of the improved general conditions, for example the new products and rates or the consistently introduced Contract Ownership process, the declared objective of the management board is to achieve increasing B2B sales again from 2013, and by 2015 to again generate three-fi gure Group revenues. For 2012 we expect revenues of approx. EUR 80 – 90 million, as well as EBITDA of EUR 6 – 7 million. In addition we are pursuing the goal of increasing the EDITDA margin from the current 8 % to 10 % by 2013.

Finally we would like to thank all employees of the ecotel Group for their accomplishments and their contribution to the success of the Company, and our customers, business partners and shareholders for the good and dependable collaboration. We are fi rmly convinced that ecotel will also set innovative accents in the German telecommunications market in 2012.

Achim TheisManagement board – sales

Bernhard Seidl

Management board – fi nance

Peter ZilsChief Executive Offi cer

ecotel introduces itself:ALL AROUND COMMUNICATION – SUCCESS FOR YOUR BUSINESS!

complex solutions for the broadband networking of enterprises and cloud services. We would like to thank our customers and partners who have placed their trust in us and at the same time declare that we will continue to do everything to satisfy their rigorous requirements. We are particularly pleased that we are also able to base the future development of ecotel on a foundation that is becoming increasingly stronger.

Peter ZilsChief Executive Offi cer"Build on the strengthened foundation!"

In the 15th year since ecotel was founded in January 1998, we, the management boards, executives and employees of ecotel, are also driven by the concept of continuously further developing ourselves, and in the process always becoming a little better. At the beginning of the liberalisation of the TC market in 1998, initially only simple preliminary products, such as preselection of DSL connections with limited bandwidths were available to us. Today, in addition to our standard products in the areas of voice, data, and wireless, we develop and market increasingly ecotel introduces itself:

"The best compliments for ecotel are references from customers and partners." Achim Theis

Management board – sales

In past years we set ourselves the task of making the topic of telecommunications even more transparent and "handy" with our "all-round worry free packages".

To achieve this goal ecotel continuously develops new solutions and product innovations, e.g. the fullaccess product that is available throughout Europe, or the networking of enterprise locations (VPN) via Ethernet technology.

Naturally this only functions with a team of highly motivated and committed employees who make the requirements of our customers the centre of their activities.

Due to the many years of positive experience collaborating with ecotel in the area of Managed Services and computer centre services, IND-DiBa placed a large order with us in the last fi nancial years for the country-wide networking of 1,200 ING-DiBa ATMs in Germany.

In 2011 ecotel also successfully further extended the collaboration with Allianz Deutschland AG. In this case the objective was to smoothly connect more than 600 workstations of insurance consultants in bank branch offi ces to the headquarters location, with professional DSL connections.

The leading distribution company AVNET, with subsidiaries in 30 countries continues to rely on the collaborative partnership with ecotel. Currently ecotel is managing more than 120 data lines worldwide for AVNET.

Learn more about these interesting customer projects on the following pages, in keeping with the statement from Henry Ford: "Coming together is a beginning. Keeping together is progress. Working together is success!"

Since ecotel has been successfully active for several years with managed services for ING-DiBa in the ecotel computer centre, the bank placed a new large order for the country-wide networking of all ING-DiBa ATMs in Germany. Currently the network includes more than 1,200 ATMs.

To meet the special performance and security requirements of Germany's largest direct bank, ecotel relies on high-performance DSL connections for the locations in the form of a virtual private network (VPN) based on high-capacity MPLS technology. Thus the transaction data of the ATMs is processed with particular speed and security. The IP-Sec data encryption procedure ensures additional protection. As part of the VPN, the bank's central computer centre was integrated with ecotel Ethernet lines including line and carrier redundancy, to particularly safeguard this central interface. The large project was rounded out with special monitoring roundthe-clock, 365 days a year, and implementation of custom fi rewall and VPN components that optimally support the processes and that are hosted by ecotel. Otto Höhne, the person responsible for the ING-DiBa AG ATMs, explained the decision for ecotel: "The crucial factor for awarding the contract to ecotel was not only the high-capacity overall concept, it was also the evaluation of TÜV Rheinland, which explicitly tested the operating concept of ecotel and assessed it as 'secure'".

ecotel delivers high-capacity overall concept

ING-DiBa – Hannover location

When the telecommunications is involved, Allianz Deutschland AG has been using the products and services of the business solutions provider, ecotel, since 2005. In concrete numbers, currently ecotel supplies over 17,000 individual products from the preselection, ISDN, DSL and complete connection areas, as well as VPN accounts to inside sales and fi eld sales of the respected insurance group.

ecotel was commissioned by Allianz with a special project for connecting the insurance consultants working in bank locations. For this the Allianz employees who provide consultation and are responsible for sales of the Allianz products from the facilities of bank locations, required a new, secure connection to Allianz headquarters in the form of stable DSL connections.

A stable connection: ecotel and Allianz

In addition to technical set up of the DSL connections that is as smooth as possible, the aspect of the connection and project costs was another crucial factor for the insurance group in awarding the contract. In this area ecotel was convincing with an attractive price performance package.

With a special project team and special coordination, incl. technical service organised with Allianz, ecotel ensured that over 600 workstations in bank locations were appropriately equipped with the necessary DSL connections, in a Germany-wide roll-out project. The joint planning of ecotel and Allianz calls for additional successive connections of a total of 1,200 workstations. Erwin Osen, head of the IT department at Allianz Deutschland AG, draws a positive balance: "Our DSL connections in the facilities of the bank locations are now running stable since the roll-out via ecotel. The close collaboration of the Allianz and ecotel project teams was particularly worthy of note. We have come to esteem ecotel's solution competence and fl exibility."

A challenging task, as the bank locations have special security requirements with highly restricted access rights to the technology during offi ce hours. In addition, compliance with special fi re safety and cable routing requirements was necessary, e.g. for installation of the necessary connections and DSL routers.

Erwin OsenDepartment Head AZD-IT Customers and distribution

The leading distribution company, Avnet, with subsidiaries in more than 30 countries markets, and sells electronic components, IT products and solutions from leading manufacturers. A worldwide technology enterprise, Avnet, has specialised sales and marketing organisations that concentrate on specifi c customer segments and thus can address the needs of its customers and suppliers in special measure.

Avnet, Inc. (NYSE:AVT), a Fortune 500 company is one of the world's largest distributors of electronic components, computer products and embedded systems.

A partnership with genuine quality-of-service

Avnet acts globally as the connecting link between leading technology suppliers and a broad base of more than 100,000 customers. With an extensive range of value-added services and IT solutions, Avnet helps its partners to successfully develop new business segments.

In the 2011 fi nancial year, which ended on July 2, 2011, Avnet Inc. had worldwide sales of USD 26.5 billion. Additional information at www.avnet.com

Now the numerous locations in the European countries are connected with the appropriate access technologies via ecotel. Depending on the location requirement, access technologies, ADSL, SHDSL, as well as dedicated standard point-to-point connections and high-speed Ethernet bandwidths from 10 to 100 Mbit/s are used. Overall, ecotel already provides 120 lines for 110 locations.

Gerhard Peschke, Director of IT, Infrastructure, Systems & Operations Avnet EM EMEA, explains: "As in the past, we are very happy with our decision for ecotel. An important point in our long-standing partnership is the central management of the international bandwidths with high-capacity availability via a reliable technology partner. The permanent line monitoring in the ecotel NOC guarantees fast response times and fast interference suppression service, important points that are indispensable for us. With ecotel we have a partnership with genuine quality-of-service."

For an international company of this order of magnitude, fast and stable data fl ow in daily business operations is an absolute prerequisite. In selecting the provider for the subsidiaries in Germany and Europe, the special requirement imposed on the technology company was obtaining high-performance and reliable connections for national and international transmission of data as a managed service from a single source. In concrete terms, the offi ce and logistics locations of the distributor were to be connected to the Avnet computer centre, and equipped with the bandwidths and access technologies suitable for the requirements of the respective location. With a tailored complete managed service package, ecotel was able to convincingly establish its capabilities as an exclusive business solutions provider.

Avnet – Poing location

The ecotel concept speaks for itself – high-level telecommunication services at attractive prices. A quality provider, a single source for fi xed line, data services and wireless – exclusively for business customers and their rigorous requirements.

We are large enough to obtain the best conditions for our customers, and we are fl exible enough to deal with their desires individually and as a partner. This applies both for extensive voice and data services in complex roll-out projects, and for services tailored for small and medium-sized business customers for optimising their telecommunication services.

In this regard we place a lot of value on a partnership with regional proximity and support. We support more than 500 sales partners pro-actively in customer projects – from individual product training to preparation of quotations, to personal support

Andreas Stamm / Andreas Mier / Stephan Friedrich Management board – sales "Customers and partners are our driving force."

in meeting jointly with customers. Through an experienced, competent sales team and qualifi ed technical consultants – as needed.

In addition, we also shape current market trends through technology partnerships and cooperation with the market leaders in the ITC industry. For example, in the data services area we are building the "race track for cloud services" with our Internet access and VPN services.

We stay on top market developments for our customers and partners.

Another focus area in sales is the business with so-called buying and marketing groups. More than 100 buying and marketing groups and numerous buying and marketing group members profi t from the products and services of ecotel via special framework agreements.

ecotel introduces itself:

Selected ecotel references

Reference customers

Reference partners

The question "where are you going" is posed millions of times every day, moves virtually every individual and also every organisation.

Naturally a company such as ecotel must also be able to answer questions about its future. In the highly technical telecommunications environment, we rely on technically new and innovative products. We also want to strengthen our market position in the highly competitive business customer environment. But what is our goal, to differentiate ourselves from the "others"?

First, certainly it is a fact that we are capable of approaching customer desires with fl exibility and responding to individual problems with a solution orientation. "It won't work" does not exist at ecotel. It is precisely when a challenge does not fi t into the "standardised pigeon holes" that we view the work on a possible solution as a special challenge and convert this challenge into a realisable and customer-oriented service. Secondly, we have imposed a program for the future on ourselves in which the quality of our achievements and services will come to the fore, even more so than has been the case in the past. We examine every business process for gaps and defi ciencies. We record every complaint in an internal audit in order to draw conclusions for optimisations in processes and services. We ask partners and customers about the level of satisfaction with our products and services. All of these measures have one goal only: The sustainable assurance and optimisation of our delivered product and service quality. To achieve this goal, in recent months we introduced focussed measures, such as certifi cation of the computer centre through the eco Verband or implementation of the Contract Ownership process. Also to ensure the continued capability to set standards, we have established an autonomous department that focuses exclusively on quality assurance and process optimisation.

"Smooth processes are the prerequisite for high quality." Margaret Friedrich Manager Processes & Improvement

Our customers expect a high quality of our products and services. The Processes & Improvement department is responsible for setting up and establishing quality management that is customeroriented and partner-oriented. Our goal is continuous and sustainable quality improvement of all processes in the operative units to increase the level of customer satisfaction.

To achieve this goal we implement the instruments of modern quality management and ensure optimisation of the relevant business processes based on the following criteria:

Defi nition of quality goals
Introduction of ISO 27001
Designing and documenting business processes
Defi nition of key performance indicators for processes and review of the quality goals
Identifi cation and elimination of weak points
within the business processes
Transparency of processes, interfaces,
and responsibilities to minimise internal friction losses

As a reliable and trustworthy contact for all topics involving the business processes, we bear the responsibility for the high quality of our services.

After receipt of the customer order at ecotel, the Order Administration department takes over the execution. In the subsequent implementation phase we accompany the customer via the newly established Contract Ownership process. In this process a personal contact person is assigned to the customer during the order implementation phase; this contact person competently helps the customer with all questions and actively informs the customer about the ongoing status of his order. This special procedure ensures that the customer feels that he is in good hands at ecotel, even during the activation phase.

Project management is responsible for smooth and on-schedule implementation of the VPN projects and large projects of our data customers. Within the framework of our multi-supplier strategy we offer our customers a mix of various preliminary products in order to realise the best possible bandwidth at the respective locations. On our team central contact persons are available to the customers and partners, to ensure the smoothest possible provision of connections at the respective locations. In close collaboration with the other departments involved, we respond to the individual requirements of the customer, in order to provide him with a tailored solution. We accompany the customer from receipt of order through the implementation process until transition to normal operation and the fi rst checked billing. In this regard customer satisfaction is the top priority in our actions.

"The networking of enterprise locations requires a high degree of coordination and responsibility." Martin HeinemannDepartment Head – Project Management

2011 was one of most profi table years in ecotel's history. The free excess cash fl ow in the last four years has resulted in the fact that ecotel has been able to reduce its net debt by more than EUR 10 million in the last 4 years. Disregarding the subordinated loan from KfW in the amount of EUR 2.5 million that is due from 2017, at the end of 2011 ecotel had a net debt of EUR 0.5 million.This year we are planning to convert the net debt into net assets. Our goal for the medium term is to achieve triple digit sales and a two-digit EBITDA result. Flanked with additional investor relations measures, share buyback programs and planned payment of dividends, this should also be an additional boost to the ecotel stock.

"We want to differentiate ourselves from the competition with our service promise."

Thorsten Renzler

Department Head – Customer Service

Basically we are always reachable – around the clock, 365 days a year. We support our customers individually; not anonymously as a "number". In the Customer Relationship Management department compliance with and implementation of the services that we have contractually agreed with the customers, is our top priority. For questions regarding contracts, rates, and bills we can usually provide immediate assistance. In the case of technical faults, we get in touch with our Technical department and in a dialogue with our upstream suppliers do all we can to fi nd a solution for the customer.

We are not an external call centre, rather we act as a highly-effi cient team within ecotel. This means that we can directly ensure optimal response times and solutions for our customers hand-in-hand and directly with our other departments.

The ecotel stock

ecotel stock has been listed on the Frankfurt Stock Exchange since March 29, 2006. On August 6, 2007 it moved from Entry Standard to Prime Standard. The capital stock is 3,900,000 shares, of which the Company holds 147,500 of its treasury shares. Thus as of December 31, 2011 there were 3,752,500 shares outstanding.

Price trend 2011

In 2011 the stock market was impacted by the worldwide fi nancial crisis and debt crisis. Many indexes reported signifi cant losses over the course of the year. The DAX as the representative of the largecap companies lost 15 % in 2011, the TecDax lost approximately 20 % by the end of 2011.

The ecotel stock was able to avoid this negative trend. Ecotel stock opened the year at EUR 3.3. After the stock had developed over the course of the year until the 3rd quarter virtually, identical to the TecDax trend, starting in June, the ecotel stock climbed briefl y to over EUR 7, however it could not maintain this high level and closed the year at EUR 4.8. Overall the ecotel shares rose by 45 % in 2011.

Average daily trading of the stock in 2011 was 2053 shares per day compared with 1,100 shares per day in the previous year. At year end ecotel showed market capitalisation of EUR 18.0 million, at a share price of EUR 4.8 and 3,752,500 outstanding shares.

Investor relations

WKN	58543 4	of fi rs t listi Date ng	03/29 /2006
ISIN	DE000 58543 43	Numb er of share s	3,752 ,500
Symb ol	E4C	Daily tradin g volu me 20 11	2,053
		High share price 2011 (€)	7.1
Marke t segm ent starti ng 08 /08/2	007 Prime Stan dard	Low s hare p rice 2 011 (€ )	3.0
Index affi lia tion	CDAX , Prim e All S hare Techn ology All S hare	Marke italisa tion t cap as of ber 31 (€ m )* Decem , 2011	18.0
Class	ar val ue sh Non p ares	Close Broth Desig nated Spon sor	ydler ers Se Bank AG

Various investor relations activities were initiated in 2011. A PR road show was executed to raise the level of awareness of the company. Research coverage of the ecotel stock was provided by the analysts of the DZ Bank. In addition in 2011 ecotel presented itself at investor exhibitions, such as the CBS Small & Mid Cap Conference. Again, additional IR measures, such as participating in the Equity Forum, are

The ecotel stock

planned for 2012 to extend the contact to new interested investors. With all of these measures we want to intensify the dialogue with investors, analysts and journalists and further extend the trading volume of the ecotel stock.

Current information on the Company, such as quarterly reports, press releases, and fi nancial calendar, as well as analyst presentations can be accessed by all investors, immediately after they are published on the company's website.

Shareholder structure

In 2011 there was a signifi cant change in ecotel's shareholder structure. Private Value Media AG acquired the shares of the insolvent AVW Management-Beteiligungs AG, and holds 9.3 % of the company's shares. The company's other major shareholders are Peter Zils (CEO of ecotel) with a share of 25.6 %, Intellect Investment & Management Ltd. with 25.1 % and IQ Martrade Holding und Managementgesellschaft mbH with a share of 14.6 % of the voting shares. The diversifi ed holdings totalled 21.6 %.

Key performance indicators Ø 2011 Stock ownership (12/31/11) in percent

Business and general conditions

Over the last fi ve years the "revenue mix" of the business customer area has changed considerably. In 2006, ecotel still achieved approx. 94 % of business customer sales with pure preselect voice services. Now the successful marketing of full access lines has virtually replaced sales of connection minutes via preselection offerings. As part of the ongoing customer loyalty measures, for existing customers, a successive product change from preselection to ecotel full access lines will be executed. Currently preselection accounts for only approx. 26 % of business customer sales and will continue to decline in the future, due to the focussed product change and high rate of cancellations.

On the other hand the new product areas were able to signifi cantly extend their shares of total sales. In addition to ecotel full access lines, the data and VPN revenues, in particular, developed positively. With full access lines (43 %), data services (21 %), housing / hosting services (7 %), as well as mobile communications (3 %) promising and sustainable product areas already contribute 74 % to the B2B business customer revenue.

Depending on the target group, sales in the Business Solutions division are made via direct sales or partner sales with a total of 500 active sales partners. Thus ecotel has broad access to its target group of small and medium-sized business customers. In addition, ecotel has established itself as a successful partner in its collaboration with more than 100 buying associations and buying and marketing groups.

In the Business Solutions area the Company supplies more than 20,000 small and medium-sized companies with annual sales of EUR 40 million, from all industries with standardised and custom telecommunications solutions.

Wholesale Solutions

In the Wholesale Solutions division ecotel integrates the offerings for other telecommunications companies. In addition, the Company is active

1. ECOTEL – OVERVIEW

The ecotel Group (hereinafter "ecotel"), is a telecommunications company that has been active throughout Germany since 1998, that specialise in meeting the requirements of business customers. ecotel markets products and services via three divisions: Business Solutions, Wholesale Solutions and New Business.

Bus ine Sol utio duc t po rtfo lio of t he tel Gro ss ns pro eco up
		Voic ctio e co nne n	Full ss ( ISD N) o ctio keov er (I SDN ) n ta acce r co nne ● nbu ndle d lo cal loop wit h Vo IP or u
	Voic e	Tele pho ny	Min ute rate inut ckag r fl a t rat ● s, m e pa es o es
		Valu e-ad ded vice ser s	Serv ice n umb (080 0, 0 180 x, 0 900 ) ● ers
Fixe d-lin e	Data	Data tion con nec	via A DSL , SD SL, Ethe or l ed l ine rnet ● eas
		VPN / se curi ty	Sec rpris rkin g vi a IP VP N ente two ● ure e ne
		1 / ho Hos ting usin g	Hou sing of s r far and hos ting of s hare d erve ms ● ices in o pute ntre serv ur o wn com r ce
	Voic e		Attr activ obil unic atio inclu ding tes e m e co mm n ra ● odu cts (wir eline to m obil e) con verg enc e pr
Mob ile c om icati mun ons		Data	Data fl at d Bl ack berr lutio ns / rate s an y so ● iPho olut ions ne s

Business Solutions

In the core division, Business Solutions, ecotel offers small and medium-sized enterprises, as well as large customers throughout Germany an integrated product portfolio of voice, data and mobile services from a single source.

In the area of voice services ecotel has a complete portfolio of connection, telephony and value-added services. For the data products the offering extends from data connections such as ADSL, SDSL, leased lines, and Ethernet to secure enterprise networking via VPN, as well as the housing of server farms and hosting of shared services. (Software as a service, cloud computing). In addition, ecotel also markets its own mobile wireless products and offers business customers combined voice and data rates at fi xed prices.

in cross- network trading of telephone minutes (wholesale) for national and international carriers; for this ecotel maintains network interconnections with approximately 100 international carriers. ecotel also handles the majority of its business customers national and international telephone calls via the wholesale business. The mvneco GmbH holding, as a technical service provider or enabler for mobile communications, is assigned to the wholesale segment.

New Business

The new high growth business segments of ecotel are combined in the New Business division. These include nacamar GmbH with its streaming business for media companies, as well as easybell GmbH with the private customer business.

Infrastructure

ecotel is "lean" and effi ciently aligned on the infrastructure side.

ecotel does not operate its own access network, but rather procures the TC call origination services from various upstream suppliers and can select the operator with the best price / performance ratio. Deutsche Telekom (DTAG), Vodafone, Versatel, Telefonica, QSC and Eplus can be cited as typical upstream suppliers. For ecotel the majority of the cost basis is variable due to customer-related purchase of the call origination service.

ecotel has its own computer centre on the campus of Europe's largest Internet node in Frankfurt a.M. and maintains its own central voice and data backbone network to ensure optimal network interconnection with all major global carriers.

For the new media business the Group maintains its own content delivery network (CDN). mvneco GmbH operates a central mobile communications platform.

On the IT side, ecotel maintains its own systems for order management and billing.

2. LEGAL FRAMEWORK OF THE COMPANY

The voting shares issued by ecotel communication ag are approved on the regulated market of the Frankfurt Stock Exchange (subsegment Prime Standard). The regulated market of the Frankfurt Stock Exchange is an organised market as defi ned in § 2, para. 7 of the German Securities Acquisition and Takeover Act (WpÜG).

Management body

The legal management and representative body of ecotel communication ag is the management board of the Company. In accordance with § 5 of the articles of association of the Company, the management board consists of at least two persons. In all other aspects the supervisory board determines the

number of members of the management board. The supervisory board can appoint a chairman of the management board as well as a deputy chairman of the management board. Deputy members of the management board can also be appointed. Members of the management board are appointed for the term of fi ve years. A repeat appointment or extension of the term of offi ce is permitted for a maximum of fi ve years. The supervisory board can revoke the appointment as member of the management board and the appointment as chairman of the board if there is an important reason. According to the articles of association of the Company the supervisory board issues rules of procedure for the management board. This has been done by the supervisory board. specifi ed annually by the supervisory board. Payment of the variable portion is coupled with sustainable enterprise development over three years and occurs only in the amount of the portion that has already been verifi ably earned at this point in time. ecotel has taken out a directors and offi cers insurance policy (D&O insurance) with an appropriate deductible for the members of the management board. In addition, two members of the management board participate in the Company's stock options program. Members of the supervisory board receive a fi xed and a variable annual remuneration. In addition ecotel has also taken out a directors and offi cers insurance policy (D&O insurance) with an appropriate deductible for members of the supervisory board.

Remuneration of executive bodies

According to § 6, para. 1 of the articles of association of the Company, ecotel is legally represented by two members of the management board or by one member of the management board together with a Prokurist (signatory authority). The supervisory board has availed itself of its authorisation and determined that each member of the management board has the right to represent the Company alone. Currently the management board of the Company is comprised of Mr. Peter Zils (CEO), Mr. Bernhard Seidl (CFO) and Mr. Achim Theis (CSO). The total remuneration of the executive bodies, as well as the individual remuneration of the members of the management board and advisory board are listed in the notes to the consolidated fi nancial statement (comment [29], "Executive body remuneration"). Changes in the articles of association Every change to the articles of association in accordance with § 179 requires a resolution of the

Annual General Meeting. Exceptions to the above are changes in the articles of association that only affect their wording; for such changes the supervi-

Capital structure

Share capital

The capital stock of the Company is EUR 3,900,000.00. The capital is divided into 3,900,000 bearer shares. The shares are issued as no-par value shares with a proportional amount of the capital stock of EUR 1.00. The capital stock of EUR 3,900,000.00 is completely paid in. Each no-par value share grants one vote in the Annual General Meeting. Voting right restrictions do not exist. Currently ecotel holds 147,500 treasury shares so that the issued capital is EUR 3,752,500 in the balance sheet. Different voting rights relative to the shares do not exist. The Company's management board is not aware of any restrictions that affect voting rights or transfer of shares, as can occur, for example, due to agreements between shareholders.

Authorised capital

With the shareholders' resolution of July 27, 2007 the management board of the Company is authorised with the consent of the supervisory board to increase the capital stock one time or multiple times by a total of up to EUR 1,750,000.00 against cash and / or investments in kind through the issue of new no-par value bearer shares, until July 26, 2012. The number of shares must increase in the same ratio as the capital stock increases. In the 2011 business year the management board did not avail itself of this authorisation.

Conditional capital

The Annual General Meeting of July 27, 2007 resolved on the conditional increase of the capital stock by up to EUR 1,500,000.00 through issuing up to 1,500,000 no-par value bearer shares (conditional capital I). The conditional increase in capital serves the sole purpose of enabling the Company or a directly or indirectly associated company to issue shares to the holders of options and / or convertible bonds based on the authorization of the Annual General Meeting held on July 27, 2007 in return for cash paid in by July 26, 2012. In the 2011 business year the management board did not avail itself of this authorisation.

