Annual Report 2013 Consolidated Financial Statements of Freenet AG

Annual Report 2013 Consolidated financial statements of freenet AG

freenet AG · Hollerstraße 126 · 24782 Büdelsdorf Lists of contents

Digital lifestyle and mobile communications...... 2 freenet AG as a service provider...... 3 Award-winning tariffs...... 5 Innovative applications...... 7 Sought-after devices ...... 9 Comprehensive services...... 10 Diverse customer approach...... 12

To our shareholders ...... 20 Letter to shareholders...... 22 Interviews with the Executive Board...... 26 Supervisory Board report...... 39 freenet AG and the capital markets ...... 45

Group management report...... 56 Corporate Profile of the Group...... 57 Economic report...... 69 Events after the reporting date...... 80 Opportunities and Risk report...... 82 Corporate Governance ...... 92 Forecast...... 104

Consolidated financial statements...... 110 Consolidated income statement for the period from 1 January to 31 December 2013. . . 112 Consolidated statement of comprehensive income for the period from 1 January to 31 December 2013...... 113 Consolidated balance sheet as of 31 December 2013...... 114 Schedule of changes in equity for the period from 1 January to 31 December 2013 . . . . 116 Consolidated statement of cash flows for the period from 1 January to 31 December 2013...... 117 Notes to the consolidated financial statements of freenet AG for the financial year 2013...... 118 Auditor’s Report...... 199 Responsibility statement...... 200

Further information...... 204 Glossary...... 205 Financial calendar...... 208 Imprint, contact, publications ...... 209

freenet AG · Annual Report 2013 Key financials: Group overview

Result

2012 Q4/2012 In EUR million/as indicated 2013 adjusted1 Q4/2013 Q3/2013 adjusted1 Revenue 3,193 .3 3,084 .8 818 .8 789 .6 815 .2 Gross profit 731 .2 719 .8 199 .8 181 .6 200 .2 EBITDA 357 .4 357 .4 94 .4 92 .6 94 .1 EBIT 301 .3 208 .8 80 .0 78 .6 56 .6 EBT 258 .4 166 .7 67 .0 68 .8 44 .6 Group result from continued operations 238 .9 173 .2 59 .8 63 .6 42 .0 Group result from discontinued operations 0 .0 0 .0 0 .0 0 .0 0 .0 Group result 238 .9 173 .2 59 .8 63 .6 42 .0 Earnings per share in EUR (diluted and undiluted) 1 .87 1 .35 0 .47 0 .50 0 .33

Balance sheet

31 . 12 . 2012 31 .12 .2012 In EUR million/as indicated 31 . 12 . 2013 adjusted1 31 . 12 . 2013 30 . 9 . 2013 adjusted1 Balance sheet total 2,477 .2 2,478 .7 2,477 .2 2,476 .4 2,478 .7 Shareholders’ equity 1,239 .6 1,177 .6 1,239 .6 1,179 .2 1,177 .6 Equity ratio in % 50 .0 47 .5 50 .0 47 .6 47 .5

Finances and investments

2012 Q4/2012 In EUR million 2013 adjusted1 Q4/2013 Q3/2013 adjusted1 Free cash flow 2,3 256 .2 259 .7 54 .6 74 .9 63 .8 Depreciation and amortisation 56 .1 148 .6 14 .4 14 .0 37 .5 Net investments3 (CAPEX) 22 .2 20 .4 9 .2 7 .0 8 .2 Net cash 3,4 –427 .2 –451 .9 -427 .2 –471 .9 –451 .9

31 . 12 . 2013 31 . 12 . 2012 31 . 12 . 2013 30 . 9 . 2013 31 . 12 . 2012 Closing price Xetra in EUR 21 .78 14 .00 21 .78 17 .89 14 .00 Number of ordinary shares in ’000s 128,061 128,061 128,061 128,061 128,061 Market capitalisation in EUR’000s4 2,789,169 1,792,854 2,789,169 2,291,012 1,792,854

Employees

31 . 12 . 2013 31 . 12 . 20121 31 . 12 . 2013 30 . 9 . 2013 31 . 12 . 20121 Employees 4 4,576 3,865 4,576 4,593 3,865

freenet AG · Annual Report 2013 Key financials: overview Mobile Communications segment

Customer development

In million 2013 2012 Q4/2013 Q3/2013 Q4/2012 Mobile Communications customers4 13 .29 14 .08 13 .29 13 .37 14 .08 Thereof customer ownership 8 .76 8 .50 8 .76 8 .67 8 .50 Thereof contract customers 5 .86 5 .79 5 .86 5 .82 5 .79 Thereof no-frills customers 2 .90 2 .71 2 .90 2 .85 2 .71 Thereof prepaid customers 4 .53 5 .58 4 .53 4 .70 5 .58 Gross new customers 3 .34 3 .50 0 .91 0 .79 0 .91 Net change –0 .79 –1 .11 –0 .08 –0 .19 –0 .23

Result

In EUR million 2013 2012 Q4/2013 Q3/2013 Q4/2012 Revenue 3,160 .4 3,025 .9 809 .7 781 .6 802 .1 Gross profit 710 .8 688 .6 194 .7 176 .9 194 .4 EBITDA 365 .1 356 .5 101 .3 95 .1 94 .3 EBIT 312 .7 212 .2 87 .9 81 .9 57 .6

Monthly average revenue per user (ARPU)

In EUR 2013 2012 Q4/2013 Q3/2013 Q4/2012 Contract customer 22 .3 23 .4 21 .6 22 .6 22 .8 No-frills customer 3 .4 3 .9 3 .0 3 .5 3 .5 Prepaid customer 3 .0 3 .0 3 .0 3 .2 2 .9

1 The comparative figures in the key financials overview as well as in other tables in this report have been adjusted due to the change of an accounting method, see items 1 .1 and 2 .18 of the notes to the consolidated financial statements . 2 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 . 3 This information relates to the overall Group (including discontinued operations) . 4 At the end of period . freenet AG · Annual Report 2013 Annual Report 2013 Consolidated financial statements of freenet AG Digital lifestyle and mobile communications

freenet AG as a service provider...... 3

Award-winning tariffs ...... 6

Innovative applications...... 8

Sought-after devices...... 10

Comprehensive services...... 12

Diversified customer approach ...... 15 Digital lifestyle and mobile communications: freenet AG as a service provider 3

freenet AG as a service provider

Social, economic and political life today is changing at tremendous speed and with enormous dynamism. The world is going mobile to a new and fascinating degree— smartphones and tablets are enabling an individualised, innovative lifestyle based on digitalization. This Digital Lifestyle affects nearly all areas of society, as some key figures, developments and examples illustrate:

■■ In 2013 the number of worldwide smartphone sales passed the one billion mark for the first time. On top of this, 230 million tablets were sold around the world. ■■ Three out of four Germans never leave home without their smartphone or mobile phone; among under –30s this rises to 83 percent. ■■ Half of all students in Germany use a smart mobile device—a smartphone or tablet—for learning or studying. Given the chronically overcrowded lecture halls, students prefer to work at home, in parks or in cafés. ■■ Retail is undergoing a massive transformation: worldwide, smartphone users spent over $ 20 billion shopping on their mobile devices in 2013. This involved more than 160 million eBay apps being downloaded from app stores and 5.6 million products being posted for sale via mobile device every week— 1.5 million items a month in Germany alone. ■■ In Germany, one product changes hands every second via mobile transaction. The most popular categories are electronics, home & garden, car & motorcy- cle. Every ten minutes a vehicle is bought via smartphone or tablet. A pair of women’s shoes is sold every 30 seconds. ■■ One in every two smartphone/tablet owners uses “location based services” while shopping—apps that gather information about retailers, offers and prices in the area. Preferred products are fashion, electronics, books and food. ■■ In terms of transparency and sustainability, in future foods will be traceable back to their source using smartphones and printed QR codes (the black and white speckled square images). ■■ One in two Germans aged between 18 and 30 now plan their next trip or holi- day via smartphone—and one in four go on to book it in this way. ■■ Smartphones have also long been usable as a means of payment. They can easily be connected to card terminals or used as mobile cash registers, by vendors at farmers’ markets or flea markets, for example. In the US, millions of users are already making use of this feature, generating tens of billions of dollars in mobile revenues annually. ■■ The Smart Home market—products for the intelligent networking and control of home, IT and telecommunications equipment—will grow by 20 percent a year across Europe over the next four years to an estimated 4.1 billion euros.

freenet AG · Annual Report 2013 4 Digital lifestyle and mobile communications: freenet AG as a service provider

■■ In addition, smartphones and tablets also ensure social and political progress. People can use them to inform and organise themselves; women can establish networks with other women or obtain medical advice and other information. Studies show that women’s equality rises significantly along with mobile communications penetration, as does the population’s health and educational opportunities.

In this fascinating world of Digital Lifestyles, freenet AG sets its own highlights: ■■ as an independent service provider that offers customers integrated lifestyle product ranges, and inexpensive mobile communications tariffs and services on all four German networks; ■■ with its main brand mobilcom-debitel, which possesses more than two decades of experience and expertise in telecommunications, mobile communications and the Internet; ■■ with the GRAVIS premium brand for high-end Digital Lifestyle products and services; ■■ with the discount brands klarmobil, callmobile, freenetmobile and debitel light; ■■ with expert, objective consultation and support, tailored to the individual needs of each client, ■■ without being compelled to recoup high development costs, yet with the market and buying power of a large, established customer base and a nationwide sales presence; ■■ with the freenet.de portal including a wide variety of information and entertainment as well as a large app store for Android, iOS and Nokia apps. ■■ with maximum closeness to the customer based on ■■ 553 shops operated under the main mobilcom-debitel brand and 32 GRAVIS stores, ■■ 400 major electronics retailers (exclusivity agreement with Media-Saturn Deutschland GmbH), ■■ around 5,600 further distribution points, ■■ with a broad range of effective online channels, social networks, and excellent customer support via leading-edge apps, chat, email, telephone, regular mail, and personal conver- sations. ■■ as one of the leading digital large companies in Germany: According to an Accenture Study published in February 2014 freenet AG ranks seventh among the 20 German large companies with the highest degree of digitalisation.

Approximately 4,600 employees in eleven offices ensure freenet AG’s outstanding competitive positioning with their daily commitment to their company and customers. freenet AG gives back to society with a variety of social and environmental initiatives at its sites and beyond. This is also in the spirit of mobilcom-debitel’s long-running “Gemeinsam geht mehr!” (Getting more together!) marketing campaign.

freenet AG · Annual Report 2013

6 Digital lifestyle and mobile communications: Award-winning tariffs

Award-winning tariffs

Smartphone and tablet features are becoming more and more complex and form the basis of contemporary Digital Lifestyle: ■■ as mobile, multi-functional devices for communication and information, ■■ for career and leisure, work and entertainment, ■■ as a means of payment and central control unit for mobile applications.

With their bundled services flat rates are becoming mas- sively important in the use of smartphone and tablet: customers are increasingly demanding tariffs with maximum transparency, providing good value for money at a calculable cost.

Against this background, freenet AG is continually expanding its range of flat rates as well as individual tariffs and adapting it to constantly changing customer needs and market conditions. In all, the Group offers dozens of tariffs through its individual brands or subsidiaries, each aimed at precisely defined target groups.

The main brand—a fixture in the mobile communications market for over twenty years with its two components mobilcom and debitel—focuses on high-value contract relationships in its customer acquisition and customer base management. The range on offer includes its own tariffs alongside the original network operator tariffs— usually at discounts of 10 percent. In addition, freenet also operates very successfully with four discount brands in the “no-frills” segment.

In the financial year 2013, the launch of the innovative Allnet suite of rates in July represented a major step for the main mobilcom-debitel brand. The new “classic Allnet”, “comfort Allnet” and “premium Allnet” tariffs complement the existing “real Allnet” tariff and benefit from freenet’s special competitive positioning as a service provider that covers all four German mobile communications networks: users can choose between the low-cost E-Plus/O2 networks or—for an extra 10 euros per month—Vodafone and Deutsche Telekom’s high-end networks (D-networks).

At launch, the regular package prices initially ranged from 9.90 euros per month for “classic All- net”, with unlimited free calls to all German networks, to 19.90 euros for “comfort Allnet”, which additionally includes unlimited mobile Internet, through to 39.90 euros for “premium Allnet”, which includes the flat rate for calls, up to 2 GB of mobile Internet, multiple SIM cards, unlimited SMS texting, and 100 roaming minutes within the EU. The mobile phone option gives users the latest smartphone of their choice for an additional 5 to 10 euros a month.

freenet AG · Annual Report 2013 Digital lifestyle and mobile communications: Award-winning tariffs 7

During the course of the year, these and other tariffs were further upgraded or discounted, some as part of marketing and Christmas campaigns or via the company’s own online sales platform www. crash-tarife.de. For example, since November klarmobil’s Allnet flat rate, bookable online, costs just 4.85 euros per month for the first twelve months, and increases to 19.85 euros for the second year of the contract term. “There is currently no cheaper flat rate for calls and the Internet in Germany,” concluded the independent price comparison portal billig-tarife.de!

More and more consumers are using their smartphones more for mobile surfing rather than making phone calls. The “Smart Surf” tariff for frequent surfers, launched in autumn of 2013, is a response to this trend. For 14.99 euros a month on the O2 and Vodafone networks, it offers 1 GB of free data with a maximum bandwidth of 7.2 Mbits/s, plus 50 free call minutes to all domestic mobile networks, as well as 50 free SMS texts for O2 customers.

For tablet and notebook users, the “surf flat 5000” rate—bookable on crashtarife.de since August 2013—offers a data flat rate including 5 GB of high-speed bandwidth at speeds of up to 7.2 Mbits/s, which makes it comparable to DSL 6000, at the base price of 6.95 euros for the first twelve months. There is no hook-up fee, and as a special offer the Surfstick costs 1.00 euro. In the second year of the contract term, the monthly fee increases to 15.95 euros.

Smartphone customers who hit their available data volume limits with their chosen tariff can select additions such as the mobilcom-debitel “T@ke-away Flat Upgrade”, launched in spring 2013 and usable on the O2 and Vodafone networks. For 9.95 euros a month, this increases the volume for existing and new customers by 1 GB, both for tariffs that include data volumes and for the classic T@ke-away Flat data option.

Over the course of the year, the tariffs offered by mobilcom-debitel and its discount subsidiaries scored dozens of test victories, recommendations, and awards in independent comparison tests by the trade and business press. The top rankings achieved in the reader polls of the magazines connect, Funkschau and Telecom Handel were especially gratifying and significant.

freenet AG · Annual Report 2013 8 Digital lifestyle and mobile communications: Innovative applications

Innovative applications

Home automation is one of the key growth segments in the Digital Lifes- tyle market. In autumn 2012 freenet launched its first product in this sector, with the trial introduction of SmartHome sets for remote control of home heating via smartphone. With monthly prices for different kits starting at 8.99 euros, the packages include heating controllers with adapters, a control unit and window contacts, and can be expanded into a complex SmartHome network using additional components. Users can control their individual home heating units by app while they are on the go, or turn it down/off at the touch of a button when leaving the house or apartment.

Since the beginning of 2013, the SmartHome box has been available at all 553 shops operated under the main mobilcom-debitel brand, and since November last year, there has been a money-back guarantee for customers: if they don’t reduce heating costs by at least 20 percent compared to the previous year’s bills with the mobile control, basic monthly charge is refunded.

Another Digital Lifestyle solution from mobilcom-debitel involves home security. Since the second half of 2013, the company has offered three versions of a “SmartHome camera”, starting at a base price of 5.49 euros per month. Its features include zoom function, infrared motion sensors and a built-in microphone, enabling mobile camera control of the home and grounds even at night. On request, email notifications can be sent to the smartphone when the camera detects movement in the house.

With these increasingly extensive Digital Lifestyle functions, it becomes more and more important that users be able to reliably access their individual applications and data at all times—this is even more crucial when they change their device, telecommunications provider, or network. With this in mind, the new md Cloud service was launched in April 2013 for new and existing customers, in two versions: “Cloud basic” gives each user 25 GB of storage for 1.99 euros a month; “Cloud pro” 50 GB for 3.99 euros per month.

Both versions work on all Internet-enabled devices—both web-based and via Android or iOS app, available on Google Play or the iTunes Store. By hosting and operating the Cloud in Germany, the company has designed this service to offer what it considers to be maximum data security and privacy.

freenet AG · Annual Report 2013 Digital lifestyle and mobile communications: Innovative applications 9

In the entertainment segment, mobilcom-debitel’s innovations during the year included the “Game- Flat” and the “md MusicFlat” for new and existing customers. From 2.99 euros per month, gamers can download and use many of the latest premium games on Gameloft at m.md.de/games, without any hidden extras or in-game purchases later. An additional premium option includes top games like Iron Man 3, Asphalt 7, Shark Dash or Real Football 2013. Customers keep the games after the end of the contract term.

The “md MusicFlat”, offered in cooperation with the streaming provider JUKE, is available in two versions—as an optional add-in to an existing mobilcom-debitel contract for 8.99 euros per month, or as a complete package with a matching smartphone tariff for 24.99 euros per month. It lets users access more than 20 million pop, rock, jazz and classical music tunes in the Dolby Pulse format, create favourites and playlists from them, use “MusicFlat” via Wi-Fi, and use the playlists in offline mode. mobilcom-debitel is also enhancing its Mobile Payment business with new and attractive applications. For instance, the sms&park 2.0 GPS smartphone app lets users first locate free parking in the area and then pay the parking fee with a click. It is billed on their next mobile phone bill without requiring registration. The service is already available in many German towns and cities— and the number of locations is growing steadily.

Since autumn 2013 Deutsche Bahn’s Touch&Travel is also available to mobilcom-debitel customers. Before com- mencing a journey, users log in at “Touchpoints” using NFC tags, QR Codes or touch-point number, board the selected train and show the barcode displayed on the smartphone as a ticket. At the end of the journey, they then log off again at the Touchpoint.

freenet AG · Annual Report 2013 10 Digital lifestyle and mobile communications: Sought-after devices

Sought-after devices

freenet’s strong position as Germany’s biggest network-independent telecommunications provider is also reflected in hardware. The company has a strong negotiating position based on ■■ around 13.3 million mobile communication customers, ■■ significant selling power in its branded shops ■■ efficient online channels, ■■ 400 major electronics markets (exclusivity agreement with Media-Saturn Deutschland GmbH) and around 5,600 further points of sale.

freenet benefits when purchasing hardware from a wide range of manufacturers, and telecommunications services from the four network operators. The company passes the resulting benefits on to its customers, for example in form of the latest smartphones and tablets at very competitive prices.

For instance, as an established Apple partner the company usually offers the always hotly anticipated new products from the iconic American manufacturer at its sales outlets as soon as they come onto the market.

mobilcom-debitel also mounts exclusive offers in cooperation with other hardware manufacturers. Back in 2012, the company was the first German provider to offer the Huawei Ascend P1 in its shops. The Chinese manufacturer has since further established itself on the German market with what the press described as “spectacular new releases” such as the Ascend P6, which was the world’s thinnest smartphone at launch. The Ascend P6 is available at mobilcom-debitel alongside smartphones, tablets or notebooks from other relevant manufacturers ranging from Apple, Nokia and Sony to Samsung.

freenet AG · Annual Report 2013 Digital lifestyle and mobile communications: Sought-after devices 11

Another exclusive mobilcom-debitel partnership involves the LG smartphone portfolio. The South Korean manufacturer first successfully addressed the premium segment in Germany with the Optimus G, and now offers another high-end LG product with the G2.

In December, mobilcom-debitel offered the GALAXY Note 3 and GALAXY Tab 3 8.0 from the current global market leader Samsung as part of a “Digital Lifestyle Christmas”. Both devices were available from 99.95 euros in combination with a mobilcom-debitel smartphone tariff. In addition, as a special Christmas gift, the cutting-edge GALAXY Gear SmartWatch was offered in a package deal with the GALAXY Note 3 and the mobilcom-debitel real Allnet tariff for 349.99 euros. And in another Christmas deal, the company offered the Samsung Galaxy SIII Mini for a one-off 49.95 euros in conjunction with the Smart Surf tariff.

freenet AG · Annual Report 2013 12 Digital lifestyle and mobile communications: Comprehensive services

Comprehensive services

For a service provider, maximum closeness to the customer is both the key to sustainable success and a raison d’être. Against this background, freenet works diligently on the continuous improvement of its service performance and customer interfaces. This applies to ■■ mobilcom-debitel’s own shops and GRAVIS stores, ■■ in 400 major electronics markets (exclusivity agreement with Media-Saturn Deutschland GmbH), ■■ the around 5,600 further points of sale, ■■ its presence on online/social media channels as well as ■■ its customer service by phone and in writing.

In earlier years, mobilcom-debitel had already further expanded or improved the number, structure and furnishings of its shops in major cities, with projects including “Instore TV” and “Z Shops”: the shops were equipped with high-end flat-screen displays for fast, efficient delivery of information about the latest Digital Lifestyle offerings via video; and “more of everything” in the Digital Lifestyle accessories sector-sorted by theme and with a “Try it!” wall.

During the course of 2013, as part of optimising the network of locations, the number of shops operated under the mobilcom-debitel brand was increased further to 553 at year-end. At the same time, following the GRAVIS acquisition at the beginning of the year the business year was dominated by the development of the long-standing exclusive Apple dealer into a more broad-based Digital Lifestyle provider—with the goal of optimal customer proximity and support at its stores.

To this end, in a first step in early September GRAVIS opened two exclusive 20m² “shop-in- shop” concessions for Samsung and Sony at the store on Ernst-Reuter-Platz in Berlin, where the two Asian premium manufacturers present and sell their product lines. Meanwhile, selected mobilcom-debitel shops are supplementing their range of Apple products, and the freenet online platform vitrado.de has added the GRAVIS range to their site’s sales portfolio at year-end. The aim of the closer integration of the shop and sales product ranges is to show users bridges and links between the complex individual product lines from different manufacturers, present and explain them to the customer, and provide in-depth consultation and support in the process.

As part of this, in early summer mobilcom-debitel launched an app for advising customers on the tablet, programmed in-house. It ■■ analyses customer’s current usage patterns taking into account existing data protection policies, ■■ draws conclusions based on this and ■■ uses this to create a custom offer, ■■ documents the consultation process and gives the customer the documentation as a printout or by email ■■ as a basis for a later contract.

freenet AG · Annual Report 2013 Digital lifestyle and mobile communications: Comprehensive services 13

The in-store smartphone and tablet displays also ensure greater effectiveness and visibility/tan- gibility. The “mini InstoreTV” multimedia info app uses them to showcase the special features of each device in detail; the customers can test the real devices in detail and with accessories, while the sales consultants use the displays for their sales pitch. mobilcom-debitel is also pursuing innovative approaches and concepts with new flagship stores at Dusseldorf airport and a Wuppertal shopping centre. At it first airport store, the company is focusing primarily on service and accessories—keeping in mind that travellers generally need chargers, car adapters, headphones, carrying cases and small gifts rather than contracts. Of

freenet AG · Annual Report 2013 14 Digital lifestyle and mobile communications: Comprehensive services

course, they also have the latest smartphones with tariffs, and a free, lockable battery-charging station as a special service. The concept clearly works, as shown in the fact that sales of accessories are double those of other locations. Meanwhile, in Wuppertal there is an open shop in the walking area of the shopping centre—with its own innovative design concept and a focus on Digital Lifestyle products and accessories.

A distribution collaboration that has been tried and tested over the years—the exclusive partnership with Saturn and Media Markt shops—was extended ahead of time last year, by at least three years. As before, mobilcom-debitel exclusively sells the original tariffs of the operators T-Mobile, Vodafone and E-Plus alongside its own mobile communications tariffs and products at all Media Markt and Saturn branches.

freenet AG · Annual Report 2013 Digital lifestyle and mobile communications: Diversified customer approach 15

Diversified customer approach

The many different initiatives to optimise customer proximity and support also include the company’s Erfurt training centre, where each year about 2,500 employees receive training and coaching in customer service and sales, based among other things on the findings of regular mobilcom-debitel “mystery shopping” tests. The centre, which is one of the most state-of-the-art in Europe, was fitted with the latest technical equipment, room structures and look in 2013.

All these investments are paying off, as demonstrated not only by customer numbers, but also by the numerous awards individual Group companies have received for their service. For instance, mobilcom-debitel GmbH is among the three nominees for the “CCV Quality Award 2013” in the Customer Satis- faction category, Germany’s highest award for call-centre organisations.

GRAVIS, meanwhile, was the top scorer for “service’ in a survey of 1,600 customers of electronics markets—alongside ElectronicPartner, a long-standing mobilcom-debitel sales partner. GRAVIS—together with Media Markt— also topped the “Range and products” category.

And last but not least, for the second time in a row the subsidiary klarmobil GmbH won “Website of the Year”—the most important German online audience award—in the”Telecommunications” category with their klarmobil. de website. Around 300,000 Internet users had voted klarmobil.de “Best Website of the Year” and “Most Popular Website of the Year”.

freenet AG · Annual Report 2013 16 Digital lifestyle and mobile communications: Diversified customer approach

“Gemeinsam geht mehr!” (Getting more together!) is the slogan of an umbrella campaign launched in 2012 to systematically communicate mobilcom-debitel’s positioning as a Digital Lifestyle provider, based on the purchasing power of around 13.3 million mobile communication customers. This slogan also sums up the variety of marketing activities with which the company coope- rates with its sales partners to establish and shape the dialogue with its customers.

As part of the campaign, several series of TV commercials were run during 2013 to advertise mobilcom-debitel’s Digital Lifestyle products—such as the SmartHome box for mobile heating control and the WetterApp weather app—as well as the company’s inexpensive flat rates. The individual spots were each served several hundred times all on the popular commercial channels.

In November the company received a coveted gold POSMA award in the Services category for the campaign kick-off, with well-known representatives from retail, trade media, science, industry and POS agencies (POS, point of sale) honouring the POS measures, decor and bus tour of German cities. In addition, it won a bronze POSMA Award in the “Personal Promo” category for the “mit Biss” (with zest) Apple tariffs promotion, which involved staff handing out “branded” apples advertising mobilcom-debitel’s “mit Biss” tariffs, to Apple fans standing in line for the launch of the iPhone 5.

In the summer of 2013, klarmobil GmbH also launched a new campaign with the slogan “Günstig in Gut” (A good kind of inexpensive) with the underlying core message of “We are the best among the inexpensive providers.” Comparable to the main mobilcom-debitel markets, this is under- pinned by the freenet subsidiary’s strategy of focusing not only on pure price-positioning in the market, but also on offering very high-quality mobile communications in the low-price segment, with excellent service. For instance klarmobil customers are offered a choice of tailor-made low tariffs on all German mobile networks. And the new, low-cost customer hotline emphasises this focus on combining high quality standards with an inexpensive range of tariffs.

The bus tour through German cities mentioned earlier has been an integral part of mobilcom- debitel’s marketing mix since 2010. It has proven to be a powerful means of increasing footfall in the shops of the cities it visits, resulting in sales increase of between 70 and 100 percent. In the past financial year, the company continued its journey to Germany customers—and created another highlight with the launch of the SmartMobil-Tour in September to coincide with IFA 2013.

freenet AG · Annual Report 2013

To our shareholders

Letter to shareholders...... 22

Interviews with the Executive Board ...... 26

Supervisory Board report...... 39 freenet AG and the capital markets ...... 45

From left to right: Joachim Preisig, Chief Financial Officer (CFO); Christoph Vilanek, Chief Executive Officer (CEO); Stephan Esch, Chief Technical Officer (CTO) To our shareholders To our shareholders freenet AG · Annual Report 2013 Report AG ·Annual freenet 22 To our shareholders : Letter to shareholder : Letter ■ ■ ■ ■ ■ ■ ■ all indicators: We corresponding and of key have our exceeded or met targets cial year 2013. Given this challenging positive balance finan the for market avery draw we can environment, rates increasingly by flat by in customers. demand supported this is factors, other panies in traditional business our communications. of mobile Amongst revenue of com service with along the years market, across several for the trend a downward To date, as aresult of on this intense has been average (ARPU) user competition, revenue per aggressive. also but less parent predictable, and it is likely going form anew trans abit forward; more to become competition in industry our during year the that has began given providers undiminished the consolidation network among intensified financial year. again in 2013 the dynamic developments extraordinarily The These opportunities. great by also but challenges, and intensity competitive enormous by racterised we have in successfully amarket that operated decades since cha- liberalisation has its been telecommunications network-independent largest in the provider Germany,As over for two shareholders to Letter ■ ■ ■ ■ ■ ■ ■ paid and no-frills segments increased by about 260,000 and is now at 8.76 million. is and at 8.76 now 260,000 increased by about no-frillspaid and segments company, during year, the gratifying: in post is ofthe customers particularly number the indicator our for akey ownership of base, customer our performance development The market. overall has but proven relatively euros, resistant is compared to with the down ARPU 22.3 Postpaid flow. cash of free percent 75 and 50 in company’s participate success the shareholders to tune the of between financial year. 2012 forthe flow) cash This is of in having line with financial our policy share percent of free (66 dividend-bearing euros per of 1.35 adividend In May we paid out is slightly million flow cash guidance above our free 2013. for euros, At 256.2 million level thus year’s previous and within the on was euros EBITDA guidance. our At 357.4 22.9 percent. year—with million is prior above the gross profit margin euros, agross of profit At 731.2 TM beginning at the revenue MOTION and consolidation year. were of the the of GRAVIS percent year-on-year in billion drivers Key byRevenues rose 3.5 euros. growth to 3.19 s - - - - 10 euros a month, on Vodafone or Deutsche Telekom’s Vodafone networks”. on Deutsche or amonth, high-quality “D 10 euros an for extra month—and euros per to 39.90 are available at transparent prices of package 9.90 rates— four flat “premium and Allnet”. These “classic Allnet”, “real Allnet” Allnet”, “comfort debitel’s between suite Allnet year, choose last of rates launched customers lets example, for business communications. of mobile mobilcom- in legacy our offers our for is true same The fees. monthly reasonable at very terms—each and packages ons, in different-sized versi above listed products entertainment and security home-automation, while to ensuring precisely the theirthat profiles user correspond high we offer flexibility. So in advising according customers to their making offers individual targeted them needs—and provider, aDigital responsibility, special our Lifestyle core we see and As competence strength ■ ■ ■ ■ were offerings new outstanding year’s The services. and waves with innovativesome products madewe continued and to establish an additional revenue stream company our for in 2013, with their fascinating features, tablets and In this which to area, us brings closer smartphones ■ ■ ■ ■ ■ ■ include together likethis fit to of They acoherent pieces amosaic success. form overall These picture. in of recent strategic decisionsA number are years months and actions for responsible and ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ genres, or to a variety of the latest of Gameloft. the premium on to or games avariety genres, which access MusicFlat gives md users tothe GameFlat, and over million 20 all from songs protection; data German possible Germany, best the provides therefore and telecommunications or change provider. your in network device, operated and It is hosted reliable for if you retrieval of and applications—even your and data storage Cloud own md monitoring mobile for grounds while and are you of your away; home phones with fornight infrared high filming, camera built-in and resolution SmartHome the micro by adding components; network into SmartHome acomplex extended flexibly be can control contacts—which window and units adapters, thermostats, radiator app—with intelligent for control box via smartphone energy home SmartHome the market. growth Digital Lifestyle attractive of the resolutethe development commitment toinvestment as with well their exemplary company as their and customers, reward this who employees, forour of range services training and wide the programmes approach, proximity customer customer and to ongoingthe improve processes service, customer smartphones, cards to high-end SIM customers—from communications of mobile to cover needs brands and different the an ideal mix of services in communications, mobile customers valuable contract on focus deliberate our AG’s acquisitionsfreenet prudent financial year, in past the To our shareholders - - : Letter to shareholder : Letter freenet AG · Annual Report 2013 Report AG ·Annual freenet s 23

To our shareholders To our shareholders freenet AG · Annual Report 2013 Report AG ·Annual freenet 24 To our shareholders : Letter to shareholder : Letter nership with Media-Saturn Deutschland GmbH for at least three years. at for three least GmbH nership with Media-Saturn Deutschland in summerand to we were the able sign exclusive an early of extension long-standing our part onlineleading retailer German communications in mobile the telecommunications and sector, a we TM, acquired In spring, MOTION channels sales our in 2013. strengthened We also further content. up international opens and reach, potential customer and communications mobile for services and range product freenet’s This extends platform. advertising countries mobile own via50 its million in than more customers 100 around reaches and digitalmobile formats, entertainment leading of suppliers world’s is of the Group one the in Los Angeles, and Berlin offices With step systematic in this is recent our acquisition direction DigitalA further Group. Jesta of the communications. of mobile revenue core towe business generate cushion lucrative price added pressure the in legacy our In this way, support. advice and independent with expert, developing them and accessories, This is lines consistentres. including integrated customers product with goal our of offering sto GRAVIS with Samsung Sony, and starting at selected premium other for manufacturers, provider. we are Lifestyle graduallytal integrating For example, exclusive outlets shop-in-shop exclusive into dealer long-standing developing the acompleteWe Apple Digi are also further of stores. our to most GRAVIS from portfolio product Apple of aselected sale the expanded then and world, Apple the for systems with “shop-in-shop” stores mobilcom-debitel we fitted step, ter positioning provider. as afirst aDigital Lifestyle As acquisition the Meanwhile, beginning at the year of the of has GRAVIS given us abroader, bet tangible customer. for the experience into shop at the a offered Mini Instore tablets and which TV, turns features the of smartphones year, e. financial in past of shops the our of We this. continued technology the upgrading are also part continuousOur initiatives shops at the to improvements and proximity customer support and deliver claim our choice”—we on in day-to-day our consultation work. online, which we really have So give “alwaysright do the many won customers awards in tests. bookable discount our mostly even subsidiaries inexpensive rates, handset, more a new offer not require do advice or special who discount. For customers at a10-percent tariffs—usually original as well carrier’s as the smartphone, purchase of alate-model the and upgrades, ous Additional options include achoice of any in communications Germany, mobile network vari g. with the new app, developed in-house for sales consultation on the tablet, or with or consultation sales for tablet, the on in-house developed app, new with the g. s - - - - - Christoph Vilanek shareholders. and business partners of customers, in our doing interests so the to devote AG—will all all and of freenet of employees commitment our Board expertise and Executive team assurance with and the that we—the as experienced in years, previous hened, with in We astrengt so industry. our do opportunities enormous of use the possible best the to make sustainable for profitability—and in current with strategy the year our beyond and challenges the telecommunications to of determined the and We meet are market confident million million 280 euros financial for year265 approx. and euros 2015. financial for year 2014 to reach approx. is expected Free flow cash million of 370 and around euros for2015. year 2014 Accordingly, we are aiming million of approximately EBITDA Group for euros financial for 365 slightlyto be year-on-year down to and stabilise in financial year 2015. current no-frills)paid and the for financial year ARPU is expected while postpaid years, in both (post ownership base customer increase in important the amoderate to see We expect 2015. thisOn we are basis, aslight for striving increase in and consolidated 2014 revenue both for positively. interest cover ratio—developed equity and Moreover, ratio, debt financial year in key 2013 the indicators of financial our strategy—the inuing AG’s freenet years successful and in ahead. months course the initiatives we have laid to to an excellent customers, optimise foundation cont for services our other and thisWith of range strategic decisions acquisitions, and associated products, the new Joachim Preisig Stephan Esch

To our shareholders - - - : Letter to shareholder : Letter freenet AG · Annual Report 2013 Report AG ·Annual freenet s 25

To our shareholders To our shareholders 26 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Boar Executive the with : Interviews Interviews with the Executive Board Executive the with Interviews d Digital Lifestyle and products services.” offer “We customers integrated worlds of Vilanek: Christoph

And there’s no end in sight end to no boom? this there’s And

first time. first of magnitude reach relevant orders the for field attractive revenues we saw in in and this 2013 increase over 2012, an extraordinary us from as That’s well. additional services of avariety bought customers percent of contract our 10 that than more we also observed in 2013 And applications. new producing ineconomy app the work of developers billion globally, apps on $26 around tens and of thousands spent users tablet and smartphone make in 2013, possible: are applications that the this will important more much But will statistically each byso German have then 1.6 contracts. percent in 2020, 160 to rise to aprojected is expected racts communications formobile market cont penetration The year, last momentum. further report gained have indeed right in sector, here this which we described Lifestyle tal quantum the LTE So device. leaps in Digi the supporting are already customers using percent of contract our 20 a million than 26 more fascinating of these more all-rounders. of few in year months last and last bought they the alone than million 62 More currently smartphones— use Germans applications seems practically unstoppable. intelligent their and smartphones of advance umphant tri the months, twelve past of the trend at the Looking - - - a lot of money—and then to do more of it. That’s what we are trying to do. what we are trying That’s of to it. more then do a lot of money—and is realising Awise man that oncetencies. said strategy earn you at where and what are you good core our on is compe and based one, it an is and important right But munications. the addition, reach of amagnitude revenue sales and that is even remotely com of to mobile comparable those have and here, in towestaying ideas—it our power time trust will before take some probably it is as But inwell. also figures our that becoming evident a great we will deal of need reflected to be success monitoring. is The starting home for of this strategy camera IP app-controlled intelligent for box an control, and home-heating SmartHome the Cloud, md new our included mainstay of communications—last business traditional mobile alongside year, these example, for as asecond services and We highlights new are setting by accelerating products Digital Lifestyle stories. few growth of the one be segments—can other on impact This also its means that thisin communications industry—including mobile contracts. to due increase the solely was product in gross domestic percent of growth 6.3 to 2012, 2010 from years in three the communications of mobile growth: in GDP it to comes proportion when the Economy top recently in that occupies industrial the spot found Germany the countries surveyed is source of the key In asurvey, Institute impetus. industry the our nowadays German of the chemistry—but and motor such engineering, as vehicle mechanical industries manufacturing, As ever, unionsAs business to associations prefer traditional key on focus trade and policymakers optimistic. successes make our strategic goal—and in very 2013 me of AG’s thisis freenet as development well asapplications, nursing part Being health. and care include at-home here focuses The cloud services. and products Home forSmart yearthe 2020 percent through 12 around to be euros in Europe by 2017, with annual expected revenue growth solutions at over 4 billion Home volume of such sales Smart possible the peg Current forecasts devices functions. and electronic sector, i. Home Smart that only referring was to And the consulting D. it. Little pithilystate,” puts firm Arthur as the market with all Digital potential Lifestyle ofThe its applications is still in abit of an “embryonic e. the intelligent networking and mobile control of all home electrical and intelligent the e. control mobile and of electrical all home networking the past several years! past the for pursuing been it has strategy the with target is on freenet So in this area? this in potential of growth plenty there’s So Germany’s economy and growth? have this for does implications What To our shareholders : Interviews with the Executive Boar Executive the with : Interviews - -

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To our shareholders To our shareholders 28 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders What exactly does that mean? that does exactly What coming everything’s So up roses? tailored to the needs of the customer. of the tailored to needs the transparent terms is available all very service at this And AG lie. freenet such as provider of aservice opportunities and challenges the is this where So : Interviews with the Executive Boar Executive the with : Interviews do when they switch to Vodafone. However, users who choose our new md Cloud receive switch they exem Cloud to when md do Vodafone. new our However, choose who users as just T-Mobile all moves data, to lose their they cloud stored customers Samsung, the use who customers Apple if former For example, providers. network or of deviceconcepts manufacturers incompatible clearly think illustrated Just be fragmented, usingof can That the a few examples. way. other, the on in and an And understandable experts properly to explained customers aren’t innovative automation in hand, home ses applications marketing. their one and benefits the On easy. too be would That We are many resources deploying our where competitors have weaknes That isThat for. what we strive Incidentally, this products. is Digital other our for Lifestyle also true smoothly. runs everything that which may they provider switch to later. adevice change when we help ensure is And pending, currently in future, or matter prefers no the customer the network or tablet which smartphone, laws—like matter No protection data an ofGerman umbrella Digital world Lifestyle. through the accompanies Cloud henceforth—under our them ways than more one: security—in data plary Management”. Experience Customer is credo “Multi-channel Our lifecycle. product and customer tangibleand entire in the all throughout pitch, but their justin sales fascinating the facets—not to customer. the traceable We want to make features the understandable, of Digital Lifestyle all accordingly and interfaces we arefactors; making this of business our focus the workflows proximity customer are crucial focus and the Forcompetitive us, it. we see how exactly That’s exception. are the while joint Internet and companies projects their concepts, own providers each pursue telecom in which manufacturers, equipment of range suppliers, fragmented criticise very the mises can also be configured or adapted according or configured mises individual also can be needs. to user’s the pre outdoor monitoring and mobile for home of one’s camera IP app-controlled new focus! Our by heatingpercent overcut bills. at 20 customerthe year’s previous is That least the costs true guarantee basic on communications charges mobile monthly ifmoney-back the control doesn’t We also application. give the to him expand wants user a if the request on expanded be can but Take forintelligent box heating SmartHome our control via It is app. available in versions, various d

- - - ■ ■ is That why service. of customer element is still contact an incredibly important in-person convincedI’m that alocal, cation customers and are and in customers cation an excellent competitive to position realise goals. these provider, Digital million Lifestyle we reach communi 13.3 around independent mobile atruly As ■ call centre to experience closeness to the customer first-hand and learn from the process. to first-handcall customer the from learn centre and the closeness to experience in or the partners with sales our that managers our in regularly demand shops, our work I also day,phy every to bring it We to customer, are life, to forthe there so speak. not vice and versa! single philoso implementing excited We to corporate employee our want every be us about on. of which contacts user channel the service—regardless customer faster to ensure efficient, more with projects Or at integrated our geted training training workshops and centre courses in Erfurt. ■ ■ ■ we offer them integrated product lines all from devices acces and relevant providers—from integrated them product we offer evenwe want to easier, be to reach; customers for closer and faster equipment and features of our shops. our features of and equipment it to comes technical when as the possible systematically as being state-of-the-art on we work tation; consul to comprehensive, applications, and objective appropriate tariffs to favourable, sories customers “the right choice”—this “the customers We always give euros amonth. 9.95 foronly“T@ke-away Flat Upgrade” mobilcom-debitel with the GB by 1 volumes data their increase can options, Digitaldiverse Lifestyle given increasingly the tariff chosen volume data of available the in their anyone encounterslimits the who example, For applies. same …the example, by hosting systematic, tar by systematic, hosting example, For employees. our with lengths Yes, why we go that’s to and great care. and support customer real define and AGis we at how understand freenet the the forward the continuous improvement of you are driving time same At the smartphones and thesmartphones like... using for tariffs the for And employee, though! single intoput by practice every Which in turn to genuinely has be mobilcom-debitel chain of shops. mobilcom-debitel To our shareholders : Interviews with the Executive Boar Executive the with : Interviews - - - - -

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To our shareholders To our shareholders 30 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders Digital Lifestyle company, the Jesta Digital Group. company, Digital Lifestyle Digital Jesta the And at then year-end, you another added customers. for selection possible best the of having background the make sense against year financial last acquisitions of the the So : Interviews with the Executive Boar Executive the with : Interviews mentation of “Always our mentation vision. right the choice!” as an too, excellent this, keting, Isee imple in purchasing marketing the and services. of media in communications mobile mar direct and expertise Jesta’s from we benefit time, same At the is up opening international potential customer content. and communications mobile for services freenet communications mobile So content and companies, providers. operators, fornetwork ner part reach and make business it model an attractive its and countries, in than 50 more customers million currently Ads Motility 100 around reaches platform company’s advertising mobile The platforms. premium fordownloading dating content, mobile and advertising and aportal videos, and games tions: of digital users for - applica of and services digital formats of leading-edge pliers entertainment leading sup group world’s is the of the one in Los Angeles, and Berlin Yes, offices with its extending the Digital Lifestyle worlds at our mobilcom-debitel shops. at mobilcom-debitel our worlds Digital the Lifestyle extending tinuing that we are steadily path time, down also step enhancing by and same At step. the and stores—and are con flagship now doing thisSamsung Sony. or in selected already We’ve started such as premium other for der—for manufacturers with exclusive outlets example, shop-in-shop company developing the into proviare systematically now further acomplete Digital Lifestyle We by exclusive taking over retailer long-standing GRAVIS. we began the Apple In early 2013, Jesta’s range of services includes ringtones and dial tones, logos, full-track mobile music, logos, dial and tones, ringtones includes ofrange services Jesta’s d

------thereby further increasing their margins for us. for margins their increasing further thereby automation home and solutions in particular, chain value to the shape we ourselves— also helped However, Cloud mobilcom-debitel of the comprehensive advice and in case the services. expert customer—in the for packages criteria, our we turn into with them meet conjunction attractive Essentially, right. IftheyThat’s we keep scanning market the forinteresting, innovative products. encouraging start! A very untilin year, last shops our sometime have they already tens generated of millions in revenues. heating mobile for Music Flat box Flat md GameFlat control, the the and SmartHome our Cloud, such as md own our selling key products Digital launch start or Even Lifestyle we didn’t though acquisitions smart few years. some in past we made the finally, And services. and products of in Digital form the Lifestyle segment new, dynamic growth We are also developing a even efficient. more sales and services making internal our processes, we areacquisition time, constantly working on same At the management. base customer and are“We resolutely advancing the development of our company!” Preisig: Joachim deliver better earnings, in customer earnings, our deliver better which relationships, contract high-value on stage— early an focusing—at began we First, to this. proactively We responded communications. mobile in traditional years declining has for been (ARPU) customer per that average true revenue It isnation. indeed determi utmost with into the them practice we put then And strategic decisions. rect It’s not so much a secret as a bundle of cor as a bundle a much secret not so It’s By doing what? Digital Lifestyle products. Lifestyle Digital innovative for costs development provider, incur any major doesn’t aservice as Especially since freenet, current in the figures? is reflected this How behind this positive performance? performance? positive this behind secret the What’s again. revenues sing its increa even recently most results, stable delivers however, continually freenet, falling have years. been for industry Earnings in the mobile communications To our shareholders : Interviews with the Executive Boar Executive the with : Interviews - -

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To our shareholders To our shareholders 32 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Boar Executive the with : Interviews d Customers will pleased! be What were the main areas of focus in of 2013? focus main areas were the What shops. in the offers and services on especially in focused area this projects initiatives and freenet’s that, year before financial the In processes. Talking efficient more about On the other hand, the launch of our Balance project was launch the of Balance our project hand, other the On sales. and service intrain of coach consultation, and employees matters our telecommunications This industry. means better we can in European the state-of-the-art most already of the one features whichand was of training our centre in Erfurt, rators at a discount. a at rators ope count of network subsidiaries original the and tariffs dis our and rates of mobilcom-debitel ding—the attractive is pen full contract the of range anew choicesthem when especially switch, since we give doesn’t customer satisfied clearly contributeprehensive to service customer this: a to com provide efforts systematic Our than saturated. market is German the more segment—even though mer valuable custo most our in Ownership, Customer growth sustained We seeing are satisfaction. customer improve assumingI’m In goal any is the so. to case significantly goal. its as tion - solu possible best and as asingle fastest with the process centres concerns writing or teams, customers’ that treats e. departments, different the between boundaries a single, central processing that eliminates system the weting are term, working medium towards In strategy. the into brought or matched, balance, by an intelligent rou are concerns staff skillscustomer the and of service our To to deal prepared withand their request. achieve this, trained isquickly to who best as employee possible the as routed letter, or be email, fax should customers phone, by tele is contacted service the Whether way: efficient convenient andcerns in flexible, customer of amore the aim is Its to manage con the keyanother in focus 2013. vice. On the one hand, we again upgraded the technology technology the we again upgraded hand, one the vice. On ser customer on of recentlyafocus more was there Most

g. callg. ------that in expires 2016. million which largely euro then ensures bond 400 repayment of the the down, euros drawn to be million credit line agreed newly allows a total for The of 300 which in due comes 2014. euros, allows us to 2013 prematurely repayin current December the credit line of initially million 240 measure capital concluded The note million with avolume of 120 promissory euros added. was a multi-year turn at year the of the Then 2012/13, including bank loan acredit line, abond. and pillars—a fixed-interest large, two latter on has the rested Since financing. 2011, its diversifying and systematically debt working on reducing Group’s the Yes. been we’ve years For now several flow. cash free our from Weterm. are paying forthis current million our from of investment 20 budget euros ayear, fed in medium to the will shops and 750 of mobilcom-debitel increase upwards, and number the inhabitants we are increasingly Now cities. major German moving into smaller towns of 30,000 in focused are mostly main brand the under mobilcom-debitel operated shops currentour 553 For instance, sales. stationary our by to strengthening years—especially three two over next the impetus created growth by the acquisitions,Besides we will also continue to organically develop revenue ideal way. contributions in apractically communications Digital our mobile Lifestyle business strengthens and ARPU-driven traditional, the on purchase AG also dependence ket our reduces multiple The group. freenet EBITDA the for current mar the stock is below Digital transaction multiple EBITDA Jesta underlying for the the acquisition Jesta takes The place of financial within our policy: flow. cash free parameters and the acquisition AG’s makes freenet on usually and EBITDA strategic sense positive impact has adirect Basically, potential our we areExactly! restricting interest to companies reasonably priced whose offerings. Group’s freenet the for groups customer international and national new up open simultaneously and reach, their increase tions, - applica Digital of mobile Lifestyle strategic portfolio our expand products Jesta’s their users. for of and services is digital aglobally formats leading of leading-edge provider entertainment Digital Group Jesta the in Los Angeles, and Berlin offices at its employees 300 around With task: year, an of exciting the end At the Digital added new Group to agreement purchase the Jesta lines of shops. our product with range the product GRAVIS the merged or that we supplemented months followed In the retail products. leading chain the German forApple online TMthe GRAVIS, and retailer MOTION First of all, there is “integration work” to be done, as in 2013. Early last year, last Early taken aswe had in over 2013. done, to be of all, is there First “integration work” activities has a different background! background! different a has activities AG’s business freenet refinance to recent loan syndicated the So agenda? else your is growth on What conservative strategy. financial AG’s sound, freenet maintaining while All What’s next—thisWhat’s year that? and after To our shareholders : Interviews with the Executive Boar Executive the with : Interviews -

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To our shareholders To our shareholders 34 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders And the targets for 2014 remain unchanged? 2014 for targets the And goals. your achieving other for foundation solid financial apretty That’s : Interviews with the Executive Boar Executive the with : Interviews financial year, and we don’t plan to change that. that. to change plan year, don’t we financial and policy,in which dividend our we want to distribute We as an in annual past did so the dividend. flow cash of free to ofin 75 percent company’s 50 is That success. the why abandwidth we set to appropriately participate we shareholders want our as million before, And year to euros. 365 to increase we are again, to striving Yes. current increase the revenuefor EBITDA expected With fore corridor—while continues of target our end is lower ratio at to the debt 1.2. the be million euros there and is at 427.2 now fewwhich years, dramatically over was past reduced the debt, net our and percent, we haveAbsolutely. ahealthy of ratio currently 50.0 equity Besides, d

- protection than other nations. Besides, our country—unlike, say, country—unlike, our United Spain the and Britain, Besides, than nations. other protection sensitive are in are extremely this committed therefore Germans more to regard—and privacy totalitarian of two century, in last experience states our the we Ibelieve are. that after we than countries other more their no Actually and citizens, emotionally but psychologically and transparent timely and invoices—month month. after correct, applications and we naturally customers have our towith their send innovative aduty products other, the On in centres. data our even lines in new of the business effects of synergy advantage we obviously want to take hand, one the On products. launchchain—and the of Digital Lifestyle acquisitions—such this integration by retail followed In the 2013 was of further GRAVIS as the form. present into in Group its viders freenet pro service separate of three merger IT, the and systems IT merging with different of the three exciting in terms forus anyway of very ones few years have past the been Although right. That’s „We are adata security trailblazer among German providers!“ Esch: Stephan specific products. specific year manifest in past have and the become during emerged have further industry our for up opens thatDigital the Lifestyle spectives fascinating the time, dimensions per and as well as ever months for since. same At the discourse as wellpress socio-political as the international and national the dominated meaning—and new hastaken awhole on term big the has data nowEdward Snowden, With in and ways than more one! Indeed, in apositive way? exciting been AG it’s freenet for So Germans particularly hard hit? are we phone, Merkel’s of Angela tapping wire the beyond revelations; employee’s NSA wake in the former of the outcry public was ahuge there Germany In especially true in 2013. true especially exciting business—and this was probably an always has been Internet the and to it communications relates IT as mobile To our shareholders : Interviews with the Executive Boar Executive the with : Interviews - - freenet AG · Annual Report 2013 Report AG ·Annual freenet

