Annual Report 2012

Consolidated financial statements of freenet AG

freenet AG · Hollerstraße 126 · 24782 Büdelsdorf List of contents

Always the right choice...... 3

To our shareholders...... 27 Letter to shareholders ...... 29 Interviews with the Executive Board...... 33 Supervisory Board report ...... 45 Corporate Governance report ...... 52 freenet AG on the capital market...... 58

Group management report...... 67 Business and macroeconomic conditions...... 69 Strategic direction, Group objectives and management...... 71 Non-financial performance indicators...... 75 Economic environment...... 79 Assets, financial position and results ...... 81 Significant events after the reporting date ...... 91 Information required under takeover law according to section 315 (4) HGB. . . 92 Compensation report for the Executive Board and Supervisory Board. . . . . 94 Opportunities and risk report...... 99 Forecast...... 108

Consolidated financial statements...... 113 Overview...... 115 Consolidated income statement and consolidated statement of comprehensive income for the period from 1 January to 31 December 2012 . 116 Consolidated balance sheet as of 31 December 2012...... 118 Schedule of changes in equity for the period for the period from 1 January to 31 December 2012 ...... 120 Consolidated statement of cash flows for the period from 1 January to 31 December 2012 ...... 121 Notes to the consolidated financial statements of freenet AG for the financial year 2012...... 122 Auditor’s Report ...... 205 Responsibility statement...... 206

Further information...... 209 Glossary ...... 211 Financial calendar...... 216 Imprint, contact, publications...... 217

freenet AG · Annual Report 2012 Key financials: overview Group

Result

Figures in € million 2012 2011 Q4/2012 Q3/2012 Q4/2011 adjusted1 adjusted1

Revenue 3,089 .0 3,266 .6 819 .5 756 .5 861 .3 Gross profit 723 .2 715 .8 203 .5 182 .3 202 .1 EBITDA 357 .8 337 .42 94 .6 92 .5 90 .93 EBIT 209 .0 168 .5 56 .9 55 .5 57 .5 EBT 166 .9 117 .3 44 .9 45 .8 46 .5 Group result from continued operations 173 .2 143 .8 42 .0 49 .0 66 .2 Group result from discontinued operations 0 .0 0 .1 0 .0 0 .0 0 .0 Group result 173 .2 144 .0 42 .0 49 .0 66 .2 Earnings per share (€) (diluted and undiluted) 1 .35 1 .12 0 .33 0 .38 0 .51

Balance sheet

31. 12. 2012 31. 12. 2011 31. 12. 2012 30.9.2012 31. 12. 2011

Balance sheet total in € million 2,474 .2 2,528 .4 2,474 .2 2,272 .2 2,528 .4 Shareholders’ equity in € million 1,190 .8 1,171 .3 1,190 .8 1,148 .8 1,171 .3 Equity ratio in % 48 .1 46 .3 48 .1 50 .6 46 .3

Finances and investments

Figures in € million 2012 2011 Q4/2012 Q3/2012 Q4/2011

Free cash flow4,5 260 .0 241 .0 64 .1 71 .9 56 .7 Depreciation and amortisation 148 .8 168 .9 37 .7 37 .0 33 .4 Net investments5 (Capex) 20 .6 21 .1 8 .4 5 .7 7 .1 Net cash5,6 –451 .3 –529 .4 –451 .3 –512 .1 –529 .4

31. 12. 2012 31. 12. 2011 31. 12. 2012 30.9.2012 31. 12. 2011

Closing price Xetra (€) 14 .00 10 .00 14 .00 12 .70 10 .00 Number of ordinary shares (in thousand) 128,061 128,061 128,061 128,061 128,061 Market capitalisation (in €’000s) 6 1,792,854 1,280,610 1,792,854 1,626,375 1,280,610

Employees

31. 12. 2012 31. 12. 2011 31. 12. 2012 30.9.2012 31. 12. 2011

Employees6 3,886 4,057 3,886 3,927 4,057

freenet AG · Annual Report 2012 Key financials: overview Mobile Communications sector

Customer development

Figures in million 2012 2011 Q4/2012 Q3/2012 Q4/2011

Mobile Communications customers6 14 .08 15 .19 14 .08 14 .31 15 .19 Thereof customer ownership 8 .50 8 .12 8 .50 8 .38 8 .12 Thereof contract customers 5 .79 5 .75 5 .79 5 .72 5 .75 Thereof no-frills customers 2 .71 2 .37 2 .71 2 .66 2 .37 Thereof prepaid customers 5 .58 7 .07 5 .58 5 .93 7 .07 Gross new customers 3 .50 4 .32 0 .91 0 .84 1 .23 Net change –1 .11 –0 .47 –0 .23 –0 .15 0 .03

Result

Figures in € million 2012 2011 Q4/2012 Q3/2012 Q4/2011 adjusted1 adjusted1

Revenue 3,025 .9 3,198 .4 802 .1 741 .1 843 .7 Gross profit 688 .6 676 .9 194 .4 173 .3 192 .4 EBITDA 356 .5 339 .67 94 .3 92 .9 95 .68 EBIT 212 .2 177 .0 57 .6 57 .1 65 .4

Monthly average revenue per user (ARPU)

Figures in € 2012 2011 Q4/2012 Q3/2012 Q4/2011

Contract customer 23 .4 23 .8 22 .8 23 .6 23 .7 No-frills customer 3 .9 4 .6 3 .5 3 .9 4 .2 Prepaid customer 3 .0 3 .1 2 .9 3 .1 3 .0

1 The comparative figures in the key financials overview as well as in other tables in this report have been adjusted due to a change of an accounting method, see items 2 .1 and 2 .18 of the notes to the consolidated financial statements . 2 Recurring EBITDA 2011: 360 3. million euros . 3 Recurring EBITDA: Q4/2011: 96 .4 million euros . 4 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 . 5 This information relates to the overall Group (including discontinued operations) . 6 At the end of period . 7 Recurring EBITDA: 2011: 359 .2 million euros . 8 Recurring EBITDA: Q4/2011: 98 .8 million euros . freenet AG · Annual Report 2012 Annual Report 2012 Consolidated financial statements of freenet AG

Always the right choice

Since the liberalisation of the telecommunications industry 20 years ago, the names mobilcom and debitel have stood for competitive offers and customer-focused services in mobile communications .

1 Die Vision der freenet AG . 4

With the now combined mobilcom-debitel main brand and the “klarmobil”, “callmobile”, “freenetmobile” and “debitel light” discount brands, freenet AG today serves around 14 million customers ■■ with its own products and tariffs on all four mobile communications networks, as well as ■■ the mobile communications services of the four network operators, ■■ with a wide assortment of useful additional products—from high-margin mobile accessories to cable broadband and green electricity ■■ by being as close as possible to our customers, based on around 530 of our own shops, approximately 6,000 additional outlets in specialist retail stores in major electronics markets and shopping malls, a wide variety of efficient online channels, social networks and excellent customer care via chat, email, phone or letter, as well as ■■ with approximately 3,900 highly dedicated and qualified employees .

Always the right choice1: The emerging digital lifestyle sector plays a prominent role here . freenet AG as Smartphones, tablets etc . facilitate and support a new mobile digital lifestyle provider lifestyle that goes far beyond mere communication: for example, they pervade and link entertainment electronics, monitor key features of our health such as blood pressure, blood sugar levels and cardiovascular functions, make our lives more secure with remote-controlled surveillance and security systems or smoke detectors, and increasingly convenient with remote heating and electricity controls . As a strong seller, freenet AG uses its expertise to bring such tried and tested lifestyle products to its customer base, coupled with consulting and other services . Particularly in the emerging areas of home automation and entertainment, the company already has a successful market presence with the relevant

1 freenet AG’s vision . 5

products—such as “SmartHome” for mobile heating controls, a utilities offer of its own, and the very popular Apple products as the basis for an intelligent entertainment network at home and while traveling .

As the largest network-independ- The company’s social and environmental commitment ent telecommunications company at its various locations has been regarded as in Germany, freenet commands exemplary for years. an excellent position in all relevant market sectors . This strength is reflected not only in attractive deals for customers, but also in fast and efficient business processes in Service and Logistics . And the company’s social and environmental commitment at its various locations has been regarded as exemplary for years . Moreover, our strong competitive position is the key message of the extensive advertising campaign that began in spring 2012 and focuses on individual customer benefits resulting from the market power of mobilcom-debitel’s 14 million customers, under the slogan “Gemeinsam geht mehr!” (Getting more together!)

1 freenet AG’s vision .

Immer die richtige Wahl 7

The new marketing campaign

In April 2012, freenet AG launched a new, cross-media umbrella marketing campaign for the brand mobilcom-debitel across all sales channels under the slogan “Gemeinsam geht mehr!” (Getting more together!) . It focuses on ■■ the company’s classic retail positioning, offering its around 14 million customers one-stop shopping with expert on-site advice, ■■ the wide range of tariffs and mobile phones/smartphones available for all four mobile networks in Germany, and ■■ the specific benefits for customers resulting from our purchasing power . They are guaranteed “always the right choice” at freenet—and thereby experience the company’s vision in action, which also permeates and inspires all operative divisions . 8 Immer die richtige Wahl

Thus, the company slightly repositioned its main mobilcom-debitel brand in order to optimally address the two dominant target groups in the mobile communications market identified in a price-psychological customer segmentation process: on the one hand customers with a high personal need for advice, and on the other well-informed buyers who are looking for the best deal . Both target groups together represent about 70 percent of the market .

By conveying a “digital lifestyle” feel for all its During the first few months of the campaign 14 million customers, the company is systematically period, a two-digit million amount was spent on implementing its strategic orientation towards a communicating the advantages of size and com- monality and the resulting benefits for each indi- digital lifestyle provider. vidual . This was done via the channels of TV (with a share of over 50 percent of the above-the-line budget), digital media, out-of-home, and of course on all promotional material media such as product brochures, direct mail, inserts, posters, etc .

At the end of October, the Christmas campaign began, with increased emphasis on Christmas symbols in combination with the campaign’s key messages . And towards the end of the year, a new TV commercial was launched that focused on the additional benefits of smartphones and apps and highlighted the attractive range of digital lifestyle products . By conveying a “digital lifestyle” feel for all its 14 million customers, the company is systematically implementing its strategic orientation towards a digital lifestyle provider .

freenet AG · Geschäftsbericht 2012 Immer die richtige Wahl 9

As part of the campaign the company adjusted more than 500 different pieces of advertising material, trained 3,000 sales colleagues and call centre agents, broadcast more than 5,500 TV commercials, printed 30,000 posters and sent out 38 million flyers . The success of the campaign can be documented from equally impressive figures . For example, the posters generated 1 .2 billion contacts and the TV spots 1 3. billion .

In parallel to the new campaign, freenet expanded the previous year’s very successful bus tour of German cities . At the 140 locations visited, footfall in the surrounding mobilcom-debitel shops increased by up to five times during the 269 days of the promotion—with up to 90,000 additional people visiting the shops .

The sales staff and partners on the ground also prove that For example, with a few clicks retailers can you can “get more together!” In 2012 freenet AG invested now order professional and personalised almost as much in subsidies for regional advertising as it did advertising based on dozens of templates. in its central advertising efforts . For example, with a few clicks retailers can now order professional and personalised advertising based on dozens of templates—from business cards to TV and cinema spots, including their address and picture . This allows for extending centralised advertising measures taking into account regional characteristics and individual requests .

freenet AG · Geschäftsbericht 2012

Immer die richtige Wahl 11

Attractive offers for customers

With a bundle of well-known, attractive brands and a base of 14 million customers, which makes the company the largest network-independent telecommunications provider in Germany, freenet AG has a strong negotiating position when buying telecommunications services from the four German network operators or from handset manufacturers worldwide . The company can pass on the benefits it derives from this to its customers—in the form of cheaper tariffs, discounts on original network operator tariffs and sought-after products such as the latest smartphones .

With the main mobilcom-debitel brand freenet focuses on valuable contract customer relationships in terms of winning new customers as well as in customer relationship management . freenet also operates very successfully in the “no-frills” field of business with four discount brands . An essential element in this case is represented by the attractive flat rate tariffs for smartphones, taking advantage of the enormous growth opportunities in the mobile internet/digital lifestyle sector . Half of new customers now choose such flat rates at point of sale . 12 Immer die richtige Wahl

In the last financial year, the company further expanded its portfolio of smartphone tariffs . mobilcom- debitel brand highlights included the ■■ “Flat 4 You Plus” as a promotional package for 29 90. euros a month, with a mobile internet flat, a quasi SMS Allnet flat rate, as well as an on-net and off-net flat rate of your choice for calls plus 120 free minutes to all national networks, ■■ “Flat Smart” on the Deutsche Telekom network as a special offer at 29 90. euros a month including a mobile internet flat rate, an SMS Allnet Flat and on-net flat rate, as well as 120 free call minutes to all national networks, ■■ “Flat Clever” on the O2 network for 29 90. euros per month with a mobile internet flat rate, alandline flat rate, an SMS Allnet flat rate and 120 free minutes per month to all German mobile networks . The customer can also opt to purchase a smartphone of their choice for 5, 10 or 20 euros per month, or order up to a gigabyte of additional data volume for 9 99. euros per month, ■■ “Easy Flat” on the E-Plus network includes a mobile internet flat rate, an SMS Allnet flat rate, an on-net flat rate as well as a flat rate to German landlines plus 120 minutes for national calls on top, ■■ “Flat All-Star” on Deutsche Telekom’s D1 network for 49 90. euros per month with flat rate calls to all German mobile networks and landlines, a mobile internet flat rate, free use of Deutsche Telekom Hot- Spots, and an SMS flat rate to all national networks, also in combination with mobile phone purchase options, ■■ “Flat Allnet” on the Vodafone network for 39 .90 euros a month with unlimited calls to all German networks, a mobile internet flat and a quasi SMS Allnet flat rate for 3,000 national text messages, again with additional selectable mobile phone options, ■■ “Flat light 100” or “Netzintern-Flat” for 19 90. euros a month, each including a mobile internet flat rate and quasi SMS flat rate for national texts . You can also choose an additional 100 free minutes per month for all national networks or an on-net flat rate for calls .

mobilcom-debitel’s positioning as a In the discount market, the “AllNet-Spar-Flat” from klarmobil .de once price-performance leader as well as the again set benchmarks in 2012 . For 19 85. euros a month it includes a comprehensive care-free package with flat rates for the internet, company’s vision from the customer’s landlines and all German mobile networks . In addition, the freenet perspective: “Always the right choice!” subsidiary realigned its complex product portfolio in the first half of the year, giving it a simpler, more transparent pricing structure with only three basic rates in the categories of pure voice telephony, data services and smart phones, in addition to related options .

Besides its own rates, the mobilcom-debitel offer also includes the network operators’ original tariffs . In March the company extended a 10-percent discount campaign for their smartphone tariffs, which has been running since 2011, to the new Deutsche Telekom, Vodafone and O2 tariff portfolio . Compared to competitors’ prices, it saves the customer up to 200 euros over a contract period of two years, thereby underscoring mobilcom-debitel’s positioning as a price-performance leader as well as the company’s vision from the customer’s perspective: “Always the right choice!” .

freenet AG · Geschäftsbericht 2012 Immer die richtige Wahl 13

Customers can also save money with a new mobilcom-debitel digital lifestyle product . At the end of September about 110 shops began selling “SmartHome” kits for intelligent energy management of one’s own home via smartphone . It includes radiator thermostats, an adapter, a control unit and window contacts in various-size kits, and can be expanded with additional components For a monthly fee starting at 7.95 euros, users can into a complex “SmartHome” network . For a monthly fee starting at 7 .95 euros, users can indi- individually remotely control their radiators at home vidually remotely control their radiators at home via app and simultaneously turn them down when via app and simultaneously turn them down when leaving the house at the touch of a button. leaving the house at the touch of a button . Initial evaluation tests show that heating costs can be reduced by up to 30 percent . Users particularly appreciate being able to come home and find their house or flat heated to a comfortable temperature without having to leave the radiators on all day .

The advantages of freenet’s strong competitive position are evident not least in the handset market . As an established Apple partner, mobilcom-debitel had the new iPhone 5 available at all its branded shops, in Saturn and Media Markt shops and at selected retailers in time for its launch in September . Another example of the company’s privileged position was that it was the first German supplier of the Huawei Ascend P1 at its launch . This Android operating system smartphone combining innovative and energy-saving technology with a stylish design and first-class features is impressive, not least due to its inexpensive purchase price, which was coupled with a suitable entry-level smartphone tariff, the Flat Light tariff at 19 .90 euros a month .

The handset range was further enhanced by the new Nokia Lumia 820 in December and then the Nokia Lumia 920 at the turn of the year . Various awards document that the customer really does always have “the right choice” and is “getting more together” . For instance, the readers of “connect”, Europe’s biggest telecommunications magazine, voted mobilcom-debitel Mobile Phone Provider/Dealer for the fourth time in a row . And in a big “Computerbild” test, freenet’s various brands achieved excellent rankings for having the best rates for mobile calls and surfing—and even came first and second place in the ‘intensive smartphone users’ sector .

In addition, freenet AG wants to continue developing attractive telecommunications- and internet-related areas—such as the fast-growing cable business . According to VATM, in the past cable network operators’ telephone and Internet connections have grown faster than traditional telecommunications providers . Against this backdrop, in February 2012 freenet agreed a partnership with Unitymedia and 150 mobilcom-debitel shops began selling its broadband and cable services in North Rhine-Westphalia and Hesse in the distribution area of Germany’s second-largest cable network operator .

freenet AG · Geschäftsbericht 2012

Immer die richtige Wahl 15

Comprehensive, expert customer service

The name says it all: as a network-independent service provider, freenet AG has the widest choice of attractive rates on all four German mobile communications networks—an essential prerequisite for truly independent advice to the customer . But in addition to this optimal support, proven staff competence and face-to-face, on-the-spot advice is also required . Engaging in dialogue results in even better customer service and support in choosing the best product for customers .

freenet AG · Geschäftsbericht 2012 16 Immer die richtige Wahl

Against this backdrop, in recent years the company has on the one hand optimised the number and structure of its 530 stores . In addition, more than 6,000 outlets in specialist retail stores, major electronics markets and shopping malls as partners provide additional tried-and-tested interfaces for direct customer support .

At the same time, last year freenet AG invested in its services once again—further improving the offers in its branded shops, through systematic staff training and the development of sales partnerships . This also reflects the fact that mobile phones and smartphones are increasingly turning into complex mini-computers, which in turn increases the need for user support .

Smartphones, tablets etc. For example, since April 2012 mobilcom-debitel has offered facilitate and support a new the instant “LogMeIn Rescue” service . Specially trained mobile lifestyle that goes far employees from the service centre in Erfurt provide help with things like configuring the smartphone/netbook or set- beyond mere communication. ting up email accounts, apps and internet access, via remote access activated by one-off PIN codes . Also, customers can now use the repair and warranty service in the shops, buy phones/smartphones without a contract by hire purchase, or exchange old devices for gift vouchers . And since Octo- ber 2012, new and existing customers can, for example, sign up for a free three-month trial of the innovative, super-fast LTE technology for smartphones—as an option with the new Deutsche Telekom “Complete Mobil Tarif” .

In the first half of the year freenet also installed the “Instore TV” system in 350 mobilcom-debitel shops that shows customers videos of the latest campaigns, digital lifestyle products and offers on high-quality flat screens, providing information many times quicker and more efficiently than by printed documents . Immer die richtige Wahl 17

In the third quarter mobilcom-debitel began another project to provide optimal customer service under the “Z Shop” label . After successful tests and subsequent conversions or new store openings, in the medium term the majority of mobilcom-debitel shops will be offering mobile accessories under the slogan “Mehr von allem” (more of everything) . The individual items are presented here by theme and not by manufacturer, with a “Try it!” wall as a highlight where customers can put frequently changing products from different manufacturers through their paces .

To ensure that as part of the systematic service The use of “Mystery shopping” carried out in all improvement campaign, the consultation provided mobilcom-debitel sales outlets and at major competitors by the staff on site is also “always right”, the com- showed that service quality and expert advice pany carries out regular tests and ongoing training . The increased use of “Mystery shopping” car- significantly further improved in 2012. ried out in all mobilcom-debitel sales outlets and at major competitors in collaboration with the market research institute Vocatus AG showed that service quality and expert advice significantly further improved in 2012 .

The results of the tests feed into the development of targeted training and workshops for shop staff, especially at our modern integrated training and education centre in Erfurt . The resulting continuous improvement processes are aimed at optimally serving and supporting customers throughout their ‘lifecycle’ .

In autumn 2011, freenet AG had entered into an exclusive agreement with the Gravis – Computervertriebsgesellschaft mbH, Berlin (“GRAVIS” in the following), the largest independent retailer of Apple products in Germany . The aim was to further enhance the product range in mobilcom-debitel shops as a premium provider . As part of the cooperation, freenet upgraded around 50 shops with special shop-in-shop systems for the Apple world, while GRAVIS has offered mobilcom-debitel products in its stores since them .

At the end of 2012, freenet AG signed a purchase agreement to acquire 100 percent of the shares in the German market leader for Apple lifestyle . The transaction was settled in January 2013 . Thus the company plans to expand a selected portfolio of products including the Apple iPad and accessories nationwide to a majority of its own mobilcom-debitel shops, while simultaneously introducing its mobile communications consulting and sales expertise to the 28 GRAVIS stores .

Immer die richtige Wahl 19

Mobile portal and complementary business fields

In recent years, in order to focus on mobile communications/mobile internet, freenet AG has successively divested itself of lines of business that are no longer part of the core business . These sectors have included DSL, web hosting and interactive telephony services . 20

In the past year, freenet AG continued its systematic portfolio streamlining in the remaining areas that are no longer part of the core business . In September 2012, the company entered into an agreement to sell its 50-percent stake in the regional telecommunications provider KielNET to Versatel Holding . And in December freenet divested itself of further holdings: With effect from 1 January 2013 it sold all its shares in the wholly owned subsidiary freeXmedia to Media Ventures GmbH; with effect from 31 December 2012 the Group sold all its shares in 4Players GmbH to Computec Media AG . The two subsidiaries employ around 80 people in Hamburg .

In the past year, freenet AG continued its As one of the remaining subsidi- systematic portfolio streamlining. aries, freenet de. GmbH—via the freenet de. online portal and the m .freenet .de mobile portal—offers all internet users high-performing services, interesting information and entertainment—with a focus on communications, shopping, community, searches and content . 21

In the last financial year, freenet .de enhanced this portfolio with the “Google Custom Search”, among other things, in order to give its online dating site www single. de. a new search feature and gaming fans an overview of the wide variety of free browser games on the new internet platform www browsergamer. com. . With an average of 3 27 million. unique users1 per month, the company was among the top 20 general interest portals in Germany .

In addition, last year the focus increas- Last year the focus increasingly moved to ingly moved to the development and the development and expansion of mobile expansion of mobile internet activi- internet activities—and especially the ties—and especially the development of more attractive apps for smartphones . development of more attractive apps for For instance, the subsidiary continued its series of very successful smartphones. football applications to coincide with the European Championships in Poland and Ukraine . The free “Pocket EM 2012” app for iPhone, Android and Windows Phone offered users news about the teams, games, groups, and tables, a live ticker during the tournament and a cost-free competition .

In August this was followed by a new free app for bargain hunt- ers—“Pocket Preise” (Pocket Prices) . It compares products found in retail shops with the offers from different companies online . The automated online search starts after the name of the product or its bar- code is entered . The user can also take a photo of the product, and the app saves its details and the place it was taken as an “electronic note” .

1 Source: AGOF internet facts 2012-10

Immer die richtige Wahl 23

Commitment to society, the environment and employees

With comprehensive stakeholder value in mind, freenet AG not only has a direct responsibility towards its customers, shareholders and employees, but also for the ecological and social conditions at each company location . 24 Immer die richtige Wahl

For instance, the company has for years supported about a dozen foundations/associations, each with four to five-figure amounts, that work for children, youth, sports and social services in places where the company has sites . freenet AG has also been committed to the “Büdelsdorf goes multimedia” project for the past thirteen years, and along with the town of Büdelsdorf has supported schools in establishing their own IT infrastructure as well as a “netbook” class at the Heinrich Heine School . In 2012 Christ- In the area of environmental mas donations totalling 40,000 euros were raised for social institu- protection, a wide variety of initiatives tions such as the Albert Schweitzer Kinderdorf (Children’s Village) in and processes reflect freenet AG’s Erfurt, the Kinderhospiz Mitteldeutschland (Children’s Hospice Cen- tral Germany), the Kinderherzzentrum Kiel (Kiel Pediatric Cardio Cen- sense of ecological responsibility. tre), the Drogenhilfe Knackpunkt drug assistance centre in Erfurt and the Stuttgart Youth Office musical project for socially disadvantaged children . In addition, employees from mobilcom-debitel and the new Chinese hardware partner Huawei also jointly renovated parts of the “Kinderhaus Fledermaus” children’s centre in Hamburg .

freenet is also involved in the national, state and business initiative “sicher online gehen” (go online safely), which makes parents more aware of media education and how to better protect their children online, and at the same time the company also supported the “JusProg” protection solution, which won an award in 2012 .

In the area of environmental protection, a wide variety of initiatives and processes reflect freenet AG’s sense of ecological responsibility . These include online reports and invoices, the collection of used mobile phones, the recycling of packaging, telephone and video conferencing instead of business travel, sustainably designed logistical processes, and—last but not least—the data centre in Dusseldorf, which uses energy-saving systems .

freenet AG was once again a highly sought-after employer in 2012 . For example, over the course of the year it received over 20,000 applications for 580 jobs . In order to promote motivation, responsibility, team spirit and identification with the company, the company offers a wide range of initiatives and incentives for employees, including: ■■ Health days, posture training, ergonomically designed worksta- tions, physiotherapy and sport offers; ■■ Playing an active part in shaping company processes via flat hierarchies, CEO dialogues, ideas competitions and many other opportunities; ■■ Specific and very popular programmes like “freenet Talents” and “mdKB +” to intensively promote high performers into project management or executive positions .

freenet AG · Geschäftsbericht 2012 Immer die richtige Wahl 25

The company also continually trains its own experts, ensuring a steady supply of urgently needed specialists and qualified young people while also living up to its social responsibility as a large, successful company . In the course of 2012 freenet hired a total of 90 trainees for professions in computer science, and as specialists in IT, retail, dialog marketing and warehouse logistics . The company also offers four different Bachelor of Science or Bachelor of Arts dual-degree courses at vocational colleges . Furthermore, a trainee program is being prepared, which will also support graduates in their new careers .

Another additional service, which is highly popular alongside the traditional company car is an “employee car model” company car . All full-time employees can receive a vehicle for private and business use on attractive terms as part of a salary concession . In addition, freenet is giving priority to environmentally friendly vehicles and new models from German manufacturers .

Existing employees and managers All full-time employees can receive a vehicle were given systematic, mainly cus- for private and business use on attractive tomised, need-based qualification terms as part of a salary concession. measures . In 2012, around 950 people participated in such person- In addition, freenet is giving priority to nel development measures, which environmentally friendly vehicles and new included technical, methodology and models from German manufacturers. team training . In addition, around 350 Group managers at all sites once again took part in a series of measures on a selected leadership topic in also 2012 . chain and new distribution channels. distribution new chain and as well in shop our as with investments increased services, and of products portfolio our in with financial a results along come consistent 2012 expansionyear good of very The To shareholders our

To our shareholders To our shareholders Chief Executive Officer (CEO); Officer Chief Executive Joachim Preisig,Officer Chief Financial (CFO) Chief Technical to Stephan(CTO); right: Esch, FromVilanek, Christoph left Officer

new sales channels sales new increased investment and in chain our and of shops services, and ofrange products in with expansion asystematic of conjunction excellent our came inThe results 2012 payout of 1 dividend to to percent 75 corridor 50 our flow cash to shareholders free generated of the percent 60 and 40 to distribute between policy ofIt dividend our is an integral part ■ ■ ■ indicators: in these all of targets our Today positive balance financial from avery draw we can year2012 ■ ■ ■ ■ such as of an 340 EBITDA with concrete indicators objectives these underpinned we had in years, previous As financial the for year2012 opportunities ate in atough competitive environment that contains great also but great challenges, telecommunications network-independent largest provider, Germany’s As we oper shareholders to Letter ■ ■ ■ ■ ■ ■ ■ to 8 resultingarea, in an increase in an ownership, essential customer indicator us, for no-frills the in customers asignificantwas increase of approximately340,000 customers increasing by than 40,000 more acquisition in 2008, hastime grown base customer againdebitelsince first the for the postpaid The percent20 than more year-on-yearby increased profit Group 173 to 2012 in upward November adjustment its guidance, the evenexceed after of 357 EBITDA Our based on increasing on based ownership customer Achieving business, high core stable sustained the in profitability company’s in chain own our partnerships; new and ments of shops consolidating Strengthening and invest channels sales our by making further sector; style especially digitalthe in life offers, withAddressing attractive areas new of growth ARPUs; stabilised and contracts valuable customer on afocus services—with data and campaign in core the business voice of service and mobile Continuing product our slightly year, level previous of the the below at 23 euros . 50 million As expected, monthly average revenue per postpaid customer stabilised customer average monthly postpaid revenue per expected, .As Against this background, we had once again set very ambitious goals once again .Against we had this very set background, . . . 35 euros per share for the 2012 financial share 2012 year euros the for per 35 . 8 million260 of flow cash euros free and . The main points included: included: main .The points 0 million euros and a free cash flow of 240 0 million of flow cash euros afree and Accordingly, we will propose to the Supervisory Board a Board .Accordingly, to Supervisory we will the propose . .We have this adjusted now target . 4 euros . . 0 million euros . .We have exceeded In addition, there .In addition, . 0 million euros . 2 million . - - .

- To our shareholders : Letter to shareholders : Letter freenet AG · Annual Report 2012 Report AG ·Annual freenet 29

To our shareholders To our shareholders 30 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Letter to shareholders : Letter position in the market with about 14 million customers, the complex range of range tariffs/ complex the million inposition 14 market the with about customers, together), (Getting more unique our on it is focused geht mehr” “Gemeinsam slogan accompanied by an extensive marketing new campaign are effectiveness sales and services range, initiativesThese product our to expand term tract con their of regardless loyalty, increasing customer and “lifecycle” their throughout to customers aim the support of and providing processes—with ment optimum service training customisedongoing inare design staff the and included of targeted, improve continued to customers for improve significantly duringpast year the as well 2012 in shops to mobilcom-debitel our test year, shoppers” every “mystery As we used smartphone-based technologymodern all for in of an and adviser matters provider adigitalbecoming customers lifestyle range Apple of the parts with equipped were shops mobilcom-debitel financial50 ing past the year about stores opened newly or appropriately converted in up by to manufacturer 200 grouped bags, or ers protective cov rangeaccessoriesmobile headphones, of such as wide a offering very year we aim of middle by next to the following be accessories: asuccessful trial period, growing the mobile for demand addresses label Shops” “Z the under project Another quality the of consultation our develop qualityther sales and systematicallynamely to fur objective, same the further to financial 2012 yearserved ing centres in entire telecommunications the German industry train productive and modern most of the as one Erfurt” of opening with “Campus the has sector, already way example for in freenet the pointed recent years, services In the in summer the P1 Huawei Ascend 2012 ber long-awaitedfans the 5 in iPhone SeptemApple alllaunch in shops time in for its offer HTCand Sony,tion communications of LG mobile Apple, from to devices, Nokia Samsung and In accordanceselec with unique our competitive widest the positioning, we also offer wants customer what on the depending purchase of asmartphone the with without or MMS, cases in and some SMS services, landlines and mobile telephone internet, mobile the ants/options prices 19 from entry and You“Flat 4 “Allnet-Spar-Flat” and Plus”, Allnet” “Flat tariffs O especiallythe in andVodafone T-Mobile,tariffs, of existingourportfolio to offers customers among demand which are increasingly attention paid to was rates Special flatin for smartphones, 2 mobile networks mobile . We were also the first German supplier to offer the innovative and powerful theGerman supplier powerful offer innovativeto and .We were first also the For example, as an established Apple partner, mobilcom-debitel was able to able was partner, mobilcom-debitel Apple as an established .For example, . The results indicate that our service quality and consultation expertise quality consultation and indicate results expertise that service our .The In addition, as part of the partnership with GRAVIS agreed in 2011, dur in 2011, agreed with GRAVIS partnership of the as part .In addition, Both of these projects in 2012 served as important steps towards steps as important served in 2012 projects of these .Both These included the “Flat Clever”, “Flat Allstar”, “Flat Select”, Select”, Allstar”, “Flat Clever”, “Flat “Flat the included .These Over the course of the year, we added further attractive attractive year, of the course the .Over further we added . . 90 euros per month, they include flat rates include flat they for month, euros per 90 . Launched in April under the inunder April .Launched With the different vari different the .With . Other initiatives .Other in the The test results test .The ------expand the current the expand This also was abig step to provider adigital becoming lifestyle ing to of apurchase agreement GRAVIS acquire all shares partner the in sales our partnerships and retail our business acquisitions through new we strengthened hand, other the On of shares our in 4Players GmbH as welltions KielNET, provider as stake our in online all and the marketer freeXmedia internet core our on business communications/mobile of mobile even further strengths our AGWe of in freenet to have order focus continued structure to corporate the simplify percent by up to 30 having without thereby reducing theirhome toheating heating the adjust system, bills can an use app to individuallyusers fee, remoteaffordable radiatorstheircontrol at managementhome via smartphone your inown energy tive kit efficient for several versions offering thisof of inmonths testing, we began autumn - innova 2012 significantwithout development costs to introduce highour them customers—all to level of properly consulting expertise and platform sales market the broad our leverage on and products attractive select provider, we can service in position market: werienced occupy this aprivileged growth systematically and pursuing plans digital our actively lifestyle We are very visiting cities, tour bus continued in of German all its locations 140 point-of-sale and media, ads TV,out-of-home, as digital withpaignprint, differentemphases, in series ran several resultant the offerings and customer across all networks, phones mobile our financial strategy for the years 2013 and 2014 and 2013 the years for financialour strategy so we have adjusted expected, than better KPIsdeveloped these In financial year2012, factor, debt ratiothe the interest equity cover the and financialstrategy: tegic direction - stra the designedof overall is the financialimplementation enable to Our strategy stabilise should in of range 23 euros the ARPU while postpaid us, for indicator acontinued increase year see in an should ownership, important customer created and ing, basis the yet for successful another business year in 2013 improved competitive our position strategic measures and further operational These distribution in territory shops its mobilcom-debitel thanthrough 150 more sold now are offers whose network, cable second-largest Germany’s with Unitymedia, agreement asales we also beginning at signed the closed of 2012 cable, and band of shops own our accessories to than 300 more Apple and iPads with GRAVIS from products Apple of selected is sale the expanding mobilcom-debitel services broadband mobile and energy, the from appropriate offers During the year, we sold our 50-percent stake in regional year,the telecommunica the .During - 50-percent our we sold We have identified three key performance that ourindicators inform .We three performance havekey identified An important milestone towards the end of 2012 was the sign the was milestone of towards 2012 end the important .An . G ravis product range, which is focused on Apple products, with products, Apple on which is range, focused product In parallel to .In parallel this highly successful freenet campaign, . “SmartHome” is a good example: after several after example: is agood .“SmartHome” .We are aiming now factor adebt for .We aim to gradually In the area .In the of broad . At the same time same .At the . The cam .The .

