1&1 AG — Interim / Quarterly Report 2007

Aug 14, 2007

DRILLISCH AG – REPORT ON FIRST HALF-YEAR 2007

DATA AND FACTS

Key Indicators of the Drillisch Group Report on 1st Half-Year 2007

Drillisch Group	I - II/2007*	I - II/2006	I - II/2005
Turnover in € m	169.9	135.1	161.9
EBITDA in € m	17.0	13.1	14.1
EBIT in € m	15.3	11.5	12.3
EBT in € m	12.4	12.1	12.8
Consolidated profits in € m	7.5	7.2	7.6
Profit/loss per share in €	0.21	0.23	0.23
EBITDA margin in % of turnover	10.0	9.7	8.7
EBIT margin in % of turnover	9.0	8.5	7.6
EBT margin in % of turnover	7.3	8.9	7.9
Consolidated profit margin in % of turnover	4.4	5.3	4.7
Equity ratio (equity % of balance sheet total)	49.5	68.4	65.4
Return on equity (ROE) (Ratio Group result to equity)	4.7	10.2	11.5
Cash flow from current business operation in € m	9.7	3.7	3.0
Depreciation
(in previous year without goodwill) in € m	1.7	1.6	1.8
Investments (in tangible and intangible assets),
adjusted in € m	1.3	1.1	2.4
Staff as annual average (incl. Management Board)	375	311	350
Wireless services customers as per 30/06 (approx. in thousands)	2.076	1.647	1.637
Wireless services customers Debit	1.241	1.102	1.211
Wireless services customers Credit	835	545	426

* The consolidated income statement also includes the figures for the acquired subsidiary Telco Services GmbH since 1 March 2007.

Contents

Data and Facts	2
To Our Shareholders	4
Letter from the Management Board	4
Investor Relations Report	5
Market Environment	7
The Wireless Services Market	7
The Software Industry	8
Commercial Development of the Drillisch Group as per 30 June 2007	9
Group Companies	9
Turnover and Earnings Position	10
Assets, Liabilities and Financial Position	11
Opportunities and Risks of the Future Business Development	12
Consolidated Interim Accounts as per 30 June 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
Certificate of Review	21
Affirmation Statement of the Legal Representatives	22
Service Corner	23
Publications	23
Your Contacts	23
Information/Order Service	23
Editorial Information	23

TO OUR SHAREHOLDERS Letter from the Management Board

The Executive Board

Paschalis Choulidis Vlasios Choulidis Executive-Board Spokesman, Director of Sales, Director of Finances, Marketing and Customer Care Financial Communication, Controlling and IT

Dear Sir or Madam,

Drillisch has continued on its course of growth by acquiring Telco Services GmbH (Telco). In comparison with the 1st quarter 2007, turnover rose by 21.4% to € 93.2 million and in the comparison of the first half of 2007 with 2006, the increase was 25.7% to € 169.9 million. Profits rose overproportionately. The most important earnings indicator for our industry, the EBITDA (earnings before interest, taxes, depreciation and amortisation), grew by 29.6% to € 17.0 million during the first half of the year. The EBITDA margin at 10.0% for the half-year and 10.2% for the second quarter is within our profitability corridor planned for the long term only a few months after the acquisition of Telco.

These figures show that we are proceeding according to plan for the integration of the service provider, Telco. We believe that currently growth in customers in the contract customer business is being achieved through an unacceptably high level of expenditures. Drillisch will reject this strategy in future as well, following instead the road of economically effective growth.

The core business in the sectors pre-paid, post-paid and wireless services discount is running as planned. All three of these sectors have contributed to the good business results in the corporation. As plans stand now, the Management Board expects to realise turnover of about € 390 million from about 2.2 million customers in business year 2007, thereof about € 90 million from the subsidiary Telco, which will be consolidated for the first time. According to our planning, the consolidated EBITDA should rise to about € 37 million.

Warmest regards from Maintal.

