08.08.2006 – 07:34
euro adhoc: freenet.de AG
quarterly or semiannual financial statement
Half of 2006: Expansionist Course, Solid Profits and New Jobs
Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement.
1st Half of 2006: Expansionist Course, Solid Profits and New Jobs
383.5 million euro in revenues Despite increased expenditure for market growth: Pre-tax earnings at 32.3 million euro 2.8 million permanent subscribers Nearly 140 new jobs created
Hamburg/ freenet.de AG - freenet remained on an expansionist course in a market that continued difficult and highly competitive. In the first six months of the present year, the company increased its revenues by 18 percent to 383.5 million euro and earned pre-tax profits of 32.3 million euro despite increased expenditures for growth.
Internet Access remains the strongest line of business, generating 188.9 million euro revenues, which translates to nearly 50 percent of total first-half revenues in 2006. Here, it should be taken into account that Deutsche Telekoms "NetRental" model created a clear distortion of competition at the expense of medium-size and small DSL providers in the promising broadband business. Though the Federal Network Agency ended up prohibiting the model in late May, its negative repercussions continued to affect freenet through the end of June, witness among other things the - restrained - number of new DSL contracts. As a result, at 55,000 the number of new broadband customers added in Q2/2006, a quarter that was already impacted by seasonal effects and one-time factors like the football World Cup, remained below that of the previous quarter and of Q2/2005. (freenets total number of DSL customers: 830,000 at the end of June 2006).
The Portal Business and B2B Services segments, which now jointly generate nearly a third of freenets income, continued to grow in importance vs. the previous year: In the Portal business, first-half revenues were up by nearly 30 percent year on year to 57.4 million euro, and B2B Services revenues increased by 77 percent to 64.8 million euro. Meanwhile, revenues in the fixed-line telephony segment declined slightly vs. the first half of 2005 to 72.4 million euro, which currently corresponds to 19 percent of total revenues. The conditions for doing business successfully in this sector remain difficult and are further exacerbated by the trend toward "Voice over Internet Protocol" (VoIP), as more and more users choose the option of making inexpensive or free phone calls via DSL.
freenet again stepped up its marketing expenditure and distribution expenditure year on year, to over 25 million euro, with the aim of recruiting permanent subscribers (contract customers) especially in the DSL segment, but also as part of the process of internationalizing the business, to five attractive European markets to begin with, by introducing the ".eu" domain for retail customers. Overall, the number of contract customers across all segments grew to 2.8 million at June 30, 2006, an increase by 500,000 vs. the end of June 2005. The number of people who use one of freenets many services - including some paid services - reached a new record at 7.9 million. One result of the companys successful expansionist course was the creation of 139 new jobs in the first half of 2006 (2,216 employees in total at June 30, 2006).
In addition to increased marketing and sales expenditures, the business indexes mainly reflect investments in DSL customer growth and the seasonal decline in user numbers in the by-call business and in narrowband Internet access. At the same time, freenet actively joined in the competition, which was characterised by virulent price wars. Nonetheless, freenet.de AG is very profitable - even though, at 47.5 million euro, first-half EBITDA was down by roughly 30 percent year on year. Pre-tax earnings declined by a similar percentage to 32.3 million euro. The group result for the first six months of the current year amounts to 19.3 million euro.
Due to tax payments of 30.2 million euro in the second quarter 2006, the companys cash and cash equivalents totaled more than 174.8 million euro at the end of June 2006.
Q2/2006 Q1/2006 Q2/2005 1st half 2006 1st half 2005 Revenues 183.5 200.1 178.3 383.5 324.5 Segment: Internet access 90.9 98.0 79.9 188.9 164.0 Segment: Voice 34.8 37.6 39.7 72.4 79.6 Segment: Portal business 29.3 28.1 24.1 57.4 44.2 Segment: B2B services 28.5 36.4 34.6 64.8 36.7 Gross profit 67.4 74.1 77.6 141.4 151.5 EBITDA 20.0 27.5 31.2 47.5 67.7 Earnings before taxes (EBT) 12.3 20.0 20.3 32.3 48.4 Group result 7.2 12.1 12.5 19.3 29.9 Capital and reserves 301.8 294.6 281.3 301.8 281.3 Balance sheet total 557.3 586.4 516.4 557.3 516.4 Cash and cash equivalents 174.8 192.7 121.9 174.8 121.9
Financial data per IFRS; in million euro / Source: freenet.de AG
end of announcement euro adhoc 08.08.2006 06:57:37
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