1&1 AG — Interim / Quarterly Report 2007

Oct 31, 2007

DRILLISCH AG – 9-MONTH REPORT 2007

DATA AND FACTS

Key Indicators of the Drillisch Group 9-month report 2007

Drillisch Group	I - III/2007	I - III/2006	I - III/2005
Turnover in € m	266.1	205.3	243.2
EBITDA in € m	27.0	23.0	21.5
EBIT in € m	24.4	20.5	18.8
EBT in € m	19.8	21.1	19.6
Consolidated profits in € m	11.9	13.1	11.6
Profit/loss per share in €	0.34	0.41	0.36
EBITDA margin in % of turnover	10.1	11.2	8.9
EBIT margin in % of turnover	9.2	10.0	7.7
EBT margin in % of turnover	7.4	10.3	8.1
Consolidated profit margin in % of turnover	4.5	6.4	4.7
Equity ratio (equity % of balance sheet total)	51.8	38.4	66.9
Return on equity (ROE) (Ratio Group result to equity)	6.9	16.4	16.8
Cash flow from current business operation in € m	21.5	20.5	12.1
Depreciation excluding goodwill in € m	2.6	2.5	2.7
Investments,
adjusted, in € m	2.0	2.3	2.9
Staff as annual average (incl. Management Board)	380	309	345
Wireless services customers as per 30/09 (approx. in thousands)	2,121	1,679	1,668
Wireless services customers Debit	1,280	1,119	1,200
Wireless services customers Credit	841	560	468

Contents

Data and Facts	2
To Our Shareholders	4
Letter from the Management Board	4
Investor Relations Report	5
Market Environment	8
The Wireless Services Market The Software Industry	8 9
Commercial Development of the Drillisch Group as per 30 September 2007	10
Group Companies	10
Turnover and Earnings Position	11
Assets, Liabilities and Financial Position	12
Opportunities and Risks of the Future Business Development	13
Outlook	13
Consolidated Interim Accounts as per 30 September 2007	14
Consolidated Income Statement	14
Consolidated Balance Sheet	15
Consolidated Statement of Change in Capital	17
Consolidated Capital Flow Statement	18
Consolidated Notes	19
Service Corner	22
Publications	22
Your Contacts	22
Information/Order Service	22
Editorial Information	23

Letter from the Management Board

The Management Board

Paschalis Choulidis Vlasios Choulidis

Management Board Spokesperson, Executive Officer Finances, Executive Officer Sales, Marketing, Customer Care Finance Communications, Controlling and IT

Dear Sir or Madam,

Drillisch AG continues its growth in turnover and profits. Consolidated turnover rose in the first nine months of 2007 by about 30% to € 266 million. The most important performance indicator for us, the EBITDA (earnings before interest, taxes, depreciation and amortisation), increased by almost 18% to € 27 million, further expanding our position as a profitable wireless services provider in Germany. Above all, we have once more clearly proven that the wireless services market remains a market where good money can be earned with good ideas. We have positioned ourselves as one of the primary companies on the discount market and made a major contribution towards ensuring that consumer-friendly prices could be taken for granted. While there is a certain time lag, we expect that this situation will result in increased use of mobile phones and their applications, causing the importance of landline networks to decline. We feel that this assumption has been confirmed by the latest study from the Verband der Anbieter von Telekommunikations- und Mehrwertdiensten e.V. (VATM) dated 16 October 2007, which determined that the use of wireless networks was growing significantly faster in comparison with landline services.

However, falling prices need not always mean falling margins and therefore declining profits. We have been able to improve our margin from each quarter to the next during this year.

The gross profit margin (turnover less cost of materials in relation to turnover) rose from 19.9% after three months to 20.9% after six and 21% after nine months. The EBITDA margin stayed in step with this trend. We are continuing to base our growth strategy on sustained profitability and not on turnover without any contribution to profits. Drillisch plans to take up an active role during the consolidation process among the wireless services providers. This is why Drillisch, by concluding a contract for the acquisition of additional shares in freenet AG in August 2007, laid the foundation for increasing further its existing shareholding in this company. Ultimately, this step has the goal of merging mobilcom Communicationstechnik GmbH, the subsidiary of freenet AG which contains the business segment "wireless services provider", with Drillish. Moreover, Drillisch entered a strategic alliance with United Internet AG, Montabaur, in September 2007 with a view towards possibly acquiring the business segment "wireless services provider"; the latter company, according to its own statements, has undertaken this participation with the aim of achieving a strategic position on the German DSL market, i.e., the German market for broadband Internet access, which is also undergoing a consolidation. The successful ongoing incorporation of the subsidiary Telco Services GmbH, acquired last spring, demonstrates clearly that we create long-term values by integrating companies into the Drillisch Group.