The current .The As an expe .As . .For an - . -

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To our shareholders To our shareholders 32 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Letter to shareholders : Letter sition of GRAVIS We also things aim other to due acqui to the increase revenue Group in 2013—among however,KPIs, remain same the percent)interest than (greater ratio 50 of cover 5) equity and than (greater afactor year during past indebt 15-percentnearly the net decrease our Büdelsdorf, March 2013 Christoph Vilanek shareholders and business partners tomers, of cus our interests the devote to furthering all of their commitment expertise and ahead whiletions market, continuingmonths yearsand the in to influence and it, help shape continuingresolute about to telecommunica challenges master the - German of the of sustainable profitability, successful our on we strategy areoptimistic Based and our as to dividends shareholders flow cash percent of to 75 free and in this, future 50 we intendSubject to pay between out 360 355 of Group EBITDA expect we 2014 For financial and 2013 years between 1 between . 0 million of flow 255 cash euros free and As in previous years, the Executive Board and all freenet AG all and will employees freenet Board Executive the in years, previous .As . 0 and 2 0 and For 2014 we expect further moderate growth moderate further we expect .For 2014 . 5 The adaptation of the target corridor is corridor related target of adaptation the to significant, .The the . Joachim PreisigJoachim . . . 0 million euros 260 and Stephan Esch Our targets forthe targets .Our . . 0 million euros and . 0 million euros - . - was stored there altogether years there ago 20 stored was You have to realise thatis data today, via more internet sent being the than second every Board Executive the with Interviews Yes that things are developing that here we cannot really foresee million in stored 50 than stores couldcabinets in be file its customers about U the hour minutes, every and 20 every book smartphones that will be using the networks by then that will using be networks the smartphones 3billion megabytes—on it will have in to and increased eightfold 2016 1,000 doubled, month of per data age megabytes of 250 Recently our industry recorded 1 billion smartphones worldwide that an use aver worldwide 1billion recorded smartphones .Recently industry our Some 2 .Some In the last financial last .In the year, of amount datathe . S firm Walmart collects more information .firm collects Walmart . 7 million Face on are posted pictures .

In what way? what In used devices. mobile on allAnd this is data increasingly and produced being over the past two centuries? two over past the ofkind increase agreat deal has seen in “mobility” it somakes topical right –considering now man What moment. the at heard read and everywhere world is is aphrase mobile” being going “The that’s discovering world.” mobile the accompany“We our customers in Vilanek: Christoph tory, and is a real challenge real is a and tory, is in unprecedented human his telecommunications by caused erably consid mobility our increase to spaceand travel all served planes cars, trains, Indeed . But the pace of change the .But I do believe .Ido To our shareholders . - - - - : Interviews with the Executive Board Executive the with : Interviews - freenet AG · Annual Report 2012 Report AG ·Annual freenet 33

To our shareholders To our shareholders 34 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Board Executive the with : Interviews cations service providers on the one hand and users and hand one the on providers cations service What implications does this have implications for telecommuniWhat does And what does the triumphant the advance of does what And smartphone, iPadfor users? co. and mean smartphone, ■ ■ ■ ■ ■ ■ ■ users for unlimited up almost devices open Features these on opportunities digital based lifestyle ■ ■ ■ ■ ■ ■ ■ options on alargeoptions on scale extra book they so and plans many for longerenough no aretariff our of customers, offers premium making on and available them through attractive customers, our example—to lions ourselves having without provider,investments these from to invest bil a service we benefit As figure 16-digit a range—that’s in petabyte the datasets tal have to digi process their networks—they upgrading on demands extreme operators network for and centres, data expensive this providers impliesIT building and new big and are here data—for cloud keywords increasingly at central stored locations—the top of each other high metres onwall if were they 31 stacked a4,000-kilometre which form would puters, billion com over tablet 60 need would you To in world the store all collected data the it to doctor our transmit and data medical measurement devices that monitoras important personal garages; or services toically emergency connecting congestion hazards or issuing automat and about real-time cars, our to alerts network architecture and to while explain travelling; cultures, art achat them request; send and location match profiles currentthe at yours whose partners that locates as a“matchmaker”’ later; delivered to homes our by in-store columns on scanning barcodes in or display having and windows goods the to avoid is at checkouts—as supermarket already queues an available option in Zurich— habits; consumption deals recorded our on at centres shopping good to based recommend currently being tested by the Metro Group in Group Germany; currently Metro by tested being the to pay at checkout counters Already today, .Already contained in standard our we are services data that seeing the Some examples: they can be used be can they examples: .Some . .We are focusing recently LTE, explaining on technologies—most new for . But because this is data because .But on the other? . .This is chains already at some possible in U the -

- - . S and is .and - - Exactly! After several months of testing, in autumn 2012 we began offering several offering ver of months in testing, several we autumn began After 2012 Exactly! and 50 percent don’t have asmartphone percent don’t 50 and citizenshave percent of this that 17 to internet, country’s the remember on still aren’t applications rates and in increasing view of the of products, digital variety lifestyles, their personal in to designing customers support and comprehensive service goal of providing expert, staff our for workshops and customised training targeted, out we systematically where carry centrecation in Erfurt, A prerequisite promise delivering for is integrated this our on training service - edu and features—remotely, and apps up new setting or book PIN codes using one-off help with things like centre configuring in Erfurt smartphone/net the at service our ees example for service, Rescue” instant “LogMeIn the introduced support for need customer’s the does so applications increases, of diversity smartphone the As fortheir needs? product consperfect and pros of the to adevice informationthe how and find about objective market the on worldwide models than ever! Currently, LTE-enabledMore are than there 80 more smartphone example, for heating bills percent by up to 30 having without thereby reducing atradiators their home toheating the adjust system, phone sions of this managementhome via smart your in innovativeown energy kit forefficient progress and give security us convenience, entertainment, access the at ourcentre customers which fantastic of offer lifestyle to a smartphones capability—we thing to is me sell that devices longer network or we no important The having without write and to off highdevelopment costs spend perspective, customer’s that is ideal the from aproduct insuccessful select telecommunications, work we can of decades in gained two experience the and main brand our With mobilcom-debitel us in an excellent puts vendor credible position therefore and an independent Being For an affordable fee, users can an use app to individuallyusers fee, remote .For an affordable theircontrol .Many things are easier becoming you but quicker and world, in mobile the The resulting .The continuous have improvement processes the Against this background, last spring .Against last this mobilcom-debitel background, . Who is going to provide users with independent and is going .Who with to independent users provide . or mobilcom-or advice of freenet expert the users even need do suchWith brilliantly simple products, Like the current “SmartHome” product! Like current the “SmartHome” digital lifestyle? AG can what freenet So contribute to modern the . Specially trained employ trained .Specially debitel at all? at debitel .

To our shareholders - - - - . .

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freenet AG · Annual Report 2012 Report AG ·Annual freenet 35

To our shareholders To our shareholders 36 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Board Executive the with : Interviews freenet offers these customers the the right these customers inexpensive tariff offers freenet and the mobile communications network of communications mobile their choice. the and network So obviouslySo customer for larg to the for the it pays opt And mobilcom-debitel further expanded this position in expanded further mobilcom-debitel And est network-independent telecommunications network-independent est provider: true to your motto “Getting more together”! to “Getting true your motto But that’s merely basis the of that’s contemporary But Exactly! Recent insights international from look Exactly! first research trend that show customers rates and products this possible competitive strong positioning best of the to form the customers—in our manufacturers equipment and operators network among we have million 14 purchasing considerable with provider some customers, power service that is unique our tomer: competitive position according to individual of the each cus requirements networks, mobile four German consultation expert we are aiming combinedexperience with independent at for mobilcom-debitel, find and inspiration want to at home feel people share events special and values people responsive community where of apersonal, part to and be emotional for long appeal, simple deals secure and for transparent, top-of-the-line accessories, and of the tariffs for for usingthem tariffs of and the top-of-the-line accessories, Yes year, for example with “Flat Allnet” and “Flat 4You “Flat year, and Plus” Allnet” with “Flat example for financial past overthe of tariffs own comprehensive our portfolio we expanded Indeed graphic change graphic in communications! that as right to we are atrendsetter the on track see proud also and rather I am pleased In the no-frills klarmobil In our the market, original tariffs operators’ discount network the on a10-percent customers featureshensive, telephony, low-cost mobile for internet texting and two networks—O two phoningcations discounter andtexting on to rock-bottom offer ratesmobile surfing, for Yes, of core marketing our the message that is campaign in in April launched fact We have the best possible selection—of mobile phones and smartphones including smartphones and phones mobile selection—of possible .We have best the Furthermore I am convinced that this is a perfect way to demo address Iam convinced that .Furthermore this is aperfect customer relationships. customer .

2 and T-Mobile—with the “AllNet-Spar-Flat” the rates T-Mobile—with and flat “freeFLAT” and . the past year. past the . de subsidiary is the only German mobile communi mobile is only German subsidiary the de -

The store is .The increasingly aplace becoming where That much is much . That clear . .This is kind of community the precisely Both flat rates flat .Both include compre We pass on the benefits of benefits .We the on pass But at the same time they same at the .But And we offer them for for allthem we offer .And .Moreover, we give . As a .As . - - - - were guidance above our as early published year last upward in adjusted and November but oncealso previousagain, results the weyear’s not only significantlyexceeded 2012, at 357 EBITDA With Indeed! planned and promised to our shareholders and the financial the and the year for to markets promised and shareholders our planned on that and basis leandeliver company figures we the throughout; even efficient as more work their good I’d whom like thank to committedemployees, take qualified for and to this opportunity coreour business communications/mobile of mobile internet—rigorously, with and very are factors several There Frankfurt and York, to shows places like road New Paris Zurich, several on and London, shareholders, elaborate investorelaborate maintaining relations with existing work, new and contact close . In the process, we are systematically making already our process, .In the cost-conscious, We pursue a sustainable strategy focused on profitability in profitability on focused asustainable .Westrategy pursue . 8 million260 of flow cash euros free and your company? consist job of agood at doing does exactly What Or even better than planned! than even better Or this strong performance? is What behindit increased by 55percent. another increasing share year last price its percent, by 38 year of shares market man 2011, stock in weak the Ger AG freenet was already best ofafter the one congratulationsIt further seems are called for: company!’ improvement in all areas of the are“We working for continuous Preisig: Joachim in the financial markets—with markets—with financial in the transparently and intensively it communicated and once again, job we did agood In 2012 it!” talk and about good “Do say: casually, it might one Putting . 0 million euros in To our shareholders . . : Interviews with the Executive Board Executive the with : Interviews - freenet AG · Annual Report 2012 Report AG ·Annual freenet 37

To our shareholders To our shareholders 38 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Board Executive the with : Interviews growth drivers high-margin and growth revenue sources. For which youare your chain converting own of Revenue is down slightly to 3.09 billionRevenue euros. slightly is down to 3.09 On the other hand freenet is upnew freenet hand opening other the On And your contract own And customer numbers Yes, with a lot of success! Examples include the new “SmartHome” digital lifestyle prod digital lifestyle Yes, “SmartHome” new with alot include the of success! Examples this remarkable industry, is indeed user) level of target at 23 the we succeeded 2012, of December end That is a logical consequence of our strategy of sustainable profitability isThat of strategy consequence our alogical mation communication of new offers to shop customers, and thus lead to more sales thus lead more and to mation communication customers, to shop offers of new with high-quality flat-screenequipped displaysthat faster, allow a for efficientmore infor were stores initiatives 350 some by service spring various 2012 ofthe years, previous optimisingas on we systematically work all company’s of units the ofWe an doing ongoing this have improvement for yearsas been part now process—just above all and increasingly the GRAVIS linesubsidiary accessories of popular mobile of recently our acquired products Apple the connections, broadband partners’ our or uct, year, this is an because area we create where alot of value isThat absolutely right our mobilcom-debitel brand, most of them at a 10-percent discount at of a10-percent them most brand, mobilcom-debitel our originalunder tariffs operators’ we also still network count sell besides the brands—and as well we cater no-frills as the mobilcom-debitel with for four customers dis our brand area us for is ownership—i customer important revenue corresponding and bases customer in attractive declines less the erately reduced sales in the hardware sector with very low margins low with very in hardware sector the sales erately reduced eral years now we have focused on valuable contract customer relationships, customer accepting valuable contract on we years have now eral focused are also very gratifying. very also are 530 shops accordingly.530 We set out to .We out stabilise set this of during the course number the . 4 euros in this key sector

. .We also (average maintained ARPU revenue per . e the postpaid customers of flagship our customers postpaid .the .In unrelentingly our competitive And with 5 .And In addition, for sev . In addition, For example, after after .For example, . . 79 million79 at the .We have delib The most most .The . .

- - - - - 1 of in dramatically to recent reduced factor years that adebt and has corresponds been of 48 optimise maturities the 2019 and untilfurther 2017 notes totallingsuccessfully promissory million placed 120 euros—among things other to multi-year acredit and line aloan bank loan, and mobile communications products, but also but in growing the market digital lifestyle communications mobile and products, thereby creating Apple for just channel an forourselves—not additional sales of 2013, 2011 in October initiallyhad highly the for sought-after signed products as adistribution partner Apple AG’s flow freenet cash on free and EBITDA impact Firstly, smaller for acquisitions that make have and strategic sense an immediate positive . 3, which is within corridor target our 3, . 1 percent And we can easily we can .And live of 451 debt with net .We completely over then took beginning thiscompany the profitable at . on three major, hedged pillars until 2016—a major, three on pillars until hedged 2016—a based is 2011, whichin funding, we diversified situation comfortable innow avery reorganising and financing,debt we are its systematically reducing Group’s the After years two in past the ten percent than by more revenue increase overall chain shop and profitable more much stations covers protective docking and bags, phones, as head by theme—such presented sories extensivemore a which offer line accesof converting existing into shops Shops”, “Z in recent weIn have addition, months been On top of this, in December freenet AG freenet AG top in of .On this, December A good example is GRAVIS, which we is GRAVIS, example .Agood .We also have ahealthy ratio equity As aresult make we were able .As the and profits? and willHow free youuse strong cash the flow in this respect? this in What strategygoing is forward financials. your a lot—in recent Group in years terms of its AGfreenet has also alot—and done achieved . 3 million euros—a figurethat . To our shareholders .Our .

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To our shareholders To our shareholders 40 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Board Executive the with : Interviews What other targets have youset? targets other What secondly...? And postpaid ARPU will ARPU stabilise at 23 around eurospostpaid aslightWith increase ownership in sector, in customer base the customer we believe 360 we will aiming also 2014 and be of 355 EBITDA For 2013 aGroup for Group freenet of the is part now which GRAVIS, revenue partner contribution some former our from are also expecting in with products data conjunction contracts devices valuable postpaid and ate increase in 2014 moder another and an increase to in revenue see Group in 2013, we expect For starters, to…we share shareholders in business naturally and successful our work want freenet’s to our shareholders to our future in yield dividend cial in to an order year attractive ensure 2014 for and shareholders our annually flow them cash to percent of free that we provides pay to 40 60 policy dividend Our . 0 million euros, and free cash flow 0 millionof flow cash 255 free and euros, So from now on we plan to pay out between 50 and 75 percent of free cash flow cash percent of 75 free and 50 we plan to on now from pay between out .So By the way, the .By we have this adjusted now current upwards range the for finan . .To achieve this goal we are continuing to selling on focus high-end . . 0 million euros 260 and . . 0 million euros and . 0 million euros For 2013, we .For 2013, - - . .

but alsobut to invoice accurately customer the time on and fees monthly via smartphone for intelligent management of your home own energy “SmartHome”, such product, . . that iswithin system, the concept—alongsidenew with traditional motors series new the Exactly ing of millions of vehicles road the on floor, shop the on ensuring and servic while alsothe managing production on-going the image is job to of an engineer whose continuously redesign existing models of car ranges is incredibly fast-paced industry our Simply because current in form Group its freenet acquisitions, and the subsequent merger of the original three service providers into providers original of the acquisitions, merger service subsequent three the and right now, sector digital the lifestyle .To car, market an the electric analogy, atotally with demands stay the suddenly Our job is job not only is have .Our working properly, to ensure product that the Here the user can select from different from versions with corresponding select can user the .Here . But the current the challenges .But great are less no exciting or . For example, mobilcom-debitel now offers one offers now mobilcom-debitel .For example, .To illustrate the used Ihad this, . Internet, this to... is analogous Internet, inAnd communications mobile mobile the and And just that’s the day-to-day routine. team then?team AG’s year arather for wasfreenet quiet So 2012 IT telecommunications in German the landscape. jects IT pro largest of the one of “Rainbow”, completion successful the is yousaid about what ayear ago ward to day business day to again” ‘normal’ –this are and for looking mode’ ‘project have left “We IT!” for and ever more complex and exciting becoming ever easier for customers, communications are “Mobile Esch: Stephan In what way? what In todue previously completed landscapes IT three of merger systemic the challenges: dinary bring extraor did indeed before at allNot .Asmall shift paradigm Although the years the .Although To our shareholders - - . : Interviews with the Executive Board Executive the with : Interviews - - freenet AG · Annual Report 2012 Report AG ·Annual freenet 41

To our shareholders To our shareholders 42 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Board Executive the with : Interviews . But the increasingly the But flat are popular boundrates Meanwhile, the daily the routine isMeanwhile, already name just afew just name examples anor antivirus what and device we combine package, whatprice—toat tariff with the to combineroaming it include should in werate, need whether aflattimedia messages anyone serve tion doesn’t customers and employees of shareholders, our ests time we also have same at the But aresponsibility tothe in inter business do profitably competitivetelecommunications offers by market provider working the with attractive, parties both it for that have of individualbe worth tariffs composed to packages rates are often ratesmean much cangreater…flatthe behind that offer such an lies complexity costs rampant about accordingly worrying without smartphone or phone mobile their use can and in process, the parency have and rateflat them, for total trans inwith inventory daily the exits and entries of fully base customer million 14 people, substantial our across spread are they and operator—times that of asingle network four than tariffs—more different of lot a discount 10-percent inal a tariffs—at orig own operators’ network the also offer we networks, mobile all four of Germany’s vider pro especially us for as aservice Indeed, For the customer,For the sure: best pick they the ing package In addition to our own contracts for to .In addition contracts own our We want to underscore our position as Germany’s largest network-independent network-independent largest .We as position our want Germany’s to underscore to make things easier. And for the provider? for the And complicated enough. . .From have we then this, to create acomprehensively appeal So we analyse how much voice and data traffic, text and mul text voice much we analysehow traffic, data and .So

That’s .That’s - - - . In the long term, ruinous competi ruinous term, long .In the . .Flat - - - - . munications companies, and strict privacy protection regulations protection privacy strict and munications companies, in compliance provisions telecomcourse, on collection data special with imposed the immediately is card desired at time or the activated SIM the into system, the credit check the and by their responses lowed day next the device has customer that want at the they so the home we can everything at all devices are usually popular ensures system most that immediately the logistics available each eight of which in comes devices, customised about versions els manufacturers three from what to felt like be used there eight ascience in mod itself: This has become now combinations that not—with are or possible their current offers special prices and is process facilitated by containing an online system This of sales selection thousands rate aflat landlinesfor acrossor all need networks? they Do connections? data speed regular-priced LTE need they do or discounted or high- for enough, calls Is UMTS abroad? days several for all unreasonable but to make wait customer aproduct for the shelf the on them sitting of their choicewaiting be should phone for the and touch at of the abutton, done in telecommunications particularly but all sectors, us for challenge another that’s ideally would . and likeon net it . the ten makingminutes to be calls later surfing and Yes—within are their on way to minutes, provider, automated previous the requests fol Exactly right smartphone ofand the tariff selection with the It all starts 530 mobilcom- How many texts does the customer send, for example? Do they want to they make example?Do for send, customer the does many .How texts .This accurate, in turn IT-controlled requires very logistics debitel shops .Today, many more between choose can customer the . Customers’ expectations are changing rapidly—across rapidly—across changing are expectations Customers’ In the unlikely .In the event that this we do is case, not the At the same time, the customer is customer the entered time, same .At the smartphone. asuitable still or they need phone mobile then And requirements. Plus there are commercial and legal smartphone... new anelegant joyfully selects shop, customer mobilcom-debitel enters the the So bespoke solution. bespoke combined can into be that options all additional the a task—what already enough acomplex that’s with ...and fromdebitel their current provider? to enters switch ashop wants and tosomeone mobilcom- say, run in background the when, processes What .Today, ideally want everything they . . . . Our sophisticated .Our It’s become become .It’s All this, of this, .All . To our shareholders . And . And - - - .

: Interviews with the Executive Board Executive the with : Interviews freenet AG · Annual Report 2012 Report AG ·Annual freenet 43

To our shareholders To our shareholders 44 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Interviews with the Executive Board Executive the with : Interviews At this point, for the customer the switch customer for the the toAt this point, So it’s not “normal”, everyday business for everyday “normal”, not it’s So What other outstanding offers are offers you outstanding other What mobilcom-debitel is done, so to speak. ismobilcom-debitel done, And that’s not your not only app. popular that’s And exclusively in Germany interestingit’s to to few store dataproviders customer note that very we areof the one while about and out tablet or via asmartphone or office, the PC, their from home constant accesscustomers to their data—whether via app amobile at home which controls your heating product, digital lifestyle isrecent “SmartHome” example our liga apps Bundes popular Pocket our and Liga most is legendary, of the one Cup are practically means no By to have aroaming option options contract deselect tions in aspirit of partnership usage current bills current and data their contract, information that app provides a free about up in their smartphones setting customers new support and ensure are followed, quality processes may have product, to reorder ners not us for But but alsobut alot of online photos documents space and storage music, for tion at freenet - offering an applica we computing, are is and soon cloud talking world about whole The tage for our customers our for tage No ucts which for innovativethrowing we provide challenges up prod new opportunities and out neglecting the “humdrum”, punctual and accurate and “humdrum”, the billing punctual monthly neglecting out We are always developing ourselves and our IT system .We IT our and are always developing ourselves .It is fascinating my and team me for to this help shape with but emerging market, In addition to our own stores these include our 6,000 specialist retail partners 6,000 include our to .In addition these stores own our . We are constantly expanding the app in the spirit of transparent customer rela customer transparent of spirit in the app the expanding constantly We are Apps also play an important role in broadening our product range—the most most range—the in role product our broadening also play an . Apps important currently working on? working currently the IT team after all? IT after team the . For example, our football apps for the European Championships or World World or Championships European the for apps football our example, For .Internally, we have to part pay sales commission the to respective fee the . de and mobilcom-debitel that not only provides calendars and contacts contacts and that calendars not only provides mobilcom-debitel and de . With the ubiquitous this the debate, .With is protection data abig advan We are setting benchmarks in market the with such products .We benchmarks are setting . .This makes if are you holiday, sense on want and example, for For instance, soon you will be able to use it to select or to will you able it use to be soon select .For instance,

Since the end of 2012, we have also offered .Since of 2012, end the Beyond the comprehensive the features, .Beyond The digital lifestyle keeps digital .The lifestyle . .This gives our .We - - - - - . ■ Board’s reports and after due review and deliberation, the Supervisory Board passed passed Board Supervisory the review deliberation, due and after and reports Board’s reports Board’s Executive the on based Board visory tions of material signi Board business areas—in consultation close Supervisory with the communications mobile the on focus the identi business the and continued company’s strategic alignment—i the Board Executive the Furthermore, provided tation basis the on documen of the these reviewed and plans targets, formance and the from deviations the business of the per Board in discussed Executive detailwith the Board committee and meetings plenary Board at Supervisory proactively, and comprehensively and questions request answered on both Board, sory ing current and situation planning, strategic development porate verbally in and both writ cor company’s the business on development, regularly comprehensively and reported and stage early an at company the of management the on decisions fundamental all management company of the of the companyagement of the decision-making it in regularly and as its advised part man Board’s Executive the constantly monitored supervised and Board Supervisory The ■ ■ on focused then Board half year, of the second In the Supervisory the ■ ■ on in particular focused meetings tions plenary of the - delibera the half2012 of in first the meetings, Board Supervisory in various the upon ofcles association it by arti law upon the incumbent and functions advisory and supervisory the formed in fi the in years, previous As Board Executive Supervision and advice in an ongoing dialogue with the 2012 during the activities its on reports Board Supervisory following, the In the report Board Supervisory ■ ■ ■ ■ ■ To this end, the Executive Board provided reports and documents to Supervi the documents and reports .To provided Board Executive the this end, optimising the Company’s financial structure through promissory notes optimisingpromissory through financial Company’s the structure in following) TM” the (“MOTION dorf Trois acquisitiona planned TM GmbH, percent stake in Vertriebs MOTION of a51 as well as on Berlin, mbH, acquisitionthe of Gravis –Computervertriebsgesellschaft strategic options for the Group, Group, strategic options the for Board to representatives Supervisory the holder of share election with anew 9May 2012, on Meeting Annual General preparing the and 2011 December 31 as financialof a review the on ofstatements resolution and . .

Besides the many the substantive issues .Besides that decided were and discussed fi cance tocance company the were in discussed great Super detailby the The Executive Board involved the Supervisory Board in Board involved Supervisory the Board Executive .The nancial year 2012 the Supervisory Board diligently Board per nancial Supervisory the year 2012 . . Likewise Executive the on based

In particular, the Supervisory .In particular, Supervisory the fi cation of possible new of cation possible . businessAll transac fi nancial year . . e ------. To our shareholders

Chairman of the Supervisory Board Supervisory the of Chairman Dr Hartmut Schenk, .Hartmut : Supervisory Board report Board : Supervisory freenet AG · Annual Report 2012 Report AG ·Annual freenet

To our shareholders To our shareholders 46 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Supervisory Board report Board : Supervisory participate in auditparticipate the committee’s discussion Annual of Financial the 2011 Statements did and not 2012 resigned from hisscher audit seat the committee on 23 on February Drillisch which audits AG’s accounts prüfungsgesellschaft, Drillisch AG reviewing of included accounting questions tasks that inscher’s are similar faced at form 2011 of Niclas with to regard Annual Rauscher of approval Financial the the for Statements case of the in existenceinterests the AG conflict on of apossible of deliberated freenet they werehow handled and of interests incidence of conflicts shall any information Board provide about Supervisory the Meeting, Annual General the full in always met Board Supervisory the members, Board Supervisory eleven twelve of the byhigh, averaging exception with each attended the meetings of three percent: over 97 very was period during reporting the meetings Board Attendance Supervisory at the complaint for cause no efficient running Board the Executive and of gave company proper, the by The effective kept of was currentand issues informed events and future and strategic alignment Board Executive with in the meetings prospects pany’s developments necessary where resolutions formal Mr to chair audit the committee in Henderson Maarten appointed Board Supervisory The ference calls additionally and decisions took by procedure written four and meetings con held Boardsixactual Supervisory the financialIn the year2012, Clause 5 nominations one and committeemeetings meeting ings latest of the business of formal meetings outside informed members Board Supervisory notice were convened at meetings short sideration, notice to the Annual General Meeting, were disclosed to the Supervisory Board to were Supervisory disclosed the Meeting, notice to Annual General the and Board requiring and disclosure to Supervisory the members, Board Supervisory and Executive of part the on of interests circumstances other No that conflicts could cause 9May 2012 on Meeting Annual General the as well as at this on issue in Annual year’s Report, last already had reported Board sory Rauscher’s place for the time until the Annual General Meeting 2012 Meeting time place until the for Annual General the .Rauscher’s Accordingly, no Supervisory Board member attended fewer than half meet of the attended member Board . Accordingly, Supervisory no Likewise, in 2012 the committees met in full except for two personnel committee in .Likewise, committees full met the personnel except in two for 2012 .In his as chairman role company’s of audit the committee others, among . 5 . 3 of the German Corporate Governance Code proposes that in its report to thatreport in its proposes GovernanceCode Corporate German 3 of the .Mr Furthermore, the Chairman of the Supervisory Board discussed the com the discussed Board Chairman the Supervisory of the .Furthermore, Rauscher is a member of the Executive Board of BDO AG Wirtschafts of BDO Board Executive of the is .Rauscher amember .

. Where current business transactions required con required transactions business current Where . . . The Executive Board also kept Board the Executive .The .To any out Mr rule risk, The Supervisory Board Board Supervisory .The . The Supervi .The Mr . . Rau . Rau ------.

tegic projects and the latest capital market communications market capital latest the and projects tegic - current stra business developments, about Board Supervisory the also informed Board Meeting to Annual General the proposed resolutions to be Board’s sory Supervi the and 2012 Meeting of this Annual General agenda the for were the meeting Executive Board members’ contracts regarding their respective areas of responsibility of areas respective their regarding contracts members’ Board Executive alreadyhad beforehand discussed which executive committee the project”), Acquisitions and (“M&A rent Merger project a cur discussed Board Supervisory the At a conference 2012, call 6 August on session Gazette Federal Electronic former of the of association as aresult change to name of articles the an the on amendment resolution a during year the passed and GovernanceCode compliance Corporate German with the mittees existing the of roles the com confirmed and meetings, existing committees plenary and strategic planning and in business detail on developments reported Board Executive the 2012, 5June On committee audit committees were the re-filled on at which line-up, Dr new its in held was Board aconstituent Supervisory of Meeting the meeting Annual General in meantime announced the AGM that been had resolutions at the in considerationcandidates, of to counterproposals proposed the AGM at the Board to Supervisory the nomination the on of candidates forelection decided and Meeting to Annual General the proposed resolutions to be about deliberations its continued Board Supervisory the aconferenceDuring call 2012, 29 March on session consolidated financialstatements in accordance audit with the committee’s annual it the recommendation approved and to findings auditors’ and the objections no raised Board examination, Supervisory the auditing auditorswith the from the PricewaterhouseCoopers firm 2011 December as of 31 statements annual the mainly on consolidated and focused 2012 March financial of 22 meeting The ■ ■ ■ included meetings contentThe regularly at discussed plenary meetings Board Supervisory ■ ■ ■ the Company’s financial position and financial situation financial and position financial Company’s the marketthe competitive and situation and currentthe business development On 9 May 2012, the Supervisory Board once again dealt nomination Board with the of Supervisory the 9May 2012, .On Together with the Executive Board, the Supervisory Board issued a statement of issued astatement Board Supervisory the .Together Board, Executive with the . The Supervisory Board dealt division with the the among Board of tasks Supervisory .The Hartmut Schenk was elected as Chairman positions and elected was Schenk .Hartmut Robert Weidinger was elected as the chairman as the Weidinger of the elected was .Robert As aresult were they formally adopted .As Another topic was a clarifying amendment to the amendment topic a clarifying was . Another The results of the audit of the were together results discussed .The . Also on 9 May 2012 following the 9May 2012 on .Also . . Based on its own its on .Based The Executive .The Other points points .Other . - - - To our shareholders : Supervisory Board report Board : Supervisory freenet AG · Annual Report 2012 Report AG ·Annual freenet 47

To our shareholders To our shareholders 48 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Supervisory Board report Board : Supervisory preparation of the Supervisory Board’s adoption of a resolution for the purchase of of the for aresolution adoption Board’s Supervisory of the preparation 2012 in meetings actual at two projects executive committee current discussed The M&A committee Executive in greater page 53 management on described in statement detail corporate the committee five and committees executive one Board set up has Supervisory the its duties, to Infulfil order efficiently committees Board Work Supervisory the of Meeting resolutions Annual at General the Board Supervisory proposed the and 2013 Meeting General Annual the thefor agenda audit, efficiency Board’s Supervisory the included 2012 December as of 31 main annual discussion the the was consolidated focus and about financial statements financial of the end on the March 25 2013 held wasyear, in meeting After plenary a annual Governance Code of compliance statement Corporate German with the regarding the passed aresolution also and was approved for2013 budget the meeting, mbH that was previously subject to discussions that previously was subject mbH in executive committee the to also purchase of agreed the Board visory into area general of “digital the sectors lifestyle” internet energy and cations, in telecommuni the portfolio service and current the product extending and expanding options discussed for few years Board in Executive with and the great next depth, the and 2013 for company’s strategy the discussed Board Supervisory the 2012 December 10 On 2012 note at aconference October call 26 on session Board Supervisory of the by note issuing this discussed ing and structure members with the apromissory optimising about Board financ Company’s the ideas to Supervisory the its presented to intense subsequent Board discussion visory Board Executive by the committee executive the on were filled auditcommittee and vacancies 2012 September 20 on 2012, August 31 on Board to resignation Supervisory the the from Due Schneider of Matthias solidated financial statements for the financialsolidatedthe for financial of 2012” thisstatements year report cussed G ravis – Computervertriebsgesellschaft mbH Computervertriebsgesellschaft ravis – Among other things, the committee members held in-depth discussions the in-depth on held committee the members things, other .Among Another topicacquisition the was . Another TM stake in ofproposed a majority MOTION . At this session the results of a Supervisory Board efficiency audit were dis efficiency Board .At this of aSupervisory results the session The Supervisory Board agreed to issuance agreed the Board of this promissory Supervisory .The The proposed acquisition noted proposed with was Super by approval the .The Details are set out in the section “Audit annual in of section the out are the .Details con set and The general tasks and members of each committee are members and tasks general .The . G The Executive Board, for the first time, first the for Board, Executive .The ravis – Computervertriebsgesellschaft Computervertriebsgesellschaft ravis – . Other topics .Other The Super .The .At this . . Its .Its ------■ ■ ■ The mediation committee mediation not convened was inThe 2012 committee Mediation ■ of 9May 2012 Meeting Annualof General the which decision required of attention special to the due change the of auditors because annual the audit, audit of to the focus committee’s was facilitate work The support and audit internal and compliance including controllingthe risk internal management the and department control system, each and managerrelevant accounting,Group gave financial on the presentations sector organisation gave responsibilities the and information about members in elected newly an audit event the committee hosted at which the 2012 21 June on regular meetings, to committee the managers reported responsible the and discussed, status ofthe riskinternal management, audit compliance and issues were also regularly half-year the interim and reports annual report the report, auditors in meetings four actual audit committee regularlylatestThe the accounting discussed audit and issues with the committee Audit approval for Board to Supervisory them the proposed and cial year 2012, finan the for agreements target the for parameters laid new down were achieved in 2011, members Board Executive of remuneration variable the for the parameters the extent Drillischturn audits AG’s accounts which in AG Wirtschaftsprüfungsgesellschaft, of BDO Board sitting Executive the on of Niclas given case the Rauscher his as role chairman audit of the committee while also potential a discussed Committee ofthe interest conflict in meeting 2012, in first At its one conference call session and atotal committee meetings held actual of three personnel of the members In 2012 Personnel committee ■ ■ ■ ■ the auditor the pro for as well proposal as the accounts, annual the resolutions on consolidated and Board Supervisory the prepared audit of the and main the determined points auditor audit, of of execution the the the and independence monitored the GovernanceCode, Corporate German of the auditors by in the 7 accordance of independence astatement sought with section . . . The members of the committee of the dealt intensively members .The with The committee also discussed whether and to and committee what also whether discussed .The For this purpose the committee the .For this purpose fi t distribution and the agreements with agreements t distribution the and . The financing . The situation and In addition to .In addition its . . 2 . 1 - To our shareholders : Supervisory Board report Board : Supervisory freenet AG · Annual Report 2012 Report AG ·Annual freenet 49