Moreover the Annual General Meeting of July 27, 2007 voted to authorise the creation of conditional capital to serve the 2007 stock option plan. Under this resolution the capital stock of the Company may be increased by up to EUR 150,000.00 through the issue of up to 150,000 no-par value bearer shares (conditional capital II). The conditional increase in capital serves exclusively to fulfi l option rights that were granted by the authorization of the Annual General Meeting of July 27, 2007, which last until July 26, 2012. In the fi nancial years 2009 – 2011 the success goals for exercise of the issued 145,000 options were not achieved and the granted options are forfeited.

Authorization to acquire treasury shares

With the resolution of July 30, 2010, the Annual General Meeting authorised the Company to acquire treasury shares up to a total of 10 % of the capital stock existing at the time the resolution was passed. The authorisation may not be used by the Company for the purpose of trading in treasury shares. In combination with the other shares owned by the Company or shares that are allocated to it in accordance with § 71a ff. of the German Stock Corporation Act (AktG), at no point in time may the acquired shares amount to more than 10 % of the capital stock. The authorisation to purchase treasury shares runs until July 29, 2015. In the 2011 fi nancial year the Company did not avail itself of the authorisation to acquire and use treasury shares. As of December 31, 2011 ecotel held 147,500 treasury shares.

Capital holdings and control rights

The table below shows the names of the shareholders, who owned more than 3 % of the capital stock at the end of 2011. Different voting rights relative to the shares do not exist.

the direct or indirect ecotel stake in nacamar GmbH must not underrange a share of 75 % of the capital stock. Additional agreements between ecotel and other persons who could be affected by a change of control as a result of a takeover bid, do not exist. For the members of the ecotel management board there are no agreements that foresee compensation in the event of a takeover.

In the event of a change of control at ecotel communication ag or ecotel private GmbH, the second shareholder of easybell GmbH, Consultist GmbH, has the right to acquire up to a 51 % investment in easybell GmbH from ecotel communication ag or ecotel private GmbH. The purchase price must correspond to the market value of the partial investment.

3. STRUCTURE AND HOLDINGS OF THE COMPANY

As parent company, ecotel communication ag is headquartered in Düsseldorf. In 2011 the Company employed 160 staff members, including the management board and trainees without its subsidiaries; this was 3 more employees than at the end of 2010. The subsidiaries of ecotel communication ag are located in Germany and in 2011, including managing directors and interns employed an average of 56 employees (compared with 52 employees at the end of 2010). Effects of potential takeover bids Loans from individual banks are granted on the basis that the stake in ecotel held by Mr. Peter Zils does not underrange a share of 25 % plus a vote of the capital stock during the entire term of the loan contract or is not wholly given up. Moreover

There are no owners of shares with special rights that grant control authority. There is no voting right control for the case that employees hold Company shares and do not directly exercise their control rights.

Sha reho lder	Sha hip ( in % ) re ow ners
Pete r Zils	25.6 4 %
Intel lect Inve stme nt & Man ent L td. agem	25.0 9 %
IQ M artra de H oldin d g un Man entg esel lscha ft mb H agem	14.5 6 %
PVM Priv ate V alue s Me dia A G	9.31 %
of th e Co Rete ntion ny's sha mpa own res	% 3.78
Tota l	78.3 8 %

nacamar GmbH

nacamar GmbH was originally founded in 1995. The company traded under the name World Online, and later as Tiscali Business GmbH. After ecotel acquired 100 % ownership of the company in 2007 and merged the company's B2B business into the parent company in 2009, nacamar now trades as an autonomous service provider in the new media business and offers companies in the media industry a broadbased offering of media applications. These include processing as well as streaming of audio and video content for a wide variety of end devices, management of media libraries for companies, as well as autonomous advertising marketing. nacamar operates its own content delivery network (CDN), as well as the largest German radio streaming platform (free-stream) in the Group's own computer centre with connection to all important national and international networks. Nacamar GmbH is headquartered in Düsseldorf and in 2011 employed an average of 17 employees (previous year: 17 employees).

ecotel private GmbH

Ecotel private GmbH is a wholly-owned subsidiary of ecotel. The company was founded in 2003 and sells voice services to private customers. ecotel private GmbH is headquartered in Düsseldorf. ecotel private GmbH holds 51 % of the shares of easybell GmbH.

easybell GmbH

Easybell GmbH is headquartered in Düsseldorf and in 2011 employed an average of twelve full-time employees. The company offers aggressively-priced telecommunications products to technically oriented private customers. Presently easybell GmbH is active in the areas of fi xed-line connection, voice as well as DSL. Sales are primarily executed via telecommunications price portals. In addition, the enterprise holds 100 % of the shares of Sparcall GmbH, which markets the Call-by-Call number "01028" to carrier-services.de GmbH, which offers the Call-by-Call numbers "010010" and "01041", (Tellina). In November 2011, init.voice GmbH, was founded with headquarters in Berlin for execution of the voice over IP services, in which, easybell, in turn holds 100 % of the shares.

mvneco GmbH

Together with other consortia partners ecotel founded mvneco GmbH in April 2007 with headquarters in Düsseldorf. ecotel holds 48.7 % of the company's shares. In 2011, the mvneco GmbH employed 13 employees on average. The company functions as a technical service provider and as a so-called virtual network enabler (MVNE) enables entry into the mobile communications market for other telecommunications companies, such as ecotel communication ag. In this regard the technical platform of mvneco GmbH is connected to the switching network of a mobile communications network operator (e.g. E-Plus), which makes it possible for the company to offer its own mobile communications services.

toBEmobile GmbH

In October 2011, ecotel sold the toBEmobile GmbH shares to André Borutta.

PPRO GmbH

Likewise, in December 2011 the remaining PPRO GmbH shares, Bad Nailbrush's, were sold to Nieland Technologies GmbH.

i-cube GmbH

In November 2011 ecotel sold the operative business activity of i-cube GmbH, Düsseldorf, to infi nity3 GmbH, Bielefeld. Subsequently ecotel purchased the outstanding shares of i-cube GmbH, in order to merge the company with ecotel in accordance with the merger agreement February 2, 2012, at the carrying amount.

4. CORPORATE MANAGEMENT OF THE GROUP

ecotel manages the three business units in accordance with the overall strategic alignment of the Group. There is overall budget planning, into which the annual budgets of the business areas, as well as the Group companies fl ow. Planning is on the product level in accordance with the cost-driver process. In this process direct variable costs are allocated to the earnings types per product and a gross margin is determined for each product. Productoverlapping direct costs, as well as personnel costs are planned separately. Reporting during the year occurs monthly on the sales, earnings, and cash fl ow level per area with detailed analysis of the deviations relative to planning and the previous year, as well an analysis of the deviations to a regularly updated forecast to the end of the fi nancial year. In addition there is continuous monitoring of liquidity and working capital. Area-specifi c key indicators (e.g. minute volume, price per minute, purchasing margin, quantity structures) that are mapped in a reporting system are used for control.

5. RESEARCH AND DEVELOPMENT

In 2011 the capitalised development expenses of ecotel (TEUR 174) essentially relate to in-house developed software solutions and product developments. At ecotel communication ag these were primarily the order processing system for fi xed-line, data and mobile communications, as well as new interfaces to additional upstream suppliers. For nacamar GmbH the developments essentially included the user statistics, http caching, as well as the customer portal.

6. MARKET AND COMPETITIVE ENVIRONMENT

According to the German Statistical Offi ce (Statistisches Bundesamt), economic growth in 2011 was 3.0 % – after growth of 3.6 % in the previous year. At the end of 2011 German economic strength experienced a slight setback. The gross domestic product (GMP) declined by 0.2 % in the last quarter of 2011, compared to the previous year. For 2012 the leading economic research institutes expect growth of 0.6 %.

Telecommunications market volume also dropped in 2011

In 2011 the total market for telecommunications services (including cable networks) in Germany declined by 0.8 % from EUR 60.8 billion to EUR 60.3 billion (source: VATM-Marktanalyse 2011, p. 5). At the same time the proportion of alter native competitors on the total market increased from 58 % to 59.4 %.

The fi xed-line market, consisting of access, voice and data services with external sales of EUR 32.6 billion represents 54 % of the total market for telecommunication services.

In 2011 mobile communications revenues increased from EUR 24.2 billion to EUR 23.9 billion, essentially driven by the signifi cant decrease in the average prices per minute. At the end of 2011 the number of activated SIM cards was slightly above the previous year's number at approx. 111 million SIM cards.

In the meantime the alternative competitors in the fi xed-line have switched more than 15 million of their own telephone connections (including the voice accesses via cable TV networks) and thus with 39 million telephone connections have a market share of almost 40 % (source: VATM-Marktanalyse 2011, p. 12). However, while the number of classic full-access lines is currently decreasing slightly, signifi cant growth is observed for unbundled voice over IP connections and for cable TV full access lines.

At the end of 2011 in Germany there were more than 27 million broadband access lines, compared with 26 million broadband access lines at the end of 2010. In this regard 9 million connections (34 %) were for unbundled subscriber access, 2 million connections (8 %) were for resale DSL / wholesale DSL / IP bit stream, 12 million connections (44 %) to DTAG, as well as 4 million connections (13 %) to cable TV. 0.3 million households (1 %) have now been connected via a broadband optical fi bre access. DTAG's competitors have a market share of 55 % (source: VATM-Marktanalyse 2011, p. 13).

The share of competitors to DTAG in the traffi c volume for voice services has signifi cantly increased in recent years, this is essentially due to the increasing share of competitors for its own full access lines, whose share of the overall traffi c volume in the German fi xed-line network was 64 % in 2011. In the meantime the proportion of voice connection minutes via full access lines of the total volume of fi xed-line minutes that are realised by the competitors was almost 84 %. On the other hand the volume for Call-by-Call (VNB preselection from the DTAG network) declined sharply (source: VATM-Marktanalyse 2011, p. 10).

Trends in the B2B market

Similar to the situation in the previous year, in the business customer segment (B2B) in Germany, the revenue trend declined, essentially driven by the continuing high intensity of competition. In addition the traditional voice technology is increasingly being replaced by voice over IP solutions.

Important TC trends for the future in the business customer area are the continuous extension of broadband Internet accesses, both via fi xed-line (VDSL, FTTH), as well as via mobile communications (HSPA + LTE), the shift of telephone systems into the network (hosted PBX / IP Centrex), as well as the strong convergence of telecommunications and IT.

The most signifi cant current IT trend is "cloud computing" with its forms, infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS). Essentially this involves the shifting of local computing services (hardware) and application programs (software), as well as data storage (content) into secure computer centres on the Internet, that the user accesses via secured broadband connections.

Other important TC trends are mobile applications, IT security, social media, virtualisation, business intelligence, IT outsourcing, business process management, smart metering, and M-payment (source: Bitkom, 37. Branchenbarometer).

Regulatory trends

As a telecommunications company, ecotel is subject to oversight by the German Federal Network Agency for Electricity, Gas, Telecommunication, Post, and Railroad (BNetzA). The BNetzA promotes the liberalisation and the opening of the market in the telecommunications sector.

Important current topics are:

Acceleration of the extension of high- performance public telecommunications networks of the next generation, including improved basic conditions for competition-conformant infrastructure investments
Assurance of a full-coverage basic supply of the same type of telecommunications services (universal services) in urban and rural areas, including broadband connections, at affordable prices
Network neutrality (i.e. equal and unchanged transmission of data packets through carriers, regardless of where these packets come from, or which applications have generated these packets)
Strengthening consumer protection relative to the length of time that data traffi c is saved

The amendment to the Telecommunications Act was passed at the beginning of 2012. The most important contents are:

Investment-friendly regulatory principles (consideration of regional particularities, investment risks, enterprise cooperations through the German Federal Network Agency for Electricity, Gas, Telecommunication, Post, and Railroad (BNetzA)
Increase in the planning security of enterprises (e.g. companies have the right to receive information concerning the general regulatoryconditions for extension of the network)
Joint use of alternative infrastructures (e.g. sewerlines, energy networks) and obligation to tolerate on the part of property owners
Microtrenching (installation of optical fi bre lines at a low depth)
Strengthening of consumer rights (including freeof-charge on-hold loops, blocking of added value service numbers for mobile phones, facilitation of changing the TC provider, shorter contract terms, price announcement for call-by-call, strengthening of data privacy, e.g. for mobile phone positioning)

As part of the EU roaming ordinance it is expected that in 2012 and coming years voice and data roaming rates will be further reduced.

7. BUSINESS DEVELOPMENT 2011

A brief overview of the most important events in the ecotel fi nancial year 2011 is provided below.

business customers in Germany (so-called on-net areas). With the purchase of these full access lines, ecotel procures the ISDN voice and data connections with an attractive wholesale discount and thus sustainably reduces its cost basis in on-net areas by 35 % compared with purchase via the previous upstream supplier, DTAG. In addition, costs for the delivery of the voice traffi c are dispensed with, because delivery occurs in the local exchange carrier's (LEC) own network. On one hand these savings increase ecotel's profi tability and on the other hand they mean that ecotel can market new products to existing customers and new customers at attractive conditions.

Successful marketing of full access products Since the end of 2009, ecotel has been marketing ISDN voice and data connections (so-called full access lines) based on the infrastructure of Versatel AG and Vodafone D2 GmbH, and thus with these connections, covers more than 70 % of the On February 24, 2011 the German Federal Network Agency (BNezA) announced its fi nal rate approvals for mobile termination fees, which will remain in effect until November 30, 2012. The resulting halving of mobile termination fees for 2011 was one essential driver for the increase of ecotel's gross profi t last year.

Thus the full access product represents the new basis of the ecotel business and signifi cantly contributes to the increase in gross profi t in the business customer segment. At the end of 2011, 13,000 orders for full access lines were active, which have been realised via alternative upstream suppliers.

Successful marketing of data and VPN products

In 2011 ecotel was able to report signifi cant successes in the marketing of its data products. Among other things 135 new broadband Ethernet lines and 250 SHDSL lines were implemented in 2011. In addition, ecotel was able to win a large order from ING DiBa for connecting more than 1,200 ATMs in 2011.

Improvement of the cost basis through lower mobile communications termination rates

Consolidation of additional subsidiaries

With the sale of the stake in toBEmobile GmbH, and the stake in PPRO GmbH, ecotel has further adapted the scope of the investment portfolio to the overall strategic alignment of the company. This also includes the sale of the business activity of i-cube GmbH and its subsequent merger with the company.

Marketing of new private customer products

Effi ciency increases of internal and external business processes

Continuation of the IT system consolidation, as well as commissioning of the automated provisioning interface with Vodafone, resulted in more effi cient order processing. Moreover, currently more and more processes are being executed paperless. The increased effi ciency on the system side went hand-in-hand with a new order management system to improve customer satisfaction. The complete activation process (order check, order confi rmation, schedule confi rmation, quality call, fi rst invoice check) for new products and the associated communication between ecotel and the end customer occurs via fi xed contact persons (Contract Ownership).

1. EARNINGS AND PERFORMANCE

In 2011 the Group achieved revenue of EUR 84.5 million (previous year: EUR 98.3 million). The decline in revenue is essentially attributed to the Wholesale area, and secondly the business customer area and New Business area. Gross profi t (sales revenue minus cost of materials) increased relative to the comparable period of the previous year by 7 %, from EUR 22.9 million to EUR 24.6 million. The reason for the improvement in the cost basis was the improved purchasing conditions for mobile communications as well as the further progression of the migration process of preselection customers to full access products. Compared with the previous year the gross profi t margin increased from 23 % to 29 %.

Increasing gross pro fi ts in the business customer segment

Declining sales in the reseller segment

The business unit Wholesale Solutions contributed to total revenue, with 36 % (previous year: 39 %) and to total earnings with 6 % (previous year: 6 %). Revenue in this segment declined by 21 %, from

The Business Solutions segment achieved a share of 49 % (previous year: 46 %) of total gross profi t and a share of 76 % (previous year: 76 %) of the gross earnings of the ecotel Group. Sales in the business customer segment were EUR 41.6 million, compared with EUR 44.8 million in the previous year. The 7 % decline in sales relative to the previous year period is due to the continuing loss of customers in the classic preselection business, which in 2011 could not be adequately compensated through new business with full access lines, data products and mobile communications products. In 2011 gross earnings were EUR 18.7 million – after EUR 17.5 million in the previous year, which corresponds to an improvement of 7 %. Compared with the previous year the gross profi t margin increased from 39 % to 45 %.In 2011 other operating income was EUR 1.6 million (previous year: 1.0). Essentially the increase is attributed to the sale of the i-cube business activities to infi nity3 GmbH. Higher personnel expenses and other operating expenses Personnel expenses increased in 2011 by EUR 0.2 million, from EUR 9.5 million to EUR 9.7 million. The number of employees of the ecotel Group increased to 214 (previous year: 206). Other operating expenses declined slightly from EUR 9.7 million to EUR 9.5 million.

EUR 38.7 million to EUR 30.6 million. The decline is due to the reduction of the mobile communication termination rates, which are forwarded 1:1 to other carriers and thus result in a correlating reduction in revenue. Gross profi t increased slightly from EUR 1.3 million to EUR 1.4 million. This corresponds to a gross profi t margin of 5 %.

Gross pro fi t constant in the New Business unit

The business unit New Business contributed with 15 % (previous year: 15 %) to total earnings, and with 18 % (previous year: 18 %) to total gross earnings. Compared with the previous year, New Business revenue declined from EUR 14.8 million to EUR 12.3 million, essentially caused by the decline in the call-by-call voice volume. Gross profi t increased from EUR 4.2 million to EUR 4.5 million. This corresponds to a gross profi t margin of 37 %.

Other operating income higher

Earnings, fi nancial and asset position

Earnings, fi nancial and asset position Group management report

Signifi cant improvement of EBITDA and EBIT

EBITDA increased in 2011 by 45 %, from EUR 4.9 million to EUR 7.1 million as compared to the previous year. This corresponds to an EBITDA margin of 8.3 % (previous year: 5.0 %). A special effect due to the higher other operating expenses in the amount of EUR 0.5 million is included in the EBITDA.

Scheduled depreciation remained at the previous year's level at EUR 3.3 million. Of which EUR 1.7 million was scheduled depreciation of intangible assets, such as development costs and client bases, and EUR 1.6 million for scheduled depreciation of property, plant and equipment.

The non-scheduled depreciation in the amount of EUR 0.6 million was essentially comprised of EUR 0.4 million depreciation on the goodwill of the nacamar subsidiary, which was based on the fact that a large broadcast customer unexpectedly changed to the streaming framework agreement of a different television station with a new upstream supplier in the second quarter of 2011, as well as depreciation on other intangible assets in the amount of EUR 0.1 million, and depreciation on short-term fi nancial assets in the amount of EUR 0.1 million.

EBIT was EUR 3.1 million, after EUR 1.5 million in the previous year. This represents an increase of 106 %.

The fi nancial result in 2011 was EUR - 0.4 million after EUR - 0.7 million in the reference period 2010. It includes interest expenses in the amount of EUR 0.3 million, as well as a provision for anticipated losses for the negative cash value of interest rate swaps in the amount of EUR 0.1 million.

The tax expense for 2011 was EUR 1.0 million and is comprised of EUR 0.5 million effective tax expenses and EUR 0.5 million deferred tax expenses due to utilisation of the losses carried forward.

The 2011 consolidated net income before minority interests was EUR 1.7 million, after EUR 0.3 million in the previous year. The 2011 consolidated net income after minority interests was EUR 1.1 million (previous year: EUR 0.1 million). This corresponds to earnings per share of EUR 0.29 (previous year: EUR 0.02). Without deferred taxes the result would have been EUR 0.43.

Comparison of the forecasts with the actual business trend

At EUR 84.5 million, actual revenues achieved were within the EUR 80 – 90 million range forecast as of June 30, 2011.

Compared with the planned values of EUR 5.5 to 6.5 million, EBITDA of EUR 7.1 million was signifi cantly above this range.

The Company was also able exceed the planned reduction in net fi nancial liabilities to under EUR 3 million, which were EUR 0.5 million as of the key date.

2. FINANCIAL POSITION

Cash fl ow from operating activities for 2011 was EUR 6.3 million, compared with EUR 5.3 million in the previous year. Working capital (the difference between receivables and liabilities) increased slightly by EUR 0.5 million compared with the previous year.

Cash fl ow from investing activity in 2011 was EUR -1.6 million after EUR -1.8 million in the previous year. It is essentially comprised of investments of EUR 0.7 million in software licenses and in-house developed software, as well as investments of EUR 1.0 million for servers, network and computer centre infrastructure, as well as proceeds from the sales of fi nancial assets in the amount of EUR 0.1 million.

EUR 24.5 million. Goodwill decreased due to the special depreciation of EUR 11.8 million. The value of the customer relations was reduced due to the ongoing depreciation of EUR 3.8 million to EUR 3.1 million. Current assets (without net cash) were reduced from EUR 15.6 million to EUR 14.7 million.

On the liabilities side equity increased by 7 % from EUR 20.0 million to EUR 21.4 million. Thus the equity ratio rose from 41 % at the end of 2010 to 47 % at the end of 2011. Non-current provisions and fi nancial liabilities decreased from EUR 6.2 million to EUR 7.6 million, of which EUR 1.0 million were due to deferred income tax. Non-current provisions and liabilities decreased from EUR 22.6 million to EUR 16.1 million at the end of 2011, essentially due to the fi nal amortisation payment of the investment loan in the amount of EUR 4.6 million, from EUR 22.6 million to EUR 16.1 million. At the end of 2011 net fi nancial liabilities (fi nancial liabilities minus net cash) were EUR 3.0 million with consideration of the equity-like nature of the KfW subordinate tranche (EUR 2.5 million) were EUR 0.5 million, which is equivalent to a reduction by EUR 4.1 million compared with the previous year.

4. GENERAL STATEMENT OF THE ECONOMIC SITUATION OF THE GROUP

In 2011, cash fl ow from fi nancing activity was EUR -4.5 million as it was in the previous year, and includes repayment of fi nancial credits in the amount of EUR 7.5 million, repayment of a shareholder loan in the amount of EUR 0.2 million, repayment of leasing liabilities in the amount of EUR 0.3 million, the assumption of new fi nancial credits of EUR 4 million and interest payments in the amount of EUR 0.5 million.

Cash and cash equivalents increased slightly from EUR 6.1 million at the beginning of 2011 to EUR 6.2 million at the end of 2011.

The economic situation of the ecotel Group improved signifi cantly compared to the previous year. The positive development of the earnings situation, which formed the basis for the successful reduction in fi nancial liabilities and the associated boost to the fi nancial results, contributed in this regard. On the assets side the non-current assets were reduced by 10 %, from EUR 27.1 million to

ecotel has a revolving credit facility of EUR 2.9 million. Of which, at the end of 2011, EUR 1.6 million was used as surety for payment. Thus EUR 1.3 million was still available.

As in previous years, the Company was able to honour its payment obligations without restriction and on time.

3. ASSET POSITION

As of December 31, 2011, the balance sheet total was EUR 45.4 million, which corresponds to a reduction of 7 % relative to EUR 48.8 million as of December 31, 2010. The decline in the balance sheet total is essentially due to depreciation of intangible assets (e.g. customer base) as well as repayment of the fi nancial credits, both of which resulted in a balance sheet contraction.

Earnings, fi nancial and asset position Group management report

Supplementary report

After conclusion of the fi nancial year there were no noteworthy changes in the boundary conditions. The economic environment did not change to a degree that had an effect on the business activities of ecotel, nor has the industry situation become different than it was as of December 31, 2011. The merger of i-cube GmbH with ecotel must be cited as a signifi cant business transaction since the balance sheet key date. The merger contract in this regard, is dated February 7, 2012, the trade register entries of February 11/16, 2012 for the acquiring or transferring legal entity. Thus economic and legal ownership of the asset objects and debts transitions to ecotel in fi nancial year 2012. The merger has no effect on the assets position, fi nancial position, or earnings situation of the Group.

Risk report

1. RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

For early identifi cation and evaluation of entrepreneurial risks and risks that threaten the existence of the Company, as well as for correct handling of such risks, ecotel uses an appropriate risk management system.

Group-wide responsibility for early identifi cation of risks and implementation of measures to counter these risks rests with the management board. For continuous identifi cation and evaluation of risks in the company, the managing directors of the subsidiaries, as well as the members of the ecotel management team assist the management board in this regard.

