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freenet AG
Quarterly Report • Aug 8, 2024
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Quarterly Report
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11/2024
Half-year report
1 January - 30 June 2024
Contents
01 Key figures
02 To our shareholders
06 Interim Group Management Report
11 Condensed interim consolidated financial statements
26 Further information
Key figures
Operational key figures ${ }^{1}$
| In EUR million/as indicated | H1/2024 | H1/2023 (adjusted) | Change absolute | relative |
|---|---|---|---|---|
| Revenues | 1,197.9 | 1,159.7 | 38.2 | $3.3 \%$ |
| Gross profit | 470.0 | 445.9 | 24.1 | $5.4 \%$ |
| EBITDA | 252.2 | 255.2 | $-3.0$ | $-1.2 \%$ |
| Adjusted consolidated profit ${ }^{2}$ | 159.8 | 132.8 | 27.0 | $20.3 \%$ |
| Adjusted earnings per share (in EUR) ${ }^{24}$ | 1.36 | 1.11 | 0.25 | $22.7 \%$ |
Subscribers
| In '000s | 30.6.2024 | 31.12.2023 | Change absolute | relative |
|---|---|---|---|---|
| Postpaid customers | 7,443.6 | 7,418.3 | 25.3 | $0.3 \%$ |
| App-based tariffs ${ }^{2}$ | 122.0 | 121.3 | 0.7 | $0.6 \%$ |
| freenet TV subscribers (RGU) | 543.5 | 583.8 | $-40.3$ | $-6.9 \%$ |
| waipu.tv subscribers | 1,698.9 | 1,369.3 | 329.6 | $24.1 \%$ |
| Number of subscribers (Total) | 9,808.0 | 9,492.7 | 315.3 | $3.3 \%$ |
Balance sheet
| As indicated | 30.6.2024 | 31.12.2023 | Change absolute | relative |
|---|---|---|---|---|
| Equity ratio | 41.8\% | 42.1\% | $-0.3 P P$ | $-0.7 \%$ |
| Leverage (x times EBITDA) | 1.3 | 1.2 | 0.1 | 11.6\% |
Cash flow, investments and depreciation / amortisation ${ }^{1}$
| In EUR million | H1/2024 | H1/2023 (adjusted) | Change absolute | relative |
|---|---|---|---|---|
| Free cash flow | 151.2 | 153.6 | $-2.5$ | $-1.6 \%$ |
| Net investments (CapEx) | $-19.1$ | $-22.9$ | 3.8 | $-16.7 \%$ |
| Depreciation | $-72.0$ | $-171.9$ | 99.9 | $-58.1 \%$ |
| Thereof amortisation of the mobilcom-debitel trademark | 0.0 | $-98.5$ | n/a | n/a |
Share
| As indicated ${ }^{1}$ | 30.6.2024 | 31.12.2023 | Change absolute | relative |
|---|---|---|---|---|
| Share price (in EUR) | 24.80 | 25.34 | $-0.54$ | $-2.1 \%$ |
| Market capitalisation (in EUR million) | 2,949 | 3,010 | $-61$ | $-2.1 \%$ |
Employees
| 30.6.2024 | 31.12.2023 | Change absolute | relative | |
|---|---|---|---|---|
| Headcount | 3,578 | 3,690 | $-112$ | $-3.0 \%$ |
| FTE | 3,022 | 3,040 | $-18.1$ | $-0.6 \%$ |
[^0]
[^0]: 1 Relates exclusively to continuing operations
2 Adjusted for effects from the amortisation of the mobilcom-debitel trademark
3 Basic and diluted
4 Includes subscribers of freenet FUNK and freenet FLEX
5 Based on Xetra closing price
To our shareholders
Letter to our shareholders
Dear shareholders,
The time has come - since 1 July, the ancillary cost law ("Nebenkostenprivileg") for cable TV has been abolished. Now over 12 million households in Germany are no longer tied to their landlord's choice of TV reception. More and more people are now watching linear television via an Internet connection - so-called IPTV. This trend has been emerging for years and is now set to increase significantly. The customer growth of our waipu.tv product also confirms this development. In Q2 2024, we achieved another record quarter and grew by more than 190 thousand customers. Overall, our customer base increased by 330 thousand in the first half of the year. We now have almost 1.7 million waipu.tv customers and aim to grow to around 2 million by the end of 2024.
"We want to convince German TV households that there is a better alternative to cable TV - and we are obviously very successful in doing so!"
We realise how important it is to make people aware that there is an alternative to traditional cable TV in the first place. For this reason, we are investing in increasing brand awareness of waipu.tv this year by running targeted campaigns (including "Dieter an alle Mieter"). Although this will weaken our previously positive EBITDA development in the TV and Media segment in the short term, it will sustainably strengthen our TV customer base and thus our company in the future.
"freenet secures long-term business relationships with all network operators."
We recently strengthened the future of our mobile communications business by concluding new agreements with the German mobile network operators Deutsche Telekom, Vodafone and Telefónica Deutschland for a longer-term period. The new contract situation gives us access to an even more comprehensive range of tariffs. Since the beginning of July, we have been offering SG tariffs in all three major German mobile networks. We expect the increase in customers to continue in the coming quarters. In the past half year, customer growth was comparatively restrained - as in the total German mobile
communications market. Nevertheless, we now have almost 7.57 million mobile communications subscribers (yearend 2023: 7.54 million) and continue to expect moderate growth in net new subscribers over the course of the year.
"First half of 2024 confirms our guidance for the year as a whole - EBITDA and free cash flow moving sideways."
After we closed our Gravis shops in the middle of this year with a heavy heart, our current reporting figures and those of the prior year relate exclusively to continuing operations. As a result, all effects relating to Gravis are excluded. These include expenses for severance payments to Gravis employees. These effects are reported under discontinued operations.
At EUR 1.198 billion, our revenues from continuing operations increased slightly compared to the first half of 2023 (EUR 1.160 billion). Customer growth at waipu.tv in particular contributed to this. After the first six months of this year, our EBITDA totalled EUR 252.2 million, which is slightly below the prior year's level (EUR 255.2 million). The reasons for this sideways movement are the deliberately temporary increase in marketing investments for waipu.tv in light of the abolition of the ancillary cost law ("Nebenkostenprivileg") as well as the planned salary increases for our employees compared to the prior year. Our free cash flow from continuing operations also showed a sideways movement compared to the prior year (EUR 153.6 million) and, at EUR 151.2 million, continued to show a high level of cash conversion. All results are within our expectations and confirm our 2024 guidance, which we communicated to the capital market at the beginning of the year. As a result, we continue to expect EBITDA of between EUR 495 million and EUR 515 million and free cash flow of between EUR 260 million and EUR 280 million for the continuing operations for the year as a whole. For the 2025 financial year, we continue to expect EBITDA of at least EUR 520 million and free cash flow of more than EUR 260 million.
"This year we are creating the basis for further successful years for freenet."
We look forward to giving you an insight into our ambitions beyond 2025 in late autumn. As part of the presentation of our results for the nine-month period 2024, we will once again offer you a longer-term outlook on the future of our TV and mobile business. We are already setting the course for this future: By securing our position in the mobile TV market through long-term agreements with the three leading network operators, while at the same time inspiring as many cable TV customers as possible with the benefits of modern, internet-based linear television. Our promise to our customers, "freenet - always the right choice", remains our credo. We are convinced that freedom of choice, whether for TV reception or the mobile network, is indispensable and makes a valuable contribution to competition in Germany!
Make your choice and stay with us.
Sincerely
Your freenet Executive Board
freenet share during the period under review
freenet share performance
Taking into account the dividend payment of EUR 1.77 per share, the freenet share recorded an increase in value (total shareholder return; TSR) of $4.9 \%$ in the first six months. If the dividend payment is not taken into account, the share price fell slightly by $2.1 \%$ compared to the end of 2023. The major German benchmark indices (MDax; TecDax), to which freenet also belongs, lost $-7.2 \%$ and $-0.3 \%$ in value compared to the end of 2023 in the same period. The SXKGR, which tracks the 32 largest European telecommunications companies, recorded a significant increase of around $7.8 \%$. freenet is proving to be a reliable dividend stock overall in challenging times.
The freenet share opened at EUR 25.76 in 2024 and performed rather volatile at EUR 25.34 until the Annual General Meeting on 8 May 2024. Less than a month earlier, freenet reached its highest level of the year so far at EUR 27.30. Following the Annual General Meeting and as a result of the dividend deduction, freenet recorded its lowest value of the year to date at EUR 23.02. The share price recovered to EUR 24.80 at the end of the first half of the year. In particular, the announcement of the conclusion of long-term contracts with the three leading mobile network operators in Germany led to positive comments from analysts and consequently to a positive share price reaction. As of 30 June 2024, freenet's market capitalisation amounted to EUR 2.95 billion (year-end 2023: EUR 3.01 billion).
