ecotel communication ag — Interim / Quarterly Report 2021

May 27, 2021

Q1 Quarterly Statement 2021

Key figures

Profit and loss account (IFRS)		1st quarter 2020	1st quarter 2021
Revenue	in million euros	19.7	20.4
ecotel Business Solutions	in million euros	11.5	11.9
ecotel Wholesale	in million euros	2.7	1.7
easybell	in million euros	5.0	6.2
nacamar	in million euros	0.5	0.6
Gross profit	in million euros	8.6	10.7
ecotel Business Solutions	in million euros	5.8	6.7
ecotel Wholesale	in million euros	0.1	0.2
easybell	in million euros	2.3	3.4
nacamar	in million euros	0.3	0.4
EBITDA 1	in million euros	2.5	3.9
ecotel Business Solutions	in million euros	1.1	1.8
ecotel Wholesale	in million euros	0.1	0.1
easybell	in million euros	1.2	1.9
nacamar	in million euros	0.1	0.2
Operating result (EBIT)	in million euros	0.6	2.0
Consolidated profit 2	in million euros	0.1	0.9
Earnings per share 3	in euros	0.02	0.25

Cash flow (IFRS)		1st quarter 2020	1st quarter 2021
Cash and cash equivalents as of 1/1	in million euros	8.3	7.8
Cash flow from ongoing business activities	in million euros	0.4	2.8
Cash flow from investment activities	in million euros	-1.6	-1.6
Cash flow from financing activities	in million euros	-0.7	-1.0
Financial resources as of 3/31	in million euros	6.4	8.0
Free cash flow 4	in million euros	-1.2	1.2

Balance sheet (IFRS)		1st quarter 2020	1st quarter 2021
Balance sheet total	in million euros	53.4	52.8
Equity	in million euros	22.5	24.8
in % of the balance sheet total		42.2 %	47.0 %
Net financial assets 5	in million euros	-0.5	3.1

Other key figures		1st quarter 2020	1st quarter 2021
Number of shares as of 3/31 (outstanding shares)	number	3,510,000	3,510,000
Employees as of 3/31 6	number	260	273
Personnel expenses	in million euros	3.9	4.3

1 Earnings before interest, taxes, depreciation and amortization

²Corresponds to the consolidated profit after deduction of minority interests

³Both undiluted and diluted

⁴Free cash flow = cash flow from ongoing business activities + cash flow from investment activities

⁵Loans payable minus funds

⁶Without minority companies (mvneco)

Key figures	2
To our shareholders
Letter to our shareholders Investor relations	4 5
Significant developments in the Group in first quarter 2021	6
Consolidated quarterly statement of accounts
Consolidated balance sheet as of March 31, 2021	7-8
Consolidated profit statement for the first quarter 2021 and the first three months of 2020	9
Contact	10
Legal disclosure	10
Disclaimer	10

Dear Shareholders,

We are pleased to report that financial year 2021 has been extremely successful so far. The »ecotel Business Solutions« and »easybell« segments achieved sustainable revenue growth in combination with an increase in gross profit. As there was no significant change in the cost basis, the Group can report EBITDA of € 3.9 million (prev. year: € 2.5 million) for the first quarter 2021. Since depreciations remained at the previous year's level, EBIT increased by € 1.4 million to € 2.0 million. As a result, the Group achieved a surplus of € 0.9 million (prev. year: € 0.1 million) with EPS of € 0.25 (prev. year: € 0.02) in the first quarter.

The »ecotel Business Solutions« segment was able to continue the positive development of fourth quarter 2020. In the first three months of 2021, revenue increased to € 11.9 million (prev. year: € 11.5 million). After completion of the transformation process of the past years the growth potentials for the core segment »ecotel Business Solutions« are becoming more apparent.

In addition to revenue growth, the development of the gross profit margin is especially noteworthy. The latter increased significantly to 55.8 % (prev. year: 50.7 %). Gross profit for the segment therefore increased to € 6.7 million (prev. year: € 5.8 million). Operating expenses, in particular personnel and other operating expenses, remained virtually stable in the quarterly comparison, so that the increase in the gross profit simultaneously led to a significant increase in EBITDA to € 1.8 million (prev. year: € 1.1 million). This corresponds to an increase of about 60 % compared to the first quarter of the previous year.