With the aid of a quarterly risk report the management board and the supervisory board track the identifi ed risks with reference to planned earnings throughout the entire year. In this regard the focus is on identifi cation of the need for action and the status of the measures implemented for systematic control of the identifi ed risks. All material risks are listed that could jeopardise earnings and the existence of the Company, in the form of a risk matrix. All potential risks are evaluated according to their probability and the possible extent of damage. In addition, the risks are quantifi ed relative to the planned earnings of the Company as potential risk, the control measures that have been implemented are included. the IFRS preparation of fi nancial statements as well as for more complex accounting issues. The same applies for preparation of the tax return. In addition the central key fi nancial fi gures are monitored by a regular target / actual comparison with deviation analysis. 2. RISKS OF FUTURE DEVELOPMENTAs part of the business activity ecotel is confronted with operative risks, fi nancial risks, strategic risks, and with risks of the market development. Operative risks Operative risks are of a more short-term nature and for ecotel are concentrated on possible failures, errors and capacity bottlenecks of the infrastruc-

authoritative for the enterprise; the internal control system is revised at regular intervals. The risk of fi nancial reporting is that the annual reports and interim reports could contain incorrect presentations that could possibly have a material infl uence on the decisions of those to whom these reports are addressed. Our accounting-based internal control system is designed to identify possible error sources and to limit the risks resulting from these error sources. To assure the correctness and reliability of the accounting, the internal control system is designed in such a manner that for all material business transactions the dual-control principle is used and that a functional separation between the departments is maintained (creditors, debtors) in the bookkeeping. Account assignment guidelines are used for correct accounting. External service providers are used for

deviation from the plan. Finally, after every potential ecotel maintains an internal control system (ICS) to assure the effectiveness and profi tability of the business activity, the correctness and reliability of the internal and external accounting, as well as for compliance with the statutory regulations that are ture (e.g. backbone, computer centre, switching technology, server farms) as well as on correct and prompt handling of processes that are critical for the enterprise in the areas of provisioning, invoicing, receivables management, as well as customer support.

Assurance of the highest possible availability of infrastructure through appropriate system redundancies both on the switching technology side and on the line side, is one of the most important measures that ecotel consistently implements to prevent risks. The implications of a possible failure of the company's own switching technology are minimised in that only the international B2B traffi c, as well as the wholesale traffi c is terminated via the Group's own switching systems, and the major portion of the B2B voice traffi c remains in the networks of the upstream suppliers. For mobile communications traffi c there is a fall-back scenario that routes the traffi c via the network of the upstream supplier, if our own network fails. In the area of availability of the server farms of the nacamar content delivery network, the server farms were completely duplicated in separate facilities.

In the area of the computer centre infrastructure, there are potential risks of failure of the air conditioning system and emergency power supply. The emergency power supply is structured redundantly, in the area of the air conditioning technology, in 2012, a n+1 redundancy will be implemented. Moreover, in the future free-air cooling will be implemented, which will further increase the energy effi ciency of the computer centre, and reduce the risk due to possible increases in power prices. Risks of external capacity bottlenecks for the power supply of the computer centre in Frankfurt / Main continue to exist; these risks can possibly cause hindrances for future customer growth. Because possible expansion measures in the power supply are associated with signifi cant investments, this project will only be undertaken when there is appropriate additional capacity demand on the part of customers.

The dependency of ecotel on DTAG could be reduced in the area of the connection transfer, if ecotel uses the connection transfer via DTAG only in so-called Off-Net regions where alternative subscriber operators (Vodafone, Versatel) do not have their own network (approx. 30 % of German business customers).

In addition, ecotel strives to distribute the know-how for handling enterprise-critical processes over multiple employees to avoid generating an excessive dependency on individual key persons.

Financial risks

For ecotel fi nancial risks include credit risks, liquidity risks, as well as interest risks.

As part of the acquisition fi nancing ecotel has agreed with the fi nancing credit institutions on fi nancial covenants that are usual in the market, that are based on the relationship of specifi c fi nancial key indicators. The IFRS consolidated fi nancial statement prepared by ecotel serves as the basis for determination of the key performance indicators. A violation of the covenants could possibly result in cancellation and premature payback of the investment loans and revolving credit facilities and thus could entail a signifi cant worsening of the liquidity position of ecotel, if an agreement concerning an adaptation of the fi nancial covenants or refi nancing cannot be achieved. For all three of the current covenants ( equity ratio (TARGET: > 25 % / 35 %; ACTUAL: 47 %), net fi nancial liabilities EBITDA (TARGET: < 2.5; ACTUAL: 0.08), EBITDA / sales revenue (TARGET: > 5 %; ACTUAL: 7.6 %)) ecotel is clearly within the intervals specifi ed by the fi nancial covenants. The enterprise assumes, that in 2012 all covenant threshold values will safely be complied with.

At year end 2011 ecotel had net cash in the amount of EUR 6.2 million. Net liabilities at year end were EUR 3.0 million (after EUR 7.1 million in the previous year). Of which EUR 2.5 million related to a subordinate tranche. The Company assumes that the available cash on hand and the anticipated capital accrual from the ongoing business activity suffi ce to fi nance the further enterprise strategy and at the same time reduce the net debt to zero. As an additional liquidity reserve ecotel has a revolving credit facility of EUR 2.9 million. Of which, at the end of 2011, EUR 1.6 million were used as surety for payment.

Presently a legal dispute is underway that has been initiated against nacamar GmbH for the non-acceptance of hardware equipment. The disputed value is 166 TEUR.

In addition, a legal dispute against ecotel, initiated by DTAG is underway for additional claims that are disputed in ecotel's view. The disputed value is 500 TEUR. For this the company has taken the precautionary measure of forming an appropriate provision. Due to the uncertainty of the outcome of the legal dispute, the possibility cannot be excluded that the claim that may possibly be asserted could exceed the amount of precautionary measure that has been initiated.

Possible payment fl uctuations for interest due to changes in the interest rate will be limited by the fact that ecotel has concluded interest rate swaps of fi xed-rate loans for the outstanding loan amounts.

Strategic risks

Strategic risks are more of a medium-term nature and are based on the strategic enterprise alignment of purchasing, products, sales, technology and IT.

Dependence on suppliers is reduced by the fact that a two-supplier strategy is maintained for essential products.

One strategic risk continues to be the high level of willingness of preselection customers to change to bundle products of other providers and the associated decline in the customer base that could not yet

be adequately compensated through our own new products. Should ecotel not succeed, for example in more strongly binding its customers through its own competitive bundle offerings and thus show a lower attrition rate, this could also have signifi cant disadvantageous effects on the asset, fi nancial, and earnings situation of ecotel.

Worsened future prospects could also possibly result in special depreciation of the value of the shareholder loan to mvneco GmbH (EUR 1.6 million). This could occur if the platform services offered by mvneco would become obsolete in the future, if its customers (versatel, ecotel, etc.) could not extend their contracts, because in turn, their IN-MVNO contracts with E-Plus, as supplier of the necessary mobile communications solution, would not be extended in 2013 and for this reason they would be compelled to move to alternative contract models (e.g. service providing). In such a case the shareholders of mvneco, with due consideration of the different interests would have to decide which of the other business fi elds (managed services / consulting) would enable the company to continue to act successfully for the future. Overall it remains to wait and observe how the market for technical enabling models in mobile communications develops in the future and how the current positive business development is impaired by this situation.

For nacamar GmbH the risk exists that in the event of an inadequately positive development of the company in 2012, special depreciations of the goodwill of the company (EUR 2.9 million) could become necessary.

Risks of the market environment

Other essential risks that could entail a signifi cant worsening of the economic position of ecotel are market-related and industry-related.

The telecommunications industry is characterised by intensive and price-aggressive competition. The existing cut-throat competition in the private customer segment could expand with even more intensity into the business customer segment in the future. A signifi cant consolidation of the telecommunications industry could have negative effects on the asset, fi nancial and earnings situation of ecotel, as dependence on individual suppliers would increase.

Moreover, due to the rapid pace of technological change new products and business models are created. The possibility cannot be excluded that in this manner the ecotel products will become less competitive and thus less in demand. Consequently ecotel continuously monitors the market environment in order to react quickly and effectively to technology changes.

The existing general regulatory conditions, which are materially infl uenced by decisions of the German Federal Network Agency for Electricity, Gas, Telecommunication, Post, and Railroad (BNetzA), and through other consumer protection measures, could also change to the disadvantage of ecotel's business activities and bring about negative business-relevant changes.

Overall risk can be calculated

In summary, ecotel is convinced that the material risks cited above neither individually nor collectively concretely jeopardise the continued existence of the Company and that ecotel, through the fl exible business model and the monitoring system, can quickly recognise risks, react to them, and implement counter measures in 2012 as well.

3. OPPORTUNITIES FOR FUTURE DEVELOPMENT

In addition to the risks there are a number of opportunities that can sustainably affect the business development of the ecotel Group.

Marketing of full access lines to existing customers and new customers

Until 2009 ecotel purchased the voice connections almost exclusively from DTAG, but did not receive any concessions, in the form of wholesale discounts. When purchasing the voice connections but also the data connections from alternative service providers, such as Vodafone and Versatel, ecotel procures these connections at attractive wholesale prices. In addition, costs for the supply of the voice traffi c are dispensed with, because the supply occurs in the TNB network. At the end of 2011 ecotel had switched 13,000 active full access lines. Via the discounts achieved for the voice connections, as well as better purchasing conditions of the connection fees, ecotel can considerably optimise the margin situation and has provided the basis for additional competitive products. In addition the ISDN full access line forms a bridge technology for a future migration of the customers to voice over IP technology.

New market developments in the areas of voice over IP and hosted PBX

An important telecommunications trend topic is the shifting of telephone systems onto the Internet (hosted PBX / IP Centrex), in combination with voice over IP. This change has only been made feasible through nationwide availability of broadband Internet accesses. ecotel is carefully observing these developments, and in the medium-term plans to shift it customer base in the off-net regions that are not supplied by Versatel and Vodafone, to so-called NGN (Next Generation Network) connections. Among other things the customers can benefi t through this shift from innovative services (e.g. convergent fi xed-line and mobile communications products). Simultaneously ecotel profi ts from signifi cant cost savings.

Extension of the data portfolio

For 2012 ecotel plans further growth in the data area. Among other things the existing Ethernet and SHDSL product range should be extended with new standard functionalities (foreign country coverage, MPLS integration), access technologies, (e.g. satellite, LTE) and capacities (SHDSL 10 Mpbs).

Further growth of the new media business

The market for audio / video applications on the Internet, in which nacamar GmbH is active, is one of the strongest growth areas in the ITC (IT + telecommunications) market segment. As a market leader in the area of radio streaming with its highly modern CDN, its online video management solution, " medianac", as well as new products like HbbTV / social media, has ideal prerequisites for profi ting from market growth.

Effi ciency increases of internal and external business processes

Conclusion of the system consolidation, as well as commissioning of the automated provisioning interface with Vodafone resulted in signifi cantly better order processing and customer support. The associated increases in effi ciency and productivity however must still be implemented, in order to sustainably assure ecotel's competitive position. In 2012 ecotel plans to further reduce its infrastructure costs through a wide variety of optimisation measures in the network and computer centre.

4. COMMENTS ON FORECASTS

This management report also includes futureoriented statements and information, i.e. statements concerning events that are in the future. These future-oriented statements can be identifi ed through formulations such as "expect", "intend", "plan", "estimate" or similar terms. Such forwardlooking statements are based on present expectations and specifi c assumptions. Consequently they are associated with a number of risks and uncertainties. A number of factors, of which many are beyond the control of the ecotel Group, infl uence the business activities, the success, the business strategy, and the results of ecotel. As a result of these factors the actual results, successes, and performances of the ecotel Group may signifi cantly deviate from the expressed or implicit information on results, successes or performances contained in the future-oriented statements.

Outlook

Increase of the EBITDA margin

Management pursues the goal of bringing the EBIT-DA margin from the current 8 % to 10 % by 2013.

Increase in B2B revenues

In combination with improved general conditions, for example, Contract Ownership, the new products and rates, the declared objective of the management board is to again achieve increasing B2B sales starting in 2013, and by 2015 to again generate three-fi gure Group revenue. Among other things this should occur through stronger customer loyalty measures and through an increase in the new customer business.

Further reduction of net fi nancial liabilities

For 2012, on the basis of the operative business development, the Company strives to reduce net fi nancial liabilities from the current EUR 3 million to EUR zero. Possible special effects, such as buybacks of shares, payment of dividends, or additional investments are not considered in this planning.

Forecast for 2012

For 2012 the company expects Group revenue of approx. EUR 80 – 90 million, and EBITDA of EUR 6 – 7 million.

Statement of the legal representatives Group management report

Statement on corporate governance

The management board and supervisory board of ecotel communication ag have issued the required statement on corporate governance in accordance with § 289a of the German Commercial Code (HGB), including the statement prescribed in accordance with § 161 of the German Stock Corporation Law (AktG), and have made these statements permanently available to the public on the Internet (www. ecotel.de under Investor Relations / Corporate Governance).

Statement of the legal representatives

To the best of our knowledge, in accordance with the applicable principles for fi nancial reporting, we assure that the consolidated fi nancial statement conveys an appropriate view of the Group's asset, fi nancial and earnings position that corresponds to the actual conditions, and in the Group management report, the development and performance of the Group, including the business results and the position of the Group, are presented in a manner that conveys a view that corresponds to the actual conditions, and that the essential opportunities and risks of the presumable development of the Company are described.

Düsseldorf, March 23, 2012 ecotel communication ag

The management board

Peter Zils Bernhard Seidl Achim Theis

Declarations

Group balance sheet

as of December 31, 2011

Consolidated balance sheet Consolidated fi nancial statement

Ass ets	Infor mati on in EUR	(No tes)	12/3 1/20 10	12/3 1/20 11

A. Non rent ets -cur ass
Goo I. dwil l an d ot her inta ngib	le a sset s	(1)	18,5 01,9 99.4 5	16,9 67,1 70.8 1
II. Prop erty pla nt a nd e quip	t men	(2)	5,86 0,12 3.80	5,07 9,56 5.01
III. Fina ncia l ass ets valu ed b	d on the ity m etho d ase equ	(3)	1,52 3,27 2.09	1,58 6,13 4.39
IV. Oth er fi cial ts nan asse		(3)	112 ,000 .00	25,0 00.0 0
V. Non rent eiva bles -cur rec		(4)	521 ,674 .29	623 ,799 .25
Defe VI. rred tax rnin es o n ea	gs	(7)	537 ,390 .46	193 ,361 .40

Tota l no t as sets n-cu rren			27,0 56,4 60.0 9	24,4 75,0 30.8 6

B. Cur rent ets ass
I. Inve ies ntor		(5)	133 ,698 .55	88,7 77.4 8
II. Trad ceiv able e re s		(6)	14,3 91,2 55.8 9	13,4 24,4 77.5 9
III. Oth ceiv able d as er re s an	sets	(6)	817 ,722 .6	1,21 1,43 5.67
IV. Cur rnin rent tax es o n ea gs		(7)	222 ,743 .79	9,19 4.76
V. Cas h an d ca sh e quiv alen	ts	(8)	6,13 3,17 6.51	6,23 5,21 5.59

Tota l cu t as sets rren			21,6 98,5 97.3 7	20,9 69,1 01.0 9

Tota l as sets			48,7 55,0 57.4 6	45,4 44,1 31.9 5

Lia bili ties	(No tes)	12/3 1/20 10	12/3 1/20 11

A. Equ ity
I. Sub scri bed ital cap	(9)	3,75 2,50 0.00	3,75 2,50 0.00
II. Cap ital r ese rves	(9)	1,66 1,09 6.69	1,67 8,03 6.50
III. Oth er re serv es		13,9 74,2 31.7 8	15,0 87,0 43.0 0
Equ ity c apit al to be alloc ated hare hold to s ers		19,3 87,8 28.4 7	20,5 17,5 79.5 0
IV. Sha of o ther sha reho lder res s	(9)	585 ,190 .90	900 ,115 .78
Tota l eq uity ital cap		19,9 73,0 19.3 7	21,4 17,6 95.2 8
B. Non rent visio -cur pro ns and liab ilitie s
I. Defe rred tax rnin es o n ea gs	(10)	792 ,328 .39	979 ,058 .08
II. Non loa rent -cur ns	(11)	5,33 1,60 4.17	6,60 9,37 5.00
III. Oth er fi cial deb ts nan	(11)	69,9 13.1 7	0.00
Tota l no t pr ovis ions n-cu rren
and liab ilitie s		6,19 3,84 5.73	7,58 8,43 3.08
C. Cur rent visio pro ns and liab ilitie s
Cur I. rent tax rnin es o n ea gs	(10)	351 ,854 .69	313 ,903 .36
II. Fina ncia l de bt	(11)	7,91 8,40 9.12	2,71 5,50 2.70
III. Trad ceiv able e re s	(11)	12,8 01,9 71.2 4	11,5 55,2 16.9 8
IV. Liab ilitie s to ciate d co nies asso mpa	(11)	130 ,797 .79	133 ,765 .95
V. Oth er li abil ities and visio pro ns	(11)	1,38 5,15 9.52	1,71 9,61 4.60
Tota l cu t pr ovis ions rren
and liab ilitie s		22,5 88,1 92.3 6	16,4 38,0 03.5 9
Tota l lia bilit ies		48,7 55,0 57.4 6	45,4 44,1 31.9 5

Consolidated cash fl ow statementfor the fi nancial year 2011

Infor mati on in EUR	(No tes)	201 0	201 1
Con solid ated fi t fo r the r be fore inc tax pro yea ome
and thir d-pa rty s hare s	(24)	730 ,501 .72	2,68 3,05 9.50
Net inte rest inc ome	(24)	455 ,044 .88	343 ,973 .04
Dep reci atio d am ortis atio n an n ex pen se	(24)	3,42 5,33 6.86	3,85 1,47 8.10
Amo rtisa tion / de iatio n of rent ets prec cur ass	(24)	85,0 04.1 7	104 ,276 .55
Earn ings from ies v alue d com pan bas ed o n th uity met hod e eq	(24)	205 ,117 .08	12,1 37.7 0
Cas h fl o w		4,90 1,00 4.71	6,99 4,92 4.89
Oth s (+ ) an d in e (-) er e xpe nse com not affe cting the bal e sh eet anc	(24)	43,8 60.0 0	66,0 80.9 7
Profi t (-) / los s (+ ) on dis als pos of n nt a sset on-c urre s	(24)	-9,3 31.3 2	-25, 801 .27
Incr e (-) / de se ( +) eas crea in tr ade eiva bles rec	(24)	1,79 2,08 0.86	997 ,660 .48
Incr e (+ ) / de se ( -) eas crea in re ceiv able d ot her ts s an asse	(24)	770 ,121 .18	-487 ,529 .66
Incr e (+ ) / de se ( -) eas crea in tr ade liab ilitie s	(24)	-2,8 74,4 44.4 6	-1,2 46,0 16.4 6
e (+ ) / de se ( -) in Incr liab ilitie eas crea s (wit hou t fi n ial d ebts ) anc	(24)	531 ,798 .47	238 ,027 .16
Paid (-) / ived (+) inco tax rece me	(24)	115 ,924 .00	-276 ,179 .97
Infl o f fu nds fro ing bus ines tivit ies w o m o ngo s ac		5,27 1,01 3.44	6,26 1,16 6.14
Pay ts re ceiv ed f reti ents men rom rem of in ible tang ts asse	(24)	21,8 91.8 5	142 ,853 .34
ts fo Pay r inv estm ents in t ible men ang and inta ngib le a sset s	(24)	-1,6 66,4 95.9 1	-1,7 17,7 32.0 9
Proc eed s fro m d ispo sal o f fi n ial a sset anc s	(24)	0.00	119 ,034 .45
Pay ts fo r inv estm ents men in fi n ial a sset anc s	(24)	-20, 016 .18	-25, 000 .00
Cha s du e to the init ial c olida tion nge ons of s ubs idiar ies	(24)	233 ,271 .15	0.00
ts fo of e Pay quis ition quit y int ts men r ac eres from min ority sha reho lder s	(24)	0.00	-113 ,800 .00
Pay ies a d fo ing ts to unte men com pan cco r us the ity m etho d equ	(24)	-350 ,399 .28	-70, 000 .00
Inte rest pai d in	(24)	31,3 28.7 1	37,0 20.7 8
Out fl ow of f und s fr inve stm ent acti vitie om s		-1,7 50,4 19.6 6	-1,6 27,6 23.5 2
Pay ts to min ority sha reho lder men s	(24)	0.00	-48, 336 .00
Proc eed s fro m b wing orro s	(24)	0.00	4,00 0,00 0.00
Rep ents of b wing aym orro s	(24)	-3,7 90,0 60.2 1	-7,9 80,2 10.8 6
Inte rest pai d ou t	(24)	-669 ,292 .91	-502 ,956 .68
Infl o w / o utfl o f fu fro m fi nds cing act iviti w o nan es		-4,4 59,3 53.1 2	-4,5 31,5 03.5 4
Cha in c ash and h eq uiva lent nge cas s affe ctin g th e ba lanc e sh eet		-938 ,759 .34	102 ,039 .08
Cas h an d ca sh e quiv alen ts a t sta rt of iod per		7,07 1,93 5.85	6,13 3,17 6.51
Cac he a nd c ash ival ents at e nd o f pe riod equ		6,13 3,17 6.51	6,23 5,21 5.59

Consolidated cash fl ow statement Consolidated fi nancial statement

Consolidated profi t and loss statement

for the fi nancial year 2011

	Infor mati on in EUR	(No tes)	01/0 1-12 /31 201 0	01/0 1-12 /31 201 1
1.	Sale s re ven ue	(14)	98,3 14,0 11.7 6	84,4 81,3 25.0 8
2.	Oth ting inc er o pera ome	(15)	1,04 5,27 6.34	1,59 9,97 3.98
3.	Oth ork italis ed er o wn w cap		116 ,812 .78	849 .00
4.	Tota l rev enu e		99,4 76,1 00.8 8	86,0 82,1 48.0 6
5.	Cos t of eria ls an d se rvice mat s
	Exp es f urch d se rvice ens or p ase s	(16)	-75, 369 ,415 .34	-59, 854 ,073 .84
6.	Pers el e onn xpe nse s	(17)
6.1	Wag nd s alar ies es a		-8,2 42,9 59.5 0	-8,3 98,1 46.0 2
6.2	Con tribu tion ial in s to soc sura nce , sion pla nd o ther ben efi ts pen ns a		-1,2 35,1 32.5 1	-1,3 06,7 11.7 6
7.	Sch edu led dep reci atio d am ortis atio n an n	(18)	-3,2 38,3 95.1 2	-3,3 09,9 30.5 4
8.	Uns che dule d de iatio prec n	(18)
8.1	Of n nt a sset on-c urre s		-135 ,812 .55	-54 1,54 7.56
8.2	Of c nt a sset urre s		-85, 004 .17	-104 ,276 .55
9.	Oth ting er o pera exp ens es	(19)	-9,7 02,9 68.3 2	-9,4 71,0 44.8 8
10.	Ear ning s be fore inte rest and tax (EB IT)		1,46 6,41 3.37	3,09 6,41 6.91
11.	Fina ncia l inc ome		139 ,638 .07	144 ,145 .74
12.	Fina ncia l exp ens es		-670 ,432 .64	,365 -545 .45
13	Res ult f inv ted estm ents rom acc oun for b y th uity met hod e eq		-205 ,117 .08	-12, 137 .70
14.	Fina ncia l res ult	(20)	-735 ,911 .65	-413 ,357 .41
15.	Res ult o f or dina ry b usin act ivity ess befo re in e ta com xes		730 ,501 .72	2,68 3,05 9.50
16.	Tax n in d ea rnin es o com e an gs	(21)	-392 ,168 .65	-982 ,536 .42
17.	Con soli date d ne t inc ome (= c olid ated preh ive inco me) ons com ens		338 ,333 .07	1,70 0,52 3.08
18.	Net inco attri buta ble to m inor ity in tere sts me	(22)	-28 1,87 1.36	-627 ,371 .44
19	Net inco attr ibut able to me tel c unic atio sha reho lder eco omm n ag s		56,4 61.7 1	1,07 3,15 1.64

Und	ilute d ea rnin hare gs p er s	(23)	0.02	0.29
Dilu	ted ings sha earn per re	(23)	0.02	0.29

			Reta ined	ning ear s	Equ ity c apit al
Infor mati on in TEU R Note s (9)	Sub scri bed ital cap	Cap ital rese rves	Oth tain er re ings earn	ed Con solid ated profi t	to b e al loca ted to sha reho lder s of tel eco icati com mun on a g	Sha of res othe r sh areh olde rs
Jan 1, 2 010 per uary	3,75 2	17,6 03	76	-2,1 54	19,2 77	314
Cha due to fi rst solid atio nge con n	0	0	-21	0	-21	21
Reg ing due to e bell Gm bH P/L tran sfer ent roup asy agr eem	0	0	32	0	32	-32
f ca s fro With draw al o pita l res cote l com icati erve m e mun on a g	0	-15, 985	15,9 85	0	0	0
Rep osti f pre viou ar's ning ng o s ye ear s	0	0	-2,1 54	2,15 4	0	0
Cha s in ity n ot a ffec ting nge equ the ings earn	0	-15, 985	13,8 42	2,15 4	11	-11
Sha ptio lan re o ns p	0	44		0 0	44	0
Con solid ated net inc 201 0 ome	0	0		0 56	56	282
Cha s in ity c apit al a ffec ting nge equ the ings earn	0	44		0 56	100	282
As Dec emb er 3 1, 2 010 per	3,75 2	1,66 2	13,9 18	56	19,3 88	585
Cha due urch ales to p nge ase or s	0	0	40	0	40	-158
Com ator nt du e to bell Gm bH P /L tr ansf t pens y pa yme easy er a gree men	0	0		0 0	0	-154
Rep osti f pre viou ar's ning ng o s ye ear s	0	0	56	-56	0	0
Cha ffec s in ity n ot a ting nge equ the ings earn	0	0	96	-56	40	-312
Sha ptio lan re o ns p	0	16		0 0	16	0
Con solid ated net inc 201 1 ome	0	0		0 1,07 3	1,07 3	627
Cha s in ity c apit al a ffec ting nge equ the ings earn	0	16		0 1,07 3	1,08 9	627
As Dec emb er 3 1, 2 011 per	3,75 2	1,67 8	14,0 14	1,07 3	20,5 17	900

Consolidated statement of changes in equity

Notes to the consolidated fi nancial statement of ecotel communication ag Principles of fi nancial accounting

GENERAL INFORMATION

Ecotel communication ag is a company headquartered in Germany (Prinzenallee 11, 40549 Düsseldorf) and is active throughout Germany as a telecommunications fi rm specialising in meeting the requirements of medium-sized enterprises in three business areas.