Warmest regards from Maintal.

Paschalis Choulidis and Vlasios Choulidis

Investor Relations Report

The Capital Market – 01 July 2007 to 30 September 2007

The third quarter of 2007 was overshadowed on the capital markets by the crisis on the US housing loan market. The expected M&A activities, which up to that point had been one of the great driving forces for the global stock markets during the year, were assessed much more pessimistically because fewer transactions were handled as a consequence of the rising costs of financing. Over the further course of the quarter, the interest measures by the central banks – lowering of rates in the USA and no increases by the ECB – contributed to the reassurance of the capital markets. The development of stock prices in the third quarter was generally less uniform than in previous quarters.

In comparison with the second quarter, the DAX lost 145.81 points, falling to 7,861.51 after reaching 8,007.32. The TecDAX ended the third quarter at 966.06 points, an improvement of 33.59 points in comparison with the figure as per 30 June 2007. The TecAllShare Index reached 1,176.74 at the end of the third quarter, a level which was virtually unchanged in comparison with the close of the first half of the year.

	Close-out 2006 30. September 2007		% change
Drillisch	€ 5.80	€ 7.80	+34.48%
TecDAX	748.32 points	966.06 points	+29.10%
TecAllShare	974.64 points	1,176.74 points	+20.74%

The Drillisch Stock and the Relevant Indices During the First Nine Months of 2007

The Drillisch Stock in the Third Quarter of 2007

During the third quarter, the stock traded within a range from € 8.47 on 3 July and € 5.55 on 17 August. As of the end of the quarter, the stock recovered to € 7.80, while development of the trading volume was highly positive. During the third quarter of 2007, a daily average of more than 200,000 shares were sold; the figure for the same quarter of the previous year was just under 50,000 shares.

The successful integration of Telco Services GmbH and the consolidation efforts undertaken by the industry as well as business operations were at the forefront for Drillisch AG in the third quarter. The holding in freenet AG was increased by 2.08% to 10.08% in July and August, and on 22 August Drillisch AG, with the support of the VATAS Group, secured an additional 18.49% of the voting rights of freenet AG. On 21 September, United Internet AG and Drillisch AG announced a strategic participation with respect to the participation in freenet AG. The cooperation with the VATAS Group and the joint participation with United Internet AG gives Drillisch AG a good strategic position in the imminent consolidation process.

Investor Relations Report

Aktuelle Researchstudien

Analysis	Rating	Target Price	Date
Arete Research	"Buy"	Fair Value € 14.00	25 September
SES Research	"Buy"	€ 10.20	25 September
Landsbanki Kepler	"Buy"	€ 15.00	24 September
Berenberg Bank	"Buy"	€ 12,00	24 September
West LB	"Buy"	€ 8.50	24 September
Commerzbank	"Hold"	€ 8.00	24 September
Sal. Oppenheim	"Strong Buy"	€ 9.00	23 August
HSBC Trinkaus	"Neutral"	€ 6.60	15 August

Agenda of the Third Quarter:

Ad hoc Reports

14 August -	1st half-year turnover € 169.9 million (+25.7%), EBITDA€ 17.0 million (+29.6%)
22 August -	Acquisition of a stock package amounting to about 18.49% in freenet AG
21 September -	Entry into a strategic participation with United Internet concerning the
	participation in freenet AG

Investor Relations Events

30 August – West LB German Telco Day

Active communication – Drillisch AG has continued the intensive communication with the capital market at a high level. The number of roadshows, individual meetings and telephone conferences had reached the level of the entire year 2006 at the end of the third quarter. The heightened interest in the Drillisch stock as an investment high in opportunity is confirmed by the increased sales on the Deutsche Börse. Many potential investors make use of the home page provided by the Investor Relations Department in addition to the personal contacts by e-mail and telephone. This site is constantly being updated and further developed on the basis of suggestions from everyone involved.

Directors' Dealings – securities trading which must be reported pursuant to Section 15a WpHG. 17 August: Sale (assignment) - 100,000 no-par shares à 6.00 – Nico Forster, Supervisory Board

Investor Relations Report

Directors' Holdings (as per 30 September 2007)

Number of shares	35,749,995
Management Board
Paschalis Choulidis	Shares	837,400 ➞ 2.34%
Vlasios Choulidis	Shares	648,984 ➞ 1.82%
Supervisory Board
Dr. Hartmut Schenk	Shares	- 0 -
Johann Weindl	Shares	- 0 -
Nico Forster	Shares	962,879 ➞ 2.69%
Dr. Horst Lennertz	Shares	- 0 -
Michael Müller-Berg	Shares	- 0 -
Dr. Bernd H. Schmidt (until May 2007)	Shares	- 0 -

