Corporate | 8 November 2011 08:15

Nine-months report telegate AG: Transformation of the business model continues

telegate AG / Key word(s): Quarter Results/Interim Report

08.11.2011 / 08:15

– Business sector Media with an increase in revenues of approx. 22 percent compared
to the previous year and slightly improved contribution margins

– As expected, EBITDA before non-recurring items in the amount of EUR 11.2 m below
the previous year's level, however, within the scope of the profit guidance for the full
year 2011.

Planegg-Martinsried near Munich, November 08, 2011 – The first nine months of the annual year of telegate AG showed a trend within the expectations of the corporate management. Focus of the business activities was still the target to achieve measurable progress regarding the transformation of the business model from a pure DA provider to a Local search and marketing specialist for SMEs. In this respect, it is particularly pleasing that the business sector Media continues to grow and thus revenues increased by approx. 22 percent from EUR 21.5 m to EUR 26.1 m compared to the previous year's period. Revenues dynamics weakened slightly compared to the beginning of the year. The Media sector contributes 31 percent to group revenues now. This share amounted to 23 percent after nine months of the annual year 2010.

Revenues of the larger business sector DA solutions were declining, as expected, by approx. 19 percent from EUR 71.3 m to EUR 57.5 in spite of slightly increased revenues per caller and thus total group revenues decreased by approx. 10 percent from EUR 92.8 m to EUR 83.6 m in the first months 2011 compared to the previous year. Here, the segment Germany/Austria was the main pillar of revenues with EUR 76.8 m and approx. 92 percent respectively of group revenues. The segment Spain contributed to group revenues with EUR 6.9 m and approx. 8 percent respectively.

Earnings situation: losses are limited by the business sector Media

Profit trend at group level is still affected by a significant decline in income in the highly-profitable DA business. It could not be compensated yet during the first nine months of the annual year by an improved contribution margin of the Media business with a development of EUR -13.4 m in the previous year to EUR -11.2 m now. Thus, telegate generated group earnings before interest, taxes, depreciation and amortization (EBITDA) before non-recurring items in the total amount of EUR 11.2 m in the first 9 months of the annual year 2011. In fact, these earnings were within the communicated profit guidance of EUR 13 m to EUR 18 m for the full year. However, this result is be significantly below the earnings of EUR 16.8 m of the previous year's period. Here, both segments made positive contributions to earnings again: Germany/Austria with EUR 10.6 m and Spain with EUR 0.6 m.

Non-recurring items amounted to approx. EUR 2.1 in the reporting period, in the previous year there were none non-recurring items. Non-recurring items of 2011 were primarily due to capacity adjustments of the DA business in Germany and Spain. Thus, the own Call Center was closed in Spain and handling of DA requests was fully outsourced to an external service provider. This step will reduce the cost base significantly and makes it more flexible as of October 2011. A decline in earnings after taxes from EUR 10.9 m to EUR 3.1 m is particularly attributable to reduced operating earnings. Lower amortization and depreciation and lower taxes compensated the declining trend to a small extent in the reporting period. Furthermore, it should be taken into consideration that a profit contribution in the amount of EUR 2.4 m was still included in the previous year's period from discontinued operations (sale of Italian subsidiary).

Balance sheet quality and availability of liquid funds remains solid

Net worth and financial position of telegate AG is still free from debt and remains very solid. The company's equity ratio amounts to 52.1 percent as of the balance sheet date. The decline compared to the same period of the previous year (59.1 percent) is primarily attributable to a share repurchase program performed by the end of 2010 and a dividend payment made in June 2011. These factors also constitute the decline in liquid assets from EUR 57.9 m in the previous year to EUR 41.8 m now. telegate AG generated liquid assets in the amount of EUR 4.4 m in the third quarter of the annual year. Excluding the dividend payment this amount was EUR 2.6 m on a nine-months-basis.

Outlook: profit guidance 2011 is confirmed, focus is still on acquiring new customers
and measures regarding customer loyalty in the Media sector

Profitability trend is still affected by the transformation of the company's business model. As a consequence, a positive revenues performance and slightly improved contribution margins in the Media sector can still not compensate a decline in the classic DA business with a strong margin. However, the corporate management confirms the profit guidance of 2011 it has set itself after the previous business trend. The management board announced a profit guidance for the full year – based on EBITDA before non-recurring items – of EUR 13 m to EUR 18 m in the spring of 2011 compared to approx. EUR 23,2 m in the annual year 2010.

The Media sector remains the focus of activities during the remaining fiscal year. Here, the company continues to work intensely on optimizing sales efficiency across all sales channels and to further improve the contribution margins. In addition, the product portfolio is further aligned to the requirements of the advertisers and the product area ''company website'' will have an even greater focus of the sales strategy. Furthermore, customer loyalty shall be improved gradually and the churn rate reduced with information which makes the success of their advertising investment transparent for the B2B customers. Thus, the company's profitability shall be further noticeably improved by these efficiency measures in the MEDIA sector together with a reduction of structural costs.

Business figures telegate AG, January – September	2011	2010	+/- in %
Group revenues	83.6	92.8	–  9.9
Revenues business sector DA solutions	57.5	71.3	-19.4
Revenues business sector Media	26.1	21.5	+21.5
EBITDA before non-recurring items	11.2	16.8	-33.3
Net income after taxes from continuing operations	3.1	10.9	-71.6
Free cash flow before M&A	1.5	7.7	-80.5
Liquid assets (as of September 30)	41.8	57.9	-27.8
Number of employees (headcount as of September 30)	1,779	2,019	-11.9

All figures stated in m of EUR; group figures refer to continuing operations

Note:
telegate AG's interim report for the first 9 months of the annual year 2011 is available for
download at http://www.telegate.com > Investor Relations

Contact:
Jörg Kiveris
telegate AG
Head of Public Relations Department
Fraunhofer Str. 12a
82152 Planegg-Martinsried
Tel.: 089/ 8954-1188
Fax: 089/ 8954-1189
E-Mail: presse@telegate.com

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Language:	English
Company:	telegate AG
	Fraunhofer Str. 12a
	82152 Planegg-Martinsried
	Germany
Phone:	+49 089 – 89 54 0
Fax:	+49 089 – 89 54 10 10
E-mail:	info@telegate.de
Internet:	www.telegate.com
ISIN:	DE0005118806
WKN:	511880
Listed:	Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart

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