DGAP-News: freenet AG reaches respectively exceeds targets for fiscal year 2016 and significantly improves key figures for revenue, EBITDA and free cash flow

freenet AG reaches respectively exceeds targets for fiscal year 2016 and significantly improves key figures for revenue, EBITDA and free cash flow

- 7.8 percent increase in Group revenue to 3.362 billion euros (previous year: 3.118 billion euros)

- Significant growth of 18.5 percent in Group EBITDA¹ to 438.8 million euros (previous year: 370.2 million euros)

- 20.0 percent increase in free cash flow² to 341.5 million euros (previous year: 284.5 million euros)

- Management confirms announced dividend proposal of 1.60 euros (previous year: 1.55 euros) for fiscal year 2016

- Capital Market Day scheduled for 12 April 2017 in Cologne to present details on TV business and to publish the guidance for 2017

Büdelsdorf, 02 March 2017 - Based on the preliminary figures, freenet AG [ISIN DE000A0Z2ZZ5] reached respectively exceeded all targets indicated for fiscal year 2016. According to the preliminary results, the company chalked up increased Group revenue of 3.362 billion euros, a 7.8 percent increase over the previous year (previous year: 3.118 billion euros). The increase is essentially the result of the revenue contribution of the newly created TV and Media segment in the past fiscal year amounting to 218.9 million euros. In addition, increased revenue from the sale of hardware and high-value digital lifestyle products made a positive contribution to the growth in total revenue. The core business mobile communications contributed a total of 3.126 billion euros to Group revenue, 2.1 percent more than the previous year (3.061 billion euros). The Mobile Communications segment was therefore again the dominant segment of the freenet Group.

The increase in mobile communications revenue is primarily due to customer ownership, which rose by 232,000 participants to 9.53 million (previous year: 9.30 million customers). With stable average revenue per contract customer (postpaid ARPU) of 21.4 euros (previous year: 21.4 euros), the strategically important postpaid customer base increased by 203,000 participants to currently 6.51 million (previous year: 6.31 million customers). In the no-frills area, which includes the mobile phone tariffs sold through the discount brands of the Group, the ARPU was 2.4 euros (previous year: 2.5 euros). The number of participants in this customer segment rose by 29,000 to 3.02 million over the previous year (previous year: 2.99 million customers). By comparison, the number of prepaid cards in circulation continued to decline from 2.94 million SIM cards as of 31 December 2015 to currently 2.53 million as a result of the disconnection of SIM cards not used by the network operators, with a prepaid ARPU of 3.1 euros (previous year: 3.0 euros).

The Group EBITDA increased significantly, by 18.5 percent to 438.8 million euros (previous year: 370.2 million euros). Of this amount, 28.0 million euros came from the TV and Media segment and 36.5 million euros from the equity interest of the freenet AG in the Sunrise Communications Group AG (mobile communications segment). The significant increase of the Group EBITDA is mainly due to the gross profit, which increased by 13.7 percent to 898.7 million euros (previous year: 790.4 million euros). At 110.8 million euros, the TV and Media segment made a major contribution to the gross profit of the Group. The gross profit margin improved thereby to 26.7 percent (previous year: 25.4 percent).

Depreciation and amortisation increased by 52.9 million euros over the previous year to 124.3 million euros (previous year: 71.4 million euros), essentially as a result of the increased inventory in tangible and intangible assets due to the acquisition of the Media Broadcast Group and the purchase price allocation implemented in that context.

After accounting for the interest result in the amount of -54.9 million euros (previous year: -44.1 million euros) and deducting the income tax charges in the amount of 27.5 million euros (previous year: 33.2 million euros), the results for 2016 showed a Group result of 216.4 million euros, 5.0 million euros below the previous year (previous year: 221.5 million euros). At 1.78 euros the result per share is on par with the previous year.

Net financial debt³ per 31 December 2016 increased to 725.8 million euros (previous year: 369.2 million euros). This resulted in a debt ratio⁴ of 1.7 (previous year: 1.0) on the balance sheet date, which is within the strategic bandwidth of 1.0 to 2.5, as it was also in the previous year.

The free cash flow in the reporting period was 341.5 million euros (previous year: 284.5 million euros), corresponding to a 20.0 percent increase. The projected amount of 300.0 million euros was therefore exceeded, even after taking out the dividend payment in the amount of 30.1 million euros received from the Sunrise Communications Group AG.

Joachim Preisig, Chief Financial Officer of freenet AG, is very pleased with the past fiscal year: "We reached or even exceeded all the targets that we set ourselves at the beginning of the year for our key figures."

As already announced in March 2016, the Management will suggest to the Supervisory Board a dividend in the amount of 1.60 euros per dividend-bearing no par-value share for fiscal year 2016. This corresponds to a pay-out ratio of approximately 60 percent of the free cash flow generated in fiscal year 2016. In this context the Management confirms its existing dividend policy, which provides for a dividend distribution to its shareholders of 50 to 75 percent of the free cash flow generated for the year.

The final numbers and the annual report 2016 will be published on 23 March 2017. A capital market day for analysts and investors will take place on 12 April 2017 in Cologne where the Management will present a number of figures and details concerning the TV business after the start of DVB-T2 HD and publish the outlook for fiscal year 2017.

1) Group result before interest, taxes on income, depreciation and impairment write-downs, including shares of associates accounted for using the equity method, excluding depreciation and deferred taxes from the subsequent accounting regarding shadow purchase price allocation (element of the result of associates accounted for using the equity method).

2) Free cash flow (FCF) 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.

3) Financial debt less liquid funds, less the share of market value of Sunrise Communications Group AG (Source stock data: Bloomberg)

4) Ratio of the financial debt less liquid funds, less the share of market value of Sunrise Communications Group AG (Source stock data: Bloomberg) to the Group EBITDA obtained in the last 12 months.

Disclaimer:
This report 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 can lead to a situation where the actual developments, and in particular the results, financial position and transactions of our company diverge substantially from the forward-looking statements made here. The company assumes no obligation to update these forward-looking statements or to adjust them to future results or developments. All of the disclosures are based on provisional calculations made prior to the final consolidation and the conclusion of the audit. These may therefore diverge from the final corporate figures to be presented on 23 March 2017.