Figure 1: Performance of freenet share in the first half of 2024 vs. the market
(indexed as of year-end 2023)
In $\%$
Shareholder structure
The free float of freenet AG in accordance with the German Securities Trading Act (WpHG) increased to 91.5\% as of 30 June 2024 compared to the end of 2023 (end of 2023: 88.2\%). The main reason for this is that J.P. Morgan fell below the threshold of 3\% of the voting rights, which was reported to freenet AG on 10 April 2024 in a voting rights notification. As a result, there were two shareholders as of the reporting date (year-end 2023: three shareholders) who each held more than 3\% of the voting rights in freenet AG. BlackRock Inc. holds the largest share of voting rights with 5.1\%. This is followed by Norges Bank with 3.4\%.
The current shareholder structure of freenet AG is shown at fn.de/shareholders.
Figure 2: Shareholder structure according to the WpHG as of 30 June $2024{ }^{1}$
In \%
[^0]Figure 3: Distribution of analysts' recommendations as of 30 June 2024
Absolute figures
Annual General Meeting
The Annual General Meeting of freenet AG took place on 8 May 2024 as an in-person event at the Congress Center Hamburg (CCH). Just under 41\% (prior year: 42\%) of the share capital was represented at the event. A total of over 400 shareholders were present (prior year: around 350).
The Annual General Meeting confirmed the dividend proposal of EUR 1.77 per share outstanding (prior year: EUR 1.68). freenet is therefore continuing its dividend continuity with a $5.4 \%$ increase in the dividend and distributed around EUR 210 million (prior year: around EUR 200 million) to shareholders for the 2023 financial year. The Annual General Meeting also confirmed all other items on the agenda. The detailed voting results of the 2024 Annual General Meeting can be found here. The dividend distribution of freenet AG in 2024 was fully paid from the tax contribution account. The payout was therefore made without deduction of capital gains tax and solidarity surcharge. In 2025, the dividend will be paid out with a partial deduction of capital gains tax - the amount has not yet been determined. From 2026, the dividend is expected to be paid out with full deduction of capital gains tax.
[^0]: ${ }^{1}$ including allocations according to the WpHG
## Analysts
The number of sell-side analysts who regularly publish studies and recommendations on freenet AG remained unchanged compared to the prior year (year-end 2023: 17). This reflects the capital market's high and consistent interest in the freenet share. The distribution of analyst recommendations has not changed compared to the end of the prior year. 13 analysts recommend buying the share. Four analysts recommend holding the share and no analyst recommends selling. On average, the analysts calculated a target price of EUR 29.57, which is $0.6 \%$ higher than at the end of 2023 (EUR 29.39). Based on the share price as of 30 June 2024 (EUR 24.80), the analysts thus saw an average upside potential of around 19\% for the freenet share. The highest price target as of the end of June 2024 was issued by Bernstein at EUR 33.40 (year-end 2023: EUR 30.70) and the lowest price target by Redburn Atlantic at EUR 25.14 (year-end 2023: EUR 25.14).
Current analysts' recommendations for the freenet share are available at $\underline{\text { fn.de/analysts. }}$
Interim Group Management Report
Primary Note
Gravis Computervertriebsgesellschaft mbH, Berlin (hereinafter referred to as "Gravis") discontinued its business operations as of 30 June 2024. In accordance with the IFRS 5 accounting standard, the activities of Gravis and certain business transactions directly related to the closure of Gravis in other freenet AG Group companies represent the discontinued operations of Gravis. The result of this division is recognised separately in the income statement in the line "Consolidated profit from discontinued operations". In accordance with IFRS 5.34, the prior year's figures in the income statement, the statement of comprehensive income and the cash flow statement have been adjusted. In this context, please refer to the selected explanatory notes (Note 2).
In the first half of 2024, the Group concluded multi-year agreements with the Mobile Communications network operators Telekom Deutschland, Telefónica Deutschland and Vodafone
Customer development and earnings performance
The number of freenet subscribers increased by 315.3 thousand to 9,808.0 thousand in the first six months of 2024 (year-end 2023: 9,492.7 thousand), driven by the strong growth in waipu.tv subscribers. As a result, revenues increased by $3.3 \%$ to EUR 1,197.9 million compared to the prior-year period (EUR 1,159.7 million).
Table 1: Revenue and earnings figures for freenet $\mathrm{AG}^{1,2}$
| In EUR million | H1/2024 | H1/2023 (adjusted) |
Change absolute |
|
|---|---|---|---|---|
| Revenues | 1,197.9 | 1,159.7 | 38.2 | $3.3 \%$ |
| Mobile Communications segment |
1,002.1 | 994.6 | 7.5 | $0.8 \%$ |
| Service revenues (Total) |
852.0 | 840.9 | 11.1 | $1.3 \%$ |
| TV and Media segment |
192.3 | 165.9 | 26.4 | $15.9 \%$ |
| Gross profit | 470.0 | 445.9 | 24.1 | $5.4 \%$ |
| Overheads | $-217.8$ | $-190.7$ | $-27.1$ | $14.2 \%$ |
| EBITDA | 252.2 | 255.2 | $-3.0$ | $-1.2 \%$ |
| Adjusted EBIT | 180.2 | 181.8 | $-1.6$ | $-0.9 \%$ |
| Financial result | $-15.6$ | $-12.9$ | $-2.7$ | $21.1 \%$ |
| Adjusted EBT | 164.6 | 168.9 | $-4.3$ | $-2.6 \%$ |
| Adjusted consolidated profit |
159.8 | 132.8 | 27.0 | $20.3 \%$ |
${ }^{1}$ Relates exclusively to continuing operations.
${ }^{2}$ Earnings figures (EBIT, EBT, consolidated profit) adjusted for effects from the amortisation of the mobilcom-debitel trademark.
At EUR 1,002.1 million, revenues in the Mobile Communications segment were slightly higher than in the prior-year period (EUR 994.6 million). This increase is mainly due to higher service revenues, which grew by EUR 11.1 million to EUR 852.0 million in the first half of 2024 (prior-year period: EUR 840.9 million). The main reason for this increase is the growth in the postpaid customer base to 7,443.6 thousand (year-end 2023: 7,418.3 thousand) in conjunction with a stable ARPU (Average Revenue Per User) of EUR 17.8 (prior-year period: EUR 17.8).
Table 2: Customer development
| In '000s | 30.6.2024 | 31.12.2023 | Change | |
|---|---|---|---|---|
| Postpaid customers | 7,443.6 | 7,418.3 | 25.3 | $0.3 \%$ |
| App-based tariffs ${ }^{1}$ | 122.0 | 121.3 | 0.7 | $0.6 \%$ |
| Mobile Communications segment | 7,565.6 | 7,539.6 | 26.0 | $0.3 \%$ |
| freenet TV subscribers (RGU) |
543.5 | 583.8 | $-40.3$ | $-6.9 \%$ |
| waipu.tv subscribers | 1,698.9 | 1,369.3 | 329.6 | $24.1 \%$ |
| TV and Media segment | 2,242.4 | 1,953.0 | 289.3 | $14.8 \%$ |
| Number of subscribers (Total) | 9,808.0 | 9,492.7 | 315.3 | $3.3 \%$ |
The TV and Media segment recorded a significant increase in revenues of $15.9 \%$ to EUR 192.3 million (prior-year period: EUR 165.9 million). This is due in particular to the significant growth in waipu.tv subscribers of 329.6 thousand to 1,698.9 thousand (year-end 2023: 1,369.3 thousand). Overall, the number of subscription customers in the TV business rose by 289.3 thousand to 2,242.4 thousand in the first six months of 2024 (year-end 2023: 1,953.0 thousand). The ongoing decline in freenet TV subscribers to 543.5 thousand (year-end 2023: 583.8 thousand) was clearly mitigated in revenues as a result of a materialising price increase.
The increase in service revenues in both operating segments is also reflected in the development of gross profit. This increased by EUR 24.1 million to EUR 470.0 million compared to the same period in 2023 (EUR 445.9 million). The gross profit margin improved slightly by 0.8 percentage points to $39.2 \%$ (prior-year period: $38.5 \%$ ).
At EUR 217.8 million, overheads as the difference between gross profit and EBITDA were EUR 27.1 million higher than in the first half of 2023 (EUR 190.7 million). Other operating expenses increased by EUR 15.8 million year-on-year to EUR 140.6 million (prior-year period: EUR 124.8 million), mainly due to the temporary increase in investments in waipu.tv's brand awareness (TV and Media segment) since the third quarter of 2023. In addition, personnel expenses rose by EUR 9.9 million to EUR 111.3 million, mainly due to planned salary increases and higher expenses for the LTIP remuneration programmes.
EBITDA decreased by EUR 3.0 million or $1.2 \%$ to EUR 252.2 million compared to the prior-year period (EUR 255.2 million), in particular as a result of the temporary increase in investments in waipu.tv's brand awareness. The EBITDA margin at Group level fell slightly by 1.0 percentage points to $21.1 \%$ (prior-year period: $22.0 \%$ ). The contributions of the individual segments to Group EBITDA can be seen in the following table.
