• Gross profit up by 6.9 per cent to 194.2 million euros (previous year: 181.6 million euros)

• EBITDA climbs by 4.0 per cent to 96.3 million euros (previous year: 92.6 million euros)

• Group result rises by 4.1 per cent to 66.2 million euros (previous year: 63.6 million euros)

• Free cash flow* up by 6.3 per cent to 79.6 million euros (previous year: 74.9 million euros)

• Customer ownership grows by 0.230 million to 8.90 million (previous year: 8.67 million)

• Group revenue falls by 3.5 per cent to 762.1 million euros (previous year: 789.6 million euros), mainly as a result of the decision to dispense with hardware trading activities with very low or no margins

Büdelsdorf, 6 November 2014 - freenet AG [ISIN DE000A0Z2ZZ5] published its interim report for the third quarter of 2014 today and thereby confirmed its outlook for the financial years 2014 and 2015. The report indicates that all of the company's earnings figures have developed in a highly positive manner compared to the previous year. In conjunction with the slightly lower Group revenue, the gross profit margin increased to 25.5 per cent.

The customer ownership figure - in which the target groups of the particularly lucrative contract customer segment and the discount segment (no-frills) are concentrated, and which serves as a key performance indicator in the company - was increased by around 230,000 customers to 8.90 million (previous year: 8.67 million), representing an increase of 2.7 per cent. The contract customer target group grew with particular dynamism, increasing its numbers by 150,000. Around 80,000 of the additional new customers are accounted for by the no-frills segment, in which there is generally less demand for personal advice.

The average monthly revenue per contract customer (postpaid ARPU) grew to 21.7 euros in the third quarter of 2014, 0.2 euros higher than in the previous quarter. The decrease compared to the same period last year (22.6 euros) amounted to 0.9 euros. This was again primarily attributable to price competition on the German market. In addition, existing freenet customers with older contracts and higher monthly basic charges are also switching to the smartphone tariffs currently on offer. In comparison, postpaid ARPU from new customers is developing in a stable manner. No-frills ARPU was lower year-on-year at 2.9 euros (previous year: 3.5 euros).

Group revenue amounting to 762.1 million euros was generated in the third quarter (previous year: 789.6 million euros). This development is attributable in particular to reduced business activity from hardware sales with very low or no margins. An additional factor in this development was the lower average revenue per customer (ARPU) in the postpaid customer segment. The mobile communications business segment remained dominant within the Group with revenue amounting to 749.9 million euros (previous year: 781.6 million euros). In the first nine months of the current financial year, Group revenue fell by 7.1 per cent to 2,206.9 million euros (previous year: 2,374.5 million euros).

In the last quarter, gross profits increased to 194.2 million euros - an increase of 12.6 million euros over the same quarter last year (previous year: 181.6 million euros) - mainly as a result of the increased number of business activities with higher margins. In the first nine months of 2014, gross profits grew by 35.8 million euros to their present level of 567.3 million euros (previous year: 531.5 million euros), representing a gross profit margin of 25.7 per cent (previous year: 22.4 per cent).

"The results once again reflect the impact of the continuous improvement in our operational performance processes. This relates not only to the development and selling of innovative digital lifestyle products and services, but also to the diversity of efficiency improvements in our core business of mobile communications," explains Christoph Vilanek, CEO of freenet AG, adding: "In this way, we are cementing our sustainable readiness to tackle the challenges that lie ahead in our market."

Accordingly, Group EBITDA (earnings before interest, taxes, depreciation and amortisation) increased to 96.3 million euros (previous year: 92.6 million euros) in the reporting period. Group EBITDA totalling 269.3 million euros was reported for the first nine months of 2014 (previous year: 263.0 million euros).

Depreciation and amortisation increased by 1.3 million euros to 15.3 million euros in the third quarter (previous year: 14.0 million euros). This increase primarily resulted from the intangible assets that were recognised within the framework of the purchase price allocation for the acquisition of the freenet digital Group.

Taking into account income tax expenses totalling 5.4 million euros (previous year: 5.2 million euros), the Group result increased in the third quarter by 2.6 million euros to 66.2 million euros (previous year: 63.6 million euros). This corresponds to earnings per share of 0.52 euros in the quarter under review (previous year: 0.50 euros). The Group result in the first nine months of 2014 consequently totalled 180.7 million euros (previous year: 179.2 million euros), corresponding to earnings per share of 1.41 euros (previous year: 1.40 euros).

Free cash flow increased by 4.7 million euros to 79.6 million euros in the last quarter (previous year: 74.9 million euros). This increase is primarily attributable to increased cash flow from operating activities totalling 87.9 million euros (previous year: 81.9 million euros). Cash flow from investing activities in the third quarter of 2014 totalled -5.3 million euros (previous year: -7.6 million euros). The main investments were again made in the field of proprietary software in connection with numerous strategic projects. In the end, cash flow from financing activities in the third quarter came to -0.9 million euros (previous year: -40.7 million euros), which is attributable to the scheduled redemption of the amortisation loan in the corresponding quarter last year.

"Based on the further improvement in our business results in the first nine months, we are confirming our earnings and cash flow forecast for the financial years 2014 and 2015," adds Joachim Preisig, CFO of freenet AG.

The Executive Board is forecasting Group EBITDA of approximately 365 million euros and some 370 million euros respectively for the financial years 2014 and 2015, plus a free cash flow* of around 265 million euros and 280 million euros respectively. In making these forecasts, the company is assuming a decrease of between 5 per cent and 8 per cent in Group revenue in the current financial year, as in 2014 the company decided to dispense with hardware trading activities with very low margins. The Executive Board expects revenue to stabilise in the financial year 2015.

The complete interim report as of 30 September 2014 - third quarter of 2014 can be downloaded at www.freenet-group.de/investor and the conference call will be transmitted there via webcast at 10 a.m. CET on 7 November 2014.

*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.

Investor Relations contact:

freenet Aktiengesellschaft
Investor Relations
Deelbögenkamp 4c
22297 Hamburg
Tel.: +49 (0) 40 / 513 06 778
Fax: +49 (0) 40 / 513 06 970
E-Mail: ir@freenet.ag


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