• B2B transactions increase to EUR 48.1 million (previous year: EUR 47.6 million)
• Growth of revenue from EUR 0.7 million to EUR 15.9 million in »easybell« segment
• Consolidated gross profit and EBITDA both increase by 7 %
• Positive free cash flow of EUR 0.9 million despite high investments

Düsseldorf, 14 March 2019

Positive review of 2018
ecotel is very satisfied with the 2018 financial year and in particular with the development in the B2B segment. The ISDN transformation is gaining substantial momentum and new business also stabilised at a high level in 2018. Higher value creation in the growing and highly promising NGN product groups is now evident in the gross profit. Following are the most important facts and figures from the group:

Increase in gross profit and EBITDA
As opposed to the past two financial years, the growth of the gross profit by EUR 2.0 million to EUR 31.9 million resulted in an increase in EBITDA. With an increase of EUR 0.5 million to EUR 7.5 million, EBITDA is fully within the forecast corridor of EUR 7 to 8 million. The increases in expenses for technical and human resources and for process adaptations were reduced during the financial year.

Earnings per share at previous year's level
High investments in 2017 and 2018 resulted in an increase in depreciations of EUR 0.6 million to EUR 5.3 million. After deducting the financial result, taxes and the shares of other shareholders, ecotel achieved a consolidated surplus of EUR 0.5 million (previous year: EUR 0.5 million) in 2018. This corresponds to earnings per share of EUR 0.13 (previous year: EUR 0.13).

Investments in further growth
In 2018, ecotel invested in high-performance customer equipment, the computer centre, and IT developments totalling EUR 5.8 million (previous year: EUR 5.1 million) in order to achieve further growth. These investments were financed essentially on the basis of substantially higher cash flow from ongoing business activities totalling EUR 6.7 million (previous year: EUR 4.2 million) and the net financial assets. Despite the high investments, this made it possible to achieve a positive free cash flow of EUR 0.9 million (previous year; EUR -0.8 million). Net financial assets decreased from EUR 1.2 million to EUR 0.4 million as of year-end 2018.

Recommended dividend of EUR 0.13 per share
Due to the very positive development of the key performance indicators in B2B revenue, gross profit, EBITDA and free cash flow, and the continued stable balance sheet figures, the Management Board decided together with the Supervisory Board to recommend a dividend to the annual general meeting of 100 % of the consolidated surplus - or EUR 0.13 per share.

Overview of results from the single segments

»ecotel Business Customers« reports increase in revenue

• In this core segment ecotel offers business customers nationwide an integrated product portfolio consisting of voice and data services (IT/telecom solutions). The focus is on enterprises with more than 50 employees.
• Revenue increased by EUR 0.5 million to EUR 48.1 million. During the same period, gross profit in the B2B segment increased out of proportion by EUR 0.9 million to EUR 23.6 million. This means an increase of 1.4 percentage points in the gross profit margin for the B2B segment to 49.1 %.
• Due to the ever increasing share of All-IP transactions (NGN products), ecotel expects further increases in the gross profit margin in the coming years.

»easybell« continues positive business development

• The »easybell« segment includes all transactions of the easybell group, which consists of four companies. This segment focuses on the marketing of broadband Internet access and VoIP telephony for private customers, as well as SIP trunking and hosted PBX services for smaller enterprises.
• Revenue increased by EUR 0.7 million to EUR 15.9 million, while gross profit increased by EUR 1.0 million to EUR 6.9 million.
• As in the ecotel Business Customers segment, the successful marketing of profitable SIP products is becoming evident here as well. The basis for this is easybell's entry into the market with SIP products for smaller business customers.

Focus on new strategy at »nacamar«

• In the »nacamar« segment nacamar GmbH offers streaming services for media enterprises on the basis of its own Content Delivery Network (CDN). With AddRadio, nacamar is the leader in Germany's radio streaming market.
• In 2018, »nacamar« was able to successfully continue its focus on the new strategy. Although revenue decreased slightly to EUR 1.9 million as expected, gross profit increased here slightly to EUR 1.0 million as well.

Targeted decrease in revenue in »ecotel Wholesale« segment

• The »ecotel Wholesale« segment comprises the services for other telecommunications companies, including network interconnections with more than 100 national and international carriers.
• The changes to the Telecommunications Act (§ 35, para. 5a, TKG) at the end of 2018 prompted ecotel to keep consolidated revenue below the threshold of EUR 100 million. This will protect ecotel from most potential risks resulting from any subsequently regulated purchasing prices by dominating enterprises. This was achieved by a targeted reduction of revenue to EUR 32.9 million (previous year: EUR 55.8 million) in the low-margin »ecotel Wholesale« segment. As a result, consolidated revenue was reduced to EUR 98.9 million (previous year: EUR 120.6 million).

Forecast for 2019

Continued control of consolidated revenue in 2019
ecotel is convinced, even in view of the present uncertainties connected with the current regulation activities, that the company continues on the right path. The changes to the Telecommunications Act (§ 35, para. 5a, TKG) allow companies with revenue below EUR 100 million to protect themselves in most cases against any negative subsequent effects of future regulatory decisions. ecotel is planning, also in the interest of the investors, to take advantage of this protection in 2019 as well. Consolidated revenue in 2019 is therefore again not expected to be above this threshold, which substantially reduces its significance as a key figure.

Stable to slightly improved segment results expected
For 2019 the Management Board expects revenue in a corridor between EUR 48 and 50 million in the »ecotel Business Customers« segment, with continued slight increases in gross profit margins, in combination with increased gross profits. Revenue of EUR 15 million to EUR 17 million is anticipated for the »easybell« segment; revenue of EUR 2 million to EUR 3 million is anticipated for the »nacamar« segment.

Increased EBITDA in forecast
EBITDA is expected to continue increasing, and will be in a corridor of EUR 8 to 9 million, taking into account the positive effects of the first-time application of the IFRS 16 leasing standard on EBITDA. In view of the currently planned business activities for 2019 ecotel expects significant negative effects from EBITDA in 2019 due to the regulations of IFRS 15, which were already applied in 2018. According to current estimations, these two opposing effects will virtually cancel each other out, so that the planned and forecast increase in EBITDA will result essentially from improvement of the business activities.


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:
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