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To our shareholders To our shareholders 36 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Boar Executive the with : Interviews d mobilcom-debitel has offered since spring offered of has 2013? mobilcom-debitel that Cloud new the also for apply features security special So to join. companies first of the was one which freenet in Germany”, made to “Email initiatives such as Add that provider... safer aGerman feel with they Because shift of users away from U.S. email providers… email away of users from U.S. shift well asignificant as as protection privacy more for several have been initiatives there aresult, As The firm Convios Consulting percent of Ger firm that found 10 The ofincreases users. our percent in number of up the to 80 revelations Snowden the monthly we saw after instance, For beneficiaries. of the one has been freenet and ..., Germany. tofew exclusively providers store this in data customer We very of are the one in office. or the at home tablet, or their smartphone anywhere—from access anytime, them can customers Our music. and photos, appointments, documents, data, for storage online of dimensions various we provide of afew euros, fee monthly For alow Indeed. session. entire customer,the for the during plus SSL login request on and for mail servers communication tocolbetween to encrypt pro Law. We Protection TLS Data also the use German the in accordance with data store maximum the with privacy and centres, data in hosting data secure German We offer toago, we committed basicregarding ourselves rules this. than in of ten security. matters man years More providers We have of atrailblazer being tradition along Ger among in Germany. are located server and jurisdiction provider’s if applies the Act Protection Data German the authorities, at local for least us, With cerned. ... future. near were at considering least a quarter such a change in the nearly and to planned switch definitely or providers, ched email accountsswit had American had who mans surveyed rity purposes. rity likelymore to accept intensive monitoring data secu for are by them Apparently, countries the affected decades. States—has been in massive recent spared terrorist attacks which they in fact are as far as data security is con are as security as data far which in they fact

------Exactly. First of all, our own security experts at freenet AG at are IT freenet meant to ensure Beyond this. experts of security all, own our First Exactly. We essentially hand them the best preconditions the cracking for systems—showing our them We essentially best the them hand accessdance potential the information and without data. but about vulnerabilities in system, the We also give groups. additional insurance gui them companies energy and at banks, experience drawing their on in gaps for systems, our in Information Technology(BSI)—search Security for Office Federal by the certified to so speak, This involves attackers, IT hackers”—benign “white third over the for months several year tests running. this penetration this, year we are performing collapsing systems IT our overloads. or as aresult of attacks internal on company communications.attacks customer and data We also must avoid at all costs smaller, to off fend Hardly. attempt to must best and our we can do “routine” as abusiness, But really. to to that, add nothingThere’s left to always during relegated game.”big a side the table roulette aren’t data they so Americans, to British themselves the and intelligence German offer the services servilely FAZ wrote: “How the November Last are believed. to be reports press and if TV case, the to appear be would That nication for everyone. easily and information commu forvirtually and endless - accessible flexible as network aglobal, via Internet the success of traffic data outstanding basic the the and idea this contradicts des, Besi instance. for in available on England “detours” connections America or low-cost for looked has which frequently in past the traffic, domestic to with able German cope be longer no would individual the ISPs between exchange local points the because man higher hubs and fees, user However,that considered being was at times. this require would investment considerable in Ger countries—at to Schengen the least extended be could then Yes, Internet” later and this “German so they cannot be spied on as on easily spied cannot be they so any by more foreign intelligence companies. and services emails will data other via and sent domestic hubs in intee that only be Germany future, German ... which I’m not expecting too much from at the end of the day. of the end fromat much too the shield is The meant towhich not expecting I’m guaran field important or—an extremely viruses phishing, through For example, either. future, calls in emails the and data, atotal be shielding of our won’t there So anyway! out services secret the to keep impossible It would be management. to traffic ensure national networks their merge in totors Germany directly opera network This would require the be working on… working be claim operators to network German of the some that shield” protection “Internet the initiative, another yet comes now And idsra espionage. —industrial To our shareholders : Interviews with the Executive Boar Executive the with : Interviews - - - -

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To our shareholders To our shareholders 38 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders in the best of hands at freenet?! at of hands best in the are partners business and customers So : Interviews with the Executive Boar Executive the with : Interviews can to ensure that the “good guys” always stay one step ahead. always one stay guys” tocan ensure “good that the we everything we do AG, At freenet as possible. piewith want apiece of as effort the little who criminal and hard work their for goals who businesses and achievements, elements and people honest Basically, evil; and between good in as in IT real between life race is there aperpetual irony. which has acertain in their ranks, own againstselves theft data Clearly, them even intelligence protect longer excellence no can decades. for in security services containing of latter were considered paragon CDs The the the fromSwiss data customer banks. showed—or operator at provider a major network service by an external theft data year’s last to ultimately, ensure. But isThat what we try is one immune no against massive criminality, as impressively far. so haveheless—as they very done to IT, the giving without doors nevert akey. but strong them hold if systems our better the All d

- - ■ ■ on focused then Board half year, of the second In the Supervisory the ■ ■ reviewed these on the basis of the documentation provided. basis the on documentation of the these reviewed and plans targets, and the from deviations the business of the performance Board Executive the in discussed with detail Board In particular, Supervisory committee and the meetings. plenary Board proactively, and comprehensively and at Supervisory questions request answered on both Board, to Supervisory the documents and reports To provided Board Executive the this end, verbally in and both writing.ation, current and situ planning, strategic development corporate - company’s business development, sions management company, the of on the the on regularly and comprehensively and reported at in an early all stage Board deci fundamental involved Supervisory the Board Executive The governance. of companycorporate of the it decision-making in regularly and its asadvised part management Board’s Executive the continually Board monitored supervised and Supervisory The Board Supervisory of the Chairman Schenk, Dr. Hartmut report Board Supervisory ■ ■ ■ ■ optimising company’s financial the structure. and & acquisitions, in mergers acquisition especially the Digital Group current Jesta of projects the preparing the ordinary Annual General Meeting on 23 May on 2013. Meeting Annual General ordinary preparing the and 2012 December as of 31 financial statements a review the on of resolution and

To our shareholders : Supervisory Board report: Supervision and advice in an ongoing dialogue with the Executive Board Executive the with dialogue ongoing an in advice and Supervision report: Board : Supervisory ary meetings focused in particular on in particular focused meetings ary plen of the deliberations the half of 2013 first in the meetings, Board Supervisory various in the upon that decided were and discussed issues many substantive the Besides ciation. of asso it by articles law upon the and bent incum functions advisory and supervisory Super in the infinancial year years, previous 2013 As Board Executive an ongoing dialogue with the in advice and Supervision 2013. year during fi the activities its on reports Board Supervisory following, the In the visory Board diligently performed the diligently performed Board visory

nancial - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 39

To our shareholders To our shareholders 40 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : Supervisory Board report: Supervisory Board meetings Board Supervisory report: Board : Supervisory hed its own examination, the Supervisory Board raised no objections to findings auditors’ the objections no raised Board examination, Supervisory own the its hed having After finis auditing business. the provider communications mobile of the about service key as auditors who for some companies questions answered in Group the waterhouseCoopers discussion Price by auditing of representatives the The also KG. was firm &Co. attended GmbH RoeverBroenner auditor together with RBS auditing the fromthe representatives sed firm audit of the were results discus The 2012. December asconsolidated of 31 financial statements central the auditing of 25 meeting 2013 consulting March In and the annual were the and subject already had Committee beforehand. discussed Executive that the tion project acurrent discussed acquisi Board At Supervisory aconference the 2013 call 8March on session ■ ■ ■ included meetings board at discussed content regularly The meetings Board Supervisory Board. to were Supervisory disclosed the Meeting, Annual General notice and to Board the that require and would disclosure to Supervisory the members, Board Super and of Executive part the on of interests circumstancesNo that conflicts could cause committee. nel (HR) Likewise, in committees full met the person except of in the meeting 2013 meetings. one for fewer than half of the attended member Board inalways Accordingly, full. met Supervisory no Board Supervisory the members, Board Supervisory by eleven twelve of the which attended was high: exception with the extremely meetingwas of one period during reporting meetings the Board additionallyand decisions Attendance Supervisory at took the by procedure. written conference one and call meetings four actual held Board Supervisory In the financial year 2013 forcomplaint. gave company cause of the no Board Executive by the running efficient and proper, The effective kept of was currentand issues informed events. and future and strategic alignment Board, in Executive with regular the meetings prospects pany’s com the discussed Board Chairman the Supervisory of the Furthermore, formal meetings. the beyond latest of the business developments apprised members Board also kept Supervisory the Board Executive The necessary. formal resolutions where passed Board Supervisory the beration, review deli due and after and reports Board’s Likewise Executive the on based reports. Board’s Executive the on based Board to company the were in discussed great Supervisory by detail the of material business All significance transactions Board. consultationclose Supervisory with the business communications new areas—in of mobile possible the on identification business the and continued company’s strategic the alignment—i. Board Executive the Furthermore, ■ ■ ■ the Company’s financial position and funding situation. funding and position financial Company’s the marketthe competitive and situation and the current business performance e. the focus the e. visory visory Susat ------cial year 2014. cial year auditor of auditor the Group and forfinan election forthe proposal the in particular Meeting, Annual General resolutions the for Board Supervisory proposed with the 2014 Meeting General Annual agenda the for the included topics Other of this report. section financial yearthe 2013’ in ‘Audit are out Details the set annual of the for consolidated and 2013. financial statements ber annual discussion the Decem the was as consolidated offocus and 31 about financial statements main Its 25 on financial 2014. year, March held was 2013 of meeting the end the After aplenary term. current the of expiry the after appointments composition Board the Executive deliberating on of the started members Board Finally, Supervisory the 2014. December of 31 solidated financial statements of an auditor auditor Group annual and the for con election and the for 2014 Meeting General Annual at current the the status on of acall forproposals jointly Audit Committee the reported Chairman and of Board Executive The resolved. Governance Code Corporate German with the annual the of and compliance declaration also was adopted, budget 2014 At the this meeting, of earlier Committee. by Executive deliberations the subject the which already had Group, been acquisition the approved Board Jesta of the acquisitions. Supervisory the In this context, possible ideas about specific more presented Board Executive the 2013, 5December on Also 2013. of 5December meeting at approved its Board which Supervisory the euros, of idea optimisingthe by agreeing acredit company’s line structure financing the of 300 million topic wascould Another facilitate in core the business Digital inorganic and growth Lifestyle. which and it feels that it identified had Board acquisitionted several to Supervisory the targets It presen business. of Digital measures the with Lifestyle on focus development strategic further in and business in the performance detailon reported Board Executive the 2013 September 19 On Chairman committees appointed. were the newly and Deputy as the at which Mr.lineup new with the held, was elected was Board Mackeprang Knut Supervisory the of ameeting Meeting Annual General the For this after reason, began. workforce by the elected newly terms members the of and the 23 May on 2013 Meeting Annual of General the end the from with effect ended Board tenure Supervisory the on representatives The employee previous of the GmbH. mobilcom-debitel of Board Supervisory to the representatives shareholder as appointed Engenhardt-Gillé were Chief Nicole HR AG freenet Corporate the and Board, AGdinger Supervisory freenet fromthe Wei Robert and Schenk Dr. Hartmut members, AG Board tion to freenet Executive three the mobilcom- subsidiary of the Board Supervisory established newly of the to side capital the appointments about aresolution also adopted Board Supervisory the tatives, represen shareholder the Through to AGM. the proposed resolutions to be Board Supervisory the and 2013 Meeting keyAnother Annual of point General this agenda the for the was meeting were thereby formally annual adopted. The financial statements solidated financial statements. inand accordance annual Audit it Committee’s withthe recommendation approved the con and To our shareholders debitel GmbH. In addi debitel GmbH. : Supervisory Board report: Supervisory Board meetings Board Supervisory report: Board : Supervisory Digital ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 41

To our shareholders To our shareholders 42 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : Supervisory Board report: Work of the Supervisory Board committees Board Supervisory the of Work report: Board : Supervisory at four actual meetings. The members of the committee of the dealt intensively members The annual with the report, meetings. at four actual regularly latest Audit Committee the accounting discussed The audit and issues auditors with the Committee Audit in 2014. Board Executive the for ration remune variable of the initialand criteria possible targets the meeting for about deliberations contracts, employment Board Executive and appointments extensions Board to Executive the regarding possible talks preparatory on focused meetings two other The adoption. for Board sory to Supervi them the proposed and financial for year 2013, agreements target forthe parameters new determined in were remuneration 2012, met Board’s Executive of the component variable the for parameters to and the what extent committee whether the determined inmeeting 2013, first At its in convened (HR) Committee atotal for 2013. meetings Personnel actual of three The Personnel committee Digital Group. purchase of Jesta the on resolution Board’s Supervisory the discussions of preparation the in-depth on held committee the members things, other Among in 2013. meetings actual at two projects current discussed Committee M&A Executive The Committee Executive greater management detailin statement. corporate the in of each committee are described members and tasks general The four committees. other and up Committee has an Executive set Board Supervisory the duties, its fulfil toIn order efficiently committees Board Supervisory Work the of pliance made regular reports to committee. the pliance regular made reports internal management, managers for responsible risk fraud auditingthe management, com and current other issues level such Furthermore, as of about the financing. Board Executive by the were regularly apprised committee members The organisational the out activities. carried who involvement chairman, under Chief its Financial of and Committee the withration the Officer, in coope out close carried was process selection The auditor Group and financial for year 2014. auditor the of selecting process the on was focus the half of 2013 second Financial In the Officer. intensively discussed which committee the members Chief with the proposal, dividend the was half of 2013 Akey in topic Committee first the for the half-year interimthe the and reports. report - - - - formally adopted. are annual thus The financial statements 25 on 2014. March meeting at the financial statements annual the approved consolidated and Board Supervisory the dation Audit Committee, of the In accordance audit. auditors’ of the results with recommen with the the agreed and objections no raised Board Supervisory the management report Group the and managementthe report concluding audit annual the of the of consolidated its the results and After financial statements, information. further provide or questions to any answer Board supplementary Supervisory and Committee available material themselves the audit to on of made Audit the and the findings reported They Boards. by consolidated both the and annualof financial statements the financial statements in discussion auditors the participated The 25 on 2014. March meeting in its Board Supervisory by and the 2014 February to 26 on Audit by Committee discussed and the audit reported was The also was unqualified. management report Group of and the solidated financial statements international con IFRS audit the on of accounting these The based standards. HGB 315a section in were accordance prepared 2013 with December asconsolidated of 31 financial statements freenet AG The report. auditor’s auditors issued an unqualified The 23 May on 2013. Meeting ral chairman in Audit Committee of the accordance Annual by Gene the passed resolution with the audit commissioned was The by Hamburg. the KG, &Co. GmbH company RoeverBroennerSusat were audited auditing by consulting the AG tax and management freenet the report and (HGB), in Commercial accordance Board Code German Executive by of the the prepared rules with the 2013, to December 31 2013 financial year the for annual 1January from The financial statements for financial the 2013 year Audit of annual the consolidated and financialstatements Nominations not convened was Committee inThe 2013. Committee Nominations not convened was Committee in Mediation 2013. The Committee Mediation ■ ■ ■ ■ committee the For this purpose annual the audit. main to was Audit Committee’s of facilitate work The focus the support and ■ ■ ■ ■ as the proposal for profit distribution and the agreements with the auditor. with the agreements distribution the and profit for proposal as the annual the resolutions on consolidated as and well Board accounts, Supervisory the prepared audit of the and main the determined points auditor audit, of of execution the the the and independence monitored the Code, Governance Corporate German of the auditors by in the 7.2.1 accordance of independence astatement sought with section To our shareholders : Supervisory Board report: Work of the Supervisory Board committees Board Supervisory the of Work report: Board : Supervisory

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To our shareholders To our shareholders 44 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : Supervisory Board report: Changes to the Supervisory Board and the Executive Board Executive the and Board Supervisory to the Changes report: Board : Supervisory Chairman of the Supervisory Board Chairman Supervisory of the Schenk Dr. Hartmut Board Supervisory The 25 2014 March Büdelsdorf, commitment hard and work. personal their for all Group and of the employees Board Executive of the appreciationand to members the also would like Board thanks its to express Supervisory The professional and support. tructive cons and cooperation, their for good members all departed thanks the Board Supervisory The Stephan. Mr. Mr. Mackeprang, Knut Ronny Minak Mr. and Birgit Geffke, Michael were by and replaced Mrs. ended, Meeting Annual General the when Board Supervisory the from down stepped Witzmann Nicole Engenhardt-Gillé, Angela Mrs. Mr. Mr. Board. Vodel Mrs. JoachimHalefeld, and Steffen to Supervisory the Thomas Gesine Mrs. and Claudia Anderleit Mrs. members previous ted the company Group re-elec employees freenet 23 May on 2013. Meeting Annual of General the end the from with effect ended Board tenure Supervisory the The on representatives of employee Board Supervisory changes in were no financial year toThere Board composition the Executive 2013. of the Board Executive Changes to the Supervisory Board and the Executive Board of appropriation profit. forthe proposal Board’s Executive with the audit of the recommendation committee the agreed followed who Board to Supervisory the this, Subsequent auditors. the with it discussed and profit of appropriation the for proposal Board’s Executive the reviewed Board Supervisory the 25 on 2014, March meeting in its In addition, - - % 100 % 140 % 160 120 were under pressure to sell lately. to sell pressure under were backdrop in Accordingly, of Europe. an improved outlook economic markets European the bond already was positively against received market, the in European 2014 the equity ting January billion star to purchases $75 that announcement (taper) reduce it would bond monthly The its important. crucially remains policy monetary expansionary its from away Reserve Federal the regarding an incipient by However, shift indicators improved. expectations market participants’ as leading to overallrecession, road recently euro recovery the area on the most inwas general France for again increase deteriorated to due outlook in While arenewed the fears ofpurchases. that announcement bond monthly itreduce would Reserve’s Federal the and activity economic At year-end improved the from global international the once again markets benefited stock recessionthe in Europe also contributed to this. from recovery rapid a regarding forecasts Improved companies. US of results quarterly positive mostly the and policies, accommodative, expansive monetary Reserve’s Federal of the firmation again However,pressure. following mid-year received asignificant markets boost stock the reaf international the put temporarily underincreased interest markets government stock on bonds quarter, second In the policy, which initially markets. in bond tary to the losses yield generally led mone continued major central their expansionary banks world’s the that In addition, resulted. of U. expectations by market participants’ quarter, international the first Since of the end the were significantly financial markets affected markets financial International 2012) December =Xetra closing price 30 on 100 (Indexed; 1: Figure share freenet the of Performance markets capital AG the and freenet % 170 % 130 % 150 % 110 % 90 % 80 % Performance of the freenet share in share 2013 freenet the of Performance Jan. freenet AGfreenet Feb. March April TecDAX May S. monetary policy and the various economic signals economic various the and policy monetary S. June To our shareholders July SDAX August : freenet AG and the capital markets: Performance of the freenet share freenet the of Performance markets: capital the AG and : freenet Sept. DAX Oct. Nov. MDAX Dec. - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 45

To our shareholders To our shareholders 46 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : freenet AG and the capital markets: The freenet share freenet The markets: capital the AG and : freenet 18.07 euros in October, then from the beginning of November a new beginningdynamism euros a new the from in then it October, of to took November the 18.07 quarter, of avalue from share the fourth initiallyIn the starting asideways trend experienced units. 462,900 was of DBAG platforms volume the on average 17.95 euros was the and daily trading period Xetra closing price during reporting the average The with a closing euros. ended finally price of 17.89 quarter The euros. atAugust 18.60 euros during early July,closing falling peaking in and euros, price to of mid 17.03 of 16.95 alow in third remainedPrice with erratic the a quarter, development share started which freenet the units. 846,700 was of DBAG platforms the on traded average the and daily euros, volume average 18.10 was Xetra closing quarter price in second the quarter. of the euros end at reaching finally the The aclosingvolumes of orders, price of 16.78 euros with comparatively high to 18.00 price in of range share, was 16.00 the the euros per of 1.35 quarter, until erratically the AGM 23 payout May. on share the the dividend developed the After euros beginning at the of quarter. second the closing While the price in 18.96 was Xetra trading share not immune was freenet to marketThe the during environment of heightened uncertainty units. 563,200 was AG (“DBAG”) Börse of Deutsche platforms the average on the and daily euros, volume traded 16.47 was quarter price in first the average Xetra closing The euros. dynamically to level of until the 18,96 quarter of the end the developed and euros in Xetra trading, Year New the share began The with aclosing price of 14.00 year. of the quarter share initially freenet in first The the quarter prior rise the from continued its percent) listed companies. (39 41 (29 percent) percent) MDAX and as well SDAX as the TecDAX the on (up stocks technology the financial year, 2013 In the share our also outperformed billion euros. to 2.8 around AG’s freenet result, market capitalisation 1billion increased by about euros in financial year 2013, a increasing As it, percent. by of 56 share again freenet significantly The basis. outperformed positively overall during year, very the developed increasing DAX The by 25 an percent on annual share freenet The ranking on the TecDAXranking in the on in terms terms of liquidity. trading of market #1 and cap AG to able freenet was clearly maintain #4 its percent of total Nevertheless, activity. trading 44 quarter. year, in final units the the Throughout accounted trading approximately for pool dark falling thousand to units, ter. 383 thousand 462 was third In the activity quarter,trading pool dark quar in second units the thousand to 789 around quarter in first units the thousand 246 around increased from alternative average pools”) on (“dark dailyThe platforms trading volume traded units. 533,500 was DBAG of platforms the average on euros the and daily volume traded 19.84 was quarter closing price in fourth the year-end average Xetra The which high year’s also was the closing euros, point. price of 21.78 - 2,000 ■ ■ ■ ■ ■ Trading Act): (German Securitiesding 21 WpHG to voting received pursuant to notifications section rights AG of freenet changed as accor follows structure shareholder the financial yearIn the 2013 structure shareholder Current euro. to each share share of value the attributable capital is 1.00 proportional The res. registered sha into euros is and divided 128,061,016 AG’sfreenet share totals capital 128,061,016 Shareholder structure 2: Figure 1,000 1,400 1,800 1,600 1,200 400 600 800 200 ■ ■ ■ ■ ■ voting rights). voting percent (4,042,278 amounted to and threshold 3.16 reporting 3-percent the exceeded had share of its March voting in us rights freenet AG that 22 on informed Bank Norges In the March rights). percent (3,816,643 voting amounted to and threshold 2.98 reporting 3-percent the below fallen In J. March voting rights). (13,366,658 10.43 percent amounted to and thresholds 15-percent and reporting 20-percent the AG below fallen had In Drillisch March share of its AG us voting March that 20 on informed in rights freenet rights). (3,870,625 voting percent to 3.022 amounted and threshold reporting 3-percent the exceeded In J. March rights). voting (6,318,741 percent amounted to and threshold 4.93 reporting 3-percent the AG exceeded had freenet share of its voting von Flossbach Storch in us that 1January rights on In informed January 0 Average daily trading volume of the freenet share in 2013 in thousands in share 2013 Average freenet volumethe of daily trading Jan. P. share of its us voting March that 20 on AG informed in rights had freenet Morgan P. share us that of its 8 March votingon informed AG in rights Morgan freenet had Dt. Börse AG Börse Dt. Feb. March April Darkpools May June July To our shareholders August Sept. : freenet AG and the capital markets: Shareholder structure Shareholder markets: capital the AG and : freenet Oct. Nov. Dec. - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 47

To our shareholders To our shareholders 48 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : freenet AG and the capital markets: Shareholder structure Shareholder markets: capital the AG and : freenet Figure 3: Figure as was follows: of 2013 end at the structure shareholder the aresult, As ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Source: freenet AG, 31 December 2013 December 31 AG, freenet Source: ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 3.04 percent (3,897,259 voting rights). percent (3,897,259 3.04 amounted to and threshold reporting 3-percent voting the AG in exceeded rights had freenet share of its 2012 us September that 14 on informed Management Asset LSV 2014 In January rights). voting (3,867,903 percent amounted to and threshold 3.02 reporting 3-percent the exceeded had freenet AG share of its voting in rights December us that 18 on informed BlackRock In December (500,000 voting rights). percent amounted to and threshold 0.39 reporting 3-percent freenet AG the below fallen had share of its voting Drillisch September in rights AG us that 30 on informed In October voting rights). percent (3,793,247 to 2.96 amounted and threshold reporting 3-percent voting the AG in below fallen rights had freenet share of its us that 23 September on Polaris informed Management Capital In September voting rights). (3,841,524 percent amounted to and threshold 2.9998 reporting 3-percent the AGin below fallen had freenet von Flossbach StorchIn August share AG us of its voting that 9August on informed rights rights). voting (3,921,847 percent amounted to and threshold 3.06 reporting 3-percent the AGin exceeded had freenet share us of its voting that 9August on Polaris informed In August Management Capital rights rights). (5,766,540 voting percent amounted to and threshold 4.50 5-percent the AG reporting below fallen had share of its voting 2013 in June DrillischIn rights freenet June AG us that 24 on informed voting rights). (3,863,574 percent to 3.02 amounted and threshold reporting 3-percent share of its voting the June that 11 on AG in exceeded rights had freenet State of Norway of of the Finance us behalf in of on name and the informed Ministry Norwegian the In June voting rights). percent (3,033,294 amounted to 2.37 and threshold reporting 3-percent the below fallen had that 8May 2013 on State of Norway of of the Finance us behalf in of on name and the informed Ministry Norwegian In May the rights). (12,791,658 voting percent amounted to and threshold 9.99 reporting 10-percent the AG below fallen had In share May Drillisch of its voting AG us that 7May 2013 on in informed rights freenet Shareholder structure of freenet AG on 31 December 2013 December AG 31 on freenet of structure Shareholder 90.92 shareholders: Other 3.04 Management: LSV Asset 3.02 Bank: Norges Norway, of State 3.02 BlackRock:

% % % identification to shareholder according investors financial and institutional register; share to the according shares investor Private Source: 4: Figure Europe. of rest the Finally,gic investment. an additional 3 sharespercent of the by are private investors held from strate Drillisch its after AG private investors, is by ended German held majority percent the 18 allnearly or with remaining this, of the percent, 33 Of investors. share is by German held capital, countriesother also account forasignificant proportion. financial investors At from respectively. 9percent, percent, 12 percent and with 15 represented of Europe continue rest the and investors heavily toUK from the In addition, be proportion. a near-doubling which represents year’s previous of the America, financial investors North from percent) (28 of are these proportion largest The group largest of investorsthe AG. in freenet percent), 58 institutional year: percent (previous At financial investors 64 around still represent distribution Geographic rest of the world: 9 world: the of rest investors Financial 15 investors: institutional German 18 investors: private German 3 Europe: of rest investors Private Geographical distribution of the freenet AG shareholder structure on 31 December 2013 December 31 on structure AG shareholder freenet the of distribution Geographical % %

To our shareholders 12 Europe: of rest investors Financial 15 Ireland: and UK investors Financial 28 &Canada: USA investors Financial : freenet AG and the capital markets: Geographic distribution Geographic markets: capital the AG and : freenet % % %

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To our shareholders To our shareholders 50 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : freenet AG and the capital markets: Earnings per share per Earnings markets: capital the AG and : freenet free cash flow. cash free to This apayout corresponds of ratio approximately percent of 72 May 2014. 13 on Meeting ral financial year, to share Annual income, Gene the euros net 2013 from per the amounting to 1.45 for of payment adividend the to propose decided Board Supervisory and Board Executive The May 2013. distributed 24 was on dividend The flow. cash percent of free tely 66 1.35 euros representing eligible apayout of ratio approxima per share financial year the for 2012, of of payment adividend the approved Meeting Annual General freenet the 23 May 2013, On Dividend (undiluted) in EUR operations continued from share per Earnings EUR in share per earnings Diluted EUR in share per earnings Undiluted 1: Table basisThe forcalculating is weighted EPS the average of shares outstanding. euros in to 2012. red 1.35 euros compa- Undiluted/diluted year amounted to share 1.87 earnings in reporting (EPS) per the share per Earnings During the reporting period, there was only one “sell” recommendation. “sell” only one was there period, reporting the During recommendation. gave a“hold” percent) (28 analysts the in reports 40 made; was mendation recom percent) a“buy” (72 cases In 100 analyst. per comments is median 10 The each. 15 reports published analysts active most three The share. freenet the regarding recommendations and comments than financial 150 more year, published 2013 firms In the analyst well-known 16 recommendations Analysts’ Earnings per share from continued operations in EUR (diluted) in EUR operations continued from share per Earnings Weighted average of shares outstanding in thousand (diluted) in thousand outstanding of shares Weighted average (undiluted) in thousand outstanding of shares Weighted average (diluted) in EUR operations discontinued from share per Earnings (undiluted) in EUR operations discontinued from share per Earnings Earnings per share per Earnings 128,011 128,011 1.87 1.87 2013 1.87 1.87 0.00 0.00 128,011 128,011 1.35 1.35 2012 0.00 0.00 1.35 1.35 - - - Type share: of Name: data Master share freenet the on Informationen relationships with existing investors. with investors new to and establish contact We strengthen in plan to current the financial year continue activities in to these order further distribution. geographical with to regard increased investor the as well structure base changed asin shareholder the the to changes athird, we responded by about activities systematically these expanding By analysts. with institutional objectives investors and and strategic direction, current business development, Investor the and Relations Board Group’s team Executive the freenet the discussed Los Angeles, time in Francisco San European exchangeYork, in stock and first New and for the locations and 11) year: at major (previous shows road investor At 12) 15 16 and year: conferences (previous lysts. AG cultivatesfreenet an ongoing dialogue with institutional private investors and as well as ana- Relations Investor Quantity of shares: of Quantity capital: Share Index Class security the on Information segment: Market standard: Transparency Sector: WKN: ISIN: Further information on the freenet share information is freenet the available on Further at www.freenet-group.de/investor-relations Designated sponsors: Trading type: model code: Reuters instrument Symbol: Trading parameters exchanges: Stock DE000A0Z2ZZ5

FNTN

freenet AG NA freenet Prime All Share, Technology All Share Technology All Prime Share, All TecDAX, Midcap Market HDAX, Index, CDAX, Wireless CommunicationDAXsubsector Telecommunication, DAXsector 128,061,016 euros 128,061,016 Registered shares value par without market Regulated standard Prime share No-par-value A0Z2ZZ Close Brothers Seydler Bank AG, equinet Bank AG equinet Bank AG, Bank Seydler Brothers Close Continuous trading FNTGn.DE Frankfurt Standard: market/Prime Regulated 128,061,016 Düsseldorf, Hannover, Munich Düsseldorf, Stuttgart, Hamburg, Berlin, Market: Open To our shareholders

: freenet AG and the capital markets: Investor Relations Investor markets: capital the AG and : freenet freenet AG · Annual Report 2013 Report AG ·Annual freenet 51

To our shareholders To our shareholders 52 freenet AG · Annual Report 2013 Report AG ·Annual freenet To our shareholders : freenet AG and the capital markets: Corporate bond Corporate markets: capital the AG and : freenet 106 EUR 106 109 EUR 109 108 EUR 108 107 EUR 107 Security: Repayment price: Interest payments: Coupon: Term: WKN: ISIN: Denomination: Issue volume: Stock exchanges: refer to following please the table: AG bonds corporate freenet informationFor more about 5: Figure euros. quoted was at 111.00 bond the At year-endinterest is coupon 2013, 7.125 annum 2016. it April and percent is per 20 on payable million The market. capital with euros avolume the on of 400 bond corporate placing afive-year things other among by successfully financing, private equity AG its replaced freenet 2011, In April Corporate bond 105 EUR 105 110 EUR 110 114 EUR 114 112 EUR 112 113 EUR 113 EUR 115 111 EUR DE000A1KQXZ0

Performance of the freenet corporate bond in 2013 (daily in 2013 closing prices) bond corporate freenet the of Performance

Jan.

Feb. March Non-subordinated corporate bond percent 100.0 2012 Annually, April 20 on starting 7.125 a. percent p. 2016 to April 20 2011 April 20 A1KQXZ 1,000 euros 1,000 million euros 400 Frankfurt Market Open regulated exchange stock marketThe Luxembourg of the April May June July August Sept. Oct. Nov.

Dec. at at AG’s freenet company the relations press about and about also can more learn Interested users analysis stock an and interactive form tool. order and including acontact dialogue website offers, and The also features of services avariety afinancial calendar. and documentation Meeting Annual includes General information offer on the presentations, market capital and reports financial announcements, to company addition In website our on at www.freenet-group.de/investor-relations bond shares corporate and freenet’s information about detailed find public can of the interested and members Shareholders online available information financial Detailed percent. at 30 least be must ratio while equity the than at more 2.5x, no fixed was factor debt The of conduct. rules tion and usual the on market is as agreement well based warranties new as obligationsThe of informa- percent. togiven 0.95 company’s amounts (net ratio current the debt debt/EBITDA) which are million calculated Withdrawals with amargin EURIBOR, euros drawn. on to be 300 existing the replaced facility completed credit facility, newly The makes and available atotal of arrangers. lead mandated as acted UniCredit LBand Nord Baden-Württemberg, Landesbank Nordbank, HSH Bayerische Landesbank, tion, AG once again was Commerzbank coordinating the mandated arranger.activities. lead In addi business to its loan AG generallyrefinance syndicated signed freenet anew 2013, In December facility Credit tranche. 7-year fixed percent the for of 4.14 coupon six 5-year variable of months the afixed and tranche, percent p. of 3.27 coupon marketing over with drawn entirea fixed range, the respective of the volume end lower at the million It was euros. of 19.5 million tranche aseven-year and of 56 fixed euros, tranche variable million afive-year euros, of 44.5 tranche note into is fixed divided promissory afive-year The Girozentrale. Hessen-Thüringen desbank Lan and Baden-Württemberg Landesbank which marketed AG, were broadly by Commerzbank note AG totalling successfully freenet apromissory placed million 120 2012, euros, In December note Promissory www.freenet-group.de/en. a. for the 5-year tranche, a floating coupon of 2.82 percent for the first first percent the for of 2.82 coupon 5-year the for afloating a. tranche, To our shareholders : freenet AG and the capital markets: Promissory note Promissory markets: capital the AG and : freenet . - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 53

To our shareholders

Group management report

Corporate Profile of the Group ...... 57 Business model...... 57 Group structure...... 58 Corporate Strategy ...... 59 Financial Management and Control System...... 60 Financial performance indicators ...... 61 Non-financial performance indicators...... 63 Macroeconomic conditions ...... 69

Economic report...... 69 Business performance ...... 71 Key drivers of the business development ...... 72 Net assets, financial position and results of operations...... 74

Events after the reporting date...... 80

Opportunities and Risk report...... 82 Opportunities...... 82 Risk management system...... 82 Major risks ...... 84 Key features of the internal control and risk management system in relation to the Group accounting process (section 289 (5) and section 315 (2) no. 5 HGB) . . . 89

Corporate Governance ...... 92 Corporate management statement...... 92 Information required under takeover law according to section 315 (4) HGB. . . . . 97 Compensation report for the Executive Board and Supervisory Board ...... 99

Forecast...... 104 The market in 2014...... 104 freenet Group...... 105 Overall guidance of the Group’s expected development ...... 106 Germany. retail the on business in with private customers marketing mainly its Group efforts focuses The continuously work expertise. employees to improve service and group’s the sales 4,600 approx. isGroup’s That (exclusivity why freenet the GmbH). with agreement Media-Saturn Deutschland markets major electronics in in and stores retail 400 points stationary 5,600 approx. another 553 ful competitive positioning telecommunications as aretail-oriented with provider some to across customer all channels the sales Closeness is essential to company’s success the offer. the of hardware complements extensive selection An this area. business significantly volume in increased its freenet early 2013, with today 32 stores—in ducts pro authorized and distributors of Apple independent largest of Germany’s (“GRAVIS”)—one mbH customer. for acquiring services and By Gravis-Computervertriebsgesellschaft products Internet-related mobile agrowing of range attractive, household offers Group freenet the services, and in sales with as provider strengths adigital capacity lifestyle in its In addition, tariffs. operators’ original the companythe network also offers no-frills services, prepaid and postpaid, network-independent own from its account. Apart own Telekom, operators Vodafone, E-Plus O and network mobile for the communication mobile markets but services network, own its not operate does Group freenet The voice of mobile services. data and especially in field the vices products, and of ser acomprehensive customers portfolio provider, offers Group service amobile freenet As hold/at-home that are related solutions forcustomers not necessarily to telecommunications. of as house aprovider sector is of inGroup establishing Digital in process the Lifestyle the itself telecommunications network-independent in is provider biggest Germany. Group the freenet The model Business Group of the Profile Corporate mobilcom- debitel shops and 32 stores operated under the premium brand GRAVIS and GRAVIS premium the brand under operated stores 32 and debitel shops 2 in its on Germany, and name own its under Group management report : Corporate Profile of the Group: Business model Business Group: the of Profile : Corporate - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 57

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 58 freenet.de GmbH (100 %) Group management report

Logistik GmbH (100 mobilcom-debitel : Corporate Profile of the Group: Group structure Group Group: the of Profile : Corporate Figure 6: Figure retail our partners. required to support expertise systems the and ment, distribution acquired. This was Group’s power, enhanced the TM”) especially in online the seg Troisdorf, (“MOTION TM GmbH, percent stake in Vertriebs MOTION a51 In 2013, March devices. mobile around based products lifestyle of high-end in sector clout the sales its strengthening thereby Berlin, acquisition the completed Group the of GRAVIS, acquisitions. 2013, In January financial year, with two past In the continued strategic optimisation Group the the portfolio of its structure Group %)

Major Group companies of freenet AG as of 31 December 2013 AG December 31 of as freenet companies of Group Major callmobile GmbH callmobile mobilcom-debitel Shop GmbH (100 %) (100 %) Computervertriebs- mobilcom-debitel gesellschaft mbH gesellschaft

mH (100 %) GmbH

freenet AG freenet (100 %) Gravis-

klarmobil GmbH Vertriebs GmbH MOTION TM

(100 %) (51 %)

FunDorado GmbH (50 %)

munikations GmbH freenet Datenkom (100 %) Cityline GmbH (100 %) freenet

9 Telefon- 0 1019 dienste GmbH

(100 %)

- Our customers are interested in attractive services and products as well as expert advice. as well as expert products and services are interested customers Our in attractive us to ensure that to we will able debts. our continue also but expect be to service debt, rates on company’s creditors not their only want uson The invested to capital. pay risk-adjusted interest reliable and areasonable overall return expect in shareholders equal measure. Our stakeholders of all expectations and needs AG freenet different considers the strategy In implementing its investment and guidelines. profitability rowly defined it will In addition, evaluate financial years. within additional strategic areasnext nar of action company the strategic alignment will its continue in the refine In and this to pursue perspective, of digital lifestyle business operations. expansion further for stage the of digital set users for applications, contentment services and year,the strategic acquisition the aglobally Digital, leading of digital provider of Jesta entertain year, last range turn At the of product with start-upcosts. to low mobilcom-debitel the added were already camera heating SmartHome and SmartHome Cloud, Security, md Mobile Norton GameFlat, MusicFlat, such md as md few products expansion in this first line The of business. of Things”, term “Internet the basispublic attention the under forms future for value-oriented which life is of increasingly societal into transformation lifestyle, The a fully networked gaining however, much, future of very market the this on dynamics segment. fledgling depends sector of business in development this further The in midterm. the communications-related products communications mobile the beyond retailing businessof the business and activities of mobile provider—which initiated was as to mainstay already another develop in financial year 2012—so into company’sThis for strategicthe development has adigital laid groundwork the lifestyle Samsung Sony. and manufacturers fromthe products with high-quality lifestyle will successively be GRAVIS premium of range the expanded brand Finally, product Apple the resulting The cross-sellingplanned. potential is strategically tosystematically and exploited. be is stores integration the progressing of GRAVIS as main brand, the ted under mobilcom-debitel opera of shops support sales and portfolio optimising product location, further the Besides retail with aview to increasing expansion of the stationary on was strategic focus profitability. continued Another to mers to decline due ongoing cards. the prepaid of deregistration inactive ownership), customer (collectively: while total no-frills and the of custo sectors number postpaid In particular,Internet. this stabilising included of relationships valuable customer base the in the vices related of addition businessthrough Communications the to activities Mobile Mobile and ser work-independent communications of mobile provider value-added increase its services—to anet AG—as freenet for strategy its developed further In Board this Executive the environment, term. medium the in expected change be communications of can mobile in selling2014—a the operators strategy year financial during is expected transaction the of approval E-Plus—antitrust of acquisition wake In the of market. Telefónica German the Deutschland’s financial yearpast also affected towards trend consolidationsed European among telecommunications companies during the Communications revenues declining in segment increa asaturated, - overall The market. mobile measured in provider Mobile market AG year as position its aservice past held freenet In the Strategy Corporate Group management report : Corporate Profile of the Group: Corporate Strategy Strategy Corporate Group: the of Profile : Corporate ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 59

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 60 Group management report : Corporate Profile of the Group: Financial Management and Control System Control and Management Financial Group: the of Profile : Corporate Equity ratio Equity the cost of external capital procurement in future. The development of the interest of the cover in development future. procurement capital The (ratio cost of external the investors in external for particular, optimise is ratio thisdebt attractive way to is further agood alow As of funds. option liquidity procuring the raising from outside and equity also preserves which company’sat million the current business 50 This volume is about euros. to targeted be available to be requires at all an adequate liquidity times, reserve strategy corporate tion of the is optimised anhowever, on ongoing time, structure capital same At basis. the - implementa the of arisk-driven part management the strategy, As of range 1to target 2.5. within specified the is ratio debt relatively the flow, cash low has astable unlike operators—and that network of the not require communications in mobile provider high the does levels segment of investment— as aservice business model freenet’s cash). less Because (borrowings debt net torated pay off result current have the operating (EBITDA) would indicates ratio gene often debt to how be The Cover Interest ratio Debt 2: Table indicators. mainas the financial performance interest the ratio, are ratio cover debt used the equity the and In managing structure, capital the controlling is established on used. based management structures system sury A comprehensive trea- as well liquidity as the performance. structure capital include the cators key whose financial management indi system by afocused is supported company’s strategy The System Control and Financial Management of their ability. to best the continue can they to perform and develop where environments work in modern jobs appropriate, long-term, secure expect employees Our shareholder value without compromising its risk profile. risk compromising its without value shareholder thereby also and contributes to along-term shareholders, increase in company’s the freenet’s for yield dividend that allows an attractive policy adividend Finally, has defined Board Executive the structure. funding as an additional indicator that acompany percent serves than has ofratio 50 more an efficient Maintaining an equity in to of interest) EBITDA this net regarded perspective. also be should

Key figures of financial management financial of Key figures 2012 adjusted 2012 47.5 1.3 8.5 % % 50.0 2013 1.2 8.3 Target 2013 Target 1.0—2.5 % > 50 > 5 Target 2014/15 1.0—2.5 > 50% > 5 - - to overcompensate revenue the decline in core the Communications. business of Mobile serve and by inorganic growth are primarily supported services, and of products own our ment cost-conscious the and business develop activities, expansion ofthe Digital Lifestyle-related to core the For instance, Communications. business ofsources Mobile that are complementary at isgenerating additional revenue directed strategy In this Board’s Executive the environment, tion with increasing price which pressure, to leads adeclining in trend revenue. competi predatory has been there long Therefore, by havingcharacterised only afew providers. Communications Mobile market is German saturated The and Communications Mobile segment. revenue in generated this The line Internet. of business Mobile iscations the and in shown the related Communi to Mobile services and core Group’s business byfreenet is products provided Revenue in company’s revenue the development. primarily reflected are business activities Digital Lifestyle to EBITDA, the Next time. mance indicator first the for perfor additional an as is regarded revenue Group therefore and important more have become business activities increased Digital Group’s Lifestyle revenue through freenet generated The ■ ■ ■ ■ ■ term success of strategic course: our indicatorsWe to currently following measure the use medium-and long- the key performance indicators performance Financial value. term company’s long- the protects while optimised structure the capital flow, cash company’s free interest in receiving shareholders’ justice an appropriate share to value-oriented does of the the increasing By Board Executive flow. cash the free financial year this onwards, 2013 the for range percent of 75 and 50 come to should between annual payouts dividend Board, Supervisory the by approved and in early 2013 Board by Executive the adopted According policy to dividend the 1 yield on dayDividend of payment share per in euros paid Dividends FCF1 of percentage as ratio Payout 3: Table ■ ■ ■ ■ ■ Postpaid ARPU. Postpaid no-frills and customers), ownership (postpaid Customer flow, Free cash EBITDA, Revenue, equipment. and plant property, of disposal the from proceeds plus ment, equip and plant property, in investment minus activities operating from flow cash as is defined (FCF) flow cash Free Key figures of dividend policy Key dividend of figures % 10.6 Group management report % 64 2011 1.20 7.7 % 66 2012 1.35 % : Corporate Profile of the Group: Financial performance indicators performance Financial Group: the of Profile : Corporate 50—75 2013 a. n. a. n. % Target 2014/15 50—75 a. n. a. n. % - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 61

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 62 Group management report : Corporate Profile of the Group: Financial performance indicators performance Financial Group: the of Profile : Corporate The key objective here is to optimise net working capital based on detailed liquidity is here planning. to detailed key on optimiseThe based objective working capital net is to continually department finance of main Group control of our the liquidity. activities One to pay potential interest principal and payments. financial obligationscompany’s as and such is operational an indicator company’s of ability the is investors significant since forexternal flow cash it free all includes time, ofAt same the the governance. corporate of its percent to percent as 75 50 part of apayout currently corridor has established Board Executive the guidance shareholders, the for To better period. provide during respective actually generated the lation inflow cash with the in This distributionscorre relation ensuresdividend is flow. cash to adirect free expressed the of “payout in as ratio” the determined accordance Commercial Code, German withprofits the AG’s of freenet payout as aproportion dividend of amount the the decides Meeting General Annual isthe equally Although Free significant raising for capital. flow cash debt and equity assessment. performance results-based to company’s a addition important an This indicator liquidity-driven represents intangible and plant equipment and assets. perty, of disposal pro the from plus proceeds intangible and plant equipment and assets, property, minus in investments activities, from operating as flow cash flow cash free AGfreenet defines Free flow Cash ling companies. Accordingly,business sel buying model. and when is forvaluation EBITDA also used purposes respective by the caused costs capital varying of the forcomparability independent provides indicator accounting, also fromthe as determined this performance efficiency operating the on planning corporate in control. However, and its interest and expense tments focuses as EBITDA has million limited 20 tofreenet about euros itself a year intaining annual inves their networks, alot of each capital year main and expanding spend on operators network mobile While the ring companies market several in same segment. the in and compa- periods across in several assessingboth business developments cial performance, as akey is EBITDA For instance, seen indicator of finan performance. operational general pany’s com the amortisation) depreciation(earnings and EBITDA reflect income taxes, interest, before EBITDA ti-channel distribution is successfully overcome with a variety of measures. Recent marketing Recent measures. of variety a with overcome is successfully distribution ti-channel discontinuity media of by cross- mul The up-selling. caused and targetingcustomer purposes for individualised for opportunities ownership opens customer this, Beyond business. of the aspect amajor represents (ARPU) user average monthly in with the revenue conjunction per generated ownership customer Communications, In Mobile long-term and for medium steering purposes. area is growing ownership in the Customer high-value and measured the no-frills postpaid sector Customer Ownership ------further distribution points. further 5,600 about and markets major electronics 400 at about outlets and brand mobilcom-debitel main the under to customer. operated mum the closeness shops latter by is 553 provided The with and maxi requirements, and needs –driven customer’s by the services and tions products advice regarding communica network-independent mobile is key- its strength brand’s The hips. relations high-value with on afocus contract communications mobile four German networks, all for tariffs prepaid and company the postpaid markets brand, mobilcom-debitel flagship its way. Under in all group-specific atarget of this segments to market’s serve strategy multi-brand Co Mobile uni mm legacy In its Products brands, new products are in of Group employed key the significance. people the and activities sales the In addition, acquisitions and partnerships. and products, new brands, consist of product of avariety strategy multi-channel sales with its indicators in connection non-financial performance Group’s freenet indicators performance Non-financial year. during of the course the it if adjust necessary and business we strategy, regularly composition review the of overall our internal financial control Taking in line expansioninto of activities digital our with core our account lifestyle further the controlOther parameters indicator to in future. decrease internal for the management is expected to increasing the Due of this share performance of high-value other importance the revenue, is still ARPU trend. adownward on competition postpaid strong market resulting saturated the Given and the German of ARPU. development the on cant impact market Changes competitive and in German situation in the ARPU. the included have asignifi is option not via mobile-device the smartphones or phones ofvices; mobile revenue sale the from rally willingness maps consumers’ to communications mobile pay the for appropriate fees ser customer. is what ARPU average we call contract gene Postpaid the revenue monthly ARPU per Postpaid-ARPU relationships. customer existing and mers munications provider, relationships valuable customer AG on custo new focuses freenet forits strategic business alignment Com of its Mobile and towards aDigital becoming part Lifestyle As noted in thisbe perspective. should shops of at online mobilcom-debitel orders collection and payment such as the activities c ations Internet Mobile and Group management report business, freenet AG relies freenet a on business, : Corporate Profile of the Group: Non-financial performance indicators performance Non-financial Group: the of Profile : Corporate ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 63

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 64 Group management report : Corporate Profile of the Group: Non-financial performance indicators performance Non-financial Group: the of Profile : Corporate ■ ■ ■ comers at the monthly price of 9.90 euros. price monthly atof 9.90 the comers new at targeted smartphone offer. Allnet-Starter the birthday Meanwhile, services its doubled of July, euros end through the of a in autumn then the as months part were there four free 19.85 Allnet-Spar-Flat of months the first The to months. month eurostwelve per by 10 were reduced first the for euros amonth year, of the end at the rate cost 4.85 just flat Allnet klarmobil the many for applies same discount of the The subsidiaries’ For example, limited-time offers. special www.crash-tarife.de. company’s online own the platform were on promotions special run sales the many of campaigns; seasonal and campaigns marketing various of part as discounts or vices ser enhanced with extra year, of the course were further the During as well as tariffs other these ■ Key innovations included: in 2013 plans data other upgrades. on and and in market, the popular which are very rates smartphones, for company the flat on once again focused In 2013, portfolio. service and AG are therefore for and freenet in a focus marketing years, ral product its fastest-growing of the one of telecommunications have been seve for fields services data Mobile online. sold mainly are tariffs Discount in ratesless and subsidised communicationsted in mobile low-cost devices services. special or are primarily who interes forcustomers Communications” “debitel discount and light” brands, “callMobile AG alsofreenet to caters “no-frills” area “klarmobil”, “freenetMobile”, the with its ■ entertainment: automation home security, with on and afocus security, data and in 2013, tions products and D In the ■ ■ ■ ■ ■ domestic mobile networks, and 50 SMS texts included for O for included texts SMS 50 and networks, mobile domestic minutes plus 50 of calls of volume data included, 1GB to allintensive surfing—with mobile a volume of 5 Gigabyte at maximum speeds of up to Mbits/s. at 7.2 maximuma volume of speeds 5Gigabyte includes flatrate data The contract. two-year of months the twelve first euros the for of 6.95 price base amonthly with a“Surfstick”—for notebooks and using for tablets flat5000 surf Sm minutes within EU. the roaming rate 100 and flat Allnet an rate, SMS Internet flat amobile line networks, mobile and include unlimited calls tariffs to the land all increases, German of service scope asand the version, selected the on Depending latest of the smartphones. forone or Telekom networks, Vodafone also the for can opt Deutsche and customers month euros per 10 an for and extra E-Plus O and low-cost euros forthe to month 39.90 euros per 9.90 from ranged prices initially package The tariff. existing the “real Allnet” complements tariffs mium Allnet” The The ators at home via an app and can turn them all down or off by pressing asingle via turn all off ators can an or when and at app them home down button remote-regulate can Users their individual radi by adding components. network SmartHome into acomplex extended flexibly be can and control contacts, window and units adapters, ats, radiator thermost month—include euros per in sets—available versions various 8.95 from The euros amonth. 9.95 for by 1GB mers The The The The art S art T A Sm @ke-away F @ke-away llnet suite of rates of suite llnet igital L artHo urf for 14.99 euros a month for customers who primarily use their smartphones for primarily who their use smartphones for customers euros amonth for14.99 ifestyle me box enables the intelligent the enables box control heating of your home via smartphone. lat U lat pgrade sector, mobilcom-debitel launched the sale of innovative sale the launched applica sector, mobilcom-debitel , which with the new “classic Allnet”, “comfort Allnet” and “pre and “classic, which Allnet” new with the Allnet”, “comfort increases available the volume data existing for custo new and 2 contract customers. contract 2 networks, networks, ------■ ■ ■ ■ With its range of services for ringtones and dial tones, logos, full-track games mobile music, logos, dial and tones, forringtones ofrange services its With of by overagain a successful Once thisten corporation years. preceded was Los Angeles. and in Berlin AG acquired freenet Digital with offices all Group shares in Jesta the 2014, In January in specialist online and retail. network sales acquisition The increases mobilcom-debitel’s MOON. called specialist for retailers, platform leading online communications mobile sales own has and telecommunications its and retailers, in Troisdorf, partner. Based long-time sales company mobilcom-debitel the is of Germany’s one over took a freenet acquiring share TMBy percent of the in in capital MOTION 2013, March 51 accessories. and Macs including iPods, products, entire the of range Apple offer now they iPads, and iPhones beyond In words, other shops. own of its to majority the portfolio GRAVIS in the products of range Apple of aselect sales expanded then and world, tems Apple the for sys with shop-in-shop shops mobilcom-debitel initially had which selected freenet under fitted an purchase exclusive followed The corporation AG over took freenet GRAVIS. 2013, In January Acquisitions partnerships and ■ ■ ■ ■ higher-end using remotely to app controlled version be can worldwide afree rotate it 360 built-in high and resolution, night for red very footage, The to record microphones sound. feature- infra by D-Link manufactured cameras The contract. euros a24-month for of 5.49 The costs. year’s previous with usage bypercent compared at 20 least cut energy event controlthe mobile that doesn’t the guarantee to in include a money-back leaving At year-end theirextended was home. offer the them, use “MusicFlat” via Wi-Fi, and use the playlists in offline mode. in playlists the offline use and via Wi-Fi, “MusicFlat” use them, classical and jazz music create tunes Pulse in format, Dolby the favourites fromplaylists and access users to It provides million than 20 more rock, month. euros pop, per for24.99 tariff as or acomplete with package amatching month, euros per smartphone 8.99 for contract The term. contract 24-month or 12- of the end the after get to games Customers keep the purchases. charges in-game or any without extra month hidden euros per 3.99 for Gameloft on games The music. and videos photos, appointments, emails, contacts, for security and privacy possible in Germany, best the operated and provides therefore and Play via iTunes and the an available or app Google on is cloud Store. hosted web-based The all on Internet-enabled works devices—both and customers existingand mobilcom-debitel is available to service all The new month. euros per for3.99 GB Pro” 50 includes “Cloud euros amonth; version gives 1.99 for of each 25storage Basic” user GB “Cloud The network. change they especially and when their telecommunications device, or provider time—even The example. as ababy monitor—while used also can be cameras for visiting The instance. neighbours, the grounds while and which of travelling, your allows house constantsurveillance fordegrees, Sm m m G a d Musi d Cloud d artHo m e F lat cF me add-on service offers game lovers a large selection of the latest of the premium alarge lovers selection game offers service add-on gives users reliable gives users access to their individual applications and data at any lat camera is also available camera with starting basic in versions, fees monthly several can be booked as an additional to option an existing booked mobilcom-debitel be can Group management report : Corporate Profile of the Group: Non-financial performance indicators performance Non-financial Group: the of Profile : Corporate - freenet AG · Annual Report 2013 Report AG ·Annual freenet 65