Paschalis Choulidis and Vlasios Choulidis

TO OUR SHAREHOLDERS Investor Relations Report

The Capital Market – 1 April 2007 to 30 June 2007.

The second quarter 2007 was marked by excellent quarterly figures for the Company, flourishing M&A business and fading fears of an imminent recession in the USA. In Europe, the German economy proved to be extremely robust, providing the basis for good development on the stock market in the second quarter. This mix led to significant price gains on the stock market. The DAX broke the barrier of 8,000 for the first time again since March 2000 and ended with the quarter with better development than the Dow Jones EURO STOXX and the market-wide S&P500 and others. Increasing returns on bonds, the imbalance on the US real estate market and higher oil prices triggered major corrections in June, but the stock market quickly recovered from these effects.

The DAX improved in the second quarter by 1,090.29 points or 15.76% from 6,917.03 to 8,007.32 points. The TecDAX improved in the second quarter by 10.12% from 846.79 to 932.47 points. The TecAllShare Index reached 1,180.42 points at the end of the quarter and so improved by 7.27% in comparison with the first quarter 2007.

The Drillisch Stock in the First Half of 2007

	Close-out 2006	30 June 2007	% change
Drillisch	5.80 EUR	8.40 EUR	+ 44.8%
TecDAX	748.32 points	932.47 points	+ 24.6%
TecAllShare	974.64 points	1,180.42 points	+ 21.1%

The dominant topic of the second quarter, besides operative business and the integration of the new subsidiary Telco Services GmbH, was the ongoing consolidation process of the service providers. Following Drillisch AG's acquisition of Telco Services GmbH in January, Talkline GmbH was taken over by Debitel AG in the second quarter for a price of 560 million. The market is therefore in part realising the move to consolidation triggered by the Management Board at Drillisch AG in the second half of 2006 with its investment in what is today freenet AG.

Current Research Studies

Analyse	Votum	Price target	Date
Commerzbank	"Hold"	€ 8.00	05 July
Kepler Equities	"Buy"	€ 11.10	15 June
SES Research	"Buy"	€ 10.20	05 June
HSBC Trinkaus	"Overweight"	€ 8.50	28 March
Berenberg Bank	"Buy"	€ 12.00	19 March
Arete Research	"Buy"	€ 10 - € 14	09 February

TO OUR SHAREHOLDERS

Investor Relations Report

Agenda for the second quarter:

Ad hoc report

1st quarter turnover € 76.8 million (+14.3%), EBITDA € 7.5 million (+21.9%)

Investor Relations Events

20/21 June – Deutsche Bank German Corporate Conference 2007 Numerous investor meetings

The continuing work of the Investor Relations Department can be tracked equally for all investor groups on our home page. In addition to a detailed financial calendar, all of the relevant reports can be viewed as PDF documents in the sense of fair disclosure. However, many investors take advantage of the opportunity for personal contact via e-mail and/or telephone.

Directors' Dealings

There were no dealings in securities requiring a report in accordance with Section 15a WpHG during the reporting period of the second quarter 2007.

Directors' Holdings (as of 13 July 2007)

Number of shares	35,749,995
Management Board
P. Choulidis V. Choulidis	Units Units	837,400 ➞ 2.34% 648,984 ➞ 1.82%
Aufsichtsrat
Dr. Hartmut Schenk	Units	-0-
Johann Weindl	Units	-0-
Nico Forster	Units	1,062,879 ➞ 2.97%
Dr. Horst Lennertz	Units	-0-
Michael Müller-Berg	Units	-0-
Dr. Bernd H. Schmidt (until May 2007)	Units	-0-

The shareholder structure (as of 13 July, 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:	22,008,482	in %	61.57

• Freefloat
• VS GmbH
• M. Brucherseifer
• Montrica Investment LLP
• JP Morgan
• N. Forster
• P. Choulidis
• V. Choulidis

MARKET ENVIRONMENT The Wireless Services Market

MSP - an innovative indurstry

Wireless services remains an innovative industry with growth potential. The value and growth drivers are the discount market, the substitution of landline phones with mobile phones and mobile data communications. Moreover, in future mobile media in particular will define the market because the Internet is also being used on mobile phones.