Table 3: Composition of Group EBITDA ${ }^{1}$
| In EUR million | H1/2024 | H1/2023 (adjusted) |
Change absolute |
|
|---|---|---|---|---|
| Mobile Communications segment |
209.4 | 205.7 | 3.7 | $1.8 \%$ |
| TV and Media segment |
52.8 | 59.2 | $-6.4$ | $-10.8 \%$ |
| Other/holding segment |
-9.9 | -9.7 | $-0.3$ | $2.7 \%$ |
| freenet Group | $\mathbf{2 5 2 . 2}$ | $\mathbf{2 5 5 . 2}$ | $\mathbf{- 3 . 0}$ | $\mathbf{- 1 . 2 \%}$ |
${ }^{1}$ Belates exclusively to continuing operations.
Depreciation, amortisation and impairments decreased by EUR 99.9 million to EUR 72.0 million compared to the first half of 2023, mainly due to the additional amortisation of the "mobilcom-debitel" brand in the same period of the prior year in connection with the realignment of the brand strategy (EUR 98.5 million). This effect no longer applies since the brand was fully amortised as of 30 June 2023.
The earnings figures for the prior-year period below EBITDA (EBT and consolidated profit) are, as in the two prior financial years, adjusted for the effects resulting from the amortisation of the mobilcom-debitel trademark in order to improve comparability.
Compared to the first half of 2023 (EUR -12.9 million), the financial result showed an increase in expenses of EUR -15.6 million (EUR -2.7 million). The main reason for this was the higher negative share of earnings in connection with contributions to the equity of Antenne Deutschland GmbH \& Co. KG, which is accounted for using the equity method (EUR -4.3 million; prior-year period: EUR -1.8 million). In addition, net interest expenses in the first half of 2024 (EUR 11.7 million) were on a par with the prior-year period (EUR 11.5 million).
Due to the effects explained above, adjusted earnings before income taxes (adjusted EBT) totalled EUR 164.6 million. This represents a year-on-year decline of EUR 4.3 million (prior-year period: EUR 168.9 million).
Expenses from income taxes totalling EUR 4.8 million were reported in the first half of 2024 (prior-year period: EUR 21.9 million). Current tax expenses of EUR 15.1 million (prior-year period: EUR 17.1 million) and deferred tax income of
EUR 10.3 million (prior-year period: deferred tax expenses of EUR 4.8 million) were recognised. The deferred tax income of EUR 10.3 million recognised in the reporting period included a one-off effect of EUR 21.0 million from the Growth Opportunities Act, which has since come into force. Due to the possibility of greater utilisation of corporate income tax loss carryforwards for the financial years 2024 to 2027 (now $70 \%$ of taxable income instead of $60 \%$ ), higher deferred income tax assets on tax loss carryforwards were capitalised in the balance sheet compared to the previous legal situation. The amortisation of the mobilcom-debitel trademark resulted in deferred tax income of EUR 14.3 million in the prior-year period (reporting period: EUR 0).
Total adjusted consolidated profit from continuing operations for the first half of 2024 amounted to EUR 159.8 million (prior year: EUR 132.8 million). Consolidated profit from discontinued operations totalled EUR $\sim 50.4$ million (pri-or-year period: EUR $\sim 4.4$ million), which includes all income and expenses attributable to the discontinued operations of Gravis. Please refer to the selected explanatory notes (Note 2) for information on the composition of the consolidated profit from discontinued operations.
Net assets and financial position
Total assets as of 30 June 2024 amounted to EUR 3,245.9 million, a decrease of EUR 168.9 million compared to 31 December 2023 (EUR 3,414.9 million).
On the assets side, non-current assets decreased by EUR 42.6 million to EUR 2,604.5 million (year-end 2023: EUR 2,647.1 million). Lease assets decreased by EUR 45.3 million to EUR 248.3 million (year-end 2023: EUR 293.6 million), mainly due to scheduled depreciation and amortisation as well as impairments in connection with the discontinued operations of Gravis (EUR 17.8 million). In addition, intangible assets decreased by EUR 18.0 million to EUR 172.8 million (year-end 2023: EUR 190.8 million), mainly due to the scheduled amortisation of the exclusive distribution right with Media-Saturn Deutschland GmbH and impairments in connection with the discontinued operations Gravis (EUR 6.9 million). In contrast, deferred income tax assets increased by EUR 16.0 million to EUR 124.1 million (year-end 2023: EUR 108.2 million), mainly as a result of the adjustment effect on the capitalised tax loss carryforwards resulting from the entry into force of the Growth Opportunities Act, as explained under "Income taxes". In addition, other financial assets increased by EUR 11.2 million to EUR 137.9 million (year-end 2023: EUR 126.7 million), mainly due to the market value of the equity investment in CECONOMY derived from the increased share price.
Current assets fell by EUR 126.3 million to EUR 641.5 million as of the reporting date (year-end 2023: EUR 767.8 million). This was mainly due to the decrease in liquid assets by EUR
64.2 million to EUR 95.6 million (year-end 2023: EUR 159.8 million). This change was primarily due to the dividend payment of EUR 210.4 million in May 2024, while a free cash flow of EUR 151.2 million was generated in the first half of 2024. The decrease in trade accounts receivable by EUR 50.3 million to EUR 262.4 million (year-end 2023: EUR 312.7 million) was mainly the result of payments received for receivables from network operators from annual bonuses for the 2023 billing period.
Table 4: Condensed balance sheet of freenet AG
| 30.6.2024 | 31.12.2023 | Change absolue |
||
|---|---|---|---|---|
| In EUR million | 2.604 .5 | 2.647 .1 | -42.6 | -1.6\% |
| Non-current assets |
641.5 | 767.8 | -126.3 | -16.5\% |
| Current assets | $\mathbf{3 . 2 4 5 . 9}$ | $\mathbf{3 . 4 1 4 . 9}$ | $\mathbf{- 1 6 8 . 9}$ | $\mathbf{- 4 . 9 \%}$ |
| Assets | $\mathbf{1 . 3 5 6 . 6}$ | $\mathbf{1 . 4 3 6 . 9}$ | -80.3 | -5.6\% |
| Equity | 934.1 | 818.4 | 115.6 | 14.1\% |
| Non-current liabilities |
955.3 | 1,159.6 | -204.3 | -17.6\% |
| Current liabilities |
$\mathbf{3 . 2 4 5 . 9}$ | $\mathbf{3 . 4 1 4 . 9}$ | $\mathbf{- 1 6 8 . 9}$ | $\mathbf{- 4 . 9 \%}$ |
| Equity and liabilities |
$\mathbf{4 1 . 8 \%}$ | $\mathbf{4 2 . 1 \%}$ | $\mathbf{- 0 . 3 P P}$ | $\mathbf{- 0 . 7 \%}$ |
On the liabilities side, equity decreased by EUR 80.3 million to EUR 1,356.6 million as of 30 June 2024 (year-end 2023: EUR 1,436.9 million). With consolidated profit totalling EUR 109.4 million, the reduction in equity was primarily due to the dividend payment of EUR 210.4 million. As a result, the equity ratio fell slightly from $42.1 \%$ at the end of December 2023 to $41.8 \%$ at the end of June 2024 and remained well above the limit of at least $25 \%$ defined by freenet.
Total non-current and current liabilities decreased by EUR 88.6 million to EUR 1,889.4 million (year-end 2023: EUR 1,978.0 million). Trade accounts payable decreased by EUR 54.1 million to EUR 283.6 million (year-end 2023: EUR 337.7 million). This was mainly due to developments in liabilities to dealers and hardware suppliers as of the reporting date. Repayments of lease liabilities decreased by EUR 29.8 million to EUR 317.4 million as of the reporting date (year-end 2023: EUR 347.2 million), mainly due to scheduled repayments. Including lease receivables, net lease liabilities amounted to EUR 286.2 million as of 30 June 2024 (year-end 2023: EUR 309.8 million). The increase in financial liabilities, which remain the largest item within non-current and current liabilities, by EUR 23.5 million to EUR 454.4 million (year-end 2023: EUR 430.8 million) was primarily due to the short-term utilisation of the revolving credit facility in the amount of EUR 25.0 million. The effects of the scheduled repayments of two tranches of promissory note loans from 2020 totalling EUR 166.5 million and the new borrowing of three promissory note loan tranches with a nominal value of EUR 165.0
million almost balanced each other out (see Note 3 of the selected explanatory notes).
At 1.3 at the end of June 2024, the leverage factor in relation to the net financial liabilites presented was at the same level as of the end of 2023 (1.2) and thus well below the limit of 3.0 defined by freenet.