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 66 Group management report : Corporate Profile of the Group: Non-financial performance indicators performance Non-financial Group: the of Profile : Corporate early September. GRAVIS opened two exclusive 20m² “shop-in-shop” concessions forSamsung “shop-in-shop” exclusive two 20m² early opened September. GRAVIS at IFA launched with was Samsung Sony and To corporation in in Berlin GRAVIS the this end, hardware other from manufacturers. quality withrange more products GRAVIS the supplementing and provider digital into dealer based lifestyle broadly amore Apple exclusive beginningat long-standing of the the year. of the development include the Objectives retail chain GRAVIS of acquired dovetailing the was with priorities those of shops the own its of One internal forcenuously improving measures. and sales through avariety investments its year, during of the course the In addition, as in company years previous the conti on worked ■ ■ comprises of: now network Germany. sales Its in platform sales competitive positioningnetwork-independent its biggest as the strengthened above— AG once freenet again—as described acquisitions the With in financial made year 2013, salesOther activities 2013. 1August from years with at for three effect least of their successfulcorporation Saturn all stores and group’s overthe Media Germany. companies signed The an early extension T-Mobile, Vodafone E-Plus and operators in network of the as well original as the tariffs ducts pro and communications mobile own sells its tariffs mobilcom-debitel exclusive cooperation, of this part As GmbH. with Media-Saturn alsoDeutschland exists partnership A long-standing all communications major mobile devices platforms. and supports and worldwide, operators work nications content via to their customers billing end relationships net mobile thanwith more 60 commu communications mobile mobile It markets content and companies, providers, providers. network for partner reach and make Digital’s business it model an attractive Jesta Ads. Motility platform, advertising Italy, mobile own viaGermany, Brazil, Switzerland its and Austria, US, the million countries in than including 50 more customers companyThe currently 100 around reaches of digital leading content.Digital providers world’s is entertainment of the one Jesta dating for online platforms and and cookbooks, applications, lifestyle fun and videos, and their offer and return and totheir it at offer any time if necessary. consultant the In turn, as abasis save can consultant’s documentation the alater for contract. an are sent email then customers print-out or of request, On main the on findings. based offers customer. the and areto analysis usage patterns the Key create past elements of customers’ vendor the both precisely, more promotions advice and sales efficiently—for vividlyducting and an tested internal shops forcon app mobilcom-debitel tablet in of this, spring selected part As smartphone. Z1 top new Xperia manufacturer’s Japanese Korean the and Note 3 bySouth manufacturer the GALAXY and SmartWatch Gear lines–including GALAXY cutting-edge the sell theirand product Ernst-Reuter-Platz, on Sony and to premium present Asian manufacturers two the for Berlin ■ ■ and an sales. and even of range online wider direct and distribution points further approximately and markets 5,600 Media-Saturn electronics 400 brand premium GRAVIS the under operated stores 32 and main brand the under mobilcom-debitel operated shops 553 - - - - - ding qualified personnel. ding qualified it potentialand leverages in fin synergies process, employer as well as a coordinated selection ensures consistent system a joint, recruitment image external This as an Group-wide portal. online www.freenet-group.de/karriere the on advertised have inall Group the been vacancies Since 2011, jobs. applications 650 around for yearthe Company the than received 22,500 more of AG course ahighly the was freenet Over in years, previous sought-afterAs employer in 2013. TM during completed year. MOTION to and the consolidation the of GRAVIS year-on-year the people, increase is mainly due 4,576 employed Group freenet At year-end 2013, externally. and as while an employer continuously internally improving development, tion and attractiveness its - qualifica goal of the optimising AG itself has freenet set staff its In thissuccess. perspective, enduring motivation competence and of its for are acompany’sThe key employees components Employees this products. in inment; turn company’s marketing increased value-add the respective the as customer-friendly of their develop stages company in the final the as participated possible, To entertainment. and automationof make security, data innovative home &security these offers mainly they areas the on focus section products” new brands, in detailin “Product the described As in growing market the during Digital 2013. Lifestyle products new also launched freenet related to communications/mobile mobile services and Internet. product of again constantly changing the sed portfolio own with market its requirements customer and innovative this market AG With environment. in in addres freenet financial year mind, the 2013 vigilant in to order maintain eye latest the developments on long-term competitiveness in this requires togical keep in progress a telecommunications, in and voice mobile services, data and However, own. technolo of its rapid the not maintain company department The does an R&D listed above in detail. more in this area are products and tariffs new important including most associated The the hardware. communications mobile as own well as its range, as described, operators network of Germany’s communications/mobile company communications the mobile the markets Internet, services traditional core business In its areas. Communications of mobileMobile Digital and Lifestyle in the infrastructure network own its without provider business as AG aservice does freenet development and Research preferences. customer later can centrallymobilcom-debitel evaluate devices gain of and use the on valuable data the real the out devices with their technical In addition, details their and try accessories. can mer catching way. consultant pitch, of while their custo displays sales The the the use can as part features special eye- the and timedia info of each device presents app in attractive auniform, clearer. tablets and makes mul displays The Mini time the Instore of same At smartphone TV the Group management report : Corporate Profile of the Group: Non-financial performance indicators performance Non-financial Group: the of Profile : Corporate ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 67

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 68 Group management report : Corporate Profile of the Group: Non-financial performance indicators performance Non-financial Group: the of Profile : Corporate sibility to regional market locations. the employment at its company social respon the In doing so, its also fulfils young people. qualified and specialists for AG continuallyfreenet cover urgent requirement to its employees own at partly trains least its manufacturers. by German models new and to environmentally gives priority vehicles freenet friendly business, environment German and of consideration concession. Out the for terms by means of asalary business attractive on use company car. model” car “employee full-time All receive can employees avehicle private for and which is traditional company highly the alongside is car additional popular service, theAnother ■ ■ ■ dited Bachelor of Science or Bachelor of Arts degree at colleges. vocational degree of Arts Bachelor of or Science dited Bachelor leading to an programmes accre dual-study four different company the In also addition, offers ■ ■ ■ ■ ■ During the course of 2013, freenet hired a total of 105 new apprentices, specifically for training for as: specifically apprentices, new hired atotal freenet of 105 of 2013, course the During ■ company: the with identification and team spirit responsibility, vation, incentives and activities to promote moti employee of range services, awide AGfreenet offers on them. on executives were sensitisedaddition, to given and relevant health information topics background In projects. challenging Group’s the handling for guidance and transparency greater managers project measures the are to designed offer company.the experts, Mainly by designed in-house culture and within methodology of measures aim with project the refining the and of unifying an was extensive focus set One management culture upcoming prepared tools projects. and and intensified its further Group’s the in training out leadership years, previous on carried Based team and training. technical, methodology which included measures, development in such personnel participated employees permanent Employees training than managers and receivedtailored 1,000 more an In basis. on on-going 2013 ■ ■ ■ ■ ■ ■ ■ ■ ■ of promoting them to project management executive or positions. of promoting to them project aim the Talents” is at targeted high programme performers—with “freenet popular very The responsibility; of positions for in them qualifying as in well support sales and as administrative careers for roles, workforce justentering the people talented target in introduced 2013 newly programmes trainee The initiatives; many other and competitions idea in CEO shaping hierarchies, dialogues, company via part flat play can processes an active They once again in 2013; which were extended social benefits, and offers, siotherapy, sport various training, posture phy health days, Employees are given workstations, ergonomically designed warehouse logistics professionals. logistics warehouse and staff marketing dialogue and management office designers media print and digital specialists IT computer science staff retail and sales - - - - the Mobile Communications Mobile sector.the despite aslight slightly increase in declined inof Germany telecommunications in 2013, services market the volume in following) the Consult” (“Dialog Consult Dialog and GmbH in following) the According of Telecommunication (“VATM” Providers to Association the Service Value-added and in to order increase competitiveness. structure - infra expansion network of the in further the cost leverage synergies and increase efficiency are in to telecommunications the sector overarching The goals consolidation of the efforts by Vodafone, however,Deutschland completed. has already been acquisition The to of Kabel finish their review by May 2014. are and expected wing project the revie are authorities regulatory European The to Telefónica E-Plus Deutschland. subsidiary man summer,In the Dutch company the it selling was announced Ger stake KPN in its amajority percent. 26.3 of share market billion with avolume of 19 around euros a and activity M&A highest the had nications sector many, according in published January, Telecommu the Trend 2013 to Mergermarket the - Report Ger In level. European at consolidation for pressure to increased leading environment, petitive have requirements customer increased in this to increasing com the Due of use smartphones, Development of Telecommunications the market in 2013 situation. export to percent due continued the difficult by rose only 0.6 exports forprice, adjusted time, same At the weak balance foreign isThe mainly trade increase to due in asharp imports. 1.3-percent percentage points. to tune in the of 2013 –0.3 growth GDP impacted negatively imports—further and exports between difference state investment and fell. Averageporate exports—the net However, percent. by state expenditure 1.1 cor percent, by rose 0.9 private expenditure 2013: in contribution performance economic to didConsumer make spending German an important compensate this. for toin failed sufficiently Germany ongoing the and Even recession European in countries. recent some demand increase in domestic is in linked slowdown 2013 the to aweak performance economic global Statistics Office, Federal According percent. to by as asthe much in 3.3 and 2011 it percent, grew by 0.7 In 2012 years. marking compared to point alow recent percent in of 2013, 0.5 around growth only moderate showed economy According German the to initial Statistical calculations Office, Federal by the apositive half dynamic year. of at level the global in second the developed nomy activities Real-eco financial year,in past percent. the while in economy euro the zone the shrank by 0.4 3percent grew economy global by the about FundAccording (IMF) to International the Monetary conditions Macroeconomic Economic report Group management report : Economic Macroeconomic conditions report: ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 69

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 70 Group management report : Economic Macroeconomic conditions report: two percent in 2013 to million percent in 478 2013 milliontwo 488 minutes year: day). minutes day per (prior per that landline telephony will shrink market by expect researchers The calls fromlandlines. made volume million percent of of the 65 minutes to day an estimated in per 2012 309 2013—roughly in outgoing call mobile minutes day, per million minutes which have day in per risen from 300 to in due increasing continued the the growth phones mobile of use flat-rates. This is reflected VATM that compared to year, previous the Consult Dialog and report calls from more were made million day in per 2013. to 168.3 8.6 million million has sent increased oncerising again, by anof estimatedtexts from 159.7 number The nue. continue to texts account athird SMS foraround of non-voicemessaging apps, revenues conti competition from140.6 million million strong Despite to gigabytes an estimated 170.1 gigabytes. this increases total the volume data to from megabytes; 261 megabytes 227 from 15 percent will user per grow volume by of the transfer data around to Compared 2012, euros. 8.8 billion to increase which year-on-year are predicted billion eurosvoice” to revenues in 2013, 8.0 from VATM to them account thirdsimportant. than two more for of “non- Consult Dialog and expect more continue and more According to become services data mobile to market researchers, billion is in increase Germany, expected. sales in euros, revenuesA 48-percent tablet from to 2.8 million billion arevenue and increase sold euros units of 7.5 in 2013. to 8.4 26.4 KOM forecast For Germany, time BIT over abillion first were of the for smartphones. them in 2013, world the around sold billion phones mobile ofding atotal out to of market 1.8 the research institute IDC, are main the sales revenue driver in telecommunications. Accor smartphone it saysbooming in 2012, billion As at 66 around euros. significantly higher telecommunications revenues 2013, for high-tech the association projects BITKOM forecasts, (“EITO”) mation TechnologyObservatory basis the On of European Infor billion a market volume euros of in 26.1 2013. expects nitude—it is of asimilar prediction mag Agency’s billion euros). Network Federal The 24.8 year: (previous sector, aslight increase in percent) revenues billion (+1.2 to atotal euros is of 25.1 expected billion euros). communications mobile In the 4.4 billion year: euros (prior percent to 4.8 around of over nine growth strong saw operators billion cable Meanwhile, to euros. 29.7 services, work main statethe decline is driverThey billion the for a1.3 euros drop in market the fixed-net for euros) 2013. for billion VATM the 60.1 billion year: euros2013, (prior Consult Dialog and assume revenues of 59.6 Telecommunications In their in published joint October “15th Analysis Market 2013” Germany ------

for continuingfor AG’s years. and few months freenet successful in next course the basisrelated core to business agood its communications form of and mobile Internet, mobile and in EUR Postpaid-ARPU in million customers Postpaid EBITDA Revenue indicated million/as EUR In 4: Table market. overall euros), relatively proved but resistant in level year previous relation of from the the (23.4 to the declined ARPU) (postpaid customer average monthly contract the revenue per euros, At 22.3 representing ayear-on-year million of 2013, increase end ofat 8.76 the ofbase 260,000. around substantialwith the increase this in no-frills in the ownership base, results acustomer customer Together million customers. to 5.86 toCompared year-end it increased by 80,000 nearly 2012 increased as envisioned: (postpaid) in key base the customer customers areaThe of contract millionat year-end euros. to currently 427.2 2012 million ofvalue 255 million euros 451.9 from Consequently, decreased financial euros. debt net million 259.7 euros), million year: euros (prior predicted thus the and exceeds 256.2 was cators, indi performance important group’s of the most one flow, cash free period, reporting In the percent. 38 approximately of year-on-year a increase euros, lion million year euros).above prior (166.7 238.9 mil was financial year income the for net 2013 Group than were 55 percent more earnings million million (EBT) pre-tax euros, euros). At 258.4 208.8 million year: percent to euros (prior 301.3 up was by 44 around EBIT ciation amortisation, and of depre deduction increased significantlycators year-on-year after period: during reporting the euros) million(357.4 million slightly euros). and key (355 other target above our The financial indi million year previous with par the on euros, to came 357.4 Consolidated 2013 for EBITDA million euros. euros to 3,193.3 3,084.8 million with revenues percent increasing achieved, from and predicted was 3.5 Revenue growth were achieved exceeded. or 2013 financial yearthe in February beginning at the set of all major targets apositive the draw conclusion can Group 2013: for The Business performance These results confirm the Group’s strategic orientation as a provider of Digital Lifestyle services services of as strategic orientation Digital aprovider Group’s the Lifestyle confirm results These Free cash flow cash Free Key 2013 financials

Group management report (February 2013) (February Forecast 2013 Forecast Stable in the the in Stable area of 23 Increase increase Slight 255.0 355.0

: Economic report: Business performance performance Business report: : Economic 3,193.3 256.2 357.4 2013 22.3 5.86

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Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 72 Group management report : Economic report: Key drivers of the business development development business the of drivers Key report: : Economic by the network operators. network by the is This related development cards to ongoing the SIM of deregistration inactive to 4.53 million. fell million markedly of customers prepaid by number amillion the in 2013 5.58 from In contrast, companythe increased again in 2013. million million, for meaning parameter from 8.50 to 8.76 that this customers, important 260,000 has grown therefore by about no-frills and customers, sum the of ownership, contract Customer year.previous million million, the versus 2.71 At year-end, 2.90 was few years. in base this customer the sector over past the important more and online more tend concluded have and to be become contracts No-frills use. to increased smartphone in connection flat-rate and fordata demand sed products to due increa the - chiefly of by no-frills over customers 180,000, AG pool increasedfreenet its management. mer improved custo overall through and systematic further supported was This development sed. - decrea rate”) (“churn their contract cancelled who of customers number the time, same At the offers. attractive of the were because won customers contract new more In financial year 2013, anear-doubling customers, of year-on-year since year. previous the growth toat close 80,000 million). 2012 lion increase at the year-end compared to December 5.79 This31 year: puts (prior mil to 5.86 customers, financial year increase another of saw 2013 contract in number the The customers Communication Mobile million In 5: Table Customer development Key drivers of the business development compared to 14.08 million at the end of 2012, representing a decrease of 790,000 customers. of representing 790,000 adecrease million of 2012, end at the compared to 14.08 million as 13.29 was 2013 of December end at total the of the customers aresult, number As

Thereof customer ownershipThereof Thereof prepaid customers prepaid Thereof Thereof no-frills customers no-frills Thereof Thereof postpaid customers postpaid Thereof Customer development in the Mobile Communications segment 31 .12 13.29 .2013 2.90 4.53 5.86 8.76 31 .12 14.08 .2012 8.50 5.58 2.71 5.79 - - communications and services, in the Media and Saturn all stores and over in Media the Germany. before, communications As services, and T-Mobile, mobile as own well Vodafone as E-Plus, its and operators network of the ginal tariffs ori the and tariffs own sells its exclusive of GmbH the mobilcom-debitel collaboration, part As ofahead time by years. at three least successful with collaboration Media-Saturn its Deutschland extended freenet 2013, In August of Media-SaturnExtension the collaboration via intelligent another controlled used or be devices can or device. to applications devices and mobile that are connected content, includes services, and sectors covers range existing Telecommunications, the Digital Lifestyle freenet’s Internet Energy and the digital content entertainment services. and contemporary markets and develops in Germany, acquisition which the Digital and Group, products Jesta of the forApple provider leading the digital lifestyle purchase of with GRAVIS, the forexample network, sales Lifestyle company time the itself. Atsame is the work increasingdevelopment optimising and Digital its having without tois any in market do positioning this by means itself of growth partnerships, to eventually services and cover entire the sector. digital freenet of products lifestyle portfolio current the competencies and resolutelyto expand and drawing develop existing on strengths concentrates on strategy digital The lifestyle market since growth 2012. Digitalthe Lifestyle well as optimisingAs on AG core has freenet Communications, business focused its of Mobile Lifestyle Digital customers Prepaid customers No-frills Postpaid customers EUR In 6: Table with par that on year. previous was of the 2013 for ARPU”) (“prepaid customer prepaid average monthly the revenue per euros, quarter. At in fourth 3.0 the activities promotion sales up our we also stepped In this connection, period. during reporting the increased further sales, we primarily discount where the reach through online no-frills our market customers segment, price pressure in The euros 2013. for euros byyear 0.5 year, on decreased No-frills ARPU to 3.4 remained relatively ARPU customer new stable. Meanwhile, promotions. pre-Christmas including by factors triggered rates within Group, to switch freenet mers to attractive more reason forthis increased willingness the was primary of The existing custo in 2013. 22.3 euros euros fell to by 1.1 ARPU”) (“postpaid customer average monthly contract revenueThe per Monthly average revenue (ARPU) user per in Mobile the Communications segment Average monthly revenue per user (ARPU) user Average revenue per monthly Group management report : Economic report: Key drivers of the business development development business the of drivers Key report: : Economic 2013 22.3 3.4 3.0 2012 23.4 3.9 3.0 - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 73

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 74 Group management report : Economic report: Net assets, financial position and results of operations of results and position financial assets, Net report: : Economic EBITDA profit Gross The The in prepaid the field). by low-margin business (mainly distributors also and and to hardware sales distribution partners year,vious in post-paid revenue also revenue and lower has to generated due ARPU areduction pre with the Compared also to due increase the in average the ownership numbers. customer time this in consolidation year,which included the have first for the been is and MOTION TM, million This increase euros. is mainly and to due companies the to GRAVIS 3,193.3 3.5 percent to year, previous Compared the GROUP Revenue ’000s EUR In 7: Table results and Revenue operations of results and position financial assets, Net online the and business. cooperations, sales other retail own tocomplement business, its retail as astrategically relevant stationary has strengthened freenet renewing contract, By the collaboration. Telefónica AG (formerly Telefónica Deutschland O Compared to the previous year 2012, OT to year previous Compared the 2012, TM. MOTION and to mainly was euros in GRAVIS gross attributable profit absolute increase margins. with The of comparatively 11.4 million gross lower profit models ness busi TM operate acquired MOTION and newly that the companiesmainly GRAVIS to due fact the result Group EBIT EBT As was the case in year,previous the case the was As the GRAVIS. derecognitionthe of acontingent purchase price liability acquisition with the in connection of of and million of freeXmedia sale primarily the from as aresult euros, proceeds of the to 69.8 13.9 million euros in personnel13.9 expenses increase million of The euros. million euros increased by to and 3.7 10.8 to self-created software, GROSS Key financial figures of the Group the of Key figures financial PROFIT M ARGIN declined by 0.4 percentage points to 22.9 percent. This decline is percent. to 22.9 percentage points by 0.4 declined H OT ER , to million 174.1 is mainly euros, to due increase the in RE H OPERATING C ER V ENUE was mainly was attributable WORK OWN APITALISED 2 increased from 3,084.8 million euros by increased 3,084.8 from Germany) products are this from excluded Germany) products IN 3,193,329 238,940 731,246 258,443 301,307 C 357,399 OM 2013 E increased by 10.9 million euros increased by 10.9 2012 adjustesd 3,084,784 166,677 719,842 173,189 208,765 357,360 108,545 11,404 92,542 91,766 Change 65,751 39 - - euros in 2012 to 238.9 million euros in 2013; this is equivalent to an increase of 38.0 percent. million this is to to euros equivalent ineuros 238.9 an in 2013; increase 2012 of 38.0 AFTER consequence, In life. useful depreciation withrelating a scheduled marks torelations customer corresponding the trade and ferences resulting lower much with the debitel purchase the from in price allocation connection million million dif euros to euros mainly 14.7 to temporary due lower the by 24.4 declined taxes million million deferred from Income euros. euros year, previous compared with the 1.6 to 34.2 million financial year. euros increased were in by past incurred the 19.5 expenses current tax The in year,previous the of million reported expenses ofincome 6.5 from taxes tax euros been had PRE in 2013, Thus, figure. year previous corresponding the with compared line annual with the average which level financial debt has of net remained roughly constant in million million to euros euros in –42.9 in 2013, 2012 with 42.1 remained roughly unchanged, IN INTEREST NET this is main the decline. in explanation the for in thislion down 2013 euros written was respect; resulting of only 7.0 mil afigure debitel assets purchase the from of price the allocation, of most life million service planned of the euros). aresultpurchase (102.0 expiry price of allocation the As resulting such as relationships customer debitel the from to intangible trademarks and assets, year. previous compared with the year, previous In the mainly depreciation was the attributable The million euros. year previous compared with of the 357.4 figure GROUP effects, aresult above mentioned of the As gains in management. overhead efficiency marketing as well as further costs million euros increase in OT of the 5.9 The marily as aresult acquisition of the of GRAVIS. pri in 2013, to 4,492 in 2012 from3,917 in Group employed the average ofthe persons number Compared with 2012, IN with 2012, Compared depreciation. million year euros); previous compared with the (166.7 this mainly was to level due lower of the percent million million euros 55.1 or increase euros were of generated—an 91.8 ofamount 258.4 MOTION TM, represents a considerable reduction in overheads. This is in overheads. mainly to due reduction aconsiderable lower represents TM, MOTION compared year,previous with the euros, initialby adjusted the and integration of GRAVIS DEPRE C IATION C - O TAX AND M E GROUP , which is total the has of all interest interest income and expenses, - TAX A C O M M GROUP ORTISATION E EARNINGS FRO M EARNINGS TAXES decreased by 92.5 million million by euros 92.5 to euros, decreased 56.1 attributable exclusively attributable to in continued the operations Group management report ON H increased by 65.8 million euros from 173.2 million million euros from173.2 increased by 65.8 ER IN OPERATING C O EBITDA M declined by 26.0 million whereas euros; by 26.0 E declined of 357.4 million euros is unchanged of 357.4 EXPENSES : Economic report: Net assets, financial position and results of operations of results and position financial assets, Net report: : Economic , namely to 280.5 million to, namely 280.5 - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 75

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 76 Group management report : Economic report: Net assets, financial position and results of operations of results and position financial assets, Net report: : Economic euros. million year, previous with the Compared million has euros increased by to goodwill 5.5 1,122.1 financial year related in past the and the distribution rights. GmbH Media-Saturn Deutschland primarily as with aresult exclusive of extension of the the gible assets, distribution co-operation intan for million is euros to reported mainly increase the assets of 40.8 attributable non-current in year, previous the As increase in The are they dominated goodwill. and by intangible assets million euros). 1,756.0 2012: The million euros). 2,478.7 2012: December year (31 previous of the end at the reported figure corresponding than percent lower the were thus 0.1 TOTAL the 2013, December of 31 As Total assets assets Current assets Non-current million EUR In Total assets assets Current assets Non-current million EUR In Assets 8: Table financial and position Assets 31 December 2012. 2012. December 31 as virtually of completely reversed debitel been purchase the from had price allocation marks relating differences to relations customer trade and year previous the to due temporary the liabilities. and only aminor was change There assets of compared the with amounts carrying the and values tax the liabilities between tax of differences deferred figure relating to temporary this In addition, item net also the includes forwards. carry loss for assets tax tion to deferred million is to mainly recognised euros, in write-ups rence rela date,- attributable to namely 186.9 compared yearprevious with the million refe assets tax euros in deferred increase ofThe 11.4 TM. assitions well as MOTION of GRAVIS are plant equipment to and mainly acqui the attributable increases property, and inThe goodwill million euros year. previous compared with the ting an increase of 5.4 million reflec euros, as 33.8 are plant equipment and reported property, 2013, December of 31 As NON Liabilities Consolidated balance sheet figures balance sheet Consolidated -C URRENT ASSETS increased by 80.2 million euros to 1,836.1 million euros (31 December December million euros (31 million euros to 1,836.1 increased by 80.2 31 31 ASSETS .12 .12 2,478.7 2,477.2 adjusted 1,836.1 1,756.0 641.1 722.7 .2012 .2013 of the Group amounted to 2,477.2 million and euros, amounted to Group of 2,477.2 the

In EUR million EUR In liabilities and Total equity liabilities current and Non-current equity Shareholders’ million EUR In Total equity and liabilities and Total equity liabilities current and Non-current equity Shareholders’ 31 31 .12 .12 2,478.7 2,477.2 adjusted 1,301.1 1,239.6 1,237.6 1,177.6 .2012 .2013

- - - - - With regard to regard NONWith -C the 47.5 percent year. previous of the end at the percent compared with accordingly ratio to 50.0 equity percentage points The increased 2.5 euros. million accounted financial year the for in for–172.8 2012 2013 made payment dividend the and accounted profit 238.9 million for net Group million 2013 the euros this euros, increaseOf of 62.0 liabilities the On S side, equity and item million “available-for-sale in of amount 7.4 the euros. assets” non-current inbalance separate shown the sheet been had 2013, from 1 January with effect 2012 December in whichding sold was year previous year, previous GmbH In the level. of freeXmedia assets the roughly in line correspon with the 2013, million euros December as of 31 amounted toand 423.1 as well as dealers and distributors, operators network are mainly due vable customers, end from accounts recei trade were again The item predominant balance the sheet within current assets. accounts receivable trade in recent case years, the has been As TM. MOTION and tion of GRAVIS year,previous million inventories euros as aresult initial of the have increased by consolida 13.2 - of with in principal the Compared interest relation and repayments payments to financial debt. million to euros is million 161.7 attributable and to payments euros dividend is attributable 172.8 of this figure, million euros activity; financing from of of cash 339.6 to outflow the attributable million this euros investing for decline is mainly activities, of 35.4 outflow acash and in 2013 million of 278.4 activities operating from inflow acash reported Group the Whereas activities. million mainly financing from euros, in relation lion to euros flow cash in the to liquid 110.8 assets mil million decline ofof euros). 93.9 the in has mention this made to be Particular 722.7 respect The over paid customer by term and contract. the of the the ponent com phone” mobile that end to are “higher attributed the contract sing phone mobile the from claims ari forpayment reflect receivables These devices user an for additional fee. end monthly higher quality that to increasing make select customers of of offer use end our our fact numbers is accounts receivable to mainly the trade of the attributable part increase in non-current The the shareholders’ equity amounted to 1,239.6 million euros (31 December 2012: 1,177.6 million euros). 1,177.6 2012: December million euros (31 amounted to 1,239.6 equity shareholders’ tribution co-operation with Media-Saturn Deutschland GmbH. with Media-Saturn Deutschland tribution co-operation mainly to due liabilities the to exclusive resulting in the out 2013 agreed extension the from dis euros), million euros year. previous compared with have and the thus increased by 48.8 This is million 563.0 2012: December (31 million 2013 euros December a astotal of 31 amount of 611.8 Trade liabilities other accounts payable, accruals and as well as liabilities other are as shown in 2013. to 1.20 in 2012 1.26 from declined EBITDA, and debt net between ratio as the expressed million euros). 451.9 million euros Accordingly, (2012: euros to 427.2 24.7 million ratio, debt the by declined Group of the DEBT NET the financial year of the in course aresult, 2013, the As million mainly euros, as of aresult principal. of repayments 538.0 million to euros of in 118.5 borrowings reduction of the has made mention to be particular 2013, million euros as of 31 December to 1,237.6 2012 million euros December as of 31 euros 1,301.1 from CURRENT ASSETS declined by 81.6 million euros to 641.1 million euros (31 December 2012: 2012: million December euros million to by 641.1 81.6 declined euros (31 URRENT AND H ARE C URRENT HOLDERS Group management report LIABILITIES ’ E Q UITY increased: As of 31 December 2013, the 2013, December of 31 As increased: , which in total by 63.5 million declined : Economic report: Net assets, financial position and results of operations of results and position financial assets, Net report: : Economic ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 77

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 78 Group management report : Economic report: Net assets, financial position and results of operations of results and position financial assets, Net report: : Economic euros) refunds. and payments resulted in outgoing net income from tax payments million million 24.6 year: euros (previous 23.5 in In addition financial year the 2013, ware sales. associated the increase and hardware to in related customers receivables high-end end to hard increaseliabilities of in sales further the and accruals and operator relating to network amobile liabilities accruals and arising relating also and to distribution from rights distribution partners million ofof 50.1 is euros in in working mainlycapital net 2013 reduction to due planned the year previous forthe (an million increase reported tolent figure of 46.3 the euros). increase The - equiva million (net working capital an increasenet of 50.1 current euros in assets) 2013, reported 1 activities operating from flow Cash milllion EUR In 9: Table Cashflow 2012. 31 December as of assets were as liabilities shown non-current of disposal with certain the in connection sold which been had liabilities GmbH the to freeXmedia attributable 2012, December of 31 As other investments. inmillion relation of subsidiaries, to associated sales companies the euros and were reported totalling inflows cash 8.2 hand, other the On notes to consolidated the financial statements. (“Acquisitions”) Please in refer to item comments our 36 TM. in the MOTION and GRAVIS ries acquisition the for 2013 for million subsidia of the - euros reported of 13.2 to outflows cash the This mainly was million attributable euros in financial year the 2013. million euros to –35.4 –9.0 year, previous with the Compared C the the frominvesting activities) flow cash million under shown has increased by In 2013, 1.5 euros. ciated of subsidiaries sale companies the from (the associated and companies inflows cash are of subsidiaries sale of the of asso sale also and the relevant by proceeds adjusted the EBITDA, TIES C year previous corresponding with the period, Compared Cash flow from financing activities financing from flow Cash activities from investing flow Cash flow cash Free equivalents cash and cash in Change intangible assets, plus inflows from the disposals of intangible assets and property, plant and equipment. and plant property, and assets intangible of disposals the from inflows plus assets, intangible and equipment and plant property, in investments less activities operating from flow cash as is defined flow cash Free has declined by 1.7 million euros to 278.4 million year,previous with the Compared euros. million by has 1.7 declined euros to 278.4 Important cash flow figures of the Group the of figures flow cash Important 1 AS H FLOW FRO M IN AS –339.6 –96.6 256.2 278.4 –35.4 V 2013 H FLOW ESTING A FRO 2012 adjusted 2012 C TIVITIES M OPERATING –149.1 122.0 280.1 259.7 –9.0 declined from declined A –218.6 C –190.4 Change TIVI- –26.4 –3.5 –1.7 - - the revolvingthe credit line. of extension of the within of framework ahead schedule the loan amortising repayment of the million million euros mainly as euros aresult to complete of the 125.0 to increased by 44.8 debt year, previous with the Compared of principal in repayments relation the 2012. in out December note year,previous million taken promissory euros the from of 119.3 received afigure Group the VITIES euros. Compared with 2012, it has declined by 3.5 million iteuros. by has 3.5 declined with 2012, Compared euros. million amounted to 256.2 plant equipment, and disposalsfrom property, and of intangible assets plus inflow intangible and plant equipment and assets in property, investments less activities C FREE the financial yearIn the 2013, relation to acquisition the remaining of the 49 percent of shares inEnergie MFE GmbH. million euros in in financial year the 2013 of 5.0 outflow acash year.ous reported Group the And million euros previ compared with the long-term an increase this bank of loans; 2.2 represents mainly in million relation to euros in 2013, were of there also 36.7 interestIn addition, payments million euros). year 153.6 (previous activities financing from in flow cash the million euros were financial reflected year, past In the of payment 172.8 dividend C the year previous corresponding with the period, Compared million euros to million by 1.3 0.8 declined euros. activities investing from flow cash under year, previous with the Compared of interest reported inflow the cash-effective. fully were assets in non-current movements of statement in consolidated disclosed the plant equipment and property, in and intangibleinvestments assets year previous In communications the hardware. in mobile our 2012, EDP investments and shops of equipment of extension and the renewal the systems, of IT our development further with the mainly and in related company’s connection funds, own the to internally-generated software completely of out were financed investments cash-effective The activities. from operating flow investing from as or achange cash under in working activities capital net flow cash the under cial year, it not disclosed was statement; did extension not have flow cash the the on any impact in finan as well the as liabilities—however,assets which not cash-effective was as atransaction has distribution resulted rights of extension these in an The increase in intangible1 August 2013. starting GmbH with distribution Media-Saturn of forthe rights months Deutschland 36 further relates This figure to investment the in of extension at a the least euros non-cash-effective. was million of 70.8 this figure, 2013; for assets inconsolidated non-current of movements statement million euros in at were plant shown equipment 93.1 and the property, in and intangible assets million euros).hly investments in line The year previous (20.4 corresponding with the figure million roug euros, as 22.2 are reported of disposal such assets, the from against inflows cash off set plant equipment, and property, in and intangible investments for assets outflow cash The declined by 190.4 million euros from –149.1 million euros to –339.6 million In the euros. million million euros euros to –149.1 from –339.6 by 190.4 declined AS H FLOW Group management report , which is defined as cash flow from operating from as flow cash , which is defined AS : Economic report: Net assets, financial position and results of operations of results and position financial assets, Net report: : Economic H FLOW FRO M FINAN C ING A C TI - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 79

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 80 Group management report : Events after the reporting date reporting the after : Events tion 21 paragraph 1 WpHG that on 31 January 2014 its share Büdels of its voting AG, in 2014 rights freenet January that 31 on 1WpHG tion 21 paragraph us pursuant to informed sec USA DE, Wilmington, LLC, 6, Holdco BlackRock 2014, 4February On 1sentence 2. paragraph 22 in with section conjunction No. 6 WpHG sentence 1, 1, paragraph rights) 22 to are company attributed the to be pursuant to section voting voting percent of the (3,860,680 rights voting rights). 3.01 percent (3,860,680 ted to 3.01 that on day and threshold amoun reporting 3-percent the exceeded had Germany Büdelsdorf, share of its voting AG, in 2014 rights freenet January that 31 on 1WpHG 21 paragraph section us pursuant to informed USA DE, Wilmington, LLC, 4, Holdco BlackRock 2014, 4February On 6WpHG. No. sentence 1, 1, paragraph 22, pursuant to section voting rights) to are company attributed to the be voting percent of the (3,615,872 rights 2.82 6WpHG. No. sentence 1, 1, paragraph to22 are company attributed the to be pursuant to section voting rights) voting percent of the (281,387 rights voting rights). 0.22 percent (3,897,259 to 3.04 that on day and threshold amounted reporting 3-percent the exceeded had Germany Büdelsdorf, to § us pursuant informed USA DE, Wilmington, MANAGEMENT, ASSET LSV 2014, 24, January On 2014. in nings Digital to Group make Jesta apositive the contribution to ear expects Group The accruals. and liabilities the payables are receivables, dominated by trade by assets million trade The euros. Digital total balance Group’s sheet is 40 available around Jesta balance the sheet to Group, the recent most the on of digital Based forusers applications. of and services formats entertainment digital of leading modern, providers Digital is world’s of Group the one Jesta the employees, 300 giving control approx. Group and over the in Los Angeles and this Berlin subsidiary. offices With 2014, January from 15 takeover with the effect finalised conditions, was of further fulfilment the Following in following). by approval antitrust and Digitalauthorities the the Group” “Jesta the U. Digital Group Jesta and in US; the Inc. Digital Holdings, Jesta Berlin; Digital GmbH, in Jesta to purchase all signed acontract shares Group voting the and rights 2013, December 16 On date reporting the Events after No. 6 WpHG in conjunction with section 22 paragraph 1sentence 2. paragraph 22 in with section conjunction 6WpHG No. sentence 1,voting 1, paragraph rights) 22 to are company attributed the to be pursuant to section voting percent of the (3,860,680 rights voting rights). 3.01 percent (3,860,680 amounted to 3.01 that on day and threshold reporting 3-percent the exceeded had Germany Büdelsdorf, AG, share of its voting in 2014 rights freenet January that 31 on 1WpHG 21 paragraph suant to section us pur informed USA DE, Wilmington, Inc., Holdings Delaware BlackRock 2014, 4February On 1sentence 2. paragraph 22 with section conjunction in No. 6 WpHG sentence 1, 1, paragraph 22 to company attributed the to be pursuant to section voting rights) are voting percent of the (3,860,680 rights voting rights). 3.01 percent (3,860,680 that on day and threshold amounted to 3.01 reporting 3-percent the exceeded had Germany dorf, S. Holdings, Inc., US (these US companies their and to subsidiaries referred as collectively to Inc., be S. Holdings, 21 paragraph 1 WpHG that on 14 September 2012 its share of its voting AG, in 2012 rights freenet September that 14 on 1WpHG 21 paragraph - - - - - 31. December 2019. 31. December until Stephan and reappointed was as Chief Technology Officer Esch 2019, until 31. December JoachimPreisig reappointed was as Chief Financial 2018. Officer December until 31. tive Officer as reappointed and Chief as Execu chairman Board hastoph Vilanek Executive been of the Chris members. Board company’s of Executive the contracts toextension employment the company of an the early Board resolved Supervisory the 2014, 21 February on meeting In its 1sentence 2. paragraph 22 with section junction in con 6WpHG No. sentence 1, 1, paragraph 22 to companyattributed the pursuant to section voting rights) are to be votingpercent of the Voting (6,462,636 rights Rights). 5.05 (6,462,636 voting percent of the rights voting rights). 5.05 percent (6,462,636 that day amounted to 5.05 on and threshold 5-percent the reporting exceeded had Germany Büdelsdorf, AG, in freenet share of its voting 2014 rights that 4February on 1WpHG 21 paragraph pursuant to section York, New NY, us informed USA Financial Inc., BlackRock Management, 2014, 6February On 1sentence 2. paragraph tion 22 in with sec conjunction 6WpHG No. sentence 1, 1, paragraph 22 company pursuant to section voting rights) to are attributed the to be voting percent of the (6,462,636 rights Rights). 5.05 Voting voting percent of the (6,462,636 rights voting rights). 5.05 percent (6,462,636 ted to 5.05 that on and day threshold amoun 5-percent the reporting exceeded had Germany Büdelsdorf, share of its voting AG, 2014 in rights freenet that 4February on 1WpHG 21 paragraph section us pursuant to informed USA DE, Wilmington, Inc., 2, Holdco BlackRock 2014, 6February On 1sentence 2. paragraph 22 with section conjunction in 6WpHG No. sentence 1, 1, paragraph 22 to company attributed the to be pursuant to section voting rights) are voting percent of the (6,465,114 rights voting rights). 5.05 percent (6,465,114 that on day and threshold amounted to 5.05 5-percent the reporting exceeded had Germany share Büdelsdorf, of its voting AG, in 2014 rights freenet that 4February on 1WpHG paragraph York, 21 New NY, us pursuant to informed section USA Inc., BlackRock, 2014, 6 February On Group management report - - - - - : Events after the reporting date reporting the after : Events freenet AG · Annual Report 2013 Report AG ·Annual freenet 81

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 82 Group management report : Opportunities and Risk report: Opportunities report: Risk and : Opportunities ■ ■ ■ ■ ■ ■ ■ ■ ■ company forthe internal could arise from: Further opportunities this could have revenues flow. home, cash on and apositive impact in the of products networking the and proliferation of smartphones to usage due further net the towards trend Given the paying communications Inter formobile increased mobile and devices, ■ ■ ■ ■ in in following particular: the market developments opportunities external company Security.The sees Mobile Norton and options Cloud such as md Digitaland Lifestyle products marketing up its of SmartHome significantly stepped Group the acquisition of GRAVIS, in to addition the business priority: another was Digital Lifestyle The base. customer contract quality stabilising customer on on and focused the flat-rate and to tariffs market smartphones Activities in 2013. AG voice mobile resolutelyfreenet on focus maintained services data and its Opportunities Risk and report Opportunities our employees and customers. and employees our damage thereby averting to company, our measures risks, are taken to identified deal with the communication to of decision-makers responsible risks the is to designed ensure that appropriate manner to appropriate the decision-makers in company. the understandable tematic, timely The by each of executives our at communicated and an are early stage detected indevelopment asys risktunities. is management The to system intended ensure that to company’s risks future the AG freenet risk is management The exclusively system applied AG. not oppor freenet to risks, of continuity long-term the to safeguarding is essential system management risk effective An system management Risk ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ concomitant improvements in terms and conditions; and in terms improvements concomitant growth market. growth in steadily the brands growing discount to able even in to participate more market, this be callmobile debitel and light freenetmobile, klarmobil, increased establishment of the The (especially of O merger operators announced the of network A merger marketing and products; implementation The Digital of new Lifestyle other things); (among by marketing additional products improvement performance in shops’ Further the distributionnew partnerships; selling through expansion of existing power revenue channels leveragingExpanded and of Ongoing process and quality improvements to effectively reduce cost structures long-term; cost reduce structures quality and toOngoing improvements process effectively tal Lifestyle sectors; Communications of review strategic options implementation in and Mobile Digi and the The increase satisfaction; customer to systems of consolidation IT further The development and terms ones; conditions and new develop and intensification steady of businessThe relations withto suppliers for stabilise existing models of Things”). (“Internet into in home the anetwork Trend products toward connecting of associated flat-rate the sale rather products, Trend towards devices expensive (smartphones) more to by and higher extension, usage or Trend tablets, and toward Internet smartphones usage mobile on willingnessIncreased to of pay customers devices, mobile for 2 and E-Plus) the and with - - - - cutive Board. cutive which is to Group, Exe presented the whole forthe are combined into arisk report risk reports of their their and implications occurrence, company the for occur. they should individual The probability examine and the risks specific describe risk reports The Board. Supervisory the and Board to Executive the directly magnitude—are reported of asufficient and—if identified being dates immediately regular the after reporting managed are and between Risks also recorded materiality in threshold formalised risk reports. that adefined existing risks exceed new and update or subsidiaries and identify individual departments freenet’s six months, At every least 8: Figure processes. and structure overall of the organisation of freenet’s tive part risk of the are management an system integra methods - and systems The management system. forarisk within whichmanagement complies requirements system Group, the with all statutory early-warning, monitoring andTo up has an efficient set AG Board Executive freenet this end, Planning and controlling processes controlling and Planning Operational riskmanagement Risk identification Process and structural organisation of the risk management system of freenet AG freenet of system management risk the of organisation structural and Process Group controlling Group Operations and risk evaluation risk and Risk assessment requirements regarding the risk management system system management risk the regarding requirements (i. e. riske. strategy, risk culture, risk guideline)

Risk management system Market and competition risks competition and Market Supervisory Board of freenet AG freenet of Board Supervisory Process-independent monitoring The Executive Board’s Executive Board’s The Executive Board of freenet AG ofExecutive freenet Board Structural organisation Structural Process organisation Process Technical infrastructure Risk reporting: Risk Audit committee Audit Risk management Financial risks Financial Legal risks Legal Tax risks Tax Group management report

Risk communication Risk

- : Opportunities and Risk report Risk and : Opportunities appropriateness and effectiveness and appropriateness Group auditing department freenet AG · Annual Report 2013 Report AG ·Annual freenet Review of the operability, operability, the of Review risk warning system warning risk Audit of the early early the of Audit Group auditor Risk monitoring

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 84 Group management report : Opportunities and Risk report: Major risks risks Major report: Risk and : Opportunities Mobile Communications is by far the most important sector for freenet Group in Group terms of both freenet for sector Communications important Mobile is most the by far risks competition and Market results. or position financial AG’s freenet assets, could significantly affect riskor current areas our from perspective, that, individual the on risks in following the Group, we report freenet for all identified risks of the Of will Board continueExecutive to monitor existing in future. risks the have risks that assumed the implications no continuedbe The forthe existence Group. of the it can to year Overall, previous pared the in terms of their of probability occurrence impact. or of overall Individual have risks risk. an overview changed slightlyBoard gives Executive the com system regular monitoringThe via risk of risks reporting monthly the and management system risks Major makers at all times. ensuring to of appropriate risks the decision timely notification Board, Executive withcation the divisions corporate various jour-fixe of the heads arethese in The constant communi meetings. future and measures are also Recent at discussed developments all for held relevant operations. which in are atimely manner at regular meetings, developments operational about informed is kept Board Executive The indicators Group. of the non-financial performance the financial and to system manage It covers monitor the and day-to-day the both reporting business operations. management up the has acomprehensive risk set the management monthly system, Besides forming main the focus. riskthe reporting regular with the review here, role of has AG asupporting internal freenet The audit department adjusted. and developed are systems constantly and reviewed, risk managementThe methods Board. Executive the from through and updates as needed is involved Board through regular reporting, Supervisory risk of Theveness the pursuant to management laws governing system the corporations. stock AG freenet audit effecti the monitors committee, the in and particular Board, Supervisory The awareness. Employees are familiarGroup. with this manual it and to their is risk systematically used expand responsibilities and of tasks allocation the of risk documented and management withinries, the dealing for risk with catego these with along major risk astrategy Group categories the for the In amanual has defined that is Board Executive continually the improved, and amended to gain market share. market share pressure and margins on in any and/or given operation make can difficult it more in to revenue, of loss Thisto lead willingness can customer shortfalls to switch plans tariffs. and TelecommunicationsThe by intensive continue markets characterised to be high competition and sector. this Accordingly,revenues earnings. and significant market competitive most and arise the risks from - - - - tive changes cannot be significant in themselves. freenet counters by risks freenet regularly monitoringtive significant changes in cannot themselves. be of individual decisions legisla or effects The levels. revenue flows cash and This impact can possibility the of and claiming structure customers. from receivables repercussions tariff forthe Legislative even or decisions by interventions judicial regulators, result changes, can in policy having realised to replaced. be at that or cannot be higher they existing partners terms, new or could result at in other gross activations partners of revenue loss channelsThe cooperation and purposes. promotional purely explicitly for give customers their agreement—so these to it possible is longer phone no now as many management the of did existing existing not customers customers, impacts siderably acquisition, customer new from this regulation new con Apart promotional for purposes. used have Consumers to explicitly agreeto their information being as “OPT-IN”). (known agreement explicit prior only after purposes advertising for by phone contacted mayConsumers be now premiumscarrier in this area could also result in ahigher commitment capital marketing and risk. of Areduction business are the devices. with expanding attendant price on mobile risks There prospects. earnings pany’s com the on this have purchasing can impact negative asustained models, attractive not offer do operators not manage to does network freenet AG if generate or the appropriate reach, mobile in declines tunities price-related revenue from calling If in Internet to mobile charges. offset oppor AG plans freenet to growth the use rise to in due strong ably of use services. data the has communications increased consider mobile revenue “non-voice from services” Since 2008, AG’s freenet on have and revenues earnings. and impact anegative model provider service the This remaining could to lead the aweakening operators. in competition between ofrestrictions communications O mobile A potential two of operators the merger of probability occurrence. despite amoderate risk is low expected the charges, of these reductions past on Based in market. customer the per charges”, “termination the lowers this will revenue reduce further Agency Network Federal If the of distributionloss channels customers. and This in turn to lead can a providers. communications rates mobile than the better service offer to able are sometimes operators network mobile to due their Also, businessmarket. structure, of the out forcing and providers themselves communications mobile service ting their products are increasingly operators marke network mobile fromthis, Apart their tariffs. structure rators ope network the how on business provider are largely dependent Margins service in mobile the results. and cial position only at or finan inordinatethis, this will cost, company’s assets, the on have impact anegative readiness to not succeed adequatelyat switchmers’ with retention customer Ifit does measures. AG to to ready freenet strives continues minimise switch. are to very customers fall custo and its Strong competition could acquisition, customer also to new for lead higher costs while revenue Group management report 2 and E-Plus could lead to lead could E-Plus and : Opportunities and Risk report: Major risks risks Major report: Risk and : Opportunities ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 85