In its core unit, Business Solutions, the ecotel Group offers medium-sized enterprises, as well as large customers, an integrated product portfolio of voice, data and mobile services as a complete package from a single source. Throughout Germany ecotel supplies approx. 20,000 business customers with standardised and custom telecommunications solutions.

In the second area, Wholesale Solutions, the ecotel Group markets preliminary products to other telecommunications companies and outside distributors. At the same time, the company achieves high traffi c volumes with this segment, enhancing added value for the core segment of Business Solutions. In addition to the wholesale business of ecotel communication ag, mvneco GmbH is also assigned to this business unit.

New high-growth business sectors and niches of the subsidiaries and holdings, which remain operationally autonomous, are the focus area of the New Business unit. These include nacamar GmbH with its new media business, as well as easybell GmbH with the private customer business.

All standards valid and applicable in the EU on the balance sheet date are applied. In addition the interpretations of the International Financial Reporting Interpretation Committee (IFRIC) have been complied with.

The following pronouncements or changes of pronouncements of the IAB or IFRIC were applied by ecotel in the consolidated fi nancial statement as of December 31, 2011:

Pro nt nou nce me	f p Dat ubl ica tio e o n IAS by B	Tit le
IAS 24	Nov ber 4, 200 9 em	Re late d P arty Di sclo sur es
IAS 32	Oc tob er 8 , 20 09	Fin ial Ins trum ent s: P ent atio anc res n
IC IFR 14	Nov ber 26 , 20 09 em	of Pre nts a M inim pay me um
		Fun din Req uire nt g me
IC 19 IFR	26 , 20 09 Nov ber em	Ext ing uis hin Fin ial Lia bilit ies g anc
		wit h E ity Ins trum ent qu s
An l nua
Imp ent rov em s
Pro jec t	Ma 6, 2 010 y	Imp IFR Ss 201 0 ent s to rov em

In October 2009 the IASB published a supplement to the standard, IAS 32 "Financial Instruments: Presentation". The European Union adopted this supplement into European law in December 2009. It concerns the clarifi cation of the classifi cation of options as equity or outside capital, if the options are denominated in a currency other than the functional currency of the issuer. To date, such rights were accounted for as derivative liabilities. The supplement stipulates that such options that are issued proportionately to the shareholders of a company at a fi xed currency amount, must be classifi ed as equity. In this regard the currency of the exercise price is not relevant. The changes take effect for fi nancial years that start on or after February 1, 2010. No effects on the presentation of the asset situation, fi nancial situation and earnings situation or on the cash fl ow of the ecotel Group have occurred from the supplement.

In November 2009 the IASB published a change in the standards for recognition of pension plans. The European Union adopted this change into European law in December 2010. It affects the interpretation IFRIC 14 "Prepayments of a Minimum Funding Requirement", which in turn presents an interpretation of IAS 19 "Employee Benefi ts". The change applies under the limited circumstances under which a company is subject to minimum fi nancing standards and makes a prepayment of the contributions that satisfy these requirements. It permits companies to recognise the benefi t arising from such a prepayment as an asset. The change is mandatory and goes into effect on January 1, 2011. Retrospective application is prescribed. The application of IFRIC Interpretation 14 had no effects on the presentation of the asset situation, fi nancial situation and earnings situation or on the cash fl ow of the ecotel Group.

In November 2009 the IASB published IFRIC Interpretation 19 "Extinguishing Financial Liabilities with Equity Instruments". The European Union adopted IFRIC Interpretation 19 into European law in December 2010. The interpretation clarifi es the interpretation of IFRS for borrowers when they renegotiate the terms of a fi nancial liability with a creditor and the creditor agrees to accept equity instruments to settle the fi nancial liabilities. IFRIC 19 specifi es that the equity instruments issued to the creditor must be considered as "consideration paid" to partially or fully extinguish the liability. Furthermore these equity instruments must be assessed at fair value. If their fair value cannot be reliably determined the equity instruments must be assessed to refl ect the fair value of the extinguished fi nancial liability. Any difference between the carrying amount of the fi nancial liability and the initial assessed amount of the issued equity instruments is included in the profi t and loss account. The interpretation takes effect for fi nancial years that start on or after February 1, 2010. No effects on the presentation of the asset situation, fi nancial situation and earnings situation or on the cash fl ow of the ecotel Group have occurred from the application of IFRC 19.

In May 2010, the IASB published pronouncements that contain changes to six standards and one interpretation as part of the third "Annual Improvement Project". The European Union adopted the changes into European law in February 2011. The changes must be applied for fi nancial years that start on or after January 1 2011, and had no effects on the presentation of the asset situation, fi nancial situation and earnings situation or on the cash fl ow of the ecotel Group.

Standards, interpretations and changes that have been published but not yet applied

At the time the consolidated fi nancial statement was drawn up, as of December 31, 2011, the following new and changed standards and interpretations were adopted. However these go into force later and have not been prematurely applied in this consolidated fi nancial statement. A brief description of the content of these alterations or changes, as well as an initial assessment of their effects on the consolidated fi nancial statement of ecotel communication ag is provided below:

In November 2009 the IASB published IFRIC 9 "Financial Instruments". The European Union has not yet adopted the changes into European law. The standard is the result of the fi rst of three phases of the project to replace IAS 39, "Financial Instruments: Recognition and Measurement" with IFRS 9. IFRS 9 regulates the classifi cation and valuation of fi nancial assets. The regulations concerning impairments of fi nancial instruments and hedge accounting are currently being revised by the IASB. IFRS 9 prescribes that fi nancial assets must be assigned to one of the following two valuation categories: "At amortised cost" or "At fair value". IFRS 9 also grants a fair value option, which allows fi nancial assets that would normally be assigned to the "at amortised cost" category to be designated as "at fair value" if the fair value designation would eliminate or signifi cantly reduce measurement or recognition inconsistency. It is mandatory to assign equity instruments to the "at fair value" category. If, however, the equity instrument is not held for trading, the standard allows an irrevocable option to be made at initial recognition to designate it as "at fair value" through other comprehensive income. Dividend income resulting from the equity instrument must be recognised in the profi t and loss account. IFRS 9 must be applied for fi nancial years that start on or after January 1, 2015. Prior periods do not have to be adjusted for fi rst time adoption, but there is a requirement to disclose the effects of fi rst-time adoption. The ecotel Group is currently reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group.

In October 2010, the IASB issued the pronouncement "Disclosures – Transfers of Financial Assets" as a supplement to IFRS 7 "Financial Instruments: Disclosures". The change requires quantitative and qualitative disclosures to be made for transfers of fi nancial assets where the transferred assets are derecognised in the entirety or the transferring entity retains continuing involvement. The change is intended to provide greater transparency of such transactions (e.g. securitisations) and help users understand the possible effects of any risks that may remain with the entity that transferred the assets. The change also requires supplementary information to be disclosed if a substantial proportion of the total amount of transfer activity takes place in the closing days of a reporting period. The changes must be applied for fi nancial years that start on or after July 1, 2011. The European Union adopted this pronouncement into European law in November 2011. The ecotel Group is currently reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group. Additional disclosure requirements may occur.

Also in October 2010, the IASB issued requirements on accounting for fi nancial liabilities. These are integrated in IFRS 9 "Financial Instruments" and replace the existing provisions on this subject in IAS 39 "Financial Instruments: Recognition and Measurement". In the new pronouncement, the requirements relating to recognition and derecognition, as well as most of the requirements for classifi cation and measurement, are carried forward unchanged for IAS 39. The new IFRS 9 modifi es the requirements relating to the fair value option for fi nancial liabilities to address the issue of an entity's own credit risk. The prohibition of fair value measurement of derivative liabilities that are linked to an unquoted equity instrument and that must be settled by delivery of an unquoted equity instrument, is eliminated. The pronouncement must be applied for fi nancial years that start on or after January 1, 2015. Prior periods do not have to be adjusted for fi rst time adoption, but there is a requirement to disclose the effects of fi rst-time adoption. The European Union has not yet adopted this pronouncement into European law. The ecotel Group is reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group.

In December 2010, the IASB issued the pronouncements "Deferred Tax: Recovery of Underlying Assets – Amendments to IAS 12". The new pronouncement determines which type of implementation is required for certain assets. This is important in cases where different tax consequences can arise depending on the type of realisation. The pronouncement poses the rebuttable assumption that the carrying amount of an investment property that is measured using the new revaluation model of IAS 40 "Investment Property" will be realised through sale. In any case there is also a non-rebuttable assumption that the carrying amount of a non-depreciable asset that is measured using the revaluation model in IAS 16 "Property, Plant and Equipment" will be realised through sale. Interpretation SIC-21 "Income taxes – Recovery of Revalued Non-Depreciable Assets" is no longer in effect due to the new pronouncement. The pronouncement must be applied for fi nancial years that start on or after January 1, 2012; the European Union has not yet adopted this pronouncement into European law. The ecotel Group is reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group, but does not expect any resulting effects, as it does not hold investment properties, nor has the revaluation model of IAS 16 been applied.

In May 2011, the IASB published three new IFRS standards (IFRS 10, IFRS 11, IFRS 12) as well as two revised standards (IAS 27, IAS 28) for the accounting of investments in subsidiaries, joint agreements and associated companies. The European Union has not yet adopted the provisions into European law; they must be applied (mandatory) for fi nancial years that start on or after January 1 2013. The application of the new and changed IFRS will possibly have effects on the presentation of the asset situation, fi nancial situation and earnings situation or on the cash fl ow of the ecotel Group for future corporate mergers and result in additional disclosures of the ecotel Group. However, the revised IAS 27 is excepted, because this standard now exclusively extends to the individual fi nancial statement, and ecotel does not prepare separate IFRS fi nancial statements in accordance with § 325, para. 2a of the German Commercial Code (HGB).

market participants under normal market conditions on the measurement key date. The standard is virtually comprehensive in its application, only IAS 2 "Inventories", IAS 17 "Leases" and IFRS 2 " Share-based Payment" are excepted. While the scope of these provisions remains virtually unchanged for fi nancial instruments, now these provisions more comprehensively or more precisely govern other circumstances, (e.g. investment property, intangible assets and property, plant and equipment). The familiar three-level fair value hierarchy must be applied overall. Application of IFRS 13 presumably results in extended disclosures in the ecotel consolidated fi nancial statement. The European Union has not yet adopted the provisions into European law.

In June 2011 the IASB published changes to IAS 1 "Presentation of Financial Statements". The changes require that the items presented in other income must be divided into two categories – depending on whether or not they will be posted via the profi t and loss account in the future (recycling). The changes to IAS 1 must be applied for fi nancial years that start on or after January 1, 2012; the European Union has not yet adopted these changes into European law. The ecotel Group is currently reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group and currently expects the changes cited above to be shown in the statement of comprehensive income.

Also in June 2011 the IASB published changes to IAS 19 "Employee Benefi ts". The changes do away with existing option rights for the recognition of actuarial profi ts and losses. Because the so-called corridor method will no longer be permitted in the future, actuarial profi ts and losses must be recognised in the full amount immediately in equity in a manner that does not affect net income, which corresponds to our current procedure. Other changes relate to the recognition of past services, expense and the presentation of net interest results for performance-oriented pension plans, as well as the differentiation between termination benefi ts and other employee benefi ts. As a signifi cant consequence of these changes the top-up amounts in partial retirement programs will no longer be classifi ed as termination benefi ts in the future, and consequently must be accrued over their vesting period. In addition disclosure obligations are extended, e.g. for characteristics and risks of performance-oriented plans. The changes to IAS 19 must be applied retrospectively for fi nancial years that start on or after January 1, 2013; the European Union has not yet adopted these changes into European law. The ecotel Group currently assumes the relevance of the extended disclosure obligations for the fi nancial statement and moreover is reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group.

With IFRS 10 "Consolidated Financial Statements", the IASB is introducing a uniform consolidation concept. The previous distinction between "classic" subsidiaries (IAS 27) and special-purpose companies (SIC-12) has been done away with. Control only exists if an investor has the power of decision, is subject to variable returns or if he is entitled to rights relative to the returns, and due to the power of decision is capable of infl uencing the amount of the variable returns. With entry into force of IFRS 10, SIC-12 "Consolidation – Special Purpose Entities" becomes invalid, as do the provisions of IAS27" Consolidated and Separate Financial Statements" that are relevant for consolidated fi nancial statements.

IFRS 11 "Joint Arrangements" will replace IAS 31 "Interests in Joint Ventures", as well as SIC-13 "Jointly Controlled Entities – Non-Monetary Contributions by Ventures". It governs the accounting of joint ventures and of joint operations. The proportionate consolidation method for joint ventures is no longer permitted with discontinuation of IAS 31. Application of the equity method is now regulated in the new version of IAS 28 "Interests in Associates and Joint Ventures" and extends to associated companies as well as to joint ventures. In the case of joint operation, the share of assets, liabilities, expenses and earnings is directly recognised in the consolidated fi nancial statement and in the fi nancial statement of the joint operator.

In IFRS 12 "Disclosure of Interests in Other Entities" all disclosure obligations that must be complied with relative to subsidiaries, joint agreements and associated companies, as well as consolidated structured companies, are centrally bundled.

The new version of IAS 27 "Separate Financial Statements" exclusively governs the accounting depiction of subsidiaries, joint ventures and associated companies in the fi nancial statement, as well as associated disclosures (separate fi nancial statement in accordance with § 325 para 2a of the German Civil Code (HGB)). The new version of IAS 28 "Investments in Associates and Joint Ventures" governs the inclusion of shares of associated companies and joint ventures in accordance with the equity method.

In May 2011 the IASB also published IFRS 13 "Fair Value Measurement". With this publication the IASB has provided a uniform, comprehensive standard for fair value measurement. IFRS 13 is mandatory and must be applied for fi nancial years that start on or after January 1, 2013. IFRS 13 regulates how fair value must be measured, if a different IFRS prescribes fair value measurement (or fair value disclosure). A new defi nition of fair value applies which characterises fair value as the selling price of an actual or hypothetical transaction between any independent

In December 2011, in IAS 32 "Financial Instruments": Presentation, the IASB published details concerning the offsetting provisions. To satisfy the offsetting prerequisites in accordance with IAS 32, according to the new provisions, an entity's right to offset at the present time must not be contingent on a future event and must apply in the proper course of business, as well as in the event of default and insolvency of a contracting party. Moreover it is determined that a gross settlement mechanism satisfi es the offsetting prerequisites in accordance with IAS 32, if no signifi cant credit and liquidity risks remain, receivables and liabilities are processed in a single settlement process and thus is equivalent to a net settlement in the result. The new provisions are mandatory and must be applied retrospectively for fi nancial years that start on or after January 1, 2014; the European Union has not yet adopted these changes into European law. The ecotel Group is reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group.

Also in December 2011, in IFRS 7 "Financial Instruments": Disclosures published extended disclosure obligations regarding offsetting rights. In addition to extended disclosures concerning actual offsets in accordance with IAS 32, for existing offsetting rights, disclosure obligations are introduced, regardless of whether an offset in accordance with IAS 32 is actually undertaken. The new provisions are obligatory and must be applied retrospectively for fi nancial years that start on or after January 1 2013; the European Union has not yet adopted these changes into European law. The ecotel Group is reviewing the resulting effects on the presentation of the asset situation, fi nancial situation, earnings situation or cash fl ow of the Group and anticipates extended disclosure obligations.

In addition to the balance sheet and the comprehensive income statement, a cash fl ow statement and a statement of changes in equity are shown.

To improve the clarity of presentation, various items of the consolidated balance sheet and the consolidated statement of comprehensive income are summarised. These items are appropriately broken out and explained in the notes. The income statement has been prepared according to the total cost method.

Because the ecotel Group did not have the appropriate circumstances in the previous yea, nor in the fi nancial year 2011, presentation of other comprehensive income at the end of the consolidated statement of comprehensive income.

The fi nancial year of ecotel communication ag and its fully consolidated subsidiaries corresponds to the calendar year. The consolidated fi nancial statement is prepared in Euro. All amounts, including the previous year's numbers are specifi ed in thousands of EUR (TEUR).

In addition to the Group management report, the audited consolidated fi nancial statement are fi led in the electronic version of the German Federal Gazette, the consolidated fi nancial statement will presumably be released for publication by the supervisory board of ecotel communication ag on March 27, 2012.

PRINCIPLES OF CONSOLIDATION

According to IFRS all mergers must be depicted in accordance with the purchase method. The purchase price of an acquired subsidiary is distributed over the purchased assets, debts and contingent liabilities. In this regard the proportionate values at the time control over the subsidiary was obtained are authoritative. The eligible assets and the debts and contingent liabilities taken over are recognised with their fair market values in the full amount – regardless of the capital ownership percentage. A remaining balancing item on the asset side is reported as goodwill. A remaining balancing item on the liabilities side is recognised in the income statement. Earnings and expenses of a subsidiary are included in the consolidated fi nancial statement from the date of acquisition. Earnings and expenses of a subsidiary remain included in the consolidated fi nancial statement until control through the parent company ends. As part of the deconsolidation, the residual carrying amounts of the goodwill are considered in the calculation of the result of the disposal.

Expenses and income between Group companies, as well as receivables and liabilities are set off against each other. Interim results are eliminated, if they are not of subordinate signifi cance. In the individual fi nancial statements depreciation or appreciation on shares in consolidated companies are always reversed.

The shares in associated companies are accounted for using the equity method. According to the equity method the shares in an associated company are shown in the balance sheet at acquisition cost plus post-acquisition changes in the Group's equity holdings. The goodwill related to the associated company is included in the carrying amount of the investment and is not amortised. The consolidated statement of comprehensive income includes the Group's participation in the success of the associated company. Changes shown directly in the equity of the associated company are also recognised by the Group proportionally and directly in equity and presented in the statement of changes in equity. The fi nancial statements of the associated companies are prepared on the same balance sheet date as the fi nancial statement of the parent company. To the extent required, adjustments are made to the Group's uniform accounting and valuation methods.

CONSOLIDATED GROUP

In addition to ecotel communication ag, in the consolidated fi nancial statement, with one exception all (previous year: all) subsidiaries are included, for which ecotel communication ag directly or indirectly controls the majority of voting stock. The company, init.voice GmbH, a German subsidiary of the fully consolidated easybell GmbH, founded in the fi nancial year 2011, has not been included in the consolidated fi nancial statement for reasons of materiality.

Initial consolidation or deconsolidation always occurs at the time of acquisition or sale of equity interests.

Consolidated fi nancial statement key date for preparation of the consolidated fi nancial statement is December 31, which is also the key date of the individual fi nancial statement of the parent company and all fully-consolidated subsidiaries.

Acquisitions and disposals of equity interests

Through the purchase contract of November 7, 2011 the minority shares (49.8 %) of the former fully consolidated subsidiary, i-cube GmbH, were purchased for TEUR 279. Due to the control relationship that existed prior to purchase, the original purchase price allocation was not adjusted with recognition of the purchased goodwill, but rather was treated as an equity transaction between shareholders. The company was merged with ecotel communication ag on the basis of the merger contract of February 7, 2012 and equity of TEUR 308 (merger key date: 1.12.2011). There were no effects in the Group in this regard.

The former fully consolidated toBEmobile GmbH was sold at a sales price of 1 EUR with the purchase contract of November 11, 2011. The remaining stake in PPRO GmbH (11.2 %) was also sold in the fi nancial year 2011.

1) Without management board members / managing directors and trainees

2) Previous year's fi gures in parentheses

Notes to the consolidated fi nancial statement of ecotel communication ag Consolidated fi nancial statement

Accounting and valuation methods

The annual fi nancial statements of the companies consolidated in the Group are prepared in accordance with uniform accounting and valuation methods. The valuations in the consolidated fi nancial statements are not infl uenced by tax regulations; they are determined solely by the economic presentation of the asset, fi nance, and earnings position in accordance with IFRS regulations.

In addition, for the consolidated fi nancial statements the supplementary provisions of § 315a para 1 of the German Commercial Code (HGB) were complied with.

Assets are capitalised if the Group is entitled to all essential opportunities and risks associated with their use. Valuation is executed at historical costs acquisition or manufacture with the exception of specifi c fi nancial assets.

Acquisition costs include all considerations that have been completed to acquire an asset and to place it in operational condition. Manufacturing costs include all costs that can be directly allocated to the manufacturing process as well as appropriate portions of the production-related overhead costs. Borrowing costs that can be allocated directly to the construction or manufacturing of a qualifi ed asset are always capitalised as a portion of the costs acquisition or manufacture. Qualifi ed assets as defi ned by IAS 23 are not present in the ecotel Group.

Purchased intangible assets are valued at cost of acquisition, self-provided intangible assets from which most likely a future benefi t will fl ow to the Group, and which can be reliably valued, are assessed at cost of manufacture and amortised using the straight-line method over their presumable economic useful life, unless in exceptional cases a different amortisation method more closely corresponds to the course of their use.

Research costs are treated as current expenses. Development costs are capitalised and amortised linearly if a newly developed product or procedure can be clearly delimited, is technically feasible and either is intended for the Company's own use or marketing. In addition capitalisation has for its prerequisite that clear expense allocation is possible and that costs are covered through future fl ow of funds with suffi cient probability.

Goodwill from consolidation is subject to an impairment test if there are indications of an impairment, at least once a year, for the cash generating unit in question. As a rule, in this regard the use value is determined on the assumption of the going-concern. If there are specifi c intentions to sell, then fair value less cost to sell applies.

	Sha re	Equ ity	Earn ings	Rev enu e	es1) Emp loye
	of E quit y 2) in %	2) in T EUR	2) in T EUR	2) in T EUR	2) (Ave ) rage
tel p riva te G mbH eco , Düs seld orf	100 .0 (100 .0)	931 (581 )	304 (47)	23 (31)	0 (0)
ybe ll Gm bH, eas Berl in	50.9 8 (50. 98)	365 (446 )	-81 (116 )	2,45 6 (2,2 58)	12 (10)
ier-s ervi .de Gm bH, carr ces Berl in	100 .0 (100 .0)	196 (130 )	66 (91)	2,04 6 (2,1 58)	0 (0)
rcal l Gm bH, spa Berl in	100 .0 (100 .0)	1,30 8 (474 )	834 (438 )	4,64 0 (5,8 92)	0 (0)
Init.v oice Gm bH Berl in	100 .00	24	-1	0	0
i-cu be G mbH , Düs seld orf (merg ed w ith ec otel unica tion a g in 2 012) comm	100 .0 (50. 1)	(79)	230 (-54 )	1,98 7 (2,2 45)	(0)
Gm toB Emo bile bH, Düs seld orf (sold in th e fi na ncial year)	(51. 03)	(96)	-42 (-14 )	5 (16)	(0)
r Gm bH, nac ama Düs seld orf	100 .0 (100 .0)	2,91 3 (5,3 75)	653 (-46 )	3,48 8 (4,9 35)	17 (17)
PPR O G mbH , Mün che n (sold in th e fi na ncial year)	(11. 2)	(308 )	(4)	(9,2 54)	(6)
Gm bH, mvn eco Düs seld orf	48.6 5 (45. 0)	-3,4 72 (-3,4 46)	-27 (-51 5)	3,29 2 (2,0 33)	13 (9)
PLU S G mbH syn ergy , Rath eno w	49.9 (49. 9)	-511 (-38 3)	-129 (-27 6)	333 (184 )	12 (10)

Other provisions take into account all obligations identifi able on the balance sheet date that are based on past transactions or past events, and for which the amount or date of settlement are unclear. The provisions are recognised with the probable settlement amount. Offsetting with positive profi t contributions does not occur. Provisions are only formed if they are based on a legal or actual obligation to a third party. Non-current provisions are accounted for with their settlement amount on the balance sheet date, if the interest effect resulting from discounting is material. The settlement amount also includes the cost increases that must be considered on the balance sheet date in accordance with IAS 37.

Liabilities are always recognised at the time they are incurred with the amount of the consideration received; transaction costs incurred in this regard, that are not measured at their fair value through profi t or loss, are taken into account. Liabilities are subsequently valued at the historical cost of acquisition. Non-current liabilities are discounted on the basis of interest rates that are in line with the market. Liabilities denoted in a foreign currency are valued at the exchange rate on the balance sheet date.

