DGAP-News: freenet AG / Key word(s): Interim Report/Quarter Results freenet AG stays focused on profitable business areas in Q1 2014 07.05.2014 / 18:00 --------------------------------------------------------------------- freenet AG stays focused on profitable business areas in Q1 2014 - Group revenue declined by 7.4 per cent to 717.5 million euros (previous year: 775.2 million euros) due to waiving of low-margin revenues - Customer Ownership rises 3.8 per cent to 8.79 million (previous year: 8.47 million) - At 85.4 million euros EBITDA remains virtually unchanged (previous year: 85.3 million euros) - Free cash flow* increases to 57.1 million euros (previous year: 56.4 million euros) - Digital Lifestyle portfolio further strengthened with new Smart Home security range and acquisition of Jesta Digital Group Büdelsdorf, 7 May 2014 - freenet AG [ISIN DE000A0Z2ZZ5] today published its interim report for the first quarter of 2014 and confirmed its outlook for the 2014 and 2015 financial years. In the first quarter, the company generated Group revenue of 717.5 million euros (previous year: 775.2 million euros). This development is attributable to the decline in postpaid ARPU and in particular to reduced business activities from hardware sales and prepaid cards, which contribute only small margins for profitability of the freenet Group. The Mobile Communications business remained the dominant segment for the Group, with revenue of 704.0 million euros (previous year: 767.5 million euros). Customer Ownership - which includes postpaid and no-frills customers and serves as a key performance indicator for the company - increased by approximately 320,000 customers year-on-year to 8.79 million (previous year: 8.47 million), an increase of 3.8 per cent. This growth was especially evident - with around 250,000 new customers - in the no-frills segment, where online distribution channels are used to address particularly price-conscious consumers with less of a need for personal consultation. The postpaid customer base also saw a positive year-on-year development, increasing by 70,000 customers. The average monthly revenue per contract customer (postpaid ARPU) declined to 21.2 euros in the first quarter of 2014, down 0.4 euros from the previous quarter. Compared to the first quarter of the previous year (22.4 euros), the decline was 1.2 euros. The key influencing factor here is the continuing price competition in the German market - which is also causing freenet customers with older contracts, some of which still have relatively high basic monthly charges, to switch to the smartphone tariffs now being offered from the own range of products. First-quarter gross profit came to 182.5 million euros (previous year: 172.8 million euros), up by 9.7 million euros. This is due primarily to the consolidated subsidiaries GRAVIS, MOTION TM, and Jesta Digital Group. Accordingly, the gross margin for the quarter under review increased by 3.1 percentage points to 25.4 per cent (previous year: 22.3 per cent). "We have now successfully established ourselves in the rapidly growing Digital Lifestyle segment and are now further expanding our range of services to meet the customer's needs and requirements," says freenet AG CEO Christoph Vilanek. "We will be bringing some very attractive product packages onto the market here over the course of the year." All in all, Group EBITDA (earnings before interest, taxes, depreciation, and amortization) was virtually unchanged at EUR 85.4 million euros (previous year: 85.3 million euros), while the sale of freeXmedia EBITDA made a positive contribution of 4.0 million euros to the prior-year figure. First-quarter depreciation, amortization and impairments increased by 1.8 million euros to 16.0 million euros (previous year: 14.2 million euros), especially in connection with the write-downs on the intangible assets recognized as part of the purchase price allocation for the acquisition of the new businesses (GRAVIS, MOTION TM, and Jesta Digital Group). Taking into account the income tax burden, which increased to 2.6 million euros (previous year: 0.9 million euros), the Group result for the quarter under review fell by 2.8 million to 57.4 million euros (previous year: 60.2 million euros). This corresponds to earnings per share of 0.45 euros (previous year: 0.47 euros). During the past quarter, free cash flow* increased by 0.7 million euros to 57.1 million euros (previous year: 56.4 million euros). This rise resulted partly from increased cash flow from operating activities in the amount of 62.9 million euros (previous year: 59.0 million euros) and partly from capital expenditure, which, due to higher investments in internally developed software of 2.6 million euros, increased to 5.8 million euros. Overall, total cash flow from investing activities in the amount of -51.9 million euros (previous year: -17.1 million euros) was influenced in particular by the payment of 46.3 million euros for purchasing the Jesta Digital GmbH shares. Finally, cash flow from financing activities was -0.5 million euros during the quarter (previous year: -45.5 million euros). "Based on the first quarter results, which are on plan, we confirm our forecast for the 2014 and 2015 financial years," says freenet AG CFO Joachim Preisig. According to the forecast, the Executive Board is striving for Group EBITDA of about 365 million euros and about 370 million euros respectively, for the 2014 and 2015 financial years, with Group revenue increasing slightly in each case, and for free cash flow* of about 265 million euros and about 280 million euros, respectively. The full interim report for the first quarter 2014 is available for download at www.freenet-group.de/investor. The company will also webcast an analyst/investor conference call on 8 May 2014 from 14:00 CEST. ----------------------- * 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 --------------------------------------------------------------------- 07.05.2014 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 --------------------------------------------------------------------- 267023 07.05.2014