Table 5: Development of net financial liabilities and leverage
| In EUR million | 30.6.2024 | 31.12.2023 | Change absolute | |
|---|---|---|---|---|
| Non-current financial | ||||
| + liabilities | 414.6 | 250.1 | 164.5 | $65.8 \%$ |
| + Current financial liabilities | 39.7 | 180.7 | $-141.0$ | $-78.0 \%$ |
| Net lease | ||||
| + liabilities | 286.2 | 309.8 | $-23.6$ | $-7.6 \%$ |
| - Liquid assets | 95.6 | 159.8 | $-64.2$ | $-40.2 \%$ |
| Net financial | ||||
| + liabilities | 645.0 | 580.9 | 64.1 | 11.0\% |
| + Leverage | 1.3 | 1.2 | 0.1 | 11.6\% |
| Equity | ||||
| - investments | 100.3 | 85.3 | 15.0 | 17.6\% |
| Adjusted net financial | ||||
| + liabilities | 544.7 | 495.6 | 49.1 | 9.9\% |
| Adjusted | ||||
| + leverage | 1.1 | 1.0 | 0.1 | 10.6\% |
Liquidity situation
Compared to the prior-year period, the cash flow from operating activities from continuing operations decreased by EUR 8.8 million to EUR 207.7 million in the first half of 2024 (prior-year period: EUR 216.5 million). In addition to a EUR 3.0 million decrease in EBITDA, the EUR 3.9 million increase in taxes paid and the EUR 2.2 million higher increase in networking capital (net working capital) including contract acquisition costs had a negative impact on the cash flow from continuing operations.
Table 6: Liquidity situation of freenet $\mathrm{AG}^{1}$
| In EUR million | H1/2024 | H1/2023 (adjusted) | Change absolute | |
|---|---|---|---|---|
| Cash flow from operating activities (1) | 207.7 | 216.5 | $-8.8$ | $-4.1 \%$ |
| Cash flow from investing activities | $-25.3$ | $-24.7$ | $-0.7$ | $2.8 \%$ |
| Net capital expenditure (CapEx) (2) | $-19.1$ | $-22.9$ | 3.8 | $-16.7 \%$ |
| Cash flow from financing activities | $-249.8$ | $-318.1$ | 68.3 | $-21.5 \%$ |
| Cash outflows for the repayment of lease liabilities (3) | $-37.4$ | $-40.0$ | 2.5 | $-6.3 \%$ |
| Net change in cash funds | $-67.5$ | $-126.3$ | 58.8 | 46.6\% |
| Free cash flow $(1)+(2)+(3)$ | 151.2 | 153.6 | $-2.5$ | $-1.6 \%$ |
1 Relates exclusively to continuing operations.
The cash flow from investing activities from continuing operations totalled EUR -25.3 million in the first half of 2024 and was almost unchanged compared to the same period in 2023 (EUR -24.7 million). Net cash investments continued to have the greatest effect, decreasing by EUR 3.8 million to EUR 19.1 million - partly due to lower investments in Media Broadcast's DAB+ broadcasting network compared to the prior year. The investments were financed entirely from own funds. In addition, there were cash outflows from the acquisition of SuperNova GmbH \& Co. KG as of 1 January 2024 (EUR 6.5 million; see Note 4 of the selected explanatory notes) and from contributions to the equity of Antenne Deutschland GmbH \& Co. KG (EUR 4.3 million; prior-year period: EUR 1.8 million).
The cash flow from financing activities from continuing operations developed from EUR -318.1 million to EUR -249.8 million in the first half of 2024 compared to the same period in 2023. Payments in the first half of 2024 were attributable to the dividend distribution of EUR 210.4 million (prior-year period: EUR 199.7 million), repayments of two promissory note loan tranches with a nominal value of EUR 166.5 million (prior-year period: EUR 78.5 million) and repayments of lease liabilities totalling EUR 37.4 million (prior-year period: EUR 40.0 million). In contrast, the Group received funds totalling a nominal amount of EUR 165.0 million in the first half of 2024 in connection with the issue of three promissory note loan tranches (prior-year period: EUR 0).
In the first half of 2024, a free cash flow from continuing operations of EUR 151.2 million was generated, which was only EUR 2.5 million below the same period in 2023 (EUR 153.6 million) despite temporary investments in the TV business.
Report on opportunities and risks
The opportunities and risks to which freenet is exposed in the course of its ongoing business activities are presented in detail in the 2023 Annual report (page 38 et seq.) and continue to apply in principle.
The risks recognised in the first half of the year in connection with the closure of Gravis were fully recognised in the balance sheet as of 30 June 2024. In this regard, please refer to the presentation of the net assets, financial position and results of operations. Beyond this, there have been no significant changes with regard to the opportunities and risks of future business development.
There were still no risks in the "high" category as of 30 June 2024. In addition, no risks were identified that could jeopardise freenet's continued existence, either individually or in combination with other risks. The potential effects on the current financial year continue to be categorised as low.
Report on expected developments
The Executive Board of freenet AG confirms the guidance for the current financial year made in the 2023 Annual report, whose reference values relate exclusively to the continuing operations.
Table 7: Guidance for business performance
| Financial performance indicators In EUR million/as indicated | Reference value 2023 (adjusted) | Guidance for 2024 (28.2.2024) | Confirmed guidance for 2024 (15.5.2024) | Confirmed guidance for 2024 (7.8.2024) | Change in guidance | $\mathrm{H} 1 / 2024$ |
|---|---|---|---|---|---|---|
| Revenues ${ }^{1}$ | 2,383.0 | Stable performance | Stable performance | Stable performance | $\rightarrow$ | 1,197.9 |
| EBITDA ${ }^{2}$ | 500.9 | 495-515 | 495-515 | 495-515 | $\rightarrow$ | 252.2 |
| Free cash flow ${ }^{3}$ | 276.6 | 260-280 | 260-280 | 260-280 | $\rightarrow$ | 151.2 |
| Postpaid ARPU (in EUR) | 18.0 | Stable performance | Stable performance | Stable performance | $\rightarrow$ | 17.8 |
| Non-financial performance indicators in '000s | Reference value 31 Dec. 2023 | Guidance for 2024 (28.2.2024) | Confirmed guidance for 2024 (15.5.2024) | Confirmed guidance for 2024 (7.8.2024) | Change in guidance | 30.6.2024 |
|---|---|---|---|---|---|---|
| Postpaid customer base | 7,418.3 | Moderate growth | Moderate growth | Moderate growth | $\rightarrow$ | 7,443.6 |
| freenet TV subscribers (RGU) | 583.8 | Noticeable decrease | Noticeable decrease | Noticeable decrease | $\rightarrow$ | 543.5 |
| waipu.tv subscribers | 1,369.3 | Significant growth | Significant growth | Significant growth | $\rightarrow$ | 1,698.9 |
- above prior guidance
$\rightarrow$ unchanged fromprior guidance - below prior guidance
- Relates exclusively to continuing operations.
Büdelsdorf, 7 August 2024
freenet AG
The Executive Board
Condensed interim consolidated financial statements*
Consolidated income statement
| In EUR million/as indicated | H1/2023 | H1/2023 (adjusted) |
|---|---|---|
| Revenues | 1,197.9 | 1,159.7 |
| Other operating income | 22.6 | 23.7 |
| Other own work capitalised | 11.5 | 11.8 |
| Cost of materials | $-727.8$ | $-713.8$ |
| Personnel expenses | $-111.3$ | $-101.4$ |
| Other operating expenses | $-140.6$ | $-124.8$ |
| Thereof result from impairment losses on financial assets and contractual assets | $-6.7$ | $-7.8$ |
| Thereof excluding result from impairment losses on financial assets and contractual assets | $-133.9$ | $-117.1$ |
| EBITDA ${ }^{1}$ | 252.2 | 255.2 |
| Depreciation | $-72.0$ | $-171.9$ |
| EBIT ${ }^{2}$ | 180.2 | 83.4 |
| Result of equity-accounted investments | $-4.2$ | $-1.6$ |
| Interest and similar income | 4.0 | 2.2 |
| Interest and similar expenses | $-15.7$ | $-13.7$ |
| Other financial result | 0.3 | 0.2 |
| Financial result | $-15.6$ | $-12.9$ |
| Earnings before taxes | 164.6 | 70.5 |
| Income taxes | $-4.8$ | $-21.9$ |
| Consolidated profit from continuing operations | 159.8 | 48.6 |
| Consolidated profit from discontinued operations | $-50.4$ | $-4.4$ |
| Consolidated profit | 109.4 | 44.2 |
| Consolidated profit attributable to shareholders of freenet AG | 110.8 | 42.8 |
| Consolidated profit attributable to non-controlling interests | $-1.4$ | 1.4 |
| Earnings per share (EPS) from continuing operations, basic and diluted (in EUR) | 1.36 | 0.40 |
| Earnings per share from discontinued operations (EPS) basic and diluted (in EUR) | $-0.43$ | $-0.04$ |
| Earnings per share (EPS) basic and diluted (in EUR) | 0.93 | 0.36 |
| Weighted average number of shares outstanding in units, basic and diluted (in millions) | 118.9 | 118.9 |
[^0][^1]
[^0]: 1 EBITDA is defined as Earnings before interest and taxes (EBIT) plus depreciation and amortisation.
2 EBIT is defined as Earnings before interest and taxes (EBIT).
[^1]: 3 This half-year report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The Group has implemented all accounting standards that were mandatory as of the reporting date. Please refer to the notes to the consolidated financial statements as of 31 December 2023 (page 100 et seq.) for information on the principles and methods applied in the consolidated financial statements.