The development of the quarterly figures in the »ecotel Business Solutions« segment shows that the transformation to a network operator was successful. With a clear focus on expansion of the local exchange network (LEN) platform and the network infrastructure, and after migrating virtually all of the customers to the new products and solutions, the focus is now on consistent expansion of the portfolio to further enhance the value chain. It was possible, for example, to offer new integrated solutions for networked home office scenarios, to introduce bundled ecotel All-IP voice and Microsoft Teams products, and to implement a multi-cloud connect service for initial customers that enables connection of ecotel data access to the major cloud providers such as Azure, AWS or Google.

The »easybell« segment likewise continued the positive development of recent quarters, with growth in revenue, gross profit and EBITDA. By focusing on modern and easy-to-integrate cloud PBX systems for business customers, as well as All-IP telephony with or without a base line, revenue increased significantly to € 6.2 million (prev. year: € 5.0 million). The high scalability of our business model, in combination with a primarily in-house production platform as well as streamlined, automated processes, have achieved an increase in gross profit to € 3.4 million (prev. year: € 2.3 million). In the first quarter 2021 this segment achieved EBITDA of € 1.9 million (prev. year: € 1.2 million) and therefore likewise reported growth of about 60 %.

The positive business development of the first quarter has led the Management Board to refine the forecast published for 2021. For 2021, the »ecotel Business Solutions« segment continues to forecast revenue between € 47 and 50 million, with increases in gross profit margins and, consequently, gross profits. The »easybell« segment continues to forecast revenue between € 24 and 26 million, and the »nacamar« segment € 2.0 to 2.5 million. The Management Board forecasts consolidated EBITDA at the upper end of the corridor between € 12 and 14 million for financial year 2021.

Düsseldorf, in May 2021

Peter Zils Chief Executive Officer

Markus Hendrich Management Board

Achim Theis Management Board

Overview of the ecotel share Shareholder structure

The ecotel share started the year 2021 at € 10.20. In the first quarter 2021 the development of the ecotel share – especially after publication of the figures for financial year 2020 and the forecast for 2021 – has been significantly stronger than the DAX30 and TecDAX. As of March 31, 2021 the share closed the first quarter at € 13.60. That represents an increase of 33 %. With an unchanged total of 3.51 million outstanding shares, this results in market capitalization of € 47.7 million (March 31, 2010: € 20.7 million). The average trading volume in the first three months totaled 3,557 shares (Q1 2020: 3,037 shares).

As of March 31, 2021 the share capital of ecotel communication ag remained unchanged at 3,510,000 shares. The following significant change occurred in the shareholder structure: Martrade Shipping + Transport GmbH fell below the threshold of 3 %. Peter Zils (CEO of ecotel) and Andrey Morozov each hold just under 30 % of the shares. Approximately another 25 % are distributed to the shareholders, as reported to us accordingly (WpHG notifications > 3 %). The diversified holdings therefore totaled approximately 19.8 %.

%-Satz gemäß letzter Stimmrechtsmeldung vom 07.04.2011 vor Einziehung der eigenen Aktien (Basis: Grundkapital in Stück 3.9000.000) ¹ According to the last notice of 4/7//2011 prior to call-in of treasury shares in 2014 (basis: 3,900,000 shares)

Key figures Ø 2021
WKN	585434
ISIN	DE0005854343
Symbol	E4C
Market segment since 8/8/2007	Prime Standard
Index affiliation	CDAX, Prime All Share Technology All Share
Class	Non par value shares
Date of first listing	3/29/2006
Number of shares as of 3/31/2021	3,510,000
Average daily trading volume 2021	3,557
High share price 2021 (€)	14.60
Low share price 2021 (€)	8.95
Market capitalization as of 3/31/2021 (in million €)*	47.7
Designated sponsor	Lang & Schwarz Broker GmbH

* Based on the closing price of € 13.60 per share for 3,510,000 outstanding shares as of March 31, 2021

Price trend of the ecotel share in 2021 in percent

Significant developments in the Group in first quarter 2021:

Effects of the Covid-19 pandemic

The Covid-19 pandemic and the resulting mandatory and voluntary measures for avoiding contact have been serious issues also for ecotel in financial year 2021. For more than a year now, the top priority in our daily activities is the safety of our employees, in addition to maintaining all services for our customers. Furthermore, ecotel plays an important role in maintaining the operations of our customers. We provide extensive services for hospitals, nursing homes and doctors, pharmaceutical wholesalers and drugstore chains, banks and insurance companies, as well as numerous other businesses. Many of our employees are working from home to safeguard business operations. Our sales department and sales partners have likewise come to terms with the restrictions and now hold all meetings as virtual meetings. However, acquisition of new customers, especially in the context of projects in the ecotel Business Solutions segment, has become more complex and is also affected by delayed decisions and restricted availability of contacts. The Covid-19 pandemic has had no significant influence on business developments so far.

