ecotel surpasses EBITDA forecast for financial year 2020 and raises the outlook for 2021

• Gross profit boosted to € 37.7 million (+12 %)
• EBITDA improved to € 11.7 million (+33 %)
• Free cash flow increased to € 4.4 million (+22 %)
• Net financial assets more than doubled to € 2.3 million (+130 %)
• Consolidated surplus increased to € 1.0 million and EPS to € 0.28
• Dividend proposal of € 0.14 in line with sustainable financial strategy
• Forecast for 2021: Sustainable EBITDA growth to € 12 - 14 million

Düsseldorf, March 11, 2021

The ecotel Group concluded the year 2020 very successfully. EBITDA of € 11.7 million clearly surpassed the forecast, together with improvements in all significant key figures. All segments contributed to this positive development. This made it possible to more than compensate for the negative economic effects of the global COVID pandemic and the shrinking gross domestic product.

Consolidated revenue, at € 98.3 million (prev. year: € 82.8 million) was deliberately below the € 100 million threshold set down in section 35 para. 5a of the Telecommunications Act, which protects the group from any retroactive regulatory decisions on the fees of market-dominating telecommunications providers. Revenue in the high-margin segments »ecotel Business Solutions« and »easybell« as well as the »nacamar« segment developed as planned. The business volume in the »Wholesale« segment likewise increased profitably in 2020.

Consolidated gross profit increased by 12 % to € 37.7 million (prev. year: € 33.6 million). In particular, the increase pertained to gross profits and gross profit margins in the »ecotel Business Solutions« and »easybell« segments.

There was only a moderate increase in operative expenses, on the other hand, so that consolidated EBITDA increased by € 2.9 million or 33% to € 11.7 million. This breaks down by segment as follows: »ecotel Business Solutions« € 4.8 million (prev. year: € 4.3 million), »easybell« € 5.9 million (prev. year: € 4.0 million), »nacamar« € 0.6 million (prev. year: € 0.4 million) and »ecotel Wholesale« € 0.4 million (prev. year: € 0.1 million).

Increase in consolidated profit, free cash flow and net financial assets
With EBITDA of € 11.7 million (prev. year: € 8.8 million) and slightly higher depreciations totaling € 7.5 million. (prev. year: € 7.2 million), the group reported EBIT of € 4.0 million (prev. year: € 1.5 million). Taking into account the earnings, taxes and shares of minorities in the consolidated profit, this results in a consolidated surplus of € 1.0 million (prev. year: € -0.2 million) and earnings per share (EPS) of € 0.28 (prev. year: EUR -0.05) for the year 2020.

Free cash flow increased to € 4.4 million (prev. year: € 3.6 million). In 2020, long-term bank loans with a volume of € 1.8 million were repatriated. With funds totaling € 7.8 million at the end of 2020, this results in net financial assets of € 2.3 million (prev. year: € 1.0 million). In comparison with the previous year, the equity ratio increased substantially to 43.4 % (prev. year: 39.0 %).

Dividend proposal of € 0.14 per share
The Management Board and Supervisory Board will propose to the shareholders a dividend in the amount of € 0.14 per share qualified for dividend. This corresponds to the communicated goals of the sustainable financial strategy, which aims at distributing 50 % of the consolidated profit to the shareholders.

Significant segment developments

ecotel Business Solutions: Sustainable increase in gross profit and gross profit margin with expected decline in sales

In 2020 the »ecotel Business Solutions« segment virtually completed the migration from traditional ISDN connections to sustainable All-IP technology. As expected, it was not possible to maintain all customer relationships. This led to a scheduled decline in revenue of € 0.6 million to € 46.3 million.

At the same time the number of proprietary voice channels increased to more than 90,000 at the end of the year. The voice channels (SIP accounts and SIP trunks) are the basis for All-IP telephony on ecotel's in-house switching platform. This growth of more than 20,000 voice channels, or about 30 % compared to 2019, was a significant factor for increasing gross profit by € 0.4 million to € 24.2 million. The gross profit margin increased as a result to 52 % (prev. year: 51 %).

Operating expenses (essentially personnel costs and other operating expenses) remained constant at € 19.4 million in the »ecotel Business Solutions« segment during the financial year, which resulted in EBITDA of € 4.8 million (prev. year: € 4.3 million).

The focus of development in the »ecotel Business Solutions« segment has now shifted, after successfully establishing an in-house local exchange network (LEN), toward product and solution development, with two main areas of priority: digitization of business processes and automation of the product landscape for the purpose of increasing efficiency. With respect to product developments, the focus is now on establishing and expanding a modular product portfolio to enable fast, versatile and precise fulfillment of the individual needs of mid-sized business customers. In 2020, we already began expanding the product portfolio in order to meet current customer requirements, always on the basis of or as a supplement to ecotel's high-quality platforms. For example, we offered our customers an integrated solution for networking in the context of working from home, introduced bundled ecotel All-IP voice products in combination with Microsoft Teams, as well as a multi-cloud connect service that enables secure connection of ecotel data channels to the major cloud providers such as Azure, AWS or Google.

easybell: Sustainable increase in revenue and gross profit

The focus on user-friendly PBX systems for business customers and All-IP telephony with or without a base line helped the »easybell« segment to achieve growth of revenue to € 21.5 million (prev. year: € 18.6 million) again in financial year 2020. The high scalability of the business model and the streamlined, automated processes ensure an equivalent increase in gross profit to € 11.2 million (prev. year: € 8.3 million). In financial year 2020 this segment therefore achieved EBITDA of € 5.9 million (prev. year: € 4.0 million), which corresponds to growth of 47 %.

Forecast for 2021: EBITDA will continue to increase in a corridor from € 12 to 14 million

Following the transformation process of the past years and the resulting lateral development with respect to revenue, the Management Board sees the company as being very well positioned in the core segment »ecotel Business Solutions« and is now pursuing a consistent growth strategy. The forecast for 2021 in this segment is for revenue between € 47 and 50 million, with further increases in gross profit margins and, consequently, gross profits. Expected revenue for the »easybell« segment is € 24 to 26 million, and for the »nacamar« segment € 2.0 to 2.5 million. The Management Board expects consolidated EBITDA of € 12 to 14 million for financial year 2021. The forecast calls for EBITDA of € 5.5 to 6.5 million in the »ecotel Business Solutions« segment, EBITDA of € 6 to 7 million in the »easybell« segment, and EBITDA between € 0.5 and 1.0 million in the »nacamar« segment.

This forecast must be viewed against the backdrop of the Covid-19 pandemic. The gross domestic product shrank by about 5.0 % in 2020. Current forecasts for the overall economic development in 2021 vary substantially depending on the institute and the point in time. The above forecasts take into account opportunities and risks of the future development as best as possible.

About ecotel communication ag:

The ecotel Group (hereinafter »ecotel«), operating throughout Germany since 1998, specializes in the marketing of IT and telecommunications solutions in various segments. The parent company is ecotel communication ag with headquarters in Düsseldorf. Including its subsidiaries and holdings, ecotel has a total of about 300 employees. Currently ecotel serves more than 50,000 customers nationwide, providing 50,000 data connections and more than 360,000 voice channels.

Note:
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