08.11.2016
freenet AG DE000A0Z2ZZ5
DGAP-News: freenet AG continues profitable growth trend and confirms its guidance 2016
DGAP-News: freenet AG / Key word(s): Interim Report/9-month figures
freenet AG continues profitable growth trend and confirms its guidance 2016
08.11.2016 / 19:36
The issuer is solely responsible for the content of this announcement.
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freenet AG continues profitable growth trend and confirms its guidance 2016
- Increase in Group revenue of 9.8 per cent to 867.2 million euros in the
third quarter (previous year: 790.1 million euros)
- EBITDA1 improves significantly in the third quarter 2016 by 21.4 per
cent to 118.2 million euros (previous year: 97.3 million euros)
- Customer ownership rises by 263 thousand to 9.47 million by September
30, (previous year: 9.21 million)
- Free cash flow2 in the first nine months 2016 up by 20.8 per cent to
262.7 million euros (previous year: 217.4 million euros)
- Successful placement of a promissory note loan for 350 million euros
with an average initial interest rate of 1.11 per cent
- Confirmation of the outlook for financial year 2016
Büdelsdorf, November 8, 2016 - freenet AG [ISIN DE000A0Z2ZZ5] has published
today its interim report per September 30, 2016 and confirms the outlook
for financial year 2016.
In the third quarter 2016 the company chalked up a significant increase in
Group revenue (+9.8 per cent) of 867.2 million euros over the previous year
(790.1 million euros). The increase is essentially the result of the
inclusion of the sales contribution of the Media Broadcast Group in the
amount of 70.1 million euros in the segment "TV and Media". In addition,
the rising solid revenue in the Digital Lifestyle Division and the Mobile
Communications core business also contributed to Group revenue. The Group
revenue for the first nine months of the current financial year thus adds
up to 2,424.1 million euros, equal to an increase of 5.8 per cent over the
previous year (2,291.1 million euros).
With stable average monthly revenue per contract customer (Postpaid-ARPU)
of 21.60 euros (previous year: 21.90 euros) and a significant increase in
customer ownership of 263 thousand or 2.9 per cent to 9.47 million per
September 30, 2016 (previous year: 9.21 million), the freenet AG sees
itself again confirmed in its strategy of focusing on high-value customer
relations when acquiring new customers and on properly managing existing
customers. The significant rise in customer ownership is primarily due to
the postpaid customer base which increased by 197 thousand participants or
3.2 per cent to 6.43 million (previous year: 6.23 million). In the no-
frills business, which covers all mobile phone tariffs distributed via the
discount brands of the Group, the ARPU stood at 2.50 euros (previous year:
2.60 euros). The number of participants in this customer segment rose in
comparison with the previous year by 67 thousand or 2.2 per cent to 3.04
million (previous year: 2.97 million). On the other hand, the number of
prepaid SIM cards in circulation continued to drop from 3.07 million per
September 30, 2015 to currently 2.59 million as a result of unused SIM
cards due to disconnections by the network users, with the Prepaid ARPU
coming in at the previous year's level (3.20 euros).
"Our solid traditional mobile communications core business is on the one
hand the foundation for our dividend strength and on the other hand also
supports our ambitious growth in the TV business", explains Joachim
Preisig, CFO of freenet AG.
The gross profit at 234.1 million euros was significantly above the
previous year's level (197.1 million euros) and came with an improved gross
margin of 27.0 per cent (previous year 24.9 per cent), mainly due to the
extended scope of consolidation which now includes the Media Broadcast
Group. The Group EBITDA in the third quarter of 2016 registered a
significant increase by 20.8 million euros or 21.4 per cent to 118.2
million euros when compared to the previous year (97.3 million euros). Of
this amount, a share in the Group EBITDA of 10.0 million euros came in the
reporting quarter (1st half of 2016: 6.1 million euros) from the inclusion
of the cash-neutral shares of the freenet AG in the results of the
associated company Sunrise Communications Group ('Mobile Communications'
segment). The contribution of the segment "TV and Media" newly created in
the second quarter of 2016 to the Group EBITDA in the third quarter was 8.3
million euros (1st half of 2016: 10.0 million euros). The Group EBITDA
achieved in the first nine months of 2016 amounted to 311.7 million euros
(previous year: 272.4 million euros).
Depreciations and impairments write-downs increased in the third quarter of
2016 by 13.5 million euros to 31.9 million euros (previous year: 18.4
million euros). The increase is essentially due to the increased stock of
tangible and intangible assets in connection with the acquisitions of the
Media Broadcast Group and the EXARING AG as well as to the associated
finalized purchase price allocations.
After including the net interest result in the amount of -14.0 million
euros (previous year: -9.9 million euros) and after deducting the income
tax exposure in the amount of 9.2 million euros (previous year: 7.1 million
euros), the Group result for the reporting quarter declined by 4.0 million
to 58.0 million euros compared with the previous year (61.9 million euros).
The earnings per share at 0.47 euros was slightly below that of the
previous year's value of 0.48 euros.
The cash flow from operating activities in the reporting quarter amounted
to 80.8 million euros (previous year: 86.0 million euros), which
corresponds to a decrease of 5.2 million euros from the previous year.