Consolidated statement of comprehensive income
| In EUR million | H1/2024 | H1/2023 (adjusted) |
|---|---|---|
| Consolidated profit | $\mathbf{1 0 9 . 4}$ | $\mathbf{4 4 . 2}$ |
| Currency conversion differences | 0.0 | -0.1 |
| Other comprehensive income / to be reclassified to the income statement in future periods | $\mathbf{0 . 0}$ | $\mathbf{- 0 . 1}$ |
| Change in fair value of investments in equity instruments | 19.6 | 10.9 |
| Recognition of actuarial gains and losses from the accounting of pension plans in accordance with IAS 19 (2011) |
2.1 | -2.0 |
| Income taxes recognised in other comprehensive income | -0.9 | 0.4 |
| Other comprehensive income/not to be reclassified to the income statement in future periods | $\mathbf{2 0 . 7}$ | $\mathbf{9 . 4}$ |
| Other comprehensive income | $\mathbf{2 0 . 7}$ | $\mathbf{9 . 3}$ |
| Consolidated total comprehensive income | $\mathbf{1 3 0 . 1}$ | $\mathbf{5 3 . 6}$ |
| Consolidated total comprehensive income attributable to shareholders of freenet AG | 131.5 | 52.2 |
| Consolidated total comprehensive income attributable to non-controlling interests | -1.4 | 1.4 |
Consolidated balance sheet
| Assets In EUR million |
30.6.2024 | 31.12.2023 |
|---|---|---|
| Non-current assets | ||
| Intangible assets | 172.8 | 190.8 |
| Lease assets | 248.3 | 293.6 |
| Goodwill | 1,385.0 | 1,379.8 |
| Property, plant and equipment | 118.2 | 129.4 |
| Equity-accounted investments | 0.4 | 0.3 |
| Deferred income tax assets | 124.1 | 108.2 |
| Trade accounts receivable | 43.2 | 44.8 |
| Other receivables and other assets | 88.9 | 90.7 |
| Other financial assets | 137.9 | 126.7 |
| Contract acquisition costs | 285.6 | 282.9 |
| 2,604.5 | 2,647.1 | |
| Current assets | ||
| Inventories | 46.5 | 63.8 |
| Current income tax assets | 0.2 | 0.2 |
| Trade accounts receivable | 262.4 | 312.7 |
| Other receivables and other assets | 170.5 | 160.5 |
| Other financial assets | 66.3 | 70.7 |
| Liquid assets | 95.6 | 159.8 |
| 641.5 | 767.8 | |
| Total assets | 3,245.9 | 3,414.9 |
| Equity and liabilities In EUR million |
30.6.2024 | 31.12.2023 |
| Equity | ||
| Share capital | 118.9 | 118.9 |
| Capital reserve | 567.5 | 567.5 |
| Accumulated other comprehensive income | $-140.8$ | $-161.5$ |
| Consolidated balance sheet result | 816.2 | 915.8 |
| Equity attributable to shareholders of freenet AG | 1,361.8 | 1,440.6 |
| Equity attributable to non-controlling interests | $-5.2$ | $-3.8$ |
| 1,356.6 | 1,436.9 | |
| Non-current liabilities | ||
| Lease liabilities | 238.3 | 269.0 |
| Other liabilities and accruals | 114.8 | 118.1 |
| Other financial liabilities | 39.9 | 56.8 |
| Financial liabilities | 414.6 | 250.1 |
| Pension provisions | 66.8 | 68.2 |
| Other provisions | 59.5 | 56.2 |
| 934.1 | 818.4 | |
| Current liabilities | ||
| Lease liabilities | 79.1 | 78.3 |
| Trade accounts payable | 283.6 | 337.7 |
| Other liabilities and accruals | 436.3 | 443.8 |
| Other financial liabilities | 29.0 | 38.3 |
| Current income tax liabilities | 55.5 | 54.2 |
| Financial liabilities | 39.7 | 180.7 |
| Other provisions | 32.1 | 26.6 |
| 955.3 | 1,159.6 | |
| Total equity and liabilities | 3,245.9 | 3,414.9 |
Statement of changes in equity
1 January to 30 June 2024
| In EUR million | Share capital | Capital reserve | Accumulated other comprehensive income | Equity | |||||
|---|---|---|---|---|---|---|---|---|---|
| Currency conversion differences | Change in fair value of investments in equity instruments | Revaluation reserve according to the IAS 19 | Consolidated balance sheet result | ||||||
| As of 1 January 2024 | 118.9 | 567.5 | 0.8 | $-150.0$ | $-12.3$ | 915.8 | 1,440.6 | $-3.8$ | 1,436.9 |
| Dividend payment | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | $-210.4$ | $-210.4$ | 0.0 | $-210.4$ |
| Consolidated profit | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 110.8 | 110.8 | $-1.4$ | 109.4 |
| Change in fair value of investments in equity instruments ${ }^{1}$ | 0.0 | 0.0 | 0.0 | 19.3 | 0.0 | 0.0 | 19.3 | 0.0 | 19.3 |
| Recognition of actuarial gains and losses acc. to the IAS 19 $(2011)^{2}$ | 0.0 | 0.0 | 0.0 | 0.0 | 1.4 | 0.0 | 1.4 | 0.0 | 1.4 |
| Foreign currency conversion ${ }^{3}$ | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Subtotal: Consolidated total comprehensive income | 0.0 | 0.0 | 0.0 | 19.3 | 1.4 | 110.8 | 131.5 | $-1.4$ | 130.1 |
| As of 30 June 2024 | 118.9 | 567.5 | 0.8 | $-130.7$ | $-10.8$ | 816.2 | 1,361.8 | $-5.2$ | 1,356.6 |
[^0]
[^0]: 1 The amounts are netted with the income taxes recognised in other comprehensive income.
| In EUR million | Share capital | Capital reserve | Accumulated other comprehensive income | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Currency conversion differences | Change in fair value of investments in equity instruments | Revaluation reserve according to the IAS 19 | Consolidated balance sheet result | Equity attributable to shareholders of freenel AG | Equity attributable to non-controlling interests | Equity | |||
| As of 1 January 2023 | 118.9 | 567.5 | 0.8 | $-166.9$ | $-6.4$ | 960.9 | 1,474.7 | $-5.5$ | 1,469.2 |
| Dividend payment | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | $-199.7$ | $-199.7$ | 0.0 | $-199.7$ |
| Consolidated profit | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 42.8 | 42.8 | 1.4 | 44.2 |
| Change in fair value of investments in equity instruments ${ }^{1}$ | 0.0 | 0.0 | 0.0 | 10.8 | 0.0 | 0.0 | 10.8 | 0.0 | 10.8 |
| Recognition of actuarial gains and losses in acc. to the IAS 19 (2011) ${ }^{1}$ | 0.0 | 0.0 | 0.0 | 0.0 | $-1.4$ | 0.0 | $-1.4$ | 0.0 | $-1.4$ |
| Foreign currency conversion ${ }^{1}$ | 0.0 | 0.0 | $-0.1$ | 0.0 | 0.0 | 0.0 | $-0.1$ | 0.0 | $-0.1$ |
| Subtotal: Consolidated total comprehensive income | 0.0 | 0.0 | $-0.1$ | 10.8 | $-1.4$ | 42.8 | 52.2 | 1.4 | 53.6 |
| As of 30 June 2023 | 118.9 | 567.5 | 0.7 | $-156.1$ | $-7.8$ | 804.0 | 1,327.2 | $-4.1$ | 1,323.1 |
[^0]
[^0]: 1 The amounts are netted with the income taxes recognised in other comprehensive income.
