• Gross profit increases by 5% to € 33.6 million
• EBITDA increases by 17% to € 8.8 million
• Free cash flow increases to € 3.6 million (previous year: € 0.9 million)
• Net financial assets increased to € 1.0 million (previous year: € 0.4 million)

Düsseldorf, 12 March 2020

ecotel Group: Gross profit and EBITDA increased with planned decline in revenue
In 2019 the group achieved total revenue of € 82.8 million (previous year: € 98.9 million), a 5 % increase in gross profit to € 33.6 million, and a 17 % increase in EBITDA to € 8.8 million.

The business volume in the low-margin segment ecotel Wholesale was further reduced. This enabled the group to create the basis for growth in the high-margin segments without exceeding the € 100 million threshold defined in § 35, para. 5a of the Telecommunications Act to protect the company against any negative, retroactive regulatory decisions.

The earnings situation is affected by the first-time application of the new IFRS 16 (Leasing): EBITDA increased by the amount of € 1.4 million. At the same time, depreciations increased by € 1.3 million and interest expense by € 0.3 million. In the final analysis, this accounting change had a negative effect of € 0.1 million on consolidate profit.

ecotel Business Customers: Migration from ISDN to All-IP was clearly at the focus of activities in 2019
In 2019 the transformation from conventional ISDN-based connections of the Deutsche Telekom to future-sustainable All-IP products with new contract terms was successfully concluded. This significantly increased the sustainability of the customer base. Revenue in this segment reached € 46.9 million (previous year: € 48.1 million). In view of the fact that virtually the entire customer base of Telekom-based preliminary products (connection and/or carrier preselection) required marketing, technical and business measures in 2019, ecotel management is very satisfied with this result.

The higher value added of the new All-IP products made it possible to increase gross profit in this segment slightly to € 23.8 million (previous year: € 23.6 million). The gross profit margin in this segment increased to 50.7 % (previous year: 49.1 %).

easybell: Increase in revenue and gross profit
The easybell segment was able to continue the successful development of past years and achieved an increase in revenue of 17 % to € 18.6 million (previous year: € 15.9 million). The 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 by 20% to € 8.3 million (previous year: € 6.9 million).

nacamar: Positive development continues
Revenue in the nacamar segment remained constant at € 1.9 million, while gross profit increased slightly to € 1.1 million (previous year: € 1.0 million). The positive development of recent years likewise continued here, especially in the area of radio streaming. This was due primarily to innovations surrounding the "Ybrid" product family.

Altogether, the group was able to increase EBITDA by € 1.3 million to € 8.8 million. This development was spurred by higher margins in the continuously changing product mix, as well as two opposing effects resulting from accounting requirements: On the one hand, the first-time application of IFRS 15 (Revenue) last year burdened revenue and therefore EBITDA in 2019 in the amount of € 0.5 million. On the other hand, the first-time application of IFRS 16 (Leasing) resulted in an increase in EBITDA of € 1.4 million. Without these two effects EBITDA would have increased by € 0.4 million. The balance sheet total increased, primarily due to the new accounting requirement, by € 9.6 million, which reduced the equity ratio by almost 10 percentage points. A comparison with the previous year is therefore possible only to a limited extent.

Consolidated profit and EPS
Depreciations totalled € 7.2 million (previous year: € 5.3 million). The accounting change in IFRS 16 resulted in an increase of € 1.4 million in this area. After deducting taxes and third-party shares, ecotel experienced a consolidated deficit of € 0.2 million (previous year: € 0.5 million) in the year 2019. This corresponds to negative earnings per share of € 0.05 (previous year: € 0.13). IFRS 16 had an overall negative effect of € 0.1 million or € 0.03 per share.

In 2019, free cash flow increased to € 3.6 million (previous year: € 0.9 million). Even without the effects of the changes in accounting due to IFRS 16, free cash flow increased to € 2.3 million.

Net assets likewise increased by € 0.6 million to € 1.0 million in 2019.

The year 2019 presented challenges, especially for the ecotel Business Customers segment. The ISDN transformation and therefore the required measures were very burdensome and also resulted in temporary increases in expenses (resources, charges, and IT optimizations). Nevertheless, the higher value added of the new NGN products made it possible to almost offset these additional costs. With the strategy of migrating virtually all customers to the new All-IP product world with new contracts and contract renewals, ecotel simultaneously secured the advantage of a "fresh customer base" as the foundation for future growth in the Business Customers segment.

On the agenda for 2020 is the migration of the final ISDN connections of alternative upstream suppliers and transformation of the Telekom-based Ethernet lines. The Management Board therefore expects revenue in a corridor between € 46 and 49 million in the core segment ecotel Business Customers, with continued slight increases in gross profit margins. Revenue of € 20 million to € 21 million is anticipated for the easybell segment, and revenue of € 1.5 to € 2.5 million is anticipated for the nacamar segment.

EBITDA is expected to be within a corridor of € 85 to 10.5 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 maintains more than 50,000 data connections and more than 100,000 voice channels.

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.


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Annette Drescher (Assistant to the Managing Director)
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For further information please visit us on the web at www.ecotel.de