Aside from the significantly higher EBITDA in the amount of 10.8 million
euros (without including the cash-neutral shares in the result of the
associated company Sunrise Communications Group AG of 10.0 million euros),
the change is essentially the result of reduced tax payments in the amount
of 7.4 million euros, a reduction of 2.1 million euros from the previous
year. The increase in net working capital by 18.6 million euros when
compared to the third quarter of 2015 counter-balanced this effect.
The cash flow from investing activities in the reporting quarter was -8.9
million euros compared to -5.7 million euros in the third quarter of 2015.
The change is essentially due to higher cash outflows for investments in
intangible and tangible assets in the amount of 4.7 million euros after
netting out the payment receipts from the disposal of these assets. The
investments with effect on the cash position were financed completely from
equity capital and concerned mainly tangible assets of the Media Broadcast
Group.
The cash flow from financing activities changed in the third quarter of
2016 by -0.7 million euros over the previous year to -15.4 million euros.
The outflow of funds from financing activities in the reporting quarter is
essentially associated with the preparation of the final purchase price
allocation of the Media Broadcast Group.
In the first nine months of the financial year 2016 the company obtained a
free cash flow that was 20.8 per cent higher than the previous year (262.7
million euros versus 217.4 million euros). On the other hand, in the third
quarter of 2016 the company showed a free cash flow of 71.3 million euros,
9.9 million euros less than the previous year (81.1 million euros), which
is essentially due to a delayed payment (valuation date effect).
The leverage3 per September 30, 2016, which is based on the net financial
debts4 in the amount of 787.7 million euros, was 1.9 and therefore within
the strategic bandwidth of 1.0 to 2.5. The net financial debts resulted
mainly from the promissory note loans due between 2017 and 2026 as well as
the syndicated bankers' loans taken out in March 2016.
In order to partly refinance the syndicated bankers' loan freenet AG
successfully placed an long-term promissory note loan with five tranches
for 350 million euros which was disbursed on November 08,2016. The
transaction, which was accomplished under customary market conditions, was
handled by the Bayerische Landesbank, the Landesbank Baden-Württemberg, the
Norddeutsche Landesbank and the ING Bank. The subscription for the entire
volume took place at the lower end of the respective sales margins with an
initial average interest rate of 1.11 per cent p.a. and maturities between
four and eight years. Specifically, the promissory note loan consists of
two four-year tranches with a fixed coupon and/or a variable coupon of 1.00
per cent p.a., a six-year tranche with a fixed coupon of 1.28 per cent
p.a., a six-year tranche with a variable coupon of 1.20 per cent p.a. and
an eight-year tranche with a fixed coupon of 1.68 per cent p.a. The
transaction confirmed the investment grade status of freenet.
The outlook for financial 2016 is confirmed. Accordingly, the Management
continues to aim for moderately rising Group revenue, an EBITDA of slightly
over 400 million euros and a free cash flow of approximately 300 million
euros. The current outlook does not even include the expected EBITDA
contribution or the dividends flowing to the Group from the equity interest
in the Sunrise Communications Group AG. The targets given for the growth of
the performance indicators Postpaid-ARPU and Customer Ownership in
financial 2016 remain unchanged: The company expects a further
stabilisation of the Postpaid-ARPUs at the 2015 level and a slightly rising
customer number in Customer Ownership compared to financial 2015.
Regarding dividend policies the Management plans to continue distributing
between 50 and 75 per cent of the annually achieved free cash flow to its
shareholders. In support of the sustainability of the business model the
Management intends to recommend to the Supervisory Board and the Annual
General Meeting in 2017 again a dividend in the amount of 1.60 euros per no
par-value share eligible for a dividend for financial year 2016. In spite
of the refinancing that took place in March as a result of the acquisitions
of companies there are no plans to change the current financial strategy.
The Management therefore continues to adhere to a debt factor within the
communicated target range (between 1.0 and 2.5).
The complete interim report as of September 30, 2016 is available for
downloading from www.freenet-Group.de/investor, and the conference call
will be broadcast there on November 9, 2016 starting at 10:00 CET via
Webcast.
1) Group result before interest, taxes on income, depreciation and
impairment write-downs, including shares of associates accounted for using
the equity method, excluding depreciation and deferred taxes from the
subsequent accounting regarding shadow purchase price allocation (element
of the result of associates accounted for using the equity method).
2) Free cash flow (FCF) is defined as cash flow from operating activities
minus investments in property, plant and equipment and intangible assets,
plus proceeds from the disposal of property, plant and equipment and
intangible assets.
3) Ratio of the financial debts less liquid funds, less the share of the
listed for the Sunrise Communications Group AG (Source: stock data:
Bloomberg) to the corporate EBITDA obtained in the last 12 months.
4) Financial debts less liquid funds, less the share of the price listed
for the Sunrise Communications Group AG (Source: stock data: Bloomberg)
Investor Relations Contact:
freenet AG
Investor Relations
Deelbögenkamp 4c
22297 Hamburg
Germany
Phone: +49 (0) 40 / 513 06 778
Fax: +49 (0) 40 / 513 06 970
E-mail: [email protected]
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08.11.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: freenet AG
Hollerstraße 126
24782 Büdelsdorf
Germany
Phone: +49 (0)40 51306-778
Fax: +49 (0)40 51306-970
E-mail: [email protected]
Internet: www.freenet-group.de
ISIN: DE000A0Z2ZZ5, DE000A1KQXU0
WKN: A0Z2ZZ , A1KQXU
Indices: TecDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover,
Munich, Stuttgart, Tradegate Exchange
End of News DGAP News Service
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