Consolidated statement of cash flows
| In EUR million | H1/2024 | H1/2023 (adjusted) |
|---|---|---|
| Earnings before interest and taxes (EBIT) from continuing operations | 180.2 | 83.4 |
| Adjustments: | ||
| Depreciation, amortisation and impairments of non-current assets | 72.0 | 171.9 |
| Dividends received from equity investments | 0.1 | 0.0 |
| Losses from the disposal of non-current assets | 0.0 | 0.1 |
| Increase in networking capital not attributable to investing or financing activities | $-25.0$ | $-30.7$ |
| Cash inflows from the redemption of financial assets from leases | 7.4 | 7.0 |
| Capitalisation of contract acquisition costs | $-153.2$ | $-139.2$ |
| Amortization of contract acquisition costs | 150.5 | 144.5 |
| Taxes paid | $-15.2$ | $-11.4$ |
| Income from interest and other financial result | 2.5 | 1.7 |
| Interest paid | $-11.7$ | $-10.7$ |
| Cash flow from operating activities from continuing operations | 207.7 | 216.5 |
| Cash flow from operating activities from discontinued operations | $-18.8$ | $-17.6$ |
| Cash flow from operating activities | 188.9 | 198.9 |
| Cash outflows for investments in property and intangible assets | $-22.0$ | $-24.5$ |
| Cash inflows from the disposal of property and intangible assets | 2.9 | 1.6 |
| Cash outflows for the acquisition of subsidiaries | $-6.5$ | 0.0 |
| Cash inflows from the sale of equity-accounted companies | 0.1 | 0.3 |
| Cash outflows into equity of equity-accounted investments | $-4.3$ | $-1.8$ |
| Cash outflows to acquire other equity investments | $-0.1$ | $-0.2$ |
| Proceeds from the sale of other investments | 4.5 | 0.0 |
| Cash flow from investing activities from continuing operations | $-25.3$ | $-24.7$ |
| Cash flow from investing activities from discontinued operations | $-0.4$ | $-2.2$ |
| Cash flow from investing activities | $-25.7$ | $-26.9$ |
| Cash outflows to company owners and minority shareholders | $-210.4$ | $-199.7$ |
| Proceeds from the raising of Financial liabilities | 164.5 | 0.0 |
| Cash outflows from the repayment of financial liabilities | $-166.5$ | $-78.5$ |
| Cash outflows for the repayment of lease liabilities | $-37.4$ | $-40.0$ |
| Cash flow from financing activities from continuing operations | $-249.8$ | $-318.1$ |
| Cash flow from financing activities from discontinued operations | $-2.6$ | $-2.4$ |
| Cash flow from financing activities | $-252.4$ | $-320.5$ |
| Net change in cash funds | $-89.2$ | $-148.5$ |
| Cash funds at the beginning of the period | 159.8 | 178.0 |
| Cash funds at the end of the period | 70.6 | 29.6 |
Composition of cash funds
| In EUR million | 30.6.2024 | 30.6.2023 |
|---|---|---|
| Liquid assets | 95.6 | 79.6 |
| Liabilities to banks for short-term cash management | -25.0 | -50.0 |
| Cash funds | $\mathbf{7 0 . 6}$ | $\mathbf{2 9 . 6}$ |
Composition of free cash flow
| In EUR million | H1/2024 | H1/2023 (adjusted) |
|---|---|---|
| Cash flow from operating activities from continuing operations | 207.7 | 216.5 |
| Cash outflows for investments in property, plant and equipment and intangible assets from continuing operations |
-22.0 | -24.5 |
| Cash inflows from the disposal of property, plant and intangible assets from continuing operations |
2.9 | 1.6 |
| Cash outflows for the repayment of lease liabilities from continuing operations | -37.4 | -40.0 |
| Free cash flow from continuing operations | $\mathbf{1 5 1 . 2}$ | $\mathbf{1 5 3 . 6}$ |
Selected explanatory notes according to IAS 34
Material accounting policies and consolidation principles
- In accordance with Regulation 1606/2002 of the European Parliament and of the Council, these condensed interim consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union in accordance with IAS 34. In doing so, the Group has taken into account all IFRS adopted by the EU and whose application is mandatory. These condensed interim consolidated financial statements have not been reviewed by an auditor.
The Group has implemented all accounting standards that were mandatory at the reporting date and refers to the notes to the consolidated financial statements as of 31 December 2023 (p. 101). None of the amendments have any material impact on these condensed interim consolidated financial statements of freenet AG.
The key estimates and assumptions have remained unchanged compared to the consolidated financial statements for 2023.
Significant events and transactions
- Due to an unprofitable earnings situation and a lack of positive future prospects, Gravis Computervertriebsgesellschaft mbH , Berlin (hereinafter referred to as "Gravis") ceased operations on 30 June 2024. With 37 stores in Germany and several online shops, Gravis was a retailer and service provider specialising in the Apple product range. Gravis also operated a certified technical and repair service as well as personnel training in the use of the products offered.
The activities of Gravis and certain business activities in other group companies of the freenet AG that are directly related to the closure of Gravis represent the discontinued operations of Gravis within the meaning of IFRS 5.13 and IFRS 5.32, as Gravis is a separate, material business area as part of the Mobile Communications segment.
In the statement of comprehensive income for the first half of 2024 and, due to the retrospective adjustment, also for the same period of the prior year, the profit or loss after taxes of the discontinued operations Gravis is recognised as a separate amount in the line "Consolidated profit from discontinued operations". Transactions between the continuing operations and Gravis took place to an insignificant extent in the reporting period and in the same period of the prior year. These mainly involved Gravis purchasing IT and administrative services from the continuing operations. In this regard, an assessment was made as to whether the resources of the continuing operations used to provide these services will be reduced in future following the
closure of Gravis. If this is probable, the external expenses incurred by the continuing operations to provide these services were allocated to Gravis. If this is not probable, the aforementioned transactions were not taken into account when determining the result from discontinued operations.
The net profit for the period of this discontinued operations for the first half of 2024 and the first half of 2023 is broken down as follows:
| In EUR '000s | H1 / 2024 | H1/2023 |
|---|---|---|
| Revenues | 69,865 | 110,242 |
| Other operating income | 1,145 | 543 |
| Cost of materials | $-66,062$ | $-96,111$ |
| Personnel expenses | $-26,992$ | $-9,819$ |
| Other operating expenses | $-4,904$ | $-5,531$ |
| Depreciation | $-29,659$ | $-3,213$ |
| Financial result | $-370$ | $-524$ |
| Income taxes | 6,565 | 63 |
| Result from discontinued operations | $-50,412$ | $-4,350$ |
EUR 15.7 million of the personnel expenses of the discontinued operations in the first half of 2024 are characterised by restructuring expenses for severance payments to employees, while depreciation and impairments in the first half of 2024 amounting to EUR 24.7 million are influenced by impairments of lease assets and Internally generated software.
As of 30 June 2024, Gravis reported lease liabilities of EUR 17.5 million, while its lease assets were already impaired to EUR 0 as part of an impairment test carried out in accordance with IAS 36. In the coming months, the company will endeavour to reduce its lease liabilities, for example by handing over the rental locations to third parties, reaching agreements with the landlords or concluding subleases, which could lead to the recognition of future income from the adjustment of lease liabilities, which would then also represent part of the result from discontinued operations.
3. In the first half of 2024, two promissory note loan tranches from 2020 totalling EUR 166.5 million were repaid in full. For refinancing purposes, freenet AG successfully placed a promissory note loan with a total volume of EUR 100.0 million in the first half of 2024. The bullet financing instrument consists of two tranches of EUR 75.0 million (fixed margin: 4.05\%, term: until May 2027) and EUR 25.0 million (fixed margin: 3.92\%, term: until May 2028). In addition, the second tranche of EUR 65.0 million of the promissory note loan placed in October 2023 was paid out in May 2024 (see Note 28, Notes to the consolidated financial statements 2023). In addition, the revolving credit line of EUR 25.0 million was drawn on a short-term basis as of 30 June 2024.
- On 21 December 2023, the Group concluded a purchase agreement for the acquisition of all shares and voting rights in SuperNova GmbH \& Co. KG, Cologne (hereinafter referred to as SuperNova). The acquisition was completed on 4 January 2024, giving the Group control over this subsidiary. The initial consolidation in the freenet Group was carried out from 1 January 2024 for reasons of simplification.
SuperNova's business activities essentially consist of advising wholesalers and retailers in the telecommunications industry, representing their interests vis-à-vis manufacturers and network operators and advising on and implementing marketing measures in the telecommunications sector.
A fixed cash purchase price of EUR 6,500 thousand was agreed.
The purchase price allocation carried out in these consolidated financial statements with regard to the acquisition of SuperNova in accordance with IFRS 3 is provisional in nature, as the fair values of the identifiable intangible assets could only be determined provisionally.
The following overview provides information on the assets and liabilities of SuperNova recognised at fair value at the time of initial consolidation:
Assets and liabilities of SuperNova at fair value as of 1 January 2024
| Assets In EUR'000s |
1.1.2024 | Liabilities In EUR'000s |
1.1.2024 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 1,171 | ||
| Goodwill | 5,275 | ||
| 6,446 | |||
| Current assets | Current liabilities | ||
| Trade accounts receivable | 1,078 | Trade accounts payable | 347 |
| Other receivables and other assets and other financial assets | 83 | Other liabilities and accruals and other financial liabilities | 218 |
| Cash and cash equivalents | 16 | Current income tax liabilities | 558 |
| 1,177 | 1,123 | ||
| 7,623 | 1,123 |
The difference between the assets and liabilities totalling EUR 6,500 thousand represents the total purchase price determined at the time of initial consolidation. The purchase price allocation resulted in goodwill of EUR 5,275 thousand. This is mainly attributable to future earnings opportunities in the wireless services business, which largely relate to the economic benefits from the integration of the SuperNova business model into freenet AG. The goodwill has been allocated to the "Mobile Communications" cash-generating unit. In our Segment reporting, SuperNova is allocated to the Mobile Communications segment. In addition to goodwill, intangible assets totalling EUR 1,161 thousand were disclosed in the purchase price allocation. These are fully attributable to Customer relationships with a useful life of 42 months. The subsequent amortisation of these intangible assets will result in scheduled amortisation of EUR 332 thousand per financial year. The fair value of the acquired receivables (including other receivables, other assets and other financial assets) amounted to EUR 1,161 thousand as of 1 January 2024 (gross receivables of EUR 1,162 thousand less loss allowances of EUR 1 thousand). No contingent liabilities or transactions were identified that are to be recognised separately from the acquisition of the assets and
the assumption of the liabilities.