To our shareholders To our shareholders 50 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Supervisory Board report Board : Supervisory with and supports the Executive Board’s proposal for the appropriation of appropriation profit the for proposal Board’s Executive the with supports and discussed it withauditorsthe and profit of appropriation the for proposal Board’s Executive the examined Board Supervisory of appropriation profit the for proposal Board’s concerning resolution Executive the 2013—a audittion of the February committee of 26 accordance- has recommenda with passed—in the Board Supervisory the Furthermore, fi consolidatedand fi annual the approved Board Supervisory audit of the the recommendation committee, audit auditors’ of the results with the agreed and objections no of appropriation pro for the proposal Board’s Executive as well as the management Group report, the and management the report statements, concluding audit annual the of the of consolidated its the results and After fi fi Board audit Supervisory the committee the of and both in discussion the annual of the consolidated and fi 25 on 2013 March meeting in its Board Supervisory byand the 2013 February to 26 on Audit by Committee discussed and the audit reported was The also was unquali management report Group ofand the accounting standards international IFRS the on based HGB in 315a were accordance prepared 31 December 2012 with section unquali Hamburg GmbH, consulting RoeverBroennerSusat company tax and auditing were audited by the AG management freenet the report and (HGB) Commercial Code in accordance Board German Executive by of the the rules prepared with the 2012 ber annualThe fi the financial year2012 Audit of the annual and consolidated financial statements for ended Board tenure the Supervisory ing the of on all representatives 2012 shareholder adoption for session to plenary presented the were then candidates proposals were and discussed in to addition many informalpurpose, discussions proposed the where ameeting it held in 2012 Board to Supervisory the deal with nominations elections new the for Following nominations the an initialin committee 2012 continued to insession 2011, committee Nominations olution passed by the Annual General Meeting on 9May 2012 on Meeting Annual by General the olution passed commissionedwas chairman by the audit of the committee in accordance res with the visory Board to answer any supplementary questions or provide further information further provide or questions to any answer Board supplementary visory nancial statements arenancial thus formally adopted statements available themselves audit tondings of made audit the and the committee Super and fi ed auditor’s report auditor’s ed The background to this was that with the end of the Annual General Meet to background this .The Annual of General the that was end with the nancial statements for the fi the for nancial statements nancial statements at the meeting on 25 on 2013 March meeting at the nancial statements The freenet AG consolidated freenet .The fi . The audit of these consolidated fi consolidated these of audit The Following this, the Supervisory Board agreed Board .Following Supervisory the this, nancial year from 1 January 2012 to Decem 31 nancial 2012 year 1January from . In its meeting on 25 March 2013, the 25 on 2013, March meeting .In its nancial statements in the meetings in meetings nancial the statements fi fi They reported on the material the on reported .They ed t, the Supervisory Board raised Board Supervisory the t, . nancial statements as ofnancial statements The auditors issued an .The The auditors took part auditors part took .The .In accordance with the nancial statements statements nancial The annual .The . The audit The .For this nancial . . - - - - . Chairman of the Supervisory Board Chairman Supervisory of the Dr Board Supervisory The 25 2013 March Büdelsdorf, mitment hard and work com their for personal all Group and of the employees Board Executive of the members also would like appreciation and to Board thanks the its to express Supervisory The support professional and constructive and cooperation, their for good members all departed thanks the Board Supervisory The 2012 1 September from with effect by replaced Witzmann, Angela was and 2012 August 31 on Board visory resigned his Super Schneider Matthias as position the representative anon employee Chairman new as its Schenk Dr elected Board Supervisory the Meeting, to Annual General the nection May2012 9 from with effect Board to replaceThomas him Supervisory the on 9May 2012 on Meeting Annualof General the Meeting General Annual the of end the from with effect Board Supervisory resigned the from Rauscher Board visory Dr current the members ing elected 9May 2012 on Meeting Annual of General the end the from with effect ended Board tenure Supervisory the on representatives The of shareholder Board Supervisory 2012 in fi changes the to Board composition wereNo made the Executive of the Board Executive Changes to the Supervisory Board and the Executive Board resentative Hans-Jürgen Klempau also resigned from the Supervisory Board at the end at the Board resentative also Hans-Jürgen Supervisory resigned the from Klempau Board to Supervisory the replaceon them were elected mut Thoma Hartmut Schenk .Hartmut . Maarten Henderson, Dr Henderson, .Maarten Robert Weidinger, .Robert Prof Tüngler, and Marc Kraemer Thorsten . . . Hartmut Schenk and Achim and Weiss Schenk to Super the .Hartmut . Christof Aha, Dr .Christof Aha, Kiel District Court appointed Gesine appointed Court District .Kiel Arnold Bahlmann Niclas and .Arnold The Annual General Meet Annual General .The The employee rep employee .The nancial year Hartmut .Hartmut .Dr .In con .Hel ------To our shareholders : Supervisory Board report Board : Supervisory freenet AG · Annual Report 2012 Report AG ·Annual freenet 51

To our shareholders To our shareholders 52 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Corporate Governance report Governance : Corporate of the Code, including reasons, in the December 2012 Statement of Compliance 2012 including in December the reasons, Code, of the Supervi ofindependent definitethe of a number for target specification the believes but members, it noted that has it an of deems appropriate independent Board number Board Supervisory the of remuneration success-based the regarding Board, declared a deviation from the new recommendation in recommendation adeviation clause new fromthe 5 declared Board, jointly and has Executive with and in the this connection, worth has proven its Board Supervisory of remuneration the dividend-oriented also past, that believes the Board is also covered Statement Management in following the Corporate 2012 in December issued jointly Board Executive with the Compliance in accordance with § reasons annual the this for in its explained Statement deviation Code ofBoard the from in out as clause set 5 Board sory in clause 5 Code theto added newly Discussion definition of the independence on centred in particular version in new, May 2012 the 15 GovernanceCode Corporate German ofmendations the recom the at look a closer took specifically Board Supervisory the 2012, In December in in recommendation future question to comply Code with the that undertake it would Board Supervisory of the competitor by aMember sentence Code 4of the deviation dealt declared recommendation in the from clause withthe 5 specifically company’s websitethe version May 2010 in 26 the ance Code with § in and accordance Board Executive together with the and, Governance Code Corporate compliance guidelines with German the of the of 9May 2012—discussed Meeting eral composition new following Annual its Gen the Board—in Supervisory the 2012, In June committed objectives to these are Group all freenet and of the executives employees and Board Supervisory and Board management control and company of the value-driven and responsible as well of transparent, principles as the GovernanceCode Corporate tives German of the objec with the themselves governance; corporate responsible and identify they of good are committed to principles the bodies management AG supervisory and its and freenet Corporate Governance at glance a (German Commercialmanagement Code) in HGB statement accordance with §289a Governance Code Corporate German of the in 3 Group accordance Governancein freenet the with Corporate section on reports Board— Supervisory of the behalf on Board—also Executive the followingIn the section report Governance Corporate 161 AktG, issued a Statement of Compliance with the German Corporate Govern issued aStatement of Compliance Corporate German with the AktG, 161 . 4 . 2, and the recommendation in recommendation clause the and 5 2, .In issuing Board this during statement year, the Supervisory the It concerned the taking on of an advisory function for akey for function taking of on an the advisory .It concerned . 161 AktG on the German Corporate Governance Code, GovernanceCode, Corporate German the on AktG 161 . 4 . 2 serves no purpose and therefore rejects it rejects therefore and purpose no 2 serves This statement may be viewed at . This any mayviewed statement time be on This section also contains corporate the .This section The new Supervisory Board declared declared Board Supervisory new .The .This Statement of Compliance . 4 . 6 paragraph 2 of the Code Code 2of the 6 paragraph The Supervisory Supervisory .The . The Supervisory Supervisory The . 4 The Executive .The . 6 paragraph 2 6 paragraph . The . The . 4 . . 10 10 . 2 - - - - - . .

3 2 1 company the from below except is to there contrary where adeclaration the in cases (asto comply Code recommendations of in with the May the 2012) future, 15 issued on May 2012 as 15 issued on in version Code of the the 2012 June 15 since and May 2010, as 26 issued on (“Code”) GovernanceCode Corporate German the exceptions listed below, complied recommendations contained with in the version of the with AG the has, freenet Since issuing of compliance statement last its 2012, 5June on Statement of compliance in accordance with § financial the for year2012 report ment instatement accordance with § committees Board’s Supervisory is there and an illustration of composition the is of the functioning and described Board provisionslegal relevant details over relating applied above the and to management practices corporate current of compliance statement trates its according to § In accordance with § Corporate management statement . . . Code) simply to due their age considered as candidates not be should great experience professional personal and with people opinion it makes that Board’s well-qualified sense no Supervisory the members Board age limitNo Supervisory and is Board laid Executive for down this inappropriate seems are same, the members Board Supervisory the on impact have avarying vary members Board circumstances Supervisory of the have uniformly set personal accountto on the although be principle, equality of the members Board isbly all for agiven Supervisory duty as isthe to there visiblecompany no associated with benefit this of an an agreement excess is not intended, Board, Supervisory of the members the members insurance company Board The its for has taken D&O out of the Code)of the GovernanceReport in Corporate the their publishednot are and implementation targets the defined, have been targets composition individually its situation in about each specific posals inappropriate wishes and to members make Board decisions concerningvisory pro of Super election the criteria other about on proposals for such restrictions deems representation“ female of degree “appropriate or “diversity” as Code the in described compositionthemes in its for consideration of specific future the for or targets now definite has not established Board Supervisory The Furthermore, the functioning of the Executive Board and Supervisory Supervisory and Board Executive of the functioning the .Furthermore, 289a HGB, freenet AG’s freenet management illus statement corporate HGB, 289a . (clause 5 289a HGB, which is also part of the company’s of manage the which is also part HGB, 289a freenet AG made the following AG management the corporate made .freenet . 1 . . 2, sentence clause 6 and 5 2, .(Clause 5 .(clause 3 161 AktG 161 . . 4 8, paragraph 3 of the Code) 3of the paragraph 8, . 1, paragraph 2 and paragraph 3 paragraph 2and paragraph 1, .Moreover, an excess would 161 AktG and elucidates and the AktG 161 An excess therefore .An would .Given that their duties The group also intends . The . The Supervisory Board Board Supervisory The . 4 . 1, sentence 2 of the 1, Acting responsi .Acting Since no specific .Since specific no With regard to regard .With To our shareholders .In . - - - - - : Corporate Governance report Governance : Corporate freenet AG · Annual Report 2012 Report AG ·Annual freenet 53

To our shareholders To our shareholders 54 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Corporate Governance report Governance : Corporate 5 resolve wrongdoing and to respond to wrongdoing toresolve and it decisively respond to to prevent power violation and corruption in of competition its rules, everything violations and are avoided nal company are policies observed, self-imposedcompliance regulations are met, inter and meansrequirements that legal is Group fully committed freenet toThe compliance law with the Group existenceendanger the freenet of the Board sory regularly auditthe to Supervi the committee of Chief Compliancereports also Officer acompliance for that ispurpose fit for management structures function essary Board Executive developed and compliance that is AG continuously function hasfreenet aGroup-wide expanded being Relevant details relating to corporate management practices 4 . . Clause 5 a matter of course it recognises the importance of its members’ independence members’ of its ita matter of recognises course importance the remuneration isremuneration not planned development to promote sustainable corporate also serves policy toremuneration dividend the sustainable business development nicated which to market, is capital the linked to flow, cash free is geared towards commu- policy also dividend Company’s that believes the Board Supervisory The is view that of this the has of well compensation variable worked form in past the financial past the for year dividend the on calculated based is Board Supervisory of remuneration variable the the of Association, Articles the sustainable business on development focused be should Board Supervisory that of remuneration the avariable recommends 2012, 5 Governance Report are implementation in not published Corporate the its situationin each specific wishes to make composition individually decisions its concerning about proposals are inappropriate, and members Board of Supervisory regarding election posals the oncriteria other pro for targets arisingdefined restrictions specifically from the to lead would uncertainties crete targets of interest ofconflict maycon arise notspecification arethe so clearly regulated, considers therefore it excessiveBoard in clause 5 definition of independence activities exercise supervisory as crucialof its toBoard effective the Executive the from members of its independence regards the Board Supervisory clause 5 recommendation inthis from differed newly incorporated sincefore, 2012, June 15 in out clause as set 5 members Board of independent number the fortarget not consider a specific it to reasonable does define Board Supervisory The . 4 . 1, paragraph 2 and paragraph 3 of the Code) 3of the paragraph 2and paragraph 1, The Supervisory Board is informed by is Compliance informed Board in event the that of risks Supervisory .The . . 4 4 . . The freenet Group’s Chief Compliance Officer reports directly to the to directly reports Chief Compliance Group’s freenet Officer .The 1 of paragraph 2 of the version of the Code as issued on 15 May 2012 as 15 issued on version Code 2of of the the 1 of paragraph 6, paragraph 2 of the Code, in version that the since has applied June Code, 2 of 15 the paragraph 6, He supports the Executive Board in arranging nec Board developing the and Executive the supports .He For this reason, an adjustment of the Supervisory Board’s variable Board’s Supervisory .For this of the an adjustment reason, Since no specific target has been defined, the andtarget the defined, been target has .Since specific no .(Clause 5 In its view, linking the .In its therefore, variable of the .Moreover, circumstances the which from a . . 4 4 . . . Finally, the Supervisory Board feels thatfeels Board . Finally, Supervisory the 6, paragraph 2 of the Code) 2of the paragraph 6, 2 goes beyond this, and the Supervisory Supervisory the and this, beyond 2 goes .According 5of to clause paragraph 11 .

The Supervisory Board Board Supervisory .The For the freenet Group freenet .For the The company .The does . 4 . 2 and has2 and there .However, the .(Clause The .The The .The As .As ------.

In exceptional cases, the meetings can also be carried out by out telephone carried also can be meetings the In exceptional cases, Board Supervisory by the tions passed to be mittees atotal has executive established of committee one five and Board com Supervisory The any has not established committees Board Executive The committees of functioning and Composition Board Executive the by of meetings outside current the businessare development also kept about informed resolutions passes if required, and, discusses them that are significant the for companybasis Boarddetail the Executiveon reports, in of Board Executive the with discusses and basis, them acase-by-case on targeted, and planned what has been situation companyagement of the decision-making regarding management company the it man of in the its oversees and of communication in resolutions in exceptionalpasses session, also by way cases of conventional means half-year calendar is convened per Board at twice least Supervisory The areasthe of responsibilities Board Executive of the individual of the members of a company of within responsibilities, framework schedule the establishes, Board sory in participate regular Board specialist Executive of the meetings members in their business areas developments and events about meetings together as ateam acontinuous on keep and each informed other basis at regular Board together have responsibility overall for the management company of the currently and interests has members three by company’s the best parent Group’s company, of the is management the bound body Board Executive the As mutual to control trust monitor and company’s business the in and aspirit closely of cooperate Board AG’s Supervisory and freenet Board Executive Board Functioning of Executive the Supervisory and Board transparency appropriate the established and key on Group, issues freenet security the for gave necessary all the employees oped, provisions internal the relevant and statutory explained company guidelines it has devel compliance the In addition, organisation training has various run sessions in which it complianceThe questions organisation is specific available advicefor on to all contacts business development, corporate planning, strategic development and the company’s the and planning, strategic development corporate business development, the regularly about decisionsdamental management company the of on the reports and isutive of procedure regulated Board rules by its These committees prepare topics to be addressed in plenary session and resolu and session in plenary addressed to committees topics prepare be .These The Supervisory Board examines any Board deviations from of business development Supervisory .The The Supervisory Board regularly advises the Executive Board in its Board Executive the regularly advises Board Supervisory .The . Moreover, the Supervisory Board examines business transactions examines business transactions Board . Moreover, Supervisory the The Executive Board involves the Supervisory Board in all Board fun involves Supervisory Board the Executive .The . The committees meet in to session this committees do meet .The The members of the Executive Board Board Executive of the members .The The Supervisory Board members members Board Supervisory .The . . The work of the Exec of the work . The Furthermore, the .Furthermore, The committees .The The Supervi . The .It normally They work . They .

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: Corporate Governance report Governance : Corporate freenet AG · Annual Report 2012 Report AG ·Annual freenet 55

To our shareholders To our shareholders 56 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : Corporate Governance report Governance : Corporate 2012), Matthias Schneider (up Schneider Matthias 2012), 2012) to August 31 to Dr 9May (Chair, 2012), 2012 Henderson February 24 from Niclas (Chair, Rauscher in 2012: Maarten left 2012), who up until 23 February Members JoachimHalefeld Steffen 2012) (sinceSeptember 20 Vodel, Weidinger (Chair, Robert Members: since Tüngler, Marc 9May 2012), (since 9May 2012), additionalauditors’ services the and independence auditors’ as well the annual as in the particular audit, function the of riskand internal internal system, management system, audit control effectiveness audit committee The is monitoring with the concerned accounting of the the process, committee Audit (Chair, Henderson Maarten up until 9May 2012) in 2012: left who Member Halefeld Joachim Anderleit, Claudia 2012) Dr Members: Board Supervisory responsibilities to mandatory the of the subject Board, Executive of the ing members regard matters personnel about Board resolutions inpasses place Supervisory of the regular review its and system compensation the Board, Executive of the concerning Board compensation the to resolution for Supervisory the proposals submits resolutions personnel Board’s Supervisory committee the prepares personnel The Personnel committee (upSchneider 2012) to August 31 (Chair, Henderson Maarten up until Matthias 9May 2012), in 2012: left who Members Nicole9 May Engenhardt-Gillé, 2012), (since Claudia 2012) Anderleit September 20 Dr Members: timetaken in good cannot be Board delay Supervisory of no a resolution the and bear matterthat can the provided of procedure, in rules accordance Board Executive Board’s Executive with the by out the carried to is approval be where required measures for transactions Board and Board visory executivekey on committee advises The Super resolutions issues of prepares the and committee Executive meetings committee content the on meeting of plenary Board to Supervisory the committees report the agenda items the on necessary resolutions pass advise where and The executive committee can pass resolutions in place of the Supervisory executive committee resolutions pass in can .The place Supervisory of the Hartmut Schenk (Chair, Schenk (since .Hartmut Kraemer since 9May Thorsten 9May 2012), Hartmut Schenk (Chair, Schenk .Hartmut since Prof 9May 2012), . . . The committee also deals .The of compliance with questions .Christof (up Aha to 9May .Dr Helmut Thoma (since Thoma .Helmut The chairpersons of chairpersons .The The committee .The .It . - - Bahlmann (up to 9May 2012) (Chair, Henderson Maarten up until Dr 9 May 2012), in 2012: left who Member Achim2012), Weiss Dr Members: Meeting General to recommendation for Annual the Board to Supervisory the upcomingfor elections in § of achieving described task the purpose committee mediation in is accordanceThe established with § committee Mediation The nominationsThe committee is of task suitable candidates with charged proposing the committee Nominations Bahlmann (up to 9May 2012) (Chair, Henderson Maarten up until Dr 9May 2012), in 2012: left who Members Nicole Engenhardt-Gillé Claudia2012), Anderleit, Dr Members: Hartmut Schenk (Chair, Schenk (since .Hartmut Kraemer since 9May Thorsten 9May 2012), Hartmut Schenk (Chair, Schenk .Hartmut since Tüngler Marc 9May 2012), (since 9 May . 31 (3) sentence 1MitbestG (3) 31 27 (3) MitbestG with the MitbestG (3) 27 . Arnold .Arnold Arnold .Arnold To our shareholders : Corporate Governance report Governance : Corporate freenet AG · Annual Report 2012 Report AG ·Annual freenet 57

To our shareholders To our shareholders 58 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : freenet AG on the capital market capital the AG on : freenet % 100 % 140 % 160 have recently receded into the background into the receded have recently of public financesthe interrelation some countries and in of bankgovernmentrisks and (ECB) Bank Central European the umbrella the of uniform under on European banking supervision 2012, in mid-October union tional foundations monetary of the institu developing the euro ofaim crisis the - of curbing impact negative the further and of resolutions with have the aseries EUIn recent the months adopted countries’ leaders increases price some saw markets stock slightly, European the prospects growth subdued and owing an reports inconsistent to showed corporate markets unfavourable performance crisis have opinion general since determined year of middle the the sovereigneconomy the and the debt concerns about 2012, of quarter icantly in first the investors market initially stock German among the on brightened signif mood While the countrieswere in group of the stable market labour situation the and growth groups of countries in euro area the economic in termsbetween of public finances, financial and economic crisis last year internationalon-goingThe the by financial European were markets affected significantly markets financial International 2011) December =Xetra closing price 30 on 100 (Indexed; 1: Figure Performance of the freenet share market capital the AGon freenet 120 % 170 % 130 % 150 % 110 % 90 % 80 % Performance of the freenet share in share 2012 freenet the of Performance Jan . freenet AGfreenet Feb . March April . . While share prices U in the and Japan Market participants’ concerns about the sustainability sustainability the about concerns participants’ Market DAX May . Overall economic development diverged greatly diverged development economic .Overall .Germany, Finland Netherlands the and Austria, These included the general agreement, signed agreement, general the included .These June . July TecDAX August Sept . . SDAX Oct The global stock global .The . . . Nov S . declined Dec . - market capitalisation market to TecDAX able placewas the clearly on in maintain terms 5th of liquidity trading and its year,the accounting a for nearly third of total activity trading half of in second units the thousand 215 around was (“darkpools”) tive platforms trading monthssix during first the shares traded fell shares to comparedplatform to an thousand average thousand an average 451 616 AG Xetra half year, of the second Börse In the daily the Deutsche volume the trading on days trading year, of at the 14 two December 28 on share the closed ber increases until high share year its the the for reached of 14 price point for further starting financialthe the for flow marked cash 2012 free and year (EBITDA) earnings operating for forecast increased an of announcement the November range relatively to 13-euro constantly share in 11- traded the freenet quarter first of the euros end 11 at the price approached the and in units March, to 778,800 in units January accordinglyvolume rose 510,400 from share to the price 10 jumped 1March, on dividend ary with aXetra closing year the 2012 price shares of 9 began freenet year last performance third-best sharethe recorded freenet the index, HASPAX Hamburg performance annual good AG Stock Hamburg its for freenet Exchange once againThe commended companies (19 percent) as well TecDAX the on (up listed stocks 21 percent)forming SDAX and combined technology the once again clearly of outper percent, 55 sharean annualOur recorded performance 2012 year increased by approximately million 640 euros to 1 around index benchmark German the performed cent an on annual basis half positively year, of the in second the very increasingdeveloped DAX by 29The per share freenet After the company published its preliminary figures for 2011, outlook, and proposed proposed and outlook, company2011, figures preliminary the for its published .After With trading volume trading at an .With unusually high 1 level of about . . Of the companies from the metropolitan region listed of Hamburg companies the on the metropolitan the from .Of . Nevertheless, the freenet share once again freenet the significantlyout .Nevertheless, . The average daily .The volume alterna trading on - All in all, freenet AG’s in .All all, freenet market capitalisation . 26 euros 26 . . 8 billion euros in financial the 75 euros at the end of Decem euros end 75 at the As the year progressed the year the progressed .As The average daily .The trading Nevertheless, freenet AG . Nevertheless, . 8 million last the on units . At the beginning .At the of 26 euros 2Janu- on 26 . 00 euros 00 . To our shareholders - - - - : freenet AG on the capital market capital the AG on : freenet freenet AG · Annual Report 2012 Report AG ·Annual freenet 59

To our shareholders To our shareholders 60 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : freenet AG on the capital market capital the AG on : freenet 1,000 ■ ■ ■ ■ year: financial 2012 in the Trading(German Securities changed as AG’sfollows freenet structure Act), shareholder 21 WpHG section to pursuant received rights votingof notifications According to the structure shareholder Current shares tered regis into euros is and divided 128,061,016 AG’sfreenet share totals capital 128,061,016 Shareholder structure 2: Figure ■ 400 900 600 800 200 700 300 500 100 ■ ■ ■ ■ ■ 0 In J March 3 ing threshold In J March 2 threshold 3 ing threshold In J March AG amountedfreenet to 2 threshold reporting 3-percent the below us that it fallen informed had (Central Bank of Norway) Bank Norges the In February to 3 threshold reporting von Flossbach 3-percent Storch the us thatIn it January informed exceeded had . . . 04 percent of freenet AG (3,894,055 voting rights) AG04 percent of (3,894,055 freenet voting rights) (3,882,306 03 percent 98 percent (3,812,072 voting rights) (3,812,072 98 percent . Jan 07 percent (3,929,643 voting rights) percent (3,929,643 07 (since including July “darkpools”) in share 2012 Average freenet the volume of daily trading . . Each share represents 1 represents share Each Xetra On 16 March its share of voting rights in freenet AG amounted to AG share of its voting March in rights freenet AG 16 .On . Feb . . P P P Morgan informed us that it had fallen below the 3-percent reporting reporting 3-percent the us that it below informed fallen had . Morgan . Morgan informed us that it had exceeded the 3-percent report 3-percent the us that it exceeded informed had .Morgan report 3-percent the us that it exceeded informed had .Morgan On 27 March its share of its voting March 27 AG in .On rights amounted freenet to On 15 March its share of its voting March 15 AG in .On rights amounted freenet to March On 25 January its share of its voting AG 25 in January rights freenet amounted .On April Darkpools . 82 percent (3,607,448 voting rights) percent (3,607,448 82 May . 00 euro of the share capital share the of euro 00 . June . On 9 February its share of its voting in rights 9February .On . July Average 2011 Average August . Sept . . . Oct

. . Nov Dec . - - - Figure 3: Figure as was follows: of 2012 end at the Consequently, structure shareholder the ■ shareholder identification to according investors financial and institutional register; share tothe according shares investor Private Source: 7 Europe: of rest investors Retail 15 investors: retail German 32investors: institutional German 4: Figure investors of Europe in rest the financialprivate German and investors toaddition strategic investment the of Drillisch by this shares the owned AG, includes investors shares half by almost the German were held remaining percent, the Of 42 investors of are Europe rest spread across the financial the of a quarter while about UK, the and America financialNorth investors from of which approximately percent, 58 at about half are in approximately equally measure Institutional financial still groupinvestors largest of the investors represent in freenet AG distribution Geograpic 2012 December 31 AG, freenet Source: 75 shareholders: Other S Management Fund IPConcept by (administered SICAV Storch Flossbach von 21 GmbH: Holding MSP AG, Drillisch ■ 2 ing threshold In September J In September . 98 percent (3,822,053 voting rights) (3,822,053 percent 98 Shareholder structure of freenet AG on 31 December 2012 December AG 31 on freenet of structure Shareholder on 31 December 2012 December 31 on structure AG shareholder freenet the of distribution Geographical % %

. A

% . ): 3 ): .07 On 11 September its share of its voting AG in September 11 rights freenet amounted to .On .07 . . P % 86 Morgan informed us that it had fallen below the 3-percent report 3-percent the us that below it fallen informed had .Morgan % % . The remaining .The by private shares held are mostly . . rest of the world: 1 world: the of rest investors Financial 14 Europe: of rest investors Financial 15 &Ireland: UK investors Financial % 16 USA: investors Financial

To our shareholders % % .In

% - : freenet AG on the capital market capital the AG on : freenet freenet AG · Annual Report 2012 Report AG ·Annual freenet 61

To our shareholders To our shareholders 62 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : freenet AG on the capital market capital the AG on : freenet Earnings per share from discontinued operations in €(undiluted) operations discontinued from share per Earnings Earnings per share from discontinued operations in €(diluted) operations discontinued 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 Earnings per share from continued operations in €(diluted) operations continued from share per Earnings Earnings per share from continued operations in €(undiluted) operations continued from share per Earnings Table 1: Table basisThe calculating for is weighted EPS the average of shares outstanding Diluted earnings per share in € in share per earnings Diluted recommendation recommendation gave a“hold” (21 percent) analysts the in reports 20 made; was recommendation percent) a“buy” (79 reports twelve published analysts share recommendations with and to regard freenet the ments 100com more than published firms analyst 17 well-known financialIn the year2012, recommendation Analysts’ approx 23 on May 2013 Meeting to Annual General the financial 2012 year, the for idend amounting to 1 of payment adiv the to propose decided Board Supervisory and Board Executive The of approx of 1 of payment adividend the approved Meeting Annual General freenet the 9May 2012, On Dividend € in share per earnings Undiluted to 0 (1 Undiluted/diluted amounted to 1 in continued from 2012 EPS operations Undiluted/diluted year amounted to share 1 earnings in reporting (EPS) per the share per Earnings compared to 1 . 12 euros in undiluted/diluted 2011)and 12 euros discontinued from amounted EPS operations . . 20 euros per eligible euros per payout20 representingratio share a financial the for year2011, 00 euros (0 00 66 percent of free cash flow cash percent of free .66 Earnings per share per Earnings 64 percent of free cash flow cash percent of free .64 . 12 euros in12 2011 . 00 euros in 2011) 00 . . During the reporting period, there was only one “sell” “sell” only one was there period, reporting the .During The median is six comments per analyst is median per six . The comments . . The dividend was distributed on 11 May distributed 2012 11 was on dividend .The This corresponds to . This a payout corresponds ofratio . 35 euros per share income, euros net from per 35 The three most active active most three .The 128,061 128,061 2012 0 0 1 1 1 1 .00 .00 . . . . 35 35 35 35

In 80 cases cases . In 80 . . 35 euros35 . 35 euros35 128,061 128,061 2011 1 1 1 1 0 0 . .12 .12 .12 .12 .00 .00 - -

investor-relations share information is freenet the available on Further at www.freenet-group.de/ Type share: of Name: data Master Information freenet the share on with institutional objectives investorsand analysts and strategic direction current Group’s team business development, freenet the discussed Investor the and Relations York,exchange Board in and Executive New the locations well as analysts AG cultivatesfreenet an dialogue on-going with institutional private investors and as Relations Investor Designated sponsors: Trading type: model shares: of Quantity capital: Share Index Class security the on Information segment: Market standard: Transparency Sector: WKN: ISIN: our ties in currentinvestor the financialbase broaden year order in further to code: Reuters instrument Symbol: Trading parameters exchanges: Stock DE000A0Z2ZZ5

FNTN

. At investor 12 at conferences major shows European road 11 and stock

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

To our shareholders - : freenet AG on the capital market capital the AG on : freenet freenet AG · Annual Report 2012 Report AG ·Annual freenet 63

To our shareholders To our shareholders 64 freenet AG · Annual Report 2012 Report AG ·Annual freenet To our shareholders : freenet AG on the capital market capital the AG on : freenet % 100 Security: 20 April 2016 April 20 Repayment price: Interest payments: Coupon: Term: ISIN: WKN: five-year variable tranche of 56 million of 19 seven-yeareurosvariable five-year of a tranche tranche and fixed over 44 note into is of divided tranche promissory a five-yearfixed The Girozentrale Hessen-Thüringen Landesbank and berg Baden-Württem Landesbank which marketed AG, were broadly byeuros, Commerzbank note AG totalling successfully freenet apromissory placed million 120 2012, In December note Promissory market capital the millionsuccessfully with aeuros onbond 400 volume of placing a five-year corporate things financing, other among private equity by AG its replaced freenet 2011, In April Corporate bond Denomination: Issue volume: Stock exchanges: table: refer to following please the AG bonds corporate freenet informationFor more about 5: Figure % 110 % 90

A1KQXZ Jan

Performance of the freenet corporate bond in 2012 (Xetra closing prices) (Xetra in 2012 bond corporate freenet the of Performance . At year-end 2012, the bond was quoted was at 112 bond the .At year-end 2012,

Feb

. The interest is coupon .The 7 March Non-subordinated corporate bond 100 Annually, starting on 20 April 2012 Annually, April 20 on starting 7 2016 to April 20 2011 April 20 euros 1,000 DE000A1KQXZ0 400 million euros 400 Frankfurt Market Open regulated exchange stock marketThe Luxembourg of the . 125 percent p . 0 percent April May . a . June . 125 percent per annum it and 125 percent is per on payable July . August . 24 euros 24 Sept . Oct . . 5 million a euros, . . Nov

Dec . . 5 - relations at www.freenet-group.de/en. at relations AG’s freenet company the press about and about also can more learn Interested users stock analysis an and form order interactive and includingtool a contact offers, afinancialand calendar documentation Meeting General Annual information also the offer on includes tions, presenta market capital and reports financial announcements, to company addition In website our on at www.freenet-group.de/investor. bond shares corporate and freenet’s detailed information about find public can of the interested and members Shareholders online available information financial Detailed of 3 withrange a fixed coupon million of 4 of 2 . . 82 percent variable months sixfixed the of a coupon first and 5-year the for tranche, 14 percent for the fixed 7-year fixed percent the for tranche 14 It was drawn over the entire volume at the lower end of the respective marketing over entire drawn .It was the respective of the end volume lower at the The website also features a variety of services and dialogue website and .The also features of services avariety . 27 percent p 27 . . a for the 5-year . for the a floating coupon tranche, . To our shareholders - : freenet AG on the capital market capital the AG on : freenet freenet AG · Annual Report 2012 Report AG ·Annual freenet 65

To our shareholders digital lifestyle provider in terms of sustainable, value-based management. in value-based provider digital terms of sustainable, lifestyle focusing in high-value provider Germany on relationships customer towardsservice a mobile network-independent inlargest the financial from development Our 2012 year report management Group

Group management report Group management report operates an online portal and increasingly and content an offers mobile online for internet operates portal as well inessentially Germany B2C business the on with private households in Germany communications for mobile tion platform products distribu and sales network-independent largest the possesses therefore Group The 2011 in place since that has been October products style acquisitionThe Life builds an on exclusive market Apple for with the leader cooperation 2012 in December GmbH mobilcom-debitel subsidiary, via its in following), the (“GRAVIS” Berlin mbH, putervertriebsgesellschaft percent of shares in Gravis –Com to purchase 100 signed acontract Group freenet the GmbH with Media-Saturn Deutschland channel is cooperation Group’s the as well sales as online notable one direct-to-customer and superstores, and sales; ers deal electronics at retailers, points additional sales 6,000 about shops, branded 530 mobile data of communicationsfield mobile primarily of voiceservices in field data the and products, and in Germany telecommunications is network-independent largest Group the provider freenet The Business operations Business conditions macroeconomic and Group particularly sells mobile communications devices and additional services in sells communications mobile the particularly Group devices additional and services rates operators’ original companythe the network also offers rates, and no-frills and prepaid services postpaid, independent network own tion to its customers end to them its markets and operators network the from services company communications the mobile buys contracts, these business: Under operative companies basis the form signed above mentioned with of the the contracts operator Telekom, operators Vodafone, E-Plus O and network mobile the for communications account, mobile own its for and name own services its under markets, but own of its infrastructure vice provider, has network no Group freenet the The Group offers its customers a comprehensive portfolio of services services of a portfolio comprehensive customers its offers Group .The freenet’s primary sales channels around sales are its primary .freenet’s The contract was concluded in January 2013 in January concluded was contract .The .

2 in Germany In addition, the freenet freenet the .In addition, Its distribution is focus . Its The company . The also Group management report As a mobile ser amobile .As The network network . The .In addition .In addi . ------.