Deferred taxes are formed at different assessment of the assets and liabilities in the consolidated balance sheet and the tax balances of the individual companies, if these different assessments result in income that must be taxed at a higher or lower rate than would have been the case under the standard of the consolidated balance sheet. Deferred tax assets also include claims for tax reductions, that arise due to the expected future use of tax loss carryforwards, and whose realisation is ensured with adequate certainty. Deferred taxes are determined on the basis of the tax rates that apply or are expected in the individual countries at the time of realisation. Deferred taxes on corporation tax carryforwards of domestic Group companies have been calculated as in the previous year at 15 %, plus 5.5 % solidarity surcharge, and on trade tax loss carryforwards at 13 – 16 %. These rates have been used appropriately for determination of deferred taxes on temporary differences, if these differences reverse in the future. Currently there are no foreign Group companies.

Derivative fi nancial instruments are only used in the ecotel Group to a limited extent, and exclusively for hedging interest rate risks arising from the outside fi nancing of the operative business. In accordance with IAS 39, derivative fi nancial instruments are valued at fair value, the change in fair value is shown with effect on net income in the fi nance result. Fair value is determined by relying on market prices quoted on the capital market that are sampled at the appropriate fi nancial institutions as of the balance sheet date. Derivative fi nancial instruments with a positive fair value are accounted for under other fi nancial assets; derivative fi nancial instruments with a negative fair value are accounted for under the other fi nancial liabilities. Initial booking-in occurs on the settlement date, which as a rule is a few days after the date the debt was incurred (transaction date). The interest rate swap contracts used by ecotel communication ag fall under the fi nancial instrument category "Financial instruments held for sale" (IAS 39.9) and are recognised in the balance sheet at their market values until they are booked out in the case of expiration or dissolution.

Con sion d co ial p rig hts erty ces s an mm erc rop	3 – 5 ye ars
Dev elop nt c osts me	5 ye ars
Sof twa re	3 ye ars
Cus tom er b ase	6 – 18 y ear s

The following useful lives are regularly used as the basis of the valuation:

If there are indications of impairment and if the recoverable amount is under the historical cost of acquisition or manufacture, the intangible assets are amortised. The recoverable amount of an asset corresponds to the higher value net sale proceeds and cash value of the payment fl ows that must be allocated to the asset (value in use).

Property, plant, and equipment is valued at cost of acquisition or cost of manufacture, reduced by use-related scheduled depreciation and if necessary written down. Property, plant and equipment is always depreciated over the presumable useful life using the straight line method, unless in exceptional cases a different depreciation method better corresponds to the course of the useful life. Property, plant, and equipment is regularly depreciated over the following economic useful lives:

If there are indications of impairment and if the recoverable amount is under the historical cost of acquisition or cost of manufacture, items of property, plant, and equipment are written down. If the reasons for write-downs carried out in previous years do not apply, appropriate write-ups are carried out. For reasons of simplicity and materiality, low-value capital goods are completely written down in the year of acquisition and are shown as disposals.

Inventories are assessed at cost of acquisition or the net sale value.

Receivables and other assets are initially recognised at fair value with due consideration of transaction costs incurred and correspondingly carried forward. Receivables bearing no interest or low interest with a term over one year are discounted on the basis of interest rates that are in line with the market. All identifi able individual risks and the general default supported on experiential values are carried at appropriately impaired values, if indications exist in the specifi c case. Receivables denoted in foreign currency are measured at the exchange rate on the balance sheet date.

Prepaid rent and insurance premiums are recognized as prepaid expenses and accrued income and is shown under other assets.

Borrowing costs are recognised as an expense in the period in which they are incurred. Qualifi ed assets as defi ned by IAS 23 are not present in the ecotel Group.

Oth quip nt, plan t an d of fi ce uipm er e me eq	ent 3 – 7 ye	ars

When preparing the consolidated fi nancial statement, discretionary decisions and assumptions are made and estimates have been applied, that have an effect on the amount and disclosure of the recognised assets and liabilities, earnings and expenses as well as the contingent liabilities. The discretionary decisions, assumptions and estimates essentially refer to the uniform Group determination of economic useful lives, the reporting of provisions, the possible realisation of future tax relief, as well as the verifi cation of the intrinsic value of cash-generating units and of underlying parameters for assets. The assumptions upon which the respective estimate is based are explained for the individual items of the balance sheet, as well as for the consolidated profi t and loss statement. The actual values may deviate in some cases from the assumptions and estimates made. Such deviations are considered with effect on net income at such a time when improved knowledge makes this necessary. Considerable risks as defi ned in IAS 1.129, that could be inherent in the assumptions and estimates were not identifi ed at the time the consolidated fi nancial statement was prepared.

Investments in non-consolidated companies are recognised in the balance sheet at cost of acquisition due to the lack of availability of market prices.

The other fi nancial instruments of the ecotel Group relate to the category "Loans and receivables". At the time of their initial recognition in the balance sheet these are valued at their fair value including directly allocatable transaction costs. They are subsequently carried at historical cost of acquisition with application of the effective interest method.

Recognition of sales revenues and other operating income always occurs when the service is provided or the assets have been delivered and thus the transfer of risk has taken place. Provisions for warranties are formed at the time of realisation of the corresponding sales revenues.

In the mobile communications business sales are generated through the offering of mobile communications services and one-time activation charges. Revenues for mobile communications services include monthly service charges, charges for special characteristics, as well as connection and roaming charges, for which ecotel bills the customer. Revenues for mobile communications services are realised on the basis of minutes of use or other agreed rate model minus credit memos and adjustments due to discounts.

Sales revenues from the data and Internet business are reported with the provision of the service. For contracts on the basis of fi xed prices, sales revenues are reported proportionally over the term of the service contract, and for all other service contracts sales revenues are reported on the basis of the service provided or based on use. Sales revenues from contracts for services billed according to time and material expense are recognised with provision of the work hours and the incurring of direct costs at the contractually specifi ed hourly rate.

Sales revenues from the sale of hardware or sales-like rental and leasing transactions are realised as soon as the product has been shipped to the customer, and if there are no unfulfi lled obligations on the part of the company, that would affect the ultimate acceptance on the part of the customer. All costs arising from these obligations are recognised at realisation of the appropriate sales revenue.

If the conditions for realisation of service revenues are satisfi ed in accordance with IAS 18.20 ff., on the level of completion of the transaction on the balance sheet date, the corresponding revenue is recognised on the basis of the assessment of the services provided according to this method.

Operating expenses are recognised with effect on net income when the service is used or at the time of causation.

Interest income and expense are recognised in the period in which they occur. Dividends are always collected when the claim legally occurs. Within the fi nancial result the costs of capital procurement that cannot be offset against equity, such as the costs for supporting the share price, are shown. The result of companies accounted for at equity is shown separately within the fi nance result.

(1) Goodwill and other intangible assets

Explanations for the consolidated balance sheet

The int ible s d lop ed in t set ang as eve	he fi na nci al y	20 11 a ear	s fo llow s:
Infor mati on in TEU R	Goo dwil	l C ions onc ess , indu stria l an d sim ilar righ ts and ets ass and lice nse s in su ch r ight s and ets ass	Dev elop t men cost s	Cus tom er rela tion ship s	Tota l
fact Acq uisi tion ts a nd m urin cos anu g ts a s of 01/ 01/2 011 cos	14,6 66	6,55 3	3,01 9	9,42 4	33,6 62
Cha to t he c olida tion nge ons gro up	-240	-322	0	0	-562
Add ition s	0	481	174	0	655
Tran sfer s	0	70	0	0	70
Disp ls osa	0	0	0	0	0
As of 1 2/31 /201 1	14,4 26	6,78 2	3,19 3	9,42 4	33,8 25
of 0 1/01 /201 Wri te-d 1 own s as	2,53 4	5,11 3	1,89 9	5,61 4	15,1 60
Cha he c olida tion to t nge ons gro up	-240	-268	0	0	-508
Sch edu led add ition s	0	564	485	670	1,71 9
Uns che dule d ad ditio ns	375	112	0	0	487
Disp ls osa	0	0	0	0	0
As of 1 2/31 /201 1	2,66 9	5,52 1	2,38 4	6,28 4	16,8 58
Car ryin ts a s of 12/ 31/2 010 g am oun	12,1 32	1,44 0	1,12 0	3,81 0	18,5 02
Car ryin ts a s of 12/ 31/2 011 g am oun	11,7 57	1,26 1	809	3,14 0	16,9 67

Infor mati on in TEU R	Goo dwil	l C ions onc ess , indu stria l an d sim ilar righ ts and ets ass and lice nse s in su ch r ight s and ets ass	Dev elop t men cost s	Cus tom er rela tion ship s	Tota l
Acq uisi tion nd m fact urin ts a cos anu g ts a s of 01/ 01/2 010 cos	14,6 49	6,35 9	2,73 0	9,42 4	33,1 62
Cha to t he c olida tion nge ons gro up	17	1	0	0	18
Add ition s	0	183	289	0	472
Tran sfer s	0	10	0	0	10
Disp ls osa	0	0	0	0	0
As of 1 2/31 /201 0	14,6 66	6,55 3	3,01 9	9,42 4	33,6 62
Wri te-d of 0 1/01 /201 0 own s as	2,53 4	4,64 1	1,34 1	4,88 7	13,4 03
Cha he c olida tion to t nge ons gro up	0	0	0	0	0
Sch edu led add ition s	0	472	477	727	1,67 6
Uns che dule d ad ditio ns	0	0	81	0	81
Disp ls osa	0	0	0	0	0
As of 1 2/31 /200 9	2,53 4	5,11 3	1,89 9	5,61 4	15,1 60
Car ryin ts a s of 12/ 31/2 009 g am oun	12,1 15	1,71 8	1,38 9	4,53 7	19,7 59
Car ryin ts a s of 12/ 31/2 010 g am oun	12,1 32	1,44 0	1,12 0	3,81 0	18,5 02

In the previous year 2010 intangible assets developed as follows:

Notes to the consolidated fi nancial statement of ecotel communication ag Consolidated fi nancial statement

Recognised development costs in fi nancial year 2011 were TEUR 174 (previous year: TEUR 289). At TEUR 131, these relate to the ecotel communication ag software solutions developed in house and product developments. At ecotel communication ag these were primarily the order processing system for fi xed-line, data and mobile communications, as well as new interfaces to additional upstream suppliers. For nacamar GmbH the developments essentially included the user statistics, http caching, as well as the customer portal in the amount of TEUR 43.

Customer relationships include purchased customer bases from the acquisition of nacamar in 2007 in the amount of TEUR 2,210 (previous year: TEUR 2,421). An additional customer base resulted at ecotel from the merged former ADTG Allgemeine Telefondienstleistungs GmbH (TEUR 338, previous year: TEUR 563). This customer base is amortised over a useful life of six years, the "nacamar" customer base is amortised over a useful life between 10 and 18 years depending on the customer segment. The customer relationships relative to DSLCOMP GmbH purchased in 2006, as of the balance sheet date are shown at TEUR 583 (previous year: TEUR 783), they are amortised linearly over ten years. Other customer relationships are recognised as of the balance sheet date at easybell GmbH (TEUR 9, previous year: TEUR 43) that is amortised over six years.

In the fi nancial year 2011, the non-scheduled depreciation on long-term assets in the amount of TEUR 375 relates to the impairment of goodwill of nacamar (TEUR 350), due to the change of the nacamar customer, ZDF, to a streaming framework agreement of a different television station with a different upstream supplier, and to i-cube (TEUR 25) due the sale of the reseller business. Additional non-scheduled write-downs of long-term assets relate to licenses of i-cube at TEUR 112 and assets under construction of ecotel communication ag at TEUR 54. The nonscheduled write-downs on current assets in the amount of TEUR 104 relate to defaults on receivables of toBEmobile.

In the previous year there were write-downs of non-current assets at capitalised development costs at toBEmobile GmbH (TEUR 81), as well on assets under construction at ecotel communication ag (TEUR 54). The write-downs on non-current assets in the amount of TEUR 85 refer to the IP transit transmission volume that was previously not called up via T-Net, which expired at the end of 2010.

The goodwill shown is comprised as follows with consideration of write-downs carried out in 2011 due to reduced recoverability:

Tota l	12,1 32	375	11,7 57		Cos f ac quis ition and nufa ing ts o ctur ma f 01 /01/ 201 1 as o
ier-s ervi carr ces	17	0	17
ybe ll eas	124	0	124		Infor mati on in TEU R
nac ama r	3,23 4	350	2,88 4			build ings on third ty la nd -par
i-cu be	25	25	0			inclu ding	ipm ent equ
Bus ines stom (DSL COM P / ec otel) s cu ers	8,73 2	0	8,73 2			land righ ts and bui lding s,	ipm ent, equ plan t an d of fi ce
Infor mati on in TEU R	12/3 1/20 10	writ e-do wns 201 1	12/3 1/20			Lan d,	Oth er
Cas h-G nit ( CGU ) rati ng U ene	Car ryin t g am oun	Uns che dule d	Car ryin t g am oun 11	(2) Prop , pla erty nt, and ipm ent equ	Pro lan nd ipm de vel d in fi n ial y ty, t, a ent per p equ ope anc ear		20 11 a s fo llow

In accordance with IAS 36, impairment tests were performed in the fi nancial year just ended for determination of the value in use, according to the discounted cash fl ow method for verifi cation of the recovery of the goodwill shown. The data of the respective company planning serves as the basis in this regard (forecast period: 5 years).

In the previous year non-scheduled write-downs on goodwill occurred as well as amortisation, and a disposal occurred due to deconsolidation in the amount of TEUR 353.

The following assumptions served as the basis for performing the impairment tests:

Capitalisation interest rate 6.0 % (previous year: 6.2 %) after taxes or 8.6 % (previous year: 8.4 %) before taxes, beta factor 0.9 (previous year: 0.9), debt ratio 34 % (previous year: 46 %). The growth rates for the fi rst fi ve years at nacamar GmbH were 5 % (previous year: 8 %) and all other companies as in the previous year 0 %. For the perpetual annuity at nacamar GmbH a growth rate of 1 % was used (previous year: 2 %), as well as for all other CGUs a growth rate of 0 % was used (previous year: 1 %). The income tax rate used was 31 % (previous year: 31 %).

build ings stru on con third ty la nd -par Infor mati on in TEU R
Cos ts o f ac quis ition and nufa ctur ing ma f 01 /01/ 201 1 5,50 8 7,76 4 as o	256	13,5 28
Cha to t he c olida tion 0 -11 nge ons gro up	0	-11
Add ition 170 840 s	52	1,06 2
sfer Tran 0 58 s	-128	-70
Disp ls 132 85 osa	0	217
As of 1 2/31 /201 1 5,54 6 8,56 6	180	14,2 92
Wri te-d of 0 1/01 /201 1 2,12 5 5,48 9 own s as	54	7,66 8
Cha to t he c olida tion 0 -10 nge ons gro up	0	-10
Sch edu led add ition 543 1,04 8 s	0	1,59 1
Uns che dule d ad ditio 0 0 ns	54	54
Disp ls 6 85 osa	0	91
As of 1 2/31 /201 1 2,66 2 6,44 2	108	9,21 2
Car ryin ts a s of 12/ 31/2 010 3,38 3 2,27 5 g am oun	202	5,86 0
Car ryin ts a s of 12/ 31/2 011 2,88 4 2,12 4 g am oun	72	5,08 0

(2) Property, plant, and equipment

Information in T

In fi nancial year 2010 development of property, plant, and equipment of the Group was presented as follows:

Infor mati on in TEU R	Lan d, land righ ts and bui lding s, inclu ding build ings on third ty la nd -par	Oth er ipm ent, equ plan d of fi ce t an ipm ent equ	Prep ents aym on t ible ang nd ts a asse ts u nde asse r ctio stru con n	Tota l
Cos f ac nufa ts o quis ition and ctur ing ma f 01 /01/ 201 0 as o	5,17 9	7,15 5	182	12,5 16
Cha to t he c olida tion nge ons gro up	0	0	0	0
Add ition s	306	770	118	1,19 4
Tran sfer s	34	0	-44	-10
Disp ls osa	-11	-16 1	0	-172
As of 1 2/31 /201 0	5,50 8	7,76 4	256	13,5 28
Wri te-d of 0 1/01 /201 0 own s as	1,59 8	4,61 3	0	6,21 1
Cha he c olida tion to t nge ons gro up	0	0	0	0
Sch edu led add ition s	538	1,02 5	0	1,56 3
Uns che dule d ad ditio ns	0	0	54	54
Disp ls osa	-11	-149	0	-160
of 1 2/31 /201 As 0	2,12 5	5,48 9	54	7,66 8
Car ryin s of 12/ 31/2 009 ts a g am oun	3,58 1	2,54 2	182	6,30 5
Car ryin ts a s of 12/ 31/2 010 g am oun	3,38 3	2,27 5	202	5,86 0

The unscheduled write-downs on assets under construction in the amount of TEUR 54 were incurred at ecotel communication ag.

Future lease payments

The outstanding leasing obligations from operating and fi nance leasing contracts as of December 31, 2011 are presented as follows:

Infor mati on in TEU R	Up t o 1 yea r	Fro m 1 yea r to 5 yea rs	From 5 y ears	Tota l 12/3 1/20 11
Ope ratin d of fi ce ipm ent (lea sing ) g an equ	197	230	0	427
Oth ntal trac ts er re con	1,52 1	1,10 5	1,15 2	3,77 8
	1,71 8	1,33 5	1,15 2	4,20 5

The leasing obligations essentially result from leasing contracts of technical equipment and software, of company vehicles, as well as from rental obligations arising from rented offi ce furnishings. The other rental contracts essentially include the rent of offi ce space, and of the computer centre and framework agreements for line deliveries.

Notes to the consolidated fi nancial statement of ecotel communication ag Consolidated fi nancial statement

Financial assets valued in accordance with the equity method at TEUR 1,586 (previous year: TEUR 1,523) essentially involve a loan from ecotel communication ag to the company, mvneco GmbH, valued at equity, with an annual interest rate of 5 %, and a qualifi ed subordinated claim. In the amount of the negative equity value of mvneco GmbH, of TEUR 946 as of December 31, 2011, previous year: TEUR 958, an additional write-off of the loan in the amount of TEUR 12 ( previous year: TEUR 177) was undertaken.

The carrying value of the holding in mvneco GmbH, valued at equity was TEUR 0 as of December 31, 2011, which was the same as that of the previous year, as the original acquisition costs of this holding of TEUR 254, due to the prorated accumulated net losses of the company, had to be written off completely. The carrying value includes prorated goodwill of TEUR 131 (previous year: TEUR 131). As of the balance sheet date the company showed assets in the amount of TEUR 1,902 and liabilities in the amount of TEUR 5,374.

The carrying value of the holding in synergyPlus GmbH, valued at equity was TEUR 0 as of December 31, 2011, which was the same as that of the previous year, as the original acquisition costs of this holding of TEUR 150, due to the prorated accumulated net losses of the company, had to be written off. As of the balance sheet date the company showed assets in the amount of TEUR 224 and liabilities in the amount of TEUR 735. The negative equity value as of 12/31/2011 was TEUR 133 (previous year: TEUR 88).

In addition, the shares in the non-consolidated Init.voice GmbH (TEUR 25) are shown in the fi nancial assets.

The non-current receivables at TEUR 624 (previous year: TEUR 522) involve a loan from ecotel communication ag to the company synergPlus GmbH valued at equity.

Infor mati on in TEU R

Up t o 1 yea r	Fro m 1 yea r to 5 yea rs	From 5 y ears	Tota l 12/3 1/20 10
134	141	0	275
1,12 6	1,98 6	0	3,11 2
1,26 0	2,12 7	0	3,38 7

From fi nance leasing relationships of nacamar, as of December 31, 2010, liabilities in the amount of TEUR 70 (previous year: TEUR 219), and of ecotel in the amount of TEUR 0 (previous year: TEUR 93) exist, which are completely of a short-term nature. The carrying amounts accounted for in the balance sheet in this regard total TEUR 70 (previous year: TEUR 307).

As of December 31, 2010 the following fi nancial obligations arising from operating and fi nancing leasing contracts existed:

(4) Non-current receivables

(3) Financial assets

The inventories shown essentially relate to routers. These are made available to the customers when a service contract is concluded for the term of the contract and when use begins are assigned to the property, plant and equipment to be depreciated. A devaluation of the terminal devices not yet in use to the net disposal value did not occur in the fi nancial year.

(5) Inventories

Infor mati on in TEU R	Res idua l ter m r 1 y ove ear	Tota l 12/3 1/20 10	Res idua l ter m r 1 y ove ear	Tota l 12/3 1/20 11
Trad ceiv able e re s
To t hird ties par	0	14,3 35	0	13,3 37
From affi liate d co nies mpa	0	0	0	27
From ocia ted ies ass com pan	0	56	0	60
	0	14,3 91	0	13,4 24
Oth ceiv able d cu t as sets er re s an rren
Prep aid exp ens es	0	143	0	286
Rem aini ther eiva bles and rent ets ng o rec cur ass	0	675	0	925
	0	818	0	1,21 1

(6) Trade receivables and other receivables and

current assets

Trade receivables from affi liated companies in the amount of TEUR 27 exist against the nonconsolidated Init.voice GmbH. The effect on results of the increase of the provision for losses on trade receivables is shown in the other operating expenses that include the release of provisions in other operating income. The receivables do not bear interest and thus are not subject to an interest rate risk. Due to the short-term payment goals the carrying values correspond to the fair values.

Infor mati on in TEU R	12/3 1/20 10	12/3 1/20 11
	537	193
	223	9
	760	202

(7)	Cur and rent
	defe rred tax es
	arni on e ngs

Deferred tax assets of TEUR 193 (previous year: TEUR 537) refer to deferred tax claims due to existing corporation tax and trade tax carryforwards at two (previous year: two) subsidiaries. The effective income tax claims relate to claims for reimbursement of taxes on earnings from trade tax, corporation tax and interest income tax credits.

(8) Cas h an d	Infor mati on in TEU R	12/3 1/20 10	12/3 1/20 11
h eq uiva lent cas s	Dep osits in b ank s	6,11 9	6,21 2
	Cas h on han d an d ch ecks	14	23
		6,13 3	6,23 5

Divi den d yie ld	% 0.00
Risk -free inte rest rate	3.90 %
Vola tility of t he e cote l sha res	35.9 7 %
Vola tility of H DAX ind ices	15.9 6 %

The changes in Group equity are presented in the statement of changes in equity.

The number of shares of ecotel communication ag in circulation as of December 31, 2011 was 3,752,500 (after offsetting the 147,500 shares held by the Company itself). The Company holds 147,500 of its own shares. Of which 100,000 shares related to the free-of-charge retransfer of ecotel stock through shareholders of the former ADTG Allgemeine Telefondienstleistungs GmbH that occurred in fi nancial year 2008. The retransfer took place on the basis of an earn-out agreement concluded with these shareholders. In the fi nancial year 2009 an additional 47,500 shares were given back, due to a purchase price adjustment that was enforced relative to the shares of the former ADTG Allgemeine Telefondienstleistungs GmbH.

The shares are issued as no-par value bearer shares with a prorated amount of the capital stock of EUR 1.00.

The capital reserves were TEUR 1,678 (previous year: TEUR 1,661). The change resulted from the proportional consideration of the expense from the stock option plan with TEUR 17.

Share-based remuneration

The stock option plan is based on the resolution of the Annual General Meeting of ecotel communication ag, held July 27, 2007. For 45,000 shares of this option plan that were issued prior to 2007, the exercise price to receive a share of the Company corresponds to the 30-day average market price of a share prior to the day of issuance (EUR 13.45). The term of the option plan is fi ve years. The share option may be exercised for the fi rst time after a waiting period of two years after the day of issuance. After the waiting period elapses, one third of the options can be exchanged per year. Options can only be exercised after the waiting period elapses if the average market price of the stock has increased at least 5 % per year compared to the exercise price, and has developed at least two percentage points better than the HDAX (includes the values of all 110 companies from the DAX, MDAX and TecDAX indices).

The fair value amount of the obligation arising from the share-based remuneration agreement has been assessed on the basis of a binomial model. In this process the following parameters were used:

The exercise price to receive a share of the Company stock also corresponds to the 30-day average market price of a share prior to the date of issuance (EUR 12.27) for the 100,000 stock options that were additionally issued on the grant date of October 1, 2007. In accordance with IFRS 2 for the valuation of the old 45,000 share options an exercise price of EUR 13.45 was

Notes to the consolidated fi nancial statement of ecotel communication ag Consolidated fi nancial statement

(9) Equity

maintained. The underlying volatility for all options is based on historically annualised volatility according to Bloomberg listings for a 260-day period. The expected exercise period is three to fi ve years.

Because the success goals for exercise of the issued 145,000 options were not achieved, as of September 30, 2011 all 145,000 outstanding options are forfeited.