15 years of digital wireless services

15 years ago, no one had any idea what was about to happen. The first digital wireless services network was activated on 30 June 1992. While the phones at that time still weighed about 500 gram and were very heavy in terms of what we have today, this represented a giant leap forward in comparison with the analogue devices of the C network. While the phones 15 years ago could not be used for anything other than making a call, today's mobile phones are multimedial "allrounders" which enable surfers to make phone calls, write messages, take pictures, listen to music, watch television, surf the Internet and write e-mails. New mobile phones can also be used as navigation devices.

The costs for using mobile phones at the end of June 2007 (according to information from the Federal Statistics Office) were 2.3% lower than a year ago. The decline in price in comparison with the previous month was 0.1%. So the trend is for prices to fall – but they are declining more and more slowly. This customerfriendly price development can also be discerned in the purchase of the mobile devices. The BITKOM (Federal Association of Information Business, Telecommunications and New Media) estimates that Germans will buy almost 33 million new mobile phones this year – more than ever before. Due to the lower prices, turnover will remain stable in comparison with the previous year at about € 3.9 billion.

Consumer-friendly prices mean that the mobile rings more often

Declining prices for devices and low prices for calls ensure that the mobile phone is becoming increasingly popular and shunting aside the landline telephone. While the use of landlines in Germany between 2002 and 2006 stayed almost constant at 230 billion minutes a year, the use of mobile telephones in the same period rose by almost 80% to 57 billion minutes. Mobile phone calls increased by one-third in comparison with 2005 alone. Although the call volume will continue to rise strongly, turnover on the market for telecommunications services in 2007 will remain stable at about 56 billion, according to estimates by the BITKOM. But this does not mean that all of the market segments are stagnating equally. The discounters in particular are acquiring ever greater market share.

MARKET ENVIRONMENT

The Wireless Service Market/ The Software Industry

However, other providers are already retreating. While the 10-eurocent rate in particular was withdrawn by some competitors after only a short time, simply the discount brand from the Drillisch Group, makes this rate even more attractive. New customers for "simply ten" are no longer required to conclude contracts with a minimum term of 24 months as was previously the case. The customer now has for this rate – as for the other simply rates – the right to terminate the contract at any time. The other terms and conditions remain the same: every call minute to all of the German networks costs only 10 eurocents with monthly minimum turnover of € 10.

When it comes to innovations, the discount pioneer simply leads the pack

At the end of January, simply became the first German discounter to offer an option for mobile television called "watcha" for only € 8.95. The mass use of mobile TV has made little progress because of the various standards. But now even the EU is applying the pressure. The technology used by "watcha" will supposedly soon become defined as standard throughout the EU, according to information from the "Financial Times Deutschland". Observers predict that the market for mobile contents and services will grow by leaps and bounds. Annual turnover of € 655 million could be realised with mobile phone TV alone in Germany by the year 2012. This was the finding of a mobile TV study which, according to "Goldmedia", was conducted on the basis of the latest results of market and user research and experience with commercial offers abroad.

High-speed Mobile Internet

Since the beginning of the year, the wireless services network operators have been forcing the expansion of the high-speed UMTS technology HSDPA. VICTOR-VOX, one of the service providers in the Drillisch Group, is starting with "mobileDSL flat" as part of the new mobile DSL product line. VICTORVOX is offering the first true flat rate for mobile data transmission at DSL speed on the German market with the rate "mobileDSL flat". For a monthly charge of € 39.95, customers can surf around the clock via HSDPA without any limits of either time or volume. The service uses the Vodafone wireless network. The offer is ideal for customers who want to be able to use the Internet simply and at a low price wherever they are and at any time.