Shareholder Structure (as per 30 September 2007)

Number of shares	35,749,995	in % 100.00
Free float according to stock exchange:	27,865,000	in % 77.94
Free float according to Drillisch:	20,159,512	in % 56.39

• Freefloat
• VS GmbH
• M. Brucherseifer
• Montrica Investment LLP
• JO Hambro
• Tremblant Trident Capital LP
• N. Forster
• P. Choulidis
• V. Choulidis

MARKET ENVIRONMENT

The Wireless Services Market

The Wireless Services Market

The wireless services market in Germany continues to be characterised by falling prices and increasing usage. The appearance on the market of the discounters in 2005 in particular triggered a decline in minute prices of 15% over the last two years, although the value-added tax was increased this year by 3% to 19%. The cost of calling on a mobile phone became 2.5% cheaper between September 2006 and September 2007. Prices remained stable in comparison with the previous month. The pressure on prices resulted from the discount providers and the government competition and regulatory authorities.

Reduced Call Forwarding and Roaming Charges Lower Wireless Services Prices

The call forwarding charges, which are set by government authorities, have been further reduced since November of last year. The charges which a network operator receives when the recipient of a call is a customer in his network come to 8.78 eurocents per minute for T-Mobile and Vodafone and 9.94 eurocents per minute for E-Plus and O2. These charges represent de facto the lower limit for profitable pricing for all market participants. Holiday-makers and business travellers have been able to make calls from abroad at cheaper rates since the summer of 2007. The costs for a call accepted abroad have also fallen substantially.

The international roaming charges have long been a thorn in the side of the EU antitrust authorities, who believe the charges to be too high. By the end of September, all of the wireless services providers had implemented the new prices which are standard throughout Europe. The new EU directive provides that calls from abroad cost a maximum of 58 eurocents a minute. The acceptance of calls when a person is abroad costs 28 eurocents a minute. According to an EU study released at the beginning of October, using mobile phones to make calls when abroad has become less than half as expensive as in the past. But the antitrust authorities do not appear to be satisfied even now. According to reports from Brussels, the next step is to reduce charges for SMS and data services abroad.

Lower Prices Lead to Continued Increases in Call Volume

The falling prices have a positive effect on call behaviour. The number of wireless services connections in the first half of the year alone rose by 5.4 million to more than 91 million. The trend of recent years continues – mobile phoning is becoming increasingly popular. Last year, the number of connection minutes rose by about one-third. Rising usage can also be presumed for the future, according to a prediction made by BITKOM (Bundesverband Informationswirtschaft, Telekommunikation und neue Medien) in the middle of September 2007, accompanied by a parallel decline in importance for landline connections in the future. However, predictions for 2007 expect a decline in turnover in the wireless services sector for the first time because there will be a time lag until the substantial fall in prices leads to significant increase in usage. The BITKOM forecast for 2007 predicts 22.8 billion in turnover, about 2.5% less. The level will then presumably be maintained in the coming year 2008.

MARKET ENVIRONMENT

The Wireless Services Market/The Software Industry

Seven Million Germans Want to Use Mobile Phone TV

The BITKOM experts hope that mobile phone TV will finally make a breakthrough in 2008 thanks to the Olympic Games and the European Championships in football. However, the regulatory authorities must agree on a uniform standard and release the required frequencies. More than seven million Germans would regularly use mobile phone TV if there were full-area coverage and it could be received using common end devices. Generally speaking, the increasing use of data services will make mobile phones even more appealing.

"simply surf" for Only 9 Eurocents a Minute

More than 23 billion text messages (SMS) will be sent in Germany this year, meaning that text messages still have the lion's share of mobile data utilisation. But more and more mobile phones can also receive and send e-mails, and it is becoming increasingly simple to download information from the Internet when on the road using these devices.

The low prices make the use of data services via mobile phone more and more interesting. simply, the discount pioneer in the Drillisch Group, introduced a new data option at the beginning of August. Customers can access the World Wide Web on their mobile phones for only 9 eurocents a minute and log onto the Internet while travelling at any time. If they use a mobile phone with UMTS capability, they can achieve transmission rates of up to 384 Kbits/s when accessing data. As is customary at simply, customers select the option "simply surf" in the Service World on the Internet. The option can also be disabled again at any time.

Group Companies

Commercial Development of the Drillisch Group as per 30 September 2007

According to its own estimation, Drillisch is one of the most profitable and innovative of the German wireless services providers. The Group subsidiaries market wireless services from all four of the network operators active in Germany through specialist shops, via the Internet and large retail chains. Within the Group, Drillisch AG has responsibility for the overlapping functions such as management, finances and accounting, controlling, cash management, human resources, risk management, corporate communications and investor relations.