The 145,000 options were granted to two board members (120,000 options, market value upon issuance total TEUR 282), and to an additional executive of ecotel communication ag, for which the expense for the addition to the capital reserve was TEUR 2 (previous year: TEUR 6) (25,000 options, market value upon issuance: TEUR 36). A listing of the market values per person is included in Note 29. The features of the newly granted options are the same as those of the previously granted options. However due to the values at the time of issuance October 1, 2007, determination of the fair value of these newly granted options was also based on a binomial model; the following parameters were used:

During the fi nancial year 2011 the following reports were submitted, which in conjunction with § 20, para. 1 or para. 4 of the German Stock Corporation Law (AktG) or in conjunction with § 21, para 1 or para. 1a of the German Securities Trading Law (WpHG) resulted in disclosures in accordance with § 160, para. 1 no. 8 of the German Stock Corporation Law (AktG).

03/31/2011

Notifi cation from the AvW Gruppe, Krumpendorf, Austria, that the share in the voting rights of ecotel communication ag underranged the voting right thresholds of 10 %, 5 % and 3 % on 03/31/2011 and on this day amounted to 0 % (this corresponds to 0 voting rights).

04/07/2011

Notifi cation from Schnigge Wertpapierhandelsbank AG, Düsseldorf, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 3 %, 5 % and 10 % on 03/31/2011 and on this day amounted to 10.21 % (this corresponds to 398,305 voting rights).

04/07/2011

Notifi cation from Schnigge Wertpapierhandelsbank AG, Düsseldorf, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 10 % on 04/01/2011 and on this day amounted to 9.31 % (this corresponds to 363,305 voting rights).

04/07/2011

Notifi cation from PVM Private Values Media AG, Frankfurt / Main, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 3 %, 5 % and 10 % on 03/31/2011 and on this day amounted to 10.21 % (this corresponds to 398,305 voting rights). These voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 2 of the German Securities Trading Law (WpHG), from Schnigge Wertpapierhandelsbank AG.

04/07/2011

Notifi cation from PVM Private Values Media AG, Frankfurt / Main, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 10 % on 04/01/2011 and on this day amounted to 9.31 % (this corresponds to 363,305 voting rights). These voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 2 of the German Securities Trading Law (WpHG), from Schnigge Wertpapierhandelsbank AG.

04/08/2011

Notifi cation from Augur Financial Opportunity SICAV, Luxembourg, Luxembourg, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 3 %, 5 % and 10 % on 03/31/2011 and on this day amounted to 10.21 % (this corresponds to 398,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

Augur Financial Holding II S.A., Luxembourg
Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main
Schnigge Wertpapierhandelsbank AG, Düsseldorf

Divi den d yie ld	0.00 %
-free Risk inte rest rate	4.15 %
Vola tility of t he e l sha cote res	36.0 0 %
Vola tility of H DAX ind ices	15.1 3 %

The underlying volatility is based on historically annualised volatility according to Bloomberg listings for a 260-day period. The expected exercise period is three to fi ve years.

The addition to the capital reserve (TEUR 17; previous year: TEUR 44) is proportionate to the period and is recognised in the personnel expenses. As of December 31, 2011, in the capital reserve an amount of TEUR 318 (previous year: TEUR 301) is included for the existing share options.

Minority interests

The minority interests refer to the indirect minority interests in the equity of easybell GmbH (TEUR 179; previous year: TEUR 219), of sparcall GmbH (TEUR 629, previous year: TEUR 220) and of carrier-services.de GmbH (TEUR 92, previous year: TEUR 60). Moreover, the minority shares of toBEmobile GmbH at TEUR 47, which were sold in the meantime, and of i-cube GmbH at TEUR 38, were shown in the previous year.

Share ownership

The following material stakes in excess of 10 % are held in the Company:

	%
Pete r Zil s	25.6 4 %
Rete ntio n of the Co ny's n sh mpa ow ares	3.78 %
Dive rsifi e d ho lding s	21.6 2 %
Inte llect Inv estm ent & M ent Ltd. ana gem	25.0 9 %
IQ M artra de H oldi nd M entg llsch aft m bH ng u ana gem ese	14.5 6 %
PVM Priv ate Valu es M edia AG	9.31 %

Notes to the consolidated fi nancial statement of ecotel communication ag Consolidated fi nancial statement

04/08/2011

Notifi cation from Augur Financial Holding II S.A., Luxembourg, Luxembourg, that the share in the voting rights of ecotel communication ag underranged the voting right thresholds of 3 %, 5 % and 10 % on 03/31/2011 and on this day amounted to 10.21 % (this corresponds to 398,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

– Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main

– Schnigge Wertpapierhandelsbank AG, Düsseldorf

04/08/2011

Notifi cation from Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 3 %, 5 % and 10 % on 03/31/2011 and on this day amounted to 10.21 % (this corresponds to 398,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

– Schnigge Wertpapierhandelsbank AG, Düsseldorf.

04/08/2011

Notifi cation from Augur Capital GmbH, Bad Soden am Taunus, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 3 %, 5 % and 10 % on 03/31/2011 and on this day amounted to 10.21 % (this corresponds to 398,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

Augur Zwei Verwaltungs GmbH, Frankfurt / Main
Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main
Schnigge Wertpapierhandelsbank AG, Düsseldorf

04/08/2011

Notifi cation from Augur Zwei Verwaltungs GmbH, Frankfurt / Main, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 3 %, 5 % and 10 % on 03/31/2011 and on this day amounted to 10.21 % (this corresponds to 398,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main
Schnigge Wertpapierhandelsbank AG, Düsseldorf

04/08/2011

Notifi cation from Augur Financial Opportunity SICAV, Luxembourg, Luxembourg that the share in the voting rights of ecotel communication ag underranged the voting right thresholds of 10 %, on 04/01/2011 and on this day amounted to 9.31 % (this corresponds to 363,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows: – Augur Financial Holding II S.A., Luxembourg

Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main
Schnigge Wertpapierhandelsbank AG, Düsseldorf

04/08/2011

Notifi cation from Augur Financial Holding II S.A., Luxembourg, Luxembourg, that the share in the voting rights of ecotel communication ag underranged the voting right thresholds of 10 % on 04/01/2011 and on this day amounted to 9.31 % (this corresponds to 363,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main
Schnigge Wertpapierhandelsbank AG, Düsseldorf

04/08/2011

Notifi cation from Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 10 % on 04/01/2011 and on this day amounted to 9.31 % (this corresponds to 363,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

– Schnigge Wertpapierhandelsbank AG, Düsseldorf

04/08/2011

Notifi cation from Augur Capital GmbH, Bad Soden am Taunus, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 10 % on 04/01/2011 and on this day amounted to 9.31 % (this corresponds to 363,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

Augur Zwei Verwaltungs GmbH, Frankfurt / Main
Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main
Schnigge Wertpapierhandelsbank AG, Düsseldorf

04/08/2011

Notifi cation from Augur Zwei Verwaltungs GmbH, Frankfurt / Main, Germany, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 10 % on 04/01/2011 and on this day amounted to 9.31 % (this corresponds to 363,305 voting rights). The voting rights are attributable to the Company in accordance with § 22 para. 1 sentence 1 no. 1 of the German Securities Trading Law (WpHG). The chain of the controlled companies is as follows:

Augur Financial Holding Zwei GmbH & Co. KG, Frankfurt / Main
Schnigge Wertpapierhandelsbank AG, Düsseldorf

08/11/2011

Notifi cation from the Auer von Welsbach Privatstiftung, Vienna, Austria, that the share in the voting rights of ecotel communication ag underranged the voting right thresholds of 10 %, 5 % and 3 % on 03/31/2011 and since then has amounted to 0 % (this corresponds to 0 voting right).

08/11/2011

Notifi cation from the AvW Beteiligungsverwaltung GmbH, Vienna, Austria, that the share in the voting rights of ecotel communication ag underranged the voting right thresholds of 10 %, 5 % and 3 % on 03/31/2011 and since then has amounted to 0 % (this corresponds to 0 voting rights).

Additional notifi cations

Notifi cation of Intellect Investment & Management Ltd., Tortola, British Virgin Islands, of 07/01/2009, that the share in the voting rights of ecotel communication ag underranged the voting right threshold of 25 % on 07/01/2008 and on this day amounted to 25.09 % (number of shares: 978,489, share of capital stock 3,900,000). The voting rights are held by Andrey Morozov, Finland, who owns more than 3 % of the voting rights of the company.

Notifi cation from Mr. Peter Zils, Germany, on 01/11/2010 that his share in the voting rights of ecotel communication ag underranged the threshold of 30 % on 01/05/2010 and on this day amounted to 25.64 % (number of voting rights: 1,000,000, total number of voting rights: 3.900.000).

Notifi cation from IQ Martrade Holding und Managementgesellschaft mbH, Düsseldorf on 01/11/2011 that its share in the voting rights of ecotel communication ag exceeded the threshold of 10 % on January 5, 2010 and on this day amounted to 14.56 % (number of voting rights: 567.879). The voting stock is held by the following companies who have more than 10 % of the voting rights:

(1) MARTRADE Logistic GmbH & Co. Kommanditgesellschaft, Düsseldorf
(2) MARTRADE Logistic Verwaltungs GmbH, Düsseldorf
(3) Günther Hahn, Germany

Capital management

The ecotel Group manages its capital with the primary goal of supporting the business activity and to assure that the Company remains a going concern in the long term. Capital management includes equity as well as borrowings. The important goal is compliance with the fi nancial covenants agreed with the banks. Consequently compliance is continuously monitored. In this process future developments relative to their effects on the fi nancial covenants are analysed in order to implement measures in a timely manner, if necessary.

(11) Other fi nancial liabilities, trade liabilities and other liabilities

Infor mati on in TEU R	Res idua l ter m to 1 yea r	Tota l 12/3 1/20 10	Res idua l ter m to 1 yea r	Tota l 12/3 1/20 11
Cre dit l iabil ities	7,91 8	13,2 50	2,71 6	9,32 5
Oth er	0	70	0	0
Fina ncia l de bt	7,91 8	13,3 20	2,71 6	9,32 5
Trad ceiv able e re s	12,8 02	12,8 02	11,5 55	11,5 55
Liab ilitie ocia ted s to ass ies com pan	131	131	134	134
Oth er ta xes	314	314	330	330
Soc ial s rity ecu	36	36	41	41
Wag nd s alar y to be paid es a	395	395	408	408
Oth l-rel ated liab ilitie er p erso nne s	365	365	192	192
Ann ual aud it / su isor y bo ard perv	105	105	102	102
Oth er	170	170	647	647
Oth er li abil ities	1,38 5	1,38 5	1,72 0	1,72 0

The fi nancial liabilities are to fi nancial institutions, and in the previous year, a small portion (TEUR 70) to a leasing company. From the valuation of an interest swap at fair value there are fi nancial liabilities of TEUR 83 (previous year: TEUR 98). The change in the fair value is included in the fi nance result.

Borrowings essentially refer to the residual amount of an acquisition loan taken out in 2007 in the amount of TEUR 250, a KfW innovation loan taken out in 2009 in the amount of TEUR 4,922, as well as an investment loan taken out in 2011 in the amount of TEUR 4,000. The loan taken out in 2007 has a term of fi ve years, the interest rate is determined according to a reference rate plus a margin. One half of the loan taken out in 2009 consists of an outside capital tranche, the other half consists of a subordinated tranche. Both tranches have a term of ten years; the interest rate is fi xed. The loan taken out in 2011 has a term of fi ve years, the interest rate is determined according to a reference rate plus a margin. The company shares of nacamar GmbH were pledged to the lending bank. Current borrowings are essentially the repayment due in 2012 for all three loans.

In the course of the usual business activity, the Group is confronted with risks associated with exchange rate change, interest rate change and credit rating risks that could have an infl uence on the asset, fi nance, and earnings position.

Exchange rate risk: Exchange rate risks occur due to receivables, liabilities, liquid funds and planned transactions that occur or will occur in a currency that is not the functional currency of the Company. The Company reviews the use of derivative fi nancial instruments to hedge the foreign currency risks. Because the exchange rate risk was low in past fi nancial years, no derivative fi nancial instruments were used to hedge exchange rate risks.

(12) Reporting of fi nancial instruments

(10) Current and deferred income taxes

Initia l lev el 01/0 1/20 11	Con ptio sum n	Rev l ersa	Allo catio n	Tran sfer s	el 12/3 End lev 1/20 11

352	232	1	195	0	314
792	0	71	495	-237	979
1,14 4	232	72	690	-237	1,29 3
352	232	1	195	0	314

Interest rate risk: In the ecotel Group interest rate risks exist primarily due to the fi nancial liabilities of the Group. Hedges through derivative fi nancial transactions are executed to hedge against negative value changes due to unexpected interest rate movements. At the end of 2011 there were three interest rate swaps. The interest rate swaps have a nominal volume of TEUR 2,000, 4,000 or TEUR 250. All derivative fi nancial instruments are valued as fi nancial assets or fi nancial liabilities at fair value as of the key date. For interpretation of the positive or negative fair values of the derivative fi nancial instruments it must be noted that they are balanced out by underlying transactions with compensating risks. The term of the interest rate derivatives concluded is oriented to the term of the underlying transactions and thus for the most part is in the short-term to medium-term range.

Credit risk: A credit risk exists for the Group if transaction partners cannot honour their obligations within the usual payment periods. The maximum default risk is presented on the balance sheet by the carrying amount of the respective fi nancial asset. The development of the receivables portfolio is constantly monitored in order to identify possible default risks early on and implement appropriate measures.

Accordingly, in the Group, value adjustments for receivables under the following balance sheet items have developed as follows:

As of December 31, 2011, past-due unadjusted receivables existed in the following amount:

Pas t-du e djus ted una ivab les rece	Gro alue ss v 12/3 1/20 11	Pas t-du e adju sted ivab les rece	Una djus ted ivab les d rece ue e fo in th llow ing time iods per
Infor mati on in TEU R			To 3 0 day s	31 – 60 day s	61 – 90 day s	91 – 120 day s	Ove r 12 0 day s
Trad e ivab les rece	13,7 86	362	174	379	410	25	287
Oth ceiv able er re s and oth er ent ts curr asse	1,21 1	0	0	0	0	0	0
	14,9 97	362	174	379	410	25	287

Adj ustm ents for 201 1 ivab les rece Infor mati on in	Trad e ivab les rece TEU R	Oth ceiv able er re s and oth er ent ts curr asse	Tota l 12/3 1/20 11
As o f 01 /01/ 201 1	441	85	526
Adju stm ents in t he r rting iod epo per	0	0	0
Disp ls osa	79	85	164
of 1 2/31 /201 As 1	362	0	362

Adj ustm ents for 201 1 ivab les rece	Trad e ivab les rece	Oth ceiv able er re s and oth er ent ts curr asse	Tota l 12/3 1/20 10
As o f 01 /01/ 201 0	489	0	489
Adju stm ents in t he r rting iod epo per	22	85	107
Disp ls osa	70	0	70
As of 1 2/31 /201 0	441	85	526

The adjustments relate completely to the valuation category "Loans and receivables".

Individual value adjustments are considered if there are indications of impairment on past-due fi nancial assets threatened by default if the fair value of these receivables is below the carrying amount shown due to unrecoverability or impairment.

Of the stated unadjustable trade receivables that are more than 120 days past due, in the amount of TEUR 287 (previous year: TEUR 378) there are receivables that the company still expects to recover. Of these TEUR 10 (previous year: TEUR 37) relate to the barter transaction of nacamar GmbH; for which liabilities for outstanding invoices are shown corresponding to the missing counter-claims.

As of December 31, 2010 the following situation existed:

Pas t-du e djus ted una ivab les rece	Gro alue ss v 12/3 1/20 10	Pas t-du e adju sted ivab les rece	Una djus ted ivab les d rece ue in th e fo llow ing time iods per
Infor mati on in TEU R			To 3 0 day s	31 – 60 day s	61 – 90 day s	91 – 120 day s	Ove r 12 0 day s
Fina ncia l rec eiva bles	522	0	0	0	0	0	0
Trad e ivab les rece	14,8 32	441	237	495	172	10	378
Oth ceiv able er re s and oth er ent ts curr asse	903	85	0	0	0	0	0
	16,2 57	526	237	495	172	10	378

In the consolidated balance sheet fi nancial instruments assessed at fair value can be categorised in the following valuation hierarchy, which refl ects the extent to which the fair value can be observed:

Level 1: Assessments at fair value based on prices listed (unadjusted) on active markets for

identical assets or liabilities.

Level 2: Assessments at fair value based on either directly (as prices) or indirectly (derived from prices) observable input data for the asset or liability, that do not represent any listed prices according to level 1.

Level 3: Assessments at fair value via input data referenced for the asset or liability that is not based on observable market data (unobservable input data).

The ecotel Group uses level 1 and 2 fi nancial instruments exclusively. During the fi nancial year 2011 there were no reclassifi cations between level 1 and level 2. All fi nancial assets in the presentation as of December 31, 2011 below are assessed at fair value and assigned to level 1. For the fi nancial liabilities, current fi nancial liabilities in the amount of TEUR 83 (previous year: TEUR 98) belong in level 2. As of December 31, 2011, these refer to the negative market value of the interest rate swaps held by ecotel communication ag.

The fi nancial assets and liabilities can be assigned to measurement categories with the following carrying values:

Fina ncia l as sets f 12 /31/ 201 1 as o	Fair val ue	Car ryin ts g am oun
Infor mati on in TEU R		Cas h and h cas ivale nts equ	Loa nd ns a ivab les rece	Fina ncia l instr nts ume d mea sure at fa ir va lue thro ugh profi t an d loss	Fina ncia l ts asse ilabl ava e for s ale	Tota l ying carr unts amo
Liqu id fu nds	6,23 5	6,23 5	0	0	0	6,23 5
Trad ceiv able e re s	13,4 24	0	13,4 24	0	0	13,4 24
Oth nt re ceiv able er c urre s and ets ass	1,21 1	0	1,21 1	0	0	1,21 1
Fina ncia l ass ets	1,61 1	0	0	0	1,61 1	1,61 1
fi na Non rent ncia l ass ets -cur
	624	0	624	0	0	624
Tota l	23,1 05	6,23 5	15,2 59	0	1,61 1	23,1 05

Fina ncia l as sets f 12 /31/ 201 0 as o	Fair val ue			Car ryin g am oun	ts
Infor mati on in TEU R		Cas h and h cas ivale nts equ	Loa nd ns a ivab les rece	Fina ncia l instr nts ume d mea sure at fa ir va lue thro ugh profi d t an loss	Fina ncia l ts asse ilabl ava e for s ale	Tota l ying carr unts amo
Liqu id fu nds	6,13 3	6,13 3	0	0	0	6,13 3
Trad e ivab les rece	14,3 91	0	14,3 91	0	0	14,3 91
Oth nt er c urre ivab les a nd a sset rece s	818	0	818	0	0	818
Fina ncia l ass ets	1,63 5	0	0	0	1,63 5	1,63 5
Non rent -cur fi na ncia l ass ets	522	0	522	0	0	522
Tota l	23,4 99	6,13 3	15,7 31	0	1,63 5	23,4 99

Fina ncia l lia bilit ies f 12 /31/ 201 1 as o	Fair val ue		Car ryin ts g am oun
Infor mati on in TEU R		Oth nt er c urre liabi lities	Fina ncia l ins trum ents d at fair val mea sure ue thro ugh fi t a nd l pro oss	Tota l ca rryi ng unts amo
Cur rent fi na ncia l liab ilitie s	2,71 6	2,63 3	83	2,71 6
Trad e ivab les rece	11,5 55	11,5 55	0	11,5 55
Liab ilitie s to ciate d co nies asso mpa	133	133	0	133
Oth er liabi lities rent cur	1,72 0	1,72 0	0	1,72 0
Non loa rent -cur ns	6,49 7	6,60 9	0	6,60 9
Oth er fi na ncia l de bts	0	0	0	0
Tota l	22,6 21	22,6 50	83	22,7 33

Notes to the consolidated fi nancial statement of ecotel communication ag Consolidated fi nancial statement

As of December 31, 2010 the following breakdown existed:

Fina ncia l lia bilit ies f 12 /31/ 201 0 as o	Fair val ue	Car ryin ts g am oun
Infor mati on in TEU R		Oth nt er c urre liabi lities	Fina ncia l ins trum ents d at fair val mea sure ue fi t a thro ugh nd l pro oss	Tota l ca rryi ng unts amo
Cur rent fi na ncia l liab ilitie s	8,04 9	7,95 1	98	8,04 9
Trad e ivab les rece	12,8 02	12,8 02	0	12,8 02
Oth er liabi lities rent cur	1,38 5	1,38 5	0	1,38 5
Non loa rent -cur ns	5,33 2	5,33 2	0	5,33 2
Oth er fi cial nan deb ts lia biliti es	70	70	0	70
Tota l	27,6 38	27,6 38	98	27,6 38

The derivative fi nancial instruments held for trading purposes were recognised in the Group income statement based on the assessment of fair value on the respective balance sheet date, as TEUR 15 (previous year: expenses of TEUR -77). The effects result exclusively from the interest rate swaps.

Liquidity risk: As a rule refi nancing of the ecotel Group companies occurs centrally through ecotel communication ag. Here the risk exists that the liquidity reserves do not suffi ce to satisfy the fi nancial obligations in a timely manner. In 2012 repayments are due with a nominal value of EUR 2.6 million. To cover the liquidity requirement, cash and cash equivalents of EUR 6.3 million are available. In addition ecotel communication ag has a contractually agreed revolving credit facility in the amount of EUR 2.9 million, which after subtracting credit fees in the amount of EUR 1.6 million, as of December 31, 2011, is EUR 1.3 million (previous year: EUR 1.0 million). So-called fi nancial covenants exist relative to the bank loan taken out by ecotel communication ag (residual value: EUR 9.2 million) and to the available credit line. A violation of the covenants could possibly result in notice of cancellation and premature repayment of the investment loans of TEUR 4,000 and credit limit, if an agreement concerning an adaptation of the fi nancial covenants or refi nancing cannot be achieved. Overall the liquidity risk is estimated as low.

coming years:

Rep ents / int t aym eres ts fo pay men r	Car ryin g unts amo		Rep ents aym		Inte	rest pay men	ts
fi na ncia l lia bilit ies Infor mati on in TEU R	12/3 1/20 11	201 2	201 3 to 2 016	From 201 7	201 2	201 3 to 2 016	Fro m 201 7
Liab ilitie s to b ank s	9,17 2	2,56 3	3,45 8	3,15 1	335	724	199
Liab ilitie s fro m fi na leas ing nce	70	70	0	0	1	0	0
Der ivati ve fi cial liabi lities nan	83	0	0	0	83	0	0

The following (non-discounted) payments will presumably result from the fi nancial liabilities in

As of the previous year's key date the following presentation occurs:

Rep ents / int t aym eres ts fo pay men r	Car ryin g unts amo	Rep ents aym			Inte rest ts pay men
fi na ncia l lia bilit ies Infor mati on in TEU R	12/3 1/20 10	201 1	201 2 to 2 015	From 201 6	201 1	201 2 to 2 015	Fro m 201 6
Liab ilitie s to b ank s	12,7 50	7,57 8	1,50 0	3,67 2	370	744	349
Liab ilitie s fro m fi na leas ing nce	322	251	71	0	12	1	0
Der ivati ve fi cial liabi lities nan	98	0	0	0	97	1	0

Interest rate risks are presented via sensitivity analyses in accordance with IFRS 7. These analyses present the effects of changes in market interest rates to interest payments, interest income and expenses, other results components, and possibly on equity. The interest rate sensitivity analyses are based on the following assumptions:

Market interest rate changes of primary fi nancial instruments with fi xed interest rate (fi nancial liabilities) only have an effect on the result if they are measured at fair value. Thus all fi xed-rate fi nancial instruments measured at historical cost of acquisition are not subject to interest rate change risks as stipulated in IFRS 7. Changes in market interest rates have an effect on the interest result of primary, variable interest-rate fi nancial instruments, for which interest payments are not designated as underlying transactions as part of cash fl ow hedges against interest-rate change risks, and consequently are considered in the calculation of the sensitivities determined by results. Changes in the market interest rates for interest derivatives (interest rate swaps) that are not integrated in a hedge relationship in accordance with IAS 39 have effects on the other fi nancial result and consequently are considered in the calculations of sensitivities determined by results. If the market interest rate level would have been higher (lower) by 50 basis points as of December 31, 2011, the earnings before taxes would have been lower (higher) by TEUR 1. The hypothetical effect on the result is determined by the potential effects from interest derivatives of TEUR 31 and primary variable interest rate fi nancial liabilities of TEUR -32.

(13) Contingent receivables and liabilities and other fi nancial obligations

As of December 31, 2011 contingent liabilities due to guarantees and other commitments existed in the amount of TEUR 1,612 (previous year: TEUR 1,878) for surety obligations.

Presently two legal disputes are underway that have been initiated against ecotel communication ag, in one case for the non-acceptance of hardware equipment, and in the other case due to the legal dispute initiated by DTAG for additional claims that are disputed by ecotel. For litigation costs associated with the legal disputes appropriate reserves have been formed.

Other fi nancial obligations occurred exclusively from the obligations arising from the operating leasing relationships, shown above.

