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

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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
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ots Originaltext: freenet AG
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Andreas Neumann

IR-Manager

Tel.: +49 (0)40 51306 778

E-Mail: ir@freenet.ag

Branche: Online
ISIN: DE000A0EAMM0
WKN: A0EAMM
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