Strengthening of Post-paid Business

The service provider Telco has been a part of the strong Drillisch corporate group since March 2007. The integration of Telco is going according to plan. Since the beginning of June, the marketing activities in the telecommunications speciality trade have been merged under the premium brand Telco. Taking as their slogan, "The best from both worlds", Telco and VICTORVOX speciality shops now have a joint market appearance with the same product portfolio. The service provider VICTORVOX concentrates on special sales forms and wide-area marketing.

Wide-ranging Pre-paid Business with Own Processor Status

ALPHATEL has specialised in pre-paid business and is the only service provider in Germany to use its own platform (processor status) for the marketing of cash cards and cash codes alongside the classic network operator rates. g~paid, the system used by ALPHATEL, enables the secure sending of PIN codes over electronic channels.

Discount Business in Two Networks

Drillisch is the only service provider in Germany to offer discount products for two networks. The subsidiary simply markets wireless service rates on the T-Mobile network over the Internet and in cooperation with large retail store chains at especially favourable terms and conditions: no basic monthly fee, no minimum charges for use and no contractual commitment. McSIM expands the discount line from Drillisch. This company concentrates on wireless services at discount prices on the Vodafone network.

IQ-optimize Software AG – Markets Own Workflow Management Software

The IT competence at Drillisch is bundled in the subsidiary IQ-optimize Software AG (formerly IQ-work Software AG). The company performs all of the IT services for the Group firms and markets its own workflow management software. The company has been operating under a new name since 29 May 2007. IQ-optimize Software AG thus documents its strategic further development and orients the company name logically to its core competence – the optimisation of business processes by the use of innovative software solutions.

Employees

As an average for the first nine months of 2007, the Drillisch Group employed a staff of 380, including Management Board (previous year: 309). The number of vocational trainees came to 17 (previous year: 18).

Turnover and earnings position

Acquisition of Telco

At the beginning of fiscal year 2007, Drillisch took over the competitor Telco, thus driving forward the consolidation on the German wireless services provider market. The acquisition was financed by a capital increase, available cash and by using a credit line. Telco has been consolidated in the Drillisch Group since March. This means that the business figures for the first nine months of 2007 are not strictly comparable with those of the same period of the previous year.

Cooperation with United Internet

On 21 September 2007, Drillisch Aktiengesellschaft and United Internet AG signed a participation agreement which provides that United Internet will participate in a joint venture operating in the future under the name MSP Holding GmbH, registered office in Maintal – "MSP Holding GmbH". The plan is for the two companies to each hold a 50% interest in MSP Holding GmbH, which in turn is the sole shareholder of the subsidiary which acts under the name MSP Beteiligungsgesellschaft mbH ("MSP GmbH"). The MSP Beteiligungsgesellschaft mbH, at that time a wholly owned subsidiary of Drillisch AG, concluded a stock purchase contract for the acquisition of about 18.49% of the stock in freenet AG, Büdelsdorf ("freenet"), on 22 August 2007. Moreover, Drillisch AG contributed about 6.01% of the stock which it already holds in freenet AG to MSP Holding GmbH, effective as per 21 September 2007. As consideration for the participation in MSP Holding GmbH, United Internet is contributing € 151.3 million as a cash contribution to equity and as shareholder loans to MSP Holding GmbH. The participation agreement provides for mutual put and call options, offer rights, pre-emption rights and mutual cancellation rights for the parties until the conditions precedent contained in the agreement have been fulfilled. The required approval from cartel authorities was granted after the close of the third quarter. The shareholders of the joint venture have kept all of their options open to change the conditions within the holding and the participation in freenet, in particular to increase further the holding in freenet and possibly even to take over freenet completely. By being a part of this participation, Drillisch aims to achieve a strategic positioning on the German wireless services provider market currently undergoing a process of consolidation. The decisive factor for the parties is the new strategy of the freenet management to separate the business areas wireless services and landline services/Internet business.

Turnover and Earnings Position

Drillisch continued on its course of growth in the third quarter of 2007. In comparison with the previous quarter (01 April to 30 June 2007), sales increased by 3.3% to € 96.2 million. In comparison with the first nine months of the previous year, the consolidated turnover rose by 29.6% to € 266.1 million. Cost of material increased proportionately to income to € 210.2 million. The gross income (turnover less cost of material) therefore rose to € 56.0 million (previous year: € 43.2 million) so that, just as in the same period of the previous year, a gross profit margin (gross income in relation to turnover) of 21.0% was achieved. Other operating income declined to € 1.9 million. The previous year's value of € 4.2 million included profits from stock prices as a consequence of the sale of Other financial assets; no such transactions were carried out in the first nine months of fiscal year 2007.