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 86 Group management report : Opportunities and Risk report: Major risks risks Major report: Risk and : Opportunities The company has no influence on the occurrence of this risk, as the (perhaps partial) elimination partial) occurrence company of the this on (perhaps asThe the has influence risk, no toferred abuyer, to buyer, close the to persons to or interests. with agroup parallel of buyers Shares are considered united to be in asingle if are they trans shareholder GewStG. (9) tion 10a in with sec conjunction if applicable KStG, in 8c accordance as or awhole, with section in part time by harmful acquisition of the the lost deducted could or be not settled carryforwards) loss acquisition (harmful ofrests shares), tax company’s income negative (corporation the trade and withinte parallel by asingle held by shareholders or several indirectly shareholder or directly If within years shares of 25 voting the more or percent or five in company rights the to came be changes structure. and in shareholder involving the inflows capital changes form, of corporate transactions other through contributions, lost toauthorities be date, partially could or wholly by financial the also and thus companies, assessed Group by freenet declared carryforwards loss tax trade and corporation that out the law. ruled corporate it cannot be under Therefore risk ofThe divergent interpretations valuations and to in applies any particular restructuring since in audits. yet have audited, particular are they tax to not usually even external been subject that of may taxes not fortypes is true same circumstancesunderlying The during audit. their tax of assessments to different or regulations tax of interpretations to different come authorities financial if the will changes or occur to that result carryforwards, loss arrears payments in tax it is that audited, finally have that always changes possible not yet been periods For assessment risks Tax revenue flow. cash and generate impacts revenue. This risk adversely cannot therefore and AG mean that any cannot freenet provide outages services system mers, decline in the from revenues earning and associated of custo loss with the Apart loss. customer failures or to lead can defaults by system caused problems service or outages nuity. Network conti and company’s successful the for operation billingand is of major importance systems, including centres technical data of the infrastructure, availability operational efficiency The and Technical Infrastructure earnings company of the is as moderate. classified thatoverall so the on risk as medium, of classified impact a negative occurringsuch be risks can of probability regulator-side The following and judgments. outcome of the legal developments with parallel interests. The above-described legal consequences apply accordingly. apply consequences legal above-described The with interests. parallel united through asingle measures other shareholders several under are or first rights shareholder asingleted under shares if of 25 shareholder. voting the more or percent risk or same exists The uni shares of 25 the more could percent or be purchase of shares company’s by shareholders, the that result Against out as thisadditional the or level. of asale der ruled backdrop, it cannot be time harmful acquisition ofthe the at sharehol by measures is transactions and about brought by deducted or not settled carryforwards) loss of any tax income negative (corporation trade and ------cially shareholdings. cially law, corporate under provision the of collateral, any and acquisitions espe revenue or of assets, structure Group’s to the change measures of implementation the operations, business Group’s regarding changes company to the to restrictions is the For example, subject credit agreements. covenants), and (undertakings trictions to AG in which view of freenet agreed continuing the AG’s is freenet leeway limited operating financial and res contractual byFurthermore, certain to future finance strategic investments. e. company the on credit raising agreements, stringent these restrictions beyond loans directly. are also money can draw There revolvingof the GmbH credit line, mobilcom-debitel in case the guarantor; the GmbH mobilcom-debitel and AG freenet is borrower the In each case, company’s financial the leeway. restrict year. of the end at the drawn which not been had provisionseuros, The credit of the agreements also has Group tranches). arevolving fixed-interest separate The million credit line totalling 300 million euros in two million 63.8 million-euro and euros—a variable-interest tranche 56 ling 119.8 as total 2013 December at 31 (shown books the on 2012 note signed in December promissory the from and million 417.4 euros), in refinancing 2011, of the April 2013: issued as part 31 December at (shown books the on bond corporate stem afixed-rate from borrowings under shown liabilities to liquidity The the reduce risk. of instruments financing We to avariety use banks risks Financial earnings financial and position. company’s assets, the on effect which could have authorities, adverse a considerable to fiscal the already deducted tax reimburse However, AG. freenet for remains there AG arisk have would freenet that in to such acase, partly that this will judgment likely BFH most legislation-related have tax sales implications negative no company The believes in case. pending this particular not objectionable was Financialberg Court Baden-Württem of judgement that the the 2013 October which resulted 16 on judgment in aBFH in following), the (“BFH” Finance Court Federal to German ruling the appealed was cial Court’s § customer, to end the delivery within meaning the of partner’s sales the for payment a third-party constitutes provision free the phones that of mobile triggers partner to provider sales the service commission of the component that and the paid mobile by the partner; sales bycustomer the is provision view that aprovision the the took phones mobile of against free to payment end the Baden-Württemberg and of Saarland Finance the Courts judgments, In two partners. by sales inconsistent have been cial in provision rulings their the courts on past phones mobile of free finan The court. highest by the which clarified haveto provision the not yet been of such phones, tax-related are in sales their There on account. nes their own and in name own relation problems freenet AG) while simultaneously pho users mobile with end providing free and customers end (such providers as service mobile between mediate communications mobile ners contracts part possibilitysales the of external Communications exists there Mobile business, In the 10 section 1 sentence 3 of the German Turnover 1sentence Finan German 3of the 10 section Tax Baden-Württemberg (UStG). The Act Group management report g. ing. order : Opportunities and Risk report: Major risks risks Major report: Risk and : Opportunities ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 87

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 88 Group management report : Opportunities and Risk report: Major risks risks Major report: Risk and : Opportunities ding to section 15 UmwG (Reorganisation Act) of the share exchange ratio applied in the 2007 share of the exchange (Reorganisation Act) in UmwG 2007 applied ratio the 15 ding to section AG review accor have acourt for of applied mobilcom AG freenet.de shareholders and Former risks Legal report. management in this Group asange immaterial classified rate changes be not require can do therefore mention and separate company relatingThe that feels such as financial other risks those to exch or foreign currency loans. the to cancel circumstances certain this Under could to lead aright banks financing forthe banks. financing with thecircumstances to agreements able being longer result deliver no its on in Group the this certain could under conditions development, anegative macroeconomic undergo the Should results. financial and position company’s assets, the on tive impact this have- would anega allowances turn sufficient, not to out these be Should losses. expected for in balance were the made sheet Allowances of complete receivables. or default to partial the income due or of currency loss risk consists of non-payment any The unexpected balance sheet. the on shown assets other and receivables with trade in exist connection of non-payment Risks result can in major write-downs. ting periods in subsequent is arisk There that impairment tes such as relationships customer gible assets trademarks. and intan and of goodwill consolidated Group significant amounts shows balance freenet sheet The ratings. Funds are usually at commercial invested with high time or as deposits banks call money credit debt. financial terest as accordingly anatural and hedge mitigate interest the rate arising risks variable-in the from (whichholdings serve are mainly EURIBOR) or invested EONIA at on interest variable rates based interest rate cash are The however risks the not explicitly secured; able-interest financial debt. companyrelated by The risks having counters interest vari and these rate risks. amix of fixed- company our to to regard isWith EURIBOR- variable-interest financial debt, largely subject results. and financial position AG’s freenet on assets, as adeteriorating impact anegative economy—have such with factors, their in other or own interaction can—on restrictions above-mentioned The ted and confirmed by the court-appointed by the auditors. confirmed ted merger and exchange as the audi was carefully and was ratio determined adjustments, cash willthere no be However, it is company’s assumption the share that the exchange appropriate was ratio that and proceedings. compensation the in even plaintiffs if were the they not among will have paid to to affected, all be shareholders settlement cash The in cash. exchange will settled the inappropriate, difference was ratio be the that decrees AG court into Ifthe of AG. mobilcom AG whatmerger is freenet freenet.de and now ------ charge. internal derive in guidelines employees followed, train to and the this, from standards other be and including requirements legal new analyse their processes, permanently departments The monitoring & control processes according to common principles. AG of has freenet mandated all Board divisions Executive Group’s of the The to manage their provisions. ensure legal compliance pertinent with the accounting, to in proper and particular economical measures and cesses to effective, secure Organisations Treadway of the tee of Sponsoring Commission) It comprises all pro framework. internal Group’s internationallyfreenet the control follows system recognised COSO (Commit system Group’s internal control freenet the of elements and Definition section 315 (2) no in relation to the Group accounting process (section and (5) 289 Key features of the internal control and risk management system proceedings. review evaluation share the on impact in avalid manner.formed company The likewise therefore assumes that this will also have no increase capital that the through contributionis company’s in understanding the per kind was shares that the issued tobillions France further Telecom and have would It voting no had rights. companythe to entitled still claims would compensation be against France Telecom running into handcontribution not one of was that any the consequence with inon the kind value, rendered and/or flawed was that the predecessor, company’s 2000 legal the in November mobilcom AG, increase capital view that the the through contribution hold in kind ofIndividual shareholders of any counterclaimsamounts company the may make. will and contest grounds and agreement, the of the which it as waived part euros, 7.1 billion anticipated be it should that Franceupheld, Telecom will claim company fromthe sum the of However, legally to by it. be Telecom shareholders bound view of not were feel these the does company valid to hasThe and agreement not considers received any be the indication that France shareholders. is agreement challenged being of validity by this an individual The ated settlement companies. with France Telecom signed asettlement companies, mobilcom Group former other associ and predecessor, of company’s legal the anumber being and mobilcom AG, 2002, In November Schleswig- this have decision applicants appealed to the Some groups of by shareholders. both filed uits laws the which rejected court, validated assessment district Kiel by its company the The sees Holstein Higher Regional Court (“OLG”). Court Regional Higher Holstein .5HGB) Group management report : Opportunities and Risk report: Key features of the internal control and risk management system management risk and control internal the of features Key report: Risk and : Opportunities in relation to the Group accounting process (section 289 (5) and section 315 (2) no. 5 HGB) 5HGB) (2) no. 315 section and (5) 289 (section process accounting Group to the relation in - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 90 in relation to the Group accounting process (section 289 (5) and section 315 (2) no. 5 HGB) 5HGB) (2) no. 315 section and (5) 289 (section process accounting Group to the relation in Group management report : Opportunities and Risk report: Key features of the internal control and risk management system system management risk and control internal the of features Key report: Risk and : Opportunities cing of customers, to value adjustments, accruals and depreciation. These automated controls accruals These depreciation. and to adjustments, value cing of customers, crosschecking formation of and of accounting-relevant from all the relevant data, to invoi data, internal in Group’s the regular control are at elements aimed The extensive system automation of Association. provisions Articles the and are in fully atimelythat recorded manner, business transactions in accordance legal with the accounting ensure Group reliable and proper securing at aimed measures control internal The accounting reliable Group and controlling to proper and ensure Key activities regulatory ted financial statements. AG’s toreconciliation packages freenet consolida subsidiaries’ from the reporting - standardised as well consolidation as the EC-CS system, SAP the and SAP-FI between interface the inspects AG auditor Group freenet regularly The consolidation EC-CS system. authorisations SAP of the access and AG’sfreenet regularly accuracy internal reviews the Group auditing department consolidation notes Excel. The information in of these out isMS control also system. carried inter Excel, in alia, MS as well as institutionalised internal of the coordination as part processes that packages are managed reporting are standardised from each generated financial statements consolidated the and notes management to report Group The the data. by entering reported manually sometimes and “FI” automatically module in ways—mostly various system via SAP the subsidiaries by the is entered into reported data the consolidating the consolidation etc., entries the statement, consolidation the consolidated the flow cash income statement, balance sheet, consolidated preparing the consolidation top When asGroup atlevel. its the system module CS” using accountingrecorded SAP. local manufacturer by “EC- the system AG SAP’s uses freenet AG’s essentially are subsidiaries freenet of statements financial the for Accounting processes accounting Group process the of Structure risk the on management system. remarks explanatory further for risk of the report section management” Please refer to “Risk the management monitoring and Group. across of the risks early systematic also detection, but the risk risk management, not the only operative includes managementnal system control system, inter of the part plausibilitythe As automatically hand. other of the the on results aggregated manual on and controls process hand, to one check the on thresholds with alert processes rol internal Group’s in automated on key freenet control are cont IT based The system elements the supervision of the freenet AG’s Supervisory Board audit committee. Board AG’s freenet of the Supervisory supervision the under in particular Board, Supervisory of the AG’s behalf on internal Group audit department reviews by freenet including control independent elements are there extraordinary In addition, measurement liabilities disclosure and and of assets in consolidated the financial statements. inventorying This an and ensures accurate data. proper recognition, detailed underlying of the byare manual supplemented plausibility of all checks relevant interim checks random and results

- - - Figure 9: Figure accounting process. Group to the regard with monitoring financial included the statement of subsidiaries, the process-independent final represent the In particular, auditor, audit Group’s by consolidated the the of the financial statements of and review activities. with process-independent ment, are also auditor involved control Group review Group’s other and in bodies environThe freenet to are systematically results used measures derive monitor and The their success. ties. level of the automation within control the activi furthermore and of internal audits, frequency increased the and continued tests to internal expand The audit department implemented. been in yearsprevious have in audited that the departments potentialwed detected improvements annual review internal of the internal sho control in Group 2013 system The audit department’s i. e.: reporting, target definition, monitoring measures monitoring measures Process-integrated freenet AG’s internal control system control AG’s internal freenet Organisational controlling Reviews

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system management Risk

: Opportunities and Risk report: Key features of the internal control and risk management system system management risk and control internal the of features Key report: Risk and : Opportunities

in relation to the Group accounting process (section 289 (5) and section 315 (2) no. 5 HGB) 5HGB) (2) no. 315 section and (5) 289 (section process accounting Group to the relation in Management Processes system management Internal

- - - freenet AG · Annual Report 2013 Report AG ·Annual freenet monitoring measures Process-independent Internal auditing Audit comittee Audit department

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 92 Group management report : Corporate Governance: Corporate management statement management Corporate Governance: : Corporate sed at any company’ssed time website. the on is in following acces may management the included and 2013 statement corporate be December Statement of The Compliance years. previous from dated 5 forward were carried justifications exceptions declared other their and exceptions. The explanation of and these justification its summarised standardised and Board Statement of 2013 Compliance, Supervisory In the the 2012. in were justified and already explained Board that relate to composition the Supervisory of the matters on Code of the 5.4.2 Section and 5.4.1 Exceptions to recommendations in the Section according 5.1.2. members to criteria the in Board out Executive section of set new a selection over take should precedence continuity Board Executive the on appointments, Board Executive of current expiry view that upon Board’s Supervisory the on exception based The was Board. annual 1in of compliance, its declaration paragraph regarding composition the Executive of the an exception 5.1.2, recommendation to justified and Code explained Board Supervisory The requiring explanation. changes for compensation Board revised recommendations Executive for the examined Board In particular, Supervisory Code. the Governance Commission Corporate Government by German the in the on 2013 in Code the ded inclu recommendations newly - the discussion on The focused Governance Code. man Corporate provisions the discussed Board Ger of the Supervisory the 2013, 5December on meeting At its are committed Group objectives. to all freenet and of these the executives employees and Board management control and company. of the Supervisory and value-driven Board Executive The and responsible as well of transparent, principles as the Governance Code Corporate German of the objectives with the themselves governance; corporate responsible and identify they good are committed to of principles the bodies management AG supervisory and its and freenet dance with § also contains management in statement corporate accor This the section Governance Code. Corporate German of the in 3.10 Group accordancerate Governance in freenet the with section Corpo Board—on Supervisory of the behalf on reports—also Board Executive the In this section Governance Corporate the company’s management report for the financial year the for 2013. company’s managementthe report managementlowing in statement corporate accordance with § fol AG the made freenet committees is presented. Board’s Supervisory of the functioning and composition of and the is described Board Supervisory and Board Executive of the functioning the provisions. Furthermore, legal above the and on applied to management practices corporate rent of compliance statement according to § In accordance with § Corporate management statement 289a HGB (German Commercial Code). HGB 289a 289a HGB, freenet AG’s corporate management statement presents its cur its AG’s freenet management presents statement corporate HGB, 289a 161 AktG and explains relevant and details the relating AktG 161 289a HGB, which is also part of which is also part HGB, 289a ------5. 4. 3. 2. 1. is of there exception where adeclaration in company fromthe cases below. (ascomply Code recommendations of in with future, the the except the May 2013) 13 issued on group is The also going to May as 2013. 13 issued on in version Code of the the 2013 June since 10 and 2013, June up until May 2012 10 as 15 issued on (“Code”) Governance Code man Corporate exceptions listed below, complied recommendations contained with in the version Ger of the the with AG the has, freenet Since issuing 2012, of compliance statement last its 21 December on Statement Corporate Governance the on in Code accordance with § visory Board’s variable remuneration is not planned. (Clause 5.4.6, paragraph 2 of the Code) 2of the paragraph (Clause is remuneration variable 5.4.6, not planned. Board’s visory Super For this of the an adjustment reason, to development. promote sustainable corporate also serves view, linking the its policy therefore, to remuneration variable dividend of the the whichket, is linked is In to geared flow, cash towards free sustainable business development. as communicated to policy mar capital also dividend the believes thatCompany’s the Board Supervisory The view that this has of compensation well variable worked form in past. the is of the Board financial year. past the for dividend the is on Supervisory calculated based The Board Supervisory of remuneration the variable the of Association, Articles 5of the paragraph According sustainable business on to development. clause focused 11 be should Board visory Super that of remuneration the avariable recommends Code 2of the paragraph Clause 5.4.6, Code) 3 of the paragraph and 2 paragraph to (Clause change need this no 5.4.1, practice. it sees Therefore, well. very out to date, Board that believes and this has worked Supervisory the for nominees selecting when candidate of qualification the by the solely guided has been Board Supervisory The above. the on which are based 3, paragraph it cannot comply recommendations in with the Clause 5.4.1 aresult, As sentence Code. 1of the 2, paragraph Clause 2and 5.4.2, paragraph Clause 5.4.1, in composition out as set its for targets definite not specify does Board Supervisory The sentence Code) 2of the sentence clause 6and 5.4.1, (Clauseage. 5.1.2, their on considered based as candidates not be solely should experience onal personal and with extensive professi people opinion it makes that Board’s well-qualified sense no visory Super In the members. Board age limitNo Supervisory and is Board laid Executive for down Code) 1of the paragraph (Clause is secondary. Code 5.1.2, 1of the paragraph in Clause 5.1.2, criteria out the on as set composition the for of Board based an Executive thatfeels aselection therefore Board Supervisory The continuity for Board. strives Executive therefore and the on as successful current regards the composition Board Executive of the Board Supervisory The Code) 3of the paragraph this Given that inappropriate. their (Clause duties seems are same, the 3.8, members. Board Supervisory the on impact Aretention vary. have therefore would avarying members Board circumstances Supervisory of the personal account the although principle, equality of the Moreover, aretention Board. have would uniformly set to on be Supervisory of the bers benefit associated with this. Acting responsibly is a duty and a matter of course forall amatter of and responsibly course is associated mem with Acting aduty this. benefit of an aretention no company agreement as the see is can not included, Board, Supervisory of the members For the members. company insurance Board The for its has taken D&O out Group management report : Corporate Governance: Corporate management statement management Corporate Governance: : Corporate 161 AktG AktG 161 - - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 93

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 94 Group management report : Corporate Governance: Corporate management statement management Corporate Governance: : Corporate The idea is to give the company the opportunity to is immediately idea toThe give take company resolute the appropriate and opportunity the company. the and allegations, by the affected whistleblower, people the using and ner a transparent that accountable and takes process into account of the interests the whistleblowing will throughAll information tool the investigated provided be in a timely man aware of compliancebecome violations. they to should give anonymously whistleblowers It enables notification Group. attool freenet awhistleblower introduced and developed Compliance the department In financial year 2013, is available questions. compliance toThe all department specific foradvice on rules. and values area are of in responsibility accordance relevant actions the with all own lawsour and applicable ensure and compliance executives represent that Group in theirfreenet in their conduct, own resolved. ver, wrongdoing violations or should of compliance occur, are comprehensively incidents these prevent compliance Howe competition violations and corruption violations from. such as fraud, to power in its everything company The does are avoided. offences and arepolicies observed, self-imposedpliance regulations are met, internal means requirements and that legal company is Group fully committed freenet toThe compliance com law. with the Group freenet For the in event Group. the that of existenceBoard risks endanger the freenet of the Supervisory the also notifies Chief Compliance audit The committee. Officer Board’s Supervisory regularly to the also reports Chief Compliance to The system changing Officer requirements. ting accordingly into them practice as well within as Group, in adapting freenet compliance the AG relevant to requirements put and freenet legal the in identifying Board Executive the ports sup He Board. to Executive the directly reports Chief Compliance Group’s freenet Officer The compliance that is AG continuously function hasfreenet aGroup-wide evolving. and expanding Relevant information on corporate management practices damage. fraud- to avert processes and measures fraud-prevention effective improving cing and is with introdu - in charged particular departments fraud Group individual the freenet between to In addition coordination in also 2013. A central was established Fraud system Management process. wer whistleblo of the implementation committeewhistleblower is operational the for responsible The of Fraud Head Management. the of and Internal Head Chief the Audit, Compliance Officer, committee whistleblower are of the the Permanent committee. members up awhistleblower set has Group freenet processing process, of in evidence whistleblower expeditious the and proper of in compliance case action violations in to order prevent To damage AG. to freenet ensure related ------cutive Board. cutive Exe by the of meetings outside current the businessare development also kept about informed members Board Supervisory The resolutions. passes if required, and, discusses them reports, that are company significant the for transactions basis in the ness detailon Board of Executive examines busi Board Moreover, Supervisory the Board. Executive with discusses the and them basis, a case-by-case on targeted, and planned fromwhat hasof business been development examines any Board deviations company’s situation. the and Supervisory gic The development planning, strate corporate business the development, regularly about companythe reports and in all decisions Board management fundamental the of on involvestive Supervisory Board the management managementcompanyitthe of in the company. of the its oversees and - Execu The decision-making in its regarding Board Executive the regularly advises Board Supervisory The lutions in in exceptional session, also by way cases of conventional means of communication. half-year. calendar is convened per Board at twice least reso It normally passes Supervisory The Board. cutive of responsibilities, areas the schedule of responsibilities Exe of the individual of the members of acompany within framework the establishes, Board Supervisory The lar specialist meetings. in participate - regu Board Executive of the members the in their business Furthermore, areas. developments acontinuous and on events informed other basis about at meetings regular Board overall for the lity management company. of the together as a team work They keep and each have Board joint Executive of the responsibi members The of procedure. regulated rules by its is Board Executive of the work The currently and interests has members. three company’s best parent Group’s company, of the by the is management the bound body Board Executive the As to controltrust monitor and company’s business. the in and aspirit closely of cooperate mutual Board AG’s Supervisory and freenet Board Executive Board Functioning of Executive the Supervisory and Board employees. ciently information provide training and regarding key compliance to topics of alarge number To training we are to developing e-learning programs effi sessions, in-person the complement appropriate the transparency. established key and on Group; issues freenet security the for sary regulations internal the and company giving guidelines neces all it the has employees developed; complianceThe organisation training has various run sessions to relevant explain statutory the responsibility has protection. fordata operational ance department Compli The to entrusted data us. the we handle how on access to and sed transparently report this us for to unauthori from data protect It is important therefore employees. and contractors suppliers, responsibility special of with its of data customers, to regard our handling personal the is has increased Group steadily aware of protection data freenet in recent years. importance The Group management report : Corporate Governance: Corporate management statement management Corporate Governance: : Corporate ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 95

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 96 Group management report : Corporate Governance Corporate : The committee also deals with questions of compliance. of questions with deals also committee The additional auditors’ services. the and independence auditors’ the annual inthe particular audit, internal internalof and as the well risk as management control audit system, function system, audit committee isThe with monitoring concerned effectiveness accounting of the the process, committee Audit (until JoachimHalefeld committee the in 2013: 23 May 2013) left who Members 23 May 2013) (since (Chair), Birgit Schenk Geffke Kraemer, Claudia Hartmut Anderleit, Thorsten Dr Members: Board. responsibilities to mandatory the Supervisory of the subject Board, Executive of the regarding matters members personnel about Board in place Supervisory of the regular review. its and resolutions committee system passes compensation The the tive Board, - concerning Execu of Board compensation the the to resolution for Supervisory the proposals It submits resolutions. personnel Board’s Supervisory committee the prepares personnel The Personnel committee/HR committee 23 May 2013) Nicole Engenhardt-Gillé, committee the in (each 2013: Claudia Anderleit left until who Members (since Mackeprang Knut 23 May 2013) (since (Chair), 23 Schenk May Birgit2013), Geffke Hartmut Thoma, Helmut Prof Dr Dr Members: time. taken in cannot be good Board delay Supervisory of aresolution the and no bear matter that can the provided of procedure, rules accordance Board’s Executive with the in Board Executive by out the carried to isapproval be required measures for transactions and where Board executive committee resolutions pass in can The place Supervisory of the Board. executivekey on committee advises The Supervisory issuesresolutions of prepares the and committee Executive content the on meeting of committee meetings. plenary Board to Supervisory the committees of report the chairpersons The necessary. where committees discuss agenda items The the resolutions pass and by out telephone. carried also be can meetings the in exceptional personal; cases, committees meet The Board. Supervisory by the passed resolutions to and session be in plenary addressed to committees topics prepare be These atotal has executive established of committee one four committees. and Board Supervisory The any has not established committees. Board Executive The committees of functioning and Composition Members who left the committee in 2013: Steffen Vodel, Joachim Halefeld (each JoachimHalefeld Vodel, Steffen until committee 23 the in May 2013) 2013: left who Members Stephan (since 23 May 2013) Weidinger (Chair), Robert Tüngler, Marc Members: Ronny Minak (since Michael 23 May 2013), 179 AktG and section 16 in the Articles of Association of freenet AG. of freenet of Association in Articles the 16 section and AktG 179 133, are sections of Association to clauses Articles governing the The amendments Association. 5 (1) of in with section conjunction Articles of the MitbestG 31 section and AktG 85 84, sections to AG of is freenet subject Board dismissal Executive and of the appointment The of members Association of Articles to the amendments Executive Board, the of members dismissal of and Appointment Employees cannot claim any if are they shareholders. rights special Type participation event control in of voting employees’ of of the rights of are control. which shares with no confer rights special vested There powers control of powers or rights with special vested Shares AG. in freenet voting percent of the shareholdings were exceeding there no rights 10 2013, December at 31 As voting the of rights percent exceeding 10 Shareholdings is of voting shares. on not aware transfer Board of the any Executive or rights restrictions The voting and restrictions transfer Share Meeting. individual share registered Each vote confers one shares. Annual at General the 128,061,016 into euros is and divided share (capital capital The to AG stock) 128,061,016 of freenet amounts capital share of Composition Information required under takeover law according to section 315 (4) HGB (Chair), Schenk Tüngler, Hartmut Marc Dr AchimMembers: Weiss Meeting. to forrecommendation Annual General the Board to Supervisory the ming elections nominationsThe committee is of task suitable candidates with charged proposing the upco for committee Nominations 23 May 2013) Nicole Engenhardt-Gillé, committee the in (each 2013: Claudia Anderleit left until who Members (since Thomas Gesine 23 May 2013) (Chair), Schenk (since Kraemer, Mackeprang Knut Hartmut Thorsten Dr 23 May 2013), Members: in § of achieving described task the mediation committee in is The accordance established with § committee Mediation Group management report 31 (3) sentence 1MitbestG. (3) 31 : Corporate Governance: Information required under takeover law according to section 315 (4) HGB (4) 315 to section according law takeover under required Information Governance: : Corporate 27 (3) MitbestG with the purpose purpose with the MitbestG (3) 27 - freenet AG · Annual Report 2013 Report AG ·Annual freenet 97

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 98 Group management report : Corporate Governance: Information required under takeover law according to section 315 (4) HGB (4) 315 to section according law takeover under required Information Governance: : Corporate pany’s website in the area Company/Corporate Governance. Company/Corporate area in the website pany’s management in statement corporate accordanceThe with § in accordance with statement § management Corporate vesting period. eventIn the of achange exercised may appreciation of of the control, rights regardless stock be company the of agreement Indemnity terms AG. on that obtained are freenet for unfavourable only be can or obtained cannot be contract loan syndicated the risk to financing that settle subsequent the AG bears freenet event contract, In the loan cancellation of the syndicated Meeting. of the jointly, acting Annual at General the parties obtain several amajority or party, if one bid exists, company. obligation the to submit provided achange Such atakeover of control already exists, rightThis for the to inapplies in eventloan particular the the cancel of a change of control at the obtain aright to banks loan.ditions call which consortium the the under con the on AG has freenet influence no cases, In some loan. syndicated of the transfer the upon obligations and AG on that took freenet event restrictions of violations contractual of certain Aright conditions. to in terminated or may full certain loan call the be under arise in in the part may contract loan liabilities syndicated The the under Group taken to by freenet out the banks control of Change acombinationoptions or two). of the call or using or (put derivatives equity by to shareholders, issuing rights the tenders, delivery exchange,stock by means of a public purchase offer, by means of a public invitation to submit shall take buyback the place through the whether chooses Board Executive subsidiaries. The its exercised company by subsidiaries the account on its or by or company third of the parties or This authorisation may be 5July 2015. current percent of the share before up or to on capital 10 shares to back buy Board Executive the authorised of 6July 2010 Meeting Annual General The shares back buy to and issue Executive Board the of Authorisation 289a HGB 289a 289a HGB was published on the com the on published was HGB 289a - - Mr Esch was 556 thousand euros (prior year: 386 thousand euros). thousand 386 year: euros (prior thousand 556 was Mr Esch euros); thousand for value the and 857 year: euros (prior thousand Preisig Mr for value 1,236 was euros); thousand the 1,286 year: euros (prior thousand 1,853 was Vilanek forMr programme provision of value the the LTIP for the 2013, December of 31 As euros to Esch. Mr 122 thousand euros to Preisig Mr thousand 270 and euros to Vilanek, Mr thousand sum the ofnamely 405 time, LTIP the were issued under first the for payments In cash financial year programme 2013 dateas same at year. previous of the the appreciation rights stock not hold do members Board Executive former and Board Executive The euros.) thousand 2,618 year: euros (prior thousand amounted to Commercial of the 2,664 Code 6a 1No. Sect. Art. 314 in compensation accordance financial year Board Executive the 2013 with In the cial year 2013. in finan the Board Executive of the were granted to Members the a long-term incentive effect with any options or stock components compensation other appreciation rights, stock new No Preisig Joachim Christoph Vilanek ’000s EUR In 11: Table ’000s EUR In 10: Table Code. Commercial the of 6a 1No. Sect. 314 a change in vesting in the conditions accordance are not included, with Art. LTIP or appreciation programme stock ges in of value on the that the are not based programme paid in compensation It financial year. includes the Commercial of the Code. 6a 1No. Chan sect. 314 in accordance Compensation with Art. members’ details Board of provides the below table the as follows; is composed company’sBoard of the Executive for members compensation The compensation Board Executive Board Executive forthe Compensation Supervisory and Board report Stephan Esch Stephan Preisig Joachim Christoph Vilanek Stephan Esch Stephan Executive Board compensation for financial year 2012 according to HGB year 2012 financial for compensation Executive Board Executive Board compensation for financial year 2013 according to year HGB 2013 financial for compensation Executive Board compensation compensation Group management report 1,505 1,514 Fixed 444 440 621 Fixed 444 445 625

compensation Variable cash compensation Variable cash 1,159 1,104 504 504 151 : Corporate Governance: Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report Compensation Governance: : Corporate 144 480 480

compensation compensation Total cash Total cash 2,664 1,125 2,618 1,105 944 595 589 924

incentive effect with long-term long-term with Compensation Compensation incentive effect with long-term long-term with Compensation Compensation 0 0 0 0 0 0 0 0 compensation compensation 2,664 1,125 Total Total 2,618 944 1,105 595 Total Total 589 924

- - freenet AG · Annual Report 2013 Report AG ·Annual freenet 99

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 100 Group management report : Corporate Governance: Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report Compensation Governance: : Corporate ■ ■ ■ Berger: Eric and Krieger Eckhard Spoerr, Axel members Board Executive former the for Arrangements planspension are as follows: provisionsCompensation in event the of and premature termination contracts of employment employedto be Compensation provisions for event the of Executive the of amember ceasing Board Board. Executive of the were issued any for warranties members of the other guarantees or no and Board, were loans given Executive of the No to any members of the euros. thousand 108 Esch Mr euros, Preisig Mr euros, 92 thousand thousand 157 Vilanek breakdown Mr the as was follows: 2012 for 174 Preisig euros; Esch Mr euros Mr and thousand euros, 125thousand thousand 250 Mr Vilanek this spread over was following figure the persons: For 2013, result commitments. pension of the as a Board Executive of the members forthe euros) expenses were recognised in personnel thousand 357 year: euros (prior thousand Total of 549 time expenses current post-service and euros). thousand 6,520 year: (prior 2013 euros December as of 31 thousand 6,236 totalled Board, Executive of the members as former Berger Mr and Krieger Spoerr, Mr for Mr euros). thousand DBOs The 751 year: Preisig Mr for euros (prior thousand amountedDBO to 893 the 2013 over commitment pension the granted to Preisig December Mr 31 On by debitel AG. AG freenet took 2008 euros). of 1September thousand As 1,531 year: euros (prior thousand 1,627 974 euros) year: thousand euros (prior Esch Mr for thousand and 1,165 were as(DBO) follows: Obligations Benefit Defined the 2013 December 31 On 1 May 2009. on Officer Chief Executive cial year, as appointed was he commitmentwhen pension Vilanek granted Mr for an was indirect finan 2009 In the commitment pension granted to anEsch. was indirect Mr 2004 In November ■ ■ ■ vant vesting period and the respective objectives being achieved, remained in achieved, being place. objectives respective the and vant vesting period rele ofStock the which appreciation have rights exercisable to due expiry already the become of 27, to amaximum paid. total pension final of amount the training, vocational or of terminating schooling end the reach age they latest at the the when life or for orphan’sany companion, pension and spouse annuity for the children untilSurvivor pension). (guaranteed salary fixed annual final of one-third to a maximum AG, of freenet.de predecessor company of legal the Board its or Executive the each for year on commenced salary amounting annuala pension percent of final to fixed 2.5 shall Board receive Executive of the members birthday, above-mentioned From the their 60th

- - ■ ■ ■ ■ 2011: from1January following apply the Stephan rules Board Esch, Executive of the member For the ■ ■ ■ 2011: from1June following apply the rules Christoph Vilanek, Officer Chief Executive For the ■ ■ ■ ■ ■ ■ ■ the Group EBITDA for the current the for financial year. EBITDA Group the shares in LongTerm the Incentive of Account to shares number that the result is from added company, of the § part under the cause which for is there good on contract termination of the service of the part not form does to Board appointment the company pursuantof to the cause § is not good for part the on contract apositiveit termination that shows balance. Provided the service of the claimcan forpayout Long-Term of the Incentive Account time at of the termination, provided Esch is his or Mr to revoked, Board termination, appointment the cancellation otherwise, or of term, to due ends expiry A four-year contract service Ifthe signed. was agreement target apply. not does restriction such termination 12-month the Where term. of cause, the is to due good not later but than end by the of employment, end fromthe months of twelve within aperiod conditions, to contractual other the remaintion rights subject in exercised, force be can and in invalidity, or earnings capacity reduction plete in event or all the apprecia- of death, stock to due or acom cause terminating forany event Esch In good the of Mr contract his service of 27, to amaximum total pension. guaranteed of amount the training, vocational or of terminating schooling end the reach age they latest at the the when life or for orphan’sany companion, pension and spouse annuity for the children untilSurvivor pension). (guaranteed salary to amaximum AG, of one-third annual of final fixed freenet.de predecessor legal pany its or com of the Board Executive year each for the contractual on commenced salary annual fixed shallFrom birthday, Esch receive Mr amounting his apension percent of final to 60th 2.5 current the for financial year. EBITDA Group the shares in LongTerm the Incentive of Account to shares number that the result is from added company, of the § part under the cause which for is there good on contract termination of the service of the part not form does to Board appointment the company pursuantof to the cause § is not good for part the on contract apositiveit termination that shows balance. Provided the service of the claimcan forpayout Long-Term of the Incentive Account time at of the termination, provided Vilanek is his or Mr to revoked, Board termination, appointment the cancellation otherwise, or A four-year target agreement was signed. If the service contract ends due to expiry of term, to due ends expiry A four-year contract service Ifthe signed. was agreement target obtain were if would to he Vilanek die. Mr entitlements agethe of 27, to of value amaximum pension the paid or total pension final of amount the training, of vocational their or end terminating schooling the reach they latest at the when life or for orphan’sany companion, pension and spouse annuity for the children untilSurvivor pany, (target to pension). amaximum of salary one-third annual of final fixed com of the Board Executive year each for the contractual on commenced salary annual fixed From shall birthday, Vilanek Mr receive his amounting apension percent of 60th final to 2.5 Group management report : Corporate Governance: Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report Compensation Governance: : Corporate

626 BGB, or that the revocation of revocation that his or the BGB, 626 of revocation that his or the BGB, 626 626 BGB, the number of virtual number the BGB, 626 of virtual number the BGB, 626 - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 101

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 102 Group management report : Corporate Governance: Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report Compensation Governance: : Corporate There are no service contracts with any subsidiaries AG. of contracts freenet are service no There ■ ■ ownership and other details. other ownership and share held, rights appreciation stock amounts, compensation about in particular information, Please also refer to item in notes the to further for 35 consolidated the financial statements ■ 2011: Preisig, Joachim Board 1June from following Executive apply the of the rules member For the Board receives double this amount, the vice chairperson one and ahalf and times this one vice amount. the this chairperson receives amount, double Board Supervisory of the chairperson The Board. full Supervisory financial year the on of membership euros foreach basic of receive compensation 30,000 fixed members Board Supervisory The ■ ■ ■ components: three consists and of of association, is compensation articles by governed the Board Supervisory The compensation of principles Basic compensation Board Supervisory ■ ■ ■ ■ ■ ■ the Group EBITDA for the current the for financial year. EBITDA Group the shares in LongTerm the Incentive of Account to shares number that the result is from added of virtual number the company, of the BGB, §626 part under the cause which for is there good on contract termination of the service of the part not form does to Board appointment the of revocation that his or the company BGB, pursuantof to the cause §626 is not good for part the on contract apositiveit termination that shows balance. Provided the service of the claimcan forpayout Long-Term of the Incentive Account time at of the termination, provided Preisig is his or Mr to revoked, Board termination, appointment the cancellation otherwise, or of term, to due ends expiry A four-year contract service Ifthe signed. was agreement target is orphan’s pension monthly times the paid.amounting to 24 payment lump-sum to At aone-time this receivetled orphan’s pension. monthly point, the willeligible orphans cease time reaching at for of enti the his to On be age death. the of 18, Preisig that pension percent ofMr the sions to combined entitled may was or 90 not exceed basis orphan’s the pen and JoachimPreisig. on for pension guaranteed rights of the Widow’s for orphan’sbinding pension and individual spouse annuity for the child custody Survivor of service. length actual the on ling based pension guaranteed of the which arise, isnon-forfeiture calculated- is according there hence asca to requirements, legal conditions once the and reachingshall prerequisite after receiveage the of 60 apension, to pension). monthly leaves Ifhe euros (guaranteed early, Preisig Mr of amount 9,333.00 the JoachimPreisig Mr retirement reaching on shallUpon age receive the of 60, in apension Performance-linked compensation. compensation. Performance-linked Attendance fees and compensation, Basic

- - warranties were issued for any of the members of the Executive Board. Executive of the were issued any for warranties members of the other guarantees or no and Board, loanswere given Supervisory of the No to any members of the exercising as well as VAT for their office, taxes. as incurred aresult of expenses for are reimbursed members Board Supervisory Furthermore, euros. thousand thus was 896.7 Board visory total Super for compensation The financial year the for resolution appropriation 2013. profit the on depends paid out be will compensation indeed this performance-based Whether an expense. euros also was recognised as thousand of compensation 405.4 Performance-based euros. and of 86.0 thous euros attendance and fees thousand of compensation 405.3 pany received fixed com of the Board Supervisory of the members the during financial year the 2013, For their activity ahalf and times this one amount. chairperson vice the this receives amount, double Board Supervisory of the chairperson The compensation. financial year. is compensation of the limited extent basic The as to fixed payable amount the share company euro of per the that previous is the for of distributed 0.10 to shareholders the euro in in excess dividends euros each for 0.01 in of amount compensation 500 the mance-based of each financial end year, the also receive, after members perfor variable Board Supervisory The in meetings. actual participation phone for and committees, its and Board Supervisory of the meetings forconference-calls of payment waive attendance fees the to decided Board Supervisory the third of the from 2010, quarter starting restrictions, imposed of voluntarily part As this receives amount. double committee chairperson The committee. the euros of each for meeting in an of addition 1,000 attendance fee MitbestG—receive (3) tion 27 in exception accordance the committee of the formed committee—with with sec Board visory to aSuper belong who members Board he/she Supervisory meeting Board attends. Supervisory euros each for receives an of 1,000 attendance fee member Board Supervisory every In addition, Group management report

: Corporate Governance: Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report Compensation Governance: : Corporate ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 103

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 104 Group management report : Forecast: The market in 2014 in market The : Forecast: mid-February, sales of applications for mobile devices (“apps”) generated around 17 billion 17 around generated euros of applications devices (“apps”) formobile sales mid-February, European by published the CommissionAccording in report Economy” to EU “Sizing the the App usage. Internet associated the increase and in share the of penetration mobile increased smartphone grid, ply sup launch vectoring include of the the 2014 for trends industry of LTE.reness expected Other year. last network This year will LTE a continued the on focus see building on and rollout - awa VATM the LTE new the expanding thatthe on noticeable made was progress network, reports delays for point-to-point ongoing and inDespite of approval the the problems links needed radio is usage, data likely by out declining cancelled to termination for be roaming. fees EU-wide and in communications, mobile especially in area growth the current of mobilethe year. expected The According to VATM, the telecommunications German the market percent will dip a 1 to in 1.5 see 2015. and percent for 2014 2.0 percent and 1.7 economy: in German areturn the to growth stronger dicts Bank) pre therefore (German Federal Bundesbank the 2013, of December report monthly In its incipient driver forthe recovery. as agrowth seen was in economy particular late, domestic the pickedeconomy up momentum again year. of towards the end the weak foreign of With trade German the full forthe year 2013, in only moderate was Germany growth economic Although percent in 2015. to by and is 1.4 grow percent in by forecast one 2014 GDP comparatively weaker. be should financial crisis, of the recovery impact the euro For zone, the by EU In the countries uneven. to affected that are be directly in Europe expected development According to IMF, the with recession, offurther the euro the zone worst has the weathered in industrialized in United the the States. recovery accelerated and growth economic countries, economic by an in expected particular during currentpositive the year development is supported According to Accordingcurrent this estimates this percent. in will 2015 to IMF increase the to 3.9 percent. (GDP), still was growing at 3.0 product measured in gross global domestic output, economic global In 2013, percent. percent to forthis 3.7 year forecast slightlygrowth 3.6 from economic global its raised Fund (IMF) International beginningAt the the of Monetary 2014 The market in 2014 Forecast apps in business-to-businessapps the (B2B) sector. installed on advertising as well group-specific as target business-to-consumerthe sector (B2C) highlights long-term the in of creation, use value apps of return which report in the for payment will give rise to developments dynamic sources of technological new The euros in Europe alone. market will volume ofthe fledgling this 63 fragmented rise billion to currently about still very devices globally billion estimated at financial 94 year. in past the by 2018 According to report, the mobile on installed of apps number with the of revenues within European the Union in 2013, - - 1 2015. million millionof approximately of 370 and around euros euros financial for for year 365 2014 company the above, is aiming described EBITDAIn accordance Group for developments with the sector.applications in Digital the Lifestyle mobile for accessories services and of revenue of devices, sale streamsdevelopment the from in core is here the increasingARPU business the main communications, of mobile the factor above- the from Apart 2015. aslight increase financial in revenue year and financial Group in year both 2014 pany expects Taking com the into account 2014, acquisition the Digitalin completed January Group of Jesta currentthe financial year, stabilization financial for year 2015. afurther and aslight decline year-on-year company in the ARPU expects in From postpaid this perspective, applications. mobile and smartphones for increased demand in with the conjunction keting of tariffs data decline in by to striving ARPUs increase improveand mar base the customer quality the of its communicationster in persistent mobile price deterioration the the market associated the and no-frills). and company (postpaid The continues to ownership sector customer coun important aslight in increase ofthe customers in number the company the expects 2015, and For 2014 base Customer indicated million/as EUR In 12: Table by driven shrinking in particular base, sector. prepaid of the this to past In has strategic the orientation adecline in led overall the customerrequirements. of customer development further the reflecting alignedand additional for quality improvements, To initiatives existing developed this, loyalty do customer valuablefor contracts. will further be companyThe will continue to retaining on focus signed up acquiring and be can who customers 2015: and in 2014 following the to developments see currently expects Board Executive The potential. with highmarkets growth is Group also in positioning emerging freenet itself services, and products ring Digital Lifestyle by side declining offe consumer and supply the Inthe addition, on side. of total users numbers by decliningcharacterized intense The market competition. volume is leading to consolidation on in asaturated core market operates Group businessIn its communications, of mobile freenet Group freenet Group revenue Group ARPU Postpaid Group EBITDA Group Free cash flow cash Free As per the Group Management Report for the 2012 Consolidated Financial Statements. Financial Consolidated 2012 the for Report Management Group the per As Development of key financial performance indicators key of performance financial Development

described expectations regarding post-paid ownership and customer expectations described Approx. 23 EUR Approx. Target 2013/14 Target Slight increase slight increase Increase/ 255/260 355/360 1

+260 thousand 22.3 Euro 22.3 +109 +109 2013 256 256 357

Slight increase Slight decline Slight Target 2014 Target increase Slight Slight 365 265

Group management report Slight increase Stable above above Stable Target 2015 Target increase Slight Slight 280 370 - - - -

: Forecast: freenet Group freenet : Forecast: freenet AG · Annual Report 2013 Report AG ·Annual freenet 105

Group management report Group management report freenet AG · Annual Report 2013 Report AG ·Annual freenet 106 Group management report : Forecast: Overall guidance of the Group’s expected development development expected Group’s the of guidance Overall : Forecast: Christoph Vilanek Board Executive The 2014 3March Büdelsdorf, requirements. investment and always remainingchannels, to core close the business in and complianceprofitability with strict expansion of enhancement the sales and areasacquisitions, involving action other portfolio organically up, through and open we will this, tolity, strive Beyond further flow. cash strong and inare safeguarding key this enhancingThe business and elements strategy long-term profitabi tial growing in market young rapidly and the segments. Digital Lifestyle market communications in position mobile the while market, also capitalizing poten growth on established relationships its valuable customer secure in in to all order further business fields company.a positive the for overall development company The will continue basic on focus its financial year, past of over range the course the expects tyle AG Board Executive freenet the expansion Digital of the Lifes that initiated as was well further as the no-frills segments in 2011, and customer stabilization the valuable postpaid on the ownership customer base of the Based Overall guidance of the Group’s expected development million financial 280 year euros the for year 2015. about and million financial is 265 around 2014 euros plant equipment, for the and of disposal property, the from plus proceeds plant minus equipment, and activities investment from inoperating property, as flow cash defined Group, freenet the for flow cash company’s free target the Furthermore,

Joachim Preisig Stephan Esch - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 107

Group management report

Consolidated financial statements

Consolidated income statement for the period from 1 January to 31 December 2013. . . . . 112

Consolidated statement of comprehensive income for the period from 1 January to 31 December 2013...... 113

Consolidated balance sheet as of 31 December 2013...... 114 Assets...... 114 Shareholders’ equity and liabilities...... 115

Schedule of changes in equity for the period from 1 January to 31 December 2013 ...... 116

Consolidated statement of cash flows for the period from 1 January to 31 December 2013. . 117

Notes to the consolidated financial statements of freenet AG for the financial year 2013. . . 118

Auditor’s Report...... 199

Responsibility statement...... 200 2 1 Notes to consolidated the financial statements: notes overview of 3 4 5 6 8 7 10 9 14 13 12 11 15 18 17 16 21 20 19 22 23 38 37 33 32 30 25 24 26 36 34 provisions. . Other 31 29 28 27 35 eea Information General

Revenue

hrhles equity Shareholders’

opn Acquisitions Company

Debt Employee

Inventories

Accounting and valuation methods valuation and Accounting Segment reporting Segment Other operating income operating Other Other capitalised own work capitalised own Other Personnel expenses Personnel of materialsCost . Other operating expenses operating Other impairments and Depreciation Earnings per shareEarnings per Taxes income. on Interest similar and . expenses interest similar and Other income. Intangible assets, property, plant and equipment and goodwill and plant equipment and property, Intangible assets, Other financial assets Other using method Companies included equity the . assets Impairment non-monetary for test Receivables and other assets other and Receivables liabilities and assets tax Deferred Cash and cash equivalents cash and Cash Current tax assets tax Current Major events after the balance sheet date balance the sheet . . after events Major Disclosures in accordance HGB with clause 315a Notes to the obligations, financial Other provisions Pension subsidiaries of sale and operations discontinued held-for-sale, assets Non-current Transactions with related parties related with Transactions instrumenets financial concerning information Additional liabilitiesCurrent income tax . . Trade liabilities other accounts payable, accruals and . . . . atcpto programmes participation . consolidated cash flow statement consolidated flow cash ...... contingencies, securities for loans for securities contingencies, . . . . . Consolidated financial statements financial Consolidated ...... : Notes to the consolidated financial statements: overview of notes of overview statements: financial consolidated to the : Notes . 118 124 138 141 142 142 142 142 143 143 144 144 144 145 146 148 147 149 149 151 152 155 155 155 194 168 195 162 156 182 169 164

162 158 171 188 167 161 freenet AG · Annual Report 2013 Report AG ·Annual freenet 111

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 112 Consolidated financial statements financial Consolidated Earnings per share in EUR (undiluted) EUR in share per Earnings result Group Group result from continued operations Group result attributable to non-controlling interest to non-controlling attributable result Group AG freenet of to shareholders attributable result Group Group result from discontinued operations Taxes on income Result before taxes on income of associates of results Share result Operating operating expenses Other write-downs impairment and Depreciation expenses Personnel Cost of materials of Cost Other own work capitalised work own Other Other operating income operating Other Revenue indicated as or ‘000s EUR In 2013 December 31 to 1January from period the for statement income Consolidated Earnings per share in EUR (diluted) EUR in share per Earnings similar and income receivable Interest Interest payable and similar and expenses payable Interest Earnings per share from continued operations in EUR (diluted) in EUR operations continued from share per Earnings (undiluted) in EUR operations continued from share per Earnings Earnings per share from discontinued operations in EUR (undiluted) in EUR operations discontinued from share per Earnings Earnings per share from discontinued operations in EUR (diluted) in EUR operations discontinued from share per Earnings Weighted average of shares outstanding in thousand (undiluted) in thousand outstanding of shares Weighted average Weighted average of shares outstanding in thousand (diluted) in thousand outstanding of shares Weighted average : Consolidated income statement for the period from 1 January to 31 December 2013 December to 31 1January from period the for statement income : Consolidated Note 14.2 14.2 14.2 14.1 14.1 14.1 12 13 11 10 17 9 8 7 6 5 4

—31 –2,462,083 3,193,329 –280,477 –174,127 258,443 238,940 238,940 301,087 1 .12 –44,633 128,011 128,011 –56,092 238,943 –19,503 .1 10,752 69,785 1,769 .2013 .2013 1.87 1.87 1.87 1.87 0.00 0.00 220 –3 0

—31 –2,364,942 3,084,784 –148,595 –160,187 –274,566 202,462 166,677 173,189 173,189 1 .12 –44,783 128,011 128,011 173,098 adjusted .1 58,919 6,512 6,303 2,695 7,049 .2012 .2012 1.35 1.35 0.00 0.00 1.35 1.35 91 0

Consolidated comprehensive income attributable to non-controlling interest AG freenet of to shareholders attributable income comprehensive Consolidated Consolidated comprehensive income 2013 December 31 to 1January from period the for incomeof comprehensive statement Consolidated Change in value recognised directly in equity directly recognised in value Change periods following the in statement income the to reclassified to be not loss)/or in profit (not recognised income comprehensive Other in equity directly recognised Taxes income on (2011) 19 IAS acc. plans pension for accounting the from arising losses and gains actuarial of Recognition periods following the in statement income the to reclassified to be loss)/or in profit (not recognised income comprehensive Other in equity directly recognised Taxes income on instruments financial of held-for-sale in value Change fair result Group ‘000s EUR In Consolidated financial statements financial Consolidated : Consolidated statement of comprehensive income for the period from 1 January to 31 December 2013 income comprehensive of statement : Consolidated

—31 238,940 239,451 1 .12 239,454 .1 .2013 .2013 –242 511 809 –80 567 –56 24 –3

—31 164,446 173,189 1 .12 164,355 –12,312 adjusted .1 –8,743 –8,711 3,601 .2012 .2012 –45 –32 13 91

freenet AG · Annual Report 2013 Report AG ·Annual freenet 113

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 114 Consolidated financial statements financial Consolidated Deferred income tax assets tax income Deferred Trade accounts receivable Trade accounts investments Other Investments in associates Investments Property, plant and equipment and plant Property, Goodwill assets Intangible assets Non-current ’000s EUR In Assets 2013 as December of31 sheet balance Consolidated Other receivables and other assets other and receivables Other Other receivables and other assets other and receivables Other Trade accounts receivable Trade accounts assets tax income Current Inventories Current assets Assets of disposal group classified as held-for-sale as classified group of disposal Assets Cash and cash equivalents cash and Cash : Consolidated balance sheet as of 31 December 2013 December 31 of as sheet balance : Consolidated 15,16 15,16 15,16 Note 18 22 19 23 20 17 21 21 21 21 24

1,836,134 31 2,477,198 1,122,112 641,064 .12 186,947 423,121 110,766 397,331 14,549 78,508 35,049 69,802 33,752 1,540 1,395 2,326 .2013 0

31 2,478,652 1,755,961 1,116,616 722,691 .12 204,621 424,524 356,533 175,528 adjusted 56,586 28,316 67,822 27,140 1,529 1,425 8,192 2,470 7,350 .2012

1,824,292 2,528,908 1,116,622 704,616 1 484,280 132,842 428,212 185,368 adjusted .1 12,460 36,256 51,537 29,227 43,039 4,047 1,775 3,243 .2012 0

Pension provisions Pension liabilities tax income Deferred payable accounts Trade liabilities Non-current Capital and reserves attributable to non-controlling interest non-controlling to attributable reserves and Capital Cumulative other comprehensive income reserve Capital capital Share Shareholders’ equity ’000s EUR In liabilities and equity Shareholders’ held-for-sale as classified group Liabilities of disposal provisionsOther payable accounts Trade liabilities Current provisionsOther Borrowings payablesOther Other payablesOther Retained earnings Retained Borrowings liabilities tax income Current shareholders of freenet AG to attributable reserves and Capital Note 25.2 25.3 25.1 19 30 29 29 27 27 27 28 27 24 31 31

Consolidated financial statements financial Consolidated 1,236,587 1,239,582 31 2,477,198 600,085 .12 637,531 128,061 113,520 401,970 –12,786 383,776 737,536 517,599 44,369 20,906 65,894 20,413 43,276 2,995 9,512 .2013 157 0 0

31 2,478,652 1,177,183 1,177,553 611,284 689,815 .12 100,449 128,061 324,883 412,626 556,105 –13,297 737,536 117,699 adjusted 44,986 22,458 29,258 9,872 7,325 .2012 272 370 49 : Consolidated balance sheet as of 31 December 2013 December 31 of as sheet balance : Consolidated 0

1,166,441 2,528,908 1,166,720 594,870 1 767,318 128,061 200,302 514,777 398,892 123,833 305,398 737,536 adjusted .1 22,188 –4,554 11,173 36,608 31,905 22,103 .2012 407 279 0 0

freenet AG · Annual Report 2013 Report AG ·Annual freenet 115

Consolidated financial statements Consolidated financial statements acquisitions company to connected liabilities option stock of Recognition shares inshares subsidiaries Acquisition of additional payment Dividend IAS 19 (2011) 19 IAS acc. losses and gains of actuarial Recognition result Group subsidiaries of consolidation Initial 2013 1. 1. of As 2012 12. 31. of As comprehensive income comprehensive Consolidated Sub-total: comprehensive income comprehensive Consolidated Sub-total: losses acc. IAS 19 (2011) 19 IAS acc. losses of actuarial Detection freenet AG · Annual Report 2013 Report AG ·Annual freenet adjusted ’000s EUR In 116 2013 12. 31. of As instruments financialheld-for-sale of value in fair Change instruments financialheld-for-sale of value in fair Change payment Dividend 2012 1. 1. of As Group result Group Consolidated financial statements financial Consolidated

Share capital Share 128,061 128,061 128,061 128,061 the period from 1 January to 31 December 2013 December 31 to 1January from period the for Schedule of changes in equity 0 0 0 0 0 0 0 0 0 0 0 0 0

: Schedule of changes in equity for the period from 1 January to 31 December 2013 December to 31 1January from period for the equity in changes of : Schedule 737,536 737,536 737,536 737,536 reserve Capital Capital 0 0 0 0 0 0 0 0 0 0 0 0 0

Revaluation comprehensive income Cumulative other reserve –69 –13 –13 –56 –56 –32 –32 19 0 0 0 0 0 0 0 0 0

accordance accordance reserve in –13,284 –13,284 –12,717 valuation Actuarial –4,573

–8,711 –8,711 567 567 0 0 0 0 0 0 0 0 0

–172,815 –153,613 324,883 324,883 305,398 383,776 238,943 238,943 173,098 173,098 Retained Retained earnings –7,601 366 0 0 0 0 0

attributable toattributable of freenet AG freenet of shareholders 1,236,587 1,166,411 1,177,183 1,177,183 Capital andCapital –172,815 –153,613 238,943 173,098 164,355 239,454 reserves –8,711 –7,601 366 567 –56 –32 0

non-controlling attributable toattributable Capital andCapital reserves interest 2,995 2,994 –366 279 370 370 91 91 –3 –3 0 0 0 0 0 0 0

Shareholders’ 1,166,720 1,239,582 1,177,553 1,177,553 –172,815 –153,613 164,446 238,940 173,189 239,451 –8,711 –7,601 equity 2,994 567 –56 –32 0

31. equivalents cash and Cash 1. equivalents cash and Cash

Cash-effective change in cash and cash equivalents cash and cash in change Cash-effective activities financing from flow Cash 1 (FCF) flow cash Free assets intangible and equipment and plant property, of disposal the from Proceeds assets intangible and equipment and plant in property, Investments activities operating from flow Cash ’000s in EUR Figures flow cash free of Composition operations of continued equivalents cash and Cash ’000s in EUR Figures equivalents cash and cash of Composition Adjustments Result from continued and discontinued operations before interest and taxes (EBIT) ’000s EUR In 2013 December 31 to 1January from period the for of cash statement flowsConsolidated

Interest paid Interest Investments in property, plant and equipment and intangible assets intangible and equipment and plant in property, Investments Purchase of subsidiaries Purchase assets intangible and equipment and plant property, of disposal the from Proceeds Proceeds from the sale of subsidiaries of sale the from Proceeds Return of capital from associates from capital of Return of fundsOutflow fromdeconsolidation Cash flow from investing activities investing from flow Cash received Interest investments other of sale the from Proceeds associates of sale the from Proceeds Proceeds from new borrowings new from Proceeds Cash repayments of borrowings repayments Cash Income from the sale of subsidiaries of sale the from Income of associates of results Share assets fixed of items on impairment and Depreciation Loss on disposals of fixed assets fixed of disposals on Loss Other non-cashOther components activities financing or to investing attributed not capital working in net Increase Cash flow from operating activities operating from flow Cash paid taxes Income Payments for the acquisition of minority interests minority of acquisition the for Payments payment Dividend 204,621 thousand euros are attributable to cash and cash equivalents, 2,732 thousand euros are attributable to non-cur attributable are euros thousand 2,732 equivalents, cash and to cash attributable are euros thousand 204,621 rent assets held-for-sale. rent assets

Consolidated financial statements financial Consolidated 1.