: Business and macroeconomic conditions freenet AG · Annual Report 2012 Report AG ·Annual freenet 69

Group management report Group management report Figure 6: Figure freenet AG · Annual Report 2012 Report AG ·Annual freenet 70 freenet.de GmbH (100 %) Major companies in the freenet Group as of 31 December 2012 December 31 of as Group freenet companies in the Major Group management report

Logistik GmbH (100 mobilcom-debitel : Business and macroeconomic conditions %)

callmobile GmbH callmobile GmbH with effect from 1 January 2013 January 1 from with effect GmbH freeXmedia subsidiary owned wholly its sold für Kommunikation 2012 in and December Gesellschaft GmbH stake in KielNET 50-percent of its it disposed lio: 2012 in September financial past In the year,strategicstreamliningGroup the continued the portfo of its structure Group (100 %) mobilcom-debitel mobilcom-debitel mH (100 %) GmbH Shop GmbH

freenet AG freenet (100 %)

klarmobil GmbH

(100 %)

FunDorado GmbH . (50 %)

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

9 Telefon- 0 1019 dienste GmbH

(100 %)

- ■ indicators: three lowing pillar financial of the strategy is supporting the structure ance with core our business communicationsof mobile capital the internet, mobile and AG’s by freenet financialstrategy This is overall supported strategic direction Strategy Financial ability their of to best the continue can they where environments to perform work and ern develop consultation expert debts our us to ensure that to we will able continue also but be expect to service debt, rates on dividends and reliable overall return their of on in share invested form the price capital, appreciation intions equal measure of all stakeholders expecta and AGneeds different considers freenet the strategy In implementing its intostrategic development of products high provider adigital quality lifestyle Apple enhancement AG’sof freenet an important represents 2013, of quarter in first the pleted and targets profitability investment gently defined to core close the channels, business in and sales and line with strin portfolio sion of its company the will evaluateFurthermore, related additional areas to expan if the action Germany across presence sales its expand systematically quality accessories of high sale with along the devices will aggressively high-end expanded, and be ucts geared towards in additional improvements quality year acquiringon maintaining and relationships valuable customer in current the financial Against this AG backdrop, will freenet will and course continue also chosen focus its on half market year of the the on in second the ‘SmartHome’ provider as adigital development lifestyle This laid foundations company’s further the the for shops brand especially via mobilcom-debitel the forward, pushed retail actively was over, stationary expansion the of year of over the profitability-driven course the the ownership) customer called: (jointly no-frills and ships sectors in postpaid the goal of realising its successfully of relation valuable customer base pursued stable the by communications mobile adeclining revenue—in overall market financial past In the year,measuredposition—as market its defended AG freenet clearly management and objectives Group direction, Strategic ■ ■ ■ Existing customer loyalty programs will be developed with this in will mind developed programs that will be loyalty customer .Existing be debt can be covered from the operative business covered operative be the from can debt income EBITDA and debt economic net factor, debt between ratio which the from The results The interest cover, which reflects the relationship between EBITDA and net net interest interestand EBITDA cover,The relationshipthe between which reflects The company successfully launched its first few lifestyle products, such as products, companyfew lifestyle first .The successfully its launched Our customers are interested in attractive services and products as well as products and services are interested customers .Our in attractive . It helps the company ensure that the necessary interest payments from the from interest company payments .It the helps ensure necessary that the . The company’s creditors not only want us .The to pay risk-adjusted interest freenet AG will .freenet continue to all leverage available channels sales and Our employees expect long-term, secure jobs in mod jobs appropriate, long-term, secure expect employees .Our Our shareholders expect a reasonable and a reasonable expect shareholders .Our In this context, sales of prod data sales .In this context, The acquisition of GRAVIS, com acquisition . The of GRAVIS, . . .We measure it using fol the . Group management report At the same time, it time, same .At the .In accord .More- : Strategic direction, Group objectives and management and objectives Group direction, : Strategic . ------. freenet AG · Annual Report 2012 Report AG ·Annual freenet 71

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 72 Group management report : Strategic direction, Group objectives and management and objectives Group direction, : Strategic Equity ratio Equity Interest cover Interest Dividend yield (onDividend day of payment) In line with the successful implementation of our strategy, these parameters developed developed In parameters line successful with of these strategy, the our implementation ■ 1 FCF of (as apercentage ratio Payout year Financial Debt factor Table 3: Table increase compromising without value in company’s shareholder the risk profile its thereby also and contributes to a long-term shareholders, freenet’s for yield dividend that allows policy an attractive Finally, a dividend has defined Board Executive the and adequate . million of 50 around euros is appropriate current reserve acash volume ofits business, inflow, cash that inherent AG freenet feels stable given business of the model’s Because investors thus debt for and reducing future costs procurement capital attractiveness aim with the earnings-driven ofthe increasing optimisation structure, capital of the its a risk-driven management strategy funds outside and including ability the tohave obtain liquidity adequate liquidity from equity reserves, company the always must in operations, the strategy corporate toIn its order implement 2: Table . strategy indicators in financial our willabove plan and as key continue performance to serve (in euros per share) per euros (in paidDividends ■ assets assets to total equity of ratio which shareholders’ the from ratio, is equity derived The equipment, plus proceeds from the disposal of property, plant and equipment and plant property, of disposal the from proceeds plus equipment, fl cash Free Key figures of dividend policy Keyof dividend figures Keystrategy financial of figures

ow is defined as cash flow from operating activities minus investment in property, plant and plant property, in investment minus activities operating from flow cash as is defined ow This protects the company against temporary fluctuations as part of part as fluctuations company the against temporary .This protects 1 ) Target 2011/12 Adjusting the bandwidth of the debt factor serves serves factor debt of the bandwidth .Adjusting the 1 .5—2 10 % 50 > % 48 2010 0 . .0 % > 5 80 .5

Actual 2011 10 % 64 2011 1 .6 % . 20 46

. 3 % 1 6 .6 .6 50—75

2012 n n .a .a % Actual 2012 Actual

. .

48 . Target 2013 Target . 50—75 1 % 1 8 . .3 5

n n .a .a % Target 2013/14 Target

. .

Target 2014 Target 50—75 1 . 0—2 . % 50 > n n > 5 .a .a % . 5 .

. .

focus on growth (through the effect of profits)gross efficiency aswell (through ascost effect growth the on focus value driverand a therefore withis a performance operational the company’s reflects amortisation) and depreciation taxes, income interest, before profit (gross EBITDA EBITDA ■ ■ ■ ■ ■ ■ ■ ■ success of strategic course: our indicators toWe following measure the medium-and use long-term the key performance managementGroup ■ ■ ■ ■ ■ goals financialthe following 2013/14: for the has set specific years Board Executive the in and compliance strategy, of the strategic direction the on cornerstones with the Based objectives Specific value long-term company’s the protects appropriate share flow, cash company’s ofwhile free the optimisedstructure capitalthe interest in receiving shareholders’ justice an to value-oriented does the Board Executive flow cash of free percent 75 and 50 of between for future payouts provides dividend Board Supervisory by the agreed and in early 2013 Board Executive by the adopted policy dividend The ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Number of gross new customers per sales channel sales per of customers gross new Number period during customer Profitability the of the contract costs retention Customer costs acquisition Customer ARPU Postpaid no-frills) and (postpaid Ownership Customer flow Free cash EBITDA Free of flow 255 cash of 355 EBITDA Group in 2014 growth modest Increase further in revenue and Group in 2013 inStabilisation of range 23 euros the ARPU of postpaid no-frills and Slight sectors increase in valuable postpaid base in the customer the By increasing this bandwidth starting with the 2013 financial increasing 2013 with .By the year, this starting bandwidth the . . 0 million 260 and euros in 2013 0 million 360 and euros in 2013 . . . 0 million euros in 2014 0 million euros in 2014 Group management report . : Strategic direction, Group objectives and management and objectives Group direction, : Strategic freenet AG · Annual Report 2012 Report AG ·Annual freenet 73

Konzernlagebericht Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 74 Group management report : Strategic direction, Group objectives and management and objectives Group direction, : Strategic other key performance indicators keyother performance channel are sales per of customers gross number new the and lifethe contract, of the retention customer and customers of new bution of acquisition customer profit costs contri the retention, and which significantlyaffect indicators of performance other AG also avariety freenet uses controlOther parameters to in future decrease the isment expected indicator internalfor of this manage performance high-value importance revenue, the indicator us for to date performance an important market competitive and situationwhich been ARPU, has the on has asignificant impact ARPU option notarethe in included mobile-device revenuethe from ket offers; willingness the of consumers to pay mar for depicts generally appropriate fees ARPU customer is what ARPU average we call contract Postpaid the revenue monthly per Postpaid ARPU relationships acquisition customer new in its existing and management customer towardsstrategic orientation intrinsic valuable customer AG on focuses freenet value, ket retaining and by continually customers new existing ones attracting communications mobile in position German mar the its defend and value shareholder is long-term and measured medium for purposes steering area growing ownership the inCustomer high-value and the no-frills postpaid sector Customer ownership planning cash detailed basis for as a which serves working capital, of net is reduction the in thiskey respect objective is to improve finance department mainof of Group our the liquidity activities One potential pay make and to interest payments debt repay the dividend on debt, financial company’sobligations operational the and is also an indicator the of company’s cashflow fl cash as free AG defines freenet Free flow cash disposal of property, plant and equipment and intangible and plant equipment and assets ofdisposal property, fromthe plus proceeds intangible and plant equipment and assets, in property, ments ority for our shareholders, creditors and the employees creditors the and shareholders, our for ority . . . ow from operating activities, minus invest activities, operating ow from The profitability of the customer customer overthe of profitability .The Due to increasing the .Due share of other .Free allincludes flow cash of freenet AG maintain can .freenet its These primarily include .These .This indicator is apri As part of its of its part .As . . The .The The . The ------.

Besides its own rates, the mobilcom-debitel offer also includes the network operators’ operators’ network the also offer includes mobilcom-debitel the rates, own its Besides associated plus the options phones, basiconly three rates in categories of pure voicethe smart and telephony, services data half the year,of in first the giving it a simpler, withmore transparentpricing structure portfolio product complex its rearranged klarmobil subsidiary freenet the In addition, ■ ■ ■ ■ and O and Deutsche running to Telekom, whichbeen has sinceVodafone 2011, tariffs, smartphone original tariffs ■ included: rates flat for smartphones in-demand and popular in range this focusing area, very the on product its expanded company further sis fast-growing the on market services data of mobile - empha AG places freenet aparticular portfolio, service and In marketing product its subsidised services devices special or mobile are primarily who interested customers for in in cost less rates and low count brands, “debitel dis “callmobile”and light” “no-frills” area “klarmobil”, “freenetMobile”, with its specialist retailers 6,000 as well at about as apresence controlled shops directly or branded thisdistribution is platform; ensured by 530 around sales independent basis largest the on of Germany’s services, and munications products include its demand-driven, network-independent customer consultation for mobile com- relationships high-value with on afocus contract tions networks, mobile German communicafor all- four tariffs prepaid and company postpaid markets communications mobile of the market target all toareas specifically AG systematicallyfreenet relies strategy amulti-brand on Product brands, new products indicators performance Non-financial ■ ■ ■ ■ ■ ■ ■ net use, landlines and all German mobile networks landlines mobile all and use, net German “ options; phone mobile again with additional selectable messages, text 3,000 internetrateAllnet amobile rate flatflat a quasi for and SMS works, A “Flat minutes free choice plus 120 to calls, for all national networks; off-net rate,flat flatrate as and well of your as on-net an on-net MMS and Allnet 4You Plu “Flat “Flat Sele purchase options; bination phone with mobile also in com to all messages national text free networks, 150 and Telekom HotSpots Deutsche internet rate, of amobile use free flat landlines, and man networks mobile A “Flat volume; data extra or as well as options foran additional smartphone networks ratemonth mobile free minutes per flat Allnet 120 German to all and an rate, SMS “Flat Clever” an SMS Allnet flat rate, on-net flat of choice;rateflat your network and a flat rate, rateon-net a flat Allnet to an SMS All 2 ’s new portfolio of tariffs ’s portfolio new N et-S ll-Star” llnet” The company extended a campaign giving a 10-percent discount these on acampaign giving company a10-percent .The extended p c ar-Flat” t” as an introductory offer on the O the on offer as an introductory on the O the on on the Vodafone network with unlimited Vodafone the on network calls to net all German s on Deutsche Telekom’s with flat-rate network Deutsche on calls D1 Ger to all as a promotional package, with a mobile internet flat, a quasi with internet ” asa mobile apromotionalSMS package, flat, from klarmobil in klarmobil from discount the rates with flat market, for inter 2 network with a mobile internet withrate, amobile a flatlandline flat network . . Under its flagship mobilcom-debitel brand, the brand, flagshipmobilcom-debitel its .Under Major new tariffs launched during the yearlaunched tariffs new .Major Discount tariffs are mainlyonline .Discountsold tariffs 2 network with an internetrate, flat network . In the 2012 financial 2012 year, .In the the

freenet AG also .freenet to caters the The brand’s strengths strengths brand’s .The Group management report . ------: Non-financialperformance indicators freenet AG · Annual Report 2012 Report AG ·Annual freenet 75

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 76 Group management report : Non-financialperformance indicators 300 mobilcom-debitel shops 300 mobilcom-debitel to than more GRAVIS from products of Apple portfolio of aselect sale will the expand were, makingwere, it faster, much efficient more therefore and up-to-date more sive run in long the expen wallsless are much flyers and partition in and comparison to posters, customers, displaying window in shop them the stores 80 also with withscreens, high-quality flat were equipped shops 350 project, the regionalised shops in informationtargeted, mobilcom-debitel customers for providingwas successfully completed, project TV” “Instore the half2012, of first In the many to steps steadily strength improve sales its channels sales to-customer of range online awide and direct- centres, and including electronics Media/Saturn the specialist retail distribution and partners 6,000 some controlled stores, directly 530 in with around Germany platform sales AG network-independent largest hasfreenet the Sales Rhine-Westphalia Hesse and of states North federal area carrier in Germanof its cable circulation, the second-largest Germany’s of offerings cable and to broadband shops sell the mobilcom-debitel 150 around for GmbH KabelBW company the signed with an 2012 Unitymedia agreement in February For this purpose, AG will freenet into tap growing business rapidly cooperation, In the another cable sectors broadband and munications services, and com mobile in energy, the to range products include digitalually its lifestyle expand sharesof the in GRAVIS staff specially and trained products, with mobilcom-debitel branches 28 its stocked GRAVIS accessories and Macs iPods, iPads, line, including iPhones, product entire Apple world Apple the for systems withdebitel shop-in-shop shops market German the on Macs and like iPad iPhone, the retail products chain Apple for largest as the itself has and established since 1991 products Apple has sold GRAVIS signed an exclusive AG agreement GRAVIS and freenet cooperation 2011, In October Strategic partnerships network “SmartHome” complex into with a additional components expanded in be various-size can and contacts kits, their homes to intelligently in use smartphones use manage energy people that lets product style digital anew life of “SmartHome”, September, end At launched the mobilcom-debitel As part of the cooperation, in 2012 freenet AG began gradually mobilcom- equipping AG its began freenet in 2012 cooperation, of the part As when leavingwhen home viaators an simultaneously at and app home turn all touchat them of the down a button At year-end 2012 freenet AG closed a contract with GRAVIS to acquire 100 percent to acquire with GRAVIS .At 100 year-end acontract AG closed freenet 2012 It includes radiator thermostats, an adapter, acontrol radiator .It includes unit thermostats, window and Besides, information can be retrieved at the touch of a button, as it touch at retrieved of the abutton, information be can .Besides, . The transaction was closed in January 2013 in January closed was transaction .The In 2012, the company made numerous investments and took and company the investments numerous made .In 2012, . For instance, users can remote-control individual remote-control can radi users .For instance, The TV content generate a lot of attention among TV .The . At the same time mobilcom- same .At the . These stores now offer the offer now stores .These GRAVIS will grad .GRAVIS . As part of part .As .In turn, debitel - - - - - . . .

be found in the “Product brands, new products” section products” new brands, in “Product found the be during year the “SmartHome”, tive product, digital lifestyle centering communications/mobile mobile on internet portfolio services and changing product own with market its requirements customer and in catered financialtargeted AG In freenet and thisto year2012 constantly connection, maintain long-term competitiveness in this innovative market environment to keep avigilant in to make order vices, it necessary eye latest the developments on in progress in telecommunications, technological and voice mobile rapid ser data and own of its not maintainbackdrop, company the department does an R&D ciated hardware communications mobile as own well including as its range, asso the operators, network company the of Germany’s mainly communications mobile net, the markets services infrastructure network own its business without provider in AG telecommunications the does freenet as aservice development and Research communications mobile third-largest as in the provider German sales importance Group’s Saturn in stores and Germany at Markt all range, own Media T-Mobile, with along its Vodafone E-Plus, and operators network the for tions products AG will mobilcom-debitel continue tocooperation, exclusivelymobile communica offer beginning at the of of 2013 2011 end through the extended already been had GmbH Media-Saturn-Deutschland with the cooperation existing long-standing The education centre the at in Erfurt staff shop closing processes market byout the research institute Vocatus is to AG, improve consultation the and in shops 2011 mobilcom-debitel for it had introduced tests shopping” AG intensified freenet “mystery the In 2012 this offer product now retail partners specialist other and shops mobilcom-debitel 150 about gained, positivethe experiences product digital lifestyle “SmartHome” new of trial also the burg ran sales nership with GRAVIS part above-mentioned of the as part products, of range Apple of GRAVIS’s with parts were stocked shops mobilcom-debitel 50 around of 2012 in course this, from the Apart will shops given also agreater be mobilcom-debitel of range accessories regular the and will established, ZShops be as many frequency, customer and as 200 stations docking and non-slip mats, cases, bags, headphones, example, for by but theme, by manufacturer range product with an restructured extensive, sories growing acces the mobile for up to were demand set meet Shops” “Z mobilcom-debitel label Shop” “Z the under thirdIn the quarter, project another launched mobilcom-debitel After a successful trial period in pilot shops, the first 19 converted or newly opened opened newly or 19 converted first the in pilot asuccessful shops, trial .After period This is described in detail under “Business operations” “Business in under detail .This is described The results of the tests feed into for feed training targeted tests of the workshops and results . The In the first months of the year, selected shops in Berlinmonths Ham the year, of and in shops first .In the selected After very positive experiences with to regard increased sales positive experiences very .After In its core business .In its communications/mobile of mobile inter The aim of the covert tests by “test customers”, carried by “test aim tests covert .The of the . . freenet also launched an also innova launched - .freenet .Items are presented longer no . A detailed explanation can .Adetailed This underscores freenet freenet .This underscores Group management report As part of the part .As . .Against this .

.However, Based on .Based ------. : Non-financialperformance indicators freenet AG · Annual Report 2012 Report AG ·Annual freenet 77

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 78 Group management report : Non-financialperformance indicators hosted at allhosted sites managers in Group the forall 350 of the training team and technical, which methodology included measures, development personnel measures basison on-going an fication customised quali mostly and managers and received need-based employees Existing at colleges vocational degrees culminating of Arts Bachelor of or Science in Bachelor well logistics as in warehouse staff, as retail apprentices and as IT sales were trained recruited and atotal of 90 2012 thereby fulfilling responsibilitiesaremarket, sociallabour its difficult find the to in AG has freenet who qualified traditionally young skilled and workers In trained addition, personnel fied it of and takes potential in advantage finding synergies quali process, nated selection image ensures uniform system external a common, as an employer as well as a coordi www.freenet-group.de/karriere the on tised were women applicants of the third a offers; job applications 580 for ing year the Company the received over 20,000 AG remained freenet ahighly in 2012 in sought-after years, previous As employer of ability our to best in workplace the men the and women between equality practice promote to and freenet AG’sefforts which reflects workforce, Group’s of the corethe business communications/mobile of mobile internet involved disposing of smaller of subsidiaries shareholdings and that are part longer no isnumber mainly to due continued which the streamlining structure, corporate of the people At 3,886 year-end, employed Group freenet employees develop to optimally seek further and should qualify humantime the resources policy externally and as in-house an employer both increasing attractiveness its staff competenceand of its enduring successThe of acompany crucially motivation in market the on the depends Employees In addition, a series of measures on a selected leadership topic leadership once again was of measures aselected aseries on .In addition, . . freenet AG has therefore set itself the goal of the continuously AG itself has .freenet set therefore freenet also offers four different dual-study programmes programmes four different dual-study also offers .freenet Since 2011 all vacancies in the Group have been adver have in all Group .Since the been vacancies 2011 In 2012, some 950 people participated in such participated people 950 some .In 2012, online portal The year-on-year .The decline in this This Group-wide recruitment .This Group-wide . Women form 44 percent 44 form .Women At the same same .At the . .Dur .In . - - - - - increase by 41 percent to 1 revenues to here expects computers BITKOM also continues tablet for strong: Demand in telecommunications, which grow would by 45 66 estimatedBITKOM that telecommunications revenues increase would 3 market grow would by 4 software While the telecommunications and industries mainly in software the to revenue strong growth grow by 2 would telecommunications market information technology and for German that the high-tech the 2012 association estimated in BITKOM published November forecast In its 2012 development Market consecutive sixth year, forthe peak a new according Statistical Office to Federal the in totalled employment Germany 41 of people number The in 2012 declined equipment and while investment in construction 1 a total of and imports—contributed exports Tradebetween difference balance—the business once again was economy export the driver German of mainthe The growth crisisnomic in 2009 of acatching-up following eco process global part was the 2011 and in 2010 growth GDP indeed modest seems (+4 in 2010 rates of growth the an on annual average GDP price-adjusted grew by atotal of 0 environmentnomic However, in comparatively proved economy adifficult robust German overall eco the significantly half down the second yearof slowed the in activity economic ning of 2012, In Germany, euro which zone the still recession was begin successfully at the defying tion of measures to manage crisis the remains great according uncertainty to IMF the IMF in economy euro the zone the shrank by 0 contrast, tocent due momentum continuing strong in 2012 mainly to Chinacome Asia, from grew economy global by the 3 FundAccording (IMF) to International the Monetary Macroeconomic trends environment Economic . 1 percentage growth to GDP points . 4 billion euros Despite first governmental achievements achievements governmentalthe in EU first .Despite concerning the implementa . 8 percent in 2012 to 152 billion euros, and attributed this billion attributed and positive development euros, to 152 8 percent in 2012 It says booming smartphone sales are crucial sales to positive the trend smartphone .It saysbooming .According to initialthe Statistical calculations Office, Federal by the . However, the Federal Statistical Office points out that the strong the out that points .However, Statistical Office Federal the . 6 billion euros . 2 per cent) (+32 per 2011 and Domestic consumption also contributed .Domestic to growth, . . 4 percent to 16 . 7 percent to 7 . 4 percent in 2012 according4 percent in 2012 to the . 0 percent), this development . 6 million in 2012, reaching6 million in 2012, . 7 percent in 2012 . 9 billion euros in 2012, 9 billion euros in 2012, . 9 billion euros in 2012 . . 4 percent to .Given . 2 per Group management report .By . . . - - - - - . . .

: Economic environment freenet AG · Annual Report 2012 Report AG ·Annual freenet 79

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 80 Group management report : Economic environment euros), communications mobile by followed the market at 24 faster mobile connections mobile faster is to designed ensure compared data to suchmore as UMTS, technologies previous in 2012 to growing expansion the ofIn response the LTE volume of data, forward pushed was and tablet computers VATM, main the driver is this for increasing the development of prevalence smartphones a third year-on-year from 101 in 2012, will years, increase by two about in past the which volume, data has doubled almost The minutes, which Consult Dialog VATM and attribute to increasing the rates of use flat million to telephone 310 calls increased byOutgoing 6percent in phone mobile 2012, remainingthe third making up services account of two-thirds total with SMS non-voice about for revenues, their on mobiles texts send that communications mobile shows are happily users continuing to internet the use and 6billion from to euros in 6 MMS) and 2011 SMS communications mobile In the sector, resurgence the revenues of “non-voice” (data, 3 year: (previous 23 year: lion’s accounts for the share of 30 sector this, stabilise at avolume of 60 telecommunications German that the market would as forecast a whole following) the of Telecommunication (“VATM” Providers Association the in Service Value-added and and in following) the Consult” (“Dialog Consult Dialog GmbH inpublished mid-October, in their 14th Analysis contrast, TelecommunicationsBy of the in Market 2012 Germany Source: BITKOM, EITO 7: Figure abytes (MB) in 2011 to an estimated 196 MB in 2012 MB (MB) to in anabytes estimated 2011 196 increased 147 from month meg larly, per user postpaid average the of amount per data +163 % +52 The fourth-generation mobile communications standard, which can carry much communications which carry mobile can standard, fourth-generation .The . 9 billion accounts 4 for euros), operators network while cable (in millions of units) millions(in of in Germany sales tablet and smartphone of Development % Tablet-PCs . 0 . 3 2 8 billion euros) .2 .1 8 The market relevance of MMS remains market negligible relevance .The of MMS .

. . 1 billion 60 year: euros (previous As in the prior year, once again in prior the .As services data mobile in 2012 . 2010 2012 2011 . 1 million (GB) gigabytes to 130 . Smartphones 9 billion 32 year: euros (previous . 5 billion (+8 euros in 2012 .According to Consult Dialog the and . 3 billion euros) . 8 billion euros (previous 22 15 . 10 . .9 .9 7 million GB

4 . . 4 billion euros The fixed-line .The +43 % +53 . 3 percent) . 6 billion % . Simi . - - Table 4: Table year level previous of the the (23 below year slightly during stabilised reporting the ARPU) (postpaid customer contract per nue goal announced also the therefore exceeds to 5 customers it increased by than 40,000 more year of the end 2011, the base) customer has increased again (postpaid customers area of contract base the in customer the key time since first acquisition For the the debitel of 2008, in to 451 year merely now 2011 Postpaid ARPU Postpaid quently, net financial debt decreased from 529 quently, from financialdecreased net debt of 255 2012 in November predicted value thus the and exceeds to 260 amounts mance indicators, perfor flow,important cash most group’sthe of one free the period, reporting In the percent 20 around of year-on-year to a increase equivalent lion euros) percent compared to yearhaveprevious the (117 increased by than 42 more (EBT) Postpaid customers m€ in flow cash Free EBITDA in m€ EBITDA Revenue in m€ 168 year: euros (previous percent to to leads which 209 an has EBIT increased by 24 around amortisation by than 6percent to more 357 in year, previous the period to same Compared the increased group EBITDA the period: essential resultThe be figures were significantlyable to increasedthereporting in minimum of 3 threshold 3,266 year: lion euros (previous company the revenue generated in amount of 3,089 the period, reporting In the exceeded were 2012 financial the adaptedfor November in year2012 than better anticipated financialwas the AG, year inAll 2012 all, freenet for 2012 in performance business statement the on Management’s summary results and position financial Assets, thus exceeds the target value of value 355 target thus the exceeds Key2012 financials The group result for the financial year 2012 is reported at 173 at group result financial .The the for is yearreported 2012

. 0 billion euros . 5 million euros) . 3 million euros . 8 million 337 year: euros (previous . 6 million euros) is and thus slightly predicted above the . 0 million 241 year: euros (previous . 0 million euros . . 8 euros) With 166 .With With 23 .With . . Forecast 2012 Forecast 4 million financial of the euros end at the . (Feb 2012) (Feb . 9 million euros, the pre-tax earnings9 million pre-tax the euros, The deduction of depreciation and deduction .The . stable stable stable 340 4 euros, the monthly average monthly the reve 4 euros, 240 .0 . 0

. Forecast 2012 Forecast (adjusted in (adjusted . 0 million euros Nov 2012) Nov . > 4 million euros) and stable stable 3,000 255 355 . . . . 0 0 0 million euros) . 2 million euros,

Group management report . Compared to .Compared 79 million79 and The targets targets .The Actual 2012 Actual . of 40,000 0 million .Conse Increase Increase . 3,089 . stable . 0 mil 260 . 357 3 mil . 8 0 0

- - - - - : Assets, financial position and results and position financial : Assets, freenet AG · Annual Report 2012 Report AG ·Annual freenet 81

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 82 Group management report : Assets, financial position and results and position financial : Assets,

not affect net net income not affect which isand did mainly related to elimination the books, cards fromthe SIM of inactive

significant reduction of the prepaid customer base nearlybase 1 by prepaid customer the of significant reduction representing ayear-on-year by 1 around decrease atotal had of freenet 14 2012, of December end At the online that are closed tracts ofuse smartphones withthe increased in connection increasingof the rate flatproducts and data for demand because no-frills increasingly particularly in areaThe recent years, has become important 2 from todue big 340,000 in the increase no-frills the by in area, about numbers customer 8 from customers increased again by no-frills and 380,000 around sectors—also tract cumulative the as base the in customer con Moreover, ownership—defined customer half financial the of in first 2012 the decline of numbers year customer following aslight quarters, apparent two in last this the increase planned, became As over year previous the customers (5 ing an increase than of 40,000 more customers of contract number saw Group an increase the thein time debitelsince first Foracquisition the the 2008, in Communications customers Mobile million in Figures 5: Table Customer development Key drivers of the business development high-value on a focus contracts core Communications Internet in with provider business its Mobile Mobile and lifestyle Group as a strategicdigital orientation the of confirmsthe positive development The . . 37 million37 to 2 12 million at year-end to 8 2011 Thereof prepaid customers prepaid Thereof Thereof customer ownershipThereof Thereof no-frills customers no-frills Thereof Thereof postpaid customers postpaid Thereof Customer development in the Mobile Communications segment

. 71 million71 (+14 .In this mainly sector, freenet sells con discounted phone mobile . . . 3 percent) .At year-end this totalled 2012 5 . . 50 million50 (+4 . . 7 percent) . 1 million . This development was mainly was .This development 08 million 08 customers, mobile The decrease is to decrease due the .The 2012 12. 31. . 5 million, to 5 . 79 million,79 represent 14 8 . 5 . 2 5 .79 .08 . 50 58 71 .

. 75 million)75 . 58 million,58 2011 12. 31. . 15 8 2 5 7 . .12 . . 19 07 37 75 - - - .

almost on par with par that on year previous almost of the (3 At 3 months which of were in charge first customer free the the for contracts, phone mobile online which area, offered until was year-end acquireto 2012 new customers quarter of 0 indecrease ARPU compared to year previous the (4 3 was period in no-frills from reporting the customers ARPU during year the ARPU customer compared stabilised to year previous the of contract development the charges within European the in Union introduced July 2012, during 2012 the at was 23 (ARPU) customer average monthly contract revenueThe per customer Prepaid customer No-frills Contract customer € in Figures 6: Table Monthly average revenue (ARPU) user per third to 22 quarter year (23 in year previous the to due effects seasonal . 0 euros the monthly average revenue per user in the prepaid sector in 2012 was in 2012 average sector in monthly prepaid 0 euros user the the revenue per The decrease is decrease primarily in no-frills .The the related scheme to promotion asales Monthly average revenue per user (ARPU) user average revenue per Monthly . 8 euros)

fi The slight decrease in contract customer ARPU from 23 slightARPU customer . The in decrease contract nancial year, thus and stabilised slightly level previous of the the below . 8 euros in the fourth quarter of 2012 is analogous to seen oftrend 2012 the quarter 8 euros in fourth the . 4 euros in the fourth quarter (3 quarter 4 euros in fourth the . 6 euros) This development was essentially by was a .This caused development Otherwise, due to of due capping roaming the .Otherwise, . 1 euros) . 5 euros) compared to the . . 9 euros, down 0 down 9 euros, 2012 . 23 . 3 . 3 . 4 euros per month 4 euros per 0 9 4

Group management report . . 6 euros in the .It involved previous . 7 euros 2011 . 23 4 3 . .6 8 1 .

: Assets, financial position and results and position financial : Assets, freenet AG · Annual Report 2012 Report AG ·Annual freenet 83

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 84 Group management report : Assets, financial position and results and position financial : Assets, tion toexpansion increase margin the our gross ofthe by of was profit the smart made no-frillsmainly and realised sectors be in valuable postpaid the vious yearvious to 276 by 3 decreased and internally-generated software millions that amounted to asum in high the single-digit to settlements income due concluded that in year, previous the fact the and this item activation, customer non-period included o other to year previous Compared the 2011, smartphones demand for high-performance increased further withthe in connection tariffs phone The reported to able was be base tomer fortunately, cus an increase quarters, contract of the in two stabilisationlast the and, relationshipscustomer during financial decrease the due focusing the to valuableyear2011 on scheduled the compared to year, previous the decreased base customer whichtract is result the of low-margin like revenue, average the con hand, other while revenue, prepaid the on from hand one of group the decrease revenue on the results ARPU, a virtually stable Communications to revenue Mobile segment the is segment the attributable The decrease of personnel expenses by 1 expenses of personnel decrease The previous year to 3,939 in 2012 yearprevious to 3,939 in the averageily of of from4,065 to the group due decrease employees number the The reduction of other op reduction The Gross profit Gross Revenue €’000s in Figures 7: Table Results and Revenue Compared to year, previous Compared the Group EBITDA Group result from discontinued operations discontinued result from Group operations continued result from Group EBT EBIT and chargeback fees, lower income from advertising allowances non-dependent on new on allowances income advertising from non-dependent lower chargeback fees, and lion euros to 58 by 5 Group result Group . g 4 percent to 3,089 ross KeyGroup the financialsof The other own work capitalised results, as in year, previous the capitalised results, work own other .The mainly the from p ro

. f . it mar . 9 million which is euros, primarily to due income dunning from lower 1 million euros is, on the one hand, connected with restructuring-related connected 1 million hand, one the on euros is, In contrast, during the course of the financial year 2012, first a first financial of during the course the .Inyear2012, contrast, gin . 0 million euros increased by 1 eratin .

g p ex . en revenue As in year, previous the .As percent of 98 almost . 9 million euros to 161 . 5 percent to 23 s e s by 38 p eratin 3,089,032 decreased from 3,266 from decreased 209,006 723,229 166,918 173,189 173,189 357,829 . . 8 million euros to 7 1 million euros compared to pre the 2012 g 0 in

. 4 percent c ome . 0 million euros is primar 3,266,619 An essential .An contribu- decreased by 27 by decreased 168,485 143,848 715,794 143,988 117,339 337,383 adjusted adjusted The increase could .The 2011 140 . 0 million euros .

6 million euros –177,587 .With 9 mil .9 20,446 40,521 29,201 29,341 Change 49,579 7,435 –140 ------.

from from –51 amounted to 117 assets these 102 acquisition with the inallocation connection of debitel: While in financial the year2012, purchase price due the to the in consolidatedbalance included 2008 werein first sheet that such as relationships customer to intangible trademarks, and attributable assets, compared to year previous the euros, respectively 42 respectively The is significantlyprevious year337 the value above of The The improved result, first of all, a special effect has to be taken be has to intoAprileffect consideration:of a In all, special improved first result, lion euros in financial the year2012 by 29 after-tax the Consequently, g allocation price chase differences arising year,previous debitelpur the from to temporary the attributable carryforward loss tax on assets tax of primarily deferred adjustment to value due lower the decreased, taxes deferred by 8 year 6 reported, been while in year previous the in of amount income 26 taxes from the in toCompared 2011, of amount 166 the p in 2012, Thus, increased 6 from tant control parameters, activities operating from flow cash the result is to average lower financial primarily the of amount net due debt attributable to ofamount 6 expenses in the interest non-cash-effective long-term financing—inone-off this context, financingnew, with old equity a private times the of from its replaced freenet 2011, g the effects, aresult above mentioned of the As customers end from writing due of the and of off receivables adjustments value from expenses as reduced suchincreases the management, in cost overhead efficiency by further explained be can result the tively impacted nying integration- of companies major levelmobile which and nega corporate at had the todue successfully the integration IT completed year previous of accompa the the and - 22 items of amount the in 2011 in one-off . 0 millionprevious this, eurosyear,for the in were off written depreciationon the . On the one hand, due to the improved result, the current tax expenses increased expenses to current due improved the tax the result, hand, one the .On de intere 2 million euros compared to year previous the . 3 million euros 143 from p re . 1 million euros in yearprevious the to –42 c s iation an t re . 9 million euros were incurred . 3 percent compared to year previous the (117 re-tax g s . 3 million financial euros inin past were the income accrued from taxes ult . 9 million increase euros were by generated—an 49 .