Significant developments in first quarter 2021:

Revenue in the ecotel Business Solutions segment increased by € 0.4 million to € 11.9 million. Gross profit simultaneously increased in this segment by € 0.8 million to € 6.7 million. This corresponds to a gross profit margin of 55.8 % (prev. year 50.7 %).

The easybell segment likewise experienced revenue growth in the first quarter of € 1.2 million to € 6.2 million, and an increase in gross profit by € 1.1 million to € 3.4 million.

The nacamar and Wholesale segments contributed to consolidated revenue with € 0.6 million and € 1.7 million (Q1 2020: € 0.5 million and € 2.7 million), respectively.

Consolidated gross profit increased by € 2.1 million to € 10.7 million in the first quarter 2021.

EBITDA increased in the first quarter 2021 by 57 % from € 2.5 million to € 3.9 million. As was already foreseeable in the last quarter of 2020, the ecotel Business Solutions and easybell segments are now benefiting from the scale effects of these innovative product platforms. The Group's NGN product range now enables visible profitable growth.

As a result of virtually unchanged depreciations, EBIDTA growth also leads to a significant increase in EBIT from € 1.4 million to € 2.0 million in the first quarter 2021. Especially due to the stronger contribution of the ecotel Business Solutions segment to the earnings, the consolidated surplus increased significantly by € 0.8 million to € 0.9 million. This corresponds to earnings per share of € 0.25 (prev. year: € 0.02) in the first quarter 2021.

In the first quarter 2021 the Group achieved a free cash flow of € 1.2 million (prev. year: € -1.2 million). While the outflow of funds from investments remained unchanged, cash flow from business activities increased in the first quarter by € 2.4 million to € 2.8 million.

Net financial assets were boosted in the first quarter to € 3.1 million. (12/31/2020: € 2.3 million). Scheduled repayments of loans and leasing liabilities totaling € 0.9 million were carried out in the first quarter.

The balance sheet total amounted to € 52.9 million (12/31/2020: € 53.9 million). With equity capital of € 24.8 million (12/31/2020: € 23.4 million) the equity ratio is 47.0 % (12/31/2020: 43.4 %).

Consolidated Balance Sheet as of March 31, 2021 (unaudited)

EUR	12/31/2020	3/31/2021
Assets
A. Non-current assets
I. Intangible assets	13,717,986	14,649,301
II. Fixed assets	10,513,000	9,872,768
III. Rights of use from leasing agreements	7,448,229	7,199,478
IV. Capitalized contract costs	3,132,841	3,210,903
V. Financial assets measured at equity	1,129,059	1,091,781
VI. Contract assets	100,291	106,137
VII.Deferred income tax claims	1,362,886	1,342,570
Total non-current assets	37,404,292	37,472,938
B. Current assets
I. Trade receivables	7,221,831	5,844,558
II. Contract assets	48,140	50,464
III. Other financial assets	649,554	278,769
IV. Other non-financial assets	411,309	653,336
V. Actual income tax claims	433,332	495,707
VI. Cash and cash equivalents	7,758,849	8,029,864
Total current assets	16,523,015	15,352,698

Total assets 53,927,307 52,825,636

Consolidated Balance Sheet as of March 31, 2021 (unaudited)

EUR	12/31/2020	3/31/2021
Liabilities
A. Equity capital
I. Subscribed capital	3,510,000	3,510,000
II. Capital reserves	1,833,234	1,912,459
III. Other provisions	14,439,493	15,324,220
Shares of the owners of the parent company	19,832,727	20,746,679
IV. Shares of other shareholders	3,550,736	4,091,784
Total equity capital	23,383,463	24,838,463
B. Non-current liabilities
I. Deferred income tax	905,847	937,714
II. Non-current loans	3,083,333	2,479,166
III. Lease payables	6,510,994	6,371,813
IV. Contract liabilities	1,259,529	1,304,882
V. Other financial liabilities	1,171,774	993,452
Total non-current liabilities	12,931,477	12,087,027
C. Current liabilities
I. Actual income tax	806,341	1,145,695
II. Current loans	2,416,667	2,416,667
III. Lease payables	1,216,204	1,168,282
IV. Accounts payable	9,102,578	7,146,832
V. Contract liabilities	1,269,296	1,130,933
VI. Provisions	10,000	10,000
VII. Other financial liabilities	2,219,857	1,591,245
VIII. Other non-financial liabilities	571,424	1,290,492
Total current liabilities	17,612,367	15,900,146
Total liabilities	53,927,307	52,825,636

