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freenet AG

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Financial Figures/Balance Sheet
freenet AG reports a successful business year in 2007

  Disclosure announcement transmitted by euro adhoc. The issuer is responsible
  for the content of this announcement.
annual report
02.03.2008
freenet AG reports a successful business year in 2007
•        Earning targets for 2007 fully met
•        Operating result increased strongly: EBITDA EUR252.8 million; EBT
EUR163.7 million
•        Customer growth in all strategic lines of business
•        Number of contract customers rises to 6.48 million - of 11.69 million
total customers
freenet AG, Büdelsdorf, 3rd March 2008 - freenet AG fully met its 
earnings targets for 2007 and takes a positive view of the past 
financial year. By restructuring its business into the mobile 
telephony, broadband, portal, hosting, B2B and narrowband segments, 
freenet has introduced greater individual manageability and 
transparency for these lines of business, which are all at different 
stages in their lifecycles.
freenet AG grew its customer base in the four strategically important
lines of business: mobile telephony, broadband, portal and hosting. 
At the end of 2007, the group had 11.69 million customers across all 
business segments, of whom 6.48 million are contract customers - a 
11.6 percent increase vs. the end of 2006 (5.81 million).
freenet´s business has traditionally been dominated by the highly 
profitable narrowband business, which has been in decline for several
years and has to be compensated for by growth in other areas. The 
group´s revenues for 2007 has declined slightly year on year, from 
EUR2.05 billion to EUR1.86 billion (-9.3 percent). Of this, EUR473.9 
million was generated in the fourth quarter - a 10.6 percent decline 
compared with Q4/2006, but slightly above the level of the prior 
quarter. In this context, it should be noted that the way in which 
customer acquisition costs have been accounted for has changed, 
largely since the start of 2007. As a result, there are lower 
revenues to report, while at the same time gross profits and in 
particular EBITDAs increased. Therefore, only limited direct 
comparisons with last year´s figures are possible.
Gross profit rose by 25.0 percent compared with the previous year, to
EUR582.4 million. EUR146.1 million of this was generated in the 
fourth quarter - a rise of 6.6 percent on the previous quarter and of
29.9 percent compared to Q4/2006. The strong decline in gross profits
in the narrowband segment was fully compensated for by increased 
gross profits in other lines of business.
freenet AG´s operating result rose powerfully, and the group fully 
met its stated earnings targets for 2007 (EBITDA EUR250 million; EBT 
EUR160 million): EBITDA rose to EUR252.8 million - an increase of 
71.9 percent compared to 2006 (EUR147.0 million). At EUR56.5 million,
fourth-quarter EBITDA was more than twice the EUR24.8 million seen in
2006. freenet improved its earnings before taxes (EBT) by 39.2 
percent to EUR163.7 million, within its target corridor for 2007. 
freenet achieved this result despite high expenditure on marketing 
and consulting in connection with the review of freenet´s strategic 
options in the second half of 2007. Fourth-quarter EBT amounted to 
EUR28.0 million, a more than 50 percent increase vs. Q4/2006 and 
roughly on par with the previous quarter (EUR28.6 million).
segments: freenet increased its number of mobile telephony customers 
significantly, by nearly 12 percent from 5.1 million at the beginning
of the year to 5.7 million as at December 31, 2007; 260,000 were 
acquired during the fourth quarter. This growth was driven both by 
the 2.99 million contract customers and the 2.71 million 
prepaid-customers, and reconfirms freenet´s market share. With 
revenues of EUR1.18 billion, the mobile telephony segment continued 
to be the group´s biggest segment in 2007, accounting for EUR301.0 
million of its fourth-quarter revenue.
The number of DSL customers grew by 280,000 over the course of the 
year, reaching over 1.28 million by the end of December 2007. This 
growth enabled freenet AG to maintain its market share of approx. 7 
percent as planned. This was achieved despite interruptions and 
delays in Deutsche Telekom AG´s processing and switch-over 
procedures, especially in the 2nd half of the year, which 
significantly impeded freenet´s growth and also led to a not 
insignificant number of cancellations by new customers. As a result 
of this, freenet AG was forced to delete several ten thousand 
customers, who couldn´t be switched over a long period of time, from 
its orders in hand. Revenues improved by 39.6 percent from EUR195.1 
million in 2006 to EUR272.3 million at year-end 2007, and the segment
has become freenet´s second-largest revenue source by now. 
Fourth-quarter revenues for the segment were EUR77.4 million, a 43.8 
percent year-on-year increase and a 7.2 percent or EUR5.2 million 
rise on the previous quarter.
The portal segment at freenet AG bundles the group´s e-commerce, 
advertising and paid services and has 540,000 customers with 
contracts for its digital services -  80,000 more than at the end of 
2006. Revenues amounted to EUR56.7 million, of which EUR15.9 million 
were generated in the fourth quarter.
The number of Hosting customers in Germany and the other European 
countries grew by 14.5 percent year on year to 1.20 million, and the 