Better Atmosphere in the IT Sector

The atmosphere in the IT industry in Germany is currently better than it has been at any time in the last six years. According to a study by BITKOM, 78% of the IT companies in Germany expect rising turnover in 2007. The BITKOM Index for the second quarter of 2007 rose by 63.5 points. This is the highest value since the index was initiated in 2001. The providers of software, IT services and digital entertainment electronics in particular are driving the market forward.

COMMERCIAL DEVELOPMENT Group Companies

Commercial Development of the Drillisch Group as per 30 June 2007

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.

Re-orientation of the 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.

Strong Pre-paid Business with Its Own Platform for the Marketing of Cash Cards and Codes

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.

Expansion of the Discount Business Will Continue

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-work Software AG becomes IQ-optimize Software AG

The IT competence of Drillisch AG is bundled in the subsidiary IQ-optimize software AG. The company performs all of the IT services for the Group firms and markets its own workflow management software. The systems house has been operating under a new company 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.

COMMERCIAL DEVELOPMENT Turnover and Earnings Position

Staff

As an average for the first six months of 2007, the Drillisch Group employed a staff of 375, including Management Board (previous year: 311). In comparison to the same quarter of the previous year, the number of vocational trainees rose from 15 to 20.

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 the credit line. Telco has been consolidated in the Drillisch Group since March. This means that the business figures for the first half of 2007 are not strictly comparable with those of the same period of the previous year. The contribution of earnings from Telco to the Drillisch Group is described in the consolidated notes.

Turnover and Earnings Position

In the first half of business year 2007, turnover rose by 25.7% to € 169.9 million. The own work capitalised rose by 76.3% to € 1.2 million. This represents primarily developments by the software subsidiary IQ-optimize which were realised in the course of the Telco integration. The cost of materials rose by 26.5%, slightly overproportionately to turnover, to € 134.5 million. The gross profit (turnover less cost of materials) thus rose by 22.9% to € 35.4 million. The gross profit margin (gross profit to turnover) fell slightly by 0.4% to 20.9%.

Personnel expenses rose by 23.5% to € 10.3 million. Other operating expenses rose by 7.1% to € 10.5 million, substantially below average in relation to turnover. During the first half of the year, the EBITDA (earnings before interest, taxes, depreciation and amortisation) improved by 29.6% to € 17.0 million. The EBITDA margin (EBITDA to turnover) reached 10.0% and is consequently within the corridor of the long-term profitability target only a few months after the acquisition of Telco.

Depreciation at € 1.7 million remained approximately at the same level as in the previous year. As a consequence, the EBIT (earnings before interest and taxes) rose by 33.4% to € 15.3 million. The EBIT margin (EBIT to turnover) improved by 0.5% to 9.0%.

The acquisition of Telco in this year and the investment in freenet AG in the second half of 2006 were financed with available cash and loans plus the capital increase at the beginning of business year 2007. This led as per 30 June 2007 to a financial result of minus € 2.9 million in comparison with plus € 0.6 million in the same period last year. The EBT (earnings before taxes) improved by 2.8% to € 12.4 million. After taxes on income in the amount of € 4.9 million (previous

COMMERCIAL DEVELOPMENT Assets, Liabilities and Financial Position

year: € 4.9 million), a consolidated surplus of € 7.5 million remains, 3.8% above the comparable value of the previous year. This corresponds to profit per share of € 0.21 for the first half of 2007. This value last year was € 0.23. The difference – despite the improved surplus – is a consequence of the larger number of shares pursuant to the capital increase of just under ten percent.

Assets, Liabilities and Financial Position

As in the first quarter, the balance sheet of the Drillisch group at the halfway point of the year is marked by the good profit situation, the acquisition of Telco and the increase in value of the freenet investment as well as the financing of these activities from available cash, a capital increase and loans from banks.