Assets, Liabilities and Financial Position

Personnel expenses rose by 26.2% to € 15.8 million. Owing to the business expansion, the other operating expenses rose by 27.7% to € 16.7 million. There was a substantial increase in legal and professional fees pursuant to the strategy of playing an active role in the consolidation process on the German service provider market. In total, the EBITDA (earnings before interest, taxes, depreciation and amortisation) improved by 17.6% to € 27.0 million. The EBITDA margin came to 10.1% (previous year: 11.2%) and is consequently – despite the ongoing integration of Telco – within the long-term profitability corridor. The EBITDA margin has improved from each quarter to the next in 2007. It came to 9.7% in the first quarter, to 10.2% in the second quarter and to 10.4% in the third quarter (percent of turnover). Depreciation and amortisation rose only by 5.8% to € 2.6 million. As a consequence, the EBIT (earnings before interest and taxes) rose by 19.0% to € 24.4 million. The EBIT margin came to 9.2% (previous year: 10.0%). The extensive investments, especially in the freenet stock, were financed by and large by loans. This led to a financial result of minus € 4.7 million (previous year: plus € 0.6 million). The EBT correspondingly declined by 6.4% to € 19.8 million. After taxes of € 7.9 million (previous year: € 8.0 million), consolidated income of € 11.9 million remains, following the € 13.1 million in the previous year. Profit per share came to € 0.34 (previous year: € 0.41). It must be kept in mind here that the number of shares has increased as consequence of the capital increase in the spring.

The income statement of the Drillisch Group does not properly reflect the company's true earning strength. In the third quarter, Drillisch received € 52.3 million in dividends or special dividend payments from the holdings in freenet. Since these payments are capital repayments or profit elements from the time period before the acquisition of the freenet stock, they were offset without effect on results against the acquisition costs for the stock. However, the interest payments on the loans for the financing of the participation are charged to the consolidated results in full.

Assets, Liabilities and Financial Position

The balance sheet total of the Drillisch Group has risen by one-third to € 333.7 million in comparison with the end of the previous fiscal year. The most significant changes under the long-term assets were to be found in the items "Goodwill" and "Other financial assets". The value of the goodwill increased, above all due to the acquisition of Telco, by € 42.2 million to € 76.8 million. Other financial assets rose from € 168.9 million to € 200.4 million. The holding in freenet AG was increased by 2.08% to 10.08% in July and August. On 22 August 2007, Drillisch also concluded a stock purchase contract for the additional acquisition of about 18.49% of the freenet stock. The latter has not yet been paid in full; as provided in the contract, a down payment was made first. The total profit distribution amount from freenet of € 52.3 million represents commercially a reduction in the purchase price. That is why the capitalised value of the Other financial assets was reduced by this amount without effect on results.

Inventories increased as of the closing date by € 2.9 million to € 8.7 million. They involve largely payments made on account for a larger quantity of vouchers and cash codes. Receivables increased by € 13.9 million to € 30.4 million as a consequence of the business expansion, including the acquisition of Telco.

Opportunities and Risks of the Future Business Development

The subscribed capital of Drillisch has risen by € 4.8 million to € 39.3 million. This is a consequence of a cash capital increase of € 3.5 million on 31 January 2007, a capital increase from company funds by the conversion of earnings reserves of € 0.9 million and the sale of own shares (€ 0.4 million) which were previously deducted from subscribed capital. The imputed value of one share of Drillisch stock now corresponds to € 1.10 of the subscribed capital. Primarily as a consequence of the cash capital increase at a price of € 6.75 per share, the capital surplus increased by € 20 million. The market revaluation provision, which rose by € 24.6 million, is the counter-position without effect on results to the Other financial assets, which rose in value. The good profitability is shown in the unappropriated retained earnings which rose by € 11.9 million.

The long-term liabilities due to banks declined on balance by merely € 0.2 million. On the one hand, a long-term amortisation cash loan was amortised by an unscheduled payment of € 24 million, reducing it to € 76 million. As per 31 December 2006, the scheduled instalments to be effected in the next twelve months were transferred to the short-term liabilities due to banks. On the other hand, the existing operating funds credit line was utilised in the amount of € 24 million. Since there is no obligation to repay this amount over the next twelve months and the Company assumes that the funds will be required for a longer term, this liability has also been classified as long-term. The short-term liabilities due to banks remain virtually unchanged. The major item shown here, as described above, is the partial instalments for the long-term amortisation cash loan which will become due over the next twelve months. The equity ratio during the first nine months of 2007 increased from 44.8% as per 31 December 2006 to the current 51.8% as per 30 September 2007.