, which improved is total the of all interest expenses, income and . d c amorti ome f ome rou On the other hand, the decrease of other operating expenses expenses of operating other decrease the hand, other the .On . . rou p 2 million decrease which of the explains euros, most 8 million in year previous euros generated the to 173 rom taxe rom earnin Further major income from deferred taxes is, as in is, the taxes major income deferred from .Further s ation p earnin . As in year, previous the .As depreciation is the mainly As a result, the interest the cover, aresult, .As impor of the one decreased by 20 decreased gs . on in s on 9 million which incurred mainly had euros, been attributable to the continued operations in to continued the operations attributable . The remaining .The improvement interest of the 60 in year previous the to 8 60 gs f rom c c roup decreased by 20 by decreased ome On the other hand, the income from the hand, other the .On . 4 million euros . 1 million euros ontinue E BIT . 1 million euros to 148 D . A 3 million euros) , with 357 d op . With regard to . With this eration . 5 million euros had . 6 million euros or . 50 . . 8 million euros, 2 million euro; 2 Group management report .

s .

increased increased . 8 million . 2 mil . - - - : Assets, financial position and results and position financial : Assets, freenet AG · Annual Report 2012 Report AG ·Annual freenet 85

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 86 Group management report : Assets, financial position and results and position financial : Assets, continued operations continued of amount 0 the disposals at net book value)disposals amounted to to book at intangible net 11 the assets while total the remaining of the additionsships (additions net trademarks, and minus to purchase due debitel price allocation the acquisition, the such as relation customer 102 tisation in financial of intangible the assets year amounting 139 to is to amor depreciation and primarily the assets attributable of non-current decrease in year, previous the As are they dominated goodwill and by intangible assets 1,822 2011: (31 December The 2,528 2011: (31 December 2 was thus, euros and, Total assets assets Current assets Non-current m€ in Figures m€ in Figures total the 2012, A December 31 On Total assets assets Current assets Non-current Assets 8: Table andAssets financialposition to amount 173 therefore, The deconsolidation, the re final to due its ID” discontinued of “Next income to the from subsequent operations Due euros, or 20 or euros, lion in euros year,previous generated the this to an corresponds increase of 29 . 0 million euros of which were depreciation on assets determined in of context determined the euros0 million of which were assets depreciation on g non- rou Consolidated balance sheet figures balance sheet Consolidated c

p urrent a earnin . 3 percent 3 . 1 million euros gs . ss . from continued and discontinued operations reported in 2012, in 2012, reported operations discontinued and continued from . 1 percent below the total assets at the end of the previous year previous of the end at the total the assets 1 percent below et s . . ult f . 9 million euros) 2 million euros 4 million euros) s decreased by 72 decreased rom d 2012 12. 31. 2011 12. 31. In the financial year 2012, there was no wasresult there from dis financial .In the year2012, 2,528.4 2,474.2 1,822 1,750 . 723 705 i SS sc . .9 . 6 8 4 ET

ontinue Compared to group .Compared earnings the of 144 . .

of the group of amounted to the 2,474 . 4 million euros to 1,750 Shareholders’ equity Shareholders’ m€ in Figures equity Shareholders’ m€ in Figures current liabilities current and Non-current liabilities current and Non-current Total equity and liabilities and Total equity liabilities and Total equity Shareholders’ equity and liabilities and equity Shareholders’ d op eration

s was reported in 2011 in in 2011 reported was . 5 million euros . . 4 million euros, 4 million euros 2012 12. 31. 2011 12. 31. . . million 2 2 million 2,528.4 2,474.2 1,190 1,171 . . 1,283 . 1,357 . 0 mil The .The . . 8 3 1 4

- - - - are reported separately under “non-current assets held-for-sale” assets “non-current under separately reported are amounting to 7 2013, dateJanuary of 1 with an effective 2012 December level as in year previous same the to amount 424 2012, December 31 as per and, utors as retailers well and as distrib operators network are mainly customers, end from due are dominating accounts receivable the current item trade balance sheet assets, have mentioned to made, be payments advance by 9 assets other and by 19 by 39 assets tax increase deferred of the The date year previous of the reporting level as the on same which the iseuros, at about euros to 656 by 58 borrowings of the reduction especially the 2012, December 31 euros as per 73 to regard With non- increased by ratio 1 equity the Thus, companythe 9May 2012 on in financialMeeting of the formed year,General Annual the by resolved been which had –153 and profit, group net 2012 the 1,171 amounted to 1,190 equity shareholders’ the 2012, liabilities the On s side, equity and 705 2011: ber The over term contract of the the paid customer by and the component phone” mobile end toare “higher attributed the that such claims payment arisingfor contract phone mobile reflect the receivables from higher devices user quality an for additional fee end monthly to them for select that an increasing make customers fact of of offer use end our our the from number primarily accounts receivable results trade of the part increase non-current ofThe the acquisition ofcontext the reported of was debitel, calculated to due purchase in price allocation the the which been had trademarks, and of 30 decrease and liabilities, where values of a assets book the values and tax the between differences liabilities item tax the total also the includes deferred hand, other of temporary the on increased by 8 2011 which compared to December 31 forward, carry loss tax on assets tax that deferred this the item hand, one contains, the on 170 at 28 are plant equipment and reported property, 2012, December 31 per As 46 . . 8 million 1,357 from euros, 3 percent at the end of the previous year previous of the end 3 percent at the . 0 million euros effect opposite has the . urrent a current 3 million euros) . 6 million euros to 205 . 6 million has emphasized to primarily be to due euros, principal payments, . 6 million euros) . 2 million mainly euros, relationships to customer due depreciation on the ss et s .173 increased by 18 . 3 million euros to 27 c urrent an . 2 million euros of this 19 . . 2 million as of wellreceivables other decrease as the euros, . .In this increase the context equivalents cash of and cash 1 million 2011)to 1,283 euros (as December 31 per .

The assets of freeXmedia GmbH, which was sold in which sold was GmbH, of freeXmedia assets .The d . 6 million per disbursement dividend euros the from c harehol . . 8 percentage points to 48 8 percentage points urrent liab 2 million euros to 723 . In this context, it .In this has taken to into context, be account 3 million mainly euros, resulting reduced from .

. der 1 million euros 130 from As in year, previous the .As current under s ’ equit . ilitie . . 8 million euros (31 December 2011: 2011: December 8 million euros (31 5 million euro increase result from . 9 million which the is euros, about s , which in by total decreased y increased: On 31 December December 31 On increased: . 8 million euros (31 Decem 8 million euros (31 . 9 million euros . . 1 percent compared to . 9 million euros to . 4 million euros, Group management report . . 4 million . 4 million On the .On 5 million These .These They .They .

- - - .

: Assets, financial position and results and position financial : Assets, freenet AG · Annual Report 2012 Report AG ·Annual freenet 87

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 88 Group management report : Assets, financial position and results and position financial : Assets, lion euros compared to year previous the 594 2011: December (31 at atotal of amount 563 charges are reported Trade as well payables other as provisions accounts payable, liabilities other for and 1 from decreased factor, debt the by which EBITDA, is quotient divided the debt of net by 78 reduced to be d net the financial of the in course aresult, the year2012, As reported as liabilities in connection with the sale of certain non-current assets as liabilities non-current of certain sale with the inreported connection were GmbH liabilities the freeXmedia to sold the attributable 2012, December 31 per As by 36 operator as wellrights as to network amobile of liabilities distribution for reduction uled chargesto and payable distribution partners . 57 in 2011 to in 1 2011 57 . 26 in 2012 26 . 1 million euros to 451 . 5 million euros), to of 30 which adecrease corresponds . . 3 million 529 euros (2011: One of the main of the reasons .One this for is sched the . 9 million euros as per 31 December 2012 2012 9 million December 31 euros as per . 5 million euros in total e b of the group was able able was group the t of . 4 million euros) . .

. Thus, .Thus, 6 mil - - 2012 for 2012 at the amount ofat 21 the for 2012 assets in in consolidated the non-current of movements statement reported equipment year (21 amounted to 20 fixed of disposal assets, the from proceeds against off set equipment, and property as well in intangible as the in investments for outgoing assets plant, The payments notesthe to consolidated the financialstatements in subsidiaries”) of sale and operations discontinued held-for-sale, assets (“non-current as well as item 25 investments”) (“other initem associated 19 companies“), (“Shares 18 8 of subsidiaries, associated companies shareholdings other in and total the of amount by 7 to year, previous Compared the c the income tax payments and refunds 29 year: lion euros (previous increase of 46 ties) increased by 15 from investing flow cash the activi under iaries associated or companies are reported of associated sale companiesas fromthe of subsid (incoming sale the from payments revenue the for arising adjusted of subsidiaries sale the from operations, as wellued to year, previous Compared the entire including the for EBITDA Group, the discontin by 18 to year, previous Compared the c the 1 activities financing from flow Cash activities from investing flow Cash activities operating from flow Cash m€ in Figures 9: Table flow Cash flow cash Free equivalents cash and cash in Change receivables arisingreceivables hardware from sales increase corresponding hardware the of and of high-end of sales increased number ther operator, as well as to by fur and for distribution the network rights, a mobile partners of liabilities reduction to charges and payable distribution scheduled by the explained by 46 in increase working capital 2012 net of the The . 2 million financial euros received in past the year . intangible assets intangible and equipment and plant property, of disposal the from proceeds plus assets, intangible and equipment and plant property, in investments minus activities, operating from flow cash as defined is flow cash Free The decisive factors for this development were primarily the proceeds from sales sales from were forthis primarily proceeds the development decisive .The factors 1 million –16 from euros, . 5 million euros to 280 Important cash flow figures of the Group the of figures flow cash Important . 1 million euros) 1 million

1 . 8 million, basically as in year previous the (increase by 45 . 6 million at to alevel previous comparable the therefore, euros and, . . 3 million euros The investments in intangible assets and property, plant and property, in and intangible investments assets .The . 5 million which is euros, mainly to due improved the EBITDA . 3 million euro were all cash-effective . . 7 million euros) resulted in outgoing net from payments 2 million euros to –9 . In 2012, the net working capital developed with an developed working capital net the .In 2012, a a s In addition, in the financial year 2012, 24 in financial the .In addition, year2012, s h f h f low f low f rom op rom inve . –149 122.3 . 280 260 1 million euros in financial the year 2012 –9 In this context, we refer .In to this item context, . . . .1 . 8 million primarily euros be can 5 1 0 eratin s tin g They were completely . They g a a –190 241 262 –16 c c 55.4 2011 tivitie tivitie . . . . . 4 0 2 0 7 million euros)

Group management report s s increased increased improved improved . Change 7 mil 66.9 18 41 . 19 7 . . .5 1 3 0 - - - - - . .

: Assets, financial position and results and position financial : Assets, freenet AG · Annual Report 2012 Report AG ·Annual freenet 89

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 90 Group management report : Assets, financial position and results and position financial : Assets, or 7 or amounted to 260 intangible and plant equipment and assets, of disposal property, from the plus proceeds intangible and plant equipment and assets, minus in property, investments activities, 56 a tranche, fixed lion euros minus one-off costs) from the promissory note taken out in December 2012, 2012, note takenDecember out in promissory costs)lion eurosthe from minus one-off en-year tranche fixed In the financial year 2012, f financialIn the year2012, interestaccrued in of amount 20 the instead but non-cash-effective due, this on been had such payments no yearvious 2011, issued in financialthatso pre the the in paid bond yearis 2011 retroactively corporate interest that the the on fact primarily the from results interestfor paid out, have been 34 primarily amounted to long-term on interest bank loans, paid in 2012, Furthermore, with 153 activities financial past flow Incash from financingthe year,the impacted payments dividend financingstructure its diversify to and further issued in 2011 bond corporate of the 2016 tranche 5-year ofmonths the of and 4 tranche variable floating of2 a coupon tranche, five-yearfixed the for note which is into is abullet loan, divided promissory a44 The in 2012 made loan cated in of amount 80 the principal payments with scheduled 69 euros a in year, previous the period to same Compared the c the by 2 investing decreased activities from flow cash under to year, previous Compared the reported from interests proceeds assets non-current in in consolidated the of movements statement of were adistribution reported right, in of amount 46 the investments ware hard in EDP investments and Communications of Mobile our equipment shops, the of extension and renewal the systems, of IT our development further with the nection funds relatedprimarily and financed own from in con to internally-generatedsoftware In contrast, the freenet Group accrued 119 accrued Group freenet the In contrast, c . . tivitie 5 million euros 0 millionborrowings repayment of the to eurosand due refinancing2011 the April in . 9 percent 9 In the previous year 2011, in addition to cost-effective additions, non-cost-effective non-cost-effective inadditions, to addition cost-effective year previous .In the 2011, In the previous year, previous .In the outgoing net ofamount the had in flows cash Group the Thus, the Group was able to secure its financing beyond the maturing financingthe beyond to its able was secure April Group the in .Thus, s increased by 41 . . The increase compared to .The year, previous the 19 when . 0 million euros 6 million 102 year: euros (previous . . 0 million euro five-year variable tranche and a 19 0 million a and eurovariable five-year tranche The subscription was made at a fixed coupon of 3 at subscription afixed made coupon was .The . ree c ree . 3 million –190 from euros, a Compared to 2011, it increased by 19 to .Compared 2011, s . 5 million to mainly extension the euros, attributable . h f 1 million euros to 2 . 5 million accumulated euros been had low . , which is defined as cash flow from operating flow cashfrom as , which is defined 3 million euros (nominal of amount 120 . 14 percent p 14 . 4 million euros) . . 1 million euros 4 million euros to –149 . 82 percent p 82 . 0 million syndi euros the on a . s a h f for the seven-year the .for fixed . 5 million euro five-year low f low . . . 5 million euro sev . a for the first six first the .for rom f rom . 0 million euros, . . 27 percent p 27 0 million euros . inan . 1 million . 0 mil c in . a g ------. . .

with § accordancein 2013 Germany,January on 7 vonus Flossbach Storch Cologne, notified AG, sentence 1No ing rights) company to are notifying attributed pursuant the to to § be voting(6,318,741 rights) at that date amounted to and 4 2013 1January on threshold 3percent reporting the accordance with § vonFlossbach Storch Invest S tence 1No 1Sen ing rights) company Section to are notifying attributed pursuant the to to §22 be 0 amounted to and 2013 of 1January 3percent on threshold the AG below fallen had in accordance 2013 with § uary S (Luxemburg) IPConcept in following) the TM” Troisdorf (“MOTION shares TM GmbH, of the in Vertriebs MOTION 51 percent tion of all shares voting and in rights GRAVIS signed regarding apurchase agreement acquisi Group the the 2012, December 18 On date reporting the after events Significant (323,500 voting rights) pursuant to § 22 Section 1Sentence 1No voting rights) Section pursuant to §22 (323,500 viain with von Flossbach Storch Sentence 2WpHG conjunction SICAV, 0 and 1Sentence 1No to attributed von Flossbach to Storch be Section AG pursuant to §22 ing rights) at that date amounted to and 4 2013 1January on threshold cent reporting Trading (WpHG): Act ing notifications concerning accordancein votingrights, with § follow we received the 2012 date balance December the sheet of 31 after In addition, at retail our sales partners to support expertise systems necessary the TM “moon”, offers MOTION platform sales with its In addition, in online the market particularly AG’sacquisition freenet strengths, sales strengthens Office Cartel Federal lowing usual by the clearance Germany’s procedures merger to agreement acquire signed transfer apurchase and Group the 2013, February 20 On business retail market14 percent Apple in German the retailer with nationwide coverageis only Apple the has and amarket share of around giving control subsidiary Group of the the 2013, January 31 on closed tion was . 04 percent (48,500 votes)04 percent at that date (48,500 21 paragraph 1 WpHG that its voting rights in freenet AG had exceeded the 3per voting the that AG its in 1WpHG exceeded rights had freenet 21 paragraph . . 6WpHG 6 WpHG via von Flossbach Storch .6WpHG SICAV The transaction is expected to close before the end of Q1/2013, fol of Q1/2013, end the to before close is expected transaction .The 21 paragraph 1 WpHG that its voting that AG its in 1 WpHG exceeded rights freenet had 21 paragraph . Of these voting these 4 rights .Of . A . , Luxembourg-Strassen, Luxembourg, notified us on 3 Jan on 3 us notified Luxembourg, , Luxembourg-Strassen, . A . 21 paragraph 1 WpHG that its voting that its in 1WpHG rights freenet 21 paragraph , Strassen, Luxembourg, notified us on 4 January 2013 in2013 January on 4 us notified Luxembourg, , Strassen, Of these voting these 4 rights .Of Of these voting these 0 rights .Of GRAVIS also operates asignificant alsoonline operates .GRAVIS .Following acquisi the antitrust approval, . . 68 percent (5,995,241 voting rights) are percent (5,995,241 68 . . 68 percent (5,995,241 vot 68 . 93 percent (6,318,741 vot93 21 ff German Securities German 21 ff .1WpHG . 01 percent (9,500 vot 01 Group management report 22 paragraph 1 paragraph 22 . . 93 percent93 . 25 percent GRAVIS .GRAVIS The .The .6 ------.

: Significant events after the reporting date reporting the after events : Significant freenet AG · Annual Report 2012 Report AG ·Annual freenet 91

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 92 Group management report : Information required under takeover law according to section 315 (4) HGB (4) 315 to section according law takeover under required : Information majority at the Annual General Meeting Annual at General the majority jointly, acting parties obtain aseveral or party, if one to submit atakeover bid exists, control company at the loan obtain right a banks call whichto the the on influence conditionsthe consortium under loan syndicated of the transfer the AG upon on took obligations and that freenet in event the restrictions of violations contractual of certain conditions in or certain full under in part called may be contract loan liabilities syndicated the The under Group taken to freenet by on the banks control of Change call or acombination options or using (put two) of derivatives the equity or a public invitation by to issuingshareholders, rights to the submit tenders, delivery take exchange, place stock by through the means of apublic purchase offer,means by of 5July 2015 current percent ofshares the share before up or on to capital 10 to back buy Board Executive the authorised of 6 July 2010 Meeting Annual General The shares back buy to and issue Executive Board the of Authorisation AGof freenet of Association in Articles the 16 section and AktG 179 133, are sections of Association of Association Articles of the 5 (1) in with section conjunction MitbestG 31 section and AktG 85 84, to sections subject AG of is freenet 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 GmbH Holding via MSP indirectly and Drillisch AG atotal holds of 21 voting the of rights percent exceeding 10 Shareholdings shares is of voting on not aware transfer Board of the any Executive or rights restrictions The voting and restrictions transfer Share Meeting General Annual individual registered shares intodivided 128,061,016 euros is and share (capital capital The to AG 128,061,016 stock) of amounts freenet capital share of Composition 315 (4) HGB section to according takeover under law required Information the company subsidiariesthe its or exercised may company by subsidiariesity be the account on its or by or third of parties cated loan contract, freenet AG bears the risk the AG financingthe that subsequent freenet bears settle to contract, loan cated This is true in particular for the right the for .This to in in is event loan call particular the the true of achange of . . Such a change of control already exists, provided the obligation the provided achange .Such of control already exists, . . The Executive Board chooses whether the buyback shall buyback the whether chooses Board Executive .The 86 percent of the voting percent of the company, of86 the rights directly The clauses governing amendments to the Articles to clauses Articles governing the .The amendments . In the event .In the cancellation of the syndi of the Each share .Each vote confers one at the In some cases, freenet AG has freenet AG no cases, . In some .Aright to may loan call the arise .

. .This author . - - the company’s websitethe in area the Company/Corporate Governance management in statement corporate accordanceThe with § in accordance with statement § management Corporate vesting of the period less eventIn the of achange exercised may appreciation of control, rights regard stock be company the of agreement Indemnity AG freenet for unfavourable terms on that obtained are only be can or obtained cannot be contract loan syndicated . . Group management report 289a HGB 289a 289a HGB was published on published was HGB 289a : Information required under takeover law according to section 315 (4) HGB (4) 315 to section according law takeover under required : Information . - freenet AG · Annual Report 2012 Report AG ·Annual freenet 93

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 94 Group management report : Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report : Compensation Table 11: Table 10: Table accordance with Art a change on that are in not vesting based programme the inconditions are not included, in financial the year 2,618 thousand euros 2,618 thousand insation accordance with Art in financial the Board year2012 Executive the of Members were with a long-term granted the to nents incentive effect optionsany or stock compo compensation other appreciation rights, stock new No ance with Art in accord Compensation members’ details Board provides of the below table the lows; as fol is composed company’sBoard of the Executive for members Compensation The Compensation Board Executive Board Supervisory and Board Executive the for report Compensation €’000s in Figures €’000s in Figures Joachim Preisig Joachim Christoph Vilanek Esch Stephan Preisig Joachim Christoph Vilanek Stephan Esch Stephan Executive Board compensation for financial year 2011 according HGB 2011 financial for to year compensation Executive Board Executive Board compensation for financial year 2012 according HGB 2012 to financial for year compensation Executive Board

314 sect .314 Changes in the value of the stock appreciation programme or LTIP or appreciation .Changes programme stock in of value the the 314 Sect .314 compensation compensation . .1No 1,514 1,510 Fixed Fixed Fixed 6a of the Commercial of the Code .6a 444 444 445 445 625 621 .1No 314 Sect .314

In the 2012 financialBoard Executivecompen 2012 year .In the the compensation compensation Variable cash Variable cash 6a of the Commercial of the Code .6a .1No 1,104 1,370 144 480 480 222 574 574

6a of the Commercial Code amounted to Commercial of the Code .6a compensation compensation Total cash Total cash 2,880 2,618 1,195 1,105 1,018 667 589 924 It includes Compensation paid Compensation .It includes

. sation withsation withsation long-term long-term incentive incentive Compen Compen 2,999 1,091 effect effect 972 936 0 0 0 0 - -

compensation compensation 2,618 5,879 1,990 2,286 1,603 1,105 Total Total Total 589 924

- - - - antees or other warranties were issued for any of the members of the Executive Board Executive of the were issued any for antees warranties other or members of the guar no and Board, Executive of the to any members of the were loans extended No to Mr euros to Mr euros) thousand 454 year: euros totalling (previous thousand costs 549 service ongoing for past and Board Executive of the also obligations include pension to members expenses personnel The euros) sand - thou 4,014 year: (previous 2012 December euros 31 on thousand totalled 6,520 Board, forMr DBO Mr commitment granted to Mr euros) thousand 832 year: euros Mr for thousand euros) thousand 453 year: 1,531 and (previous Obligations (DBO)were Mr follows: as euros for thousand Benefit 974 Defined 2009 on1 May Officer as Chief appointed Executive was he financial year,pension was2009 commitment Mr granted an to indirect commitment pension angranted towas indirect Mr 2004 In November euros) thousand 144 year: (previous Mr euros Mr for sand thou provisions the LTIP the for amounted to 2012, 1,286 programme December of 31 As notesof the to consolidated the financialstatements years closingprevious’ in we date refer to item remarks our were 27 exercised in 2012; that the on existed Board of the by members held appreciation rights stock ofAll the clauses non-competition post-contractual for euros thousand to 400 amounting bers mem Board Executive to made former payments above, table figures the shown the in inchanges to addition to and, vesting the conditions appreciation rights; stock the for to euros due thousand amounting compensation compensation; negative to 587 fective not considered as cash-ef euros time at of in the payment 2011, thousand ofvalue 3,586 this LTIP the from compensation euros, also included at fair programme 2,880 thousand amounting variable and fixedcompensation compensation to cash-effective year’s last Sect in compensation accordance Board Executive the with year previous Art In the 2011 or expired, in 2012 expired, or since all were exercised, rights 2012, December as of 31 Board Executive of the members Mr for appreciation rights stock for made euros Mr for thousand euros Mr for thousand amounted tosion appreciation rights stock for 332 Board Executive of the members former these for recorded euros been had thousand ling 273 Preisig amounted to 751 thousand euros (previous year: 468 thousand euros) thousand 468 year: .Preisig euros (previous thousand amounted to 751 Preisig (previous year: 321 thousand euros), and 386 thousand euros forMr euros), thousand thousand .Preisig 386 and 321 year: (previous .1No Vilanek, 84 thousand euros to Mr thousand 84 .Vilanek, . 6a of the Commercial Code amounted to 6,279 thousand euros thousand amounted to Commercial of the 6,279 Code .6a .Preisig 174 and euros to Mr thousand .

Spoerr, Mr . Spoerr, Vilanek (previous year: 481 thousand euros), 857 thousand euros for euros), thousand thousand 481 year: 857 (previous .Vilanek On 31 December 2011, provisions total appreciation for stock rights 2011, December 31 . On For 2012, 250 thousand euros went to Mr thousand 250 .For 2012, .Preisig euros Mr for thousand 419 and Krieger and Mr and .Krieger As of 1 September 2008 freenet AG over pension took freenet the 2008 of 1September .As .Preisig by debitel AG . Preisig, and 232 thousand euros to Mr thousand .Preisig, 232 and Berger, as former members of the Executive of the .Berger, members as former .Spoerr, Mr Group management report Esch; and for 2011, 138 thousand euros thousand 138 2011, for and .Esch; On 31 December 2012, the DBO for DBO the 2012, December 31 .On On 31 December 2011, the provi the 2011, December 31 .On Krieger or Mr or .Krieger On 31 December 2012 the 2012 December 31 .On .Esch Vilanek, 125 thousand thousand 125 .Vilanek, No provisions .No were .Berger, as former : Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report : Compensation Esch (previous (previous .Esch Vilanek when .Vilanek In addition to .In addition . Esch Vilanek, 191 191 .Vilanek, .Vilanek .Esch . In the Esch .Esch The .The 314 .314 . . . 1 . ------freenet AG · Annual Report 2012 Report AG ·Annual freenet 95

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 96 Group management report : Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report : Compensation ■ ■ 2011: 1 Junefollowingthefrom apply rules Vilanek, Christoph Officer Chief Executive For the ■ ■ ■ 2011: 1 January from following apply the Stephan rules Board Esch, Executive of the member For the ■ Berger: Eric and Krieger Eckhard Spoerr, Axel members Board Executive former the for Arrangements plans pension are and as follows: tracts provisionsCompensation in event the of premature termination con of employment ceasing employed to be Compensation provisions for event the of Executive the of amember Board ■ ■ ■ ■ ■ ■ ■ ■ pursuant to § company of the cause is not good for part the on contract mination service of the Group EBITDA for the current the for financial EBITDA Group year Long Term Incentive of Account to shares number that the result is the from added shares of virtual in number the the BGB, §626 under cause whichfor is there good company, of the part the on contract termination of the service of the part not form third of final annual fixed salary (guaranteed pension) (guaranteed salary fixed annual final of third freenet predecessor company of legal the its Board or Executivethe foreach on yearof finalcontractual commenced annual salary fixed paid or the value of pension entitlements Mr of entitlements value pension the paid or reach age they latest the of when 27, to amaximum totalpension final of amount the children until training, of vocational their or end terminating schooling the at the life or any for orphan’s pension companion, and spouse annuity the for Survivor pension) get company, of the Board to amaximum of one-third of final(tar annual salary fixed Executivethe foreach on yearof finalcontractual commenced annual salary fixed From birthday, Mr his 60th place in remained achieved, being objectives respective the and relevant vesting of the period expiry Stock which appreciation have rights exercisable to due already the become reach age they the of 27,when to amaximum totalpensionpaid final of amount the children until training, vocational or of terminating schooling end the latest at the life or any for orphan’s pension companion, and spouse annuity the for Survivor the time ofthe apositive termination, it shows balance provided Mr revoked, is his or to Board termination, appointment the of term, cancellation otherwise, or was targetA five-year signed agreement From birthday, Mr his 60th pension) freenet predecessor company legal of the its Board or Executive year the on commenced shall receive amounting apension to 2 Board Executive of the members birthday, above-mentioned From the their 60th . de AG, to a maximum of one-third of final annual fixed salary to(guaranteed amaximum AG, ofde one-third of final annual salary fixed . Vilanek can claim can .Vilanek payout for Long-Term of the Incentive Account at . 626 BGB, or that the revocation of his appointment to the Board does of revocation does that his or the to Board appointment the BGB, 626 . Vilanek shall .Vilanek receive amounting apension to 2 Esch shall .Esch receive amounting apension to 2 . 5 percent of final annual fixed salary foreach 5 percent of final annual salary fixed If the service contract ends due to expiry to due ends expiry contract service .Ifthe . Vilanek would obtain were if would to he .Vilanek die . . de AG, to a maximum AG, ofde one- Provided that the ter that .Provided the . . 5 percent 5 percent - - - . . There are no service contracts with any subsidiaries AG of contracts freenet are service no There ■ ■ 2011: 1 June JoachimPreisig, Board from following Executive apply the of the rules member For the ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Group EBITDA for the current the for financial EBITDA Group year Long Term Incentive of Account to shares number that the result is the from added § under cause whichfor is there good company, of the part the on contract termination of the service of the part not form pursuant to § company of the cause is not good for part the on contract mination service of the other contractual conditions, within a period of twelve months from the end of end the from months of twelve within conditions, contractual other aperiod to theall remain appreciation rights stock subject in exercised, force be can and in invalidity, or earningsto capacity acomplete reduction in event or the of death, eventIn the of Mr reach agethey the of 27, to amaximum total pension guaranteed of amount the dren until training, vocational or of terminating schooling end the latest at the when life or any for orphan’s pension companion, and spouse annuity chil the for Survivor the time ofthe apositive termination, it shows balance provided is Mr revoked, his or to Board termination, appointment the of term, cancellation otherwise, or isorphan’s pension paid monthly times the amounting payment lump-sum At aone-time to this 24 point, will orphans cease to entitled to receive orphan’s be pension age monthly of the 18, Mr that pension percent of the orphan’s pensions combinedand may 90 not exceed of service length actual the on is there hence ascaling based pension guaranteed of the to requirements, legal according is calculated which arise, to prerequisite non-forfeiture conditions the early, Mr sion in of amount 9,333 the Mr retirement reaching on Upon age the of 60, current the for financial EBITDA Group year Long Term Incentive of Account to shares number that the result is the from added § under cause whichfor is there good company, of the part the on contract termination of the service of the part not form pursuant to § company of the cause is not good for part the on contract mination service of the time of apositive termination, it shows balance provided not apply does restriction 12-month the cause, todue good not later but term of than the end by the employment, custody rights on the basis the Preisig Joachim on for pension guaranteed rights of the custody binding for orphan’s pension and individual spouse annuity child the for Survivor A five-year target agreement was targetA five-year signed agreement revoked, Mr revoked, is his or to Board termination, appointment the of term, cancellation otherwise, or was targetA five-year signed agreement .Preisig to entitled was eligible or time at for of the his death .Preisig once and reaching shall after age receive the of 60 apension, Esch can claim can .Esch payout for Long-Term of the Incentive Account at the 626 BGB, or that the revocation of his appointment to the Board does of revocation does that his or the to Board appointment the BGB, 626 626 BGB, or that the revocation of his appointment to the Board does of revocation does that his or the to Board appointment the BGB, 626 .Preisig claim can payout for Long-Term of the Incentive Account at Esch terminating his service contract for any good cause or due or cause terminating forany .Esch good contract his service .

. . 00 euros (guaranteed monthly pension) monthly euros (guaranteed 00 626 BGB, the number of virtual shares of virtual in number the the BGB, 626 626 BGB, the number of virtual shares of virtual in number the the BGB, 626 If the service contract ends due to expiry to due ends expiry contract service .Ifthe If the service contract ends due to expiry to due ends expiry contract service .Ifthe Group management report . . .JoachimPreisig shall receive apen Where such termination .Where is Provided that the ter that .Provided the . Provided that the ter that .Provided the .

: Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report : Compensation On reaching .On the If he leaves .Ifhe Widow’s .Widow’s . - - - - . freenet AG · Annual Report 2012 Report AG ·Annual freenet 97

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 98 Group management report : Compensation report for the Executive Board and Supervisory Board Supervisory and Board Executive the for report : Compensation ■ ■ result of exercising their aswell office for astaxes turnover as a incurred forexpenses are reimbursed members Board Supervisory Furthermore, thus was 924 activities Board total Supervisory for compensation The financialthe for resolution appropriation 2012 profit the on year depends paid out be also recognised as an expense of 113 companythe 405 receivedof fixed compensation Board of Supervisory the of members the during financial the For theiryear2012, activity this amount times ahalf and one vice the this chairperson receives amount, double Board Supervisory the basic whichamount fixed is of in the form payable the compensation financialprevious for the year holders in excessidends of 0 euros each for 0 in of amount compensation 500 the performance-based of each end financial the also receive, after year, members Board variable Supervisory The third 2010 the from of quarter with effect in meetings actual participation phone as conference held as well committee and calls, meetings as for Board Supervisory for fees attendance waived Board Supervisory the self-restraint of avoluntary agreement, part As committee ofeach the meeting euros for in an of addition 1,000 attendance fee MitbestG—receive (3) 27 ance with section in exception accord the committee of the formed committee—with Board to aSupervisory he/she meeting Board attends each Supervisory euros for receives in an of addition 1,000 attendance fee member Board Supervisory Every this amount ahalf and times one vice the this chairperson receives amount, double Board Supervisory Board each full financialSupervisory the on yearmembership of euros for 30,000 receivebasic fixed of compensation members Board Supervisory The ■ components: three of consists and of association, is compensation articles by governed the Board Supervisory The compensation of principles Basic Compensation Board Supervisory share details other ownership and held, rights appreciation stock amounts, compensation about in particular information, ther Please also in refer notes to the to item consolidated the fur 36 for financialstatements ■ ■ ■ Performance-linked compensation Performance-linked Attendance fees and Basic compensation, Basic . 0 thousand euros 0 thousand . . . 10 euro per share euro company of per the which10 is distributed to share the Performance-based compensation of compensation 406 .Performance-based Whether this performance-based compensation will compensation indeed this performance-based .Whether The committee chairperson receives double this receives amount double committee chairperson .The The extent of the compensation is compensation of the limited extent . The to that . .

Supervisory Board members who belong belong who members Board .Supervisory . 0 thousand euros attendance and fees 0 thousand . The chairperson of the chairperson .The . 5 thousand euros was 5 thousand The chairperson of chairperson .The . 5 thousand euros 5 thousand . 01 euro in01 div . . - - - -

. .