The balance sheet total rose as of the middle of 2007 by € 72.1 million to € 323 million. The current assets rose by € 12.2 million to € 50.4 million. The cash, which rose by € 5.0 million to € 14.0 million, and the inventories, which fell as of the closing date by € 3.1 million to € 2.7 million, and tax reimbursement claims which were reduced by € 4.9 million to € 0.1 million, were in contrast with € 30.6 million in receivables, € 14.1 million higher. This increase resulted primarily from the inclusion of Telco in the Drillisch Group.

The fixed assets rose by € 59.9 million to € 272.6 million. This was caused by the € 16.8 million increase in other financial assets to € 185.7, which reflects the rise in the price of freenet stock in the first half of 2007. This growth was posted without effect on results on the equity and liabilities side with a correspondingly higher market evaluation provision. Goodwill rose by € 42.1 million as a consequence of the Telco acquisition.

Short-term liabilities rose by € 24.5 million to € 75.9 million. Trade receivables and payments on account rose due to the initial consolidation of Telco by € 5.3 million to € 13.4 million and by € 6.2 million to € 18.5 million, respectively. After tax payments had been made, tax liabilities declined by € 6.3 million to € 2.1 million. Provisions rose by € 2.7 million to € 4.9 million, also a consequence of the Telco acquisition.

Long-term liabilities remained more or less constant at € 87.2 million. Due to the capital increase and the good profit situation, shareholders' equity rose by € 47.5 million to € 160.0 million. The equity ratio rose during the first half of the year to 49.5% as opposed to 44.8% as per 31 December 2006.

A positive cash flow of € 9.7 million was achieved in operative business, € 6.0 million more than in the previous year. This is especially noteworthy against the background of the rise in interest and tax payments. The Telco acquisition was financed from this inflow of funds, the use of existing cash of € 4.0 million, the sale of own shares with a value of € 2.5 million and the capital increase which realised € 21.5 million.

COMMERCIAL DEVELOPMENT

Future Corporate Growth Opportunities and Risks

Outlook

The Management Board expects turnover to grow to about € 390 million from about 2.2 million customers for the year 2007 as a whole. According to our planning, the consolidated EBITDA should rise to about € 37 million.

Enactment of the Corporate Tax Reform 2008

The Bundesrat, the upper house of the German Parliament, passed the Corporate Tax Reform Act 2008 on 06 July 2007. Thanks to a lowering of the overall tax rate in Germany, the tax ratio of Drillisch AG will tend to fall. The implementation of the interest barrier will not have any negative effects on Drillisch AG.

According to the IFRS regulations, the corporate income tax rate of 15% which will apply in future is to be applied for the specification of deferred taxes as of the third quarter of 2007. The effects of this will not have any major influence on the assets and liabilities, the financial position and the profits and losses of Drillisch AG.

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 six months of business year 2007. Adequate precautions have been taken to cover any probable risks.

Supplementary to the risks related to the investment in freenet AG (formerly mobilcom AG) and the financing of the transaction described in the annual report for 2006, reference is made here once more to the price risk of the freenet investment and the risk of a change in interest rates. As per 30 June 2007, the freenet investment had a value of € 185.7 million. This is a consequence of a price rise in the amount of € 48.2 million which is shown in the balance sheet without effects on results mainly as a market evaluation provision.

To minimise the risk of the change in interest rates, the Company has concluded an interest limitation transaction (cap) which covers the risk of an increase in the EURIBOR to more than 4% pa. This covers a share of € 50.0 million of the total amortisation cash credit facility of € 100 million. The market value of the cap as per 30 June 2007 amounted to € 582k (premium paid: € 279k). The risk of a change in interest rates for the other share of € 50 million is not secured.

COMMERCIAL DEVELOPMENT

Future Corporate Growth Opportunities and Risks

Supplementary Report

On 19 July 2007, Drillisch AG increased its holding in freenet AG by 2.077% to 10.077% or 9,680,656 voting rights. The holding entitles Drillisch AG to a dividend of € 6 for each freenet share held. € 0.50 thereof per each freenet share held was paid on the day after the annual general meeting of freenet AG, which was held on 20 July 2007. The special dividend of € 5.50 per freenet share held will be distributed by freenet AG on 10 August 2007. In total, Drillisch will receive a distribution amount of € 52.3 million.