12.

: Consolidated statement of cash flows for the period from 1 January to 31 December 2013 December 31 to January 1 from period the for flows cash of statement : Consolidated

20, 21, 21, 20, 30, 31, 31, 30, 13, 19 13, - 36.1, 36.1, Note 36.3 33.2 33.3 33.1 33.1 36.2 29 29 17 17 24 24 9

—31 31 31 freenet AG · Annual Report 2013 Report AG ·Annual freenet –339,550 .12 .12 –172,815 –125,020 –96,587 301,307 278,398 256,165 110,766 110,766 –35,435 1 .12 207,353 –50,096 278,398 –36,715 110,766 –22,323 –22,323 –23,545 –13,176 .1 –4,009 –5,000 56,092 –2,734 –1,131 .2013 .2013 1,140 1,318 2013 .2013 .2013 –220 250 90 90 0 0 0 0

—31 31 31 –149,120 .12 .12 –153,613 121,985 280,091 208,765 259,667 1 .12 207,3531 207,353 207,353 –46,295 –34,548 –80,239 148,595 119,280 280,091 –24,645 –21,019 –21,019 adjusted –8,986 85,368 .1 –6,303 .2012 .2012 1,156 2,079 7,669 .2012 .2012 –333 152 382 595 595 331 –24 117 0 0 0

Consolidated financial statements Consolidated financial statements 1 freenet AG · Annual Report 2013 Report AG ·Annual freenet 118 General General Information Consolidated financial statements financial Consolidated

the Group: the on their and related impact 2013, since adoption 1January of early voluntary subject the been which or have 2013, 1January from with effect adoption of mandatory which are subject the interpretations or (IFRIC), (IAS/IFRS) standards modified or new the following shows The table Gazette. Federal are consolidated to submitted electronic the The financial statements tion to date balance the sheet consolidated of the financial statements. to uniform accountingare in subject have rela prepared - They all valuation and been principles. companies of in consolidated the annual the included financial financial statements statements with are their The fair stated value. financial assets that some to restriction the tion—subject historical applying the cost conven prepared have consolidatedThe been financial statements million or euros (€’000s) in are euroscurrency. thousand (m€). stated figures All functional Company‘s the in euros, prepared have consolidatedThe been financial statements have taken intoaccordance additionally HGB been consideration. with clause 315a regulations The of commercial in law applicable 2013. in European the December Union as of 31 applied as (IFRSIC), Committee Interpretations Standards Financial International Reporting the International of the IFRS with interpretations Accounting the the and of (IASB) Standards Board in were accordance financial year prepared forthe consolidated 2013 The financial statements focussingGermany communications/mobile mobile on internet digital and lifestyle. in telecommunication provides Group services The 7306. HRB under Kiel court) gericht (local registered was and Amts at the Germany. Company originally was dorf, The in 2005 founded is registered in Büdels parent company Group‘s the (“freenet”), Company”), AG (“the freenet 1 year 2013 financial for the AG of freenet statements financial consolidated the to Notes . 1 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Business activity and accounting and standards activity Business

- - - 1 1 IFRS Standard/interpretation IAS 12 IAS IAS 19 IAS 1 IAS IFRS 10 IFRS 11 IFRS IFRS 12 IFRS IFRS 13 IFRS IAS 27 IAS IAS 28 IAS IFRS 1 IFRS 20 IFRIC and IFRS 12 IFRS and 11 IFRS 10, IFRS Various 7 IFRS Mandatory adoption in the EU detailed at this point differs from the IASB requirements. IASB the from differs point this at EU detailed the in adoption Mandatory

First-Time Adopters for Dates Fixed of Removal and Hyperinflation Severe Amendments to IFRS 1, First-Time Adoption of IFRS: IFRS: of First-Time Adoption 1, to IFRS Amendments Amendment to IAS 12, Realisation of Underlying Assets Underlying of Realisation 12, to IAS Amendment Amendment to IAS 19, Employee Benefits 19, Employee to IAS Amendment Presentation of Individual Items of Other Result Items of Other of Individual Presentation of Statements— Financial Presentation Consolidated Financial Statements Financial Consolidated Arrangements Joint Disclosures of Interests in Other Entities in Other of Interests Disclosures Fair Value Measurement Separate Financial Statements Statements Financial Separate Investments in Associates and Joint Ventures Joint and in Associates Investments Amendment to IFRS 1: Government Loans Government 1: to IFRS Amendment Mine aSurface of Phase Production in the Costs Stripping Offsetting Financial Assets and Financial Liabilities Liabilities Financial and Assets Financial Offsetting 7, Disclosures: to IFRS Amendment Instruments: Financial Transition Guideance for the Adoption of the Standards the of Adoption the for Transition Guideance 12: IFRS and 11 IFRS 10, to IFRS Amendments Improvements of the IFRS (IFRS 1, IAS 1, IAS 16, IAS 32, IAS 34) IAS 32, IAS 16, IAS 1, IAS 1, (IFRS IFRS the of Improvements Annual Improvements Project 2009 to 2011— 2009 Project Improvements Annual Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

application Mandatory 2013 1. 1. 2013 1. 1. 2013 1. 1. 7.1. 2012 2014 1. 1. 2014 1. 1. 2014 1. 1. 2013 1. 1. 2014 1. 1. 2014 1. 1. 2013 1. 1. 2013 1. 1. 2013 1. 1. 2014 1. 1. 2013 1. 1.

1 1 1 1 1 1 1 1 EU Commission Adoption by 2012 12. 11. 2012 12. 11. 2012 5. 6. 2012 5. 6. 2012 12. 11. 2012 12. 11. 2012 12. 11. 2012 12. 11. 2012 12. 11. 2012 12. 11. 3. 2013 4. 2012 12. 11. 2012 12. 13. 2013 4. 4. 27. 3. 2013

Effects None No material effects material No financial statements, item 2.18 item statements, financial consolidated the to notes See tement of comprehensive income of comprehensive tement sta of consolidated Presentation type of future transactions of transactions future type and nature the on Depending of balance sheet of balance reduction minor ventures; joint for mandatory method Equity in companies, incl. subsidiaries subsidiaries incl. in companies, Disclosures in notes for interests No material effects material No None No material effects material No None None No material effects material No No material effects material No No material effects material No freenet AG · Annual Report 2013 Report AG ·Annual freenet

119

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 36 IAS 32 IAS Standard/interpretation 120 39 IAS IFRIC 21 IFRIC 7 IFRS 9and IFRS IAS19 Various Various 9 IFRS and IAS 27 IAS and 12 IFRS 10, IFRS

Consolidated financial statements financial Consolidated Measurement of Recoverable Amount of Recoverable Measurement Assets: of Impairment 36, to IAS Amendment Offsetting Financial Assets and Financial Liabilities Financial and Assets Financial Offsetting Presentation: 32, Instruments Financial to IAS Amendment Amendment to IAS 39, Financial Instruments: Instruments: 39, Financial to IAS Amendment Continuation of Hedge Relationships of Hedge Continuation and of Derivatives Novation of Measurement: Recognition Levies: Recognition of Obligations for Paying Public Levies Public Paying for Obligations of Recognition Levies: of Time 7: Mandatory IFRS 9and to IFRS Amendment Adoption and Information Regarding Transition Regarding Information and Adoption Liabilities and Assets Financial of Measurement and Classification Instruments: Financial Amendment to IAS 19; Employee Benefit Employee 19; to IAS Amendment Improvements of IFRS (IFRS 1, IFRS 3, IFRS 13, IAS 40) IAS 13, 3, IFRS IFRS 1, (IFRS IFRS of Improvements Annual Improvements Project 2011 to 2011 2013— Project Improvements Annual 38) IAS 24, IAS 16, IAS 13, IFRS 8, 3, IFRS IFRS 2, (IFRS IFRS of 2010 - Improvements to 2012 Project Improvements Annual the Obligation to Consolidate Investment Entities Investment to Consolidate Obligation the from 27: Exception IAS and 12 IFRS 10, to IFRS Amendments tions in the notes with regard to employee benefits and also in particular the changes the also described and in particular tions in notes the with to regard benefits employee has resulted (Employee in extensive more Benefits) disclosure 19 obliga to IAS amendments The Group. the on a not insignificant impact in time in line 2013 relevant with transitional the first which regulations the for were applied have interpretations and standards which in following are the explained and amended and new The Group: the on their in and financial impact year the adoption 2013 of mandatory which are subject not yet the interpretations or (IFRIC) (IAS/IFRS) standards modified or new the following shows The table dated financial statements, please refer to item 2.18 of these notes regarding of these refer to comparison please figures. item 2.18 dated financial statements, consoli these on impact corresponding the and 2012 also and December as of 31 2012 1 January as of out carried to entries to be regard amendment With the return. basis the on typified of the arising costs obligation the have pension and now the from amount as anet shown toassets be plan by income the generated the In addition, recognised. to be beginningat the period of the discount the on obligations rate pension of based the return plan assets on sible atypified for it is only pos now 19, IAS Following amended application of the the investmentof the portfolio. of in value management the regarding development the basis the on expectations of the period calculated was beginning at the by accounting of income plan assets generated the expected the in past, in year loss the review or the In addition, in under whichprofit incurred. such cost was in has recognised cost now to directly be service comprehensive past other In addition, income. fully and recognised in directly only be now can this which means that option, such fluctuations has abolished 19 version of new IAS The method. corridor the AG used had freenet method. ridor (b) in comprehensive other income statement, (c) income or cor adelay using after so-called the recognised to either (a) be forsuch fluctuations possible It was in financial statements. thethe in presented to were able be losses, and actuarial profits so-called the obligations, in pension the fluctuations in following. an with option the to regard Previously unexpected how has there been : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

application Mandatory 2014 1. 1. 2014 1. 1. 2014 1. 1. 2014 1. 1. 2015 1. 1. 2015 1. 1. 7.1. 2014 7.1. 2014 7.1. 2014 2014 1. 1.

EU Commission Adoption by 2013 12. 20. 2012 12. 13. 2013 12. 20.

Pending Pending Pending Pending Pending Pending 2013 11. 21.

Effects recoverable amount recoverable Disclosures in notes on No material effects material No effects material No None None No material effects material No management by to audit Subject Subject to audit by management management by to audit Subject Subject to audit by management by to audit Subject Subject to audit by management by to audit Subject None

- - - - 1 2015. as of 1January adoption of mandatory which is standard subject of the the early adoption are plans no voluntary for There for comparison figures. notes of these refer to please item 2.18 income to statement, and balance the sheet adjustments to regard retrospective With the using method”. item included equity sheet “Companies the is in balance shown the now 2013 December as of 31 GmbH interest in Group FunDorado of the the Instead, items in corresponding ger disclosed the in consolidated the financial statements. are liabilities,lon no incomeexpenses and in assets, Group the of the interests corresponding This means that the are measured using now method. equity consolidation the method, pro-rata in using consolidated included the financialwhich statements the previously been had GmbH, s. Media percent holding in NetCon 50 its change to disclosures GmbH, in notes) FunDorado to effect: earlypanies; adoption. also subject of future extent and transactions) (Information 12 as well regarding as IFRS shares in comother nature the on depend effects the (Consolidated far; so Financial impact no IFRS 10 Statements; Joint Ventures; and in Associates (Investments 28 Group),Group), material the no on IAS impact the on (Separate Financial 27 impact no Statements; IAS following the for standards: adoption has also Group exercised of option the early the In this Arrangements). connection, (Joint 11 has voluntarily Group the of IFRS exercised of option early adoption the 2013, Since 1January to in income statement future. the reclassified not be havetaxes distinguished to be in to relate order they indicate whether to items which will will or senting items the of comprehensiveother basis a incomea post-taxpre-tax on or basis. The to of option pre made the change No has been recycling). to (so-called income statement the in recognised value in comprehensive other income might have reclassified subsequently to be comprehensive other the has broken to income now changes to down the indicate be whether result Group reconciles consolidated with the the comprehensivechange meansThe that income. consolidated AG of the relatesfreenet which income statement of that to part presentation the 1 (Presentation of Financial to a result IAS amendment Statements), of the As main the change for 50 percent in voting rights. percent 50 whichence but are and normally involving 20 not controlled Group; by the ashare of between - asignificant influ as companies over exerts companies which Group are the defined Associated as joint them ventures. identified and AG jointventures. has arrangements freenet its reviewed obligations and joint and rights resulting joint namely the activities joint the from arrangement, of form the on depending of forms joint are there arrangements two In accordance 11, with IFRS in item HGB 37. with clause 315a consult AG’s please in freenet disclosures our consolidated in accordance financial statements, changes criteria of the more to or one of control. For acomplete list of all companies included a reassessment areifAG out there indications control. freenet carries that have there its been returns of the Company if extent the holding and as is the aresult the from to able of influence returns to overrol company fluctuating the if it in interest, is which an exposed equity it holds Company is The to said Group. by control the companyled another if it is to able exercise cont include all consolidated companiesThe financial statements as subsidiaries which are control . 2 Consolidated companies Consolidated Consolidated financial statements financial Consolidated r. o. as well as its 100% holding in siXXup new Media new holding in siXXup as 100% wello. as its : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 121

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 122 Consolidated financial statements financial Consolidated for the purpose of asituation assessing consideration due is whether given purpose of the for to control exists, Control is normally associated with a share However, in voting percent. than of 50 more rights are deconsolidated time at They at the which to Group. such controlferred the is terminated. date the from which possibility on the dation) of control is over subsidiary trans the with effect time (full in consolidated the financial statements consoli first Companies the for are included which result from an agreement regarding a contingent consideration. contingent a regarding agreement an from result which of liabilities and purchase of fair comprise all values the costs recognised the assets In addition, liabilities the issued for acquisition acquired assets, any and instruments dered equity purposes. of purchase ofCost abusiness combination is sum by ren determined of fair the of the values the to consolidation. capital applied was the purchase method The balance the on sheet. separately are interests Non-controlling disclosed rights. minority enhanced or right agreements company. ofmain the activities Asituation of control may of voting instance for in case exist the is parent but to company votingthe percent able of the fewer manage than 50 holds the rights, is tothere an assessment out an determineinstance also of whether therefore carries control if circumstances and which to point Group possibility the of control. The any and facts other ments of potential existence resultingthe rights impact and voting agree contractual other from rights, 1 2013. December ending 31 period forthe statements annual forthe financial 3HGB paragraph in clause 264 exemptionof the regulations specified as will well as callmobile GmbH take klarmobil GmbH advantage mbH, tervertriebsgesellschaften Gravis—Compu & PR, für IT Stanniol GmbH GmbH, Shop mobilcom-debitel Multimedia GmbH, MobilCom GmbH, mobilcom-debitel GmbH, Direkt freenet GmbH, directions new GmbH, 01083.com tellfon GmbH, GmbH, Datenkommunikations 01050.com freenet GmbH, GmbH, Cityline freenet GmbH, freenet.de Telefondienste GmbH, 01024 Telefondienste GmbH, 01019 trolling financial liability the In is this recognised. case, shareholders relating to option the are non-controlling by retained shareholder, the to which non-con the is equity attributable the financial liability risks and in relation to obligation option opportunities the is If the recognised. only a In such cases, to which non-controlling shareholders. the is Group of the attributable in equity the in reduction acorresponding this Group, is to freenet reflected the are transferred risks and arising risks and opportunities If the shares are from these attributed. opportunities way in the way on in the whichgroup companies, which options are the recognised depends shares on further options are to granted toWhen serve non-controlling enable shareholders Acquisition-related are are they incurred. recognised when in income statement costs the company. acquired the to trollable attributable are basis recognised at the on fair or assets value percentage of of net the individual non-controlling basis shares the in acquired whether the company which are not con For of each any companyextent an on non-controlling acquisition, interests. decides Group the of the at separately irrespective their will fair disclosed value, be recognition criteria 3.37 of IFRS liabilities contingent acquired assets, and ofAll the company’s identifiable liabilities the meeting . 3

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Consolidation principles Consolidation ------ventures and associates. and ventures liabilitiesand are eliminated. elimination The of intercompany is joint for also applicable profits income as and well as intercompany expenses revenue, receivables losses, and Internal profits result. under recognised in resultother viously been is recognised longer in no equity, instead and is shown liabilities. and which loss pre or had This assets corresponding means of the that aprofit posed resultother relating to that company are recognised parent as if company dis the directly had under shown all amounts In addition, loss. or is resultantthe recognised as difference aprofit control over loses Group a company,If the remaining the interest is and at fair revalued value, associatethe joint or venture. companythat for the obligations has payments entered has or into made constructive or legal to reduced zero, areding only recognised additional as losses has aliability been to extent the hol recognised amount the for the After losses. proportionate not recognise anydoes further ajointor venture is equal to holding in higher or that of value than its company, the Group the ventures is separately. not disclosed of an associate interest in losses Ifthe Group the of the at arising which associate the is acquisition acquired. Goodwill the from of associates joint and of associates losses jointand and ventures is point recognised the from in income statement the percentage interest in Group profits of The the Group. pany to which freenet the is attributable com changes of respective of the capital the in equity by proportion the reduced increased or are holdings of recognised the values the whereby according method, statements to equity the in associatesInvestments as well as joint ventures arein consolidated disclosed the financial revenue. as recognised share acquired of value the fair of net the company of acquisition over costs the is immediately liabilities contingentacquired assets, and company’s identifiable liabilities. Any excess in the mined in initial the valuation, which share is fair of inof value the the excess purchaser‘s of the time at value of the asset acquisition, of the is as deter recognised as that portion Goodwill of disposal non-controlling are the which interests also occur recognised upon inlosses equity. subsidiary, of the is recognised assets and such in difference net ofamount equity. the Profits which amount the interest is corresponding the paid and in carrying the between difference acquisition Ifthe Group. of the providers of anon-controllingwith equity interest in results a Transactions of control loss with non-controlling without are interests treated as transactions amount. repurchase in the changes possible taking and into interest rate account method cost of the purchase by meanssed effective of the time of exercising, financial liability the and expected the is measured at amorti subsequently financial liability is initially estimated of value the repurchase at amount present at the valued The AG. of freenet to shareholders the obligation is attributable recognised against equity the Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 123

Consolidated financial statements Consolidated financial statements 2 freenet AG · Annual Report 2013 Report AG ·Annual freenet 124 valuation methods and Accounting Consolidated financial statements financial Consolidated when customers are signed up. In the case of certain agency services of dealers for whom the whom for of dealers services agency of are certain case signed In customers up. the when devices as well commissions, dealer as the are normally recognised immediately as expenses of signing which costs consistThe up mainly of customers, acquiring costs of the mobile the distributor. are the delivered to or customer the products is the recognised when products sories devices of acces and mobile Revenue sale the from is provided. during which service the period voice The communicationges. transmission data and are recognised fees as revenue over the charges features for special comprises charges, monthly roaming and as well char as connection communications revenue (voice Mobile communicationaccessories. as well transmission) as data provision charges as devices of well and mobile sale as the one-off offered, nications services CommunicationsRevenue is commu of range by mobile in Mobile the generated segment - the recognition: revenue on notes Supplementary torevenue business is clients. attributable remaining the is revenue ofwith users; Group the aoflarge ofgenerated end the number Most business of normal activities. framework the within services and which received of or products willsale receivedwhich forthe has been be Revenue fair consideration of comprises value the the discounts. cash and tax of added value net Revenueinvoiced is disclosed in consolidated separately are the accrued financial statements. not yet but to rendered Company. the will flow that afuture Services benefit probable economic reliably completely of amount revenue if if the it and be is determined can rendered have been Revenue services the is recognised after period. ashort for mainly Group services provides The 2 notes. of these 2.18 year. previous compared with the applied refer to to regard please and items With changes, 1.1 accounting in The have consistently principle valuation been and methods financial statements. following consolidatedThe accounting preparing the when were applied valuation and methods values. The extent of the revenue of recognised which the to in extent have relation be The to already elements the values. business is fair broken over valuation various down the entities basis the on proportionate of the entire price the for The multiple-component seq. et in accordance 8.10 00-21) EITF with IAS merly 605-25 (for guideline ASC US-GAAP the applies Group The contracts. with multiple-component “relative-fair-value The for isrevenue generated used method” 18.13. in asIAS detailed contracts Communications are in multiple-component Mobile segment the contracts user end Certain life customer. of the ractual over dealer of cont the the as is customer totala percentage of the acquired service expressed at point at which dealer by the the the rendered service of the extent the on acquired depends recognisedamount immediately at point at is in which income customer the statement the the remaining The are of customer. recognised each over new ent. life costs the contract of the The are insteadat acquired, and which customers the are in income statem recognised the partially are not recognised in full point at services the purchased the acquired newly with the customers, of future extent generated alsoin the and client revenues on Group the of Group the of the base acquired have who remaining been customers new ofamount commission dealer the on depends . 1 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Recognition expenses revenue of and - - - - - fit is greater than the costs incurred, are capitalised as intangible assets under the category category the are is under capitalised as intangible greater incurred, fit assets costs than the overall bene economic expected by Company, the used which be can product’s if and the duct pro that clearly relate software in year Costs the to are they a definable incurred. expenses as usually are recognised programs maintaining or software in developing incurred Costs licences. for years to three and ten life, years economic software for inthree general over their expected method are at shown historical are cost and depreciated usingLicences straight-line software and the months. 51 and one between was life trademarks useful of these remaining the astraight-line on 2013, date balance December the sheet 90 months 31 On basis. life economic useful to of at 12 their historicalried are cost and depreciated over their expected are car maturity. contrary, have trademarks the on adefinable These trademarks, other The life. useful its on could to any nor of is value loss this steady timeno discernible limit asset, set with respect be because areif there any chosen life useful indefinite indications has An of been an impairment. mic life year to which instead and is or an impairment is not depreciated, once every test subject is amount with an with econo a majorasset an useful residual indefinite carrying trademark One Impairment assets. test for non-monetary as well goodwill as and item plant equipment and 16, property, Intangible assets, to item 15, refer please breakdown, toregard which specific With gavemerger the the rise to goodwill. the from to abenefit derive groupsgenerating of or generating cash units which units are expected It is is cash to to allocated goodwill allocated generating cash the those units. For this purpose, impairments. cumulative year, is impairment for tested at once every least Goodwill is and at shown original cost less 2 commission revenue is accordingly. accrued were performed, services the in which period the are claims recognised beyond in revenue. Where these the extend customers, granting if the subsidies of the and, is linked operators to newcampaigns the network by the user.revenue per cost subsidies advertising advertising areIn for some addition, also provided average the or tive quarter quantitative and per customers of features, new number such as the provider.access commission at qualita anetwork The - claims contractually defined on are based with is network customer as is anew provided revenue recognised customers as new for soon Commission extensions. are signed who up contract for and users new for particularly works receives Group commission communications mobile ofThe the net revenue operators fromthe “cash restriction”). in futureprovided (so-called to is be supplied limited services on been revenue of the to which extent is the not dependent 2 interest and income. forinterest is used interest expenses rate method effective The expense. are recognised as costs borrowing Other of capitalised were being incurred. capable wing costs borro no financial year In the 2013, exists. asset are capitalised if aqualified costs Borrowing . . 3 2 Intangible assets Intangible Borrowing costs, interest expenses and interest income interest and expenses interest costs, Borrowing Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 125

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 126 Consolidated financial statements financial Consolidated 2 improvements Leasehold hardware and equipment Telecommunications equipment IT Motor vehicles machinery and equipment Technical Buildings : Asset following the on lives: useful is plant equipment and generallybased of property, Depreciation applicable. where adjusted lives economic useful and are values at reviewed date each balance residual sheet andThe book lives useful are grounds of disregarded on immateriality.assets‘ livesuseful within Company. the In calculating residual of the the end at values depreciation, the expected assets’ the reflect depreciation lives of assets useful the for assumed The depreciation. straight-line less cost of at is plantacquisition equipment the and valued Property, production or 2 underlyingthe agreement. are duration of depreciated rights usingDistribution straight-line the over expected the method months. 33 and one relationscustomer between was remaining the life useful of capitalized 2013, date balance December the sheet 31 On method. using months to straight-line the 66 relationsCustomer of 36 are depreciated over aperiod straight-line life useful years. to of three five depreciation over duration of their the prospective to are subjected costs development feasibilityeconomic software Capitalised proven. be can technical and are not capitalised until product’s costs in point the the time when Development in incurred creating fees and asset. the team services on ware development as well as expenses soft of the costs personnel include the costs these For example, software”. produced “Internally write-up is permissible. is write-up as no This cost of purchase. is goodwill, for not applicable not exceeding amortised figure the is asset of up value the to written reason the an for impairmentIf the a is applicable, longer no year in (impairment). accordance provisions 36 with the of IAS tested once a lives with useful indefinite intangible and be must assets Goodwill impaired. be indicate if triggering might events out asset of value that the the Impairment has carried to be in use. value the and to sell higher as costs the less fair of asset of value the the recoverable amount is defined The amount. recoverable the exceeds value are always impaired book assets if the Non-monetary . . 5 4 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Impairment of non-monetary assets non-monetary of Impairment Property, plant and equipment and plant Property, 2 to 14 years 2 to 14 2 to 5years 3 to 3years 5 to 8years years 3 to 19 to 3325 years Useful life Useful - tion using the equity method, please refer to please item 1.3. tion using method, equity the to regard of consolida principles With the accounting- Group‘s the and valuation and methods. associates various joint the for or ventures prepared financial statement in accordance with IFRS inEquity associates investments joint and ventures continue recognised to via an be individual 2 in leases. finance inlessor is as the which Group classified the are contracts no there 2013, closing of the date December As 31 financial income spread over relevant periods. the are recognised as interest components The component. aredemption and income statement, which areinstalments received are split into which is an interest recognised in component, the Lease is concluded. investment time at value net atin of amount the which the contract the the in is accordance 17. receivable shown lessee The the from due with areceivable IAS shows Group customer, or the partner to contractual ownership of an is the asset transferred beneficial When 2.6.2 shops. our for hardware relates agreement lease—this as a finance to andleasing the sified itemsof various of software clas was agreement one 2013, date December 31 reporting of the As in income statement. the interest content The have made. leasing of the is already recognised been instalments directly is as shown a liability by repayment content the reduced and leasing of the which instalments Accordingly, life useful termtheir lease. of the normal the and liability the arising lease the from of are and depreciated over minimum of value shorter the the present the and payments, lease asset are of leases lower fair leased capitalised with ofcial value the finance the under owner benefi as to the Group which the are attributable In assets accordance 17, leased the with IAS as a cost in using income statement the straight-line the over lease. duration of the the method rating (net lease taking account after lessor) by are of the incentive recognised made payments with an ope in connection made Payments are transferred. property leased ownership of the the associated with all opportunities significant and risks the whether on depending leases, finance or leases as enters are either operating into whichLeases Group classified the lessee as the (purchase),ment not to but hardware telecommunications and IT equipment. to apply motor rules vehicles (operating leases) specific plant equip and and assets, non-current For purchased. or are leased to be basis assets by case acase on whether decides Group The 2.6.1 2 . . 7 6 Leases Investments in associates and joint venture and in associates Investments Leases where Group the is lessee the Finance leases where Group the is lessor the Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 127

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 128 Consolidated financial statements financial Consolidated payments and fixed terms in relation fixed and to management whichpayments intends Group is and to able hold determinable or with fixed financial assets are non-derivative financial assets Held-to-maturity 2.8.4 which for claim billed but acontractual exists. been which but have which provided have not yet been also includeLoans services receivables and current highly with liquid an original financial assets term of maximum months. three other and comprising consist deposits Liquid demand equivalents assets cash of and cash cash, as well as in equivalents. cash assets and cash other and in receivables other accounts receivable, trade are under in balance shown the sheet Loans receivables and assets. non-current latter are date. under balance shown The the sheet after months exception with which the twelve only fall of due those current assets, under ded to any are a debtor without directly inclu They intention- receivables. services ofor the trading money, provides arise Group ifwhich the They commodities are market. not listed an on active determinable or payments with fixed financial assets areLoans non-derivative receivables and 2.8.3 date. balance the on sheet loss or measured at fair through value profit are financial assets no There isasset designated accordingly are in also this included Derivatives by management. category. if it is in acquired principle intention with the in near future the of financial sold being if the or beginning. is Afinancial asset assigned right very to loss” the from or this through category profit which as at are “measured fair classified value financial assets and righttrading start, fromthe Financial which as are held-for- classified assets sub-categories: comprises two This category 2.8.2 initial recognition. upon liabilities financial liabilities and financial assets of classification the determines were the acquired. Management financial and which for financial assets the individual the on purpose depends classification The ■ ■ ■ ■ ■ financial liabilities and assets are normally broken into down following the categories: cial financial of measurement, liability of entity. another instrument equity or purposes For the is thatA financial instrument gives any afinan rise and to entity contract of afinancial one asset 2 assets—have to be shown under non-current assets. non-current under shown toassets—have be date balance the within sheet which and after correspondingly months are as12 shown current until maturity. exception which final the fall due of those financial assets—with Held-to-maturity 2.8.1 . ■ ■ ■ ■ ■ 8 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Financial liabilities Financial assets financial Available-for-sale assets financial Held-to-maturity receivables and Loans loss or Financial measured at fair through value profit assets

Financial instruments Financial

Definition and and classificationDefinition Loans and receivablesLoans and Financial assets measuredFinancial fair at assets value through profitor loss Held-to-maturity financial assets financial Held-to-maturity - 2.8.6 assets. other and as well receivables other as the are in financial other assets shown the available-for-sale The date balance which the on sheet existed financial assets. financial assets are securities considered and available-for-sale to investments be companies, Shares in affiliated date. balance the sheet within after months 12 not intend if management to does sell them assets non-current under are classified They shown. any under categories other of which the classified or have this not under been category sified whichAvailable-for-sale either have financial assets clas to be are non-derivative financial assets 2.8.5 as held-to-maturity. any not classify financial instruments does Group the At present, ment arises. ment claim as at income point income other at statement which legal pay for the the Group of the to available-for-sale attributable have Dividends in shown to the instruments be equity reserve. revaluation the under result, in other directly recognised are losses or profits unrealised reby initialAfter recognition, available-for-sale are with shown their whe fair financial value, assets impaired amortised. are or derecognised, tments inves held-to-maturity if the are recognised in losses result and period the the for Profits costs. initialAfter are at shown recognition, fair investments held-to-maturity plus value transaction impaired amortised. are or derecognised, receivables and loans the if are in result shown period the losses and the for Profits in value. reductions for impairments less interest method cost using effective the are at shown receivables amortised loansand tion, initial is After loss or takensured at recogni to fair through value income profit statement. the mea assets financial of measurement subsequent the from resulting loss or profit Any value. fair at measured subsequently are loss or profit through value fair at measured assets Financial statement. in income the are expensed costs tially with shown their transaction corresponding fair value; Financial which are are designated ini assets loss” or as at “measured fair through value profit costs. transaction plus value aredesignated initially loss” or as at “measured fair through value profit with shown their fair enters intowhich Group Financial which the are an not obligation asset. assets to sell the or buy date, i. are as trade of shown the of financialRegular assets sales and purchases 2.8.7 liabilities other the and financial debt items. deferred and financial liabilitiesThe accounts payable, date as balance of the sheet in are trade disclosed the partner. contractual becomes freenet to Afinancial athird liability of financial rendering other assets the party. or is recognised when Financial regarding liabilities of payment liquid the agreements assets contractual on are based

Available-for-sale assets financial Measurement of financial instruments of financial Measurement Financial liabilities Financial Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes e. the day the one. ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 129

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 130 Consolidated financial statements financial Consolidated been recognised in the income statement, they are not subsequently reversed. are they not subsequently recognised in income statement, the been have instruments of equity impairments Once in income shown statement. and the from equity derecognised estimated of value the future present the flows—is cash and amount carrying the loss cumulative the to available-for-salein assets, relation are is Ifthere impaired. such an indication instruments an to indicationsidered equity that be the is con instruments equity of these costs decline in the fair to value the alevelpermanent below that as are available-for-sale classified instruments asignificant andof equity financial assets, casetive In the indications of an impairment agroup of or of afinancial asset financial assets. are there to any determine whether objec is date, balance acheck performed sheet every On 2.8.8 minimum ofvalue the payments. lease as financial liabilities. Financial liabilities arising are present at leases shown the finance from Accordingly, basis the on shown of futurealso can be flows. cash financial derivative instruments are measured financial instruments date. balance Derivative the from months sheet than twelve liability of the tohave settlement in apoint earlier time unconditional no the right to postpone Loan liabilitiesfulfilment. as are current not classified liabilities does Group that the provided Current liabilities interest method. are forrepayment or in due amount shown the effective the historical repayment amount are the cost and recognised in accordance between withdifferences Any liabilities cost. Non-current liabilities are at shown amortised are amortised. or derecognised are the recognised when in losses income and statement the Profits interest method. effective financial liabilities the cost usingrowing. following the In the are at period, shown amortised associated with bor costs fair consideration transaction with of value the the the received less initiallyWhen of purchase are financial liabilities shown costs recognised, measured at amortised are are Ifthere recognised. any these indicationssent. of fair lower values, moreover, at pre not exist; sold market to is there does intention be active no assets these for as shares it is are their for The fairreliably not not listed possible to value an and be determined. in far however so are securities at and shown cost, investments companies, Shares in affiliated Group’s experience with payment inflows in the past, an increase in the frequency of payment an increase in frequency the in past, the with inflows payment experience Group’s are of the receivables indications of an impairment of aportfolio Objective basis. a portfolio on an on individual determined whichfor impairment basis no has been are impairment for tested assets accounts receivable, forinstance trade categories of financial assets, of some case In the are principal, and considered an to indication existence of the be of an impairment. e. as well as any process, breach of contract, restructuring will or bankrupt will have become borrower thattoincreased probability the go through another of adebtor, are financial difficulties not fully Considerable an recoverable. amounts due the indications is that accounts receivable recognised impairment are if there An objective of trade requirement. any impairment e. areprices are used, available, valuation other methods market indication Ifno of an shares impairment. the has considered to an to objective be be cost of purchasecontinuing the of to in fair securities of value alevel the the below reduction of unlisted case any In the shares, significant or in paragraph. previous the described ments Unlisted shares which as are available-for-sale, classified instru equity are of the an example : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

Impairment of financial assets assets of financial Impairment —measured as the difference between between difference the as —measured g. default or late or default of payment g. interest g. the DCF method, for establishing for method, DCF the g. - - - - - reserves. in capital equity of increases in capital are shareholders’ recognised costs directly rent taxes, of related cur deduction equity. the non-controlling are After interests as shown shareholders’ as well as profit cumulative Group reserves, revaluation reserves, capital shares, Ordinary 2 euro. fromthe which differed currency company Group no afunctional had financial yearthe 2013, In referenceeuro thanother into arethe date converted rate euros using method. modified the items balance and sheet results of all companiesThe Group which currency have afunctional in financial year occurred the 2013. Negligible transactions volumes of foreigntement. currency ties denominated in as reference of foreign the date currency are- recognised in income sta the liabili and assets of converting monetary process also and the from of suchment transactions which result losses fulfil and from the Profits date the on transaction. ofrates applicable the exchange using the currency functional into the translated are transactions currency Foreign AG. of freenet currency reporting which the in form euros, prepared are consolidated The financialwhich statements company (functional currency). the operates environment economic in primary of the to corresponding currency basis the currency of the 2 liability. corresponding the to will settle used asset basis be anet on if it or respective isled of the sale that intended the is entitlement tothere alegal such treatment if it and is will position that intended sett the be Financial liabilities and if in balance the figure assets sheet as anet shown and are only netted 2.8.10 to athird associated with assets ownership of party. the opportunities essentially and financial asset the to all and if risks it or expires afinancial the transfers asset attributable right contractual derecognises only to afinancialif asset the Group flows cash The 2.8.9 accounts receivable. of trade impairments in relation are under in income to shown statement the inflows previously amounts derecognised payment it is irrecoverable, impairment the from derecognised account. Subsequent become is by receivable of using value the reduced an impairment book has account. If a receivable The climate economic national local or of which receivables. are associated with defaults over average the as duration of well aloan as changes evident in within the portfolio the defaults The items company of in each annual Group The thethe included on are financial statements valued 2 to sell. costs less ceeds estimated as the pro recoverable realisable net date. is value The defined balance-sheet the on realisable net the cost and valueInventories of are production lower purchase at and shown the . . . 11 10 9 Inventories

Shareholders’ equity Shareholders’ Foreign currency transactions currency Foreign Derecognition of financial assets ofDerecognition financial assets Netting of financial Netting instruments Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 131

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 132 Consolidated financial statements financial Consolidated Restructuring provisions ProvisionsRestructuring essentially to employees. comprise payments for severance of an charge asset in relation to individual obligations in this included group. group of obligations Aprovision is determined. is also is if there shown only aminor probability of probability basis an charge asset the the on of this of obligations identical If anumber exists, date, balance taking the gation on into sheet account discounting the obligations. of non-current provisions estimate The possible using are obli of made. the valued obligation abest be the can areliable resources where and of Group estimate of extent of the gation will to lead an outflow it is where likelywhich more obli arise of the as aresult events, of than past not that settlement Provisions timing obligations of uncertain constructive are and/or or recognised legal for amount 2 yearthe in which are they incurred. plans are recognised in in income statement the benefit Contributions to defined-contribution result. financial to addition of the provisions is interest in the shown and portion expenses, personnel under cost is shown service cost is recognised The immediately service in income statement. Past the incur. they which in result other the in period under are the in shown equity to experience past tions attributable changes and to actuarial assump adjustments on which are losses based and profits Actuarial salaries. and in pensions increases date; balance the on it sheet acquired alsoons and likely known includes interests vested future takes account This notmethod only pensi of the unit credit using method. projected the expert actuarial year obligation is by calculated an independent every benefit defined ofvalue the present The date balance fair plan assets. obligation of value the the the on sheet less benefit provision defined is inof value balance the shown to the equivalent actuarial present sheet the Pension provisions pension are The (2011). recognised measured and in accordance 19 with IAS 2 lower limit:lower zero). (upper improvements limit: leasehold of amount; recoverable value the to book adjustment the words changes and/or amount in fulfilment the discount the are rate, recognised by means of an at point at which obligations the the Changes arise. in of value an existing the provision, in other of resources is likely; of this value obligationspresent forwhich provision an outflow is created In accordance 37,obligations aprovision restoration. with is IAS created therefore to cover the for expected include costs improvements of leasehold purchase costs the According 16, to IAS agreements. rental of termination premature the for payments and tariffs negative-margin contingent primarily costs, relate losses to vacancy . . 13 12 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

Other provisions Other Pension provisions Pension - - - - on the Company’s forecast for pre-tax result applicable as of the balance sheet date. result as balance of the sheet applicable forpre-tax forecast Company’s the on future the for are based is expected likely results The that will they utilised be by future profits. are also that only capitalised to it extent the forward in relation carried toassets any losses tax tax Deferred by thatfuturewill used itextent is profits. be assets likely tax thatdeferred the are only recognised to assets the tax deferred the this exceeds figure, differences temporary ble in relation to assets allowa- tax liabilities deferred of amount tax the Ifthe that deferred exist. are recognised to extent differences the in relation to assets temporary allowable tax Deferred liability tax is asset is realised deferred tax settled. the red or defer the to when apply date balance the on sheet that and are expected substantively enacted rates (and are taxes measuredtax at laws)liabilities. the tax Deferred have or that apply been and of assets values book the and values balance sheet tax the between differences temporary all for using and liability the method, carry-forwards loss are taxes recognised tax for Deferred 2 LTIP AG. of freenet programme refer to please explanations our toFor details, item 26.2, provision is vested. shares measured fair at virtual whichof value the the will become probably The including share time payment. at the of the the price applicable factors, various on depends balance LTIP the the on payments on of depending these time, extent The account. a defined financial year. at are made then For each financial charges, year, and taxes less payments, cash specific the for year, defined of success degree the in on attaining objectives depending certain this account recording for is shares credit used of or in virtual adebit form each for financial the LTIP aseparate For this Board; Executive of purpose, the account member is maintained forevery Board. Executive of the “LTIP up programme”, members for set was so-called the with along-term programme compensation incentive anew effect, financial yearIn the 2011, 2.14.2 AG. Stock of appreciation freenet rights refer to please explanations our to For details, itemstrike charges. and the taxes price 26.1, less price and relevant stock the between to ofpayment equivalent amount difference acash the are rights exercised in return These for vested. whichappreciation rights will become probably AG issued by appreciation are freenet rights stock fair measured stock at of value the the The 2.14.1 following: the in accounting individualThe of are the detailed share valuation and programmes option methods ■ ■ 2013: year financial (or existed programmes following still participation exist)The employee in in Group the the 2 . . 15 14 ■ ■ Long Term IncentiveAG of (“LTIP freenet Programme programme”) AGStock of appreciation freenet rights

Deferred and current taxes on income on taxes current and Deferred Employee participation programmes participation Employee Stock appreciation of AG rights freenet LTIP programme Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - freenet AG · Annual Report 2013 Report AG ·Annual freenet 133

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 134 Consolidated financial statements financial Consolidated 10 percent in the planning period, the fair value less costs to sell would decrease by 551 million to by 551 decrease sell would costs fair less value the percent in planning the 10 period, increased by or were reduced to be if interest earnings (EBIT) taxes that, and before and points million WACC euros if the increase 277 would and by approx. were to percentage decline by 0.5 million 234 WACC euros decline by if the would approx. were percentage points increased by 0.5 to sell Communications” costs thatfair less value the has established “Mobile ting unit (“CGU”) - to cash-genera allocated the sitivity regarding assessment impairment assets the the for test Asen assets. 293.3 million euros), Test refer to impairment for please item of non-monetary 16, million year: previous euros, 293.2 2013: December as value of 31 nite life economic useful (book million euros) 1,116.9 as well with of year: previous an intangibleas indefi impairments assets million euros; 1,122.1 2013: December as value of 31 ting to potential (book impairments goodwill rela- tests of assumptions the within made framework the to regard forward-looking With the anticipatedcombination. The also life has useful estimated. to of such assets be determining fair time at value the of the acquisition of abusiness are acquired assets as if part the estimates on is for intangible and based plant equipment and assets valuation ofThe property, financial statements. might assumptions have estimates, consolidated which uncertainty and the these on impact the as well as of financial risks reporting underlying of the understanding for a correct importance accounting associated chosen following with the as well are policies uncertainty as of the crucial original major estimates the from related The and estimates. assumptionsdiffer in out the set which occur may amounts actual in The future estimates. on uncertainties and events based as recognitionwell the as on assumptions valuation and methods depends financial statements in consolidated the of operations results financial and position assets, of net presentation The 2 authorities. paid to fiscal the create appropriate, when likely provisionstion and, the on which will based amounts have to be to interpreta subject are which to issues regard with particularly declarations, tax reviews larly closing the on dateapplicable which in near or future. will- regu the applicable Management be is calculated in regulations expense accordance current tax tax whichThe are German with the future as in foreseeable aresultnot reverse the of this influence. will differences it and is Group by likely determined the be can are temporary that reversed the differences subsidiaries associates and time unless at the are which temporary recognised, the in with holdings liabilitiesin connection tax differences Deferred which result from temporary ments relating to the facility for end customers to select more valuable mobile units in units valuable mobile return more relating to select customers ments to end for facility the agree to that multiple-component accounts receivable are attributable to regard trade With the in dunning process. receivables the collection and status of the on and as well age mainly as the structure on experience were based past on ments assess These assets. other and accounts receivable hing trade for suitable valuation adjustments forestablis out carried was as evaluation well receivables An of as value assets the other of the to allocated impairment this with to regard assets CGU. the euros WACC (if the percentage points); by 0.5 were this reduced to not result be would in any euros WACC (if the percentage points) million were increased by to 0.5 increase be or by 653 . 16 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Discretionary decisions, based on future events and uncertainties in estimates uncertainties and future on events based decisions, Discretionary ------king valuationassumptions for the provisions of made the have for similarpensions been and to regard provisionsWith pension forward-loo how similar and describes item obligations, 30 Employee participation programmes. refer to please item 26, blishing provision the 2013, LTIP for the December as of 31 programme - foresta as appreciation well rights stock valuation provisions as the the model outstanding for determining for to regard assumptionsWith the used estimates and in valuation the made model in future. tariffs inretained these of are time assumptions that users regarding have length made the primarilygin been tariffs, to creation the of provisions of negative-mar for contingent losses relating losses to expected regard With of future in extent thus this and the rental losses terms agreement of field. certain to for remaining made an the assumption has been reducingfor landline/internet the network, losses contingent for provision the of valuation to the regard With in future. sublet being areas assumptions in buildings, relation made have to possibility the been of these office and shops regard to creationWith the provision of the of rentedfor contingent for any losses vacancy companies. Group the representing passive disputes legal are created in basis particular the lawyers on of the assessment of the calculation In and particular, statement estimates. of on provisionsThe provisions depends for life dealer. over by contractual the gained customer the ofprovided the basis consideration of which the dealer of is the of cost estimates only of value that of the part by this gained also users the and dealer on end average with the generated revenue Group of the customer. which amount is The recognised in this way is essentially future of an the assessment life over dealer contractual of the the of the as total apercentage of the service expressed red at point at is which dealer by customer the the the acqui rendered service of the extent the on immediately at point at is in which customer income the statement the the acquired depends are of customer. recognised each over new costs life the contract recognisedofamount the The remaining The are instead acquired, and mers are in income statement. recognised the partially are not recognised in full at point at which services custo the the purchased the customers, red acqui of future newly with extent the generated also the and revenues on Group ofGroup the acquired have who remaining been customers new the on in client the of thedepends base of amount commission dealer the whom for of dealers services agency of certain case In the payable. commissions which final become (which cancelled) be longer no can with to probability the estimates basis assess the on Group, experience are of the of made past commissions sales from products various to regard accrual the for With the services of purchased percentage points. by 0.5 rate declined had rest million euros higher inte if the 1.0 have would and been percentage points increased byhad 0.5 million 0.9 have interest would euros if the lower receivables been rate that these established Asensitivity analysis receivables. risk in relation default ofas these the to this interest rate has This interest rate takes arising account agreements. maturity of as the these from well flows cash futuremensurate terms levels and of risk expected in to of value the order present determine the assumptions regarding interest made the com for have rate applicable receivables, been these anfor additional (mobile payment monthly option), in to and order fair determine of value the Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes ------freenet AG · Annual Report 2013 Report AG ·Annual freenet 135