number of hosted domains increased to more than 3.5 million. Revenues
for 2007 increased by 15.1 percent to EUR79.4 million. Fourth-quarter
revenues came to EUR21.4 million, an 18.4 percent rise on Q4/2006.
Despite considerable legislative restrictions, the B2B Services 
operations managed to nearly match the high level of the previous 
year´s performance, generating revenues of EUR134.9 million. 
Meanwhile, gross profits improved year on year, rising from EUR28.4 
million to EUR31.2 million.
The narrowband segment is comprised of the by-call, pre-selection and
Internet narrowband access, all of which are in decline and are 
increasingly being supplanted by DSL telephony, mobile telephony and 
DSL. The number of active narrowband Internet customers dropped by 
about 900,000 over the course of 2007, and the number of fixed-line 
callers diminished by 1.2 million. As at 31st December 2007, a total 
2.96 million customers used one of the above listed narrowband 
services offered by freenet. Revenues showed a startling collapse 
from EUR281.7 million in 2006 to EUR149.3 million in 2007. The fourth
quarter saw revenues of EUR27.8 million, after EUR59.5 million in 
Q4/2006 and EUR33.9 million in Q3/2007. Gross profit, formerly 
strong, also dropped in 2007, and amounted to EUR88.9 million after 
EUR145.4 million in 2006, a 38.9 percent fall. Further declines are 
expected for this segment.
In 2007, group result was diminished by depreciation on deferred 
taxes in the amount of EUR74.5 million, which included a reduction of
the tax rate as part of the corporate tax reform. This did not result
in an actual outflow of cash or cash equivalents. Group result, there
this effect is reflected, was reduced to EUR16.5 million in 2007.
After paying out total dividend of EUR576 million (EUR5.50 special 
dividend and EUR0.50 dividend per share) to its shareholders last 
summer, freenet AG´s cash and cash equivalents have diminished to 
minus EUR38 million. The number of employees in the group increased 
to 3,838 including temporary staff. The new hires primarily serve to 
strengthen freenet´s sales and customer support operations, thereby 
forming a strong basis for future growth.
Key financials of the freenet Group
Accounting method: IAS/IFRS
in EURm                                  GJ 2007  GJ 2006  Q4/07   Q3/07   Q4/06
Third-party revenue                     1,863.3  2,054.8  473.9   470.0   530.2
Gross profit                             582.4    465.8    146.1   137.1   112.5
EBITDA                                   252.8    147.0    56.5    60.3    24.8
EBIT                                     156.6    103.1    28.2    31.7    13.7
EBT                                      163.7    117.6    28.0    28.6    18.5
Group result                             16.5     257.0    -50.6   -22.7   181.3
Net cash                                -38.0    534.0    -38.0   -4.3    534.0
Third-party revenue for the group *      1,863.3  2,054.8  473.9   470.0   530.2
1. Revenue mobile telephony              1,184.8  1,331.7  301.0   301.7   348.7
2. Revenue broadband                     272.3    195.1    77.4    72.2    53.8
3. Revenue portal                        56.7     63.5     15.9    12.4    20.5
4. Revenue hosting                       79.4     69.0     21.4    19.5    18.1
5. Revenue B2B                           134.9    141.4    33.4    33.5    37.8
6. Revenue narrowband                    149.3    281.7    27.8    33.9    59.5
Group gross profit*                      582.4    465.8    146.1   137.1   112.5
1. Gross profit mobile telephony         289.5    191.0    81.0    67.2    44.5
2. Gross profit broadband                67.6     2.2      14.9    16.0    0.9
3. Gross profit portal                   40.7     50.7     11.3    8.4     16.1
4. Gross profit hosting                  65.5     54.5     15.6    15.7    14.2
5. Gross profit B2B                      31.2     28.4     6.9     9.7     7.2
6. Gross profit narrowband               88.9     145.4    16.7    20.3    33.3
Total customer freenet group in million  11.69    12.68    11.69   11.81   12.68
Thereof contract customers in million    6.48     5.81     6.48    6.32    5.81
Mobile telephony customers in million    5.70     5.10     5.70    5.45    5.10
Thereof contract customers in million    2.99     2.75     3.00    2.90    2.75
Thereof prepaid customers in million     2.71     2.35     2.71    2.55    2.35
Narrowband customers(internet+teleph)    2.96     5.07     2.96    3.42    5.07
in million
DSL customers in million                 1.28     1.00     1.28    1.27    1.00
Paid service customers Hosting in million 1.20     1.05     1.20    1.17    1.05
Paid service customers portal in million 0.54     0.46     0.54    0.51    0.46
* Netting between segments is the reason behind the difference 
between the figures shown for sales and gross profits in the 
individual segments and the corresponding figures for the overall 
group.
end of announcement                               euro adhoc

Further inquiry note:

Andreas Neumann
IR-Manager
Tel.: +49 (0)40 51306 778
E-Mail: ir@freenet.ag

Branche: Online
ISIN: DE000A0EAMM0
WKN: A0EAMM
Index: Midcap Market Index, TecDAX, CDAX, HDAX, Prime All Share,
Technologie All Share
Börsen: Börse Frankfurt / regulated dealing/prime standard
Börse Berlin / free trade
Börse Hamburg / free trade
Börse Stuttgart / free trade
Börse Düsseldorf / free trade
Börse Hannover / free trade
Börse München / free trade

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