A capital value-oriented method, the multi-period excess earnings method, is used to determine the fair value of the intangible assets (customer relationships) recognised as part of the preliminary purchase price allocation.
SuperNova's contribution to the Group's external revenues and EBITDA from the time of its initial consolidation was insignificant.
5. New contractual agreements concluded in the first half of 2024 resulted in new other financial obligations (order commitments for services) of EUR 1,477 million as of 30 June 2024, thereof EUR 101 million due within one year, EUR 616 million Due after one and five years and EUR 760 million Due after more than five years. Otherwise, the Group's other financial obligations as of 30 June 2024 were at a level comparable to 31 December 2023.
- The deferred tax income of EUR 10.3 million recognised in the first half of 2024 included a one-off effect of EUR 21.0 million from the Growth Opportunities Act, which has since come into force. Due to the possibility of greater utilisation of corporate income tax loss carryforwards for the financial years 2024 to 2027 (now 70\% of taxable income instead of $60 \%$ ), higher deferred income tax assets on tax loss carryforwards were capitalised in the balance sheet compared to the previous legal situation.
- The following significant transactions took place between the Group and related parties:
| In EUR million | H1/2024 | H1/2023 |
|---|---|---|
| Revenue attributable to billing of services | ||
| Joint ventures | ||
| Antenne Deutschland GmbH \& Co KG | 5.2 | 4.1 |
| Associated companies | ||
| Bayern Digital Radio GmbH | 0.2 | 0.3 |
| Non-consolidated companies | ||
| Hessen Digital Radio GmbH | 0.6 | 0.6 |
| Total | 6.0 | 5.0 |
| In EUR million | H1/2024 | H1/2023 |
|---|---|---|
| Expenses from the purchase of services | ||
| Joint ventures | ||
| Antenne Deutschland GmbH \& Co KG | 0.1 | 0.0 |
| Associated companies | ||
| ad.audio GmbH | 0.1 | 0.2 |
| Bayern Digital Radio GmbH | 0.3 | 0.3 |
| Total | 0.5 | 0.5 |
As of June 30, 2024, the following significant receivables and liabilities to related parties existed:
| In EUR million | 30.6 .2024 | 30.6 .2023 |
|---|---|---|
| Receivables from current transactions |
||
| Joint ventures | ||
| Antenne Deutschland GmbH \& Co KG |
0.0 | 0.1 |
| Total | $\mathbf{0 . 0}$ | $\mathbf{0 . 1}$ |
All transactions were based on standard market prices.
Other disclosures in the notes
- Fair values disclosures:
The following overview "Fair value hierarchy as of 30 June 2024" shows the main parameters on which the measurement of the financial instruments recognised at fair value as well as the portion of the financial instruments recognised at amortised cost for which no fair value could be determined is based. For the definition of the individual levels in accordance with IFRS 13, please refer to the notes to the consolidated financial statements of freenet AG as of 31 December 2023.
| In EUR'000s | IFRS 9 measurement category | Carrying amount of balance sheet | Measurement | Fair value of financial instruments | |
|---|---|---|---|---|---|
| 30.6.2024 | Amortised cost | Fair value recognised in profit or loss | Fair value through other comprehensive income | ||
| Assets | |||||
| Cash/liquid assets | AC | 95,571 | 95,571 | $-1$ | |
| Trade accounts receivable | 305,569 | ||||
| At amortised cost | AC | 187,586 | 187,586 | $-1$ | |
| At fair value through profit or loss | FVTPL | 117,983 | 117,983 | $-1$ | |
| Other financial assets | 204,194 | ||||
| Lease receivables | n/a | 31,178 | |||
| Non-derivative financial assets | |||||
| At amortised cost | AC | 21,808 | 21,808 | $-1$ | |
| Other financial assets | |||||
| At amortised cost | AC | 9,086 | 9,086 | $-1$ | |
| At fair value through profit or loss | FVTPL | 39,144 | 39,144 | ||
| Other equity instruments | |||||
| At fair value through profit or loss | FVTPL | 2,139 | 2,139 | $-1$ | |
| At fair value through other comprehensive income | FVOCI | 100,839 | 100,839 | 100,839 | |
| Equity and liabilities | |||||
| Lease liabilities | n/a | 317,407 | |||
| Trade accounts payable | AC | 283,601 | 283,601 | ||
| Financial liabilities | 454,353 | 454,353 | |||
| Financial liabilities from promissory notes | AC | 426,623 | 426,623 | 419,295 | |
| Other Financial liabilities | AC | 27,730 | 27,730 | ||
| Other financial liabilities | 68,916 | ||||
| At amortised cost | AC | 68,916 | 68,916 | ||
| At fair value through profit or loss | FVTPL | 0 | 0 | $-1$ | |
| Thereof aggregated by IFRS 9 measurement category |
|||||
| Assets | |||||
| At amortised cost | AC | 314,051 | 314,051 | $-1$ | |
| At fair value through profit or loss | FVTPL | 159,266 | 159,266 | $-1$ | |
| At fair value through other comprehensive income | FVOCI | 100,839 | 100,839 | 100,839 | |
| Equity and liabilities | |||||
| At amortised cost | AC | 806,870 | 806,870 | 419,295 | |
| At fair value through profit or loss | FVTPL | 0 | 0 | $-1$ |
[^0]
[^0]: 1 No fair value was determined for the items, but the Carrying amounts represent a reasonable approximation of the fair value. As a result, the aggregated fair values for the AC and FVTPL measurement categories are each significantly lower than their aggregated Carrying amounts of balance sheet.
Fair value hierarchy as of 30 June 2024
| In EUR '000s | Total | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Assets | ||||
| Trade accounts receivable, at fair value through profit or loss | 117,983 | 0 | 0 | 117,983 |
| Other financial assets, at fair value through profit or loss | 39,144 | 0 | 0 | 39,144 |
| Other equity instruments, at fair value through profit or loss | 2,139 | 0 | 0 | 2,139 |
| Other equity instruments, at fair value through other comprehensive income | 100,839 | 100,839 | 0 | 0 |
| Equity and liabilities | ||||
| Financial liabilities from promissory notes | 419,295 | 0 | 0 | 419,295 |
| Other financial liabilities, at fair value through profit or loss | 0 | 0 | 0 | 0 |
There have been no changes to the levels.
9. Based on updated interest rates (freenet, debitel programmes: 3.9\%, Media Broadcast Group programmes: $3.7 \%$ ), pension provisions were revalued on the basis of otherwise unchanged assumptions. The resulting actuarial gain of EUR 2.1 million and the offsetting reduction in deferred tax assets of EUR 0.9 million were recognised in the statement of comprehensive income. On balance, there was a positive result of EUR 1.2 million from items not to be reclassified to the income statement.
10. The calculation of current and current income taxes was based on an average tax rate of $30.3 \%$ (prior-year period: $30.3 \%$ ), as in the consolidated financial statements for 2023.
11. The following event occurred after 30 June 2024: The Chairman of the Executive Board of freenet AG, Christoph Vilanek, informed the Personnel Committee of the company's Supervisory Board on 21 July 2024 that he is not available for an extension of his term of office and intends to step down from the company's Executive Board at the end of his term of office, which, according to his contract, ends on 31 December 2025 at the earliest. The Supervisory Board will initiate the search and selection process for a suitable successor at short notice.
12. The Executive Board organises and manages the company as the chief operating decision maker on the basis of the differences between the individual products and services offered. As the Group conducts its business activities almost exclusively in Germany, it is not organised and managed by geographical segment. The Group operated in the following business segments in the first six months of 2024:
- Mobile Communications:
- Activities as a mobile communications service provider - marketing of mobile communications services (voice and data services) of the mobile network operators Telekom Deutschland, Vodafone and Telefónica Deutschland in Germany
- offering its own network-independent services and tariffs as well as offering the network operators' tariffs on the basis of the network operator contracts concluded with these network operators
- Distribution/sale of Mobile Communications devices and additional services in the areas of mobile data communications and digital lifestyle
- "freenet Internet": Offering its own app-based Internet product
- Provision of distribution services
-
Planning, setup, installation and maintenance of WiFi networks
-
TV and Media:
- Provision of services, primarily to end customers, in the area of IPTV
- Planning, project development, construction, operation, service and marketing of broadcasting-related solutions for business customers in the broadcasting and media industry
- Provision of DVB-T2 services to end customers
- Other/holding:
- Provision of portal services such as e-commerce/ advertising services (these essentially include the provision of online shopping and the marketing of advertising space on websites), payment services for end customers and the provision of various digital products and entertainment formats for download or for display and use on mobile devices
- Development of communication solutions, IT services and other services for business customers
- Offering narrowband voice services (call-by-call, pre-selection) and data services
- Provision of distribution services
In addition to the operating activities, the "Other/holding" segment also includes Other business activities. These mainly include the holding activities of freenet AG (with the provision of intra-group services in centralised areas such as legal, HR and finance), but also areas that cannot be clearly allocated to the operating segments. EUR 25.6 million of the segment revenue of EUR 25.4 million reported for the "Other/holding" segment in the first six months of 2024 (prior-year period: EUR 19.8 million) relates to operating activities (prior-year period: EUR 20.0 million) and EUR $\sim 0.2$ million (prior-year period: EUR $\sim 0.2$ million) to other business activities.
