DGAP-News: freenet AG / Key word(s): Preliminary Results freenet AG announces preliminary results for 2013: Business development continues stable on path to becoming a Digital Lifestyle provider 27.02.2014 / 18:30 --------------------------------------------------------------------- freenet AG announces preliminary results for 2013: Business development continues stable on path to becoming a Digital Lifestyle provider - Slight increase in Group revenue to 3.2 billion euros (prior year*: 3.1 billion euros) - Group EBITDA unchanged at around 357.4 million euros (prior year*: 357.4 million euros), but slightly above the guidance - freenet Group's free cash flow** near stable at around 256.2 million euros (prior year*: around 259.7 million euros) and slightly above the guidance - Group result increases by 38 percent to 238.9 million euros - Customer ownership rises to about 8.76 million (prior year: about 8.50 million) - Postpaid ARPU at 22.3 euros (prior year: 23.4 euros) - Proposed dividend of 1.45 euros per share - Outlook for financial years 2014 and 2015 Büdelsdorf, 27 February 2014 - According to preliminary figures, freenet AG [ISIN DE000A0Z2ZZ5] generated Group EBITDA (earnings before interest, taxes, depreciation and amortisation) of 357.4 million euros (prior year*: 357.4 million euros) and free cash flow of 256.2 million euros (prior year*: 259.7 million euros). As a result, freenet AG exceeded its forecast for the full year published in February 2013, of 355.0 million euros in consolidated EBITDA and 255.0 million euros in free cash flow.** Based on the preliminary figures, freenet AG achieved a slight increase in Group revenue during the past financial year, to 3.193 billion euros (prior year*: 3.085 billion euros). With a revenue contribution of 3.160 billion euros, Mobile Communications was once again the dominant business segment for the freenet Group, with the first-time consolidation of Gravis-Computervertriebsgesellschaft mbH since 31 January 2013 accounting for around 131 million euros of the segment's external revenues, and of MOTION TM Vertriebs GmbH since 20 March 2013 contributing around 108 million euros. The first Digital Lifestyle products such as md MusicFlat, md GameFlat, Norton Mobile Security, md Cloud, SmartHome Heating and SmartHome camera were also included in the mobilcom-debitel product range. The important customer ownership performance indicator (sum of contract and no-frills customers) formed a mainstay of the business with 8.76 million Mobile Communications customers (prior year: 8.5 million), as great up-selling or cross-selling potential exists here due to the direct and exclusive customer relationship. With an increase of more than 180 thousand to 2.90 million the no-frills customer group, which is especially reached via online sales channels, could be expanded. The number of the particularly high-value contract customers also rose by around 80 thousand to 5.86 million. In contrast, the ongoing earnings-neutral deregistration of inactive SIM cards by network operators once again led to a significant decline in the number of prepaid customers, to 4.53 million (prior year: 5.58 million). Monthly average revenue per contract customer (postpaid ARPU) fell by 1.1 euros to 22.3 euros. The primary reason for this was the increased willingness of existing customers to switch to more attractive rates within freenet Group in conjunction with increasing smartphone usage, triggered by factors including pre-Christmas promotions. Price pressure in the no-frills discount market segment continued to increase during the past financial year. In this connection, we also stepped up our sales promotion activities in the fourth quarter. No-frills ARPU declined accordingly in financial 2013 by 0.5 euros to 3.4 euros. Prepaid ARPU remained unchanged at 3.0 euros. Gross profit rose to 731.2 million euros (prior year*: 719.8 million euros). This is mainly attributable to the Group-wide portfolio optimisation (particularly initial consolidation of GRAVIS) with a focus on Mobile Internet/Digital Lifestyle. As a result, Group EBITDA remained stable at 357.4 million euros (prior year*: 357.4 million euros). "As a result, in the last year we successfully set the strategic course for the freenet Group's further development into a true Digital Lifestyle provider in this age of mobile communications," says freenet AG CEO Christoph Vilanek. "We will build on this in the current financial year and further sharpen our profile in the dynamic competitive environment." Depreciation and amortisation decreased by 92.5 million euros year-on-year to 56.1 million euros (prior year*: 148.6 million euros). This is almost exclusively due to the completion of the amortisation of intangible assets by 31. December 2012, which were related to the purchase price allocation from the debitel acquisition in financial year 2008. The change in income taxes, from tax income of 6.5 million euros in the prior year to tax expenditure of 19.5 million in the reporting year is also related to this. Consequently, Group result increased by around 38 percent to 238.9 million euros (prior year: 173.2 million euros), which is equivalent to earnings per share of 1.87 euros (prior year: 1.35 euros). Free cash flow** in 2013 amounted to 256.2 million euros (prior year*: 259.7 million euros). The decrease resulted primarily from lower cash flow from operating activities due to reporting date effects. Net financial debt was reduced to 427.2 million euros at the end of 2013 (prior year*: 451.9 million euros), which is mainly due to the full repayment of the syndicated bank loan. This brought down the debt ratio - the ratio of net debt to EBITDA - to 1.20 (prior year*: 1.26). "In financial year 2013 we achieved or in fact exceeded all the key targets and corresponding indicators we had set for ourselves," says freenet AG CFO Joachim Preisig. Proposed dividend for financial year 2013: In line with the Executive Board's existing dividend policy, the Executive Board of freenet AG will propose the distribution of a dividend of 1.45 EUR per dividend-bearing share to the Supervisory Board. This represents a payout ratio of 72.5 percent of free cash flow**. Outlook for financial years 2014 and 2015: Based on the preliminary figures for financial year 2013, the Executive Board is aiming for a modest increase in Group revenue for both 2014 and 2015. At the same time, the company expects a slight increase in the number of customers in the important customer ownership sector (postpaid and no-frills) in both years, and expects postpaid ARPU for the current financial year to be slightly down year-on-year and to stabilise in financial year 2015. In line with the developments described above, the company is aiming for Group EBITDA of approximately 365 million euros for financial year 2014 and of around 370 million euros for 2015. Furthermore, the company is striving for a free cash flow of about 265 million euros for FY 2014 and about 280 million euros for FY 2015. Notes: The full Annual Report 2013 with the audited consolidated financial statements is expected to be available for download from 26 March 2014 at www.freenet-group.de/investor-relations. The company will webcast an analyst/investor conference call on 28 February 2014 from 10:00 CET. This announcement contains forward-looking statements based on current assumptions and forecasts made by the Executive Board of freenet AG. Known and unknown risks, uncertainties and other factors could cause the actual development, in particular the results, financial condition and performance of our company, to differ materially from the forward-looking statements given above. The company assumes no obligation to update these forward-looking statements or to adjust them to future events or developments. All figures are based on preliminary, unaudited calculations. There may therefore be discrepancies to the final financial figures to be presented on 26 March 2014. ----------------------- *Retrospectively adjusted due to early application of IFRS 11. **Free cash flow 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. End of Corporate News --------------------------------------------------------------------- 27.02.2014 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- 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: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 254883 27.02.2014