Earnings Release • Feb 24, 2015
Earnings Release
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Corporate | 24 February 2015 18:11
freenet AG announces provisional figures for 2014: Increase of EBITDA and free cash flow leads to a higher dividend
freenet AG / Key word(s): Preliminary Results/Forecast
2015-02-24 / 18:11
freenet AG announces provisional figures for 2014:
Increase of EBITDA and free cash flow leads to a higher dividend
– Group EBITDA of 365.6 million euros up slightly compared with the previous year (357.4 million euros) and targeting the guidance
– Gross profit increases by 6.4% to 778.1 million euros
– The freenet Group’s free cash flow* is also positive at 266.6 million euros (previous year: 256.2 million euros)
– The Group result increases by 3.9% to 248.2 million euros compared with the previous year
– Customer ownership increases to 8.92 million (previous year: 8.76 million)
– Postpaid ARPU lower at 21.4 euros (previous year: 22.3 euros); but only 0.50 euros below the previous year in Q4
– Group revenue falls by 4.8 per cent to 3.0 billion euros (previous year: 3.2 billion euros), mainly as a result of the decision to dispense with low-margin business; modest growth in Q4 compared with the previous year
– Outlook for the financial years 2015 and 2016
– Dividend proposal of 1.50 euros per share
Büdelsdorf, 24 February 2015 – Provisional figures indicate that freenet AG [ISIN DE000A0Z2ZZ5] generated Group EBITDA (earnings before interest, taxes, depreciation and amortisation) of 365.6 million euros (previous year: 357.4 million euros) and free cash flow* of 266.6 million euros (previous year: 256.2 million euros). This means that freenet AG has slightly exceeded the forecast 365.0 million euros for Group EBITDA and 265.0 million euros for free cash flow* for the year 2014 as a whole that it announced in February last year.
Based on the provisional figures, freenet AG’s Group revenue decreased slightly to 3.041 billion euros in the financial year ended (previous year: 3.193 billion euros). Revenue-reducing effects arose first and foremost from lower revenues in low-margin hardware business. An additional factor in this downward trend was the lower average revenue per customer (ARPU) in the postpaid customer segment. With a revenue contribution of 2.989 billion euros, the mobile communications segment was again dominant in the freenet Group.
Customer ownership (sum total of contract and no-frills customers), with 8.92 million mobile communications customers (previous year: 8.76 million), was an essential pillar of the company’s business due to the fact that this is where direct and exclusive customer relations and the resultant cross-selling potential supports the further expansion of digital lifestyle business activities. At the same time, the number of particularly valuable contract customers further increased by more than 150 thousand to 6.01 million. The no-frills customer group, which is reached primarily via online distribution channels, increased further in number by some 12 thousand to 2.91 million. The further earnings-neutral derecognition of inactive SIM cards by network operators, on the other hand, again led to a significant fall in prepaid customer numbers, this time to 3.81 million (previous year: 4.53 million).
Average monthly revenue per contract customer (postpaid ARPU) decreased by 0.9 euros to 21.4 euros. This was caused primarily by the increased readiness of the freenet Group’s existing customers to switch to more attractive tariff offers. This downward trend recently slowed down, however. The pressure on prices in the no-frills discount market segment was again palpable in the financial year ended. No-frills ARPU in the financial year 2014 decreased accordingly by 0.6 euros to 2.8 euros compared with the previous year. Prepaid ARPU was almost unchanged compared with the previous year at 2.9 euros.
Gross profit increased by 46.8 million euros to 778.1 million euros (previous year: 731.2 million euros) – largely to the expansion of the consolidated group through the addition of freenet digital Group. As a result of the effects referred to above, Group EBITDA totalled 365.6 million euros, 8.2 million euros more than in the previous year (previous year: 357.4 million euros).
“The provisional results for the financial year impressively demonstrate the success of our strategic advancement to become a genuine digital lifestyle provider”, says Christoph Vilanek, CEO of freenet AG. “We will continue resolutely along this path and sharpen our profile accordingly in the dynamic competitive environment.”
Depreciation and amortisation showed a year-on-year increase of 8.3 million euros to 64.4 million euros (previous year: 56.1 million euros). This is attributable mainly to the acquisition of freenet digital Group, which led to amortisation of the respective purchase price allocation in the amount of 5.0 million euros, but also to higher ongoing amortisation. In connection with this, taxes on income decreased from 19.5 million euros in tax income in the previous year to tax expenses of 12.5 million euros in the reporting year.
The Group result thereby improved by some 4 per cent to 248.2 million euros (previous year: 238.9 million euros), corresponding to earnings per share of 1.93 euros (previous year: 1.87 euros).
Free cash flow* in the financial year 2014 amounted to 266.6 million euros (previous year: 256.2 million euros). This increase resulted mainly from higher cash flow from operating activities.
Net debt as at year-end 2014 totalled 426.6 million euros, almost the same as in the previous year (previous year: 427.2 million euros). This reduced the leverage as a ratio of net debt to EBITDA to 1.17 (previous year: 1.20).
“In the financial year 2014, we again achieved all of the significant targets that we set ourselves and attained, or even exceeded, the corresponding key performance indicators”, says Joachim Preisig, CFO at freenet AG. “Our two-year guidance also shows a steady development with increased profitability and pay-out potential.”
Dividend proposal for the financial year 2014:
Within the framework of the company’s existing dividend strategy, the Executive Board of freenet AG proposes to the Supervisory Board that a dividend of 1.50 euros per dividend-bearing share be distributed. This corresponds to a dividend pay-out ratio of 72.1 per cent of free cash flow*.
Outlook for the financial years 2015 and 2016:
Based on the provisional figures for the financial year 2014, the Executive Board is aiming for a stabilisation in Group revenue in the financial year 2015 and a modest increase in 2016. With this in mind, the company is expecting a modest increase in customer numbers in the important customer ownership segment (postpaid and no-frills) in both years and is assuming that postpaid ARPU will stabilise in the current financial year and in the financial year 2016.
In line with the developments described above, the company aims to achieve a Group EBIDTA of around EUR 370 million for the 2015 financial year and around EUR 375 million for the 2016 financial year.
Furthermore, the company is aiming for free cash flow* of around 280 million euros in the financial year 2015 and some 285 million euros in the financial year 2016.
Explanations:
The full 2014 Annual Report, including the audited consolidated financial statements, is expected to be available for download at www.freenet-group.de/investor-relations from 26 March 2015. The company will transmit a conference call for analysts/investors at 2 p.m. CET on 25 February 2015 via webcast.
This corporate news 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, unaudited calculations. These may therefore diverge from the final corporate figures to be presented on 26 March 2015.
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*Free cash flow 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.
2015-02-24 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
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| Language: | English |
| Company: | freenet AG |
| Hollerstraße 126 | |
| 24782 Büdelsdorf | |
| Germany | |
| Phone: | +49 (0)40 51306-778 |
| Fax: | +49 (0)40 51306-970 |
| E-mail: | [email protected] |
| Internet: | www.freenet-group.de |
| ISIN: | DE000A0Z2ZZ5, DE000A1KQXU0 |
| WKN: | A0Z2ZZ , A1KQXU |
| Indices: | TecDAX |
| Listed: | Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart |
| End of News | DGAP News-Service |
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| 326535 2015-02-24 |
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