Ecotel communication : Annual financial report 2023

Annual Report 2023

FOREWORD BY THE MANAGEMENT BOARD

To our shareholders

Company profile Our values

DEAR SHAREHOLDERS,

We are pleased to present our annual report for 2023. The end of the financial year always involves looking back, and overall we are very satisfied with the 2023 financial year. On the whole, we met or even exceeded our forecasts. With the integration of the nacamar segment into the joint venture UPLINK Digital GmbH in April 2023, we successfully continued the plans we announced in 2022 to focus on our core segments. Our investment in the future growth of our core business has paid off and begun to bear fruit, allowing us to look to the future from a stronger position.

Overall, we increased consolidated sales to EUR 106.3 million (+14%), gross profit to EUR 32.1 million (+6%) and operating EBITDA to EUR 9.0 million (+2%).

This enabled us to achieve a consolidated net profit of EUR 7.4 million (previous year: EUR 70.2 million). Adjusted EPS came to EUR 0.94 per share (previous year: EUR 1.39 per share).

At last year's Annual General Meeting, you, the shareholders, resolved to pay a dividend of EUR 66.1 million, which reduced the net financial assets to EUR 3.7 million (previous year: EUR 66.9 million). The equity ratio also fell to around 50% (previous year: around 75%) as a result. However, we remain entirely self-financed and free of external financial debts.

We have decided, together with the Supervisory Board, to propose the distribution of a dividend of EUR 0.47 per share (50% of adjusted EPS) to our valued shareholders, ensuring that we keep our promise to you.

» Our transformation into the leading quality telecommunications provider in the German business ­customer market is paying off. I'm delighted at the

great response­ we have had from the market and, of course, the trust that more and more well-known customers are showing in us as a provider. Our ­consistent focus on our target customers' needs

ensures­ we keep our finger on the pulse and helps us to place ecotel ­successfully on the market. That is only possible thanks to the dedication of

our employees,­who go above and beyond even in challenging times and help us to achieve our ­ambitious growth targets.

Markus Hendrich

Chairman of the Management Board

Foreword by the Management BoardManagement Board

Authorized signatories Supervisory Board

Report of the Supervisory Board

Key achievements in the 2023 financial year

Key figures at a glance The ecotel share Sustainability at ecotel

Group management report Consolidated financial statements Notes

6

Let's take a look at the individual segments:

ecotel Business Customers:

The focus on »Cloud« and »Fiber« is having an impact. Sales in the ecotel Business Customers segment grew to EUR 46.2 million in the 2023 financial year (previous year: EUR 45.6 million), the first noticeable increase after years of transformation-related falls. In the second half of the year in particular, the investment we made as planned in 2023 in the growth markets »Cloud« and »Fiber« began to reap significant rewards in terms of sales, leading to a year-on-year rise in the number of orders in both these areas.

Operating EBITDA for the segment came to EUR 7.8 million (previous year: EUR 8.3 mil- lion). The above-mentioned investment in the growth strategy led to this temporary drop.

EBITDA (operating EBITDA) was adjusted for extraordinary income from the transfer of right-of-use assets to online resources of EUR 3.9 million (previous year: EUR 14.9 million), expenses for non-cash measurement effects of EUR 0.1 million and non-recurring expenses for reorganisation measures in the amount of EUR 0.4 million. Reported EBITDA thus came to EUR 11.2 million (previous year: EUR 22.8 million).

ecotel Wholesale:

Sales in the ecotel Wholesale segment recorded a significant increase of EUR 13.6 million to EUR 60.2 million in the 2023 financial year. This change is mainly due to two effects. Sales with the former easybell segment are no longer consolidated outside the Group following the disposal in 2022, and instead are reported as external sales in the ecotel Wholesale segment (effect: +EUR 6.4 million). In addition, business with cross-network trading in telephone minutes (Wholesale) grew in the 2023 financial year (effect: +EUR 6.1 million), and we successfully expanded our marketing of data lines for national and international carriers (effect: +EUR 0.8 million).