EUR 15.3 million (prior-year period: EUR 12.0 million) of the gross profit of EUR 14.9 million (prior-year period: EUR 11.7 million) reported for the "Other/holding" segment in the first six months of 2024 is attributable to operating activities and EUR $\sim 0.4$ million (prior-year period: EUR $\sim 0.3$ million) to other business activities. Of the EBITDA of EUR $\sim 9.9$ million (prior-year period: EUR $\sim 9.7$ million) reported for the "Other/ holding" segment in the first six months of 2024, EUR 7.2 million (prior-year period: EUR 4.4 million) was generated by operating activities and EUR $\sim 17.1$ million (prior-year period: EUR $\sim 14.1$ million) by other business activities.
Segment report
1 January to 30 June 2024
| In EUR million | Mobile Communications | TV and Media | Other/holding company | Elimination of intersegment revenues and expenses | Total |
|---|---|---|---|---|---|
| Third-party revenues | 995.1 | 186.2 | 16.6 | 0.0 | 1,197.9 |
| Intersegment revenues | 7.0 | 6.1 | 8.8 | $-22.0$ | 0.0 |
| Total revenues | 1,002.1 | 192.3 | 25.4 | $-22.0$ | 1,197.9 |
| Cost of materials to third parties | $-645.6$ | $-72.1$ | $-10.1$ | 0.0 | $-727.8$ |
| Intersegment cost of materials | $-17.1$ | $-0.8$ | $-0.3$ | 18.2 | 0.0 |
| Total cost of materials | $-662.7$ | $-72.9$ | $-10.5$ | 18.2 | $-727.8$ |
| Segment gross profit | 339.5 | 119.4 | 14.9 | $-3.8$ | 470.0 |
| Other operating income | 23.0 | 0.4 | 1.9 | $-2.7$ | 22.6 |
| Other own work capitalised | 7.8 | 2.9 | 0.8 | 0.0 | 11.5 |
| Personnel expenses | $-59.4$ | $-32.4$ | $-19.5$ | 0.0 | $-111.3$ |
| Other operating expenses | $-101.5$ | $-37.5$ | $-8.1$ | 6.5 | $-140.6$ |
| Thereof loss allowances on financial assets and contract assets | $-8.9$ | 2.2 | 0.0 | 0.0 | $-6.7$ |
| Thereof without loss allowances on financial assets and contract assets | $-92.6$ | $-39.7$ | $-8.0$ | 6.5 | $-133.9$ |
| Total overheads ${ }^{1}$ | $-130.1$ | $-66.6$ | $-24.9$ | 3.8 | $-217.8$ |
| Thereof intersegment allocation | $-3.3$ | $-1.5$ | 1.0 | 3.8 | |
| Segment EBITDA | 209.4 | 52.8 | $-9.9$ | 0.0 | 252.2 |
| Depreciation, amortisation and impairment | $-72.0$ | ||||
| EBIT | 180.2 | ||||
| Financial result | $-15.6$ | ||||
| Income taxes | $-4.8$ | ||||
| Consolidated profit from continuing operations | 159.8 | ||||
| Consolidated profit from discontinued operations attributable to the shareholders of freenet AG | |||||
| Consolidated profit | 109.4 | ||||
| Consolidated profit attributable to shareholders of freenet AG | 110.8 | ||||
| Consolidated profit attributable to non-controlling interests | $-1.4$ | ||||
| Net cash investments | 11.9 | 6.7 | 0.9 | 19.5 | |
| Thereof from continuing operations | 11.6 | 6.7 | 0.9 | 19.1 | |
| Thereof from discontinued operations | 0.4 | 0.0 | 0.0 | 0.4 |
[^0]
[^0]: 1 Overheads are defined as the difference between gross profit and EBITDA and include the items operating income, other own work capitalised, personnel expenses and other operating expenses.
| In EUR million | Mobile Communications | TV and Media | Other/holding company | Elimination of intersegment revenues and expenses | Total |
|---|---|---|---|---|---|
| Third-party revenues | 988.1 | 160.0 | 11.5 | 0.0 | 1,159.7 |
| Intersegment revenues | 6.5 | 5.8 | 8.2 | $-20.6$ | 0.0 |
| Total revenues | 994.6 | 165.9 | 19.8 | $-20.6$ | 1,159.7 |
| Cost of materials to third parties | $-652.5$ | $-53.5$ | $-7.7$ | 0.0 | $-713.8$ |
| Intersegment cost of materials | $-11.4$ | $-5.1$ | $-0.3$ | 16.8 | 0.0 |
| Total cost of materials | $-664.0$ | $-58.6$ | $-8.0$ | 16.8 | $-713.8$ |
| Segment gross profit | 330.7 | 107.3 | 11.7 | $-3.8$ | 445.9 |
| Other operating income | 23.6 | 0.3 | 2.0 | $-2.2$ | 23.7 |
| Other own work capitalised | 7.7 | 3.2 | 0.9 | 0.0 | 11.8 |
| Personnel expenses | $-56.9$ | $-28.0$ | $-16.5$ | 0.0 | $-101.4$ |
| Other operating expenses | $-99.4$ | $-23.6$ | $-7.8$ | 6.0 | $-124.8$ |
| Thereof loss allowances on financial assets and contract assets | $-7.6$ | $-0.3$ | 0.1 | 0.0 | $-7.8$ |
| Thereof without loss allowances on financial assets and contract assets | $-91.8$ | $-23.3$ | $-8.0$ | 6.0 | $-117.1$ |
| Total overheads ${ }^{1}$ | $-125.0$ | $-48.1$ | $-21.4$ | 3.8 | $-190.7$ |
| Thereof intersegment allocation | $-4.2$ | $-0.6$ | 1.0 | 3.8 | |
| Segment EBITDA | 205.7 | 59.2 | $-9.7$ | 0.0 | 255.2 |
| Depreciation, amortisation and impairment | $-171.9$ | ||||
| EBIT | 83.4 | ||||
| Financial result | $-12.9$ | ||||
| Income taxes | $-21.9$ | ||||
| Consolidated profit from continuing operations | 48.6 | ||||
| Consolidated profit from discontinued operations attributable to the shareholders of freenet AG | $-4.4$ | ||||
| Consolidated profit | 44.2 | ||||
| Consolidated profit attributable to shareholders of freenet AG | 42.8 | ||||
| Consolidated profit attributable to non-controlling interests | 1.4 | ||||
| Net cash investments | 11.6 | 11.0 | 2.5 | 25.1 | |
| Thereof from continuing operations | 9.4 | 11.0 | 2.5 | 22.9 | |
| Thereof from discontinued operations | 2.2 | 0.0 | 0.0 | 2.2 |
[^0]
[^0]: 1 Overheads are defined as the difference between gross profit and EBITDA and include the items operating income, other own work capitalised, personnel expenses and other operating expenses.
Further information
Responsibility statement
To the best of our knowledge, and in accordance with the applicable reporting principles, the condensed interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group in accordance with German accepted accounting principles, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.
Büdelsdorf, 7 August 2024
freenet AG
The Executive Board
Quarterly overview
Our latest quarterly figures are available for download at fn.de/downloadsir.
Financial calendar
| Date | Event |
|---|---|
| 28 February 2024 | Publication of preliminary results for the 2023 financial year* |
| 26 March 2024 | Publication of the 2023 Annual report |
| 8 May 2024 | 2024 Annual General Meeting in Hamburg |
| 16 May 2024 | Publication of the 2024 Quarterly statement* |
| 7 August 2024 | Publication of the 2024 Half-year report* |
| 7 November 2024 | Publication of 2024 Nine-month statement* |
- Publication after close of trading (Xetra)
All dates are subject to possible changes. The current status of the Financial calendar (including conference call dates) is available at fn.de/calendar.
Further information on freenet and the share is available at fn.de/investors.
Imprint and contact
| freenet AG | Consultancy, concept \& design |
|---|---|
| Hollerstraße 126 | Silvester Group, Hamburg, Germany |
| 24782 Büdelsdorf, Germany | www.silvestergroup.com |
| Phone: +49 (0) 43 31/69-10 00 | |
| Investor Relations \& ESG Reporting | |
| The half-year report is also available in German. | |
| In case of doubt, the German version shall | |
| Deelbögenkamp 4 | |
| 22297 Hamburg, Germany | |
| Phone: +49 (0) 40/5 13 06-7 78 | |
| E-maill: [email protected] |
For more information on 2023 financial year including statements from our Executive Board members, go to (n.de/23)ty