■ ■ ■ ■ ■ ■ company the for could arise from: opportunities Further and processes structure overall are of the systems an integrativement organisation of freenet’s part for a riskrequirements management system itoring within which management and complies system Group, the with all statutory Tomon up has anearly-warning, efficient set AG Board Executive freenet the this end, customers and company,our employees damagepriatethereby averting measuresto arerisks, taken to identified deal with the communication to of risks responsible executive the is to designed ensure that appro way logical to right the incated decision-maker asystematic, in company the early by on each of executives communi our and are futureny’s detected development AGof freenet risk system managementsafeguarding isvital for long-term the effective An continuity management Risk Risk report towas ensure base customer quality customer to and stabilise contract the services data and mobile systematicallyon voice AG freenet focus financialcontinued its In the year2012, Opportunities report risk and Opportunities ■ ■ ■ ■ ■ in in following particular: the market developments opportunities pany sees ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ucts by also shops of marketing the additional improving prod Further performance the partnerships; sales exploiting new and by existing channels expanding distribution of power sales the strengthening The tures; qualityContinuous and to improvements process sustainably cost reduce struc cations; mainly testing of strategic options, implementation in and The communi mobile isfaction; increase sat customer to systems of consolidation further IT The development and terms for ones; conditions and new develop and models intensification steady The business of relations withstabilise suppliers to existing related of and flat-rateusage, sales products towards trend devices expensive (smartphones) more The associated and higher conditions concomitant with the in improvements terms and operators, of network A merger marketingImplementing and products, digital new lifestyle Mobile internet usage trends; Mobile willingnessIncreased to of pay customers devices; mobile for . The risk is management .The system meant to ensure that to compa risks - the . . In the marketing of smartphones and flat-rate tariffs, the flat-rate and focusmain marketing .In the tariffs, of smartphones . The systems and methods of risk manage methods and systems . The . The timely .The The com .The Group management report ------: Opportunities and risk report risk and : Opportunities freenet AG · Annual Report 2012 Report AG ·Annual freenet 99

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 100 Planning and controlling processes controlling and Planning Operational riskmanagement Group management report Risk identification Risk Group controlling Group Operations : Opportunities and risk report risk and : Opportunities and risk evaluation risk and Risk assessment requirements regarding the risk management system system management risk the regarding requirements (i systematically build their risk awareness risk their build systematically agement within Group the responsibilities and distribution of the tasks of documented risk and man categories, dealing for risk with these with along major risk astrategy the Group categories the for In amanual has defined that is Board Executive continually the improved, and amended which is Group, Board to submitted Executive whole the the for company occur they should investigate and risks of their probability their and implications occurrence, the the for Board to Executive the reported directly enough—are substantial and—if identification their after right controlled and detected are risks dates inexisting risks aformalised new risk and reporting update or subsidiaries and identify individual departments freenet’s basis, a quarterly On 8: Figure . e .risk risk strategy, culture, risk guideline)

Risk reporting according to Kon TraG: according reporting Risk Risk management system Market and competition risks competition and Market freenet AG freenet of system management risk the of organisation structural and Process 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 freenet of Board Executive Structural organisation Structural Process organisation Process Technical infrastructure Audit committee Audit Risk management Financial risks Financial Legal risks Legal Tax risks Tax .Employees are familiar with this manual it and to is used The individual risk reports are combined into arisk individual report risk .The reports Risk communication Risk . Also between the regular reporting regular the reporting between .Also The risk reports describe specific specific describe risk reports .The appropriateness and effectiveness Group auditing department Review of the operability, operability, the of Review . Audit of the early early the of Audit warning system warning Group auditor Risk monitoring

- the risk report for further explanatory remarks on the risk the on management system remarks explanatory further for riskthe report monitoring Group across of the risks management and early systematic also detection, riskbut the operating management, internal of riskthe the not only includes the management control system system, part controlsprocess plausibility to the check automatically of the results aggregated manual on hand other the on and hand, one the on thresholds with alert processes trol internal Group’s in automated on freenet Key control are con IT based system elements in employees chargetrain the internal derive and guidelines, followed, to standards other be and requirements legal including with to regard analyse their new processes, permanently departments The principles responsibilitythe managing for according their control own to processes, common mission) of COSO (Committee Organisations Treadway offramework the of Sponsoring Com internal Group’s internationally freenet the control follows The system recognized Group freenet the in system internal the of control elements and Definition (2) 315 no.section 5HGB) in relation and to accounting Group the (5) process(section 289 Key features of internal the control risk and management system times all at ensuring risks decisionof timelyappropriatethe notification to Board, makerExecutive divisions corporate various of the heads are also in constant communication with the future and measures are jour-fixe also at discussed developments these meetings at regularner “jour-fixe”which for allheld are operations relevant meetings, in atimely man developments operational is kept about Board Executive informed The Group indicatorsthe in financialperformance tonon-financial the the both extends and to system manage that monitor and business on-going operations reporting monthly management upthe has a riskcomprehensive set the management system, Beyond forming main regular the the review focus risk of the reporting adapted and developed are systems constantly and reviewed, risk managementThe methods Board Executive the from needed porations risk pursuant the of rules governing system management the to stock cor effectiveness AG freenet audit the monitors committee, the in and particular Board, Supervisory The The Executive Board of freenet AG has entrusted all of the Group’s departments with AG of all freenet has departments entrusted Group’s Board of the Executive The in particular sions accounting provi legal proper and tive, economical compliance and pertinent with the The freenet AG internal audit department plays a supporting role here, with here, role plays AG asupporting internal freenet .The audit department It comprises all the processes and measures and that .It comprises to are all effec processes applied secure the The Supervisory Board is updates as and involved Board through regular reporting Supervisory .The . . . . . Please refer to the “Risk management” section of section management” .Please refer to “Risk the .

Group management report .Recent . The .The As .As ------.

: Opportunities and risk report risk and : Opportunities freenet AG · Annual Report 2012 Report AG ·Annual freenet 101

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 102 Group management report : Opportunities and risk report risk and : Opportunities ing process ing account Group the to regard with measure monitoring process-independent final the financial reviewsubsidiaries included statementthe from of the and the forms represent In particular, audit consolidated the ofGroup’s the auditor the financialby statements itoring review activities with process-independent are also auditor mon involved Group’s Group review other and in bodies freenet The the of controls purpose and aware need wherein of involved the all employees the are very of acomprehensive, apicture constantly evolvingyielded internal control system annual review internal of the control in 2012 system audit department’s Group The Board ticular monitoring the audit under of AG’s the committee of freenet Supervisory in par Board, Supervisory AG of the of behalf on freenet audit department Group the reviews by including process-independent control the elements arethere extraordinary liabilitiesdisclosure and of assets in consolidated the financialstatements and measurement recognition, accurate an and stocktaking inventory proper ensures data detailed underlying of the of all checks relevant interim random and results depreciation ing-relevant accruals via data invoicing raw the and to of adjustments, value customers automation crosschecking formation of and of ranging all the invoic from relevant data, internal in Group’s the regular control are at elements aimed anThe system extensive of Association provisions legal with the Articles the and areensure in fully atimely that recorded manner in business accordance transactions accounting Group reliable and proper securing at aimed measures control internal The accounting reliable Group and Key to proper ensure control activities regulation and AG consolidated freenet the financialstatements to packages as tem, well transition as the subsidiaries’ reporting the from standardised consolidation EC-CS sys SAP the and SAP-FI between interface the regularly inspects consolidation EC-CS system authorisations SAP of the access and regularly accuracy AG’s reviews the freenet auditing Group department Excel in out MS is carried statements Excel managed in MS which are packages, individual the notes reporting arecase, taken standardised the from accounting summarised Excel in subgroup then inCSS and accounts various MS automatically obtained the from that data previously had been by entering reported manually sometimes and tem in ways—automatically “FI” various module via SAP the dations etc equity, the and income debt consoli as well expense statement, as solidated flow cash con the consolidated the consolidatedpreparing the income statement, balance sheet, consolidation level top at as the its Group system module “EC-CS” SAP’s uses areies essentially using accounting recorded CSS and local by SAP systems Accounting company the for AG’sof freenet financial processes statements subsidiar accounting Group process the of Structure . . , the data reported by the subsidiaries by the is entered into reported data , the consolidating the sys . These automated controls are supplemented by manual plausibility checks checks plausibility manual by supplemented are controls automated These Also the consolidation the .Also notes of the to consolidated the financial . . . The freenet AG auditor Group freenet .The .

In addition, .In addition, freenet AG .freenet .In each When .When .This ------. . els in the market could also have a negative impact on freenet’s marginsels in market the could freenet’s also on have impact anegative in market customer the revenuereduce per will Agency Network Federal by charges’ the ‘termination of the reduction A further channels toThis lead of can customers sales aloss and providers ratesservice mobilethan better to able offer are partly operators network market of the out providers service increasingly to and forcing moving themselves over mobile to marketing their products their tariffs structure operators work net the how on business provider are largely dependent Margins service in mobile the financialposition this results and will company’s assets, the on have impact anegative tion measures AG to strives freenet minimise readiness to switch customers’ with reten customer its financialposition this results and will company’s assets, the on have impact anegative to ready continues switchenue are to very customers fall and Strong acquisition, customer competition also to new leads on higher while costs rev any and/or given operation make can difficult it more to gain market share in revenue, to of loss market toshare lead can to shortfalls and pressure margins on in withfraught intensive high willingness customers’ the competition and to switch arisepetitive risks this from sector terms revenues earnings and of both in Group freenet the for sector communications important Mobile is most the by far risks competition and Market financialposition AG’s results and freenet assets, could significantlyaffect current the from areas perspective, ual or risks of seen risk that, individ those on below elaborate we Group, freenet the for all identified risks of the Of risks Major 9: Figure 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 If it does not succeed adequately at this, or only not at succeed at adequately or inappropriate this, .Ifit does cost,

system management Risk .Moreover, mobile to due their business structure, The telecommunications .The continue markets to be .Accordingly, significant market most the and com Apart from this, mobile network operators are operators network mobile this, from .Apart

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103

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 104 Group management report : Opportunities and risk report risk and : Opportunities not made a call on their mobile phone contract for three consecutive months nor written consecutive three for nor months contract acall their phone on mobile not made AG if have they ruling, cannot freenet bill customers According its court to district aKiel financialposition results and company’s assets, the on impact an adverse in time AG to back card freenet their term SIM lease if did of they not the send end the tion and AG termina cannot freenet charge after to- afee customers of Schleswig, Court District Higher the ruling,by whichAccording has confirmed since court to been district a Kiel company’s results the could on have impact anegative hotline of will charge free 2013 waiting June from service be customer times the for to Telecommunications basis amend the Act On of the Legislation dated 3May 2012, blocked being card the about additionallyhas grown warned to debtor has euros been the 75 and if their of card debt defaulting customers SIM in the future AG only block can freenet of Justice ruling beginning issued atAccording the Court of 2011, Federal to aGerman renewed be not possibly that have would at implemented higher to terms be coulding partnerships or new or could also at to exist other lead gross activations channels of partners sales loss and The forpurely promotional purposes customers these to phone diding not explicitly customers give their agreement as many management the of exist existing customers, regulation considerably impacts promotional for purposes used being as “OPT-IN”) (known agreement explicit prior only after purposes advertising for by phone contacted mayConsumers be a higher commitment capital marketing and risk devices business are the communication with expanding attendant price on mobile risks There company the on earnings impact prospects negative tained this purchasingcan have a susmodels, attractive not offer do operators network if the voice services declinesprice-related in internetofrevenue mobile from to offset opportunities growth rise to in due strong of use services data the siderably operators consolidation network be mobile among that will out there aresult persistent competitive of the ruled pressure As it cannot be Since 2008, mobile communicationsincreased con mobile revenue from “non-voice services” Since 2008, to in market participate this growth in order brands, “debitel-light” “callmobile” and “klarmobil”,with “freenetmobile”, the steadilyby the growing discount market margins is B2Cmarket exacerbated communication mobile for in German the services sure to lead and aweakening model provider service of the Upon confirmation of the ruling in possible appeal proceedings, this rulinghave confirmationcould proceedings, the of possible .Upon appeal in A reduction of network operator premiums operator in this area of network will also likely .Areduction result in This could adversely affect the company’s assets, financialposition andresults the assets, company’s affect .This could adversely If freenet AG does not manage AG to does .Iffreenet generate appropriate reach mobile or . Consumers have .Consumers to explicitly agree to their information . Apart from new customer acquisition, customer new from this new .Apart freenet AG also does business AG in alsothis .freenet does market . .This could competitive reduce pres . It is since possible longer no then . freenet AG plans .freenet to the use The pressure prices and on . The . . . .This - - - - - . exists if 25 percent or more of the shares if of 25 voting the more or percent or united areexists through first rights other cent united shares of the asingle more could or be under shareholder 25 per result additional or purchase of of shares asale company’s by shareholders, the level at shareholder actions wards) time by harmful acquisition of the the by measures are trans and about brought carryfor loss tax income negative (corporation trade and deducted or of any not settled elimination occurrence company (partial) The the on thisof has influence no the as risk, to or buyer interests with agroupthe parallel of buyers unitedto be in a tosingle a ifbuyer, are they transferred shareholder to close to persons GewStG (9) 10a in with section conjunction if applicable 8c KStG, in accordance as or awhole, harmful acquisition withthe section in part lost could be by time of the deducted or not settled carryforwards) loss tax (corporation trade and acquisition (harmful with interests parallel of shares), company’s income negative the by asingle held by shareholders or several indirectly shareholder or directly come to be If withinpercent five more shares the years or of or 25 voting rights the in company changesand in composition the of shareholders involving inflows capital changes transactions other form, contributions, of corporate through lost be partially or wholly could authorities, fiscal by the assessed far alsoand so companies by Group, the declared in freenet the carryforwards loss tax trade and ration turing status legal of corporate risk ofThe divergent interpretations valuations and to in applies any particular restruc audits tax to external not subject usually they are thatof may taxes because in not yet have audited, particular even been during audit their tax of any fact underlying assessments different or to regulations tax of interpretations different to come authorities fiscal the if changes will changes or occur to that result carryforwards, loss arrears payments in tax that finallyhave it possible not audited, yet periods that been Foris assessment always risks Tax financialthe for companylosses alsofailures and or result to of lead loss customers can in the faults by system caused continuity its and successful business operations including company’s for centres the data billing and is of major importance systems, thetechnicalMaintaining of availability infrastructure, operational the efficiency and Technical infrastructure operations of results and position financial is this such obligation, no could have implications negative assets, company’s net the for lines for its Telekom’sservices preselection obligationcall-by-call and to offer Deutsche reviewing is currently Agency) Network (Federal Bundesnetzagentur The financialposition results and company’s assets, the on impact adverse obligated tobe in refrainfuture, charging from fee which the could have anon-use an (non-use)an SMS Upon confirmation of the judgment on appeal, the the company would on confirmation appeal, judgment the of .Upon Against this backdrop, it cannot be ruled out that .Against out as this the ruled backdrop, it cannot be Therefore it cannot be totally corpo that out the it cannot be .Therefore ruled . . . . Network outages or service problems problems service or outages .Network . The same is true for the types types the for is true same .The .Shares are considered . The same risk same .The Group management report .Ifthere - - - - - : Opportunities and risk report risk and : Opportunities freenet AG · Annual Report 2012 Report AG ·Annual freenet 105

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 106 Group management report : Opportunities and risk report risk and : Opportunities impairment testing in subsequent periods can result can inimpairment major write-downs testing periods in subsequent such as relationships customer intangible assets trademarks and and of goodwill consolidated major Group amounts shows balance freenet sheet The ratings credit Funds are usually at commercial with invested high time or deposits as banks call money rate arising risks variable-interest financial the from debt as accordingly anatural and hedge serve mitigate EURIBOR) interest or the EONIA on (which holdings cash however the are mainly invested at interest variable rates based July 2013 31 with an interest are loan secured that cap runs through syndicated variable rates the for variable-interestmix of financialand fixed- debt largelyrisks in relation to EURIBOR the to regard our With variable-interest financialcompanyto rate interestdebt, is subject results and position financial AG’s freenet on assets, such as adeteriorating impact anegative economy—have tors, with fac theirinother or own interaction can—on restrictions above-mentioned The as any especially shareholdings acquisitions of assets, sales or law, corporate under provision the to change of structure collateral, Group’s the as well measures of implementation the activities, business Group’s to the changes regarding continuing credit agreements the covenants), and (undertakings tual restrictions to AG in which view of agreed freenet AG’s freenet financialleeway is operating limited Furthermore, and contrac by certain e within stringent restrictions, directly money also down can draw revolving of the GmbH case creditthe line, mobilcom-debitel in guarantor; the GmbH mobilcom-debitel AG and isfreenet borrower in the each case company’s financial the leeway restrict credit agreements year of the end by the down drawn which not been had euros, terest tranches 63 and euro variable-interest tranche as totalling 119 books the on were shown 2012 December liabilities Group’s the note signed in resulting to promissory banks new 2012, fromthe refinancing of2011 the April in which were as part implemented 416 2012: December as at 31 (shown books the on bond corporate pon 119 2012: December as at 31 (shown books the on loan variable-interest syndicated a from stem first borrowings under shown to banks of financingthe to riskliquidity Wereduce avariety use instruments risks Financial legal consequencesabove-described apply accordingly with interests parallel asinglemeasures shareholders several under or shareholder The company is permitted to raise loans beyond these credit agreements only credit agreements company these to .The raise beyond loans is permitted .From that interest date the rate are explicitly longer risks no on, secured; . In addition, the Group has arevolving Group the credit line .In addition, totalling 100 million .

. g .in to order financefuture strategic investments For example, the company is subject to restrictions company to the restrictions is .For example, subject . 7 million euros fixed-in distributed separate to two The company . byThe risks counters having these a Risks arising .Risks changes from in interest . 9 million euros),- afixed-cou from and . . . 4 million euros—a 55 . . The covenants of .The the As of 31 December December of 31 .As There is arisk .There that . 5 million euros), The liabilities .The . . 7 million . The .The - - - evaluation review proceedings review evaluation companyThe likewise therefore assumes that this will share the on also have impact no in avalid manner increase capital that the through contribution in performed kind was to France Telecom have would voting no had rights claims against France Telecom running into shares that the issued billions further and company the hand to entitled still one would that compensation the consequence on be and/or flawed was notwasthat the of anycontribution withthevalue, in kind rendered predecessor, company’s 2000 legal in the inbution kind of November mobilcom AG, increase capital view that the the through contri hold individual shareholders Some of any counterclaims amounts grounds and the company the may make sumthe of 7 anticipated be it should that France upheld, legally Telecom will claim company the from by it Telecom bound not feel does company valid to has indicationThe and agreement no that considers be the France challengedbeing of by individual anumber shareholders France Telecom associated and companies companies mobilcom with Group agreement enteredof former into other asettlement predecessor, company’s legal anumber the being and mobilcom AG, 2002, In November of mobilcomin AG merger the freenet and share of the exchange (Reorganisation Act) UmwG according appliedratio 15 to section of mobilcom AG shareholders freenet and Former risks Legal in separately required shown this to management be report Group exchange or classified rateas changescurrency immaterial be can not aretherefore and opinionIn the company, of the financial other relating risks such those as to foreign right financing loanscancel the for the banks to financing with the banks agreements circumstances to able being certain longer result deliver no its under on in Group the this could development, anegative conditions undergo macroeconomic should If the financialposition results and company’s assets, the on impact losses income or of currency loss balance the on sheet shown assets other and accounts receivable with trade in exist connection of non-payment Risks mined and was audited and confirmed by the the by court-appointed audited was confirmed and mined and merger auditors exchange as the carefully was ratio deter adjustments, that cash willand no there be However, it is company’s assumption the share that the exchange appropriate was ratio even plaintiffs claimthe in if were the they notcompensation among shareholders, cash in settled difference willbe exchange that the inappropriate, was ratio proceedings the legal in these decrees court Should these allowances turn out not to be sufficient, thiswould allowances negative turn sufficient, have not to a out these be .Should . 1 billion euros, which it waived as part of the agreement, and will and contest agreement, of the 1 billion which it as part waived euros, Allowances were made in the balance sheet for expected expected for in balance were the made sheet .Allowances . The cash settlement will have settlement cash paid to to all .The be affected .However, to be shareholders view of were these the The non-payment risk consists of any unexpected risk consists of non-payment any .The unexpected Under certain circumstances certain this .Under could to lead a The validity of this settlement agreement is agreement of validity this .The settlement . de AGde into AG what is freenet now . . de AG reviewde have for a court applied It is the company’s understanding .It is company’s understanding the . . . . Group management report . . If the .

- - .

: Opportunities and risk report risk and : Opportunities freenet AG · Annual Report 2012 Report AG ·Annual freenet 107

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 108 Group management report : Forecast to local transmitters to local especially with toregard improved access marketfor in participants 2013, advanced to be expansion is key another market believe topic network will researchers and The continue ing termination mobile continuing and fees market price competition in broadband the 1 to 2percent is expected telecommunications German marketthe in 2013 VATMThe a slight association consultingfall and inDialog Consult industry expect firm a0 ning of this year expects now and of 0 forecast October revised its IMF measuresalthough to combat crisis the have initial shown success to is believes there recession end the no in sight IMF The in euro zone the in 2013, a4 casts credit on terms private sector delayed the for positive impact spreads of of yield euro willdecrease zone countries’ government only have bonds a in current recently the yearers expected generally as most was to condition the euro that zone the are actually recov economy subject expectations 2012 in October Economic World in published its Outlook over forecast the will grow by 3 currently estimates Fund economy thatglobal the (IMF) InternationalThe Monetary Market development 2013 Forecast grow in 2013 accordinggrow in 2013 to VATM Consult Dialog and will communications usage data in mobile mobile continue the industry to contrast, By expects GDP growth to rise 1 growth GDP expects rate of 0 agrowth 2012 October of only 0 growth GDP year, currently expects IMF the also was downward revised sharply in Germany for January outlook The is currently expected increase in European a1-percent performance economic 2014, . 1-percent increase in global economic performance for 2014 for increase in performance economic global 1-percent . 5 percent in 2013, which represents an increase of which +0 represents 5 percent in 2013, . .This estimate assumption the on of is continued based declin . 4 percent . 9 percentage points was forecast was 9 percentage points . 2 percent fall in GDP in euro area the 2 percent fall in 2013 for GDP . 2 percent GDP growth downwards at the begin at downwards the growth 2 percent GDP . Overall, a decrease in adecrease total revenues .Overall, of . . 6 percent in Germany, while in .Accordingly, fore IMF the At the same time the same .At the . 1 percentage points 1 percentage points For 2014, the IMF IMF the .For 2014, Nevertheless, the .Nevertheless, . For the current .For the The revised .The .For . - - - - .

year’s level year’s going forward company will risk-conscious and continue conservative to policy rely its on treasury flow, cash steady and the structure capital good business model, scalable very its ket, communications mobile market in position established German mar the of its Because inpaid out future as dividends willbe flow cash percent of 75 free and 50 between Board, Supervisory by the agreed and in early 2013 Board Executive by the adopted In accordance policy dividend with the respectively of flow cash 255 free and lion euros in 2014, companyThe is aiming of 355 EBITDA Group for intoment of products high provider adigital quality lifestyle Apple strategicdevelop our to complement an important represents 2013, of quarter first the acquisitionThe of marketing the and of high-quality devices in with products, data conjunction continued the successful marketing base, contracts customer of valuable postpaid tract in 2014 growth moderate by followed further companyThe also aims revenue to Group in grow 2013, its to stabilise ARPU at 23 around euros postpaid pany expects smartphones for increased demand with the an and increased marketing base customer in quality ofconjunction its of tariffs data resulting communications in mobile of ARPUs the decrease market by improving the company for the no-frills), and indicator (postpaid an important ownership in sector customer the 2014 sector primarilyoverall as base, aresult customer in prepaid of base the reducing customer the towards additional quality improvements them gearing and measures loyalty customer its developing further while customers, company the business, will customer new continueIn its to adding high-value on focus 2014: and anticipates 2013 for following the developments declining usage figures cases, in some rates and, inences growth divisions Group’s in freenet ofAll highly the with operate differ competitive markets, freenet Group The The company expects a moderate increase in the customer base for 2013 and increase 2013 for base in customer the amoderate company .The expects . . In financial year 2013 and 2014, investments will investments remainprevious the at .In financial2014, and year2013 Crucial factors here are our expectations of aslight increase in con are here the expectations our .Crucial factors The company . The is price erosion attempting and to counter expected the G ravis – Computervertriebsgesellschaft mbH, Berlin, completed in completed Berlin, mbH, ravis –Computervertriebsgesellschaft . In the past this has led to a reduction in the this to past .In has the areduction led For financial year 2013 and 2014, the the com .For financial2014, and year2013 . 0 million euros 260 and . 0 million 360 and euros in 2013 . The company .The currently . . 0 million euros . . 0 mil ------Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet : Forecast 109

Group management report Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet 110 Group management report : Forecast Christoph Vilanek Board Executive The 2013 4March Büdelsdorf, investmentand objectives profitability to core close evaluated, being the business defined in and line with strictly channels company’s sales the is and also related to portfolio the expanding of activity of this business strategy flowEnsuringcash arestrong a elements and sustainable key expanding profitability and a positive company of overall the development expects AG Board freenet Executive the expansion initiated offer digital gradual of the the and 2012, lifestyle of end the at 2011, no-frills initiated and base customer stabilisationGiven the valuable postpaid of the in Overall statement on the expected development of the Group The companyThe will relationships valuable customer continue on focus its The organic and inorganic development of additional fields inorganic and organic development .The . Joachim PreisigJoachim Stephan Esch . .

Group management report freenet AG · Annual Report 2012 Report AG ·Annual freenet : Forecast 111

Group management report

(IFRSIC) Committee Interpretations Standards Financial International Reporting of the tations International by the ance with IFRS Accounting interpre the and (IFRS) Standards Board consolidated The of in financialprepared been accordstatements 2012 have year statements financial Consolidated . - -

Consolidated financial statement Consolidated financial statement Responsibility statement Responsibility Auditor’s Report for the financial year 2012 year financial the for Notes to consolidated the AGof freenet financial statements 2012 to December 31 1January from period the for Consolidated of flows cash statement 2012 to December 31 1January from of period changes the for in equity Schedule 2012 Consolidated December as of balance 31 sheet comprehensive income for the period from 1 January to 31 December 2012 to December 31 1January from comprehensive period income the for Consolidated income statement and consolidated statement of Overview ......

. 206 205 122 121 120 118 116 Consolidated financial statements financial Consolidated freenet AG · Annual Report 2012 Report AG ·Annual freenet : Overview 115

Consolidated financial statement Consolidated financial statement freenet AG · Annual Report 2012 Report AG ·Annual freenet 116 Consolidated income statement and consolidated statement of comprehensive income for the period from 1 January to 31 December 2012 December to 31 1January from period the for income comprehensive of statement consolidated and statement income Consolidated statements financial Consolidated :

in thousand (diluted) in thousand outstanding of shares Weighted average in thousand (undiluted) in thousand outstanding of shares Weighted average (diluted) € in operations discontinued from share per Earnings in € (undiluted) € in operations discontinued from share per Earnings income operating Other Revenue €’000s in Figures for the period from 1January to 31 December 2012 income comprehensive of statement consolidated and statement income Consolidated in € (diluted) € in operations continued from share per Earnings capitalised work own Other Earnings per share in €(diluted) in share per Earnings €(undiluted) in share per Earnings interest to non-controlling attributable result Group Cost of materials of Cost in € (undiluted) € in operations continued from share per Earnings result Group Group result from continued operations Taxes on income operating expenses Other write-downs impairment and Depreciation expenses Personnel of freenet AG freenet of to shareholders attributable result Group Group result from discontinued operations Result before taxes on income Operating result Operating Interest payable and similar and expenses payable Interest Interest receivable and similar and income receivable Interest of associates of results Share

Note . 14 . 14 . 14 14 14 14 12 13 18 11 25 10 .1 .1 .1 2 5 4 2 6 2 7 9 8

2012 12. —31. –2,365,803 3,089,032 –148,823 –161,022 –276,135 203,240 173,189 173,189 166,918 2012 1. 1. –44,783 128,061 128,061 173,098 58,942 6,271 2,695 5,766 7,049 1.35 1.35 0 0 1 1 .00 .00 . . 91 35 35 0

2011 12. —31. –2,550,825 3,266,619 –168,898 –314,275 –162,918 143,848 143,988 2011 1. 1. 167,398 117,339 adjusted 128,061 128,061 143,764 -56,102 26,509 86,857 10,838 1,087 4,956 1.12 1.12 1 1 0 0 140 224 .12 .12 .00 .00

1 to non-controlling interest Consolidated comprehensive income attributable AG freenet of to shareholders Consolidated comprehensive income attributable equity in directly recognised value in Change in equity directly recognised Taxes income on instruments financial of held-for-sale in value Change fair result Group €’000s in Figures Consolidated comprehensive income 2 2 items see method, accounting an of change to a due adjusted been have figures comparative The . 18 of the notes to the consolidated financial statements financial consolidated to the notes the of 18

Consolidated income statement and consolidated statement of comprehensive income for the period from 1 January to 31 December 2012 December to 31 1January from period the for income comprehensive of statement consolidated and statement income Consolidated

. 2012 12. —31. 173,189 173,157 2012 1. 1. 173,066 –32 –45 13 91

2011 12. —31. 143,988 143,951 2011 1. 1. 143,727 . 1 and 1 and –37 224 –53 16

Consolidated financial statements financial Consolidated freenet AG · Annual Report 2012 Report AG ·Annual freenet :

117

Consolidated financial statement Consolidated financial statement freenet AG · Annual Report 2012 Report AG ·Annual freenet 118 Consolidated financial statements financial Consolidated : Consolidated balance sheet as of 31 December 2012 December 31 of as sheet balance : Consolidated €’000s in Figures Assets Intangible assets Intangible assets Non-current as of 31 December 2012 sheet balance Consolidated Other investments Other in associates Investments equipment and plant Property, Goodwill Other receivables and other assets other and receivables Other assets tax income Deferred Trade accounts receivable Trade accounts Inventories Current assets Current income tax assets tax income Current Assets of disposal group classified as held-for-sale as classified group of disposal Assets Cash and cash equivalents cash and Cash assets other and receivables Other receivable Trade accounts

15,16 15,16 15,16 Note 18 22 22 22 22 19 23 25 20 21 24

1,750,440 2012 12. 31. 2,474,222 1,116,862 723,782 205,224 424,852 169,985 357,407 56,586 28,427 27,300 67,822 1,605 8,332 2,470 7,350 0

1,822,869 2,528,429 2011 12. 31. 1,116,868 705,560 130,900 485,325 185,673 428,471 12,482 36,601 51,537 29,280 43,039 1,915 3,060 3,278 0

Borrowings Liabilities of disposal group classified as held-for-sale as classified group Liabilities of disposal Other provisionsOther Other provisionsOther provisions Pension Other payablesOther Trade accounts payable accounts Trade liabilities Non-current reserve Revaluation to non-controlling interest attributable reserves and Capital Borrowings liabilities tax income Current payablesOther payable accounts Trade liabilities Current Capital reserve Capital to shareholders of freenet AG freenet of to shareholders attributableCapital and reserves earnings Retained €’000s in Figures Shareholders’ equity and liabilities Share capital Share Shareholders’ equity

Note 26 26 26 30 30 25 29 28 28 28 28 32 32 Consolidated financial statements financial Consolidated 31 . . . 2 1 3

2012 12. 31. 2,474,222 1,190,467 1,190,837 690,890 592,495 100,449 128,061 118,499 324,883 412,781 556,105 737,536 22,458 26,197 29,378 9,872 7,325 272 370 –13 49

2,528,429 2011 12. 31. 1,171,293 1,171,014 588,393 768,743 128,061 200,302 514,777 124,775 305,398 399,370 737,536 22,188 11,173 36,608 22,108 25,428 : Consolidated balance sheet as of 31 December 2012 December 31 of as sheet balance : Consolidated 407 279 19 0

freenet AG · Annual Report 2012 Report AG ·Annual freenet 119

Consolidated financial statement Consolidated financial statement As of 31.12.2012 of As income comprehensive Consolidated Sub-total: instruments financialheld-for-sale of value in fair Change result Group payment Dividend 1.1.2012 of As 31.12.2011 of As income comprehensive Consolidated Sub-total: instruments financialheld-for-sale of value in fair Change result Group freenet AG · Annual Report 2012 Report AG ·Annual freenet €’000s in Figures for the period from 1January to 31 December 2012 equity changes in of Schedule 120 company acquisitions company to connected liabilities option stock of Recognition of subsidiaries Initial consolidation payment Dividend 1.1.2011 of As Consolidated financial statements financial Consolidated

Share capital Share 128,061 128,061 128,061 128,061 : Schedule of changes in equity for the period from 1 January to 31 December 2012 December to 31 1January from period the for equity in changes of : Schedule 0 0 0 0 0 0 0 0 0 0

Capital reserve Capital 737,536 737,536 737,536 737,536 0 0 0 0 0 0 0 0 0 0

Revaluation reserve –13 –32 –37 –37 –32 56 19 19 0 0 0 0 0 0

–102,409 –153,613 324,883 268,811 305,398 305,398 173,098 173 Retained Retained 143,764 143,764 earnings –4,768 .098 0 0 0

shareholders ofshareholders attributable toattributable 1,134,464 1,190,467 1,171,014 1,171,014 Capital andCapital freenet AG freenet –102,409 –153,613 173,066 173,098 143,727 143,764 reserves –4,768 –37 –32 0

non-controlling attributable toattributable Capital andCapital reserves interest 279 279 370 224 224 91 91 55 0 0 0 0 0 0

Shareholders’ 1,134,464 1,171,293 1,171,293 1,190,837 –102,409 –153,613 173,157 173,189 143,988 143,951 –4,768 equity –37 –32 55

Cash and cash equivalents 31.12. equivalents cash and Cash Cash and cash equivalents 1.1. equivalents cash and Cash equivalents cash and cash in change Cash-effective

Free cash flow (FCF) flow cash Free Adjustments 1 assets intangible and equipment and plant in property, Investments activities operating from flow Cash €’000s in Figures flow of cash free Composition operations of continued equivalents cash and Cash €’000s in Figures equivalents cash and cash of Composition Result from continued and discontinued operations before interest and taxes (EBIT) €’000s in Figures for the period from 1January to 31 December 2012 cash of flows statement Consolidated Proceeds from the disposal of property, plant and equipment and intangible assets intangible and equipment and plant property, of disposal the from Proceeds Liabilities as part of current finance scheduling due to banks to due scheduling finance current of part as Liabilities Interest received Interest Proceeds from new borrowings new from Proceeds payment Dividend activities investing from flow Cash Cash repayments of borrowings repayments Cash Interest paid Interest Cash flow from financing activities financing from flow Cash Cash flow from operating activities operating from flow Cash paid taxes Income non-cashOther components activities financing or to investing attributed not capital working in net Increase Purchase of subsidiaries Purchase Proceeds from the sale of other investments other of sale the from Proceeds associates of sale the from Proceeds associates from capital of Return subsidiaries of sale the from Proceeds Loss on disposals of fixed assets fixed of disposals on Loss subsidiaries of sale the from Income Investments in property, plant and equipment and intangible assets intangible and equipment and plant in property, Investments Proceeds from the disposal of property, plant and equipment and intangible assets intangible and equipment and plant property, of disposal the from Proceeds Share of results of associates of results Share assets fixed of items on impairment and Depreciation able to non-current assets held-for-sale attribut are euros thousand 2,732 equivalents, cash and to cash attributable are euros thousand 205,224

. Consolidated financial statements financial Consolidated : Consolidated statement of cash flows from 1 January to 31 December 2012 2012 December 31 to January 1 from flows cash of statement : Consolidated - 21,22,31, 32, . 34 13, 20 13, Note . 34 . 34 34 18 18 18 19 30 30 25 .1 3 1 2 9

2012 12. —31. freenet AG · Annual Report 2012 Report AG ·Annual freenet 2012 12. 31. 2012 12. 31. –149,120 –153,613 122,283 209,006 280,538 259,965 207,956 2012 2012 1. 1. 207,956 207,956 –34,548 148,823 –46,797 –80,239 119,280 280,538 –21,267 –21,267 –24,736 85,673 –9,135 –5,766 1,156 2,079 7,669 –333 152 382 694 694 365 –24 0 0 1

2011 12. —31. 2011 12. 31. 2011 12. 31. –190,427 –100,000 –102,409 –700,670 168,644 240,962 262,024 –16,221 2011 2011 1. 1. 631,644 168,898 185,673 –45,719 262,024 –18,992 –22,495 –22,495 –29,735 30,297 85,673 85,673 55,376 –1,087 1,106 1,430 1,433 1,433 4,174 –763 –83 121 0 0 0 0

Consolidated financial statement Consolidated financial statement 122 freenet AG · Annual Report 2012 Report AG ·Annual freenet 7 IFRS Standard/Interpretation 1.

General information General Consolidated financial statements financial Consolidated Regarding Transfers of Assets Financial Regarding Information 7, to IFRS Instruments: Financial Amendment

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes dated financial statements are subject to uniformaccountingdated are financial subject statements valuation principlesand fair value withstated their financialare that some assets to restriction the convention—subject the historicalapplying consolidatedprepared The cost havebeen financialstatements million or euros (€’000s) sand euros tional currency func Company’s the consolidatedprepared euros, in The havebeen financialstatements taken intoally been consideration ulations of commercial have in law accordance addition applicable HGB with clause 315a 2012 in European as applied the December Union as of 31 (IFRSIC), Committee Interpretations Standards Reporting Financial International the of interpretations the accordance International of the IFRS with Accounting the and (IASB) Standards Board consolidated financialthe The for financialwere prepared 2012 statements in year in focussing Germany communications/mobile mobile on internet 7306 HRB under Kiel court) richt (local many Ger is registered incompany Büdelsdorf, (also to referred in following the as “freenet”), parent Group‘s the AG (alsofreenet Company”), to referred in following the as “the 1.1 2012 year financial the AGfor freenet of statements financial consolidated the to Notes related impact on the Group: the on impact related their and 2012, since adoption 1January of early voluntary subject which the have been or 2012, January 1 from with effect adoption of mandatory which are subject the (IFRIC), or interpretations standards (IAS/IFRS) modified or new the following shows The table Gazette consolidatedFederal The are financial electronic submitted statements the to financialstatements in have relation prepared They to date all balance the sheet consolidated been of the Business activity and accounting and standards activity Business The Company was originally founded in 2005 and was registered was and Amtsge at the Company originally was .The in 2005 founded The annual the .The of financialcompaniesthe in consoli statements included Corresponding to the respective indication, all indication, figures stated arethou in to respective the .Corresponding . 1 application Mandatory .7 .2011 . .

