Freenet AG : exceeds forecast with preliminary results for 2013: Business development continues stable on path to becoming a Digital Lifestyle provider

freenet AG is drawing a positive balance according to preliminary figures for 2013 and 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 of 255.0 million euros in free cash flow.** "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."

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: 8.50 million), as great up-selling or cross-selling potential exists here due to the direct and exclusive customer relationship. With an significant 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).

The 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 due to reporting date effects. "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:
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 expecting 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.

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.

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*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.