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 136 Consolidated financial statements financial Consolidated Discontinued operations and available-for-sale long-term assets, which are classified as held-for- as classified are which assets, available-for-sale long-term and operations Discontinued 2 period. planning relevant in the percent 10 income were to tax decline by million corporation the income or trade euros if the 18.4 approx. decline by that and would they were to percent in relevant planning increase the by 10 period, income tax million corporation income or trade euros if the increase 18.4 would by approx. assets tax thatdeferred the has established assets analysis in out tax relation to carried deferred the liabilities. tax Asensitivity deferred and assets tax Deferred refer to please itemrecognised, 19, have been in assets relation tax to which deferred forward no carried losses of the extent also the and forward carried losses on taxes capitalised deferred of the to regard extent With the market. telecommunications of the as well development as the developments toregard macro-economic with instance for assumptions, forward-looking recognises which years financial four subsequent planning corporate on the for are based relating forward carried assets to losses tax deferred The in is determined. which taxation definitively the income in period the originally the from this on taxes will figure, assumed current deferred the and have on an impact eventual differs Ifthe due. in income will on relation taxation taxes transactions to become these basis the on ofcipated audits estimates tax as to whether, additional to if so and what extent, of provisions extent determines the Group anti for The of business. course during normal the in relation to are transactions whichThere it is to taxation not possible definitive determine the notes to refer of to consolidated these please the item financialtions, statements. 30 euros higher.thousand relating sensitivity analyses to obliga to regard pension the With further 11,051 obligations be would unfunded and funded of value the present the percentage points, discount if the euros and, rate by declines 1.00 thousand obligations by declines unfunded 8,339 and funded of value the present the percentage points, discountif the rate increases by 1.00 result of is The asensitivity assessment that, life expectancy. beneficiary’s of the assessment as well as an beneficiary income of the pensionable of future the of the ment development This involvesobligations. recognition the assess of the adiscount in trend pensions, the rate, ending 31 December 2012. 2012. December ending 31 period for the compared consolidated with adjusted the financial statements retrospectively year previous the have comparison figures been consolidatedIn these financial statements, 2 of continued operations. are as in income part shown statement the grouption of of the assets to revalua the adjustments The time amount recoverable at of the the reclassification. tions” and - as “discontinued classified opera not been had group or of assets assets if the out carried been revaluations depreciation or less value which have would are of lower at book shown the assets group of the or assets The criteria the 5 are satisfied. longer when no of IFRS operations” nued “Conti as reclassified are assets of available-for-sale group the or available-for-sale assets The is calculated. longer no assets corresponding depreciation of the long-term assets, to available-for-sale of discontinued and point At reclassification the the use. operations further it is realised likely generally more be by can value way than of by a sale that way their of book to sell if costs fair and less value value of are lower book at shown the accordingsale 5, to IFRS . . 17 18 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

Discontinued operations and available-for-sale long-term assets Comparable figures figures Comparable - - - - - Intangible assets Intangible ’000s EUR In balance sheet the of adjustment ventures: Retrospective Joint method equity the using included companies of Result operating expenses Other Depreciation expenses Personnel materials of Cost income operating Other Revenue ’000s EUR In statement income the of adjustment Ventures:Joint Retrospective in following. is out the set adjustments retrospective of the effects precise of the overview An financial year the for taxes 2012. result Group after the on has any not had adjustment impact retrospective ent only The of in itemcompanies using the method”. included “Result equity the in income and statem the using method” included equity only in “Companies position the the are in balance shown the sheet adjusted, retrospectively being joint the ventures, after tement, as previously, in published individual being - the items income sta the and balance of the sheet Instead of, notes to of consolidated these item on the 1.1 financial comments statements. our Please also Arrangements). refer to (Joint 11 ofThis IFRS relates adoption to early voluntary the Total Taxes on income Goodwill Current trade accounts receivable accounts trade Current assets tax income Current assets other and receivables other Non-current assets financial Other equity method the using included Companies equipment and plant Property, Deferred income tax liabilities tax income Deferred Liquid assets assets other and receivables other Current Current trade accounts payable accounts trade Current Current other liabilities and deferred items liabilities deferred and other Current Summe liabilities tax income Current Consolidated financial statements financial Consolidated

as published 31 .12 1,425 .2012 –800 –120 –155 140 111 160 246 603 328 –38 874 76 – –

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

retrospectively retrospectively 31 .12 adjusted 1,425 1,425 .2012 – – – – – – – – – – – – –

as published 31 published .12 2012 as as 2012 –1,569 4,248 1,045 .2011 –861 –942 –835 –478 –228 –241 537 140 246 305 345 987 259 –38 23 22 53 –5 35 – –

2012 retrospec retrospectively retrospectively tively adjusted tively 1 adjusted .1 .2012 537 987 537 987 – – – – – – – – – – – – – – – – – – – – - -

freenet AG · Annual Report 2013 Report AG ·Annual freenet 137

Consolidated financial statements Consolidated financial statements 3 freenet AG · Annual Report 2013 Report AG ·Annual freenet 138

reporting Segment Consolidated financial statements financial Consolidated

sation and management based on geographical regions. The Group operated in following the operated Group The regions. geographical on management and sation based exclusively almost exercises business Group operations the its in Germany, is there organi no Company. by the offered Because services and individual the products between differences the manages and organises Company the as main Board Executive decisionThe maker basis the on of profitability. its of measurement the and to this segment resources of Company ofmain the with to regard decision-making decisions body relating to allocation the are results regularly by reviewed operating the whose distinguishedto be segments Group from have basis the on and of internal segments In accordance operating 8, management, with IFRS liabilities and assets the wed of freeXmedia. still sho 2013, unlike December as of balance 31 the sheet 2012, December as ofbalance 31 sheet the In addition, 2012. for in income statement 4Players were the included as well as freeXmedia Unlike (for than respectively). 9months more for situation and 2013 for months 11 the in 2013, year,previous TM in consolidated were the included MOTION and financial statements GRAVIS Unlike to following the situation restriction: the subject are comparable, in 2012 the and 2013 for We also wish to individual that out the point items income statement and balance of the sheet (cumulative euros in equity comprehensive other income). of 4,573 thousand areduction and assets tax euros in deferred thousand provisions,pension an increase of 1,904 euros in the thousand an increase shows of 6,477 2011, December as published ofbalance 31 sheet compared with the 2012, as of balance 1January adjusted sive sheet income). retrospectively The (cumulative euros in equity thousand comprehen other of 13,284 areduction and assets tax red euros in defer thousand euros), thousand an increase of 5,505 euros to 44,986 26,197 thousand sion provisions as aresult complete of the disclosure cumulative of the (from actuarial losses euros in pen the thousand as published ofbalance that date, an sheet increase shows of 18,789 compared with the 2012, December as of balance 31 adjusted sheet retrospectively The tements. We (2011). also refer to 19 notes of the item to consolidated- the 1.1 of IAS financial sta adoption first-time with to regard out mandatory the carried has also adjustment been A retrospective ■ in 2013: segments operating ■ : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes ■ ■ Communications: Mobile ■ ■ ■ ■ ■ ■ Rendering of sales services of sales Rendering communications data mobile digital and lifestyle Sale/distribution communications of mobile for devices as well as additional services Vodafone, E-Plus and O and E-Plus Vodafone, (voice T-Mobile, communicationtion services mobile services)data and for the operators provider—marketing communications as amobile Activities service communica of mobile - of the network operators network of the as well as of arange tariffs tariffs and services independent own Company’s ofa range the operators, network with these concluded agreement operator basis the network On of the 2 in Germany in - - - - - finance) as well as entries which cannot be clearly allocated. Of the figure of 48.7 million of 48.7 euros figure the finance) Of as well clearly as allocated. which entries cannot be within human in resources Group central suchand as the legal, areas, of rendering services the AG This mainly of (with freenet also holding activities business comprises other the activities. but activities operating contains segment above-mentioned not only the “Other/Holding” The ■ Group isGroup accordingly individual on customers. not dependent The mass business primarily which operates private customers. on focuses Group freenet The is not available. services or extensiveA more breakdown of individual products in is item detailed 4. services or revenue by individualA breakdown products of third-party consolidated year. consolidated last the the and case balance as the income was statement sheet in shown measurements and figures the from not differ income do and expenses corresponding for the shown measurements and figures the reporting, of segment mic For purposes relevance. criteria basis econo and the on of selected are to allocated segments the expenses and Income prices which are basis are usual the market. on charged the on of transaction services These (or also provides to to segment. other provide) used the segments two of services the Each million euros) to business other the is activities. attributable –24.0 year: million euros (previous million20.5 euros) –19.6 and activities to operating the is attributable million year: euros (previous 8.2 2013, for segment “Other/Holding” forthe forEBIT reported million euros) million –3.5 year: euros (previous of –11.4 figure the Of businessother activities. million million –21.5 year: euros) euros (previous to is the –18.8 attributable and rating activities million euros) to ope the is attributable million 22.4 year: 11.1 euros (previous in 2013, segment millionmillion 0.9 “Other/Holding” year: for the for EBITDA euros) euros (previous reported of –7.7 figure the euros) Of –1.0 million to year: business other ous the is activities. attributable million euros (previ euros) –0.2 and activities to operating the is 36.6 million attributable year: million euros 26.1 (previous in 2013, segment “Other/Holding” the for gross for profit reported million euros) million 35.6 year: euros (previous of 25.9 figure the Of businessother activities. million euros) million 4.6 to year: is the 4.1 euros and (previous attributable rating activities million 67.9 year: euros (previous million euros) 44.6 to ope the is attributable for2013, ment million seg revenue in “Other/Holding” segment for euros) the 72.5 year: (previous reported ■ ■ ■ ■ ■ Other/Holding: ■ ■ ■ ■ Rendering of sales services of sales Rendering services. data and (call-by-call, pre-selection) voiceRange of narrowband services customers business for services other and services of communication EDP solutions, Development on web sites) web on users end for as well as pay services marketing the and banners of advertising of range comprise online the services shopping such as E-commerce/-advertising (these essentially services services of portal Rendering Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 139

Consolidated financial statements Consolidated financial statements Investments in continued operations result Group Group result from discontinued operations Group result from continued operations Taxes on income result financial Group EBIT Segment write-downs impairment and Depreciation Segment EBITDA Segment in associates result of Share operating expenses Other expenses Personnel capitalised work own Other Other operating income operating Other Segment gross profit gross Segment total materials, of Cost of materials cost Intersegment party third materials, of Cost total Revenue, revenue Intersegment freenet AG · Annual Report 2013 Report AG ·Annual freenet revenueThird-party ’000s EUR In 140 Group result attributable to non-controlling interest to non-controlling attributable result Group AG freenet of to shareholders attributable result Group Consolidated financial statements financial Consolidated Segment report 1 January to 31 December 2013 December to 31 1January report Segment : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes –2,444,618 Mobile Com Mobile –2,449,541 munications 3,154,949 3,160,388 –268,894 –150,707 710,847 365,114 312,747 –52,367 19,078 –4,923 10,045 63,823 5,439 0 -

–11,440 –17,465 –22,787 –20,816 –23,420 38,380 25,867 –7,715 48,654 –5,322 –3,725 10,274 3,245 9,727 Other 220 707

Elimination of intersegment and costs and –15,713 –15,713 –5,468 revenue revenue 10,245 10,245 –3,765 9,233 0 0 0 0 0 0 0 0

–2,462,083 –2,462,083 3,193,329 3,193,329 –280,477 –174,127 731,246 238,940 238,940 301,307 357,399 –42,864 –56,092 238,943 –19,503 22,323 10,752 69,785 Total 220 –3 0 0 0

IT products and accessories. and IT products million euros) 552 year: ous relates communications of to mobile sale computers/ the devices, euros) relates525 million to premiums for fees million commissions, and 750 and euros (previ million euros) 1,923 year: (previous relates million 555 to year: rentals euros fees, (previous and million euros 1,812 Communications revenue in Mobile segment, generated the external Of reporting. Segment item under is 3, out set ments million euros) over seg the million 3,085 year: euros (previous A breakdown of revenue of 3,193 revenueThird-party adjusted ’000s EUR In 2012 December to 31 1January report Segment Segment gross profit gross Segment total materials, of Cost of materials cost Intersegment revenue Intersegment Other own work capitalised work own Other income operating Other party third materials, of Cost result Group Group result from discontinued operations Group result from continued operations Taxes on income result financial Group write-downs impairment and Depreciation EBITDA Segment total Revenue, Investments in continued operations Segment EBIT Segment expenses Personnel Share of result in associates result of Share operating expenses Other Group result attributable to shareholders of freenet AG freenet of to shareholders attributable result Group Group result attributable to non-controlling interest to non-controlling attributable result Group

Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Communications –2,332,790 –2,337,317 3,021,103 3,025,939 –144,235 –131,986 –260,069 688,622 212,235 356,470 14,707 –4,527 53,583 Mobile Mobile 4,836 6,320 0

–32,152 –36,896 –23,248 –28,201 35,640 63,681 –3,470 –4,360 72,536 –4,744 - - 6,312 Other 6,303 9,667 8,855 890 729

4 freenet AG · Annual Report 2013 Report AG ·Annual freenet Elimination of intersegment

Revenue and costs and –13,691 –13,691 revenue revenue –4,420 –4,331 9,271 9,271 8,751 0 0 0 0 0 0 0 0

–2,364,942 –2,364,942 3,084,784 3,084,784 –148,595 –160,187 –274,566 173,189 173,189 719,842 208,765 357,360 –42,088 173,098 21,019 58,919 6,512 6,303 7,049 Total 141 91 0 0 0

Consolidated financial statements Consolidated financial statements 8 5 6 7 freenet AG · Annual Report 2013 Report AG ·Annual freenet 142 te operating Other Cost of of Cost Personnel te capitalised Other income materials expenses own work own Consolidated financial statements financial Consolidated

Personnel expenses are broken as follows: down expenses Personnel sions premiums and partners. sales for mainly comprise charges communications, mobile for commis services of purchased costs The business. prepaid from also and bundles products puters/IT com and principally telephones of mobile comprise purchase costs goods the of purchased Costs services purchased of Costs goods of purchased Costs ’000s EUR In cost of materialsThe is broken as follows: down overheads. expenses) as well as proportionate personnel and fees consultancy (mainly individual costs attributable directly comprise the relating capitalised costs The to are exclusively almost These to due communications strategic projects. field. in mobile the relates work capitalised own other essentially ofThe software to development the notes). of refer to these item (please 24 of freeXmedia sale fromthe to profit million notes), of these euros relates an and of amount 4.0 refer 36.1 to text (please of GRAVIS relation to derecognition the of acontingent purchase price liability arising acquisition the from million euros an in includes of amount 5.5 income of 2013 operating other forthe shown figure vation), the income from charging In addition, of use to company for the fees employees cars. cost subsidies advertising (insofar as not linkedreversing debits, to acti customer new direct income mainly operating other comprisesThe income from dunning charges charges and for nel expenses in accordance with IFRS 2 (previous year: 2,520 thousand euros). thousand 2,520 in year: accordance 2(previous expenses nel with IFRS euros in person thousand Company of the has appreciation resulted programme stock 2,538 The persons).3,865 year: (previous persons financial year, of the end At the 4,576 employed Group 3,917). the year: in (previous financial year in were Group the employed the 2013 persons average, 4,492 On salaries Wages and ’000s EUR In Social contributions and expenses for retirement pensions retirement for expenses and contributions Social : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 2,462,083 1,669,351 174,127 792,732 147,807 26,320 2013 2013

2,364,942 1,804,455 160,187 136,440 560,487 adjusted adjusted 23,747 2012 2012 - - - -

for rental leasing income and statement the contracts. euros) thousand recognised was in 26,865 year: euros (previous thousand of amount 33,734 An accounts receivable. tosively trade attributable wereexclu almost euros)- costs thousand These were incurred. 30,018 year: eurosand (previous thous totalling of financial receivables year,In the 33,885 of write-off allowances the and costs of billing, postage. and costs outsourcing of receivables, default the and of impairments administration and costs shops of building), the costs ancillary (e. administration costs million costs, consultancy and euros in legal 2012), with 111.2 million mainly compared euros comprise in marketing expenses 2013 (91.3 operating costs Other Hamburg. GmbH, intment libri.de relate in year previous shown the financial for to assets impairment inves the write-downs The tribution right which used. will be longer no recognised in impairments relationThe to in year previous intangible the relate assets to adis tion as has aresult expired year. previous of the of end depreciation at the debitel- of purchase the price recognised alloca within framework assets life the of the of most decline in depreciation relatingThe to useful that is the intangible mainly assets to due fact the assets intangible on write-downs Impairment assets intangible on Amortisation ’000s EUR In impairments: depreciation and the out following sets The table euros). thousand 11,284 year: plans (previous contribution benefit ofcontribution defined as costs social insurance euros employer’s as the thousand of 12,338 include afigure expenses Personnel euros), Pension provisions thousand also item similar 513 and see 30, year: (previous obligations. plans benefit euros defined for thousand of 646 also comprise an expense expenses Personnel programmes. Employee participation to 26, and itemscomments 2.14 refer to please our programme, regard toWith an participation explanationemployee of the Impairment write-downs on property, plant and equipment and plant property, on write-downs Impairment equipment and plant property, on Depreciation Impairment write-downs on financial assets financial on write-downs Impairment Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 56,092 46,491 9,601 2013 0 0 0

g. rents and rents g. 148,595 138,254 adjusted 9,156 2012 113 152 920 - - -

9 10 freenet AG · Annual Report 2013 Report AG ·Annual freenet Depreciation and and Depreciation impairments Other operating operating Other expenses 143

Consolidated financial statements Consolidated financial statements 13 12 11 freenet AG · Annual Report 2013 Report AG ·Annual freenet 144

Taxes Taxes Interest and and Interest similar income similar and interest Other on income similar expenses similar Consolidated financial statements financial Consolidated

Interest on pension obligations pension on Interest Deferred tax expenses attributable to tax rate changes rate to tax attributable expenses tax Deferred refund of tax Interest Other payments tax of additional expense Interest instruments financial of derivative valuation of market Expense liabilities. and assets tax Deferred refer to please item details 19, concerning taxes, deferred For further years previous for Tax income year financial the for expenses tax Current ’000s EUR In taxes. income as on well taxes asThis deferred item comprises outstanding paid and ding of provisions. other to compoun euros the is attributable lities thousand liabilities, current and income tax 191 and liabi other accounts payable, to compounding of euros trade the is attributable thousand 4,586 as aresult compounding of of liabilities, 2013 for the shown interest for figure expenses the Of liabilities of Compounding costs similar and payable Interest ’000s EUR In Interest similar and are broken as follows: down expenses income similar and collection debt banks, from receivable Interest ’000s EUR In interest similar and Other income consists following of the items: Deferred tax income due to temporary differences to temporary due income tax Deferred Deferred tax income due to the write-up of deferred tax assets tax deferred of write-up to the due income tax Deferred : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes –19,503 –31,805 44,633 10,831 –2,394 37,855 1,769 1,136 1,302 4,777 2,729 1,769 2013 2013 2013 207 492 0 0

–32,737 adjusted 44,783 36,489 30,790 6,512 2,695 6,248 2,596 1,551 8,917 –623 2012 2012 2012 110 373 165 12 99 - -

ders by the weighted by the ders average of shares number in circulation during financial year. the In future, Undiluted share earnings are per calculated by to dividing sharehol resultthe the attributable (undiluted) EUR in share per Earnings Weighted average of shares outstanding of shares Weighted average AG in EUR'000s freenet of to shareholders attributable result Group capital”. “Contingent 26.5 point under comments to our refer please purposes, information For capital. contingent of utilisation it is that undiluted possible share earnings might per increased as aresult possible be of the 14 percent). 29.3 year: percent (previous in were financial year calculatedtaxes the with 2013 an average rate of 29.85 deferred The percent) were also used. 384.81 year: percent (previous rateassessment of 400.70 as well percent in tax as tax an relation average surcharge to trade darity corporation the of 5.5 Asoli income. on taxes in calculating for financial year the used current 2013 deferred the and percent) 15 was year: percent (previous rate of 15 tax acorporation companies, Group For the Results from continued and discontinued operations before taxes on income ’000s EUR In million income of 6.5 tax euros) year: (previous is in following shown the reconciliation. million euros of 19.5 expense tax this actual the and amount lion euros). between difference The mil of million 77.1 48.8 year: expenses euros (previous tax result income would on in expected rate consolidated average of the the tax Applying companies taxes result to Group before the

(previous year: 29.30 percent) year: (previous 29.85 of percent rate atax applying expense tax Expected tax assets in relation to losses carried forward carried to losses in relation assets tax deferred non-recognised and assets tax deferred for allowance inChange the Actual tax income tax Actual years previous from Tax expense rate tax in changes to due Effects income tax-free and expenses non-deductible of Tax effect Effective tax rate in percent rate in tax Effective Thereof from continued operations in EUR operations continued from Thereof Thereof from discontinued operations in EUR operations discontinued from Thereof . 1 Undiluted earnings per share per earnings Undiluted Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 128,011,016 –19,503 258,443 238,943 –77,145 –2,394 –1,811 59,118 2,729 2013 1,87 2013 1,87 0,00 7.55

128,011,016 –48,836 166,677 173,098 adjusted –1,999 57,805 6,512 –3.91 –623 1,35 2012 2012 0,00 1,35 165 - - -

14 freenet AG · Annual Report 2013 Report AG ·Annual freenet Earnings per share per

145

Consolidated financial statements Consolidated financial statements 15 freenet AG · Annual Report 2013 Report AG ·Annual freenet 146 Intangible assets, assets, Intangible goodwill and equipment and property, plant Consolidated financial statements financial Consolidated (diluted) EUR in share per Earnings Weighted average of shares outstanding plus number of diluting shares number plus outstanding of shares Weighted average

The extension of the exclusive distribution right with Media Saturn Deutschland GmbH which exclusive of extension GmbH the The distribution right Saturn Deutschland with Media lion euros), million euros). including million 22.5 of distribution year: 61.9 rights euros (previous 47.1 2012: mil December (31 million 2013 euros are December as shown of 31 of 94.8 gible assets relations customer intan and debitel acquisition, the from toIn further addition trademarks the relations Customer Trademarks ’000s EUR In relation: customer and trademarks of these values book the out following sets The table acquisition occasion of the the on allocation in debitelfinancial year of Group the the 2008. to purchase price the attributable relates of value intangible to main assets trademarks The book assets. in non-current movements of statement ted are in consolida intangible shown and plant the equipment and - assets in property, Movements outstanding of shares Weighted average AG in EUR'000s freenet of to shareholders attributable result Group potential nor dilution effects. are dilution there neither effects 2013, December of 31 As diluting potentially by shares. in circulation increased shares of number average weighted the by Diluted share earnings are per calculated by to dividing shareholders the result the attributable 14 intended limited use. use. limited intended are impaired as a result of to the rights software and use technology, of network reduction the is impaired as a result of Software 2013. December Impaired as existed of intangible 31 assets million euros. This resulted in incomeinued of in this 1.2 operating other connection. distribution right which up existed to had that related also and point the liabilities were discont Saturn Media the time, At same the million 2013. euros December as of as 31 shown 60.9 was resulted of which adistribution right, in as re-capitalisation 2013 of the 1August effective became Thereof from continued operations in EUR operations continued from Thereof Thereof from discontinued operations in EUR operations discontinued from Thereof . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 2 Diluted earnings per share per Diluted earnings 128,011,016 128,011,016 31 302,455 .12 302,444 238,943 .2013 2013 1.87 1.87 0.00 11 128,011,016 128,011,016 31 309,409 .12 173,098 307,286 2,123 .2012 1.35 2012 0.00 1.35 - - - aims to generate Group EBITDA of 365 million euros and 370 million euros respectively; it also million million aims euros 370 euros and to of respectively; 365 EBITDA generate Group freenet no-frills). and 2015, and (postpaid For 2014 ownership in sector customer base the mer a slightly increasing Company custo the expects 2015 and for 2014 Furthermore, overheads. as euros well in planning as slightly the in of range period 21 eurospaid 22 ARPUs the and lower slightly acquisition, customer reduced slightly higher as retention well customer as Post costs is assuming freenet as a result acquisition of the programmes. paid to partners loyalty or sales commissions hardware dealer and the procuring for by loyalty. costs mer to This be is opposed retaining dominate customers contribution the to custo and earnings by customers new made of acquiring costs The and operators. with to network regard mobile the particularly services, purchased for costs by the are opposed retention. customer These and customers by new made contribution the to resultsCommunications” CGU broken into earnings down be can flows, two “Mobile tions of in the relation gross profit the to In main principle, the result drivers. value and future and Planning expecta assumptions experience previous from detailed on derived is based 13. IFRS to according This is to equivalent yield. level fair 3of hierarchy value the in perpetual the extrapolated was planning detailed forcalculating by phaseapproved management The used fair was value. the munications” CGU. Planning up which to and was including and which covers period 2017 the Com “Mobile of amount recoverable as the the used to sell has costs been fair less value The euros). thousand 293,204 year: (previous to euros allocated was atrademark thousand 293,204 life euros) of thousand service an and intangible with asset an undefined 1,111,830 year: vious Communications” to euros CGU allocated was (pre the thousand “Mobile of 1,117,372 Goodwill testing: impairment following the we hereby provide details asset on In accordance provisions 36, with the of IAS were recognised in income statement. the costs research development and No consolidatedthe financial statements. Please refer also to item notes 25 to of these GmbH”). (“freeXmedia Hamburg GmbH, eXmedia relates to deconsolidationof fre the “Other” euros under shown thousand of 46 decrease The solidated financial statements. euros). notes to Please of con refer these also in the to(1,948 thousand item comments our 36 euros)thousand acquisition the and percent of shares TM GmbH in Vertriebs of 51 MOTION (3,594 mbH ting acquisition the from of shares in Gravis –Computervertriebsgesellschaft Communications increase to purchase price Mobile for resul allocations the isThe attributable Other Communications Mobile ’000s EUR In recognised in goodwill relation toThe CGU is broken in following: down the Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 1,122,112 31 1,117,372 .12 4,740 .2013

31 1,116,616 1,111,830 .12 adjusted 4,786 .2012 ------

16 freenet AG · Annual Report 2013 Report AG ·Annual freenet Impairment test test Impairment assets for non-monetary 147

Consolidated financial statements Consolidated financial statements 17 freenet AG · Annual Report 2013 Report AG ·Annual freenet 148 Companies Companies equity method equity the using included Consolidated financial statements financial Consolidated

In the consolidated financial statements for 2013, FunDorado GmbH, GmbH (“FunDorado”), (“FunDorado”), GmbH GmbH, FunDorado 2013, for consolidatedIn the financial statements disposal. fromthe euros as profit thousand current the for annual as well result as 4,764 2012 euros thousand year, previous the for toeuros KielNET is including attributable of 1,002 afigure thousand 5,766 result for the of companies using method, included equity the reported figure the within in greater telecommunications the licensed the territory Of region services of Kiel. offered percent stake in this a50 company, owned Group The which 2012. 25 on completed October was up to at point which companytements the the deconsolidated as was aresult which sale of the as an associate included in consolidated- the been had financial sta followingthe as “KielNET”) für Kommunikation, (referred Kiel Gesellschaft to in GmbH KielNET In 2012, 2013. 31 December ending associates period the for inNo are consolidated the included financial statements impairments. and Depreciation to item 9, refer operations—please continued the for assets to non-monetary in relation recognised were euros) thousand of 1,185 impairments year: (previous impairments no financial yearIn the 2013, life. useful indefinite an with demark that impairment no has recognised to in- relation as be well tra goodwill to as the allocated the in out relation to carried CGU Communications the impairment 2013 test Mobile The confirmed percent). 0.5 assumptions year: (previous growth of result a as assumed been has percent 0.5 of discount a 2018), (starting phase subsequent the percent). regard to capitalisation With the rate in 6.4 year: percent (previous fair is value 6.35 Communications basisMobile the on ofof in marketdetermining course the used and data the CGU of the risk in structure relation derived to capitalisation specific tax the The rate after Communications. will within mainly generated as CGU flow cash well EBITDA the be free asGroup the Mobile The million million of aims265 280 eurosand in euros in 2015. to 2014 flow cash generate free nies thus did not generate any fromchanges in results other in equity. recognised value directly are exclusively compa- the recognised in of income continued statement; results the operations euros). thousand These 537 year: (previous companies using the for method included equity the euros thousand including of 220 subsidiaries results generated its FunDorado investments and In 2013, is using in consolidated method. the included equity financialFunDorado the statements acquired Hamburg. percent stake in Funview a50 FunDorado GmbH, In 2013, Pulheim (“siXXup”). GmbH, distribution Media company new percent of its siXXup 100 holds in turn NetCon of FunDorado. internet portal primarilyis used in fee-based to designed the be s. Media acquired percent stake in NetCon a50 FunDorado In 2006, internet portal. fee-based a operates percent). FunDorado 50.0 year: (previous shares percent of the in FunDorado 50.0 holds is as ajointincluding Group included subsidiaries venture. freenet its investments, and The r. : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes o. based in Hlucin, the Czech Republic (“NetCon”). The Company produces content Company produces The which Republic (“NetCon”). in Czech Hlucin, the based o. previous year: 134.4 million euros) as aresult anticipated of the carry-forwards. loss of use tax 134.4 year: previous million million 41.1 year: previous euros; term euros) (42.1 million long-term and euros; (144.7 million euros) million 175.5 year: previous euros; is as short- classified which are recognised (186.8 AG group of freenet tax trade and tax corporation the for assets tax overhang ofThe deferred liabilities tax Deferred assets tax Deferred ’000s EUR In are following in consolidated shown the The amounts balance sheet: percent). 29.3 year: percent (previous were calculated using with rate atotal liability of the 29.85 tax method liabilities and were assets taken into tax differences deferred consideration, temporary After assets. financial created in been relation had impairments to no other the in 2011, GmbH Entertainment Media date, balance of exception withthe sheet the impairment of the As in relation to Pocketfilm euros. thousand acquisition of this costs as holding are 398 stated historical The forearnings—this2013. not changed December had as assessment of 31 spects pro in Frechen, significantly view of the poor GmbH, Entertainment Media intment Pocketfilm recognised percent was in in financial year relation the 2011 to inves the impairmentAn of 100 purchase. of cost at measured euros which has been thousand of amount 500 holding with ana dormant unchanged carrying as rental collateral is there are and also measured at In forshops addition, fair serve value. these euros); thousand 1,027 year: euros (previous thousand with long-term maturitiesbonds of 1,037 recognised date as balance of the sheet mainly financial other assets The comprise fixed-income interest joint Group tion with in the ventures. these contingent were there no liabilities in commitments capital 2013, connec or December of 31 As amount. inthis carrying treated to had amount as be areduction in 2013; euros received FunDorado from was thousand of payment 250 that adividend fact the euros is to due thousand of 30 reduction the euros, thousand as 220 shares reported profit With euros). thousand 1,425 year: (previous 2013 euros December as of 31 thousand ments) 1,395 was (including subsidiaries holding in Group’s amount of the FunDorado its invest and carrying The Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 186.790 .12 186.947 .2013 –157

31 175.528 .12 175.528 adjusted .2012 0 - - - -

19 18 freenet AG · Annual Report 2013 Report AG ·Annual freenet Other financial financial Other

assets and liabilities and assets tax Deferred 149

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 150 Consolidated financial statements financial Consolidated Other assets and liabilities and assets Other Borrowings Provisions Other liabilities Other Loss carry-forwards Loss Financial assets Financial Borrowings liabilities Other Provisions the income tax expenses and income in 2013 were attributable solely to continued solely operations. were attributable income in and 2013 expenses income tax the in year, previous the case the was As to continued discontinued and attributable operations. income on taxes to sum deferred the of income the correspond and expenses income tax The Taxes on income ’000s EUR In euros) thousand are in consolidated shown the as income follows: statement 39,085 year: euros (previous thousand amounting income income from to and tax 14,696 expenses The assets Intangible equipment and plant Property, ’000s EUR In liabilities and in 2013 assets tax in deferred Changes table: lowing liabilities and assets are financial tax year in fol the for shown Change the 2013 in deferred the Intangible assets Intangible equipment and plant Property, ’000s EUR In liabilities and in 2012 assets tax in deferred Changes liabilities as tax follows in financial year the deferred 2012: and developed assets tax deferred The liabilities and assets Other carry-forwards Loss Group result from discontinued operations discontinued result from Group assets Financial : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes –107,116 175,528 1 256,711 –135,631 132,842 1 .1 11,750 adjusted 13,514 247,794 .1 11,358 –1,216 1,670 .2013 –872 –134 1,615 .2012 9,247 –322 –3 5

Change in group group in Change of consolidated consolidated of consolidated consolidated companies Change in in Change companies group ofgroup –3,192 –3,192 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 Shown directly directly Shown in other result other in Shown directly directly Shown in other result other in –242 –242 3,601 3,601 0 0 0 0 0 0 0

0 0 0 0 0 0 0

taxes on income on taxes expenses from Income and and Income from taxes Income and and Income on income on expenses 14,696 14,696 14,901 14,696 –1,498 39,085 28,515 –1,098 1,633 –791 2013 2,156 8,917 302 –14 344 188 87 76 55 0

31 31 –111,806 186,790 .12 271,612 –107,116 175,528 .12 256,711 15,147 10,717 adjusted 39,085 11,750 13,514 39,085 1,746 .2013 –570 1,670 .2012 –872 –134 –47 2012 –9

0 5 -

sed in relationsed to year-end of inventories. stocks euros) thousand recogni has been 3,714 year: euros (previous thousand impairmentAn of 3,668 products Computers/IT Mobile devices/accessories ’000s EUR In Inventories are broken as follows: down to in near reverse future. the that are they not expected in in fact view of relation the recorded differences have toeuros). taxes these been deferred No million approximately year: million euros (previous purposes) 40.7 of approximatelytax 36.6 for shown of investments according amounts is to higher carrying IFRS corresponding than the basis (net equity differences outside shareholders’ are there temporary 2013, December of 31 As (Einkommensteuergesetz). Tax Income Act German in accordance 1clause 2of with the clause paragraph 4h interest carry-forwards unreported no year previous the date, on balance were there case sheet the was As billion tax). euros trade 1.4 and billion tax 1.9 billion euros corporation year: 1.1 and euros (previous relatetax tax to trade billion euros relate created 1.6 to in consolidated been the had corporation balance sheet, assets tax which for deferred no carry-forwards, loss other for shown figure the Of carry-forwards. loss euros) thousand tax to istrade 122,746 attributable year: euros (previous thousand 130,187 and euros) carry-forwards loss thousand tax to corporation is attributable 133,965 year: (previous euros thousand 141,425 this figure, euros). Of thousand 256,711 year: (previous carry-forwards created in euros been relation had to thousand loss of 271,612 taxes deferred 2013, December 31 of date. result as balance of As the sheet applicable pre-tax for relevant forecast Company’s the on are results based expected realised. The that this be probable will to asset sidered be indeed that to it asset extent is the con tax only recogniseconsolidated adeferred financial statements cumulative sum forecast the of the result following of Accordingly, the four financial years. the exceed any without restriction forward carried that be can carry-forwards loss existing tax The Tax income result in other directly Shown companies in of consolidated Change group 1. of As ’000s EUR In is taxes in following: shown the of deferred summarised development net The SIM cards SIM Other vouchers and Bundles 1. Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 186,790 175,528 .12 69,802 19,460 36,801 14,696 –3,192 9,344 3,096 1,101 .2013 –242 2013

31 132,842 175,528 .12 adjusted adjusted 56,586 42,895 39,085 2,469 2,663 3,601 8,559 .2012 2012 0 0 - -

20 freenet AG · Annual Report 2013 Report AG ·Annual freenet Inventories 151

Consolidated financial statements Consolidated financial statements 21 freenet AG · Annual Report 2013 Report AG ·Annual freenet 152 Receivables and and Receivables other assets Consolidated financial statements financial Consolidated In the previous year, previous In the that accounts receivable were not impaired of not and trade in case the invoice the invoicestely after The is to submitted raised. DTAG days. have term apayment of 30 invoices immediaWhere due - are they itself, mostly Group are by the issued to customers end Telekom of Deutsche AG (DTAG) services collection the are utilised. services, narrowband for invoicesOther/Holding, some itself; issued Group by are the partially Invoices Communications segment itself. are In the in issued Group Mobile by segment the the 2013. 31 December euros) as of sale for thousand held consist non-financial assets or 17,850 year: of assets other euros (previous thousand of 23,136 payments advance and assets Other partners. sales and lers - dea are they from business due extent to and customers, a lesser mainly customers, from end are due These significant accounts item receivable. most are the in trade thisGroup, category freenet In the Additional information concerning financial instruments. 34, point under ments refer to please information, euros). com our thousand For further 509,828 year: (previous 2013 euros December as of 31 thousand amounted to recognised, 528,091 whichwances been had allo less financial assets, non-derivative other the and accounts receivable total ofThe trade internet and services. network fixed and sales equipment to fees, butable comprise and mainly attri receivables Trade parties, are accountsexternal from receivable due assets Other receivable Trade accounts ’000s EUR In are broken as follows: down assets other and Receivables The Group does not have to any does it. which provided Group securities haveThe been receivable. accounts trade ve-mentioned abo of value the risk maximum date to default as balance book ofThe the the sheet corresponds have who in past. the not defaulted customers are fromvarious due euros) thousand receivables are overdue are but These not impaired. 13,670 2012: (31 December euros thousand of 8,087 financial assets Trade non-derivative other and accounts receivable overdue. euros) thousand are impaired neither nor 432,248 2012: December euros (31 thousand 463,959 of financial assets non-derivative other and accounts receivable trade 2013, December of 31 As receivables. to existing in relation held were renegotiations no overdue, Advance payments : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 551,227 501,629 11,787 37,811 2013

527,678 492,346 adjusted 22,173 13,159 2012 - - - -

Net allocations toimpairments allocations Net 2012 31 of as December recorded Allowances 2011 31 of as December recorded Allowances adjusted ’000s EUR In toimpairments reductions Net 2013 31 of as December recorded Allowances 2012 31 of as December recorded Allowances ’000s EUR In financial assets: as accounts well receivable as non-derivative of trade gory information out concerning cate movement the infor following sets the impairments The table receivable Trade accounts adjusted ’000s EUR In assets financial non-derivative Other receivable Trade accounts ’000s EUR In financial assets. non-derivative and vable following accounts receiThe information of relates trade of this to age category the structure to buyer. the were transferred associated receivables with ownership of these euros). thousand opportunities and major All risks income of 1,279 year: (previous of receivables sale from the euros generated was thousand financial of year, the course In the income of 1,449 Total Total financial assets financial non-derivative Other

Consolidated financial statements financial Consolidated 31 31 528,091 .12 501,629 Carrying Carrying 509,828 .12 492,346 amount 26,462 Carrying Carrying amount 17,482 .2013 .2012

impaired nor nor impaired date neither impaired nor nor impaired date neither On closing closing On 463,959 On closing closing On 438,464 432,248 Thereof: Thereof: overdue 415,121 25,495 Thereof: Thereof: overdue 17,127

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes less than less than days90 Thereof: On closing date not impaired impaired not date closing On Thereof: Thereof: On closing date not impaired impaired not date closing On Thereof: 13,238 5,843 13,004 90 days90 5,535 308 234

and overdue by overdue and and overdue by overdue and and 180 days 180 and and 180 days 180 and between 91 between between 91 between 946 939 302 246 56 7

more than than more –30,563 132,645 102,082 more than than more 180 days180

132,645 135,865 180 days180 –3,220 1,298 1,272 130 130 26

- -

freenet AG · Annual Report 2013 Report AG ·Annual freenet 153

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 154 Consolidated financial statements financial Consolidated Total allowances individual Utilisation Allocation 1. of As receivable accounts totrade relating allowances individual in Development ’000s EUR In in individual development allowances. the shows followingThe overview mainly distribution businessfrom partners. users, individual of the allowances whereas most were created in relation users, end to due receivables individual global reference the allowances dates, related two of from to the due receivables As buckets to time according allowances individual Global ’000s EUR In receivables: of ries allowances createdThe to date asfollowing balance of the the sheet were catego attributable also declined significantly. declined also allowances the createdwith allowances, for unchanged percentages in relation to this category days Accordingly, have considerably mainly declined receivables. than to of 180 due old sales formore due year previous with past the Compared reference receivables user date, end the Reversal Reversal 31. of As Reversal Utilisation Allocation 1. of As assets non-derivative toother relating allowances individual in Development 31. of As initial consolidation Additions,

Total allowances allowances Individual Thereof for receivables past due for <90 days <90 for due past receivables for Thereof due past not receivables for Thereof Thereof for receivables past due between 90 and 180 days 180 and 90 between due past receivables for Thereof Thereof for receivables past due for 180 days 180 for due past receivables for Thereof : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 1. 1. 12. 12.

31 102,082 .12 98,280 85,560 3,802 3,802 3,458 1,278 1,193 4,422 5,211 6,231 .2013 2013 344 484 343 328 88 16 0 0 31 132,645 127,895 .12 113,537 4,422 4,750 4,750 6,468 1,268 1,425 1,332 6,622 4,533 .2012 2012 328 204 328 0 0 0 0 - purchase price (which is not subject to any subsequent adjustments); of this figure, 500 thousand purchase price (which to any adjustments); is of 500 this subsequent not subject figure, as the euros agreed was thousand of 4,080 Afigure segment. in “Other/Holding” the included this company is reporting, In segment social media. and freenet.de interest general as portal the living active as and well issues the of on sport automotive, digital focused media entertainment, of online marketing, freeX field In the Ventures Cologne. to Media GmbH, GmbH”) “freeXmedia (referred Hamburg to in following the GmbH, as percent holding in freeXmedia 100 its sold Group the 2013, 1January from with and effect 2012 of purchase 4December agreement the With in year previous “Other/Holding”. the included was in segment the this company reporting, In segment 2012. 4Players December deconsolidated as was of 31 2015. euros will paid (and be and recognised in financial in years 2014 the flow) cash 200 thousand remaining The euros. thousand 100 also received Group afigure the financial yearthe 2013, In euros paid in financial year the thousand 2012. adjustments); of 100 thissubsequent figure, purchase as price the (which euros agreed was to thousand any is not subject of 400 A figure services. 4Playerseditorial sitesweb operates games server provides Fürth. and AG, Media (“4Players”) Hamburg percent holding in 4Players GmbH, to Computec 100 its sold had Group the 2012, December 31 from with and effect 2012 of purchase 3December agreement the With year as previous of the case reference date. also was the 2013—as December as of discontinued in were 31 Group no the There operations years. previous from balances credit netting tax to mainly corporation attributable comprise assets receivables current tax The held-for-sale. assets to euros non-current are attributable thousand 2,732 and to liquidattributable assets, euros are thousand 204,621 in for liquid shown equivalents, cash and cash figure the assets Of operations continued of assets Liquid ’000s EUR In months: to up of three liquidatedwhich be can at any time as well as current financial liabilities with an original term 7, market current and money paper with cheques consisting IAS in cash hand, of at cash banks, followingThe is areconciliation in accordance equivalents with of cash and liquid cash assets banks at cash and in hand Cash ’000s EUR In are broken as follows: down equivalents cash and Cash Liabilities as part of current finance scheduling due to banks to due scheduling finance current of part as Liabilities Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 31 110,766 110,766 .12 .12 110,766 110,766 .2013 .2013 0

31 31 204,621 207,353 . 12 . 12 204,621 207,353 adjusted adjusted . . 2012 2012 0 -

22 24 23 freenet AG · Annual Report 2013 Report AG ·Annual freenet Current Non-c ah and Cash tax assets sale of subsidiaries sale operations and discontinued sale, held-for-assets cash equivalents cash urrent

155

Consolidated financial statements Consolidated financial statements 25 freenet AG · Annual Report 2013 Report AG ·Annual freenet 156 equity Shareholders’ Consolidated financial statements financial Consolidated

4Players and freeXmedia were sold as part of the policy of continuing policy of the strategic portfolio the as part were sold 4Players freeXmedia and income. operating other which the is under shown year 2013, financial euros forthe thousand deconsolidation company of the The resulted of 4,009 in aprofit Liquid assets receivable Trade accounts Current assets equipment and plant Property, assets Non-current ’000s EUR In Assets 2012 December 31 of as GmbH liabilities and freeXmedia of Assets 2012. December as of 31 a breakdown liabilities and out individual of the assets following sets The table of freeXmedia held-for-sale” assets”.assets as well of disposal with non-current as the “Liabilities in connection items in balance the sheet “Non-current 2012 consolidatedthe December as of balance 31 sheet liabilities and in were disclosed assets The of freeXmedia 2013. deconsolidated as of 1January was freeXmedia (non-cash-effective). euros were netted thousand euros were received 1,000 and thousand 540 with liabilities netted and afurther to due purchaser. the financial year In the 2014, euros recognised was as non-cash-effective thousand of 1,000 afigure euros; thousand 1,040 received atotal Group the of financial year In the 2013, euros paid in financial year the 2012. at euros. their acquisition thousand of 50 costs in reserve capital company. turn by the from the is owned wholly shares own were deducted The which Schleswig, Logistik shares by are GmbH, mobilcom-debitel of these held 50,000 thousand entireeuro. The share is capital fully shares All paid up. issued with equal rights. have been registered no-par-value shares nominal each of with value 1.00 atheoretical of 128,061,016 consists capital share The euros. thousand is 128,061 company the of capital share issued The 25 earnings financial situation and group. assets, of the for the presentation the on material effects deconsolidations no had The liquidations of companies any without mergers and operations. as well involved as debitel GmbH go GmbH MIDRAY Beteiligungs Klarcall Dritte GMbH, GmbH, Logistik DEG S.L., in financialof out year CLAROMOVIL the deconsolidations 2013 carried The communications/mobile internet mobile in with digital conjunction lifestyle. streamlining as and aresult process decision of the to concentrate core our on areas of business . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 1 Share capital Share 31 .12 7,329 7,350 4,598 2,731 .2012 21 21 Equity and liabilities and Equity Other liabilities and deferred items deferred and liabilities Other payable accounts Trade liabilities Current In EUR ’000s EUR In 31 .12 7,325 7,325 6,839 .2012 486 of conversion or option bonds whichof basis conversion are the issued on Company bonds authorisation option of of or the the tingent registered increase value capital is shares granted to to to holders no-par the be enable con of the purpose The euro share of the (contingent capital accounting 2009). capital 1.00 for share value registered with value each individual shares, no-par no-par new up to 15,000,000 share the for by out capital way of issuing euros carried was thousand increase of up to 15,000 acontingent capital ofAccording 7July 2009, Meeting to Annual of General aresolution the 25 Gazette. in Federal tion the to annual 2013 the meeting general agenda item under published 6in invita the has- been Board Executive authorisation of the the complete wording The of euros. thousand increase the occasions; however, is limited to 12,800 by way of issuing shares new in return and/or cash for contributions more or one on non-cash to increase share the board, up capital to 2018 6 June supervisory ofapproval with the the sed, is authori Board Executive (authorisedThe annual of 23 meeting May 2013 2013). capital general created was capital at authorised the New 2012. December as existed of capital 31 authorised No 25 acquisitions. Company notes, Please of refer these in this item under to context 36 Energie comments our MFE GmbH. euros as aresult acquisition of thousand the remaining of the were increased by 366 shares in bility relating acquisition to the for option aput remaining of the and shares TM, in MOTION euros as aresult recognition of thousand the of alia were additionally byresults 7,601 - reduced Group the million financial year euros) In the 2013, financial year paid the for was 2012. of 172.8 share euros (a total per of 1.35 adividend In 2013, payments. AG dividend the of less freenet ders earnings retained consistThe mainly cumulative of to the sharehol the attributable group results 25 Gazette. Federal Electronic in the 2010 items Meeting agenda in invitation the the 8on 7and Annual to General the attend under complete 21 May wording 2010 on authorisation published resolutionsThe was of these may in to derivatives additionally order acquire equity use shares. treasury Board Executive the 8AktG, no. toIn paragraph addition authorisation pursuant to the clause 71 authorisation is valid The regulations. until to legal the 5July 2015. subject purpose share existing capital time at at the which permissible this authorisation is forevery exercised, at regarding which resolution the this or—if authorisation is adopted this is amount lower—the shares to equivalent treasury atotal share percent of the existing of capital up to time at the 10 to acquire Board, use and Supervisory of approval with the the 6July 2010, on Meeting General byAnnual the authorised was Board Executive the 8 AktG, 1 no. Pursuant paragraph to clause 71 25 euros). million (134.7 AG related the and acquisition in 2007) freenet.de shares minority of in former the the effective AG AG to (which freenet form mobilcom AG freenet.de became and between well merger as the million euros) as to due acquisition the (349.8 debitel of Group the increase capital the in 2008 comprised 2013 December as of 31 additional of paid-in the reported capital components Major . . . . 3 5 2 4

Retained earnings Retained Contingent capital Contingent Additional paid-in capital paid-in Additional Authorised capital Authorised Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 157

Consolidated financial statements Consolidated financial statements 26 freenet AG · Annual Report 2013 Report AG ·Annual freenet 158 Employee programmes participation Consolidated financial statements financial Consolidated programme are set out in following out are the set table. programme price each for base to days individual trading exercise. the and prior the caps The 30 last the for exercise The price is average the price share in individual the price company of programmes. the exercise the on exercise is acap the whereby price, imposed price abase and ference between appreciation foreach payment acash right stock to equivalent dif the specify they instead, res; any not provide do appreciation authorisation to right stock sha for - subscribe programmes The 2existed. programme from rights that appreciation so only stock expired, of had or disposed exercised, either been 5had 4 and 3, 1, all programmes fromthe units 2012, year previous of the reference date December As 31 5. 1 to programme aseparate programme from sake For reclassified the of have simplicity, been SARs 2014. these December until 31 granted to extended 1was Mr. of that programme been had Stephan as part SARs Esch 300,000 life the still of the outstanding 2011, from1January with and effect financial year 2011, In the occasion of his the on Board. to Executive appointment the astoph of Vilanek 1May 2009 4) were issued to Mr. (programme Chris SARs 400,000 financial year In the 3). 2009, gramme AG of occasion (pro freenet of his the on Board to Executive appointment the 2008 September were granted to Mr. JoachimPreisig as of 30 400,000 SARs executivessenior 2008; as of 1April were issued to SARs 720,000 In aprogramme were issued in 2008: programmes Two SAR further 1”). (“programme Board Executive ofAWRs) the including members to executives, senior former (SARs) (Aktienwertsteigerungsrechte; rights appreciation stock issuing 5,145,000 of total a by appreciation programme stock AG a so-called introduced freenet of 2006, course In the 26 ■ ■ programmes: participation employee following the offers Group The increase. tal contingent the out capi details carrying for further the to is fix authorised Board Executive The beginning entitlement fromthe financial adividend year of the in which are they issued. carry shares new will The settlement. acash not provide Company if the or does forsettlement used with aconversion theirders conversion obligation shares meet are obligation if treasury and not to to extent out which the conversion are carried utilised rights option or be to or which hol contingent The increase capital is of incorporation. only to articles 7of the clause 4paragraph registered issue new in no-par-value the for amount out The set rules the shares on is based pany which or establish aconversion obligation in relation shares. to these aconversionprovide right option or registered value in shares relation Com of to the no-par the A) which and letter agenda item under 10 of 7July 2009 Meeting Annual by General the adopted by the company,by the stock percent of the 20 2for with shut-out to regard the programme period to condition the is thatemployee the still Subject employed return shareholder approach. strike the from price in accordance total the for are each deducted with recognised methods shareholders the for benefits other and to shareholders the payments of value dividend The ■ ■ . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes LTIP AG of freenet programme AGStock of appreciation freenet rights 1 Stock appreciation rights of freenet AG freenet of rights Stock appreciation ------ciation rights of programme 2 are exercisable. are 2 programme of rights ciation all still existing appre stock 2013, December of 31 As 2013. December 2as of 31 programme from (exclusively of ashort-term nature) appreciation rights stock outstanding the were for shown euros Aprovision thousand of 483 in were 2013. appreciation awarded rights stock new No euros. 17.89 as a result in exercisings 2013 of made the payments an on average were exercise based price of The 2012. plus euros an in increaseprovision the of thousand 13 December compared with 31 financial year of the in course euros 2013, the to of which payments is thousand 612 attributable euros, of 625 thousand expenses 2resulted in programme personnel financial yearIn the 2013, appreciation right. stock euros per date balance2 at the sheet is 13.22 programme price option forthe The exercised cap. maximum at the namely the be price, would likely units date, as balance of it extremely the was outstanding that sheet the because, cap the price and base the between difference bycalculated units the by multiplying outstanding the was 2013 obligation December arising as of 31 The programme appreciation rights stock the from table: in during following appreciation out are of financial the year rights stock Details set the 2013 are however, retained. cable; targets profit the If achange of control takes place Company, at the above shut-out are appli longer the no periods until term. of the end the shut-out corresponding of the end the Company of period the after Meeting Annual General ordinary first of the end the am Main after ange exchange stock days trading the on in Frankfurt exch stock which commences 31 period as the in each exercise instance isThe defined period up percent increase to in a50 5. relation tranche, price to fortranche base per the points tage percentage increases the by ten to percen five, two tranches of appreciation the rights stock the 2(on For of program 2014). 1April exercisable endingciation and expiry with the become rights appre immediately stock corresponding the when starting occasion in period one the at on least price (under base the exceed must total-shareholder-return the approach) by at ten least percent is relevant target the price thatcompany’s of the shares the 2, of programme tranche first For the attained. have providing been targets tranche that certain first forthe 2009 1 April with of each year is1April on ends entitled starting toappreciation rights which beneficiary the Tranche 5 Tranche 4 Tranche 1 Tranche 2 Programme Tranche 3 Tranche 2 Tranche Strike price 7.78 7.78 7.78 7.78 7.78 EUR