(14) Sales revenue

Infor mati on in TEU R	201 0	201 1
Wag nd s alar es a y	8,24 3	8,39 8
Soc ial s rity tribu tion ecu con s	1,23 5	1,30 7
Of w hich es f ions and port exp ens or p ens sup	632	654
	9,47 8	9,70 5

Staf f	201 0	201 1
Full -tim ploy e em ees	171	176
	171	176

Infor mati on in TEU R	201 0	201 1
Diss olut ion of lia biliti es	80	120
Rec harg ing of fe nd e es a xpe nse s	119	85
Rev l of ision s fo r los ivab les ersa prov ses on r ece	75	79
Exc han ate gain ge r s	17	12
l of Disp inta ngib le a sset rty, plan t, osa s, p rope and ipm ent and fi na ncia l ass ets equ	22	27
Oth er	732	1,27 7
	1,04 5	1,60 0

income and other own

(16) Cost of materials and services(17) Personnel

expenses

The other own work capitalised shown in 2011 refers to programming projects that were offset within the Group, as in the previous year.

Disposal of intangible assets, property, plant, Other(15) Other operating work capitalised Other operating income consists of the following:

The cost of materials and services was incurred exclusively for external services utilised.

Distribution of sales revenue across the business units, Business Solutions, Wholesale Solutions and New Business is shown in the segment reporting. Sales revenue is earned exclusively through the provision of services.

Domestic

Infor mati on in TEU R	201 0	201 1
Dom	84,4	74,3
estic	34	09
Fore	13,8	10,1
ign	80	72
	98,3 14	84,4 81

Notes to the consolidated income statement

In the fi nancial year the average number of staff employed in the consolidated companies:

In addition the number of management board members or managing directors for the consolidated companies was 6 (previous year: 5) and the number of trainees was 7 (previous year: 8). For the companies valued at equity, 23 (previous year: 17) full-time employees and 2 (previous year: 2) managing directors were employed.

(18) Scheduled depreciation and unscheduled impairment

A distribution of the depreciation for intangible assets, property, plant, and equipment and fi nancial assets is provided in the explanations for the respective item.

In fi nancial year 2011, after execution of the impairment tests, there were unscheduled writedowns on goodwill of the cash-generating units totaling TEUR 375 (previous year: TEUR 0), on other non-current intangible assets of TEUR 112 (previous year: TEUR 81), as well as on property, plant, and equipment of TEUR 54 (previous year: TEUR 55).

In addition, in 2011 other current assets in the amount of TEUR 104 (previous year: TEUR 85) were depreciated.

Infor mati on in TEU R	201 0	201 1
Cos f de ts o liver ing ds goo	3,86 6	3,84 2
Leg al, a udit ing and sult y fe con anc es	1,08 9	1,24 6
Ren ts, l ises end iture eas es, prem exp	728	708
EDP ts cos	920	1,00 2
Oth dmi nistr ative ts er a cos	1,53 5	993
Veh icle cost s	430	283
Mar ketin g ex pen ses	416	447
Cha in p rovi sion s fo r los ivab les nge ses on r ece	350	418
Insu emi ranc e pr ums	187	182
Rep airs and inte ma nan ce	0	135
Lea sing	29	153
f int Los dis al o ible ts a nd i tem s on pos ang asse s of p rty, plan t, an d eq uipm ent rope	0	1
Oth er	153	61
	9,70 3	9,47 1

(19) Other operating

expenses

(21) Taxes on income and earnings

A reconciliation of the expected to actual tax expense is show below. To determine the expected tax expense, the result before income taxes is multiplied by a fl at income tax rate of 31 % specifi ed by the Group (previous year: 32 %). This consists of a tax rate of 15 % (previous year: 15 %) for corporation tax, plus 5.5 % for the solidarity surcharge, and 15 % (previous year: 16 %) for trade tax. The expected tax expense is compared with the actual tax expense.

Interest incomeInterest expense

Infor mati on in TEU R	201 0	201 1
Inte rest inc ome
Inte rest inc from ban k de its / fi xed -term dep osits ome pos	3	19
Oth er in tere st in d si mila rnin com e an r ea gs	134	125
	137	144
Inte rest exp ens e
Inte dit l iabil ities rest exp ens e on cre	-615	-486
Res ult f der ivati ve fi cial instr nts rom nan ume	77	15
Oth er in tere st a nd s imila r ex pen ses	-54	-17
	-592	-488
Net inte rest inc ome	-455	-344
Oth er fi cial nd i nan exp ens es a nco me
Misc ella ther fi na ncia l inc neo us o ome	2	0
Cos f su er fi ts o rting the sha rice and oth cial ppo re p nan exp ens es	-78	-57
Res ult o f co nies val ued quit at e mpa y	-205	-12
	-281	-69
Fina ncia l res ult	-736	-413

Infor mati on in TEU R	201 0	201 1
Effe ctive ning s ta ear x	-218	-453
Defe rred tax rnin es o n ea gs	-174	-529

(20) Financial result

Infor mati on in TEU R	201 0	201 1
Inte rest inc ome
Inte rest inc from ban k de its / fi xed -term dep osits ome pos	3	19
Oth er in tere st in d si mila rnin com e an r ea gs	134	125
	137	144
Inte rest exp ens e
Inte dit l iabil ities rest exp ens e on cre	-615	-486
Res ult f der ivati ve fi cial instr nts rom nan ume	77	15
Oth er in tere st a nd s imila r ex pen ses	-54	-17
	-592	-488
Net inte rest inc ome	-455	-344
Oth er fi cial nd i nan exp ens es a nco me
Misc ella ther fi na ncia l inc neo us o ome	2	0
Cos f su er fi ts o rting the sha rice and oth cial ppo re p nan exp ens es	-78	-57
Res ult o f co nies val ued quit at e mpa y	-205	-12
	-281	-69
Fina ncia l res ult	-736	-413

Infor mati on in TEU R	201 0	201 1
Effe ctive ning s ta ear x	-218	-453
Defe rred tax rnin es o n ea gs	-174	-529
Inco tax me exp ens e	-392	-982

A reconciliation of the expected to actual tax expense for the year under review and for the previous year is show below:

Infor mati on in TEU R	201 0	201 1
Res ult b efor e ta xes	731	2.68 3
Gro up t ate ax r	32.0 %	31.0 %
Exp ecte d ta x in com e	-234	-832
Diffe es d ue t o ta tes diffe ring from the Gro up t ate renc x ra ax r	14	-11
Tax redu ctio ns t o du e ta t ea rnin x-ex emp gs	240	-23
Tax incr es d ditu that -ded uctib le ue t not tax eas o ex pen res are	-400	-189
Prev ious r's t yea axe s	27	0
Valu atio n ad just t of defe rred tax ets on l yfor ds men ass oss carr war	24	120
from Earn ings ity h oldi equ ngs	-64	-4
Oth x ef fect er ta s	1	-44
Tax cord ing he P /L s t (ex / inc +) to t tate exp ens e ac men pen se – ome	-392	-983
Effe ctiv e ta te in % x ra	-53. 6 %	-36. 6 %

Infor mati on in TEU R	201 0 Ass ets	201 0 Liab ilitie s	201 1 Ass ets	201 1 Liab ilitie s
Los rryfo rds s ca rwa	537	0	193	0
t / in Prop erty , pla nt, a nd e quip tang ible ts men asse	461	1.21 8	743	1.69 1
Trad ceiv able e re s	0	66	0	57
Fina ncia l de bt	31	0	26	0
Oth er it ems	0	0	0	0
Offs et – ets / liab ilitie ass s	-492	-492	-769	-769
Valu e ad just t men	0	0	0	0
	537	792	193	979

Deferred tax assets in a single tax jurisdiction are offset against deferred tax liabilities in the same jurisdiction, in so far as the terms correspond.

Deferred taxes are determined using the balance-sheet oriented liability method. According to this method, tax relief or burdens that are likely to come to bear in the future are balanced to account for temporary differences between the carrying amounts listed in the consolidated fi nancial statement and the taxable amount of assets and liabilities that are recognised. If the temporary differences refer to items that directly increase or reduce equity, then the associated deferred taxes are also set off directly against equity. Offsetting without effect on net income did not occur as of December 31, 2011 and December 31, 2010.

The deferred taxes must be allocated to the following items:

	201 0	201 1
fi t fo r (in R) Acc rued solid ated r the EU con pro yea	56,4 61.7 1	1,07 3,15 1.64
Wei ghte d av mbe r of sha erag e nu res	3,75 2,50 0.00	3,75 2,50 0.00
(in ) Und ilute d ea rnin hare EUR gs p er s	0.02	0.29
Dilu ted ings sha re ( in E UR) earn per	0.02	0.29

All tax loss carryforwards that are taxable as of the balance sheet dates were taken into account in the recognition of deferred tax assets, since in subsequent years there will presumably be enough taxable earnings available for their use. As of December 31, 2011 at ecotel communication ag the corporation tax loss carryforward of TEUR 957 (previous year: TEUR 1,994) and the trade tax loss as of December 31, 2011 of TEUR 0 (previous year: TEUR 823) were fully taken into account for the tax group of companies with nacamar GmbH, including the tax adjustments to be considered for 2011 for the recognition of deferred tax assets. For ecotel private GmbH, overall an existing income tax loss carryforward of TEUR 134 was completely considered (previous year: TEUR 352).

No deferred taxes are created for the taxable temporary differences in conjunction with shares in subsidiaries and companies accounted for using the equity method, if the conditions are met for an exemption from IAS 12.39.

The earnings to which other shareholders are entitled of TEUR 627 (previous year: TEUR 282) relate to the proportional annual results of easybell GmbH (TEUR -40; previous year: TEUR 57), of sparcall GmbH (TEUR 409, previous year: TEUR 214), of carrier-services.de GmbH (TEUR 32; previous year: TEUR 45), of toBEmobile GmbH (TEUR -42; previous year: TEUR -7) and of i-cube GmbH until purchase of minority interests in November 2011 (TEUR 114; previous year: TEUR -27). In 2011, in conjunction with the profi t and loss transfer agreement with easybell GmbH, there was a claim for compensation on the part of the minority shareholder in the amount of TEUR 154.

The undiluted earnings per share are determined in accordance with IAS 33 as the quotient of the annual group net profi t to which the shareholders of ecotel communication ag are entitled and the weighted average number of no-par value bearer shares in circulation during the fi nancial year.

A dilution of earnings per share occurs when the average number of shares is increased by taking into account the issue of potential shares from options and convertible fi nancial instruments. As of December 31, 2007 and December 31, 2008 the existing 145,000 stock options must always be considered as dilutive equity capital instruments. Due to the balance sheet ratios, until forfeiture of the stock options by the end of the third quarter 2011, and likewise on the previous year key date, however the exercise price of these options was signifi cantly higher than the recorded average stock market price for the ecotel shares for the corresponding period. In accordance with IAS 33.47 these options would have had no diluting effect in the fi nancial year 2011 and as of the previous year's closing date, so that the undiluted and the diluted earnings are identical.

(22) Share in earnings of other shareholders

(23) Earnings per share

(24) Cash fl ow statement

Notes to the cash fl ow statement

The cash fl ow statement is prepared in accordance with the regulations of IAS 7 and is organised according to cash fl ows operating, investing and fi nancing activities. The infl uences of changes in the basis of consolidation exchange rate changes on cash and cash equivalents are shown separately.

The cash and cash equivalents of the cash fl ow statement correspond to the item "Cash and cash equivalents" shown in the consolidated balance sheet, minus short-term current account liabilities.

(25) Distribution of dividends

Other notes

(26) Related party disclosures

In accordance with § 58, para. 2 of the German Stock Corporation Law (AktG), the balance sheet result shown in the legal annual fi nancial statement of ecotel communication ag is defi nitive for determining dividends distributed to shareholders of the Company, this is TEUR 549 (previous year: TEUR 0).

The volume of services supplied to or provided by related parties is presented as follows:

	Volu ices serv	of me vide d pro	Volu of th me e ices util ised serv
Infor mati on in TEU R	201 0	201 1	201 0	201 1
Pha seF ive R&D Ltd
from ds a nd s ervi goo ces	98	0	0	0
PLU S G mbH syn ergy
from ds a nd s ervi goo ces	160	6	14	297
Gm bH mvn eco
from ds a nd s ervi goo ces	847	146	120	1.16 7
init.v oice Gm bH
from ds a nd s ervi goo ces	0	27	0	0

The receivables from the companies synergyPLUS GmbH and mvneco GmbH valued at equity are included in the consolidated balance sheet with TEUR 60 (previous year: TEUR 578).

The loan from ecotel communication ag to the company mvneco GmbH valued at equity in the amount of TEUR 2,544 (previous year: TEUR 2,469) was written off due to the negative equity value of mvneco GmbH as of December 31, 2011, due to the impairment by TEUR 12 (previous year accumulated: TEUR 946).

	Volu ices serv	of me vide d pro	Volu of th me e ices util ised serv
Infor mati on in TEU R	201 0	201 1	201 0	201 1
Noe rr LL P
From ds a nd s ervi goo ces	0	0	38	6
QIT S G mbH
From ds a nd s ervi goo ces	11	10	853	785
ADC O U ltdie Ho lding Gm bH nste mwe
From ds a nd s ervi goo ces	86	143	0	0
MPC Se rvice Gm bH
From ds a nd s ervi goo ces	3	12	339	301
GFE I Ak tien ellsc haft ges
From ds a nd s ervi goo ces	0	0	0	4
Mob ile O ne G mbH
From ds a nd s ervi goo ces	91	109	0	0
IQ M aft m artra de H oldi nd M entg llsch bH ng u ana gem ese
From ds a nd s ervi goo ces	1	1	0	0

The ecotel Group maintained service relationships with the following related parties in 2011:

Agreements with QITS GmbH

QITS GmbH, Quality Information Technology Services ("QITS"), whose managing partner is the chairman of the supervisory board, Mr. Johannes Borgmann, has been providing various services for ecotel communication ag since 1999. In addition to services under the framework contract for software, particularly for the Company's billing system, printing services, IT services, data privacy as well as fi nancial bookkeeping services were also provided.

Agreements with Noerr LLP

Nörrr LLP, a partnership of attorneys, tax consultants and auditors has been providing consulting services for the Company since November 2005. The supervisory board member, Dr. Thorsten Reinhard, is an attorney and partner in Noerr.

Agreements with MPC Service GmbH

A business representation contract between MPC Service GmbH and ecotel communication ag has existed since August 2002. Under this contract MPC Service GmbH receives a closing commission for the monthly order acquisition, as well as a product-dependent commission on the monthly revenue of all customers supplied by MPC. The agreement corresponds to the agreement with the other sales partners of the Company. The supervisory board member, Mirko Mach is managing director and shareholder of MPC Service GmbH and was formerly a shareholder of ADTG GmbH which was merged with ecotel in the previous year.

See Note 29 for additional information.

The internal organisation and management structure, as well as the internal reporting to the management board and the supervisory board are the basis for determination of the segmentation criteria for the business segments for ecotel communication ag.

Segmentation is executed according to the internal reporting by business units that can be delimited as follows:

• In the segment Business Solutions (operative core area) the ecotel Group offers small and medium-sized companies voice, data and value-added services in the form of complete packages, as well as direct connections for voice and data traffi c, from a single

• In the Wholesale segment ecotel markets products and comprehensive solutions for other telecommunications companies (including resellers and call shops).

source.
as the new media business are combined.

• In the New Business segment the high growth business areas and subsidiaries, as well

As segment result, which the management board uses for corporate control and monitoring, the annual result before interest and income taxes is presented. The segment assets correspond to the sum of all segment-related reported assets, without income tax assets. The segment liabilities include the segment-related provisions, liabilities and fi nancial liabilities, however no income tax liabilities.

(27) Segment reporting

	Bus Solu	ines s tion s	Who	lesa le	New Bus	ines s	Con solid acro ss s	ated ents egm	Gro	up
Infor mati on in TEU R	201 0	201 1	201 0	201 1	201 0	201 1	201 0	201 1	201 0	201 1
Exte rnal rev enu e	44,8 13	41,5 63	38,6 67	30,6 18	14,8 34	12,3 00	0	0	98,3 14	84,4 81
Inte nt re r-se gme ven ue	0	0	5,56 1	4,39 2	457	357	-6,0 18	-4,7 49	0	0
EBIT	900	1,80 5	183	551	727	740	-344	0	1,46 6	3,09 6
Ann ual lt resu	331	1,14 0	183	371	168	189	-344	0	338	1,70 0
Gro rofi t ss p	17,4 55	18,7 17	1,27 1	1,39 0	4,21 9	4,52 0	0	0	22,9 45	24,6 27
Writ e-do wns	-2,1 68	-2,3 42	-260	-483	-1,0 31	-1,1 31	0	0	-3,4 59	-3,9 56
Res ult o f co nies mpa valu ed a uity t eq	-8	0	-197	-12	0	0	0	0	-205	-12
Seg t as sets men	23,1 47	23,5 25	9,41 6	9,14 9	13,3 72	9,03 8	2,82 0	3,73 2	48,7 55	45,4 44
Seg t lia biliti men es	6,88 2	6,11 7	6,27 8	5,43 1	2,61 8	1,92 6	13,3 92	10,5 53	29,1 70	24,0 27
Inve stme nts i n int ible ang ts a nd p rty, asse rope plan t, an d eq uipm ent	897	1,23 7	4	205	765	276	0	0	1,66 6	1,71 8

Notes to the consolidated fi nancial statement of ecotel communication ag Consolidated fi nancial statement

Inter-segment transactions were executed at market prices.

In the reporting year 2011 the management board of ecotel communication ag was composed as follows:

Peter Zils, engineer, Düsseldorf (Chairman)
Bernhard Seidl, engineer, Munich
Achim Theis, businessman, Düsseldorf

The following persons were appointed as members of the supervisory board in 2010:

Johannes Borgmann, businessman, Düsseldorf (Chairman)
Mirko Mach, businessman, Heidelberg (Deputy Chairman)
Dr. Norbert Bensel, independent corporate consultant, Berlin
Dr. Joachim Dreyer, independent corporate consultant, Heiligenberg (until 07/29/2011)
Brigitte Holzer, businesswoman, Murnau
Dr. Thorsten Reinhard, attorney, Frankfurt / Main
Sascha Magsamen, businessman, Frankfurt / Main (from 29/07/2011)

In 2011, the remuneration of management board and supervisory board consisted of the following components:

(29) Governing bodies and remuneration of governing bodies

(28) Statement on

corporate governance in accordance with § 289 A of the German Commercial Code (HGB) including the statement in accordance with § 161 of the German Stock Corporation Law (AktG) regarding the German Corporate Governance Code

With regard to the classifi cation of revenue according to sales regions, reference is made to the Notes on sales revenue. Segment assets and segment investments refer completely to Germany.

The management board and supervisory board of ecotel communication ag have issued the statement on corporate governance required in accordance with § 289a of the German Commercial Code (HGB,) including the statement prescribed in accordance with § 161 of the German Stock Corporation Act (AktG), and have made these statements permanently available to the public on the Internet site of ecotel communication ag (www.ecotel.de under Investor Relations / Corporate Governance.

Infor mati on in TEU R	Fixed tion remu nera	Perfo r man ce base d / varia ble tion remu nera	Sha re optio lan ns p	Tota l	Stoc k optio lan ns p Num ber	Stoc k optio ns fair v alue at is sue
Bern hard Se idl	191 .9	50.0	12.0	253 .9	90.0 00	239
Ach im T heis	191 .5	35.8	4.9	232 .2	30.0 00	43
Pete r Zil s	314 .2	25.0	0	339 .2	0	0
Joh es B ann orgm ann	14.0	0.2	0	14.2	0	0
Brig itte Holz er	10.0	0	0	10.0	0	0
Dr. T hors ten Rein hard	7.0	0	0	7.0	0	0
Mirk o M ach	9.5	0	0	9.5	0	0
Sas cha Ma gsa men	3.0	0.1	0	3.1	0	0
Dr. N orbe rt Be l nse	5.0	0	0	5.0	0	0
Dr. J him Drey oac er	2.5	0.4	0	2.9	0	0

For fi nancial year 2011 the management board is entitled to variable remuneration in the amount of TEUR 110 (previous year: TEUR 143). Payment of the variable portion is coupled with sustainable Company development over three years and occurs only in the amount of the portion that has already been verifi ably earned at this point in time. Appropriate provisions were formed for the well-deserved remuneration entitlements.

In 2011, Ms Sandra Zils received remuneration totaling TEUR 14 for her activity at the ecotel Group (previous year: TEUR 9).

In 2010 the remuneration was comprised as follows:

As of December 31, 2011 the members of the supervisory board of the Company served on the

following boards:

Supervisory board member
Johannes Borgmann
	Currently membe




	Presiden

Sup isor y bo ard mbe erv me r	Fun ctio n	Com pan y
Joh es B ann org man n	Mana ging direc tor	ADC O Um weltd ienst e Ho lding Gmb H
	Curre ntly m embe r of th ment boar d e ma nage	ADC O HO LDIN GS, I nc., i n Ma rietta Geo rgia 3 0062 , USA
	CEO	ADC O HO LDIN GS, I nc., i n Ma rietta Geo rgia 3 0062 , USA
	Mana ging direc tor	ADC O Inv estm ent- G mbH (Rati ) ngen
	Mana ging direc tor	ADC O Im lien G (Rati ) mobi mbH ngen
	Mana ging direc tor	ADC O Int ernat ional Gmb H, Ra tinge n
	Presi dent of the adm inistr ative board	TOI T OI AG , Affo ltern (Swit zerla nd)
	Mana ging direc tor	MEP S Gm bH in Rati ngen
	Mana ging direc tor	QITS Gmb H in R ating en

Infor mati on in TEU R	Fixed tion remu ne ra	Perfo r man ce base d / varia ble tion remu nera	Sha re optio lan ns p	Tota l	Stoc k optio lan ns p Num ber	Stoc k optio ns fair v alue at is sue
Bern hard Se idl	210 .3	33.3	30.7	274 .3	90,0 00	239
Ach im T heis	193 .1	21.7	7.2	222 .0	30,0 00	43
Pete r Zil s	298 .5	16.7	0	315 .2	0	0
Joh es B ann orgm ann	11.2	1.2	0	12.4	0	0
Brig itte Holz er	5.8	0.5	0	6.3	0	0
Dr. T hors Rein hard ten	4.4	0.5	0	4.9	0	0
Mirk o M ach	6.0	0.6	0	6.6	0	0
Step han Brü hl	1.5	0	0	1.5	0	0
ld O Mag . Re inho blak	1.5	0	0	1.5	0	0
Dr. N orbe rt Be l nse	1.6	0.4	0	2.0	0	0
Dr. J him Drey oac er	1.6	0.4	0	2.0	0	0

Com pany	Func tion	Supe rviso ry bo ard m emb er
Linu x Inf tion Syst AG, Mun ich orma ems	Mem ber o f the ervis ory b oard sup	Brig itte H olze r
Holz er H oldin g Gm bH, Berg	Own er / m ing d irect anag or
OCT AGO N CA PITA L Gm bH, Berg	Own er / m ing d irect anag or
Ado be S yste ms G mbH , Mu nich	FP & A m anag er East ern E urop e, Midd le Ea st & Afric a
MPC Ser vice Gmb H, H eide lberg	Man agin g partn er	Mirk o Ma ch
1sto AG bile. i. L., Hei delb pmo com erg	Liqu idato r
Noe rr LL P, Lo ndon	Part ner	Dr. T hors ten Rein hard
Wac ker H oldin g SE , Mu nich	Mem ber o f the ervis ory b oard sup
Prak tiker Bau - und Hei rkerm ärkte Hol ding AG, Kirk el mwe Prak tiker AG	Mem ber o f the ervis ory b oard sup	Dr. N orbe rt Be nsel
K Sa a.G DEV ch- u nd H UK-V ersic heru erein ngsv	f the Mem ber o ervis ory b oard sup
Prak tiker Deu tsch land Gm bH	Mem ber o f the ervis ory b oard sup
IAS Instit ut fü r Arb eits- und Soz ialhy gien e AG	Dep uty c hairm f the ervis an o sup ory boar d
Com Gro up D euts chla nd G mbH pass	Mem ber o f the ervis ory b oard sup
Tran sCa re AG	Cha irma n of the s viso ry bo ard uper
BLG Log istics Gro up A G & Co. KG	Mem ber o f the adv isory boa rd
BRE UER Nac hrich tente chni k Gm bH, Bonn	Mem ber o f the adv isory boa rd
IQ M artra de H oldin d Ma tges ellsc haft mbH g un nage men	Cha irma n of the a dviso ry bo ard
Qna mic A G, S witze rland	Mem ber o f the adm inistr ative boa rd
ZU S tiftun g, Fr iedri chsh afen	Mem ber o f the adv isory boa rd	Dr. J oach im D reye r
EnB W E ie Ba den- Wür ttem berg AG, Kar lsruh nerg e	Mem ber o f the adv isory boa rd
ile O ne G Mob mbH , Rat inge n	f the Mem ber o adv isory boa rd
G, K Wig e Me dia A öln	Cha n of irma the s viso ry bo ard uper	Sas cha Mag sam en
ICM Med ia AG , Fra nkfu rt / M ain	Cha irma n of the s viso ry bo ard uper
GFE I AG nkfu rt / M , Fra ain	Cha n of irma the s viso ry bo ard uper
Mist ral M edia AG, Col ogne	Dep hairm uty c an of th isory boa rd e su perv
Next evol ution AG, Mai nz	Dep hairm uty c an of th isory boa rd e su perv
Clos e Br othe rs Se ydle r Re ch A G, F rank furt / Mai sear n	Mem ber o f the ervis ory b oard sup

The members of the management board hold no positions in oversight and control bodies, as specifi ed in section 285, no. 10 of the German Commercial Code (HGB).