Cash flow from current business activities rose by € 1.1 million to € 21.5 million. The inflow of funds was not any higher because € 10.5 million in taxes was paid in the first nine months alone (previous year: € 1.7 million). The investments in tangible assets and software at € 2.0 million were only slightly less than the amount of the previous year (€ 2.3 million). About € 48.3 million was paid for the Telco acquisition and the increase in the freenet holding less the dividend payment from freenet AG. This was financed from operative cash flow, the sale of own shares, the cash capital increase and available cash. Overall, the amount of cash declined by € 5.3 million to € 3.7 million.

Outlook

Subject to changes in the member companies of the Group, the Management Board expects a significant increase in turnover for the Group for 2007 as a whole in comparison with the previous year from about 2.2 million customers as of the end of the year.

Risk Report

The Drillisch Group maintains a qualified risk management system. The goal of this system is to recognise at an early stage any developments which could endanger the existence of the Company. The risk situation – in comparison with the risks described in the annual report for the year 2006 – did not change during the first nine months of business year 2007. In the opinion of the Management Board, adequate precautions have been taken to counter any probable risks.

CONSOLIDATED INTERIM ACCOUNTS Consolidated Income Statement

Consolidated Interim Accounts as per 30 September 2007

	I-III/2007*	I-III/2006	III/2007*	III/2006	II/2007*	II/2006	I/2007*	I/2006
	€ k	€ k	€ k	€ k	€ k	€ k	€ k	€ k
Sales	266,131	205,342	96,217	70,202	93,152	67,998	76,762	67,142
Other own work
capitalised	1,662	1,201	502	543	637	244	523	414
Other operating
income	1,931	4,244	713	2,451	584	793	634	1,000
Cost of materials/Expenditures
for purchased services	-210,165	-162,186	-75,681	-55,866	-72,977	-51,685	-61,507	-54,635
Personnel expenses	-15,835	-12,543	-5,519	-4,191	-5,829	-4,183	-4,487	-4,169
Other operating
expenses	-16,724	-13,097	-6,210	-3,276	-6,051	-6,192	-4,463	-3,629
Amortisation and depreciation	-2,599	-2,456	-896	-809	-896	-753	-807	-894
Operating result	24,401	20,505	9,126	9,054	8,620	6,222	6,655	5,229
Financial result	-4,651	596	-1,794	-36	-1,442	308	-1,415	324
Profit before taxes	19,750	21,101	7,332	9,018	7,178	6,530	5,240	5,553
Taxes on
income	-7,894	-8,041	-2,967	-3,177	-2,890	-2,658	-2,037	-2,206
Consolidated profit	11,856	13,060	4,365	5,841	4,288	3,872	3,203	3,347
Profit per share (in €)
Undiluted	0.34	0.41	0.13	0.18	0.12	0.13	0.09	0.10
Diluted	0.34	0.41	0.13	0.18	0.12	0.13	0.09	0.10
EBIT	24,401	20,505	9,126	9,054	8,620	6,222	6,655	5,229
EBITDA	27,000	22,962	10,022	9,863	9,516	6,975	7,462	6,123

* The consolidated income statement has included the figures from the acquired subsidiary, Telco Services GmbH, since 01 March 2007.

CONSOLIDATED INTERIM ACCOUNTS

Consolidated Balance Sheet

ASSETS
	30.09.2007	31.12.2006
	€ k	€ k
Fixed assets
Software	4,568	4,076
Goodwill	76,752	34,572
Tangible assets	2,118	2,005
Other financial assets	200,397	168,875
Deferred taxes	2,781	3,216
Long-term assets, total	286,616	212,744
Current assets
Inventories	8,718	5,812
Trade accounts receivable	30,415	16,533
Accounts due from affiliated companies	101	94
Tax reimbursement claims	553	4,924
Liquid assets	3,722	9,038
Other current assets	3,617	1,757
Current assets, total	47,126	38,158
ASSETS, TOTAL	333,742	250,902

CONSOLIDATED INTERIM ACCOUNTS Consolidated Balance Sheet

SHAREHOLDERS' EQUITY AND LIABILITIES
	30.09.2007	31.12.2006
	€ k	€ k
Shareholders' equity
Subscribed capital	39,325	34,510
Capital surplus	43,360	23,318
Earnings reserves	16,423	17,302
Market evaluation provision	55,760	31,180
Unappropriated retained earnings	17,885	6,029
Equity, total	172,753	112,339
Long-term liabilities
Deferred tax liabilities	1,815	2,047
Bank loans and overdrafts	84,232	84,055
Leasing liabilities	525	1,059
Long-term liabilities, total	86,572	87,161
Short-term liabilities
Provisions	5,660	2,111
Tax liabilities	1,540	8,384
Bank loans and overdrafts	14,744	14,764
Trade accounts payable	26,848	8,110
Payments on account	18,513	12,180
Leasing liabilities	850	691
Other liabilities	6,262	5,162
Short-term liabilities, total	74,417	51,402
SHAREHOLDERS' EQUITY AND LIABILITIES,	333,742	250,902