These increases in sales led to a rise of EUR 0.7 million in gross profit to EUR 1.9 million. Operating expenses remained almost unchanged year on year, meaning that the substantial rise in gross profit was reflected directly in operating EBITDA, which grew by EUR 0.6 million to EUR 1.2 million.

» We would also like to thank our business partners and, above all, our sales partners and customers. We are pleased to be making good progress with our realignment and to have established a new awareness, including among major customers, relatively quickly. The conclusion of contracts with two well-known companies in this interesting target group within a very short time confirms that we are on the right path and spurs us on to expand our project business further. With our scalable infrastructure and expertise, we will be delighted to serve complex requirements for major customers. We would also like to thank you, our valued shareholders, for your loyalty and trust in us and in ecotel.

Achim Theis

Member of the Management Board

To our shareholders

Company profile

Our values

Foreword by the Management BoardManagement Board

Authorized signatories Supervisory Board

Report of the Supervisory Board

Key achievements in the 2023 financial year

Key figures at a glance The ecotel share Sustainability at ecotel

Group management report Consolidated financial statements Notes

7

A look ahead:

In December 2023 we received the largest individual contract in the history of the com- pany. We then won another major large-volume contract at the end of January 2024, having laid the foundations for it in 2023. These two contracts, which have a combined TCV (total contract value) of over EUR 20 million, will be implemented gradually in 2024. Rising, recurring sales will initially be offset here against initial expenses for investment in hardware and licences, as well as for the transformation and provision of services. Following a start-up phase in 2024, these two contracts will then be fully reflected in sales and income from 2025 onwards and, in combination with our planned sales performance, will have the potential to generate double-digit sales growth in the following years.

We also reorganised our sales approach and structure in the area of »Cloud« in the 2023 financial year. As a result, we now anticipate significant growth in cloud-phone seats here and have appointed excellent staff in both growth areas, »Cloud« and »Fiber«, who can help ensure lasting growth.

The Wholesale segment is growing very successfully in the area of data in particular­ and is contributing more and more to overall income. ectoel generally provides high- quality data lines here, in collaboration with partners, for major international customers­ with branch offices in Germany. Here, too, we are on the verge of signing contracts with several interesting customers.

In view of the very good opportunities on the market and the successful positioning of our product range, we expect to be able to achieve annual sales growth of 10% or more in the Business Customers segment.

We predict that consolidated sales for 2024 will be within the range of EUR 108 million­ to EUR 112 million. This is based on the assumption that the Business Customers segment will grow significantly and generate sales of between EUR 48 million and EUR 52 million, while sales in the Wholesale segment will be between EUR 50 million and EUR 60 million.

We expect operating EBITDA to increase slightly to between EUR 9 million and EUR 10 million, while consolidated net profit is expected to surpass EUR 2 million.

We anticipate significant sales growth in the ecotel Business Customers segment in 2025 and 2026, as our investment in sales and measures to support sales is continuing to have a positive impact on incoming orders and the above-mentioned large projects will by then be expected to be fully reflected in sales. In detail, we believe that ongoing sales growth of around 10% per year in the ecotel Business Customers segment is achievable. Operating EBITDA is expected to increase significantly to as much as EUR 15 million in 2025 and 2026, due to the effects outlined above.

We look forward to the 2024 financial year.

Düsseldorf, 8 March 2024

To our shareholders

Company profile

Our values

Foreword by the Management BoardManagement Board

Authorized signatories Supervisory Board

Report of the Supervisory Board

Key achievements in the 2023 financial year

Key figures at a glance The ecotel share Sustainability at ecotel

Group management report Consolidated financial statements Notes

8

Annual Report 2023

AUTHORISED SIGNATORIES

To our shareholders

Company profile Our values

Foreword by the Management Board Management Board

Authorized signatories

Supervisory Board

Report of the Supervisory Board

Key achievements in the 2023 financial year

Key figures at a glance The ecotel share Sustainability at ecotel

Group management report Consolidated financial statements Notes