(31) Exemption from publishing individual fi nancial statements

(30) Audit expenses In the fi nancial year 2011 the fee entered as expense for the auditors of the consolidated fi nancial statement of ecotel communication ag for the audits of the consolidated fi nancial statement and the individual fi nancial statements of the parent company and consolidated subsidiaries was TEUR 65 (previous year: TEUR 65). No other expenses were recorded for the Group auditors for other confi rmation or evaluation services, tax consulting services, or for other consulting services.

For the subsidiary nacamar GmbH, Düsseldorf, use is made of the exemption from publishing the individual fi nancial statement, in accordance with § 264 para. 3 of the German Commercial Code (HGB).

Düsseldorf, March 23, 2012

The management board

Peter Zils Bernhard Seidl Achim Theis

We have audited the consolidated fi nancial statement of ecotel communication ag ‒ comprising the balance sheet, statement of comprehensive income, cash fl ow statement, statement of changes in equity and the notes to the consolidated statement‒ and its Group management report for the fi nancial year from January 1 to December 31, 2011. Preparation of consolidated fi nancial statement and the Group management report in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the additional requirements that must be applied in accordance with § 315a, para. 1 of the German Commercial Code (HGB), is the responsibility of the management board of the Company. Our responsibility is to express an opinion on the consolidated fi nancial statement and the Group management report based on our audit.

We have carried out our audit of the consolidated fi nancial statement in accordance with § 317 of the German Commercial Code (HGB) taking into consideration the generally accepted German auditing standards. Those standards require that we plan and perform the audit in such a manner that misstatements materially affecting the presentation of the asset, fi nancial, and earnings positions in the consolidated fi nancial statement in accordance with applicable fi nancial reporting principle and in the Group Management Report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and evaluations of possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the internal control system referring to accounting and the evidence supporting the disclosures in the books and records, and in the consolidated fi nancial statement and Group management report are examined primarily on a test basis within the framework of the audit. The audit includes the evaluation of the fi nancial statements of the companies included in the consolidated fi nancial statement, the segregation of the consolidated group, the accounting and consolidation principles used and the main assumptions made by the management board, as well as acknowledgement of the entire presentation of the consolidated fi nancial statement and the Group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not resulted in any objections.

Based on the knowledge gained in the audit the consolidated fi nancial statement of ecotel communication ag, Düsseldorf, is in accordance with IFRS as adopted by the EU and the additional requirements of § 315a, para. 1 of the German Commercial Code (HGB), and conveys in compliance with these regulations, a true and fair view of the asset, fi nance, and earnings position of the Group. The Group management report is consistent with the consolidated fi nancial statement, conveying overall an accurate picture of the Group's situation, and correctly presents the opportunities and risks associated with future development.

Düsseldorf, March 23, 2012 Deloitte & Touche GmbHWirtschaftsprüfungsgesellschaft

Audit opinion of the statutory auditor

ecotel communication ag (ecotel) has organised itself according to international and national standards for value-oriented and responsible corporate governance. With open information and transparent decision-making structures we attempt to foster trust on the part of investors, customers, employees, and the interested public. In this regard ecotel views corporate governance as a continual process.

The management board and supervisory board of ecotel report below concerning corporate governance in accordance with Number 3.10 of the German Corporate Governance Code (the Code) in the version of May 26, 2010 and also hereby explain deviations from its recommendations. The following report also integrates the remuneration report required in accordance with Number 4.2.5 of the Code.

Management board and supervisory board work closely together for the well-being of the Company with the common goal of sustainable increase of the value of the Company. The management board reports to the supervisory board regularly in written and verbal form, promptly and completely concerning the situation of the Company, business development, corporate planning, as well as the risk situation.

The supervisory board meets regularly to fulfi l its monitoring and advisory function. It has formed a three-member audit committee for more effi cient handling of accounting, risk management and compliance issues, in particular. In addition the supervisory board has formed a three-member nomination committee that prepares the election proposals for the Annual General Meeting.

The central information event for shareholders is the Annual General Meeting. The management board presents the individual and consolidated fi nancial statements, as approved by the supervisory board, to the Annual General Meeting. The annual fi nancial statement is adopted via approval by the supervisory board unless the management board and supervisory board decide to delegate that determination to the Annual General Meeting. The Annual General Meeting decides on the appropriation of the balance sheet profi t, the approval of the actions of the management board and supervisory board, election of members of the supervisory board, and decides on the auditor, the articles of association, as well as in other cases prescribed by law. With appropriate notices before the opening of the Annual General Meeting, shareholders can comprehensively inform themselves of pending decisions via the annual report and the agenda for the Annual General Meeting. All documents and information are also available on the ecotel website.

Corporate communication sets itself the standard of providing true, complete, regular, and timely information. The shareholders are regularly informed of important dates in the quarterly reports, and on an ongoing basis via the Internet and the Company website. Presentations at road shows or at other information events are published immediately and completely on the ecotel website under the heading Investor Relations. All annual reports and quarterly reports, as well as press releases and ad-hoc releases can also be found on the ecotel website.

Corporate Governance

Signed Frank Auditor

Signed Schlereth Auditor

The remuneration of the members of the supervisory board is appropriate for their tasks and their responsibility. It consists of fi xed and variable components; the details are stipulated in the articles of association of the Company. For fi nancial year 2011 members of the supervisory board can only claim the fi xed remuneration component.

The members of the management board of ecotel are remunerated on the basis of § 87 of the German Stock Corporation Act (AktG) and Management Board Remuneration Act (VorstAG); remuneration includes a fi xed annual base compensation, as well as a variable component. The target requirements (including incoming orders, EBITDA, EBIT) for the variable component are agreed annually between management board and the supervisory board. Payment of the variable portion is coupled with sustainable Company development over three years and occurs only in the amount of the portion that has already been verifi ably earned at this point in time. For fi nancial year 2011 the management board is entitled to variable remuneration claims in the amount of TEUR 110. Each of the three members of the management board is entitled to a company car. In addition a stock option plan for members of the management board and top executives of ecotel is implemented on the basis of the resolution of the Annual General Meeting of July 27, 2007. Because the success goals for exercise of the issued 120,000 options were not achieved as of September 30, 2011, these are completely forfeited. Additional information on the stock option program is provided on the website www.ecotel.de under the header, Investor Relations / Corporate Governance, as well as in the Notes to the fi nancial statement. For the members of the ecotel management board there are no agreements for indemnifi cation in the event of a takeover bid.

Information on individual remuneration of management board and supervisory board in 2011 is included in the Notes to the consolidated fi nancial statements.

The table below shows the holdings of management board and supervisory board in the capital stock of the Company at the end of 2011:

Number 5.1.2

The supervisory board considers diversity an important criteria for the composition of the management board and is of the particular opinion that women must be appropriately considered for board-level appointments. In 2011 however this policy did not result in the appointment of a female member of the management board. Management board and advisory board regularly conduct discussions on the development of ecotel management. However issues concerning long-term succession planning were not discussed in 2011.

Number 5.4.1, para. 2

In 2011 the supervisory board had not yet cited any concrete goals for its composition, however it intends to do so in 2012.

Number 5.4.3

The supervisory board considers it neither practical nor expedient to inform shareholders of suggestions of candidates for the position of chairman of the supervisory board.

Number 5.4.5 sentence 2

The supervisory board continuously and critically reviews whether its members have suffi cient time to carry out their mandate. However, whether this is the case, in the opinion of the supervisory board cannot be determined simply by the number of supervisory board mandates held in combination with the board activity for a publicly listed company. Rather the crucial factor is to carefully review this criterion on a case-by-case basis.

The statement of compliance of ecotel communication ag in accordance with § 161 of the German Stock Corporation Law (AktG) can be reviewed on the Company's website at www.ecotel.de. The complete Code is available on the Internet at www.corporate-governance-code.de.

ecotel communication ag

The management board The supervisory board of ecotel communication ag of ecotel communication ag

Tota l	27.0 %
Sup ervi boa rd sory	% 1.2
Man t bo ard age men	25.8 %
Bod y	Sha rshi p (in %) re o wne

The information concerning transactions with ecotel shares on the part of members of the management, supervisory boards and other persons with management responsibilities or with closely associated third parties (directors' dealings) is also listed on the website www.ecotel.de under the header, Investor Relations / Corporate Governance.

In addition ecotel has taken out an appropriate pecuniary damage liability insurance policy (D&O insurance) for the management board, as well as for the members of the advisory board with a deductible that is in line with the Corporate Governance Code.

ecotel has followed the recommendations of the Code since January 1st 2011, with the following exceptions:

The supervisory board of ecotel communication ag (ecotel) regularly monitored and supported the work of the management board in fi nancial year 2011, in an advisory role. The detailed reports of the management board in written and oral form were the basis of this monitoring and advisory support. The chairman of the supervisory board was involved in a regular exchange of information and ideas with the chairman of the management board. In addition various members of the supervisory board have made their technical expertise available to the management board without requesting or receiving any compensation beyond the supervisory board remuneration stipulated in the articles of association. These consultations involved a number of areas, including organisation, personnel, sales, fi nances, law and communication.

In the reporting period the ecotel supervisory board came together for a total of seven meetings, of which two meetings were held in the form of a telephone conference. In addition nine resolutions were made via the circulation procedure. No member of the advisory board participated in less than half of the meetings.

In the meetings the ecotel management board reported to the supervisory board on fundamental issues of corporate planning, profi tability of the Company the course of the business and the position of the Company, in accordance with legal requirements, and consulted together with the supervisory board concerning these issues. Moreover the supervisory board was integrated in decisions of major signifi cance and in particular reviewed and approved measures of the management board that required its agreement in accordance with the rules of procedure of the management board.

1. Focus of consultation in the supervisory board

The supervisory board supported the management board in its strategy of simplifying the Group structure and simultaneously separating its members from peripheral activities. Thus the supervisory board reviews and approves the decisions of the management board to sell the stakes in Phase Five R&D Ltd., toBEmobile GmbH, and in PPRO GmbH. Likewise the supervisory board agreed with the plan to top up the stake in i-cube GmbH from 51 % to 100 %, in order to then merge the company with ecotel. Two additional important resolutions were adopted that related to the initiation of court proceedings against a network operator; the amount in dispute is less than EUR 10 million, and the refi nancing of a loan in the amount of EUR 4 million.

In addition the supervisory board received reports of strategically signifi cant projects. These included a high-volume tender, in which ecotel participated throughout the entire year under review; this tender was not yet defi nitively concluded at the time this report was prepared. Likewise the supervisory board accompanied the cooperation with a network operator, which was realised in the year under review 2011, which with regard to additional cooperation components is still in the coordination phase. On the other hand the supervisory board is dealing with the loss of large customer at the subsidiary nacamar GmbH.

In addition, the measures with which the management board intends to improve order management processes were presented to the management board. As in the past the supervisory board devoted special attention to risk management issues.

Report of the supervisory board

The supervisory board discussed the regular risk reports with the management board and also made recommendations relative to risk management. The supervisory board is convinced that the management board devotes the necessary attention to risk management, prioritises the risks identifi ed by the management board and is striving to reduce these risks through appropriate measures.

The status of the 2010 fi nancial statement was the focus of the supervisory board meeting held on March 28, 2011. In addition, in the meeting of March 28, 2011, as a precaution the supervisory board approved various contracts between ecotel and companies in which members of the supervisory board hold shares (see below for more in this regard).

2. Treatment of confl icts of interest in the supervisory board

All members of the supervisory board are obligated to comply with the principle of aligning their decisions exclusively to the corporate interests of ecotel. If in consultation or taking of resolutions in the supervisory board, confl icts of interest occurred or the concern of confl icts of interest occurred, these were dealt with in the supervisory board. The member of the supervisory board concerned in each case refrained from voting, and if in the specifi c case it seemed expedient, did not participate in the preceding discussion. In addition the other members of the supervisory board obtained the necessary assurances by posing questions to the management board, that its actions were not infl uenced by the (potential) confl ict of interest of the respective member of the supervisory board. The principles cited above were only employed in the reporting period for resolutions of the supervisory board concerning the approval of contracts between ecotel and companies in which members of the supervisory board hold investments. These affect Mr. Johannes Borgmann, Mr. Mirko Mach and Dr. Thorsten Reinhard.

3. Financial statement and consolidated fi nancial statement

The management board prepared the fi nancial statement and management report of ecotel in accordance with the regulations specifi ed in the German Commercial Code (HGB), and the consolidated fi nancial statements in accordance with IFRS principles. ecotel's auditor, Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf, audited the fi nancial statement, the consolidated fi nancial statement, the management report and the Group management report. The auditor has given the annual fi nancial statements and the consolidated fi nancial statement its unqualifi ed audit approval.

The fi nancial statement documents and reports of the auditor were submitted to all members of the supervisory board for review. Representatives of Deloitte & Touche GmbH participated in the negotiations of the supervisory board concerning these documents and have reported on the essential results of their audit.

The supervisory board has thoroughly reviewed the fi nancial statement, the consolidated fi nancial statement, and the Group management report submitted by the management board, and the management board's recommendation for use of the balance sheet profi t and has discussed them with the auditor. The supervisory board has reviewed and approved the auditor's report concerning the result of its audit.

After the fi nal result of its review the supervisory board raised no objections to the annual fi nancial statement prepared by the management board or to the consolidated fi nancial statement for fi nancial year 2011, but rather approved the annual fi nancial statement and the consolidated fi nancial statement with the resolution of March 27, 2012. The annual fi nancial statement of ecotel for fi nancial year 2011 is thereby adopted.

4. Changes in the supervisory board in the reporting period

The mandate of all members of the supervisory board ended with the conclusion of the Annual General Meeting on July 29, 2011. Dr. Joachim Dryer had declared beforehand that he would no longer be a candidate for the supervisory board. The other supervisory board members were again presented for election at the recommendation of the supervisory board on July 29, 2011: Ms Brigitte Holzer, Dr. Norbert Bensel, Mr. Johannes Borgmann, Mr. Mirko Mach, Mr. Sascha Magsamen, and Dr. Thorsten Reinhard. Instead of Dr. Joachim Dreyer, the supervisory board recommended that Mr. Sascha Magsamen be elected to the supervisory board. The Annual General Meeting accepted each of the supervisory board's election recommendations. The members of the supervisory board were elected with a mandate that ends at the conclusion of the Annual General Meeting that passes a resolution for ratifi cation of the acts of the supervisory board for the fi nancial year 2015.

5. Changes in the management board in the reporting period

The appointment of board member Berthard Seidl ended on May 31, 2011, as scheduled. By resolution of the supervisory board of February 22, 2011, his appointment was extended for three years. Simultaneously, the employment contract of Mr. Seidl was extended for the same period subject to new conditions.

6. Committees

The supervisory board has formed a three-member audit committee that in particular deals with accounting, risk management and compliance issues. In the reporting period the audit committee met fi ve times, and in particular, dealt with the quarterly reports and the 2010 annual fi nancial statement. The audit committee was newly selected in the meeting of the supervisory board held on July 29, 2011 and is now comprised of Ms Brigitte Holzer (chairwoman) and Mr. Mirko Mach and Mr. Sascha Magsamen.

In addition, the supervisory board has formed a three-member nomination committee that prepares voting selections for the Annual General Meeting. The committee is unchanged and is comprised of Ms Brigitte Holzer, Mr. Johannes Borgmann (chairman) and Dr. Thorsten Reinhard. In the fi nancial year 2011 this committee met once to prepare the election recommendation for the Annual General Meeting for the election of the new supervisory board.

The supervisory board thanks the members of the ecotel management board, as well as all employees of the companies of the ecotel Group for their great dedication to the Company and the work performed in the fi nancial year 2011. Likewise the supervisory board thanks Dr. Joachim Dreyer who resigned from the supervisory board in the year under review for valuable contributions and dynamic support.

Düsseldorf, March 27, 2012 For the supervisory board:

Johannes Borgmann Chairman of the supervisory board

ARPU

Average revenue per user.

Backbone network

A backbone is a high-performance network or main network for the connection of local sub-networks, geographically distributed end devices, or centrally controlled networks. As a rule, the backbone has higher transmission capacity than that of the devices and networks connected to it and to each other.

Broadband access

Subscriber-side broadband network connection (broadband access) with high transmission speed. The connection is possible by wire via the existing copper twin wire using DSL processes via fi bre optics, or via the broadband cable network (BC).

Carrier

A carrier / network operator is a company that operates telecommunications networks. A carrier / network operator has its own networks or has essential components, switching devices or network management systems that are important for transmission. Network operators are differentiated relative to the territory they cover, as global carriers, national carriers, regional carriers, and city network carriers or so-called city carriers. Global carriers act worldwide or internationally, national carriers offer their services and their network infrastructure in a geographically limited area within a country, and city carriers act within city limits or within a metropolitan area.

Contract Ownership

Is the active support of customers in the realisation phase of the order.

Customer Relationship Management (CRM)

Customer Relationship Management has the goal of addressing customer needs individually in order to increase customer satisfaction and thus keep the customer loyal to the company long-term. To this end the customer-oriented departments of a company, such as sales, marketing, and support are systematically aligned to the customer's needs.

DSL

Digital Subscriber Line – a digital broadband transmission technology with which transmission speeds of as much as several megabits / sec. can be achieved with conventional telephone networks (via copper cable).

Ethernet

Cable-based data network technology primarily used in local area networks (LAN). It enables data exchange between all devices connected in a LAN (PCs, printers, etc.). In its traditional form the LAN is limited to one building. Today Ethernet also connects devices over great distances and in the process enables transmission of greater data volumes.

Glossary

HGB

Handelsgesetzbuch (German Commercial Code)

Housing / hosting

Provision of computer centre space and computer capacity in the computer centre through Internet service providers for the connection to the Internet.

IFRS

International Financial Reporting Standards.

IP Bitstream Access

The "IP Bitstream Access" product of Deutsche Telekom AG enables providers without their own infrastructure to autonomously market DSL connections without the additional telephone connection which was previously required.

Convergence product

A convergence product is an integrated fi xed-line, Internet and mobile communications product.

Media streaming

Audio and video data that is received from a computer network and simultaneously sent.

MVNE

While the Mobile Virtual Network Operator (MVNO) develops, operates, and markets its own services as a virtual network operator, the Mobile Virtual Network Enabler (MVNE) in turn is a partner of the MNVO. The MVNE operates the necessary infrastructure in order to connect the services of the MVNO to the communication infrastructure of a mobile communications network (for transmission of greater data volumes).

MVNO

The Mobile Virtual Network Operator (MVNO) is a new business form of the mobile communications industry between the actual network operator and the service provider or reseller. As opposed to the network operator, the MVNO does not operate its own access network with its own broadcasting stations. However the MVNO has the possibility of operating core network services itself or renting core network services – e.g. switching, IN-platform, customer management, Home Location Register (HLR) from the network operator.

Thus the MNVO has the same possibilities of designing services as does the mobile network operator itself. For the service provider the design possibilities are limited to the implementation of price models that can be calculated on the basis of the voice data supplied by the carrier.

"NetMig" project

The term "NetMig" (abbreviation for network migration) describes the project of concentrating the IP backbone of 21 different access points to 2 redundant access points through consolidation of the network infrastructure. In this project the conventional connections of existing customers via fi xed-line connections (leased lines) are replaced by high-performance Ethernet connections.

Network Operation Centre (NOC)

The network operation Centre (NOC) is the technical operating facility for a network and is responsible for the monitoring of the network.

credit accounts, which is widespread in the telecommunications industry. The frequently-used designation "prepaid card" is based on the English word "prepaid" which is translated in German as "vorausbezahlt".

Preselection

Permanent preselection of the connection for the subscriber network operator (TNB) for a connection network operator (VNB) for handling calls. As a rule preselection requires a contractual agreement with the desired VNB. Implementation of preselection on the connection is made by the subscriber network operator.

Prime Standard

The Prime Standard is the admission segment for companies on the Frankfurt Stock Exchange who desire to position themselves internationally. In Prime Standard joint stock companies must satisfy international transparency requirements that extend beyond the scope of the General Standard.

PSTN

Public Switched Telephone Network (PSTN) is a long-distance network that is designed for handling telephone calls.

on-net- / off-net areaIn on-net areas full access products from alternative network operators are available. In the so-called off-net areas telecommunications services are realised through line transfer via DTAG. Prepaid card The term prepaid card describes the use of services via prepaid Voice over IP – voice services based on the Internet protocol (so-called VoIP services) that in terms of quality and product design are comparable to traditional telephone services. VoIP services are characterised by the fact that their users can telephone on the basis of a packet-switching data network. In this regard the data network can either be the Internet or managed IP networks.

Reseller

Entity that resells telecommunications services of other telecommunications companies under its own name and at its own billing. So-called switch-based resellers have their own switching technology, resellers without their own switching computers are referred to as rebillers or switchless resellers.

Roaming

Enables telephone calls via networks of different network operators, for example, such as international roaming in the pan-European GSM system.

Virtual Network Operator (VNO)

Virtual network operators do not have their own network infrastructures. Instead they put a network together from the infrastructures of other providers and connect these with their own components to a virtual (overall) network, e.g. via their own switch technology.

VoIP

Full access product

Provision of a "genuine" ISDN connection via alternative subscriber network operators instead of a line transfer through Deutsche Telekom AG. The full access can optionally be purchased with a DSL connection.

VPN

Virtual Private Network – enterprise networks that are used for closed networking of enterprise locations.

White label service

Products that are marketed to customers not under their own brand, but as the brand of other companies, are referred to as white label products.

Wholesale service

Network overlapping trade (purchase and sale) of telephone minutes in larger volumes.

Other Glossary

110 Fina ncia l cal end ar A ckno wled ents gem			Note 111 s 111
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AI assistant

ecotel communication ag — Annual Report 2011

131_10-k_2012-04-30_d098ef32-64ae-4593-b924-4228115ec8f7.pdf

Key performance indicators

Corporate profi le

EBITDA in mill. EUR 1042 2007 2008 2009 2010 20117.19.26.04.94.9

including subsidiaries and holdings.

CONTENTS

Index

Forward of the management board

Dear Shareholders,

Peter ZilsChief Executive Offi cer"Build on the strengthened foundation!"

ecotel delivers high-capacity overall concept

A stable connection: ecotel and Allianz

A partnership with genuine quality-of-service

Selected ecotel references

"Smooth processes are the prerequisite for high quality." Margaret Friedrich Manager Processes & Improvement

Thorsten Renzler

The ecotel stock

Price trend 2011

Investor relations

Shareholder structure

Key performance indicators Ø 2011 Stock ownership (12/31/11) in percent

Business and general conditions

Wholesale Solutions

1. ECOTEL – OVERVIEW

Business Solutions

New Business

Infrastructure

2. LEGAL FRAMEWORK OF THE COMPANY

Management body

Remuneration of executive bodies

Capital structure

Share capital

Authorised capital

Conditional capital

Authorization to acquire treasury shares

Capital holdings and control rights

3. STRUCTURE AND HOLDINGS OF THE COMPANY

nacamar GmbH

ecotel private GmbH

easybell GmbH

mvneco GmbH

toBEmobile GmbH

PPRO GmbH

i-cube GmbH

4. CORPORATE MANAGEMENT OF THE GROUP

5. RESEARCH AND DEVELOPMENT

6. MARKET AND COMPETITIVE ENVIRONMENT

Telecommunications market volume also dropped in 2011

Trends in the B2B market

Regulatory trends

7. BUSINESS DEVELOPMENT 2011

Successful marketing of data and VPN products

Improvement of the cost basis through lower mobile communications termination rates

Consolidation of additional subsidiaries

Marketing of new private customer products

Effi ciency increases of internal and external business processes

1. EARNINGS AND PERFORMANCE

Increasing gross pro fi ts in the business customer segment

Declining sales in the reseller segment

Gross pro fi t constant in the New Business unit

Other operating income higher

Earnings, fi nancial and asset position

Signifi cant improvement of EBITDA and EBIT

Comparison of the forecasts with the actual business trend

2. FINANCIAL POSITION

4. GENERAL STATEMENT OF THE ECONOMIC SITUATION OF THE GROUP

3. ASSET POSITION

Supplementary report

Risk report

1. RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

Financial risks

Strategic risks

Risks of the market environment

Overall risk can be calculated

3. OPPORTUNITIES FOR FUTURE DEVELOPMENT

Marketing of full access lines to existing customers and new customers

New market developments in the areas of voice over IP and hosted PBX

Extension of the data portfolio

ecotel communication ag Annual Report 2011