The Group provides telecommunication services telecommunication provides Group services .The 22 Commission Endorsed by EU .11 .2011 No material effects material No Effects . The reg .The . - - - - - - .

and IAS 27 IAS and 12 IFRS 10, IFRS and IFRS 12 IFRS and 11 IFRS 10, IFRS Various IFRS 1 IFRS IFRS 7 IFRS 9and IFRS IFRS 9 IFRS IFRS 7 IFRS IAS 32 IAS IFRIC 20 IFRIC IAS 28 IAS IAS 27 IAS IFRS 13 IFRS IFRS 12 IFRS 11 IFRS 1 IAS IAS 19 IAS IFRS 10 IFRS IAS 12 IAS business policies in such a way that the Group parent benefits from the activities theof activities the from business in policies parent such away benefits Group that the in to aposition Company indirectly or company’s determine is financial the directly and consolidated whichto The financialallthe include statements companies with respect 1.2 time time company of ahead the standard 11 will IFRS voluntarily the adopt 2013, From 1January 1 1 IFRS Standard/Interpretation Group: the on impact theirand probable in financial the adoption year2012 of mandatory which are subject not yet(IFRIC) the or interpretations standards (IAS/IFRS) modified or new the following shows The table Consolidated companies Consolidated

Mandatory adoption in the EU detailed at this point differs from the IASB requirement IASB the from differs point this at EU detailed the in adoption Mandatory . Furthermore, the company does not plan to adopt the new standards ahead of ahead standards new the not plan to company the adopt does .Furthermore,

Obligation to Consolidate Investment Entities Investment to Consolidate Obligation the from 27: Exception IAS and 12 IFRS 10, to IFRS Amendments for the Adoption of the Standards the of Adoption the for Transition Guidance 12: IFRS and 11 IFRS 10, to IFRS Amendments Annual Improvements Project 2009 to 2011 - Improvements of IFRS of -Improvements to 2011 2009 Project Improvements Annual Amendment to IFRS 1: Government Loans Government 1: to IFRS Amendment Transition Disclosures and Date Effective 7: Mandatory IFRS 9and to IFRS Amendment Assets and Liabilities and Assets Financial of Measurement and Classification Instruments: Financial Offsetting Financial Assets and Financial Liabilities Financial and Assets Financial Offsetting 7, Disclosures: to IFRS Amendment Instruments: Financial Assets and Financial Liabilities Financial and Assets Financial Offsetting Instruments: Financial 32, to IAS Amendment Stripping Costs in the Production Phase of a Surface Mine aSurface of Phase Production in the Costs Stripping Investments in Associates and Joint Ventures Joint and in Associates Investments Separate Financial Statements Financial Separate Fair Value Measurement Disclosure of Interests in Other Entities in Other of Interests Disclosure Arrangements Joint Consolidated Financial Statements Financial Consolidated items of Other Result Other of items of individual of Statements—Presentation Financial Presentation Amendment to IAS 19, Employee Benefits 19, Employee to IAS Amendment Amendment to IAS 12, Realisation of Underlying Assets Underlying of Realisation 12, to IAS Amendment Hyperinflation and Removal of Fixed Dates for First-TimeAdopters for Dates Fixed of Removal and Hyperinflation Severe IFRS: of First-Time Adoption 1, to IFRS Amendments Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . 1 1 1 1 1 1 1 1 1 1 1 1 1 1

1 1 1 1 1 application Mandatory .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .7 .1 .1 .1 .2012 .2014 .2013 .2013 .2013 .2015 .2015 .2013 .2014 .2013 .2014 .2014 .2013 .2014 .2014 .2014 .2013 .2013 .2013

1 1 1

1 1 1 1 Pending Pending Pending Pending Pending Pending 13 13 11 11 11 11 11

11 11 5 5 11 11 Commission Adoption by EU .6 .6 .12 .12 .12 .12 .12 .12 .12 .12 .12 .12 .12 .2012 .2012 .2012 .2012 .2012 .2012 .2012 .2012 .2012 .2012 .2012 .2012 .2012

None No material effects material No Subject to audit by management by to audit Subject None No material effects material No Subject to audit by management by to audit Subject No material effects material No No material effects material No None No material effects material No None No material effects material No in companies, incl in companies, Disclosures in notes for interests of balance sheet of balance reduction minor ventures; joint for mandatory method Equity type of transactions future type and nature the on Depending financial statements item 2 item statements financial consolidated to notes See No material effects material No income of comprehensive statement of consolidated Presentation None Effects freenet AG · Annual Report 2012 Report AG ·Annual freenet

.subsidiaries

. 16 123

Consolidated financial statement Consolidated financial statement 124 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes value, irrespective of the extent of any extent of the non-controlling interests irrespective value, meeting the recognition the meeting criteria 3 of IFRS liabilities acquired ofAll the assets, and company’scontingent identifiable liabilities consideration contingent a regarding agreement an from liabilities result which and assets recognised acquisition purposes liabilities the issued for acquired assets, any instruments and rendered of equity the ues of purchase of abusiness combinationCosts are sum by determined fair the of val the to consolidation capital applied was the purchase method The sheet in balance companies interests Non-controlling the the on separately are disclosed of voting rights in case enhanced minority or the right agreements control as aresult subsidiary of the of de-facto is to but voting percent able of the manage financial50 the policy rights, business and is there an instance of whether control parent if company the fewer thanchecks holds convertible or exercisable currently are which voting potential rights of consideration due is given to control as existence toment the exists, impact and whether ciated with ashare in voting percent than of 50 more rights deconsolidated time at at the which such control is terminated Group the to subsidiary is transferred the financialof policy business and consolidation) datepossibilitythe from whichon the of control over withthe effect time the in first consolidatedCompanies the for arefinancialstatements included (full 1.3 2012 December ending 31 period the annualthe for for HGB financialstatements 3 paragraph 264 in clauseulations specified as well will as callmobile GmbH klarmobil exemption take GmbH of the reg advantage GmbH, MIDRAY &PR, für IT Stanniol GmbH Logistik DEG GmbH, GmbH, debitel Shop mobilcom- Multimedia GmbH, MobilCom GmbH, mobilcom-debitel GmbH, Direkt 01050 Datenkommunikations freenet GmbH, GmbH, Cityline freenet GmbH, freeXmedia freenet Telefondienste GmbH, 01024 Telefondienste GmbH, 01019 percent in voting 50 and 20 rights between whichbut influence cant normallynotareGroup; involvingthe controlled by a share of a signifi as companiescompaniesexerts Group over arewhich defined Associated the to which joint is management subject an activity economic out carry A joint partners venture more or which two under is agreement acontractual in item HGB 38 315a please consultour disclosuressolidated financial accordancestatements, in with clause company in question

Consolidation principles Consolidation . . com GmbH, tellfon GmbH, 01083 tellfon GmbH, com GmbH, . .

.For acomplete list of all AG’s companies in freenet included con In addition, the costs of purchase of fair comprise all values the costs the .In addition, . . com GmbH, new directions GmbH, freenet freenet GmbH, directions new com GmbH, . . 37 will be disclosed separately at separately their will fair disclosed be 37 De-facto control may for instance exist .De-facto . With regard to regard assess .With the .Control is normally asso . . .For each company . The Group also Group The . de GmbH, GmbH, de They are .They ------ applicable for associates liabilities and receivables are eliminated as and wellincome as expenses intercompany revenue, losses, and Internal profits separately associate is acquired of associateslosses is at point which recognised fromthe in income the statement the Group to freenet the attributable changes of the in associate’s which the capital is equity proportion by the reduced or are holdings increased of recognised the values the whereby ing method, to equity the in associatesInvestments in are consolidated disclosed the accord financialstatements and income statement are summarised items in corresponding consolidated the expenses the on balance sheet tional consolidation method Joint ventures in areconsolidated the included using financialpropor statements the revenue as recognised immediately is acquisition Any excess in share acquired of the value the fair of net the company of over costs the liabilities acquired ofvalue the assets, and company’scontingent identifiable liabilities in initialdetermined the which valuation, is in share excess fair of purchaser’s the of the time at value of asset the of acquisition, the is as recognised as that portion Goodwill rateinterestmethod of purchase by means effective of the time of exercising, financial the and cost liabilitymeasured at is amortised subsequently initially estimated of value the repurchase expected at amount present at the the valued AG of freenet to shareholders the attributable against equity the ognised shareholder, is to rec which non-controlling shareholders the is equity attributable the gation is recognised trolling shareholders to which non-con the is Group of the attributable in equity the reduction responding in a cor this Group, is to freenet reflected the are risks transferred and opportunities arising risks and shares way inthe are fromthese which attributed opportunities way onshares in the group on companies, which options are the recognised depends options are to granted toWhen receive non-controlling enable shareholders further Acquisition-related are are they incurred recognised when in income statement costs the to acquired the company attributable basis assets percentage of of net the in acquired the company which are not controllable are recognised at the on fair or value an on individualacquisition, non-controlling basis shares the decides Group whether the In this case, the financial the .In this case, liability relatingobligation option the to is recognised .

If the opportunities and risks are non-controlling by risks retained and the opportunities .Ifthe Goodwill arising acquisition .Goodwill the from of associates is not disclosed In such cases, only afinancial liability .In such cases, in relationobli option the to . . Consolidated financial statements financial Consolidated The Group’s shares of the assets, liabilities, income and shares Group’s assets, of the .The The percentage interest of the Group in profits and percentage interest in Group profits of .The the The elimination .The of intercompany is also profits . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . The financial .The liability is . .Ifthe ------. . freenet AG · Annual Report 2012 Report AG ·Annual freenet 125

Consolidated financial statement Consolidated financial statement 126 freenet AG · Annual Report 2012 Report AG ·Annual freenet 2.

Accounting and valuation methods valuation Accounting and Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes The Group receives Group commission communica mobile ofThe the - revenue operators the from restriction”) “cash (so-called in future provided to be services on revenue of the which extent isthe not dependent recognised which in haveis relation supplied limited to already elements the been to fair values entities basis the on proportionate of the business is entire broken over valuation the for various down the multiple-component roaming and charges connection as transmission) data charges features special for comprises charges, monthly as well as devices accessories and provisionmobile charges aswell of sale the one-off as offered, communications services CommunicationsRevenue is of range by mobile in Mobile the generated segment the recognition: revenue on notes Supplementary remaining to revenue business is clients attributable the is revenue users; with of of alarge Group the end generated of the number Most activities business of normal within framework the services and of products sale received the for which received fair consideration or ofcomprises value will the the which has been be vided with network access at a network provider access at anetwork with network vided Commission is customer as is a new pro revenue recognised customers as for new soon extensions are signed who up contract for and users new for particularly tions networks in accordance 8 605-25 (formerly 00-21) EITF withguideline IAS ASC contracts with multiple-component generated enue 18 in IAS as detailed contracts nent Communications are in multiple-compo Mobile segment the contracts user end Certain are signed customers up when expenses devices as mobile well commissions,the dealer as the are recognised immediately as of signing which costs consistThe up mainly customers, of acquiring costs of the distributor are the delivered to or customer the ucts prod is the recognised when devices ofaccessories and products mobile sale the from is provided duringare recognised which as service revenue the over period the statements not yet invoiced but vices rendered in consolidated separately are the accrued financial willflowCompanythe that if it and mined to afuture is benefit probable economic reliably completely of amount revenue if the be deter can rendered have been services period ashort for mainly Group services provides The 2.1 refer tochange, following please the item 2 ciple consistently year previous compared with the applied solidated financialstatements following conThe accounting preparing the when were applied valuation and methods Recognition expenses revenue of and . Revenue is disclosed net of value added tax and cash discounts cash and tax .Revenue of added value is net disclosed Mobile communications .Mobile revenue (voice communication as well . The accounting in .The have prin valuation been and methods The voice .The communication transmission data and fees . 13 The “relative-fair-value .The rev for is used method” . . 1 . The commission .The claims on are based . . The Group applies the US-GAAP US-GAAP the applies Group .The The extent of the revenue of the to extent be .The .Revenue the is recognised after With regard to regard only .With the . 10 et seq et 10 The price . The .Revenue .Revenue .Ser ------.

nor could any lifenor useful time limit its on set be to of is value loss this steady no discernible asset, with respect because chosen has been year are if there or anyonce every indications of an impairment lifeful economic to which instead and is an impairment is not depreciated, test subject is amount with an with asset amajor an residual indefinite use carrying trademark One assets Impairment non-monetary for test as well goodwill asand item 16, equipmentplant and property, Intangible assets, please refer breakdown, to cific item15, which merger gave the from rise goodwill the to abenefit derive to generating cash groups ofor units generatingcash which units those are expected is to allocated goodwill generating cash the units For this purpose, impairments cumulative less year, is impairment for tested at once every least Goodwill is and at shown original cost 2.3 and interest income . recognised as expense of capitalised were being incurred capable costs borrowing exists are capitalised if aqualified asset costs Borrowing 2.2 lished consolidated2011 for financialstatements eurospub higher figures thanthe in thousand the disclosed as 48,718 reported been revenue cost of and materials have adjustment, each 2011 for result retrospective of the of a materials” as well as “Cost As in consolidated the “Revenue” income statement: positions forthe 2011 for comparison of the period adjustment aretrospective been inamount each case materials are and increased bysame the asare comparatively disclosed higher amounts, involvesmerely a change of disclosure revenueThe the of cost and within gross profit: Group of the results financialtheon and or position Group the of assets net the not have on andoes impact receive reliable relevant more information more and statements accounts separately the on are shown now transactions were recognised as related transactions conclusion witha subsequent adevice agreement mobile component of user an end devicesmobile sale distributors of and anddealers a to field, in mobile the transactions devices of regarding mobile sale the agreements for of accountingmethod usingbeen modified Group has a the Since financial the year2012, accordingly accrued is revenue commission revenue grantingthe subsidies are of the recognised in is these the linked customers, to new the if and, operators campaigns advertising sidies network by the some for are also provided average user the or revenue per quarter per customers qualitative quantitativecontractually defined and new of features, number such the as Intangible assets Intangible Borrowing costs, interest expenses and interest income interest and expenses interest costs, Borrowing Where claims extend beyond the period in which the services were performed, were performed, in which services the period the claims beyond .Where extend In these consolidated financial statements, there hasthere accordingly consolidated .In these financialstatements, Compared with the previous accounting treatment method, this accounting previous with the .Compared treatment method, The effective interest rate method is used for interest expenses for expenses interestis rateused interestmethod effective .The Consolidated financial statements financial Consolidated . Based on the latest knowledge, the two legal two the latest the knowledge, on . Based . .

.Previously, of certain in case the In addition, advertising cost sub advertising .In addition, : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Thus, readers of the financial of the readers .Thus, In the financial year 2012, no financial .In the year2012, Other borrowing costs are costs borrowing .Other An indefinite .An useful life With regard to regard spe .With the .This change of method .It is to allocated . - - - - freenet AG · Annual Report 2012 Report AG ·Annual freenet 127

Consolidated financial statement Consolidated financial statement 128 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes date applicable where adjusted and lives economic useful and are values at reviewed each balance residual sheet The book immateriality lives useful are grounds of disregarded on residual assets‘ of the end at values the lives useful within Company the expected assets’ the straight-line depreciation less cost of at is acquisition plant equipment the and valued Property, production or 2.4 agreement underlying duration of the are rights depreciated usingDistribution straight-line the over expected the method 2012 December 31 on debitel of acquisition the completely almost down written as part allocation been had purchase priceprevious which the of to financial years and were statements attributable line method using months to straight- the 66 relationsCustomer of 42 are depreciated over aperiod life useful to of three five years tion of their prospective to straight-line are subjected costs development depreciation- over dura the software technical feasibility economic and proven be can product’s the time when inincurred creating asset the fees and services on team expenses development or software of the costs personnel software” produced “Internally category the under tothree ten years licences for and life, years economic software for inthree general over their expected line method are at shown historical are cost and depreciated usingLicences straight- software and the months 36 and 12 between was remaining the life trademarks useful of these 2012, astraight-line on months life to of 12 90 basis economic useful at their historicalcarried are cost and depreciated over their expected contrary, haveuseful life the on adefinable trademarks, other The economic benefit is capitalised greater are as incurred intangible benefit thaneconomic the assets costs overall expected Company, by the used which be can product’s if the and ware product in year the are they incurred as expenses usually are recognised programs maintaining or software in developing incurred Costs Property, plant and equipment and plant Property, The main relations .The customer in consolidated which shown the have been .

. The useful lives assumed for the depreciation of assets reflect reflect depreciation lives of assets useful forthe assumed .The Development costs are not capitalised until costs in point the .Development .

. . Costs that clearly relatesoft .Costs to adefinable On the balance sheet date 31 December date balance December the sheet 31 .On For example, these costs include the costs these .For example, .In calculating the depreciation, . These trademarks are trademarks .These .Capitalised . - leasing in is income statement the recognised directly instalments leasingof the which have made instalments already been bility arising is lease as the from shown aliability byrepayment content the reduced and life of useful term lease their of the normal the and over shorter the are and depreciated minimum of value the present the and asset payments, lease leased finance lowerfaircapitalised the leases of theare value under owner of with beneficial as to the Group which the are attributable In assets accordance 17, leased the with IAS over lease duration of the the method lessor)by are the recognised as using acost in income statement the straight-line the (net lease with an taking operating account after ofnection incentive made payments are transferred ciated property leased ownership of with the the asso opportunities all the and whether significanton risks depending financeor leases, leases enters are into whichLeases Group operating classified as the either lessee as the (purchase), equipment and not to but hardware telecommunications and IT equipment motor rules to apply vehicles specific leases) (operating plant assets, and For non-current purchased or are leased to be basis assets by case acase on whether decides Group The 2.6.1 2.6 is write-up as no permissable goodwill, purchase of cost up to afigureexceedingnot amortised the is asset of value the written the reason an for impairmentIf the is applicable, longer no (impairment) once tested ayear of in be value loss for must accordance provisions 36 with the of IAS mightasset impaired be indicate if triggering events out of value that the the Impairment has carried to be to in value the use sell and costs less amount recoverable the exceeds value are always impaired book assets if the Non-monetary 2.5 improvements Leasehold hardware and equipment Telecommunications equipment IT Motor vehicles machinery and equipment Technical Buildings Asset ful lives: following the on use is plant equipment and based generally of property, Depreciation Leases Impairment of non-monetary assets non-monetary of Impairment Leases where Group the is lessee the The recoverable amount is defined as the higher of the fair the valueas higher asset the the of of is amount recoverable defined .The .

Goodwill and intangible assets with indefinite intangible and useful lives assets .Goodwill Consolidated financial statements financial Consolidated . . . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes The interest content .The of the .This is for not applicable Payments made in con made .Payments .Accordingly, lia the As of the reporting reporting of the .As Useful life Useful 1 to 15 years 1 to 15 1 to years 10 1 to years 10 1 to 8years years 1 to 19 9 to 33 years - - - - . . freenet AG · Annual Report 2012 Report AG ·Annual freenet 129

Consolidated financial statement Consolidated financial statement 130 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes The classification depends on the individual purpose for which the financial assets andwhich financialfor the the purpose on assets individual classificationdepends The ■ ■ ■ ■ is investmentreceivable time inat net value ofamount at shown the the whichthe the in accordance 17 tomer, lessee fromthe due with areceivable IAS shows Group the or cus partner ownership of the to an asset contractual is transferred beneficial When 2.6.2 the near futurethe financial if the or designatedasset is accordingly by management assigned if it to is this in acquired principle category intention with the in of sold being beginning right loss” the very or from at fair through value profit whichfor-trading financial and “measured are as classified assets right start, the from Financial which areheld- classified as assets sub-categories: comprises two This category 2.8.2 recognition initial upon liabilities financial and assets financial financial liabilities acquiredwere ■ lowing categories: financial financialand urement, assets liabilitiesnormally brokenare down intofol the afinancialand entity of liabilityanother equity instrument or A financialthat is instrument givesriseany to a financialcontract one entity of asset 2.8.1 2.8 2012 dateas balance December of the sheet 31 associatedno company in consolidated the included was of freenet financialstatements year, of the in course the sold für Kommunikation, been had Kiel, Gesellschaft GmbH refer to please item 1 method, equity the accounting valuation and methods associate concerned the for in accordance prepared Group’sstatement the and with IFRS inEquity associates investments continue recognised to via an be individual financial 2.7 isin financelessor Group classified leases the as periods are recognised as financial interest components The spread income overrelevantthe which is component recognized aredemption and component, in income statement, the is concluded contract relates hardware to shops and our for leasing the items of various of software classified as a was finance agreement agreement lease—this one 2012, date December 31 atives are in also this included category ■ ■ ■ ■ ■

Investments in associates in Investments Financial instruments Financial Financial liabilities Financial Available-for-sale financial assets financial Available-for-sale Held-to-maturity financial assets financial Held-to-maturity Loans and receivables and Loans Financial assets measured at fair value through profit or lossFinancialor measured at fair through value profit assets Definition and and classificationDefinition Financial assets measuredFinancial fair at assets value through profitor loss Finance leases where Group the is lessor the As of the closing date 31 December 2012, there are no contracts in which the are contracts there no 2012, closing of the date December .As 31 Lease instalments which are .Lease instalments received are split into an interest Management determines the classification determines the .Management theof With regard to regard of consolidation principles .With the using . . 3, Consolidation principles 3, . .

For the purposes of meas purposes .For the . .Afinancial asset is After KielNET KielNET .After .

.Deriv The .The - - - - .

2.8.6 assets other and bles datebalance sheet are in financialas other well shown - the receiva the other as assets ble-for-sale financial assets securitiesShares in and are affiliated be consideredavaila to - companies, investments intend date balance to the sheet within sell them after months 12 categories shown whichunder or the anyclassified other of have been this notcategory classified under be Available-for-sale whichfinancial either have assets non-derivative financialare to assets 2.8.5 any not classify held-to-maturity financialas does Group the instruments At present, assets non-current under arespondingly shown as to current shown assets—have be date balance which the sheet which within and fall due of corre those after months 12 is until to able hold final maturity fixed and terms minablein relation payments whichGroup to management intends and or deter financialwith fixed assets non-derivative financialare Held-to-maturity assets 2.8.4 which for right billed but acontractual exists not yet been which but have which provided have been alsoLoans include services receivables and months current other and highly liquid with financial originalan assets of maximumterm three comprising consist deposits Liquid demand assets equivalents cash of and cash cash, as well as in equivalents cash assets and other cash and in receivables other receivable, rent assets date balance the sheet after months twelve fall due ables to any adebtor without directly intention receiv of the services trading or commodities which are market not listedments an on active determinable or fixed with financial pay assets areLoans non-derivative receivables and date sheet balancethe on measuredloss fair or are financial valueprofit at no through There assets is recognised when freenet becomes contractual partner contractual becomes is freenet recognised when of financial rendering other third the to a or party assets uid assets Financial regarding liabilities of payment liq the agreements contractual on are based payable, financial the other liabilities debt payable, and itemsdeferred and financialThe liabilitiesaccounts balance date as the of sheet trade arethe in disclosed 2.8.3

They are included under current assets, with the exception with which the only of those current assets, under are included .They Available-for-sale assets financial Loans and receivablesLoans and Financial liabilities Financial Held-to-maturity financial assets financial Held-to-maturity . . Loans and receivables are shown in the balance sheet under trade accounts trade are . Loans inunder receivables balanceshown and the sheet

They are classified under non-current assets if management does not if managementdoes assets non-current are classified .They under . Consolidated financial statements financial Consolidated The available-for-sale .The which existedthe financialon assets Held-to-maturity financial assets—with the exception the financial .Held-to-maturity assets—with They arise if the Group provides money, provides arise Group if . They the The latter are shown under non-cur latter are under shown .The : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes .

. . . .Afinancial liability . . ------. freenet AG · Annual Report 2012 Report AG ·Annual freenet 131

Consolidated financial statement Consolidated financial statement 132 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes ance with the effective method interest ance effective with the historicalrepayment arethe amount recognised and accordcost in between differences are amortised or derecognised method financial the interestliabilities usingeffective cost period, the are at shown amortised associated with borrowing costs transaction the received less eration initiallyWhen financial recognised, liabilitiesfairvalue are with the the of shown consid these are recognised at present sold to be assets these for moreover,shares not exist; are market not listed is there does intention an and active no as it in far is so their for reliably fair not possible to cost, value ical be determined securities howeverShares in and shown affiliatedare at histor companies, investments arises payment for Group claim the of as at in income point income other at shown statement which legal to the the the be revaluation reserve the under arein result, other losses recognised or directly unrealisedwhereby profits initialAfter recognition, available-for-sale financialfairare withtheir shown value, assets impaired amortised are or derecognised, investments held-to-maturity costs transaction initialAfter are at shown fair recognition, plus investments held-to-maturity value impaired or amortised are derecognised, receivables and loans if the are in result shown period the the for value in for reductions less impairments method interest effective cost using initialAfter the are at shown receivables amortised recognition, and loans in fair are value thus immediately recognised in income statement the accounting” in accordance are 39 as caps not “hedge shown and swaps with IAS loss takenor measured atis fair through value profit statement assets the to income at fair value measured subsequently are loss or profit through value fair at measured assets Financial in the income statement are are initially expensed costs with shown their transaction corresponding fair value; Financial which are designated assets loss” or as at “measured fair through value profit costs withshown their fair plus value transaction which are not designated areloss” or as at “measured initially fair through value profit day enters into which Group on the an obligation asset to sell the or buy date, i of financial are trade Regularas the sales shown of and purchases assets 2.8.7 complete documentation and also does not carry out an effectiveness test, the the interest test, an effectiveness out not carry also and does complete documentation of rising risks the interest rates financial for liabilities hedging for are are financialand caps derivative and used Interest swaps instruments

Measurement of financial instruments of financial Measurement Profits and losses are recognised in the income statement when the the liabilitiesarewhen statement losses recognised the in and income .Profits Any profit or loss resulting from the subsequent measurement loss resultingor of .Anyfinancial profit subsequent the from Profits and losses are recognised in the result for the period theif period are losses recognised result the in and the for .Profits Dividends attributable to available-for-sale attributable have .Dividends instruments equity . . . Non-current liabilities cost .Non-current are at shown amortised If there are .Ifthere any indications of fair lower values, . .Current liabilities are in due amount shown the . Since freenet does not maintain .Since does freenet Profits and losses and .Profits In the following .In the . .Financial assets

. .Changes . e .Any The .The .the - - - .

for impairment on a portfolio basis impairmentfor aportfolio on an on individual determined which for basis impairment no has been areassets tested accounts receivable, for trade instance categories of financial of some case assets, In the existencethe of an impairment late or default of payment interest are principal, and considered an to indication of be e as well ashave any process, breachto of contract, go through restructuring another of adebtor, will or bankrupt will become an borrower that increased probability the are not fullytions recoverable amounts due that the - indica is accounts receivable recognised impairment are if there objective An of trade requirement any impairment establishing for method, DCF impairment indicationcost of of shares purchase an of the has considered to an to objective be be theor fair securities below nificant value continuinglevel the to a the in of reduction in paragraph previous the described instruments Unlisted shares which are classified as available-for-saleequity the of areexample an reversed subsequently not are they statement, income income statement estimated shown the ofin value equity and the future derecognised from flows—is cash present the and amount carrying the between lative difference as the loss—measured impaired are is considered instruments an to indication instruments equity that be the equity these of fairdecline the value permanent a significantcosts below the in levelto a and that are classified as instruments available-for-sale of equity case In the financial assets, indications of an impairment of afinancialobjective or a group of financialasset assets are there to any determine whether is date, balance acheck performed sheet every On 2.8.8 liability corresponding the towill settle used be asset basis anet on if it or respective is of the sale that intended the tion will settled be is entitlement if to there alegal suchsheet treatment if it and is posi that intended the Financial liabilities and figure assets asbalance anet shown and the in are only netted payments lease liabilities arisingvalue the minimum financeof from present leases are the at shown ingly, as be financialshown can also financial derivative liabilitiesinstruments basis measured financialarethe on Derivative futureof flows cashinstruments liability to date in apoint balance earlier the timefrom months sheet no than twelve of the not have settlement unconditional the does right Group that the to postpone fulfilment repaymentfor or which are associated with defaults ofwhich receivables are associated with defaults duration ofas a loan well as changes evident climate economic in national the local or over average the within portfolio the of defaults payment an increase in frequency the past, the within inflows payment experience folio Group’s might the of receivables be

Impairment of financial assets assets of financial Impairment If there is .Ifthere such an indication in relation to available-for-sale cumu the - assets, If no market prices are available, other valuation methods are used, e market .Ifno are prices are used, available, valuation other methods . Once impairments of equity instruments have been recognised in have the been instruments of equity impairments .Once Consolidated financial statements financial Consolidated .Loan liabilities are classified as current liabilitiesprovided .

Objective indications of an impairment of aport .Objective .

In the case of unlisted case any .In the shares, sig . Considerable financial .Considerable difficulties : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . . .Financial .Accord . g .the . g - - - - . . .

freenet AG · Annual Report 2012 Report AG ·Annual freenet 133

Consolidated financial statement Consolidated financial statement 134 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes the income statement the in cost not shown as in income well service shown statement the as subsequent been which nothavefarlosses by adjusted cumulativeand so plan assets the actuarial profits fair the datevalue less obligation of balance-sheet the on benefit defined ofvalue the provisionpension inis balance shown to the equivalent actuarial sheet present the Pension provisions are (1998) recognisedmeasured and in accordance 19 with IAS 2.12 reserves in capital equity in shareholders’ directly recognised are increases capital of costs taxes, current related equity as non-controlling are as interests shareholders’ shown well as profit cumulative Group reserves, revaluation reserves, capital shares, Ordinary 2.11 euro the from which differed rate method euro than into other are the reference converted date eurosrency using modified the items balance and sheet results of all companiesThe Group which cur have afunctional 2012 year financial in the occurred tions recognised in income statement the liabilities and assets denominated in as reference of foreign the datetary currency are mone process of the also converting from and fulfilment of transactions the from such exchange date the on transaction of rates the applicable using the currency functional into the translated are transactions currency Foreign environmentnomic in which company (functional currency) the operates eco primary of the to corresponding currency basisthe the on currency of the ued items in annualThe the included Group of financial each companystatements valare 2.10 to sell costs less proceeds recoverable date balance-sheet the on value ble realisa net the cost and - Inventories are of lower at purchaseproduction shown and the 2.9 to athird associated with assets ownership of party the opportunities and risks the to financial utable a financialthe essentiallyexpiresand or if asset it transfers asset all derecognises afinancialrightattrib Group only flows the if cashThe asset contractual to is by receivable using of value reduced the an impairment book accountThe freenet AG of currency whichreporting the datedform prepared euros, arein financial statements it is impairment irrecoverable, the from derecognised account has become able 2.8.9 accounts receivable of trade impairments under income statement in inflows quentrelation payment are shown thein previouslyderecognised to amounts Inventories

Shareholders’ equity Shareholders’ Pension provisions Pension Foreign currency transactions currency Foreign Derecognition of financial assets ofDerecognition financial assets .

In the financial year 2012, no Group company had a functional currency currency Group no companyfunctional a had financial .In the year2012, The present value of the defined benefit obligation calculated is benefit defined of value the present .The . . The net realisable value is defined as the estimated the as realisable net is value .The defined .Negligible transac volumes of foreign currency . . Profits and losses which losses result and .Profits After the deduction of deduction the .After . The consoli .The .Ifareceiv .Subse The . The . ------tions arise of resources is likely;this outflow provision is pointcreated whichobligaat the at - the a provision is created therefore to cover of value obligations present which for the an for obligations to improvements remove leasehold expected include costs improvements of leasehold purchase costs the According 16, to IAS agreements rental of sions contingent for premature the for primarily comprisetermination losses payments provisionsRestructuring essentially to employees comprise payments severance group minor of probability an charge asset in relation to individual obligations in this included of this group of obligations is determined of probability basis an charge asset the the on of obligations identical If anumber exists, obligations non-current discounting of the date,best-possible taking estimate into balance-sheet obligation of the the on account made estimate obligation of be the can extent of the a where Group reliable resources obligation ofofand the willtlement to lead an outflow it is where likely which amount more or arise as aresult events, of than past not that set Provisions timing obligations of uncertain constructive are and/ or recognised legal for 2.13 in yearment the in which are they incurred plansstaterecognised are thebenefit income in Contributions to defined-contribution toaddition provisions is in shown financial result of the interest the and portion expenses, personnel cost is under shown service The vested become rights in using incomeshown statement the straight-line untilthe the over period the method vested) until entitlement becomes (period period remaining employee the on Company with the plan depend adefined for pension the cost is immediately changes unless the in taken service toPast income statement, the remaining years beneficiary of the service expected period reporting previous of the end at the plan assets) of the ten or fair plan assets percent of of value the the deduction (before obligation benefit higher the defined exceeds of of value ten the present percent of the notstatement shown the balancein losses income cumulative ofand the actuarial profits are if in the income shown statement the to experience assumptions past attributable changes and actuarialto adjustments on which losses based are and profits Actuarial salaries and date; balance the on it sheet also likelyknown includes future increases in pensions takes intoThis method account acquired pensions and not only the interests vested unit credit using method projected the actuarial expert year by an independent every Other provisions Other . .Changes in of value an existing the provision, in words other changes in the .