Relations to relatives and companies

As per 30 June 2007, there were claims due from and liabilities due to relatives and companies as shown below:

The Baugemeinschaft Maintal, consisting of the shareholders Paschalis Choulidis and Marianne Choulidis, has rented office space in Maintal to the Drillisch Group. The lease has a fixed term until 30 June 2010 and will automatically be extended for additional periods of five years each unless six months' notice of termination, expiring at the end of a term, has been given. Rent in the first half of 2007 amounted to € 254k (previous year: € 254k).

Consolidated Income Statement

Consolidated Interim Accounts as per 30 June 2007

	I-II/2007*	I-II/2006	II/2007*	II/2006	I/2007*	I/2006
	€ k	€ k	€ k	€ k	€ k	€ k
Sales	169,914	135,140	93,152	67,998	76,762	67,142
Other own work
capitalized	1,160	658	637	244	523	414
Other operating
income	1,218	1,793	584	793	634	1,000
Cost of materials / Expenditures
for purchased services	-134,484	-106,320	-72,977	-51,685	-61,507	-54,635
Personnel expenses	-10,316	-8,352	-5,829	-4,183	-4,487	-4,169
Other operating
expenses	-10,514	-9,821	-6,051	-6,192	-4,463	-3,629
Amortisation and depreciation	-1,703	-1,647	-896	-753	-807	-894
Operating result	15,275	11,451	8,620	6,222	6,655	5,229
Financial result	-2,857	632	-1,442	308	-1,415	324
Profit before taxes	12,418	12,083	7,178	6,530	5,240	5,553
Taxes on income	-4,927	-4,864	-2,890	-2,658	-2,037	-2,206
Consolidated profit	7,491	7,219	4,288	3,872	3,203	3,347
Earnings per Share (in EUR)
Basic Earnings per Share	0.21	0.23	0.12	0.13	0.09	0.10
Diluted Earnings per Share	0.21	0.23	0.12	0.13	0.09	0.10
EBIT	15,275	11,451	8,620	6,222	6,655	5,229
EBITDA	16,978	13,098	9,516	6,975	7,462	6,123

* The consolidated income statement has included the figures from the acquired subsidiary, Telco Services GmbH, since 1 March 2007.

Consolidated Balance Sheet

ASSETS
	30.06.2007	31.12.2006
	€ k	€ k
Fixed assets
Software	4,637	4,076
Goodwill	76,683	34,572
Tangible assets	2,312	2,005
Other financial assets	185,681	168,875
Deferred taxes	3,288	3,216
Long-term assets, total	272,601	212,744
Current assets
Inventories	2,681	5,812
Trade accounts receivable	30,636	16,533
Accounts due from affiliated companies	99	94
Tax reimbursement claims	60	4,924
Liquid assets	14,030	9,038
Other current assets	2,858	1,757
Current assets, total	50,364	38,158
ASSETS, TOTAL	322,965	250,902

Consolidated Balance Sheet

SHAREHOLDERS' EQUITY AND LIABILITIES
	30.06.2007	31.12.2006
	€ k	€ k
Shareholders' equity
Capital subscribed	38,446	34,510
Capital surplus	43,415	23,318
Earnings reserves	17,302	17,302
Market evaluation provision	47,198	31,180
Unappropriated retained earnings	13,520	6,029
Equity, total	159,881	112,339
Long-term liabilities
Deferred tax liabilities	2,316	2,047
Bank loans and overdrafts	84,173	84,055
Leasing liabilities	724	1,059
Long-term liabilities, total	87,213	87,161
Short-term liabilities
Provisions	4,855	2,111
Tax liabilities	2,054	8,384
Bank loans and overdrafts	29,749	14,764
Trade accounts payable	13,430	8,110
Payments on account	18,471	12,180
Leasing liabilities	833	691
Other liabilities	6,479	5,162
Short-term liabilities, total	75,871	51,402
SHAREHOLDERS' EQUITY AND LIABILITIES, TOTAL	322,965	250,902