Consolidated financial statements financial Consolidated Target 11.67 10.89 10.11 price 8.56 9.34 EUR

21.00 21.00 21.00 21.00 21.00 EUR Cap

1.4.2014 1.4.2014 1.4.2014 1.4.2014 1.4.2014 Maturity

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 .12 100,817 Balance 18,250 18,250 20,250 20,250 23,817 .2013 SARs

Issued 0 0 0 0 0 0

Exercised 12,250 13,000 56,182 11,750 13,365 5,817

Disposals 1,250 5,000 1,885 8,135 0 0

- - - - - Expiry 0 0 0 0 0 0 freenet AG · Annual Report 2013 Report AG ·Annual freenet 31 .12 36,500 Balance 13,000 8,000 4,000 8,500 3,000 .2013 SARs

in EUR ’000s EUR in 31 Provisions .12 .2013 483 159

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 160 Consolidated financial statements financial Consolidated diting of apositive debiting or account of in amount anegative virtual the respective the for in of this relation of compensation, to component cre introduction the financial the year after second of the end with relevant the financial for yearthe Starting are approved. statements closing exchange day price 20 of the the which consolidated days on trading the after financial accountvirtual basis is into The converted this for shares. virtual calculation is average the Xetra in amount the less) or target percent of the respective 80 is The account. to debited virtual the basic is percent of the EBITDA (if amount of amount Group a negative up to amaximum of 200 financial year. percent target, account respective the for 90 fails the EBITDA to IfGroup meet of 0is a figure created is to target percent of virtual the attained, the account; if onlyvirtual 90 basic apercentage of the which amount a linear is on reduced 100 percent, basis is credited to the and percent target 90 fixed the is EBITDA between Group defined the for attainment target the basic percent of the is amount credited If account. to virtual the only 200 istarget exceeded, basic percent of percent the is amount 120 credited Ifthe account. to virtual the 200 achieved, is attainment percent target 120 for defined EBITDA dited Group Ifthe account. to virtual the in basic is percent of afinancial target year, the is amount EBITDA attained Group creIf the 100 foreach financial year beneficiaries. forthe defined euros in have each case thousand been 590 assuming in futurethe value, development that totalling acredit balance Basic amounts is shown. on depending is and in paid out annual instalments, Board, Executive of the member respective year, this basic as is amount a positive amount in negative account or recorded a virtual of the in in following, and the accordancetion; as in attainment described target each with financial the forthis of compensa component of each agreement beneficiary in employment the defined been date the shares on Abasic which new on are has amount the issued. dilution net effect effective to the are proportionately adjusted earnings the by issues targets are shares, of new financed parameter. target as the event In financialthe year with of the acquisitions 2011, starting which basis four financial years the on business of the plan, next of the EBITDA with Group agreement this In to addition annual the involved agreement, target a four-year Board. Executive target LTIPs)led of the members with the in were relation concluded agreements to employment the (so-cal components salary variable long-term granting agreements 2011, year financial the In 26 percentage of target attainment for the respective financial year, respective the for attainment percentage of target estimate the of future share are share the AG price of freenet date,astion balanceestimate model of the the sheet of the in this included main 2in The valua parameters linewith IFRS with arecognised valuation model. obligation arisingThe LTIP at the from determined fair in value accordance has been programme years. subsequent by yearout success thesubsequent or for the in attaining parameters target corresponding the cancelled willtive has amount Board negative only been receive the when a(further) payment - Execu of the member balancenegative the at point at which the is apayment made, to due be share account the virtual on have value Ifthe a in calculation. shows the included to depend be stipulations which in event areprotection the applicable of financial marketable instruments asof well conversion as circumstances payments into dividend which for dilution shares, virtual euros (cap).share price increase purpose is For the only recognised up to ashare price of 25.00 relevant financial year the for The which consolidatedon the are approved. financial statements basis the on cash average of the Xetra closing day market the price 20 of days trading the after balance shares of virtual is in respective into turn the converted dit balance. For this purpose, financial year, 25 account percent of the balance is annually paid out account if the acre shows . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 2 LTIP AG freenet of programme ------Other liabilities and accruals and liabilities Other received payments Advance recognised book value due to due discounting. value the recognised book For long-term liabilities other market the accruals, is and value approximately to equivalent the accruals. liabilities sundry the received are and inunder balanceshown the payments sheet advance The euros) thousand 33 year: have euros (previous years. a maturity thousand than of five more 8,012 Liabilities euros) years. year thousand one five of and have 288 year: amaturity of between euros (previous thousand Liabilitieseuros) months. twelve of 57,882 are within due next the thousand 530,325 year: euros (previous thousand forliabilities, shown figure the 515,490 Of Transactions with related refer toparties. euros) please item to 35, related parties; attributable are liabilities thousand there no 701 year: (previous 2013, December as of shown 31 figure the Of liabilities broken into down as well asbeen “Advance accruals”. received” “Other and payments liabilities accruals” and has item balance the sheet “Sundry above table, of the purposes For the payable accounts Trade ’000s EUR In as well accounts payable as liabilities other trade The accruals and are broken as follows: down euros. thousand amounting to 2012 3,645 euros provisionand of the December compared with 31 consistingyear euros an and increase 2013 amounting of thousand 1,116 thous to of payments 797 euros in financial the thousand of 1,913 LTIPThe expenses has resulted programme in personnel Target financial year percent the for will attainment 2013. 120 also be forMr. Esch. Preisig 18,863 and Mr. for shares virtual Mr. for 41,919 Vilanek, 62,878 comprised portfolio the 2013, December 31 euros). of sharesthousand virtual for Mr. As to (leading of apayment 122 Esch euros) 6,288 and shares virtual Mr. for Preisig euros),thousand thousand to (leading of apayment 270 13,973 shares virtual Mr. for to resulted (leading of Vilanek apayment 405 in payments 20,959 In 2013, shares shares virtual virtual Mr. for Mr. for Preisig Esch. shares Mr. for 9,961 22,137 and Vilanek, this resulted in contribution the ofFor 2012, 33,204 virtual euros. an average share price of 18.07 on this into converted based was amount approved, shares financial year virtual the for 2012 been had 2012 consolidated the financial statements After Board. Executive of the members the for paid into have accounts virtual euros, the been thousand to equivalent atotalamount, of 1,180 basic percent of the that so 200 percent, is 120 for 2012 established attainment target actual The estimates)ous as well estimate as the discount of the rate. previ estimate accounts (derived the virtual of two the out of fromthe futureprices, payments Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 581,384 .12 111,298 401,970 68,116 .2013

31 530,646 . 12 412,898 adjusted 72,127 45,621 . 2012 - -

27 freenet AG · Annual Report 2013 Report AG ·Annual freenet accruals and liabilities payable, other Trade accounts 161

Consolidated financial statements Consolidated financial statements 29 28 freenet AG · Annual Report 2013 Report AG ·Annual freenet 162 tax liabilities tax income Current Debt Consolidated financial statements financial Consolidated

Of the figure shown for long-term financial debt in the Group as of 31 December 2013, 397.5 mil 2013, forlong-term December shown as of in 31 figure Group financial debt the the Of conditions. to favourable more years subject of five aperiod for euros raised million million revolving by replaced anew credit euros line has been 300.0 for line 100.0 for revolving previous The million credit euros fallingoriginal in due nominal 2014. of amount 240.0 million with loan an amortising euros the for instalment of 40.0 final outstanding of the ment AG by mandated arranger. as Commerzbank lead the ded premature This the comprised repay - with hea abank agreement syndicate loan syndicate signed anew Group the 2013, In December Liabilities from corporate bonds Non-current ’000s EUR In as follows: is structured Debt years. financial previous for payments tax trade and liabilities tax Current income tax additional corporation mainly comprise expected euros) closing the thousand 33 years date. after year: vious is than five more due euros (pre thousand 8,012 and years, year euros) one five and thousand is 288 between year: due euros) thousand is euros within (previous due year, thousand one 456,967 year: (previous 57,882 euros thousand financial liabilities other non-derivative accruals and are 445,488 as follows: maturities liabilitiesThe of those and accounts payable which are in categories trade shown the lion euros as well as a seven-year fixed tranche for 19.5 million euros. As of the previous year previous of the million As euros. lion 19.5 for euros as well tranche as aseven-year fixed for 56.0 mil tranche million variable afive-year euros, for44.5 tranche fixed afive-year prises it note com iseuros). loan maturity; which instrument afinancing falls upon due promissory The of 0.3 million 0.7 million costs year: euros (previous of one-off million deduction the euros after as 119.7 million 2012 euros isa nominal in shown December long-term of amount 120.0 31 on debt with 2012 note which taken was in out December promissory The interest rate method. effective using over life the the bond of the compounded and debt the from which areissued, deducted was(amounting bond the which 2012) million were when incurred to euros December as 3.5 of 31 charges to one-off the is amount attributable nominal carrying the the and value euros between million of 2.5 difference million The euros. with anominal of value issued in2011 400.0 April million euros) bond corporate to five-year is the 396.5 attributable year: lion euros (previous Liabilities from promissory notes Liabilities promissory from Liabilities due to banks due Liabilities Liabilities from finance leasing finance from Liabilities to banks due Liabilities notes Liabilities promissory from Liabilities from corporate bonds Current leasing finance from Liabilities : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 .12 517,599 119,680 397,483 20,413 19,911 .2013 139 181 131 232 255 31 556,105 . 12 100,449 396,525 119,280 80,101 39,887 19,988 . 2012 138 222 413 - - - - - payments. The interest rate The recognising for percent. resultingpayments. the liabilities lease finance is 4.4 minimum contractual is of value the to figure equivalent present balance the sheet leaseThe years five than More years five and one Between year one Within ’000s EUR In maturitiesThe overall of liabilities the lease finance are in following: shown the leasing finance from liabilities total the of values Present years five than More years five and one Between year one Within ’000s EUR In payments lease Minimum as follows: due minimum become The payments lease euros) hardware. for thousand 349 year: (previous euros thousand 223 and euros) thousand 270 forsoftware year: euros (previous thousand to 172 leasing finance under amounted assets of fixed amounts carrying the 2013, December of 31 As equipping for chain. shop our items forvarious ment of hardware software and liabilities lease finance The date as balance shown of the sheet relate to aleasing-purchase agree million euros). 451.9 year: (previous 2013 31 December million euros is as of in Group shown of the 427.2 financial debt net with liquid assets, Netted 2013. to euros December as down of alimited 31 drawn thousand of 58 only extent been had and 2012, December as million revolving of down 31 drawn The credit line euros. not been had 240.0 milliontially of originally loan containedamortising euros of an the 80.1 from additional figure this item essen 2012, year. last December of 31 As cash-effective which not become had bond million euros) 20.0 year: euros relates (previous to cumulative the interest corporate the for million atotal of 19.9 2013, as short-term shown figure the December as of financial 31 debt Of million euros. of originally loan amortising euros the from 240.0 reference date, long-term the essentially financial debt also contained an of amount 39.9 million Between one and five years five and one Between year one Within Interest component of future leasing payments years five than More Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 .12 .2013 2013 413 413 429 184 181 232 245 –13 –3 0 0 0 31 . 12 . 2012 2012 636 636 676 246 223 413 430 –23 –17 0 0 0 - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 163

Consolidated financial statements Consolidated financial statements 30 freenet AG · Annual Report 2013 Report AG ·Annual freenet 164 Pension Pension provisions Consolidated financial statements financial Consolidated Provision shown in balance sheet assets plan of Fair value Sub-total present value of obligations value present Sub-total programmes (previous year: 18.5 years). 18.5 year: (previous programmes debitel years for the years) 12.9 year: 18.0 and (previous programme freenet years for the 12.0 weightedThe average amounted to remaining 2013 term obligations of the December as of 31 1. of As ’000s EUR In obligations:ded non-fun and funded of value the in present the development the out following sets The table term. in long obligations the that will fulfilled these be It is expected obligations of unfunded value Present obligations of funded value Present ’000s EUR In provision of amount the The in consolidated the is balance calculated sheet as follows: Company. at the time of the service and of amount salary the are commitments pension All always by determined by areinsured fund. financed benevolent are partly benefits pension The dependants. to surviving of payment benefits the and 65 or 60 in is of payment alifetime each case the provided reaching retirement upon pension age the of benefit pension The commitments. obligations pension pension are ofThe aconsequence direct Interest expense Interest costs service past and Current Sub-total actuarial losses actuarial Sub-total losses Actuarial Employees’ contributions 31. of As made Payments Thereof due to changes in financial parameters to in due financial changes Thereof parameters to in due demographic changes Thereof in inventories to changes due Thereof : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 1. 12. 31 .12 48,880 44,369 48,671 –4,302 48,671 –1,194 –1,289 38,751 –1,135 1,446 9,920 .2013 2013 646 95 28 0

31 . 12 adjusted adjusted 48,880 44,986 34,922 48,880 12,625 12,553 –3,894 39,103 1,552 9,777 –689 . 2012 2012 426 44 72 0 -

Experience-based adjustments of the liabilities of the plan the of liabilities the of adjustments Experience-based Net loss for the plan the for loss Net Experience-based adjustments of the assets of the plan the of assets the of adjustments Experience-based Interest expense Interest cost service past and Current ’000s EUR In followingThe items are recognised in consolidated the income statement: euros. thousand pensions for of 793 plan assets of the out euros as well as payments thousand of 665 into plan assets payments the is expecting freenet financial yearFor the 2014, losses. or rial profits actua the and euros), plan assets income the from are and calculated sum as expected the of the thousand 217 euros (2012: thousand to amount –257 plan assets income the from actual The assets plan from income actual and expected between Difference assets plan from income Expected 1. of As ’000s EUR In in fair value: development the out sets wing table euros), follo are and invested shares The or funds which for market. in is there equity an active thousand 3,894 2012: December euros (31 thousand with atotal fair ofthis value 4,302 purpose, up for set fund consist plan assets reinsurance of several The benefit by the concluded policies ’000s EUR In periods: reporting previous the and period current plans forthe reporting defined-benefit the for shown have followingThe been amounts 31. of As Present value of funded obligations of funded value Present Fair value of plan assets plan of Fair value obligations of unfunded value Present Total cost of defined benefit plans benefit defined of Total cost assets to plan contribution Employer's

Thereof recognised in personnel expenses in personnel recognised Thereof Thereof recognised in interest and similar and in interest expenses recognised Thereof 1. 12. Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 44,369 –4,302 38,751 9,920 –383 2013 7

3,894 4,302 1,965 1,319 1,319 –383 2013 2013 646 646 126 665 adjusted 44,986

–3,894 39,103 9,777 2012 51 35

adjusted adjusted 3,894 2,065 3,017 1,639 1,552 2012 2012 660 166 513 426 51 31,905 29,154 –3,017 - - 5,768

2011 –21 25 freenet AG · Annual Report 2013 Report AG ·Annual freenet –2,294 29,535 27,187 4,642 2010 230 9

26,457 –1,389 28,768 3,700 –214 2009 –79 165

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 166 Consolidated financial statements financial Consolidated Future pension increases (programme freenet) (programme increases Future pension Life expectancy: Age shift +2 shift years Age expectancy: Life increases in pension future points percentage of 0.25 Reduction increases in pension future points percentage of 0.25 Increase increases in salary future points percentage of 0.5 Increase rate in discount points percentage 1.0 of Reduction in rate discount points percentage of 1.0 Increase ’000s EUR In obligations. unfunded We and have commented funded of as value the regarding follows sensitivity present of the the basis. biometric as the used of have Dr. tables been Klaus Heubeck mortality 2005G RT The debitel) (programme increases Future pension freenet) (programme increases Future salary debitel) (programme increases Future salary assets plan from income Expected rate Discount In percent mainThe actuarial assumptions are as follows: made Payments reserve) equity (valuation in recongnised Reclassifications, statement income consolidated in the Total recognised cost 1. of As ’000s EUR In recognised as provisions in amounts the are in following: shown Movements the 31. of As Employees' contributions : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 1. 12. 31 Change in present value .12 44,986 44,369 –1,801 Increase 11,051 1,965 .2013 –809 2013 2,454 of obligations 1.50 1.50 1.50 0.00 3.00 3.00 226 932 28

31 Decrease . 12 adjusted 44,986 31,905 12,312 –1,340

2,065 8,339 . 2012 2012 1.50 2.00 0.00 3.00 3.00 1.75 888 44

announced ahead of time, thereby creating of ahead time, announced arisk position. the for information is negotiating More and not given legal that so the here is position notyear 2014. during financial the disputed of will the settled questions majority that the be expects Group as well customers as and issues of competition law.to The partners litigation trade with former provisions of these related Most disputes panies as well with third as outstanding other parties. against group com actions of provision various The costs litigation for relates to expected the provisions. basis anniversary as the assumed calculating for service the have payment date balance actual the sheet the been and of eightaverage years between period an percent and A discount euros for this rate of 1.8 thousand purpose. 1,091 to be is expected to 2033 years 2015 forthe of assets outflow corresponding the and euros, thousand 257 ted to be is expec 2014 for of assets created;Provisions anniversaries have outflow the been forservice to 2024. euros in years 2015 the thousand 1,161 and euros in 2014 thousand 1,303 to be is expected of funds outflow the rental agreements, underlying of the expiry Following probable Group. the mantling technical various and administrationimprovements and of the of locations leasehold provision the for stated fordismantling figure The obligations relates to obligations dis the for in 2014. is expected of assets outflow probable the tariffs; negative-margin from expected euros losses for visions thousand for contingent of 6,582 include a figure losses finally, And pro the in this respect. year—has previous the compounding for purposes used been euros) thousand (3,439 euros) to 2018 2015 as well as in period the thousand (1,599 in 2014 is expected of assets euros); thousand outflow the buildings (5,038 office Provisions of and rented shops costs contingent for created have losses vacancy for also been percent—as in this in respect. year—has previous the forcompounding purposes used 1.20 been euros). thousand Arate of euros) (1,089 thousand to (278 2018 place in in years and 2015 the 2014 to take is expected of assets euros), thousand outflow the (1,188 whereby Group of the activities provisions landlineThe with the contingent for in connection relate losses to services pending Other costs Storage Warranty/guarantee anniversaries Service losses Contingent ’000s EUR In provisions:the of amounts carrying of the abreakdown out development of the sets followingThe overview Employee incentive programmes incentive Employee Dismantling obligations risks Litigation Consolidated financial statements financial Consolidated 1 32,330 .1 16,601 2,999 2,472 8,616 .2013 368 725 549 0

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes consideration Addition Addition initial 629 486 48 10 85 0 0 0 0

—a rate of 1.20 percent—as in—a rate of 1.20 Consumption 3,727 1,937 898 594 202 90 0 3 3

Reversal 6,451 2,297 3,162 154 725 77 36 0 0

Compounding - - - - 191 191 31 0 0 0 0 0 0 0 freenet AG · Annual Report 2013 Report AG ·Annual freenet Other Other Allocation provisions , 46 7,4 2,064 1,341 2,810 146 725 250 36 74

31 .12 30,418 12,808 1,404 1,348 2,464 4,129 7,718 .2013 146 401 167

Consolidated financial statements Consolidated financial statements 32 freenet AG · Annual Report 2013 Report AG ·Annual freenet 168 Ot securities for loans for securities contingencies, obligations, cial Consolidated financial statements financial Consolidated her finan -

The obligations rental from relate leasingThe and buildings mainly agreements to rental of the office leasing obligations and Rent ’000s EUR In in following commitments the order and amounts: obligations other and as leasing and well leases from as maintenance, agreements ted) support financial year, of the end At the obligations lease are there (which operating termina cannot be - programmes. participation Employee 26, item under documented details concerningFurther creation the are of provisions programmes participation employee for accessories. This itemaccessories. also financial obligations includes arising centre data from services. and phones mobile e.g. resale, for purchased as well as products tion with ongoing projects euros) thousand 7,560 year: mainly euros (previous in relate connec to services 6,105 thousand purchase obligations of Further euros)and assets. of fixed to procurement the is attributable thous 216 year: euros (previous thousand euros). 1,433 this thousand figure, Of 7,776 year: vious commitment financial year of order the euros end (pre at amounted to the The thousand 7,538 infrastructure. network as the engineering maintenance as well the for building services ments hardware of databases, and IT relateobligations arising mainly agreements other and to maintenance, from agree support The are in to negotiable identical current or freely all the conditions cases agreements. of the conditions options extension of The these leasing and of leases ding majority the agreements. date, balance of were the there options sheet for exten As euros arrangements. from subletting thousand revenues of 11,700 as well shops and as hardware by leasing. expected This is opposed commitments Order

obligations other and support Maintenance, Regarding inventories, expenses and services Due term greater than five years greater five term than Due years five and one within Due year one within Due Regarding intangible assets intangible Regarding Regarding property, plant and equipment and plant property, Regarding years greater five term than Due Due within one and five years five and one within Due Due within one year one within Due contingent losses for as provision recognised already Thereof : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 101,409 106,447 114,750 .12 34,419 68,375 5,803 7,538 1,316 6,105 5,038 3,653 5,357 .2013 446 117 0

31 121,922 105,529 112,749 . 12 adjusted 34,797 73,740 8,617 7,776 4,212 1,076 7,560 7,220 7,541 . 2012 130 86 0 - - - - -

activities. from operating flow cash presenting for the used has been calculation method indirect The ties. investing activi financing and activities are activities, broken as operating down flows cash The 2013). as of 1January which sold was GmbH to (in whichliquid held-for-sale are this attributable assets assets case: non-current million of 2.7 afigure euros for included 2012 ver, December as of 31 equivalents cash and cash the Howe from discontinued not include any do operations. equivalents cash and cash equivalents in year, previous the case the was original As cash and cash maturity thanmonths. of three less liquidated which be can market at any papers time current and financial liabilities, each with an short-term and cheques money in cash consist hand, equivalents of cash at and cash banks, Cash exclusively to continued operations. attributable were flows cash the in 2012, case as also was the discontinued and inued operations). In 2013, overall (cont forthe Group are reported figures the statement, consolidatedIn the flow cash is not reliably quantifiable. partners, volumeof of the any which any may input less tax have claims refunded to against be business which company. of mainly the of operations consists results financial and position This effect to this revenue the authorities; might assets, net the have on asignificantly impact negative However,AG. is there arisk AG that might freenet have to input corresponding tax repay some will judgement BFH not have VAT under anyabove-mentioned impact negative law freenet for company, of the From individual itpending is perspective case. likely the more than not that the in the Baden-Württemberg Fiscal Court toof the appraisal the that are objections there no ded deci 2013 October of judgement 16 BFH the proceedings, appeal regard to With these Court). Fiscal Federal (BFH; Bundesfinanzhof the with lodged been has Baden-Württemberg Court Fiscal of the against verdict the appeal An in 1sentence accordance 3UStG. paragraph with clause 10 user to end the partner sales of the of-charge delivery the for payment constitute athird-party free- user to end the provided being as a result phone mobile of the partner pays to sales the commission user, of to the end the elements provider which mobile that and the partner those constitutes free-of-charge telephones mobile a delivery, salesthe in of the return for payment, of providing act that the judgements, in were opinion, of two the Baden-Württemberg land and in Saar the courts fiscal The involving partners. sales by the such treatment phones of mobile a uniform on arrangement of the appraisal based have not been verdicts court Previous fiscal regarding VAT the Court level Supreme at of the the problems treatment of this arrangement. charge are in user to as fortheir their yet and end There account. name own unresolved own the (suchvider AG) as freenet user, end the of and free simultaneously and phones mobile provide pro mobile the between agreements mobile arrange is situation the partners sales that external following were the There major contingent there liabilities: Communications Mobile In field, the date. sheet euros) thousand as balance of the 16,416 year: euros (previous thousand amounted to 17,322 liability and guarantees and rents for Other obligations of as exist comfort aresult of letters Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes freeXmedia freeXmedia ------33 freenet AG · Annual Report 2013 Report AG ·Annual freenet No flow statement flow cash consolidated tes to the the to tes 169

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 170 Consolidated financial statements financial Consolidated intangible assets and liabilities; however, because this transaction was not cash-effective in the liabilities; and intangible assets not cash-effective was however, this transaction because of extension this The distribution right has resulted in an increase in 2013. 1August the starting months of at 36 least period afurther for GmbH rightbution with Media-Saturn Deutschland related latter figure to of extension exclusive the distri lion euros not cash-effective—the was 70.8 mil plant equipment, and in property, and intangible for investments assets for 2013 assets million euros in consolidatedin shown of the 93.1 non-current figure of movements statement millionare euros). thus roughly to year previous equivalent (20.6 corresponding the the figure Of million they euros; are as 22,2 shown of disposal such assets, the from proceeds with the netted plant equipment, and alsoin and in intangible forinvestments property, assets outflows cash The investments. other and of euros in subsidiaries, year previous were associates generated sales the fromthe 8.2 million totalling inflows cash hand, other acquisitions”). the On (“Company dated financial statements notes to of consoli these Please in the refer to item comments our 36 TM. MOTION and VIS million euros financial in year last the regarding acquisition the of 13.2 subsidiaries of the GRA million to mainly outflows was cash the This development attributable euros. yearous to –35.4 million euros in previ the from–9.0 investing from declined inflow cash activities the In 2013, 33 refunds. and payments to tax million euros) due million 24.6 year: euros of (previous 23.5 were outflows there also net In 2013, related the and increasehardware to customers in arising end receivables hardware from sales. of valuable increased sales further the and operator toregard communications amobile network resulting asaccruals distribution from well rights as with with to regard partners contractual of liabilities is reduction inin to working mainly capital planned 2013 net and the attributable million compared with million an increase increaseeuros, of euros 45.7 of in 50.1 The euros 2011). (with 2012 for an increase figure corresponding with the of comparable 50.1 million was in 2013 investing from in working capital net activities). development flow cash are The under shown of of subsidiaries associated sale sale companies the from (the associated and companies inflows of subsidiaries sale million the from revenues byby adjusted included the 1.5 as well euros, as the million year, previous with the Compared euros. million increased EBITDA by 1.7 euros to 278.4 slightly declined activities fromoperating flow cash the to comparison the period, respect With 33 0.8 million euros year, previous compared with the 0.8 to namely million 1.3 euros. by investing from declined activities in flow cash shown the interest from payments inflows The cash-effective. fully were plant equipment and property, in and intangible investments for assets for2012 assets in consolidatedshown in the non-current investments of movements statement The hardware. communications of mobile our as in well shops asEDP fittings of investments extension and the renewal the systems, of IT our development further with the in connection self-created software mainly and entirely related of were funds, own financed out to investments cash-effective The in change the in activities working capital. of net operating flow cash the of arising cash this from future distribution right The outflows activity. in are operating in shown any there was nor change of investing in working capital net activities, in flow cash disclosed the financial year, not It was statement. did extension not have the flow cash the on any impact . . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 1 2

Cash flow from operating activities operating from flow Cash Cash flow from investing activities investing from flow Cash - - - - - pages): next on (see tables reconciliation 39 and valuation IAS corresponding with the categories under related the to allocation classes 2012, December as and of 31 2013 December as of 31 Group the inWe following have the financial instruments of out the information set presentation the for additional information provides itemsand balance on sheet which include financial instruments. Group, for the significance of ofthe financial instruments an overview provides This section 34 operations continued of taxes before Earnings ’000s EUR In consolidated the from : income statement following calculation the of The this shows result interest (EBIT). taxes and before operations is result statement the continued of the discontinued and flow cash the for point starting The 33 remaining 49 percent of shares inEnergie MFE GmbH. million euros in as financial year aresult the of 2013 the of 5.0 an outflow reported Group The long-term million bank loans resulting year. euros in compared prior with the an increase of 2.2 mainly in relation to in million 2013, euros were reported of 36.7 interestIn payments addition, million euros). 153.6 year: (previous in 2013 activities fromfinancing million flow cash euros depressed of 172.8 payments Dividend ding revolving the credit line. a result premature of the of exten within full loan amortising repayment of framework the the million millioneuros compared year,previous with the euros mainly as to namely by 44.8 125.0 of principal in repayments relation The to increased financial debt 2012. in December raised loan note million year, previous In the promissory euros the from of 119.3 received proceeds Group the million euros. million million euros to –149.1 from namely –339.6 euros, byvities 190.4 declined year, previous of the acti financing from period corresponding with the Compared flow cash the 33 Interest payable and similar expenses of continued operations of continued similar and expenses payable Interest Interest payable and similar income of continued operations continued of income similar and payable Interest discontinued operations and continued of (EBIT) taxes and interest before Earnings . . . 3 4 1 Cash flow from financing activities financing from flow Cash Disclosures in accordance 7 Disclosures with IFRS Calculation of the starting point for determining the consolidated cash flow statement statement flow cash consolidated determining the for point starting the of Calculation Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes —31 301,307 1 .12 258,443 .1 44,633 –1,769 .2013 .2013

—31 208,765 1 . 12 166,677 adjusted .1 44,783 –2,695 .2012 . 2012 - -

34 freenet AG · Annual Report 2013 Report AG ·Annual freenet Additional Additional instrumenets financial concerning information 171

Consolidated financial statements Consolidated financial statements of purchase cost at amortised liabilitiesFinancial measured (measured of atpurchase) cost assets financial Other equivalents cash and Total cash according to IAS 39 toIAS according by categories valuation aggregated Thereof 7 IFRS of scope by the covered not instruments financial of Sum Loans and receivables and Loans freenet AG · Annual Report 2013 Report AG ·Annual freenet Other non-derivative financial assets receivable Trade accounts Total other financial assets fairvalue) at (measured assets financial Other equivalents cash and Cash Assets 2013 according December 31 of as to classes Financial instruments 172 Held-for-sale other assets other Held-for-sale Held-for-sale financial instruments financial Held-for-sale according to IFRS 2 IFRS to according participation employee for Provisions 19 to IAS according provisions Pension 17 to IAS according lease of finance liabilities from values Present 7 IFRS of scope by the covered not instruments Financial deferrals and liabilities of Sum liabilities Non-financial of purchase at cost measured liabilities financial non-derivative Other Derivative financial liabilities financial Derivative assets financial Derivative of IFRS 7 IFRS of scope the within liabilities financial of Sum shareholders) and to banks due (liabilities debt Financial payable accounts Trade Liabilities assets other and receivables of Sum assets Non-financial In EUR ’000s EUR In Consolidated financial statements financial Consolidated

programmes programmes

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

according according Valuation to IAS 39 IAS to category FLAC FLAC FLAC FLAC FIPL FIPL HFS HFS HFS HFS LR LR LR LR

–1,048,981 501,629 179,414 110,766 537,599 401,970 638,857 109,412 110,766 537,599 Carrying Carrying 48,911 49,598 44,369 amount 26,462 20,239 70,002 1,540 4,129 2,897 1,037 4,437 503 413 0 0

–1,048,981 Amortised Amortised 501,629 110,766 purchase 401,970 638,857 109,412 110,766 537,599 26,462 cost of of cost

purchase Cost of of Cost 503 503 Approach

statement in income income in Fair value value Fair 0 0 Fair value value Fair in equity 2,897 1,037 3,934

–1,097,976 31 586,594 501,781 Fair value 110,766 .12 586,594 401,970 639,009 109,412 110,766 44,369 26,462 4,129 2,897 1,037 3,934 .2013 413 – 0 0

Other non-derivative financial assets Trade accounts receivable Trade accounts Total other financial assets fairvalue) at (measured assets financial Other (measured of atpurchase) cost assets financial Other equivalents cash and Total cash Derivative financial assets financial Derivative of purchase (FLAC) of purchase cost at amortised liabilitiesFinancial measured (FIPL)loss or profit through at value fair measured instruments Financial Cash and cash equivalents cash and Cash Assets adjusted 2012 according December 31 of as to classes Financial instruments Held-for-sale other assets other Held-for-sale Held-for-sale financial instruments (HFS) instruments financial Held-for-sale Derivative financial liabilities financial Derivative shareholders) and to banks due (liabilities debt Financial payable accounts Trade Liabilities assets other and receivables of Sum assets Non-financial according to IFRS 2 IFRS to according participation employee for Provisions 19 to IAS according provisions Pension Loans and receivables (LR) receivables and Loans of IFRS 7 IFRS of scope the within liabilities financial of Sum according to IAS 17 to IAS according lease of finance liabilities from values Present 7 IFRS of scope by the covered not instruments Financial deferrals and liabilities of Sum liabilities Non-financial of purchase at cost measured liabilities financial non-derivative Other In EUR ’000s EUR In according to IAS 39 toIAS according by categories valuation aggregated Thereof 7 IFRS of scope by the covered not instruments financial of Sum

Consolidated financial statements financial Consolidated programmes programmes

according according Valuation to IAS 39 IAS to category FLAC FLAC FLAC FLAC FIPL FIPL FIPL HFS HFS HFS HFS LR LR LR LR : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

–1,113,377 31 117,748 492,346 204,621 655,918 .12 714,449 412,898 204,621 44,561 73,187 655,918 Carrying Carrying adjusted 48,621 35,332 44,986 14,154 amount 17,482 1,529 2,999 5,225 1,027 3,696 .2012 502 636

0 0 0

–1,113,377 Amortised Amortised 492,346 204,621 714,449 412,898 204,621 purchase 44,561 655,918 17,482 cost of of cost 636

purchase Cost of of Cost 502 502 Approach

statement in income income in Fair value value Fair 44,986 2,999 0 0 0

freenet AG · Annual Report 2013 Report AG ·Annual freenet Fair value value Fair in equity 4,723 1,027 3,696

–1,165,809 31 204,621 492,417 708,350 Fair value .12 412,898 204,621 714,520 44,561 708,350 adjusted 44,986 17,482 2,999 4,723 1,027 3,696 .2012 636 173

0 0 0

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 174 Consolidated financial statements financial Consolidated the company’s creditthe risk interest the and rates. notes valuation latest which at athe the estimates determined fair on date was value, of based euros resulted measurement promissory from ofthe thousand the rence in of amount 1,255 the adiffe date. market as balanceof of the Furthermore, the price sheet of this bond corporate basis47,740 the on established was and euros to valuation bond, the corporate thousand of the in amount of the is This attributable difference 2013. euros December as of 31 thousand 48,995 by amount carrying the fair long-term of value the exceeded The financial debt amount. carrying to the fair current corresponds maturity of of value the the financial involved, the debt Because market. fair price as in value the the an active defines Group the held-for-sale other For the assets, these are recognised. are Ifthere any areshares. plansthere to no at indications present sell these of fair lower values, Moreover, them. for shares market areThe not exists listed exchange, active astock no and on are measured at cost of purchase. financial other assets the fair reliably to value be determined, are normally measured at Ifit fair is value. the for financial other instruments not possible The market fair as value. the price in the uses an active Group measured the at fair value, financial instruments For those values. fair the and instruments financial these of amounts carrying the between are there only minor differences interest method, ting using effective the aresult of discounwith consideration due As given being to relevant interest the parameters. associated assets, with the payments of the values to year present than the one more correspond with remaining financial other assets and receivables terms of fair non-current of value the The remaining This is value. financial to instruments. terms due short the of these book the current other and financial accounts obligations payable is trade roughly to equivalent assets, current other financial accounts receivable, trade fair equivalents, cash of value and cash The 7. not covered of IFRS scope bydeferrals” the non-financial liabilities liabilitiesThe item constitute balance of the sheet “Other and that part 7. not covered of IFRS scope by the assets” other and receivables item constitute balance of the sheet “Other non-financial assets thatThe part no derivative financial instruments as of 31 December 2013. December as of 31 financial derivative instruments no market compared withodically the which calculated values have internally. been had Group The are peri partners closingthe external market from the date. obtained confirmations value The are discounted and then to curves forward and basislated the on relevant rate of the structure are financial- instrument calcu the from future flows cash price expected option models).or The (discounted basis the on Group method bymined of recognised the actuarial methods flow cash which is are not deter exchange-traded financial fair instruments derivative of value the The : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - - Total Total assets financial Other assets other Held-for-sale ’000s EUR In Fair hierarchy 2012 value Borrowings receivable Trade accounts assets financial Other assets other Held-for-sale ’000s EUR In Fair hierarchy 2013 value market data). observable on not based financial liability the or asset (input factors market measuring for data financial the observable on which are not based ofUse input factors ■ financial liability. the or asset (i. which are listed which not but the are prices recognised directly in ofUse input Level factors 1, ■ financial liabilities. or financial assets foridentical markets of active use prices on Unchanged ■ follows: as in accordanceaccordance individual 13 7, levels The are with with IFRS IFRS defined are based. at fair in value reported valuation the and financial instruments of the financial instruments, which valuation on the fair of of value the major parameters the shows followingThe overview are thus recognised approximately figures terms; the to equivalent fair value. the Trade financial other liabilities and accounts payable accruals remaining and normally have short ■ ■ ■ e. in the form of in aprice) form e. the (i. indirectly or Level 3: Level 2: Level 1: Level Consolidated financial statements financial Consolidated –484,238 e. derived from prices) observable for the financial the for fromprices) derived e. observable 566,159 77,987 4.723 2,897 1.027 1,037 3.696 Total Total : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes –441,290 445,224 Level 1 4.723 2,897 1.027 1,037 3.696 Level 1 0 Level 2 Level 2 0 0 0 0 0 0 0 –42,948 120,935 77,987 Level 3 Level 3 0 0 0 0 0 freenet AG · Annual Report 2013 Report AG ·Annual freenet 175

Consolidated financial statements Consolidated financial statements Total (FLAC) cost at amortised liabilitiesFinancial measured through profit or loss (FIPL)loss or profit through at value fair measured instruments Financial Loans and receivables (LR) receivables and Loans (HFS) instruments financial Held-for-sale (FLAC) cost at amortised liabilitiesFinancial measured (LR) receivables and Loans freenet AG · Annual Report 2013 Report AG ·Annual freenet ’000s EUR In Total (HFS) instruments financial Held-for-sale ’000s EUR In 176 through profit or loss (FIPL)loss or profit through at value fair measured instruments Financial Consolidated financial statements financial Consolidated through profit or loss comprise the income and expenses from the measurement financial from the of the comprise expenses income and loss the or through profit measured at fair value of financial instruments to category the attributable losses or profits Net receivables. and loans recoveries and fromderecognition in of value as previously well written-off losses the as inflows gains include changes receivables and loans in from and allowances, gains the losses and Net (adjusted) 2012 categories by valuation result Net 2013 categories by valuation result Net in year: wereinprevious and financial shown year the results the net 2013 following the in individual accordanceFor the 39, categories of financial instruments with IAS the effective interest rate method. effective the cial liabilities application of the on are loss or based not measured at fair through value profit Information finan and concerning financial assets of interest the interest income and expenses interest expenses. fromfinancial liabilities gains cost of losses purchase and consistNet of measured at amortised impairments. of held-for-sale comprise category the from gains financial instruments losses and Net market the from valuation interest of the expenses income cap). and the prise acquisition withliability the com in year: option TM put connection of the (previous of MOTION : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes From Interest From Interest –36.086 –37.855 –33.893 –36.489 1.769 2.596 0 0

0 0

At fair value value fair At statement) At fair value value fair At statement) (income (income 7.601 7.601 From subsequent measurement –12 –12 0 0 0

Aus der Folgebewertung Aus der 0 0 0

At fair value value fair At At fair value value fair At (equity) (equity) –80 –80 –45 –45 0 0 0

0 0 0

Impairment/ Impairment/ receivables receivables receivables receivables –35.334 –35.334 –31.378 –31.378 losses losses 0 0 0

0 0 0

From disposals From disposals 1.449 1.449 1.279 1.279 0 0 0

0 0 0

Net result Net –62.450 –32.116 Net result Net –37.855 –64.049 –36.489 –27.503 7.601 –80 –45 –12

- -

Executive Board. Executive information on to following is presented risks theThe based information concerning specific the to in debt reduce this way, is and also to entitled take measures such as issuing shares. new in order to management sell assets is permitted manage structure, to capital In order the actively as closing of the 0.38). date year: 0.34 was Gearing riskcapital (previous management. is of relevant another parameter (gearing) equity Group and debt net Group between ratio The covenants All date. as balance are of the met sheet group managementthe report. in in refer chapter to the please information, comments our management” “Financial For further EBITDA). Group and Group of the debt net (ratio as factor well between Group debt asthe the interestinterest net income), Group and cover EBITDA of ratio Group equity (ratio the between in immediately. called loansbeing the in main relation The financial to covenants the are defined failure where such financial covenants to might meet involve agreements, in loan the specified risk capital Group’s of management the is to objective monitor financial covenants the primary The keylidated derived and balance figures. sheet in risk conso shown capital the is management equity Group The related of the to shareholders’ partners. sales and customers impairment end from or due of receivables is to to main failure minimise the of its objectives attributable One costs the department. ment are Manage monitored in users Receivables fromend the due Receivables risks. ting forthese as well partners) as B2B other regular and internal dealers distributors, (in risk particular repor is of Treasury monitoring for major responsible risks debtors Group default the The department byand maintaining of in credit form lines. the adequate reserves monitoring status by finance are Liquidity permanently market risks the reduced positions. open obtaining by way finance of an adequate commitment of credit linespossibility the of and closing possibility the of equivalents, cash of and cash involves holding an adequate reserve department to optimise liquidity interest management net Prudent Treasury income. controlled Group by the 34 Group Treasury department is the principle of minimising risk; a further important objective is objective is principle of Treasury minimising the Group important department a further risk; forthe overriding The priority basisting the extent. and on risks which of the degree analyses by way Group of of the regular internal segments associated risk operating risks with the repor it managesmonitors and market Inaccess addition, the liquidity and to financial markets. the co-ordinates and segments to operating the services provides Treasury Group The department Board. Executive of approval the prior require the financial transactions certain In addition, Board. by Executive the tion are defined in following the explained sec components with its of financial policy aspects fundamental The activities. finance-oriented and by operational of financial risk management is objective to to and The constantly risks limit monitor these them risks. liquidityto default and risks market risks, in particular is Group exposed freenet the liabilities transactions, planned assets, and its With . 2 Principles and objectives of financial risk management risk financial of objectives and Principles Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 177

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 178 Consolidated financial statements financial Consolidated The liabilities shown under the financial debt are attributable to a fixed-income corporate bond bond liabilities corporate toThe a fixed-income are financial debt attributable the under shown the reference date. The corporate bond comes with a coupon of 7.1 with comes acoupon bond reference percent. corporate the date. The to interest variable applied percent was the bank liabilities Interest of 2.9 borrowings. asrest of million euros relate of 56.1 this to figure, inte variable 2013, December as of 31 term borrowings million short-term eurosthe are under liabilities shown long- and balanceIn the sheet, of 538.0 as closing of holdings the financial instrument the reference date. are by determined relating changes in risk theoretical to the the variables effects periodic The of changes equity. in interest result the rates shareholders’ on and a sensitivity analysis uses Group the effects which the market to shows the In order risks, present of calculating in are process and the included result-related the sensitivities. interestcould net have on originally income on an impact variable-interest financial instruments Changes inwell options available market various as the interest debt. forscheduling the rates basisinvesting the on daily debt of and the liquid the liquidity assets planning as disposal at its available for opportunities constantly various monitors the Treasury Group The department accordingly. debt financial variable-interest interest the reduces and rate as anatural risk arising hedge, acts the from EURIBOR) or EONIA however, in cash (which hand is mainly basis the invested on in of variable-interest instruments interest explicitly to rate have The hedged; risks interest not been rate is risks. Group exposed the In this respect, 2013. million financialble-interest liabilities euros December as of 31 of –56.1 utilised millionvaria - year. of the end atwhich the not been had euros, has reported Group The also has Group tranches). arevolving fixed-interest to The credit two linebutable totalling 300 million euros are attri million to63.8 and euros a variable-interest are tranche 56.1 attributable this figure, 2013—of million euros December as (shown of 31 with 2012 atotalber balance of 119.8 in note Decem concluded also and loan resultingcing in 2011 promissory process April the from refinan of the (recognised as part which raised was 2013) million as 417.4 euros December as of 31 34.3.1 exchangeinterest rates. currency rates and to changes to in attributable financial risks are of primarily Group our exposed activities The 34 an impact of –84 thousand euros on the results after tax (previous year: –201 thousand euros). –201 thousand year: (previous tax after results euros the on thousand of –84 an impact haveeuros), would in basis interest the of 50 rate points curve shift downward aparallel and thousand 201 year: (previous tax after euros results on thousand have of 84 would an impact lities (measured at fair value), in basis interest the of 50 rate points curve upward shift aparallel liabi and of position variable-interest net assets the on Based euros. thousand toamount 32,459 entire would forthe in financial debt 2014 This means outflows that the percent. 3.6 and 2.9 ween lies interest in bet variable-interesta range for 2014 for loans of expected market the estimates, of cumulative basis million the payments On interest. euros relates to expected of 20.4 figure the contrary, the repayment of principal 2014—on for is mandatory no There as currentshown debt. euros are thousand 20.4 2013, December as of total financial for 31 debt shown the figure Of . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 3

Market risk Market Interest rate riskInterest ------control liquidity. planning ranging horizons Different up to are one considered in this respect, to Group monitor the Comprehensive and throughout are financing planning used instruments obligationsand arising leasing from agreements. instance for pay it financial to obligations, might purchase obligations able repayits not be debt, risk as the Company that the to might liquidity able meet risk isThe not be Group defined of the and the proceeds of maturing proceeds the financialand assets. anticipates Group flows cash obligations other The of operating out that its it to will able meet be participate. Group in existingof several which main internal the agreements companies pooling cash freenet of the investment the of and for liquid are in managed Group Demand funds centrally the basis the on in to liquidity order the reduce risk. instruments financing ofrange different awide liabilities. uses and Group financial The assets of the maturity profiles the for performed Reconciliations are also flows. cash alsoand by actual and constantly monitoring forecast the also credit manages lines Group at liquidity bybanksThe risks holding appropriate at cash banks, with Accounting Controlling and basis the on of current data. planning The is daily following updated Treasury months. three liaison Group by the department year. short-term The liquidity planning control adaily and on are basis done following forthe 34 risk considers foreign that Group is the the of currency negligibleOverall, significance. currency. in foreign denominated dings byrisk futures concluding is or, generallyhedged currency by means of if hol necessary, cash foreign to within The currency aminor extent are Group. conducted the trades Foreign currency 34.3.2 cost of purchase. are they recognised at rate amortised riskrest because to financial liabilitiesrecognised an at The inte fair value. are not exposed therefore of freenet only if are they Changes in financial interest instruments rates fixed-income have on an impact risk ofThe interest rate changes is negligible interest-bearing other the for liabilities. and assets euros). thousand –166 year: (previous equity shareholders’ on euros euros), thousand of 5percent in have of price –138 would the shift adownward and an impact 166 thousand year: (previous equity euros shareholders’ on thousand have of 138 would an impact 5percent in price acquired of an the the upward shift shareswell financial other assets, as under as assets other and receivables sundry the other the under in balance shown the sheet bonds and market in money financial funds investments the on Based any and payments. rument dividend dates interestrity or dates; change areturn adjustment the from results in price inst of the the matu- are contractually defined no There short-term trading). for in basis avery on funds (held However,possibility of invested price losses. is there significant has no risk been money as the to marginal market that are is funds so there subject Money always interest a rate fluctuations . 4

Liquidity risk Foreign currency risk currency Foreign Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 179

Consolidated financial statements Consolidated financial statements Debt (liabilities due to banks) due (liabilities Debt freenet AG · Annual Report 2013 Report AG ·Annual freenet payable accounts Trade ’000s EUR In to banks) due (liabilities Debt payable accounts Trade ’000s EUR In 180 Other non-derivative financial liabilities financial non-derivative Other Other non-derivative financial liabilities financial non-derivative Other Consolidated financial statements financial Consolidated 34 liabilities Financial liabilities Financial 2012: and 2013 years original of the payments financial liabilitiesredemption financial of the end at the Group of the undiscounted contractually agreed the show following interest The tables andshareholdings. provisionthe of collateral as well as any acquisitions in and particular disposals and of assets, company measures under of internal law, conduct structural the Group, of the operations the Company the on in relation to restrictions instance for changes impose in These agreements. regulations by certain loan of the is Group restricted of the scope operational financial and The interests. markettal forthese capi as is there organised no difficult more notice be possibly would at their short sale holdings, to sell these necessary are plans notice. Ifit no to became There sell any holdings. of the short account) (money deposit in securities liquidatedSecurities the market be can bonds and at funds instance for in to future order finance agreements strategic investments. loan the outside debt to Company the Within raise is narrow limits, permitted provided. lion euros which has been mil not utilised had date, revolving Group balance of the the sheet credit lineAs of 300.0 contract customer areas before a contract is taken customer. with the out acontract areas customer before contract major for out are carried Credit checks partners. sales and of customers to creditworthiness the attention is mass devoted particular In business the of Group, our assets. other and Receivables item under refer to 21, please information, comments our For further toregard risks. default Trade are main the with customers item end from Group accounts receivable in freenet the hisis to not able obligations meet within period. agreed the This risk materialises of complete receivables. or default to partner partial contractual the if the income attributable or equivalents cash of and cash loss A credit risk consists unexpected of the . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 5 Credit default risk default Credit 31 31 .12 .12 412,898 538,012 401,970 656,554 109,412 Carrying Carrying adjustet 44,561 amount amount .2012 .2013

Interest Interest 30,788 30,674 (fixed) (fixed) Cash flows 2014 flows Cash Cash flows 2013 flows Cash

(variable) (variable) Interest Interest 3,250 1,671

100,449 401,970 412,626 44,512 20,413 43,518 Repay Repay ment ment - - Interest Interest 30,664 30,775 (fixed) (fixed) Cash flows 2014 flows Cash Cash flows 2015 flows Cash

(variable) (variable) Interest Interest 1,680 1,923

40,119 36,557 Repay Repay ment ment 254 272 16 - - Interest Interest 34,579 65,337 (fixed) (fixed) Cash flows 2015 and later and 2015 flows Cash Cash flows 2016 and later and 2016 flows Cash

(variable) variable Interest 5,063 3,861 Zins Zins

515,986 517,345 29,337 Repay Repay ment ment 33 - - - - default is equivalent to the book value of these instruments. of value these is todefault equivalent book the available-for-sale maximum the credit risk of counterparty in case the financial investments, and such equivalents cash as and cash Group, of the to regard financial other assets With the obligations. payment are indications there no date as balance of their will the sheet debtors thatment, the not meet which accounts receivable are impaired neither overdue nor trade pay for to regard With those future investments. of yields the constantly current expected monitors the and department significantly limited Treasury Group The as aresult risk of the spread over being banks. various risk default has been The are liquid and mainlySecurities assets invested banks. at major German irrecoverable. receivable considers the Group are if the derecognised assets appropriate other and creationAn Receivables takes of account impairments risks. of default correlations. no are there because and is broad base is date. customer significant balance no the concentration There the sheet of credit risk because at point which terms the the of were payment granted and between change in creditworthiness toIn order account intrinsic determine due the accounts receivable, is taken of value trade of any hedged. haveto users not been end with regard risks rating have Default business toa poor the is or pay not in established. advance, with accounts general, limit system—in internal an of means limited by are insured not are which to accounts attributable risks tothis calculate The volume insured. to notification sales be the insurer the of current each of key notifies the sales insurer The account. uses department sury Trea Group the month, key Every has with insured percentagethese of- sales accounts. a certain are covered by way of commercial credit insurance. to In order minimise Group the credit risk, the credit regarding risks Major key accounts (dealers distributors and in communications) mobile limit if the is imposed is reached. restriction priate, adelivery appro Where monitored. and Credit limits are also defined franchise partners. and dealers from with to regard ongoing is process An accounts due also dunning operated collection debt and Group. in our monitoring monitoring as well as are high-spender key measures minimising for risk default the companies long-term in and collection with benchmarking several process collection collection regular and of arapid dunning entered and into, performance has been the acontract Once Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 181

Consolidated financial statements Consolidated financial statements 35 freenet AG · Annual Report 2013 Report AG ·Annual freenet 182 rnatos with Transactions related parties related Consolidated financial statements financial Consolidated Liabilities transactions from regular