CONSOLIDATED INTERIM ACCOUNTS

Consolidated Statement of Change in Capital

	Number of Shares	Share capital	Capital reserves	Market evaluation provision	Earnings reserves	Unapprop- retained earnings	Total
		€ k	€ k	€ k	€ k	€ k	€ k
As per
01/01/2006	32,178,332	34,606	23,569	0	9,902	2,646	70,723
Dividend payments		0	0	0	0	-6,408	-6,408
Change in
own shares	-136,996	-148	-473	0	0	0	-621
Revaluation
of financial assets		0	0	3,060	0	0	3,060
Consolidated profit		0	0	0	0	13,060	13,060
As per
30/09/2006	32,041,336	34,458	23,096	3,060	9,902	9,298	79,814
As per
01/01/2007	32,089,936	34,510	23,318	31,180	17,302	6,029	112,339
Change in
own shares	410,064	441	2,067	0	0	0	2,508
Market valuation of the
Other financial
assets		0	0	24,580	0	0	24,580
Capital Increase	3,249,995	4,374	17,975	0	-879	0	21,470
Consolidated profit		0	0	0	0	11,856	11,856
As per
30/09/2007	35,749,995	39,325	43,360	55,760	16,423	17,885	172,753

CONSOLIDATED INTERIM ACCOUNTS

Consolidated Capital Flow Statement

	I-III/2007	I-III/2006
	TEUR	TEUR
Earnings before interest and taxes on income	24,401	20,505
Interest paid	-5,414	-359
Interest received	788	955
Tax payments	-10,544	-1,696
Depreciation on intangible
and tangible assets	2,599	2,455
Losses from the disposal of
tangible assets and Software	9	0
Change in inventories	-2,652	812
Change in receivables and
other assets	6,979	-1,678
Change in trade payables
and other
liabilities and provisions	-833	-907
Change in payments received on account	6,196	383
Net cash provided by current operations	21,529	20,470
Investments in tangible assets and software	-1,974	-2,274
Income from the sale of tangible assets and software	8	0
Payments for acquisitions less acquired
cash	-41,669	0
Investments in Other financial assets	-58,942	-82,581
Received dividends or special dividends	52,264	0
Net cash used in investing activities	-50,313	-84,855
Change in own shares	2,508	-621
Dividend payments	0	-6,408
Capital Increase	21,470	0
Outgoing payments for amortisation of loans	-24,000	0
Incoming payments from the taking out of loans	24,158	81,960
Change in investment liabilities	-668	-102
Inflow of Funds from Financing Activities	23,468	74,829
Change in cash	-5,316	10,444
Cash at end of period	3,722	40,509
Cash at beginning of period	9,038	30,065
Change in cash	-5,316	10,444

CONSOLIDATED INTERIM ACCOUNTS Consolidated Notes

Consolidated Interim Accounts as per 30 September 2007

1 Applied accounting principles

The consolidated interim accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as they are to be applied in the European Union (EU). The same accounting and valuation methods were applied as with the consolidated annual accounts as per 31 December 2006.

2 Change in the consolidated group

During the course of the year, Drillisch AG acquired Telco Services GmbH (Telco), Idstein, which was incorporated into the consolidated interim accounts for the first time as per 31 March, 2007.

On 8 March, 2007, Drillisch AG took over 100% of the shares in Telco. Telco, a service provider, offers its own wireless services rates and services in addition to the original network operator rates from T-Mobile, Vodafone, E-Plus and O2.

Telco contributed the amount of € 5,794k to the consolidated surplus. This amount does not take into consideration any tax provisions. Since such provisions are calculated only at the Group level as per 30 September 2007, the significance of the contribution of Telco in relation to the consolidated net income is limited.

The acquisition costs for Telco comprise a purchase price of € 44,000k and ancillary acquisition costs of € 1,182k.

On the basis of the final purchase price, this capital consolidation results in a difference amounting to € 42.1 million, which will be allocated to the individual assets and liabilities and goodwill when the purchase price allocation is completed. Cash in the amount of € 3,578k was acquired simultaneously with the purchase of Telco.

Additional sales of € 21,411k and an additional contribution to the results of -€ 3,328k resulted from a fictitious integration of Telco into the Drillisch Group as per 01 January 2007 (Telco was included in the accounts from March 2007). A book loss of € 2,229k resulted from the sale of land and the building on it in February 2007. Adjusted for this special item, the result would be -€ 1,099k.