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
Consolidated profit		0	0	0	0	7,219	7,219
As per
30/06/2006	32,041,336	34,458	23,096	0	9,902	3,457	70,913
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 evaluation of
other financial
assets		0	0	16,018	0	0	16,018
Capital increase	3,249,995	3,495	18,030	0	0	0	21,525
Consolidated profit		0	0	0	0	7,491	7,491
As per
30/06/2007	35,749,995	38,446	43,415	47,198	17,302	13,520	159,881

Consolidated Capital Flow Statement

	I-II/2007	I-II/2006
	€	€
	k	k
Earnings before interest and taxes on income	15,275	11,451
Interest paid	-3,525	-42
Interest received Tax payments	772 -6,632	674 -2,116
Amortisation and depreciation on intangible
and tangible assets	1,703	1,647
Losses from the disposal of
tangible assets and software	15	0
Change in inventories	3,385	1,485
Change in receivables and
other assets	7,520	-1,321
Change in trade liabilities
and other liabilities
and provisions	-14,918	-10,757
Change in payments on account	6,153	2,718
Inflow of funds from current operations	9,748	3,739
Investments in tangible assets and software	-1,341	-1,052
Income from the sale of tangible assets and software	3	0
Payments for acquisitions less acquired
cash	-41,604	0
Investments in financial assets	-465	0
Outflow of funds from investment activities	-43,407	-1,052
Change in own shares	2,508	-621
Dividend payments	0	-6,408
Capital increase	21,525	0
Change in bank loans	15,104	0
Change in investment liabilities	-486	-109
Inflow/outflow of funds from investment activities	38,651	-7,138
Change in cash	4,992	-4,451
Cash at end of period	14,030	25,614
Cash at beginning of period	9,038	30,065
Change in cash	4,992	-4,451

Consolidated Notes

Consolidated Interim Accounts as per 30 June 2007

1 Applied accounting principles

The consolidated interim accounts were prepared in accordance with the International Financial Reporting Standards (IFRS). The same accounting and valuation methods were applied as with the consolidated annual accounts as per 31 December, 2006.

The accounts included in the abbreviated consolidated interim accounts were reviewed by the BDO Deutsche Warentreuhand AG.

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 € 4.130 million to the consolidated surplus.

The acquisition costs for Telco comprise a purchase price of € 44.000 million and ancillary acquisition costs of € 1.182 million.

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 € 3.578 million was acquired simultaneously with the purchase of Telco.

Additional sales of € 21.901 million and an additional contribution to the results of -€ 3.328 million resulted from a fictitious integration of Telco into the Drillisch Group as per 1 January 2007 (Telco was included in the accounts from March 2007). A book loss of € 2.229 million resulted from the sale of land and the building on it in February 2007. Adjusted for this special item, the result would be -€ 1.099 million.

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

HALF-YEAR FINANCIAL REPORT Consolidated Notes

3 Capital increase

On 31 January, 2007, Drillisch AG successfully completed a private placement of 3,249,995 no-par 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.

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 € 9.375 million to € 25.059 million as per 30 June 2007.