All transactions were based on market prices. There are securities. no There market on prices. were based transactions All transactions from regular Receivables ’000s EUR In 2013: 31 December following liabilities from and due The major receivables as existed of to due related parties toservices attributable income and Sales ’000s EUR In related and Group parties: the have following takenThe major place transactions between 35 IAS 24, no information was provided (n.a.). information no provided was IAS 24, in accordance as related were classified not to parties with be companiesIf the persons and and onward charging services Purchased

b2c.de GmbH, München (Drillisch AG Group) (Drillisch München GmbH, b2c.de Companies with a major influence on freenet AG AG Group) (Drillisch Munich GmbH, b2c.de b2c.de GmbH, Munich (Drillisch AG Group) (Drillisch Munich GmbH, b2c.de SIMply Communication GmbH, Maintal (Drillisch AG Group) (Drillisch Maintal GmbH, Communication SIMply Companies with a major influence on freenet AG Hamburg GmbH, FunDorado venturesJoint AG Group) (Drillisch Maintal GmbH, Communication SIMply Companies with a major influence on freenet AG Hamburg GmbH, FunDorado venturesJoint siXXup new Media GmbH, Pulheim GmbH, Media new siXXup venturesJoint Kiel Kommunikation, für Gesellschaft GmbH KielNET companies Associated b2c.de GmbH, Munich (Drillisch AG Group) (Drillisch Munich GmbH, b2c.de eteleon e-solutions AG, Munich (Drillisch AG Group) (Drillisch Munich AG, e-solutions eteleon Unternehmen mit maßgeblichem Einfluss auf freenet AG . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 1 Overview 31 .12 3,053 3,029 .2013 2013 732 446 286 n.a. n.a. n.a. n.a. 63 63 24 0 0 0 31 .12 14,874 14,782 1,500 1,005 .2012 2012 247 701 222 208 273 701 11 28 27 65 0 1 Esch Stephan Preisig Joachim Christoph Vilanek ’000s EUR In Christoph Vilanek ’000s EUR In 35 GmbH). Holding shares the (incl. of MSP 0.39 percent Drillisch AG voting holds of rights 2013, Drillisch for voting notification AG rights of 1October According recent to most the 2013. March 20 before out if were they carried with related parties as transactions with companies in Drillisch the transactions were only reported Group 2013, period Consequently,lisch AG in reporting the as related classified parties. have been longer no this since means that, that Drillisch time, companies AG companies with the and Dril affiliated Drillisch to able AG exercise has Group; not acontrolling been freenet the on 2013, influence Since March 20 GmbH). Holding shares (incl. the of of voting MSP 2013 March 20 on rights percent Drillisch AG 10.43 According held to of voting 25 the 2013, March notification rights Executive Board compensation 2012 compensation Board Executive 2013 compensation Board Executive follows: company of the Board is Executive of broken as the down members the for compensation The 1 Stephan Esch Stephan Preisig Joachim . 2 not cash-effective in the financial year and which were measured in accordance with IFRS 2. IFRS with accordance in measured were which and year financial the in cash-effective not not cash-effective in the financial year and which were measured in accordance with IFRS 2. IFRS with accordance in measured were which and year financial the in cash-effective not This is variable compensation from the SAR programme as well as the LTIP programme, including payments which were were which payments including LTIP programme, the as well as programme SAR the from compensation is variable This This is variable compensation from the SAR programme as well as the LTIP programme, including payments which were were which payments including LTIP programme, the as well as programme SAR the from compensation is variable This

Executive Board compensation Board Executive Consolidated financial statements financial Consolidated compensation compensation 1,505 1,514 Fixed Fixed 444 440 621 Fixed Fixed 444 445 625

compensation compensation Variable Variable 1,159 1,104 504 504 151 144 480 480

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Sub-total cash cash Sub-total compensation Sub-total cash cash Sub-total compensation 2,664 1,125 2,618 1,105 944 595 589 924

with long-term long-term with compensation compensation with long-term long-term with compensation compensation incentive Variable Variable incentive Variable Variable 1,913 effect1 2,380 effect1 1,044 649 972 292 720 616

compensation compensation 4,577 2,097 1,593 4,998 1,644 1,205 Total Total 2,149 887 Total Total

- freenet AG · Annual Report 2013 Report AG ·Annual freenet 183

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet Preisig Joachim Christoph Vilanek ’000s EUR In Christoph Vilanek ’000s EUR In 184 Stephan Esch Stephan Esch Stephan Preisig Joachim Consolidated financial statements financial Consolidated provision under IFRS 2 provision under IFRS 2 out of the LTIP programme, namely 405 thousand euros to Mr. Vilanek, 270 thousand euros to euros to thousand Mr. thousand LTIP of 270 the out 405 namely Vilanek, programme, payments cash first the saw financial year LTIP The 2013 notes, AG. these of freenet programme of refer to please item “LTIP 26.2 programme”; via so-called the Board Executive of the members to were the awarded with along-term incentive components effect salary variable new In 2011, any year as previous appreciation ofhold the rights stock reference date. did not Board Executive of the as members well as Board former Executive of the members The Company. of the Board Executive of the were granted to members the with along-term incentiveinstruments effect compensation other options or stock appreciation rights, stock new no financial yearIn the 2013, 2012 with long-term incentiveVariable effect compensation 2013 with long-term incentiveVariable effect compensation following breakdown the withThe of shows compensation along-term variable incentive effect: compensation instruments had been granted in accordance been had with HGB. instruments compensation in financial years disclosed in the which already the had been as such elements incentive effect, year, previous the not include any with compensation along-term variable this does figure year’s in euros). case the was thousand As 2,618 year: (previous HGB 6a 1no. paragraph with clause 314 euros in accordance thousand amounted to in 2,664 2013 emoluments In Board total, Executive euros). thousand 386 year: euros (previous thousand Mr. for value the and 556 was Esch euros), thousand 857 year: euros (previous euros); thousand forMr. value the Preisig 1,236 was 1,286 thousand year: euros (previous thousand LTIP the for forMr. programme 1,853 was Vilanek provision of value the the 2013, Mr. December of euros 31 to Mr. thousand Preisig As Esch. 122 and (non-cash-effective) compensation from compensation (non-cash-effective) compensation from compensation : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes SAR programme programme SAR SAR programme programme SAR change in the the in change change in the the in change –942 –419 –332 –191 0 0 0 0

compensation from compensation compensation from compensation actual payments SAR programme programme SAR actual payments SAR programme programme SAR 1,739 571 793 375 0 0 0 0

(non-cash-effective) compensation from compensation change in provision provision in change (non-cash-effective) compensation from compensation change in provision provision in change LTIP programme LTIP programme 1,116 1,583 567 379 170 805 536 242

compensation from compensation compensation from compensation actual payments LTIP programme actual payments LTIP programme 797 122 405 270

0 0 0 0

incentive effect with long-term long-term with incentive effect compensation compensation with long-term long-term with Total variable compensation compensation Total variable 1,913 2,380 1,044 649 972 292 720 616

no remuneration will be payable for participation by telephone in physical by telephone attendance meetings. forparticipation will remuneration payable no be and committees, its and Board Supervisory of the meetings attendance allowances telephone for for will remuneration payable no be in third of the 2010, quarter starting that, has decided Board Supervisory the activities, own its on imposed restriction of avoluntary Within framework the this receives amount. double committee chairperson The committee. of the meeting euros each for attended in an of addition attendance1,000 fee (Mitbestimmungsgesetz)—receive Codetermination Act German 3of the paragraph clause 27 in exception accordance the committee of the formed committee—with with Board Supervisory to a belong who members Board he/she Supervisory meeting Board attends. each Supervisory euros for receives an of 1,000 attendance fee member Board Supervisory every In addition, amount. ahalf and times this one vice the this chairperson receives amount, double Board Supervisory of the chairperson The euros each for full board. financial year the on of membership of 30,000 basic receive compensation fixed members Board For each full financial year, Supervisory the ■ ■ ■ components: three consists and of of association, is compensation articles by governed the Board Supervisory The 35 Board. Executive of the were issued any for warranties other members of the guarantees or no and Board, Executive of the to any members of the were loans extended No euros. thousand Mr. 108 Esch Mr. euros, Preisig euros thousand andbreakdown Mr. as thousand was follows: 92 157 Vilanek Mr. the euros, Preising thousand Mr.250 euros, 174 2012, for euros; Esch 125thousand thousand Mr. in Vilanek spread over 2013: was This following figure the persons commitments. pension the as aresult of Board Executive of the members the for recognised expenses in total in personnel euros) thousand were 357 year: euros (previous thousand of 549 time expenses Current service euros). thousand 6,520 year: (previous 2013 euros December as of 31 thousand totalled 6,236 Board Executive of the members as former Berger and Spoerr, Krieger Messrs. for euros). thousand DBOs Mr.for The 751 year: Preisig euros (previous thousand 893 was DBO the commitment 2013, granted to Mr. December of 31 Preisig As debitel AG. former by the AG over pension took freenet the 2008, euros). of 1September thousand As 1,531 year: vious euros (pre thousand 974 euros);year: thousand forMr. figure corresponding 1,627 was the Esch euros (previous thousand obligation Mr. for (DBO) amounted to Vilanek 1,165 benefit defined the 2013, December of 31 As as of as 1May 2009. Chairman Board appointment Executive of the commitment pension granted to an was indirect Mr. occasion of his the on Vilanek year 2009, financial In the commitment pension granted to was indirect Mr.An 2004. in November Esch ■ ■ ■ . 3 Performance-linked compensation Performance-linked Attendance fees compensation Basic Compensation for the Supervisory Board Supervisory the for Compensation Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - freenet AG · Annual Report 2013 Report AG ·Annual freenet 185

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 186 Consolidated financial statements financial Consolidated totals, because the figures have been rounded to one position after the decimal point. the to after position one rounded have figures been the totals, because final subtotals and presenting for used format the from may result differences rounding that note Please financial years are in following shown two the last forthe tables. Individualised figures Board. Supervisory of the were issued any for warranties other members of the guarantees or no and Board, Supervisory of the to any members of the were loans extended No exercising as well as forturnover taxes. their office as incurred aresult of expenses for are reimbursed members Board Supervisory Furthermore, euros. thousand thus was 896.7 activities Board tion paid Supervisory for total- compensa The financial year forthe resolution appropriation 2013. profit the on depends paid out be will compensation indeed this performance-based Whether as acost. also recorded euros was thousand profit-linked In addition, euros. thousand of compensation 405.4 86.0 as well of as euros attendance fees thousand of compensation 405.3 Company received fixed of the Board Supervisory of the members the during financial year the 2013, For their activity ahalf and times this one vice amount. chairperson the this receives amount, double Board Supervisory of the chairperson The basic compensation. year. is compensation of the limited extent The to that which amount is of in form payable the share company of the financial which previous forthe stock are distributed to shareholders the euro per euro in in excess dividends of 0.10 euros each for 0.01 in of amount 500 the pensation of each financial end year, the also receive, after members com variable Board Supervisory The : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - Angela Witzmann Angela Steffen Vodel Joachim Halefeld Weiss Achim Weidinger Robert Nicole Engenhardt-Gillé Former members Marc Tüngler Marc Gesine Thomas Gesine Prof. Dr. Helmut Thoma Prof. Dr. Helmut Stephan Michael Ronny Minak Kraemer Thorsten Birgit Geffke Birgit Claudia Anderleit Claudia 1 Mackeprang Knut Schenk Dr. Hartmut Active members ’000s EUR In 2013 financial the year for Compensation Employee representative in accordance with section 7 (1) clause 1 no. 1 MitbestG of 4 May 1976. 4May of 1MitbestG 1no. 7(1) clause section with accordance in representative Employee 1 1 1 1 1 1 1 1 1 1 Consolidated financial statements financial Consolidated compensation 405.3 351 Basic Basic . 53 18.2 18.2 18.2 11.9 11.9 11.9 60.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 27.3 17.7 . 4 9

: Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Attendance Attendance 86.0 12.0 12.0 . 77 9 . 1.0 1.0 4.0 8.0 4.0 4.0 4.0 6.0 3.0 5.0 5.0 5.0 5.0 fee 7.0 0 0

compensation Performan ce-based ce-based 405.4 352 53 11.8 11.8 11.8 18.3 18.3 18.3 60.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 27.5 17.6 . .0 4 - 896.7 781 . 115 132.0 Total 64.0 64.0 36.3 68.0 58.8 41.5 41.5 72.0 42.5 24.7 26.7 65.0 65.0 67.0 27.7 . 4 3 freenet AG · Annual Report 2013 Report AG ·Annual freenet 187

Consolidated financial statements Consolidated financial statements 36 freenet AG · Annual Report 2013 Report AG ·Annual freenet 188 Company Acquisitions Consolidated financial statements financial Consolidated On 18 December 2012, the Group concluded a purchase agreement for acquiring for apurchase agreement concluded Group the all shares and 2012, December 18 On Matthias Schneider Matthias Niclas Rauscher Hans-Jürgen Klempau Hans-Jürgen Dr. Arnold Bahlmann Dr. Arnold Dr. Christof Aha Dr. Christof Joachim Halefeld 36 Anderleit Claudia Nicole Engenhardt-Gillé3 Schenk Dr. Hartmut Active members ’000s EUR In 2012 financial the year for Compensation purchase price adjustments of 10,078 thousand euros; this euros; paid financial in year last was thousand the 2013. of 10,078 purchase price adjustments in in abinding 2013 manner, defined have resulting been purchase cash price in after afinal pect liabilities acquired of the company. which are relevant in purchase price this adjustments The res as well financial and cash as current the net assets the on depending to adjustments, subject was purchase cash price The purchase cash price. as the euros agreed was thousand of 12,250 A figure significant online also operates business. retail GRAVIS market. Apple German control over with dealer this nationwide coverage issubsidiary. only Apple the in the GRAVIS to Group acquire the which enabled 2013, takeover January the as completed of was 31 approval, law Following cartel (“GRAVIS”). mbH voting in rights Gravis-Computervertriebsgesellschaft Henderson Maarten Former members Thorsten Kraemer Thorsten 3 2 1 Angela Witzmann Angela Weiss Achim Weidinger Robert Thoma Prof. Dr. Helmut Steffen Vodel Tüngler Marc Thomas Gesine . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes Employee representative in accordance with section 7 (1) clause 1 no. 1 MitbestG of 4 May 1976. 4May of 1MitbestG 1no. 7(1) clause section with accordance in representative Employee 2012. 9May until Board Supervisory the of Chairman 2012. May 10 since Board Supervisory the of Chairman 1 On AcquisitionOn GRAVIS of 3 3 3 3 3 3 1 2 3 compensation 405.0 320 . Basic Basic . 84 21.4 20.1 30.0 30.0 30.0 30.0 10.0 19.3 19.3 19.3 19.3 19.3 10.7 10.7 10.7 10.7 49.2 45.0 3 7

Attendance Attendance 113.0 30 . 83 12.0 14.0 10.0 8.0 2.0 2.0 2.0 8.0 4.0 2.0 8.0 4.0 6.0 5.0 5.0 5.0 9.0 fee 7.0 .0 0

compensation Performan ce-based ce-based 406.5 322 84 21.3 30.1 30.1 30.1 30.1 20.0 10.0 19.5 19.5 19.5 19.5 19.5 10.7 10.7 10.7 10.7 45.1 49.4 . .1 4 - 924.5 198 726 112.6 Total 44.8 48.1 46.8 54.7 98.1 22.0 42.8 23.4 23.4 23.4 25.4 70.1 65.1 43.8 43.8 69.1 67.1 . . 4 1 - contingent liabilities fair of value the The recognised in purchase have price allocation. the been 474 euros has recognised following No of to in the thousand each be financial quarter years. depreciation of recognised of purchase in price intangible course of allocation, the the assets depreciation subsequent of result a As allocation. price purchase the of result a as recognised euros which were thousand of 2,262 rights euros as well as thousand trademark tions of 4,334 communications”.unit “Mobile acquired mainly The intangible comprise assets rela customer - to cash-generating attributed the was goodwill The of GRAVIS. workforce also and the GRAVIS totence continue of GRAVIS to acquire in distribution future, customers the organisation new of Liquid assets assets other and receivables Other receivable Trade accounts Inventories Current assets equipment and plant Property, Goodwill assets Intangible assets Non-current ’000s EUR In Assets 2013 January liabilities 31 of as and GRAVIS of Assets acquired at time at fair of values the initial consolidation: information liabilities and provides concerning following assets The overview the of GRAVIS 3is final. with IFRS with to regard out acquisition the purchase carried price in allocation accordanceThe of GRAVIS 2013. December as income of statement 31 the from derecognised therefore was euros during financial year the thousand 2013, to 5,454 consolidation, which compounded was euros time at of the initial thousand of 5,164 liability The earn-out the from payable. therefore is that earn-out and range no of the end bottom than lower the was figure that assumed the be however, itred; can which prepared, have basis the on financial statements separate been of the - were consolidated prepa at point at which the these financial adopted statements not yet been had 2013 commercial December under as of 31 year financial statements separate GRAVIS for The is amount precise related commercial to under of EBITDA year GRAVIS. law calendar 2013 the for million the euros; within of arange 0euros 6.25 and may there earn-outs alsoIn addition, be tion has resulted in goodwill of 3,588 thousand euros, which is euros, to mainly compe the thousand attributable tion has resulted of in 3,588 goodwill euros timeat of the initial thousand - purchase price alloca consolidation. The liabilities of 15,242 and assets the euros) between thousand difference the represent of 5,164 anticipated earn-outs euros plus the thousand anticipatedThe total purchase price (final purchase cash price of 10,078 Liabilities Consolidated financial statements financial Consolidated 31 43,094 26,162 .1 16,932 18,842 2,044 1,485 3,588 5,682 3,791 7,662 .2013 Other provisionsOther Debt liabilities tax income Current deferrals and liabilities Other payable accounts Trade liabilities Current Debt liabilities Non-current ’000s EUR In : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 31 .1 25,919 27,852 15,328 1,933 5,409 1,933 4,435 .2013 173 574 - freenet AG · Annual Report 2013 Report AG ·Annual freenet 189

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 190 Consolidated financial statements financial Consolidated 36 2013. place as of 1January taken had transaction if the applicable also would have to result been Group 2013—this for tax contributed balanced result an million almost after GRAVIS euros. 148.9 have would been 2013 to consolidated contribution the the of revenue GRAVIS in financial year the 2013, of 1January taken initial had time place of as the its after transaction consolidation. with Ifthe third parties contributed atotal million GRAVIS of 131.3 euros revenue to Group the financial yearIn the 2013, Communications”. “Mobile is to segment allocated the AG GRAVIS Group, freenet of the reporting In segment GmbH. Shop of mobilcom-debitel of know-how is transfer achieved to intended by adirect be expansion communications of mobile planned branches The business in GRAVIS the system. distribution into GRAVIS the products service and communicationsof mobile energy, services we are intime, field planning the to gradually introduce existing our products digital lifestyle of agenuine becoming of Group our provider. digital lifestyle strategy corporate same At the communications with mobile this in internet; mobile connection and is consistentducts with the pro aim Lifestyle acquisitionThe of the is of range our high-quality Apple to extend of GRAVIS basis the on residual-value of the method. method capital-value-oriented using relations fair customer of value the established was The a right. fair brand of value the the determining for used was method license-price analogy well The as declining revenue growth. years with margin aconstant EBITDA of five as period over afurther extrapolation analytical year of one with This covered period a detailed method. planning DCF the on calculation based avaluation-relevant on of liabilities. based transfer purchase was and price allocation The assets which acquisition have fromthe any separately disclosed to transactions be ofidentified the euros as date of the thousand of acquisition. Company has The not ofgross 3,864 receivables created in euros been relation had to thousand of 73 Impairments 2013. full December as of 31 in received almost this euros; been had figure thousand acquired is as 5,276 receivables stated 2013. this euros; also was paid in thousand of 5,065 purchase price adjustments purchase price after in in financial year the abinding 2013 manner, defined have been resultingrespect cash in afinal liabilities acquired of the company. which are relevant in purchase price this adjustments The as well financial and cash as current the net assets the on depending to adjustments, subject purchase million cash price is The purchase cash price. as the euros agreed was of 4.0 A figure to dealers. approved competence providing for system support sales necessary TM “moon”, thealso MOTION provides distribution platform its With of online operations. in distribution field force the its this particularly With acquisition, AG has freenet strengthened has accordingly Group the acquired 2013; control 20 March on completed over this subsidiary. was transaction the authorities, cartel the from obtained was approval After (“MOTION TM”). Troisdorfding acquisition the shares TM GmbH, percent of the in Vertriebs MOTION of 51 assignment apurchase and concluded regar Group agreement the 2013, February 20 On . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 2 Acquisition of MOTION TMAcquisition MOTION of - - Liquid assets assets other and receivables Other receivable Trade accounts Inventories Current assets residual-value method. residual-value basis the on of the method using relationscustomer established was acapital-value-oriented fair of value the The fordetermining right. used was fair brand of value the the method analogy license-price The following the for period. planned percent was rate of 1.0 Agrowth years. two of This coveredvaluation-relevant period planning adetailed calculation method. using DCF the euros as date of a the on thousand acquisition. of the based purchase was price allocation The created in euros and been withrelationhad accounts receivable a gross of tovalue 9,070 trade thous of 15 Impairments euros. thousand tofair 9,894 acquired of value the amounts receivables contingentcial No years. liabilities The recognised in purchase have price allocation. the been euros has recognised following toof in the each thousand be finan quarter depreciation of 288 recognised of purchase in price intangible course quent depreciation of allocation, the the assets aresult eurosand which of subse were recognised As as aresult purchase price of allocation. the of 1,105 thous rights euros as well as thousand trademark comprise relations customer of 3,193 communications”. unitted to cash-generating the “Mobile acquired mainly The intangible assets - attribu was goodwill The with to regard online particularly capability hening activities. sales our with is strengt togoodwill essentially in future connection attributable earnings opportunities The method. calculated using euros has been proportionate the thousand of 1,948 Goodwill equipment and plant Property, Goodwill assets Intangible assets Non-current ’000s EUR In Assets at fair value March liabilities TM and 20 of as MOTION of Assets acquired at time at fair of values the initial consolidation: information liabilities and provides concerning following assets The overview the of MOTION TM 3isdance final. with IFRS with to regard out acquisition the purchase carried price allocation TMThe accor of MOTION The purchase price is the difference between the assets and liabilities of 5,065 thousand euros. thousand liabilities and assets the of 5,065 between purchase price is difference The the Liabilities Consolidated financial statements financial Consolidated 20 . 3 13,849 20,821 6,972 1,948 4,342 3,373 9,055 . 2013 682 582 839 Debt liabilities tax Current deferrals and liabilities Other payable account Trade liabilities Current provisionsOther liabilities tax Deferred Debt liabilities Non-current equity in interests Non-controlling ’000s EUR In : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

20 . 3 11,111 15,756 1,651 2,994 1,259 6,430 3,765 . 2013 878 337 38 55

------freenet AG · Annual Report 2013 Report AG ·Annual freenet 191

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 192 Consolidated financial statements financial Consolidated to acquire control over this also and with subsidiary. in Los Angeles and Berlin locations With Group the which enabled 2014, takeover January the as completed conditions, of was 15 further of fulfilment law the and approval Following in cartel following). Digital the Group” “Jesta as the (these together with their companies, subsidiaries, in are USA the described registered offices with Inc. Holdings, Digital U.S. Group as well in as USA Jesta the with registered offices Inc. Digital Holdings, Jesta in Berlin, with registered Digital votingand offices GmbH in rights Jesta acquisition signed the for apurchase agreement Group the of all shares 2013, December 16 On 36 consolidatedhin affected. result equity—the has thus not been remaining consolidated the on by balance shares way wit an of sheet had impact reclassification This acquisition paidof financial in year was last This the figure 2013. euros. thousand of 5,000 by exercising apurchase for price GmbH MFE Energie shares, the an existing serving for option acquired Group remaining the the 49 percent of shares in 2013, April 30 from effect With 36 2013. takenhad place as of 1January transaction if the applicable also would have to result been Group 2013—this for tax result after TM million contributed MOTION abalanced euros. 130.8 have would financial year been 2013 TM contribution the to of consolidated MOTION the revenue in the 2013, place as of 1January initialtaken had time of the its after revenue consolidation.with transaction third If the parties TM million contributed MOTION atotal of euros 107.6 to Group the financial yearIn the 2013, euros. against thousand consolidated the cumulative of 7,601 profit of 2013 quarter time in This second the liability first recognised was the for 2013. December 31 sing. Along-term liability other options as of euros recognised of was 7,979 forthese thousand remaining the shares options own serving for which time at exist of the exercishareholders to afuture acquisition remaining minority of the the things, other Among 49 percent of shares. with regard agreed options have various acquisition with the been In TM, connection of MOTION Communications”. TM is“Mobile AG MOTION to allocated segment Group, freenet the of the reporting In segment are attained within the first 96 months of the acquisition. Under certain conditions, a defined adefined conditions, acquisition. of months the certain Under 96 withinare first attained the acquisition the after EBITDAs months if certain or 60 within are sold first Group of the the parts significant Digital or Group Jesta 2”. the whether an on “earn-out also be This depends amount may there In addition, Digital Group. Jesta of the year calendar 2014 for the grossthe profit on million depends amount precise the dollars; US 10.0 and dollars 0US in of arange between may there an “earn-out 1” also In addition, be wereconsolidated approved. financial statements time at at the which prepared these however, not been had financial statements 2013; these ber Decem basis Digital as of the 31 Group on of reference of Jesta fixed date financial statements will definitivelyfinancial liabilities be purchase price adjustments acquired of the group—these as working capital well and net cash as the the on depending toprice is adjustments still subject purchasecash million The purchasecash asprice. the agreed was dollars US of 72.18 A figure of digital forusers applications. services and digital formats entertainment of modern, in world Digital leading is of the the Group providers one Jesta the employees, approximately 300 . . : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 3 4 Acquisition remaining of in MFE shares Acquisition of the Jesta Digital Group Acquisition Jesta the of - - - Liquid assets assets other and receivables Other receivable Trade accounts Current assets Property, plant and equipment and plant Property, assets Intangible assets Non-current ’000s EUR In Assets amounts at carrying 2013 June 30 of according as Group to HGB Jesta the of sheet Balance are broken as follows: down These in accordance prepared with HGB. 2013, June is dated 30 by an auditing company to an audit review performed subject which and has Group been of the Digital which is Group recent consolidated in possession most the Jesta of the balanceThe sheet reporting. segment our to goodwill generatinga cash unit to for and a segment expected regard to of the allocation the taken decision with has No yetding of been digital international, lifestyle. in field markets the of new, as well development incluas the - expansion with of the ofrange our services connection which is goodwill to to essentially in future see attributable earnings opportunities We expect acquisition of liabilities. transfer the and the from separately which disclosed to had also and with be to regard goodwill transactions acquiredand liabilities, with to regard contingent liabilities, with to regard total the of amount group of recognised acquired time at of the acquisition assets amounts primary every for vables, time of acquisition, it is to information not possible the provide with regard to acquired recei In particular, in of material absence data view of the at the exemption 3.B66. regulation of IFRS bination is of takes the not complete advantage Group time at of the this freenet the approval, initial the although were forpublication, approved accountingstatements business the for com consolidated these financial acquisition the before Digital occurred Group ofBecause Jesta in field. digital the lifestyle plans to acquisition freenet the consistently DigitalWith Group, Jesta of the continue growth its applications. lifestyle digital mobile for demand increasing to dynamically leading are tariffs as well as data-friendly mobile PCs continuous tablet and The dissemination of smartphones in this agreed respect. hasamount been as fall an due would additional maximum purchase price; no proceeds sales percentage of the Consolidated financial statements financial Consolidated 30 .6 39,702 37,823 27,813 1,879 1,233 3,384 6,626 .2013 646 Equity and Liabilities and Equity Other provisionsOther liabilities tax income Current deferrals and liabilities Other payable accounts Trade liabilities Current Equity ’000s EUR In : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 30 .6 39,702 33,726 17,505 5,976 6,811 8,633 .2013 777 - - freenet AG · Annual Report 2013 Report AG ·Annual freenet 193

Consolidated financial statements Consolidated financial statements 37 freenet AG · Annual Report 2013 Report AG ·Annual freenet 194 icoue in Disclosures clause 315a HGB 315a clause with accordance Consolidated financial statements financial Consolidated FunDorado GmbH, Hamburg GmbH, FunDorado companies valued At equity Troisdorf GmbH, TM Vertriebs MOTION Berlin mbH, Gravis – Computervertriebsgesellschaft Hamburg GmbH, callmobile mobilcom-debitel Oberkrämer Shop GmbH, Oberkrämer &PR, IT für GmbH Stanniol Berlin GmbH, Energie MFE Hamburg GmbH, Direkt freenet Hamburg GmbH, directions new klarmobil Hamburg GmbH, Schleswig GmbH, Multimedia MobilCom Schleswig GmbH, Logistik mobilcom-debitel mobilcom-debitel Büdelsdorf GmbH, Hamburg GmbH, 01083.com Hamburg GmbH, tellfon Hamburg GmbH, Datenkommunikations freenet Hamburg GmbH, 01050.com Kiel GmbH, 01024 Telefondienste Hamburg 01019 GmbH, Telefondienste Hamburg GmbH, freenet.de Kiel Citylinefreenet GmbH, companies Fully consolidated companies in consolidated the for the included financial statements. we havefollowing the overview provided In accordance 3 HGB, 2 and with paragraphs clause 313 services. euros relates 9thousand and to certification other services euros relates thousand to audit of during 906 this financial year; the figure, 9HGB 1no. graph paid euros to was in auditor the fees A total thousand in accordance of 915 - para with clause 314 corporate-governance/entsprechenserklaerung in Internet followingtoat the the shareholders address: available permanently made It has been 2012. Company of the in Board December Supervisory and Board Executive by submitted was the of in conformity accordance AktG with clause 161 we declaration hereby that declare the 8HGB, In accordance 1no. paragraph with clause 314 Transactions with related refer toparties. please item 6HGB), (clause 35, 1no. paragraph 314 to regard disclosuresWith the Company of the concerning executive of compensation bodies the notes. in these expenses, Personnel inshown item 8, has been 4HGB) (clause 1no. in average Group of employees the number The paragraph 314 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes www.freenet-group.de/unternehmen/ Holding % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 50 51 % Other events of major significance have not occurred after the balance sheet date. of balance major significance events the have sheet after not occurred Other (CTO) 2019. Technical until December 31 Officer in charge of IT/Chief member Board Executive as appointed the Stephan has again Esch been and in charge of Finance &Controlling/Chief (CFO) 2019, until Financial December 31 Officer (CEO). Preisig Joachim member Board Officer as appointed Executive Executive has again been again and as appointed Chief 2018, againas chairman until Board December Executive of the 31 appointed has Christoph Vilanek been members. current Board of the Executive to contracts the signed early extensions Board Supervisory Company’s the 2014, 21 February on meeting At its solidated financial statements. notes to of con these the control over this subsidiary. Please in refer to item comments our 36.4 to Group acquire the which enabled 2014, takeover January the as completed of was ditions, 15 con of further fulfilment law the and approval Following cartel in USA. the registered offices with Inc. Holdings, Digital U.S. Group as well in as USA Jesta the with registered offices Inc. Digital Holdings, Jesta in Berlin, with registered Digital votingand offices GmbH in rights Jesta acquisition signed the for apurchase agreement Group the of all shares 2013, December 16 On Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes - - 38 freenet AG · Annual Report 2013 Report AG ·Annual freenet Major events events Major sheet date balance the after

195

Consolidated financial statements Consolidated financial statements Payments on account and assets under construction under assets account and on Payments Other office equipment machinery and equipment Technical networks and Switches Land, facilities on land and buildings and land on facilities Land, equipment and plant Property, Goodwill relationships Customer Trademarks licenses and Software software Internally-generated Intangible assets ’000s EUR In construction under assets account and on Payments Other office equipment machinery and equipment Technical freenet AG · Annual Report 2013 Report AG ·Annual freenet (adjusted) 2012 December 31 of as assets in non-current movements Consolidated networks and Switches buildings and land on facilities Land, equipment and plant Property, Goodwill relationships Customer Trademarks licenses and Software software Internally-generated Intangible assets ’000s EUR In 2013 December 31 of as assets in non-current movements Consolidated 196 Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 2,223,184 2,395,057 1,116,616 2,460,745 2,220,767 1,116,622 171,873 1 334,906 485,960 223,481 239,978 1 .1 334,906 486,310 15,299 62,221 109,037 18,917 227,292 49,593 87,774 .1 94,866 15,123 20,815 55,637 .2013 .2012 290 137 consolidation consolidation included in included companies Change in in Change included in included companies Change in in Change 23,864 17,501 6,363 1,110 3,367 5,803 5,497 7,527 –416 –308 –724 –410 560 –259 –49 –6 0 0 0 0 0 0 0 0 0 0 Cost of purchase or production of purchase Cost Cost of purchase or production of purchase Cost Additions Additions 84,326 93,102 74,395 11,706 21,029 8,776 1,943 5,701 9,931 9,323 6,805 3,909 5,008 4,373 106 259 767 528 329 77 0 0 0 0 0 0 Transfers –60,719 –60,760 Transfers –55,743 –4,439 –673 –504 –52 –173 621 52 52 41 99 41 0 0 0 0 0 0 0 0 0 0 0 0 131,240 180,077 Disposals 132,102 Disposals 48,837 45,346 16,360 25,274 11,337 3,251 –878 8,914 1,319 3,701 7,815 240 221 878 15 0 0 0 1 0 3 0 0 2,331,946 31 2,193,823 1,122,112 2,223,184 31 2,395,057 1,116,616 138,123 .12 338,273 494,365 166,936 171,873 .12 334,906 485,960 223,481 96,648 72,137 15,965 20,620 15,299 62,221 18,917 4,506 49,593 87,774 .2013 .2012 384 290 143,557 893,592 750,035 1 483,389 195,477 830,616 619,865 1 210,751 .1 386,968 175,544 108,635 72,138 14,301 43,618 49,585 27,551 .1 22,700 18,729 34,653 76,431 7,533 .2013 6,954 .2012 0 0 2 0 consolidation Additions included in included Depreciation and impairment write-downs impairment and Depreciation companies Change in in Change 46,491 56,092 10,308 26,391 9,601 5,444 4,348 1,328 7,613 –647 –349 –298 –349 624 –249 –49 36 0 0 0 0 0 0 0 0 0 Depreciation and impairment write-downs impairment and Depreciation Transfers 138,254 Additions 147,410 97,299 27,139 9,156 1,346 8,965 4,851 7,206 –48 –48 48 579 48 25 0 0 0 0 0 0 0 0 0 0 0 write-downs Impairment 122,194 Disposals 170,933 123,057 48,739 45,346 3,152 –878 1,033 241 113 920 113 920 15 0 0 0 0 0 0 0 0 0 0 0 0 31 104,371 674,380 778,751 .12 488,615 –60,443 –60,426 Transfers 15,388 –55,502 32,995 53,911 99,859 76,551 –4,406 8,157 4,275 .2013 –535 17 17 0 0 0 0 0 0 0 0 Disposals 24,394 15,722 10,828 8,672 1,319 3,573 7,794 1,519,443 31 1,553,195 1,122,112 878 .12 305,278 33,752 18,226 68,077 20,097 0 0 0 2 0 Net book amounts 5,232 5,750 7,808 .2013 384 231 31 143,557 893,592 750,035 .12 483,389 195,477 72,138 14,301 43,618 49,585 27,551 7,533 .2012 1,501,465 1,473,149 1,116,616 1 307,355 0 0 28,316 .1 28,004 18,603 15,636 2,571 4,616 .2013 7,766 290 8 1,501,465 1,473,149 31 1,116,616 .12 307,355 28,316 Net book amounts 28,004 18,603 15,636 2,571 4,616 .2012 7,766 290 8 1,600,902 1,630,129 1,116,622 1 312,206 .1 29,227 20,984 99,342 18,435 51,748 2,086 8,169 .2012 402 135 Payments on account and assets under construction under assets account and on Payments Other office equipment machinery and equipment Technical networks and Switches buildings and land on facilities Land, equipment and plant Property, Goodwill relationships Customer Trademarks licenses and Software software Internally-generated Intangible assets ’000s EUR In construction under assets account and on Payments Other office equipment machinery and equipment Technical networks and Switches buildings and land on facilities Land, equipment and plant Property, Goodwill relationships Customer Trademarks licenses and Software software Internally-generated Intangible assets ’000s EUR In 2,223,184 2,395,057 1,116,616 2,460,745 2,220,767 1,116,622 171,873 1 334,906 485,960 223,481 239,978 1 .1 334,906 486,310 15,299 62,221 109,037 18,917 227,292 49,593 87,774 .1 94,866 15,123 20,815 55,637 .2013 .2012 290 137 consolidation consolidation included in included companies Change in in Change included in included companies Change in in Change 23,864 17,501 6,363 1,110 3,367 5,803 5,497 7,527 –416 –308 –724 –410 560 –259 –49 –6 0 0 0 0 0 0 0 0 0 0 Cost of purchase or production of purchase Cost or production of purchase Cost Additions Additions 84,326 93,102 74,395 11,706 21,029 8,776 1,943 5,701 9,931 9,323 6,805 3,909 5,008 4,373 106 259 767 528 329 77 0 0 0 0 0 0 Transfers –60,719 –60,760 Transfers –55,743 –4,439 –673 –504 –52 –173 621 52 52 41 99 41 0 0 0 0 0 0 0 0 0 0 0 0 131,240 180,077 Disposals 132,102 Disposals 48,837 45,346 16,360 25,274 11,337 3,251 –878 8,914 1,319 3,701 7,815 240 221 878 15 0 0 0 1 0 3 0 0 2,331,946 31 2,193,823 1,122,112 2,223,184 31 2,395,057 1,116,616 138,123 .12 338,273 494,365 166,936 171,873 .12 334,906 485,960 223,481 96,648 72,137 15,965 20,620 15,299 62,221 18,917 4,506 49,593 87,774 .2013 .2012 384 290 Christoph Vilanek Board Executive The 143,557 893,592 750,035 1 483,389 195,477 830,616 619,865 1 210,751 .1 386,968 175,544 108,635 72,138 14,301 43,618 49,585 27,551 .1 22,700 18,729 34,653 76,431 7,533 .2013 6,954 .2012 0 0 2 0 consolidation Additions included in included Depreciation and impairment write-downs impairment and Depreciation companies Change in in Change 46,491 56,092 10,308 26,391

9,601 5,444 4,348 1,328 7,613 –647 –349 –298 –349 624 –249 –49 36 Consolidated financial statements financial Consolidated 0 0 0 0 0 0 0 0 0 Depreciation and impairment write-downs impairment and Depreciation Transfers 138,254 Additions 147,410 97,299 27,139 9,156 1,346 8,965 4,851 7,206 –48 –48 Joachim Preisig 48 579 48 25 0 0 0 0 0 0 0 0 0 0 0 write-downs Impairment 122,194 Disposals 170,933 123,057 48,739 45,346 3,152 –878 1,033 241 113 920 113 920 15 : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes 0 0 0 0 0 0 0 0 0 0 0 0 31 104,371 674,380 778,751 .12 488,615 Stephan Esch –60,443 –60,426 Transfers 15,388 –55,502 32,995 53,911 99,859 76,551 –4,406 8,157 4,275 .2013 –535 17 17 0 0 0 0 0 0 0 0 Disposals 24,394 15,722 10,828 8,672 1,319 3,573 7,794 1,519,443 31 1,553,195 1,122,112 878 .12 305,278 33,752 18,226 68,077 20,097 0 0 0 2 0 Net book amounts 5,232 5,750 7,808 .2013 384 231 31 143,557 893,592 750,035 .12 483,389 195,477 72,138 14,301 43,618 49,585 27,551 7,533 .2012 1,501,465 1,473,149 1,116,616 1 307,355 0 0 28,316 .1 28,004 18,603 15,636 2,571 4,616 .2013 7,766 290 8 freenet AG · Annual Report 2013 Report AG ·Annual freenet 1,501,465 1,473,149 31 1,116,616 .12 307,355 28,316 Net book amounts 28,004 18,603 15,636 2,571 4,616 .2012 7,766 290 8 1,600,902 1,630,129 1,116,622 1 312,206 .1 29,227 20,984 99,342 18,435 51,748 2,086 8,169 .2012 402 135 197

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 198 Consolidated financial statements financial Consolidated Christoph Vilanek Board Executive The AG freenet 2014 3March Büdelsdorf, : Notes to the consolidated financial statements of freenet AG for the financial year 2013 year financial the for AG freenet of statements financial consolidated to the : Notes

Joachim Preisig Stephan Esch

Driesch (Wirtschaftsprüfer) Driesch Wirtschaftsprüfungsgesellschaft/Steuerberatungsgesellschaft KG &Co. GmbH RoeverBroennerSusat RBS 2014 March 4 Hamburg, development. of future risks and opportunities the suitably and position presents Group’s suitable view of the is consistent a provides as and awhole consolidated report withment the financial statements manage group The requirements. these with in accordance Group the of operations of results suant to § commercial of German EU by additional requirements the law the as and pur adopted with IFRSs comply consolidated the of audit, financial our statements findings the on based In opinion, our to audit hasOur any not led reservations. basis areasonable provides opinion. forour We believe that audit our group management the and consolidated report. financial statements significant as estimates well by management, as evaluating made overall of the the presentation of in entities consolidation, accounting included to the be consolidation and and used principles entities in of consolidation, determination included those annual the the financial statements audit assessing includes primarilymined The basis atest on audit. of the within framework the are- exa disclosures group management the and in consolidated report the financial statements accounting of the the related internal supporting evidence the effectiveness control and system areto misstatements taken possible into account in The determination the of audit procedures. as environment expectations and legal Group and of economic the the and business activities of the with assurance. Knowledge reasonable are detected in group management the report and framework in accordanceted financial financial statements reporting applicable with the in consolida the of- operations results financial and position assets, net of the presentation the audit the such materially that misstatements dards affecting require that perform we plan and (Institute stan Those of Public Auditors in Germany) (IDW). Institutthe Wirtschaftsprüfer der promulgated by generallyaccepted audit forthe of financial statements German standards and audit in our consolidated of accordance the We financial statements conducted with § audit. our on based group management the on and report solidated financial statements responsibility Our is of managingcompany’s an to con opinion board the express on directors. Commercial Code) German are responsibility the parent of the (“Handelsgesetzbuch”: 1 HGB (paragraph) Abs. 315a to (Article) § pursuant law commercial German of requirements additional in accordance byEU, the the as and adopted group with management the IFRSs and report ents consolidated of the preparation financial statem The 2013. 31, 1to December year January from business the for group together with management the report consolidated financial statements, notes of the to changes and statement statement of inthe financial position, equity, flow cash comprising of comprehensive statement of statement the income statement and the the income, Büdelsdorf, We AG, have freenet by the prepared audited consolidated the financial statements Auditor’s Report 315a Abs. 1 HGB and give a true and fair view of the net assets, financial position and assets, fair give and and net view of the atrue 1 HGB Abs. 315a

Nommensen (Wirtschaftsprüfer) Nommensen Consolidated financial statements financial Consolidated 317 HGB HGB 317 - - - - - freenet AG · Annual Report 2013 Report AG ·Annual freenet : Auditor’s Report : Auditor’s 199

Consolidated financial statements Consolidated financial statements freenet AG · Annual Report 2013 Report AG ·Annual freenet 200 Consolidated financial statements financial Consolidated Christoph Vilanek Board Executive The AG freenet 2014 3March Büdelsdorf, Group. the of development associated expected risks with and the principal of the a description opportunities together with Group, of position business the of the the and performance and development the afair includes review of management report Group the and Group, of the loss or profit tion and liabilities, financial posi fair assets, give and view ofconsolidated the atrue financial statements the principles, in and accordanceTo reporting of knowledge, our applicable with the best the statement Responsibility : Responsibility statement : Responsibility

Joachim Preisig Stephan Esch - freenet AG · Annual Report 2013 Report AG ·Annual freenet 201

Consolidated financial statements

Further information

Glossary ...... 205

Financial calendar...... 208

Imprint, contact, publications...... 209 ness toness Consumer) . ARPU pany . pany while were they with that com acts wrongful in event for the are they costs sued defense to itself, cover corporation the damages or of acompany, officers to and or directors to the payable insurance Insurance; Liability insurance D&O . no-frillsand segments Customer ownership rate governance . corpo- internalviour, controls good and effective basis the on ofcial ethical beha reporting to improvingdedicated quality the of finan organization in US, the private-sector tary ations Treadway of the Commission; avolun- COSO . software and computing power, space), storage platforms (i .e infrastructure others include among and technology information of range entire computing of cloud cover as the part offered services .The via anetwork services of IT using billing and offering, demand-oriented computingCloud . groups of or assets assets other from inflows cash of the largely independent that are that inflows cash generates assets ting unit group of is smallest identifiable the CGU B2C = Business to Business) . B2B App . Act man Stock Corporation AktG Glossary

Business with business customers (B2B customers business with Business

Business with consumers (B2C =Busi Short form of “application” . form Short Cash generating unit; a cash genera cash a unit; generating Cash German: Aktiengesetz; English: Ger Aktiengesetz; German: Average . user revenue per Committee of Sponsoring Organiz

Directors’ and Officers’ Officers’ and Directors’ Describes the dynamic, dynamic, the Describes

Includes the postpaid postpaid the Includes ------DBO EBT . amortisation and depreciation EBITDA EBIT . shares issued of number weighted by loss the average profit/net net It is calculated by dividing consolidated the towhich an is individual attributable share . loss or of consolidated profit net portion DTAG kbps) . high (up transmission speed to 52,000 nies transmitting for receiving and at data compa- and Line by is households scriber used DSL issuable at fair . value shares ordinary the and price subscription the at valued programmes option stock employee to attributable shares ordinary potential the is between calculated difference as the diluting potentially shares of number The . diluting potentially by shares ding increased weighted average of shares number outstan by the to shareholders result the attributable sharenings are per calculated by dividing the share per Diluted earnings . interneton and/or smartphones lifeeveryday via technical based equipment share per Earnings lifestyle Digital . others tion among telecommunica on focus Industry strategy; competitive market and of corporate, entry inter- in areas experience the national project with company consultancy management Consult Dialog

Earnings before taxes . taxes Earnings before Digital Subscriber Line; a Digital Sub Digital a Line; Subscriber Digital Earnings before interest . taxes Earnings and before Defined Benefit Obligation . Obligation Benefit Defined

Deutsche TelekomDeutsche AG . Earnings before interest, taxes, taxes, interest, before Earnings

Describes simplificationDescribes of Dialog Consult GmbH; GmbH; Consult Dialog This ratio specifies the This specifies ratio Diluted ear Diluted - - - - Further information Further freenet AG · Annual Report 2013 Report AG ·Annual freenet : Glossary 205

Further information Further information freenet AG · Annual Report 2013 Report AG ·Annual freenet 206 Further information Further : Glossary HGB HFS . rials profit Gross English: Trade German Tax . Act GewStG . intangibleand assets equipment and plant property, of disposal the from plus proceeds intangibleand assets, plant equipment and in property, investments minus activities, from operating flow cash Free flow cash . cost tised FLAC . loss and throughvalue profit FIPL munikation, Eisenbahnen) und Post . Telekom- Gas, für Elektrizität, netzagentur Railways and (German: Bundes Posts cation, Telecommuni- Electricity, for Gas, Agency Agency Network Federal EPS ware . ware computers computer and soft electronic communicate of use information with the store and that to helps produce, technology IT ISIN of companies . nal reporting exter forthe of standards dards; acollection IFRS . Code Commercial German Number . Number

Information Technology; describes any

Earnings per shareEarnings . per Held-for-sale financial instruments . instruments financial Held-for-sale Financial instruments measured at fair at measured instruments Financial International Securities Identification Identification Securities International International Financial Reporting Stan FinancialInternational Reporting German: Handelsgesetzbuch; English: Handelsgesetzbuch; German: Financial liabilities measured at amor at measured liabilities Financial

German: Gewerbesteuergesetz; Gewerbesteuergesetz; German:

Revenue minus of mateRevenue cost Free cash flow is defined as is defined Free flow cash

Federal Network Network Federal ------transfer speeds in communications mobile speeds transfer providing of UMTS significantlysor higher succes future and standard communications LTE LR Long-Term Incentive Account TaxEnglish: . Corporation German Act KStG without any additional features any additional without No frills few centimeters each from other. a devices held two of between data transfer NFC . ofmission up kbps to 128 with aspeed Narrowband . ations situ customers real perceive and customers like act normal shoppers, mystery so-called quality,service in observers, which trained shopping Mystery in their for their and account name own own . such as SMS, services, as well as added value phones tele- mobile cards and minutes, SIM telephony sell mobile they network; mobile theirown without communications services provider service Mobile English: . Codetermination Act German MitbestG of ownership inencumbrance acompany . concerningall the and processes transfer the Merger & Acquisitions (M&A) . tive effect incen- long-term with programme pensation LTIP . second per megabit with up to 300

Loans and receivables . Loans receivables and

Long Term Evolution; mobile anew Long Term Incentive com Programme; Near field communication; Wireless field Near German: Körperschaftsteuergesetz; Körperschaftsteuergesetz; German:

Basic services and necessities and services Basic German: Mitbestimmungsgesetz; Mitbestimmungsgesetz; German: Analogue or digital data trans data digital or Analogue

A procedure toA procedure assess Provider of mobile

See also LTIP.See Describes - - - - example push e-mail) . e-mail) push example internet access and/or (for e-mail transfer keyboard feature and for easy set qwertz or Smartphone etc audio and .)system radio . (TV, electronics etc fridges .)machines, entertainment and appliances etc (washingshutters .), electric (light, of electricity inhouse connection home Smart tacts toand professional social and develop con to information share people of groups large by used are that communication of means Media Social . network in mobile the operator, userwork the which and identifies bynet allocated the ding number user the inclu information, storing various devices, mobile for memory and withcard aprocessor card SIM SAR . roaming) nal (internatio operators network international (nationaloperators as well roaming) as to reach network to of various similar networks .Roaming also location can home the from different in alocation service connectivity which ensuresnications, of extension the Roaming . requirements high transparency larly particu with exchange stock Frankfurt the standard Prime such as e-mail . tional services, addi content and aggregated functions, tion comprises a comprehensive of range naviga- Portal toin acharge digital . subject media provisioning and offering of digital services Pay services

Stock appreciation rights . rights appreciation Stock Central web site web Central which generally

A feature in wireless telecommu- Subscriber Identity Module; chip Module; Identity Subscriber

Mobile device with touchMobile and/ Pay services describes the describes Pay services Automatization and inter and Automatization Websites and other online other and Websites Stock market of segment ------SMS English: Trading Securities . German Act WpHG . number identification English: securities WKN . assets its to finance holders average to security all its to pay rate that onthe acompany is expected WACC . providers service nications added value and English:e .V.; association of telecommu The Telekommunikations- Mehrwertdiensten und VATM only taken being user into account once . visits with of same several time, of the period vidual visitors to a website within a certain user Unique . year financial the during standing weightedthe average of shares number out by to shareholders result the the attributable shareearnings are per calculated by dividing Undiluted share per earnings Undiluted . network nates acall in operator’s another communications it termi- pays when operator Termination fee

Short message service . service message Short German: Wertpapierkennnummer; German: German: Verband Anbieter von der German: Weighted average cost of capital; capital; of cost average Weighted German: Wertpapierhandelsgesetz; Wertpapierhandelsgesetz; German: Describes the number of indi number the Describes

The charge whichThe atele - - - - Further information Further freenet AG · Annual Report 2013 Report AG ·Annual freenet : Glossary 207

Further information Further information freenet AG · Annual Report 2013 Report AG ·Annual freenet 208 Further information Further : calender Financial Publication of interim report III/2014 interim of report Publication 7 November 2014 II/2014 interim of report Publication 2014 7 August Meeting General Annual 2014 May 13 I/2014 interim of report Publication 2014 8 May 2013 Report Statements/Annual Financial Consolidated of Publication 2014 March 26 Financial calender 1 Probable dates. 1 1 1 1 1 at: at: Current information share concerning AG is freenet the and freenet available website our on is binding. legally version of this German Annual Report The Annual Report. is version English of the atranslation German The of the version Annual of Report the www.freenet-group.de/investor/publications/quarterly-annual-reports are also available at: interim our and reports annualThe report [email protected] 70 (0) 40/5 06-9 13 +49 Fax: (0) 40/5 78 06-7 13 +49 Phone: Hamburg 22297 4c Deelbögenkamp Investor Relations AG freenet www.freenet-group.de 00 (0) 43 31/69-10 +49 Phone: 24782 Büdelsdorf 126 Hollerstraße AG freenet publications contact, Imprint, www.freenet-group.de/en directed to the freenet Group website Group to by freenet scanning the directed this code. will you be recognition software, has QR-Code phone If your mobile Further information Further

: Imprint, contact, publications contact, : Imprint, freenet AG · Annual Report 2013 Report AG ·Annual freenet 209

Further information