During the takeover of Telco, pension reserves were also taken over, whereby IAS 19 must now be taken into account for the first time.

As of September 2007, the Neunundsechzigste Vermögensverwaltungsgesellschaft FKP mbH, Saarbrücken (acting in future as the company MSP Holding GmbH) and the Einundsiebzigste Vermögensverwaltungsgesellschaft FKP mbH, Saarbrücken (acting in future as the MSP Beteiligungsgesellschaft mbH) were fully consolidated for the first time. As per 30 September 2007, Drillisch AG was the sole shareholder of the future MSP Holding GmbH, which in turn holds 100% of the stock in the future MSP Beteiligungsgesellschaft mbH. Future activities with the objective of consolidation of the German wireless services provider market will be bundled in these two previously ready-made companies.

The acquisition costs for the two companies amounted to € 28k each. A total of € 65k in incidental acquisition costs was incurred.

CONSOLIDATED INTERIM ACCOUNTS Consolidated Notes

3 Capital Increase

On 31 January, 2007, Drillisch AG successfully completed a private placement of 3,249,995 nopar shares (almost 10% of the capital stock) and placed all the shares with institutional investors in Europe at a price of € 6.75 per share. The company therefore increased its authorised capital stock by issuing 3,249,995 new no-par shares against a cash investment. The new shares are entitled to a profit share for the fiscal year 2006. A right of purchase for the shareholders was excluded.

In addition, a capital increase from Company funds was carried out by conversion of a partial amount of € 878,860.27 of the earnings surpluses shown in the annual balance sheet as per 31 December 2006. The increase was entered in the Commercial Register on 13 August 2007.

Sale of Own Shares

On 15 January, 2007, Drillisch AG successfully completed the sale of all its own shares. Since the beginning of the year, it has sold 410,064 of its own shares on the stock exchange.

4 Contingent Receivables

The contingent receivable shown in the consolidated annual accounts as per 31 December 2006 had increased by € 7,212k to € 22,896k as per 30 September 2007.

5 Segment presentation

The sales and the operating result can be presented by segment as follows:

	I-III / 2007	I-III / 2007	I-III / 2006	I-III / 2006
	Turnover	Operating result	Turnover	Operating result
Telecommunications	€ 266.0 m	€ 24,456 k	€ 205.2 m	€ 20,825 k
Software services	€ 0.1 m	€ - 55 k	€ 0.1 m	€ -320 k

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Finance and Event Calendar · Publications Your Contact · Information and Order Service

Finance and Event Calendar

November 2007 DVFA Analyst Event, Frankfurt

Publications

The present 9-month report 2007 is also available in a German version.

You can view and download our annual and quarterly reports, ad hoc reports and press releases as well as other publications by logging onto www.drillisch.de.

Your Contact

We will be glad to help with any questions about our publications or about Drillisch AG:

Oliver Keil, Head of Investor Relations

Drillisch AG, Wilhelm-Röntgen-Strasse 1-5, D – 63477 Maintal Telephone: + 49 (0) 61 81 / 412 200 Fax: + 49 (0) 61 81 / 412 183 E-mail: ir@drillisch.de

Information and Order Service

Please use our online order service in the section Investor Relations on our website www.drillisch.de.We will of course be glad to send you the requested information by post or fax as well.

SERVICE CORNER

Editorial Information

Editorial Information

	Company Headquarters: Wilhelm-Röntgen-Strasse 1-5 · D – 63477 Maintal
Telephone:	+ 49 (0) 61 81 / 412 3, Fax: + 49 (0) 61 81 / 412 183
Responsible:	Drillisch AG
Management Board:	Paschalis Choulidis (Spokesperson), Vlasios Choulidis
Supervisory Board:	Dr Hartmut Schenk (Chairperson) Dr. Horst Lennertz Johann Weindl (Deputy Chairperson) Michael Müller-Berg Nico Forster Dr. Bernd H. Schmidt (until May 2007)
Commercial Register Entry:	HRB 7384 Hanau
VAT ID No.:	DE 812458592

Tax No.: 03522506037 Offenbach City Tax Office

Disclaimer:

The information provided in this publication is checked carefully. However, we cannot guarantee that all specifications are complete, correct and up to date at all times.

Future-oriented Statements:

This report contains certain statements oriented to the future and which are based on the current assumptions and projections of the management of the Drillisch Group. Various risks, uncertainties and other factors, both known and unknown, can cause the actual results, financial position, development or performance of the Company to deviate substantially from the assessments shown here. Such factors include those which we described in reports to the Frankfurt securities exchange. The Company does not undertake any obligation to update such future-oriented statements and to adapt them to future events or developments.