5 Segment presentation

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

	I-II / 2007	I-II / 2007	I-II / 2006	I-II / 2006
	Sales	Operating result	Sales	Operating result
Telecommunications	€ 169,8 m	€ 15.303 m	€ 135,0 m	€ 11.666 m
Software services	€ 0,1 m	€ -28 k	€ 0,1 m	€ -215 k

REPORT OF FIRST HALF YEAR Certificate of review

We have reviewed the abbreviated consolidated interim accounts – consisting of the income statement, balance sheet, cash flow statement, change in equity statement and the selected information from the notes – and the consolidated interim management report for Drillisch Aktiengesellschaft, Maintal, for the period from 1 January to 30 June 2007, which are components of the semi-annual financial report in accordance with Section 37w WpHG. The preparation of the abbreviated consolidated interim accounts in conformity with the IFRS for interim reports as they are to be applied in the EU and of the consolidated interim management report in accordance with the provisions of the WpHG applicable to the consolidated interim management reports is the responsibility of the Management Board of the Company. It is our responsibility to issue a certificate on the abbreviated consolidated interim accounts and the consolidated interim management report based on our review.

We have conducted our review of the abbreviated consolidated interim accounts and of the consolidated interim management report in accordance with the German standards on the review of accounts as issued by the Institute of Chartered Accountants (Institut der Wirtschaftsprüfer, IDW) as well as with the supplementary application of the International Standards on Review Engagements (ISRE). These standards require that we plan and perform the review to obtain reasonable assurance, after critical appraisal, that the abbreviated consolidated interim accounts have essentially been prepared in conformity with the IFRS for interim reporting as they are to be applied in the EU and that the consolidated interim management report has essentially been prepared in conformity with the provisions of the WpHG applicable to the consolidated interim management report. A review is limited primarily to questioning of the Company's employees and to analytical assessments and therefore does not offer the security achievable by a final audit. As we did not, in accordance with the engagement, perform a final audit, we cannot issue an auditor's opinion.

Based on our review, we did not become aware of any circumstances which would lead us to believe that the abbreviated consolidated interim accounts were not essentially prepared in conformity with the IFRS for interim reports as they are to be applied in the EU or that the consolidated interim management report was not essentially prepared in conformity with the provisions of the WpHG applicable to consolidated interim management reports

Düsseldorf, 14 August 2007

BDO Deutsche Warentreuhand Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Rauscher ppa. Meier Chartered Accountant Chartered Accountant

REPORT OF FIRST HALF YEAR

Versicherung der gesetzlichen Vertreter

We warrant, to the best of our knowledge, that the consolidated interim accounts, in accordance with the applicable accounting principles for interim reporting, present a true and fair view of the assets and liabilities, financial position and profit and losses of the Group, and that the course of business described in the consolidated interim management report, including the results of business activities and the Group's position, is presented in such a manner as to give a true and fair view thereof as well as of the major opportunities and risks of the foreseeable development of the Group during the remainder of the business year.

Maintal, 14 August 2007

Paschalis Choulidis Vlasios Choulidis

Finance and Event Calendar

Tuesday, 13 November 9-Month Report

Thursday, 30 August WestLB German Telco and Media Day 2007, Frankfurt November 2007 DFVA-Analyst Meeting, Frankfurt

Publications

The present half-year report 2007 is also available in an English version. You can view and download our business and quarterly reports, ad-hoc announcements, press releases and other publications about Drillisch AG at 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 under the heading Investor Relations on our website www.drillisch.de. Naturally, we would also be happy to send you the desired information by post or by fax. We will be glad to help you with any personal queries by telephone.

Editorial Information

	Company Headquarters: Wilhelm-Röntgen-Straße 1-5 · 63477 Maintal Telephone: + 49 (0) 61 81 / 412 3, Telefax: + 49 (0) 61 81 / 412 183
Responsible:	Drillisch AG
Management Board:	Paschalis Choulidis (Spokesperson), Vlasios Choulidis
Supervisory Board:	Dr. Hartmut Schenk (Chairperson) Johann Weindl (Deputy Chairperson) Nico Forster	Dr. Host Lennertz Michael Müller-Berg 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. The factors described in our reports to the Frankfurt Stock Exchange and to the American Securities and Exchange Commission (incl. Form 20-F) are among such factors. The Company does not undertake any obligation to update such future-oriented statements and to adapt them to future events or developments.