Consolidated profit statement

for first quarter 2021 and for the first three months of 2020 (unaudited)

EUR		1/1–3/31/2020	1/1–3/31/2021
1.	Sales revenue	19,734,887	20,434,896
2.	Other operating income	103,129	133,954
3.	Other company-manufactured items capitalized	46,023	169,602
4.	Total revenue	19,884,039	20,738,452
5.	Cost of materials
	Expenses for services purchased	-11,118,571	-9,769,883
6.	Personnel expenses
6.1	Wages and salaries	-3,323,631	-3,693,050
6.2	Social contributions and expenses for pensions and benefits	-564,167	-609,272
7.	Depreciations
7.1	Depreciations on intangible assets and property, plant and equipment	-1,481,795	-1,543,856
7.2	Depreciations on rights of use from leasing agreements	-333,634	-332,305
8.	Other operating expenses	-2,416,228	-2,777,049
9.	Operating result (EBIT)	646,013	2,013,036
10.	Interest income	-	42
11.	Interest expense
	11.1 Interest expenses for loans payable and other financial liabilities	-65,415	-44,385
11.2	Interest expense for leasing liabilities	-60,059	-54,073
12.	Other financial expenses	-156	-1
13.	Earnings from financial assets measured at equity	-2,061	62,722
14.	Financial result	-127,691	-35,695
15.	Earnings from normal business activities before income tax	518,322	1,977,341
16.	Taxes on income and earnings	-152,597	-551,566
17.	Surplus (= total consolidated profit)	365,725	1,425,775
18.	Allocation of the surplus to the
18.1	Owners of the parent company (consolidated surplus)	53,024	884,727
18.2	Shares of other shareholders	312,701	541,048

EUR	1/1–3/31/2020	1/1–3/31/2021
Undiluted earnings per share	0.02	0.25
Diluted earnings per share*	0.02	0.25

* As of 3/31/2021, as in the previous year, there was no dilution of the earnings per share. In the first three months of 2021 no share options were exercised (4-year qualifying period). Due to lack of data, »other comprehensive income« is not reported.

Contact

Annette Drescher Phone: 0211-55 007-740 Fax: 0211-55 007 5 740 E-mail: investorrelations@ecotel.de

Legal disclosure

Published by ecotel communication ag Prinzenallee 11 D - 40549 Düsseldorf

Disclaimer

Exclusion of liability:

This report (especially the »Outlook« section) contains forward-looking statements, which reflect the current views of ecotel's Management with respect to future events. They are generally characterized by the words »expect«, »assume«, »presume«, »intend«, »estimate«, »strive«, »set as a goal«, »plan«, »become«, »aspire to«, »outlook« and similar expressions and generally contain information that refers to the expectations or goals for sales revenue, EBITDA or other performance-related standards. Forward-looking statements are based on current plans, estimates and expectations. They should therefore be viewed with caution. Such statements involve risks and uncertain factors, most of which are difficult to assess and which generally are beyond the control of ecotel.

Other possible factors that can significantly affect the cost and revenue development are changes in interest rates, regulatory requirements, stronger than expected competition, changes in technologies, legal disputes and supervisory developments. If these or other risks and factors of uncertainty occur, or if the assumptions on which the statements are based turn out to be incorrect, ecotel's actual results can diverge substantially from those expressed or implied in these statements.

ecotel can make no guarantee that the expectations or goals will be achieved. Notwithstanding existing capital market obligations, ecotel refuses to accept any responsibility whatsoever for updating the forward-looking statements by taking into account new information or future events or other issues.

In addition to the key figures presented in accordance with IFRS, ecotel also presents pro forma key figures, such as gross profit, EBITDA, EBITDA margin, free cash flow and gross and net financial obligations, which are not covered by the accounting regulations. These key figures are intended as a supplement, but not as a substitute for the information presented in accordance with IFRS. Pro forma key figures are subject neither to IFRS nor other generally applicable accounting regulations. Other companies may, under some circumstances, use different definitions for these terms.