• Gross profit increases by 6 % to EUR 24.7 million
• EBITDA increases by 18 % to EUR 6.6 million
• Free cash flow increases to EUR 1.9 million (previous year: EUR -0.8 million)

Düsseldorf, 12 November 2019

ecotel Business Customers: Migration from ISDN to All-IP nearly complete
The focus of financial year 2019 is clearly on the migration from ISDN to All-IP in the ecotel Business Customers segment. Priority was given to customers whose access would have been affected by the impending discontinuation of their ISDN service by Deutsche Telekom at the end of the year. As of the end of the third quarter 2019, the switch was completed for about 90 % of the affected customers, the majority with new contract terms.

The slight decline in revenue in the ecotel Business Customers segment to EUR 35.2 million (previous year: EUR 35.9 million) was due partially to unusually long delivery times for the new broadband Ethernet products of Deutsche Telekom, and partially to the low prices for customer access within the framework of the ISDN migration. The share of All-IP products at the end of the third quarter constituted about 60 % of the total revenue and 70 % of the total gross profit for voice services. Currently, 70 % of all outgoing voice minutes are generated on the company's own IP platforms. Higher value creation from the All-IP products automatically results in higher gross profit margins. The fact that the absolute gross profit of EUR 17.5 million has not yet increased, with a slight decline in revenue, is due exclusively to the temporary high expenses and one-time charges for the provision of new connections.

easybell: Increase in revenue and gross profit
Revenue in the easybell segment totalled EUR 13.7 million in the first nine months of 2019 (previous year: EUR 11.9 million). The continued focus on scalable SIP products and cloud telephone systems for small business customers, as well as router leasing transactions continued to have a positive effect, much more than compensating for the expected decline in call-by-call transactions. Altogether, gross profit increased to EUR 6.1 million (previous year: EUR 5.0 million).

nacamar and ecotel Wholesale develop as planned
Revenue in the nacamar segment remained constant at EUR 1.4 million, while gross profit increased slightly to EUR 0.8 million (previous year: EUR 0.7 million). Revenue in the low-margin Wholesale segment, with a share of EUR 11.5 million (previous year: EUR 27.3 million), further decreased as planned, while gross profit increased slightly to EUR 0.3 million.

Increase in consolidated gross profit and EBITDA and effects of IFRS 16
Consolidated gross profit increased in the first nine months of 2019 to EUR 24.7 million (previous year: EUR 23.4 million). Higher value creation in the growing NGN product groups, both in the ecotel Business Customers segment and in the easybell segment, had positive effects.

First-time application of the new IFRS 16 accounting standard »Leasing Relations« - obligatory as of 1 January 2019 - had substantial effects on the earnings and assets situation. Long-term leasing payments (essentially for office and computer centre leasing) are no longer reported directly as expenses, but are instead split up into an interest share affecting net income and a repayment share not affecting net income. In addition, the leasing contracts must be reported as rights of use and depreciated over the scheduled leasing term.

This change in accounting had a positive effect of EUR 1.0 million on EBITDA in the first nine months of 2019. The opposing effects of IFRS 15 for this year are not expected to become manifest until the fourth quarter. Altogether, EBITDA increased by EUR 1.0 million to EUR 6.6 million.

Consolidated profit and EPS
Depreciations totalled EUR 5.4 million (previous year: EUR 3.9 million). The accounting change in IFRS 16 resulted in an increase of EUR 1.0 million in this area. These changes also had a negative effect of EUR 0.2 million on the financial result, for a total of EUR -0.2 million (previous year: EUR -0.1 million). After deducting taxes and third-party shares, ecotel achieved a consolidated deficit of EUR 0.1 million (previous year: EUR 0.4 million) in the first nine months of 2019. This corresponds to earnings per share of EUR -0.04 (previous year: EUR 0.11). Without the negative effects of IFRS 16 on consolidated profit, the consolidated profit totals EUR 0.0 million.

In the first nine months, free cash flow increased to EUR 1.9 million (previous year: EUR -0.8 million). Even without the effects of the changes in accounting due to IFRS 16, free cash flow increased to EUR 0.7 million. Compared to the previous year, the net debt was reduced by EUR 0.8 million to EUR 0.3 million.

Altogether, the first three quarters of 2019 went as planned. The ISDN migration has challenged and burdened the entire organisation. At the same time, the migration resulted in substantial one-time costs, which however have a fast ROI due to the higher value creation of the new NGN products.

The Management Board confirms the forecast for 2019 and expects revenue in the core segment ecotel Business Customers in a corridor of EUR 48 to 50 million, in the easybell segment from EUR 15 to 17 million, and in the nacamar segment from EUR 2 to 3 million.

After EBITDA of EUR 7.5 million in 2018, EBITDA is expected to continue increasing in 2019, in a corridor of EUR 8 to 9 million.

About ecotel communication ag:
The ecotel Group (hereinafter »ecotel«) is a group of companies operating throughout Germany since 1998 that specialises in the marketing of information and telecommunications solutions for different target groups. The parent company is ecotel communication ag with headquarters in Düsseldorf (hereinafter »ecotel ag«). Including its subsidiaries and holdings, the group has a total of about 300 employees. Currently the ecotel Group provides more than 50,000 customers nationwide with about 14,000 data connections and more than 80,000 voice connections.

Note:
This publication is not an offer for the sale nor an invitation for the purchase or subscription of securities. This publication is not a securities brochure. This publication and the information contained therein are not intended for direct or indirect dissemination to or within the United States of America, Canada, Australia or Japan.


PR office:
Business and Financial Media
Annette Drescher (Assistant to the Managing Director)
Phone: 0211-55 007-740
Fax: 0211-55 007 5 740
E-mail: presse@ecotel.de

Business Media
Bernadette Loosen-Flanz (PR)
Phone: 0211-55 007-316
Fax: 0211-55 007 5 316
E-mail: presse@ecotel.de

For further information please visit us on the web at www.ecotel.de