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08.08.2006 – 07:34

freenet AG

euro adhoc: AG
quarterly or semiannual financial statement
1st 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/ 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
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 Telekom’s "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.
(freenet’s total number of DSL customers: 830,000 at the end of June
The Portal Business and B2B Services segments, which now jointly
generate nearly a third of freenet’s 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 freenet’s many
services - including some paid services - reached a new record at 7.9
million. One result of the company’s 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, 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 company’s 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: AG
end of announcement                               euro adhoc 08.08.2006 06:57:37

Further inquiry note:

Andreas Neumann
Investor Relations
Tel.: +49 (0)40 51306 778

Branche: Online
ISIN: DE0005792006
WKN: 579200
Index: TecDAX, CDAX, Prime All Share, HDAX, Technologie All Share,
Midcap Market Index
Börsen: Frankfurter Wertpapierbörse / regulated dealing/prime
Börse Berlin-Bremen / free trade
Hamburger Wertpapierbörse / free trade
Baden-Württembergische Wertpapierbörse / free trade
Börse Düsseldorf / free trade
Niedersächsische Börse zu Hannover / free trade
Bayerische Börse / free trade

Original content of: freenet AG, transmitted by news aktuell