. . Consolidated financial statements financial Consolidated .Aprovision is also is if there shown only a . These profits or losses are losses realisedor overthe profits .These . . In this case, the past service cost is service past the .In this case, . The provisions .The using are valued a : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . In accordance 37, with IAS .Provi - - - . freenet AG · Annual Report 2012 Report AG ·Annual freenet 135

Consolidated financial statement Consolidated financial statement 136 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes our explanationsour to item 27 charges strike and price the and taxes vant price stock less rele the in returnbetween ofto for payment a amount equivalent cash difference the vested which appreciation will rights stock become probably AG issued by appreciation are freenet rights stock fair measured at of value the theThe 2.14.1 in following: the detailed accounting individualThe of are the share valuation and programmes option methods ■ only recognised to the extent that it is likely that the deferred tax assets will be used by will used only that recognised to it extent is be the assets likely tax deferred that the are tax assets exceedsthisdeferred differences the figure, tion to temporary allowable liabilities tax that deferred extent exist differences are recognised intheto relation to assets temporary allowable tax Deferred settled liability tax is asset is realised deferred tax the or deferred the to when apply expected date balance the on sheet that and are substantively enacted have or that apply been liabilities and of assets ues val book the values and balance tax sheet the between differences allfor temporary refer to explanations our to item 27 vested sharesfair virtual which of value the will become probably share time payment atthe of the the price applicable LTIPthe account balance the on on depending time, at adefined are made then charges, and taxes less financial specific the year for defined objectives shares each for financial year, of successdegree the on in depending attaining certain thisutive Board; account recording for is credit used of or in virtual adebit form the ■ 2012: year financial in the (or existed programmes following still participation exist)The employee in Group the 2.14 zero) limit: (upper improvements lower limit: leasehold of amount; recoverable value the book the fulfilment and/oramount discountthe rate, are meansrecognised by adjustment of an to Deferred taxes are recognised for tax loss carry-forwards and using and liability the method, carry-forwards loss are taxes recognised for tax Deferred 2.15 LTIP aseparate For this Exec of purpose, the account member is maintained forevery Board Executive“LTIP the of members programme”, set up wasfor so-called the effect, withlong-term a programme new a compensation incentive financialIn the year2011, 2.14.2 ■ ■

“LTIP programme”) “LTIP Long Term AG Incentive of (also freenet Programme to referred in following the as Stock appreciation rights of freenet 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 . . The extent of these payments depends on various factors, including factors, various on depends payments of these extent .The Deferred taxes are measured at the tax rates (and are taxes tax measured at laws) the tax .Deferred . 1, Stock appreciation rights of freenet AG Stock of appreciation freenet rights 1, . 2, LTIP AG2, of freenet programme If the amount of the deferred tax assets in rela- assets tax deferred of amount the .Ifthe .For each financial year, cashpayments, The provision .The is measured at the For details, please refer to please .For details, These rights are exercised rights .These For details, please .For details, . . - - - . allocated to this CGU this to allocated test for the assets allocated to the cash-generating unit to cash-generating allocated the (referred assets the for test to in following the as assets impairment of non-monetary 0 centage million points) increase or euros WACC (if by the 680 by were reduced to be million by euros WACC (if 575 decrease the sell would were increased by to 0 be to costs fair less value the percent in planning the increased by or period, 10 reduced be by 0 increase would and by approxage points decline bywould approx to sell costs Communications” fair that less value CGU) the has established “Mobile 293 2012: December value31 as of witheconomic an(book indefinite giblelifeuseful assets 1,116 2012: December as value of 31 relating tests tothe potential (book impairments goodwill of to regard within future assumptions on With the made framework events the based estimated be of abusiness combinationas part mates fordetermining fair time at value the of the acquisition are acquired assets if the esti on is intangible and based plant equipment and assets valuation ofThe property, assumptions might uncertainties and have consolidated the on financialstatements estimates, which these as well of the financialas risks impact underlying the reporting of understanding accounting chosen acorrect for the are policies of crucial importance related assumptions associated in following with out the set as well uncertainty as the which occuroriginal may amounts the from differ estimates well in as future estimates assumptions on uncertainties and events based as recognitionthe valuationon methods and depends solidated financialstatements financialthe in positioncon operations of results and assets, of net presentation The 2.16 likely which will amounts have paid toauthorities to fiscal the be record appropriate, provisions to the when on interpretationare and, based subject which to issues regard with particularly declarations, tax reviews regularly Management closingwhich the on are date applicable which in near or future will the applicable be is calculated in regulations expense accordance current tax tax The German with the influence future will differences not as a foreseeable resultthe reverse in thisof temporary the Group it and determined be the is by likelycan differences arethat reversed porary ings in subsidiaries associates and time unless at the are which tem recognised, the hold with liabilities tax differences in connection whichDeferred result temporary from thatonly capitalised to it extent is the likely that will they utilised be by future profits future profits . 5 percentage points); this not result would in any impairment with to regard assets the . 3 million 293 year: previous euros, . . 9 million 1,116 year: previous euros; 5 percentage points and that, if earnings before interest and taxes (EBIT) were to if interest earnings (EBIT) taxes that, and before and 5 percentage points Discretionary decisions, based on future events and uncertainties in estimates uncertainties and future on events based decisions, Discretionary . . Deferred tax assets in relation to any tax losses carried forward are also forward in relation carried to assets any losses tax tax .Deferred . 254 million .254 WACC euros if the were increased by 0 Consolidated financial statements financial Consolidated The anticipated .The also life has useful to of such assets A sensitivity assessment regarding .Asensitivity assessment impairment the . 3 million euros), Test refer to for please item 16, . 9 million euros) as well of intan as impairments 301 million WACC euros if .301 the were to decline : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes The major estimates .The and . The actual .The . 5 percent . 5 per . . ------. freenet AG · Annual Report 2012 Report AG ·Annual freenet 137

Consolidated financial statement Consolidated financial statement 138 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes products of the Group, estimates are made on the basis of past experience to the estimates basis assess the on Group, experience are of the of made past products commissions from sales to regard various accrual With the for the services of purchased by 0 declined had 8,635 thousand euros and, if the discount if the euros rate and, by declines 1 8,635 thousand obligations by declines unfunded and funded of value the present the centage points, result discount if of the is asensitivity assessment that, rate increases by 1 plan return the assets on as well as expected ofan assessment an beneficiary the income of pensionable of future the of the assessment the development in pensions, sions similar and obligations valuation assumptions the for provisions of the made ward-looking have forpen been to regard provisionsWith pension similar and for how item describes obligations, 31 pation programmes refer to please item 27, Employeeaccording partici 2012, 2) to December as IFRS of 31 forestablishing provisionvaluation the LTIP model the for (in each case programme determiningfor as appreciation well rights stock as provisions the the outstanding for to regard assumptionsWith the estimates and in Black-Scholes the made used model of future in this losses field to for remaining made the extent thusbeen and the rental terms agreement of certain has assumption an network, landline/internet the reducing for losses contingent for areasbility in of sublet being these future assumptionsmadebuildings, inpossi beenrelation office and rented shops the have to to regard creationWith the provision of the of contingent for any for losses vacancy calculation and estimates statement of on provisionsThe depends payable withprobability which final become commissions cancelled) be longer no (whichcan 0 0 have would receivables been ables This interest rate takes account maturity of receiv risk as the well default of as these the futurearising flows cash agreements these from expected of value the mine present the interestthe commensurate for rate applicable terms levels and of risk in to order deter assumptions regarding made haveto receivables, determinefair been of value the these in units mobile return foran additional (mobile payment monthly option), in and order valuable more relating to select customers to agreements end for facility the ponent to that multiple-com accounts receivable are attributable to regard trade With the in status dunning process of the receivables the on and collection and structure assets other and accounts receivable for establishing for trade suitable valuation adjustments out carried was as evaluation well receivables An of as value assets the other of the of the lawyers representing the Group companies Group the representing lawyers the of sions passive for disputes legal are created in basis particular the on assessment of the . 5 percentage points and would have been 0 have would and been 5 percentage points .Asensitivity analysis in relation to this interest that rate these has established These assessments were based mainly on past experience as well age as the mainly on experience were based past on assessments .These . . 5 percentage points . . .This involves recognition the of adiscount trend the rate, . 8 million interest euros if the lower rate increased by had . With regard to regard valuation .With the provision of the . 8 million euros higher interest if the rate . . 00 percentage points, the percentage points, 00 .In particular, provi . 00 per 00 . The . The ------.

of a sale than by way of further use thanof by asale way of further to sell if it realised costs isless likely be generallymore by can value way that their book fair and value value held-for-sale of are lower book at shown the according 5, to IFRS as classified are which assets, available-for-sale long-term and operations Discontinued 2.17 period planning vant percent in income rele were to the tax decline by 10 corporation the income or trade evant planning period, and that they would decline by that and would approx they evant planning period, income were to percent in rel tax increase the by corporation 10 income or trade the been retrospectively adjusted in view of a change in the method of in recognising adjusted view of a change in method retrospectively the the been previous yearthe consolidatedfigures comparison In these financialhavestatements, 2.18 operations continued of part as statement income sification reclas of time the at amount recoverable the and operations” “discontinued as classified not been had group or of assets assets if the out ations carried which have would been revalu depreciation or - less value of are lower book at shown the group of the assets or criteria the 5are satisfied longer no when of IFRS operations” “Continued as reclassified are assets of available-for-sale group the or available-for-sale assets The is calculated longer no assets corresponding the of depreciation assets, available-for-sale long-term and operations increase would by approx assets tax deferred that the established liabilitiestax deferred and assets tax refer Deferred to please item recognised, have 20, been assets in relation tax to which deferred forward no carried losses of the extent alsoand the ket telecommunications of the as well development as mar the developments ro-economic instance for assumptions, with to regard ning mac which recognises forward-looking plan corporate on are based relating forward carried assets to losses tax deferred The isdetermined definitively in which taxation the income in on period taxes the current deferred the and on impact originally the from differs figure, this assumed relation transactions will to these have an due income will on additional taxes to become what extent, provisions basis the anticipated for on of audits estimates as tax to whether, if so and of business course during normal taxation the in relation to are transactions whichThere it is to not possible definitive determine the changes for in value via reserve in the equity euros) thousand will recognised directly provisions be (pension increased by 18,789 2013 as of 1January increase adjustment able the whereby in provisions pension freenet, for will involve aconsider method, corridor of abolition with the the 2013, since 1January higher euros thousand 11,548 obligations be would unfunded and funded of value the present With regard to the extent of the capitalised deferred taxes on losses carried forward forward carried losses on taxes capitalised deferred of the to regard extent .With the

Discontinued operations and available-for-sale long-term assets Comparable figures figures Comparable The modified IAS 19 (2011) which has been the subject of mandatory adoption of mandatory subject the 19 whichbeen (2011) has IAS modified .The The adjustments to revaluation are in the shown the group of of the assets adjustments .The A sensitivity analysis carried out in relation to the deferred tax assets has assets .Asensitivity analysis in out tax relation to carried deferred the . . Consolidated financial statements financial Consolidated . At the point of point .At reclassification the discontinuedthe to . The Group determines the extent of extent determines the Group .The . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes If the eventual .Ifthe in taxation .17 . 1 million euros if the .17 . 1 million euros if The assets assets .The ------freenet AG · Annual Report 2012 Report AG ·Annual freenet 139

Consolidated financial statement Consolidated financial statement 140 freenet AG · Annual Report 2012 Report AG ·Annual freenet 3.

Segmental reporting Segmental Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes ■ ■ ■ Other: ■ ■ ■ 2012 for all expenses and income to be clearly allocated to the two segments “Mobile “Mobile segments to clearly income to and two allocated the be all for expenses 2012 relevance economic and criteria basis the on of selected are to segments allocated the expenses and Income ■ Communications: Mobile in 2012: in following segments the operating operated Group Germany, regions geographical is on there organisation management no and based Company the by offered services and the products individual between basisthe differences of the manages and organises Company the as main Board Executive decisionThe maker on profitability sions relating of to resources allocation to the measurement this of the and its segment Companyularly of main by the reviewed with the to regard decision-making deci body - reg are results operating whose segments Group from distinguished have to be ments basis the on and of internal seg In accordance operating 8, management, with IFRS profit gross within recognition this accountingprevious with the pared involves merely a change treatment method, of Group the of results financialthe on and or positionGroup the of assets net the Recognition of expenses income and revenue as well cost of as materials the the market the ment also (or provide to to seg other provide) used segments the two of the Each services ■ ■ ■ ■ ■ ■ ■ ■ ■ Range of narrowband voice services (call-by-call, pre-selection) and data services data and (call-by-call, pre-selection) voiceRange of narrowband services services of sales Rendering ness customers busi for services other and services of communication EDP solutions, Development sites) web on banners advertising users end for as well as pay services marketing the and essentially of of range comprise online the services shopping such as E-commerce/-advertising (these services services of portal Rendering communicationsdata communications of mobile Sale mobile for devices as well as additional services operators network the of as of arange tariffs as well tariffs and services independent own Company’s of arange the operators, network with these concluded agreement operator basis the network On of the ators T-Mobile, Vodafone, E-Plus O and (voicemunication communication mobile services services) data and the for oper provider—marketing communications as amobile Activities service com of mobile Rendering of sales services of sales Rendering These services are charged on the basis of transaction prices which are basis are usual the on charged on of transaction services .These Because the Group exercises its business operations almost exclusively almost exercises business Group operations the its in .Because . . As in year, previous the .As in financial it possible the was year . This change of method does not have on an does impact .This change of method Please refer to our comments under item .Please under refer to 2 comments our 2 in Germany Germany in .Com The .The . . 1, 1, ------ers mass business primarily which operates private custom on focuses Group freenet The is not available services or revenue by individualA breakdown products of third-party income statement in consolidated shown consolidated the the ures measurements and and balance sheet income do and expenses responding the for cor shown measurements figures the and reporting, of segment For purposes nies to segments of the one by allocating individual the consolidated compa- Group Communications” “Other” and The Group is Group accordingly individual on .The customers not dependent . Consolidated financial statements financial Consolidated .

—like in year—not previous the fig the from differ : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . . - - - freenet AG · Annual Report 2012 Report AG ·Annual freenet 141

Consolidated financial statement Consolidated financial statement result Group Group result from discontinued operations Group result from continued operations Taxes on income result financial Group Investments in continued operations Segment EBIT Segment write-downs impairment and Depreciation EBITDA Segment Other own work capitalised work own Other income operating Other profit gross Segment Share of result in associates result of Share operating expenses Other total materials, of Cost of materials cost Intersegment party third materials, of Cost Personnel expenses Personnel Revenue, total Revenue, 142 freenet AG · Annual Report 2012 Report AG ·Annual freenet revenue Intersegment revenueThird-party €’000s in Figures 2012 December to 31 1January report Segment 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 2012 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

–33,013 –24,817 –29,036 –37,757 –3,229 39,027 67,929 –4,588 –4,744 76,784 6,560 1,359 8,855 9,690 5,766 Other 729

Elimination of intersegment revenue and –13,691 –13,691 –4,420 –4,331 9,271 9,271 8,751 costs 0 0 0 0 0 0 0 0

–2,365,803 –2,365,803 3.089,032 3,089,032 –148,823 –161,022 –276,135 723,229 209,006 173,189 173,189 357,829 –42,088 173,098 21,267 58,942 6,271 5,766 7,049 Total 91 0 0 0

Cost of materials, total materials, of Cost of materials cost Intersegment party third materials, of Cost total Revenue, Segment gross profit gross Segment revenueThird-party €’000s in Figures (adjusted) 2011 December to 31 1January report Segment Intersegment revenue Intersegment Personnel expenses Personnel capitalised work own Other income operating Other Other operating expenses Other Share of result in associates result of Share Segment EBITDA Segment 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 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 : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Communications –2,518,241 –2,521,569 3,194,635 3,198,423 –134,377 –162,564 –289,052 676,854 176,997 339,561 19,806 10,004 76,132 –3,328 Mobile Mobile 3,788 0

–32,584 –30,890 –28,541 –37,270 71,984 40,285 –8,353 –2,019 –4,686 15,206 –6,334 77,555 2,689 1,087 5,571 Other 834

revenue and costs and revenue Elimination of intersegment –1,345 –4,322 –9,359 –9,359 8,014 8,014 5,667 0 0 0 0 0 0 0 0

regarding IFRS 5 IFRS regarding freenet AG · Annual Report 2012 Report AG ·Annual freenet Effects Effects –159 –159 –159 0 0 0 0 0 0 0 0 0 0 0 0

–2,550,825 –2,550,825 3,266,619 3,266,619 –168,898 –314,275 –162,918 143,848 168,485 143,988 715,794 337,383 –51,146 143,764 22,495 26,509 86,857 10,838 1,087 Total 140 224 143 0 0

Consolidated financial statement Consolidated financial statement 144 freenet AG · Annual Report 2012 Report AG ·Annual freenet 7. 6. 5. 4.

Revenue Cost of materials of Cost Other operatingOther income Other capitalised own work own capitalised Other Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes commissions premiums and partners sales for mainly comprise charges communications, mobile for services of purchased costs The business prepaid from alsoand bundles telephones principallyof mobile purchase comprise costs goods the of purchased Costs services purchased of Costs goods of purchased Costs €’000s in Figures cost of materialsThe is broken as follows: down overheads expenses) as well as proportionate personnel and to fees consultancy (mainly individual costs attributable directly comprise the relating capitalised costs The communicationsmobile field in the relates work capitalised own other essentially ofThe software to development the involving seven digit alow amount settlements due to agreed periods to other attributable income This item contains cash-effective activation),tomer income charging from of use company to the for fees employees cars cost subsidies advertising (insofar as not linked reversingfor debits, to cus new direct income mainly operating other comprises incomeThe dunning from charges charges and nications devices and accessories million euros) 533 year: 552 million euros (previous relates commu of to mobile sale - the million 591 year: euros)(previous relates to for premiums fees commissions, and and million euros) million relates 2,037 525 year: euros toeuros (previous rentals fees, and million 1,923 Communications revenue in Mobile segment, generated the external Of reporting Segment item under is 3, out set segments the million euros) over million 3,267 year: euros (previous A breakdown of revenue of 3,089

These are exclusively almost .These to due migrations IT . . . . . 2,365,803 1,805,316 560,487 2012

2,550,825 1,969,955 . 580,870 . 2011 - .

GmbH, Hamburg GmbH, financialrelate on impairment assets write-downs the to investment The in libri in futurewhich the used will be longer no recognised in impairments relationThe to relate intangible to assets adistribution right assets intangible on write-downs Impairment assets intangible on Amortisation €’000s in Figures impairments: depreciation and the out following sets The table euros) thousand 11,691 (previous plans year: benefit insurancecontribution of contribution defined as costs social euros employer’s the as thousand include afigure 11,284 of expenses Personnel obligations similar euros), Pensionthousand provisions also 31, see item408 and(previous year: plans fit bene euros defined for thousand of 513 also comprise an expense expenses Personnel to items comments our 2 refer to please programme, to regard With participation an employee explanation of the euros) sand - thou 1,381 euros in year: accordance thousand 2(previous increasing with IFRS by 2,520 Company expenses of the has appreciation resulted programme stock inThe personnel persons) 4,057 year: (previous 4,065) year: vious (pre in financial in were Group the employed the year2012 persons average, 3,939 On pensions retirement for expenses and contributions Social salaries Wages and €’000s in Figures are broken as follows: down expenses Personnel Impairment write-downs on financial assets financial on write-downs Impairment equipment and plant property, on write-downs Impairment equipment and plant property, on Depreciation .

Further information is included in item 19, Other financial assets Other information is in .Further item included 19, At the end of the financial year, the Group employed 3,886 persons persons financial of the 3,886 end .At the year, employed Group the . . . 14 and 27, and 14 programmes Employee participation Consolidated financial statements financial Consolidated .

. : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes 148,823 161,022 138,448 137,163 23,859 9,190 2012 2012 113 152 920

. 168,898 162,918 154,581 138,871 12,630 24,047 1,136 . 2011 2011 153 398 . de - -

8. 9.

Personnel expenses Depreciation and impairments and Depreciation freenet AG · Annual Report 2012 Report AG ·Annual freenet 145

Consolidated financial statement Consolidated financial statement 146 freenet AG · Annual Report 2012 Report AG ·Annual freenet 11. 10.

Other interest and similar and interest income Other Other operatingOther expenses Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Interest of tax refund of tax Interest Interest receivable from banks, debt collection and similar income similar and collection debt banks, from receivable Interest €’000s in Figures interest similar and Other income consists following of the items: nised rental for leasing in income and statement the contracts euros) thousand recog was 32,141 year: euros (previous thousand of amount 26,920 An year,previous accounts receivable to were trade fully attributable costs these euros) thousand were incurred 36,831 year: euros (previous 30,331 thousand financialIn the year,receivables of totallingwrite-off of the allowances and costs postage of billing, and outsourcing costs of receivables, write-off the of allowances and administration and costs shops of building), the costs ancillary and 104 mainly comprise marketing expenses (112 operating costs Other Communications” “Mobile financial of the segment impairment primarily arethe to costs yearThe 2012 attributable Frechen relateGmbH, Media to investmentEntertainment the in Pocketfilm in year previous shown the in impairment relation write-downs The to financial assets as technical machinery and equipment as well networks switches and line and licenses, mainlyaffected field, fixed-network the in equipment of network related plant equipment and to reduction the property, and in year previous shown the in impairment relation write-downs The to intangible assets . 3 million euros in 2011), legal and consultancy costs, administration costs (e administration costs 3 million costs, consultancy euros and in 2011),legal

. .

. . 1 million euros against 2,695 2,596 2012 . 99

. As in the .As

. . g rents .rents 4,956 4,923 2011 33 -

assets and liabilities and assets tax refer Deferred to please item details 20, concerning taxes, deferred For further 1 changes rate to tax attributable expenses tax Deferred differences to temporary due income tax Deferred assets tax deferred of write-up to the due income tax Deferred years previous for Tax income year financial the for expenses tax Current €’000s in Figures taxes income as on well taxes asThis deferred item comprises outstanding paid and to compounding of provisions other the attributable liabilities other euros ispayable, thousand liabilities, current and income tax 856 and accounts to compounding of euros trade the is attributable thousand liabilities, 5,392 as a result 2012 ofthe of compounding for shown figure the for expenses interest Of obligations pension on Interest liabilities of Compounding costs similar and payable Interest €’000s in Figures Interest similar and are broken as follows: down expenses Other payments tax of additional expense Interest Expense of market valuation of derivative financial instruments financial of derivative valuation of market Expense costs for the discontinued operations discontinued for the costs to tax is attributable euros thousand 19 and operations, continued the for income to tax is attributable euros thousand 26,509 2011, year the for income tax actual the for euros thousand 26,490 of figure the Of

. Consolidated financial statements financial Consolidated . . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes –32,978 44,783 36,489 30,790 6,271 6,248 1,551 8,917 –623 2012 2012 110 373 165 12

26,490 –24,898 56,102 12,371 41,086 24,098 26,997 1,560 2011 2011 148 . 293 145 792 0 1

12. 13. Taxes income on Interest and similar and Interest expenses freenet AG · Annual Report 2012 Report AG ·Annual freenet 147

Consolidated financial statement Consolidated financial statement 148 freenet AG · Annual Report 2012 Report AG ·Annual freenet 14. Earnings per share per Earnings Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes an average trade tax assessment rate assessment of 384 tax an average trade ing reconciliation ing

€(undiluted) in share per Earnings outstanding of shares Weighted average AG in €'000s freenet of to shareholders attributable result Group to 26 item contingent capital of utilisation possible the of result cial year weighted by the averageshareholders of shares number in circulation during finan the Undiluted share earnings are per calculated by to dividing the result the attributable 14.1 average rate of 29 were also used income inon financialtaxes calculating the used was for deferred year 2012 current the and percent) 15 year: percent (previous rate of 15 tax acorporation companies, Group For the 1 29 of rate atax applying expense tax Expected taxes on income before operations discontinued and of continued Results €’000s in Figures result income would on of taxes 48 in anticipatedbefore expenses tax rate consolidated average of the the tax Applying companies to consolidated the result (previous year: 34 year: (previous tax income of 6 tax Effective tax rate in percent rate in tax Effective Tax effect of non-deductible expenses and tax-free income tax-free and expenses non-deductible of Tax effect forward carried to losses in relation assets tax deferred recognised non- and assets tax deferred for allowance in the Change (previous year: 29 year: (previous Actual tax income tax Actual Tax expense from previous years previous from Tax expense rate tax in changes to due Effects Thereof from discontinued operations in € operations discontinued from Thereof Thereof from continued operations in € operations continued from Thereof euros to continued operations and 19 thousand euros are tax expense for discontinued operations discontinued for expense tax are euros thousand 19 and operations to continued euros thousand 2011,26,509 year the for income tax actual as shown euros thousand 26,490 of figure the Of Undiluted earnings per share per earnings Undiluted A solidarity surcharge .Asolidarity of 5 .In future, it is that undiluted possible share earnings might per as a go down . 5, Contingent capital Contingent 5,

. The deferred taxes in financial taxes the calculated were with deferred year2012 an .The . 4 percent) 3 million 26 year: euros (previous . . . 3 percent (previous year: 29 year: 3 percent (previous 5 million euros) . The difference between this actual the and amount between difference .The . 5 percent in relation to the corporation tax as well5 percent in as tax relation to corporation the . 3 percent 3 percent . 81 percent (previous year: 389 year: percent (previous 81 . 4 percent)

. 5 million euros) is in follow shown the . For further information we refer refer we information further For . 128,061,016 –48,907 166,918 173,098 –2,169 57,805 6,271 –3 –623 1.35 2012 2012 0 1 165 .00 . . 35 76

. 9 million euros . 38 percent)38 128,061,016 –34,544 26,490 143,764 117,498 60,981 –22 . –240 1.12 2011 2011 1 0 293 . .12 .00 54 0 - - 1

Customer relations Customer as aresult limited intended of the use are impaired to rights software and use technology, of network result reduction of the 2012 December asImpaired existed of 31 intangible assets 74 2011: ber of 48 intangiblether assets relations customer and debitel acquisition, the from toIn fur addition trademarks the Trademarks €’000s in Figures which were significantprevious year: the in relations, customer and trademarks of these values book the out following sets The table 2008 year financial acquisition occasion of the the chase on price allocation in debitel of Group the to pur the attributable relates of value intangible to main assets trademarks The book assets in non-current movements of statement consolidated are in intangible shown and plant the equipment and assets in property, Movements €(diluted) in share per Earnings of diluting shares number plus outstanding of shares Weighted average of diluting shares Potential number outstanding of shares Weighted average AG in €'000s freenet of to shareholders attributable result Group potential nor dilutioneffects are dilution there neither effects 2012 December 31 per As diluting shares potentially by in circulation increased shares of number average weighted the by holders Diluted share earnings are per calculated by to dividing share the result the attributable 14.2 Thereof from discontinued operations in € operations discontinued from Thereof Thereof from continued operations in € operations continued from Thereof Diluted earnings per share per Diluted earnings . 0 million euros)

. . Consolidated financial statements financial Consolidated . 0 million euros are shown as of 31 December 2012 (31 Decem (31 0 million 2012 euros December are as of shown 31 . .

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Software is impaired as a .Software 128,061,016 128,061,016 .

2012 12. 31. 309,409 173,098 307,286 2,123 1.35 2012 0 1 .00 . 35 0

128,061,016 128,061,016 2011 12. 31. 411,360 312,127 143,764 99,233 1.12 2011 1 0 .12 .00 0 - - - - .

and equipment and goodwill and equipment and 15. Intangible assets, property, plant property, assets, Intangible freenet AG · Annual Report 2012 Report AG ·Annual freenet 149

Consolidated financial statement Consolidated financial statement 150 freenet AG · Annual Report 2012 Report AG ·Annual freenet assets non-monetary 16.

Impairment test for Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes within CGU Communications the Mobile euros in 2014 Other euros in 2014 as welleurosof in flow cash as255 a free 2014 For 2013 freenet strives for a Group EBITDA of 355 EBITDA aGroup for strives freenet For 2013 no-frills) and at(postpaid 23 around euros as ARPU well as astabilisation postpaid of the ownership in sector customer base the customer aslight of the growth pany expects as well as slightly overheads equipment lower acquisitioncustomer slightly and higher in retention planning customer the costs period operators network with to regard mobile the particularly services, purchased for costs by the opposed retention customer and contribution customers bythe new to made results Communications” CGU broken into earnings down “Mobile be of can flows, the two in relation to main the result drivers value expectations and future and Planning assumptions experience fromprevious detailed on derived is based yield in perpetual the planning extrapolated was phase which calculating for by approved management was used fair was value the Communications” CGU “Mobile amount recoverable of as the the used to sell has costs been fair less value The euros) thousand 293,204 (previous year: waseuros allocated to atrademark thousand life of 293,204 service fined unde an with asset intangible euros) an and thousand 1,111,830 year: (previous tions” Communica to euros CGU allocated was the thousand “Mobile of 1,111,830 Goodwill testing: impairment asset following the we hereby provide details on In accordance provisions 36, with the of IAS were recognised in income statement the costs research development and No refer also to item notes 25 to of consolidated these the financialstatements (also Hamburg tion of to 4Players referred in following GmbH, the as “4Players”) relates to initial the consolida “Other” - euros under shown of 6thousand decrease The Communications Mobile €’000s in Figures recognised in goodwill relation toThe CGUs is broken in following: down the a result acquisition of the programmes loyalty or as commissions hardware dealer and the procuring for costs paid to partners to sales be tribution loyalty to customer and earnings by customers new made

The Group EBITDA as well as the free cash flow will as flow cash well EBITDA free mainly as Group the be generated .The The costs of acquiring costs retaining .The and dominate customers con the .Planning and up to including and which covers period 2016 the . . Furthermore, for 2013 and 2014 the com the 2014 and 2013 for .Furthermore, . 0 million 260 and euros in 2013 freenet is assuming .freenet slightly reduced . 0 million euros of and 360 . In principle, the gross profit the .In principle, 1,116,862 2012 12. 31. 1,111,830 5,032 This is opposed by . This is opposed

The detailed detailed .The . These are .These . . 1,116,868 2011 12. 31. . 0 million 0 million 1,111,830 .Please 5,038 - - - - .

The impairment test 2012 carried out in relation to the “Mobile Communications” in out relation CGU to carried “Mobile the impairment 2012 test The been assumed as a result of growth assumptions (previous year: 0 assumptions year: as aresult assumed (previous of growth been capitalisation rate in the subsequent phase (starting 2017), adiscount 2017), capitalisation (starting phase rate of 0 in subsequent the Current assets Current €’000s in Figures in financialor the year2012: 2012 are December as liabilities, shown of 31 expenses income and followingThe assets, 50 year: cent stake (previous 50 a holds Group whichand in freenet the in financial the established year2001 which was in following), the (“FunDorado” Hamburg, GmbH, is here FunDorado cerned consolidated The an show financialjoint investment one statements in venture impairments and Depreciation to item 9, refer ations—please continued the for oper assets were recognised1,687 euros) in relation to non-monetary (previous year: euros thousand 1,185 of impairments financialIn the year2012, with an indefinite as welluseful life trademark as the that impairment no has recognisedestablished to in relation be goodwill to allocated the determining fair is value the 6 Communications” basisCGU the on of of in course market “Mobile the used and data theof risk instructure relation derived to capitalisation specific tax the The rate after Non-current assets Non-current Current liabilities Current Expenses Income liabilities Non-current

Consolidated financial statements financial Consolidated . 0 percent) . 4 percent (previous year: 6 year: 4 percent (previous FunDorado operates a fee-based internet portal afee-based operates .FunDorado . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . 6 percent) .

FunDorado 4,804 2,165 . GmbH 1,967 8,199 2,089 2,837 9,112 5 percent) With regard to regard .With the 76

. 5 percent has Attributable to Attributable .

the Group . .Con 0 per 2,402 1,082 1,045 4,100 1,419 4,556 984 38 - - - .

17.

Joint ventures Joint freenet AG · Annual Report 2012 Report AG ·Annual freenet 151

Consolidated financial statement Consolidated financial statement 152 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes of simplicity, 1 November 2006 has been chosen as the date as the chosen of initial has been consolidationof simplicity, 2006 1November as joint included are ventures both in consolidated the financialstatements in following) the Pulheim (“siXXup” GmbH, Media new siXXup of FunDorado portal s Media percentstakeacquired NetCon50 GmbH in a FunDorado 2006, October 13 Effective 38) year: (previous 2012 holding in Group’s with the this inexisted joint connection venture December as of 31 in year, previous the case the was As contingent no liabilities obligations capital or Expenses Income liabilities Non-current liabilities Current assets Non-current assets Current €’000s in Figures in financialor the for year2011 FunDorado: 2011 areDecember as liabilities, of shown 31 expenses income and followingThe assets, pany produces content which is designed to be used primarily in the fee-based internet contentpany produces primarily which is used in fee-based to designed the be In the financial year 2012, FunDorado GmbH employed an average of 37 persons persons 37 employed an averageGmbH of financialFunDorado .In the year2012, . r . o based in Hlucin, the Czech Republic (“NetCon” in following) the Republic (“NetCon” in Czech Hlucin, the .based

. NetCon in turn owns a 100 percent stake in its sales company sales percent stake in its in turn owns a100 .NetCon NetCon as well as siXXup .NetCon FunDorado 2,840 4,566 GmbH 2,190 8,704 2,764 2,376 7,984 76

For the sake .For the Attributable to Attributable The Com .The the Group 1,420 2,283 1,188 1,095 1,382 3,992 4,352 . 38 -

Expenses Income connection with the Group interest companies Group with in the these connection contingent were there no liabilities 2012, in commitments capital or December of 31 As 7) year: (previous 8 persons includingsubsidiary,NetCon, its employed an average of financialIn the year2012, Expenses Income liabilities Non-current liabilities Current assets Current €’000s in Figures respectively: financial for the and year 2011 2011 December as of 31 bilities, incomeexpenses and lia- following the shows assets, NetCon siXXup, Including subsidiary balances the of its liabilities Non-current liabilities Current assets Non-current assets Current €’000s in Figures 2012: year financial the for expenses liabilities, income and following the and assets, liabilitiesand 2012, December as of 31 following the shows assets NetCon siXXup, Including subsidiary balances the of its Non-current assets Non-current

Consolidated financial statements financial Consolidated . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . r.s. o. Media r.s. o. Media Netcon Netcon 2,003 1,936 Netcon Netcon 1,839 1,775 128 692 128 368 324 673 344 176 328 176 0

Attributable to Attributable Attributable to Attributable the Group the Group 168 173 444 484 460 501 44 32 44 86 82 92 81 32 0 0

freenet AG · Annual Report 2012 Report AG ·Annual freenet 153

Consolidated financial statement Consolidated financial statement 154 freenet AG · Annual Report 2012 Report AG ·Annual freenet 18. 19.

Investments in associates in Investments Other investmentsOther Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes relation to financial other the assets createdbeen in had no impairments 2011, in made GmbH Media Entertainment etfilm date, balance of exception the with sheet the impairment of the As in relation to Pock measured at cost of euros purchase which has been thousand of 500 2012 earnings for -this not changed December had as assessment of 31 prospects cantly poor in view the of signifiFrechen, GmbH, Media investmentEntertainment in Pocketfilm recognised percent was in financial the in year2011 relation impairmenttheto An of 100 2012 financialin assets received amount has the already euros; been sand - thou for a price of 152 sold was 2011, December euros 31 on thousand ofamount 304 interest the in Libri In 2012, value are and measured at as shops for fair rental securities euros); thousand serve these 1,033 (previous year: euros thousand long-termwith bonds fixed-income 1,027 maturities of balance date financialrecognised other as the of sheet mainlyThe assets comprise “Other” in segment shown was the KielNET reporting, In segment profit current with the result disposal in the and accounted 2012 using for method equity the KielNET euros) thousand disposal ofthe from as shown profit was (namely value book 4,764 recently most recognisedpurchaseprice year, the the and Last between difference the value in book treatedthis as areduction been had euros received KielNET; from was thousand distribution of 1,157 a dividend in 2012, that, up is to of to point deconsolidation, due fact euros in the shown the 2012 1,002 thousand in with aresult conjunction of associated companies of 2011, with 31 December pared euros 2,905 thousand amounted to of value KielNET At time book at the the which it deconsolidated, was completed been had agreement purchase the which recognised after was in income statement euros, the thousand 7,669 in purchase price (incl Group the interest freenet ofThe the in associates investments of the accountedit amount deconsolidated inwas financial the carrying for all the yearof 2012, in following) the für Kommunikation, (“KielNET” Kiel Gesellschaft GmbH Until KielNET KielNET supplies telecommunication services within license supplies telecommunication the area services region in Kiel the KielNET Berlin, and thus took a further step in the direction of strategic portfolio streamlining of strategic portfolio step in direction the afurther thus and took Berlin, to Versatel investment GmbH, in Holding its KielNET sold Group freenet the 2012, ber which 25 on completed Octo was 2012, of 25 purchase agreement September the With The historical acquisition costs of this holding are stated as 398 thousand euros historical thousand acquisition .The of this as costs holding are 398 stated . . In addition, there is also a dormant holding with an unchanged carrying amount amount carrying unchanged an with holding dormant a is also there addition, In Overall, 5,766 thousand euros were recognised result as the companies thousand of the 5,766 .Overall, The reduction of 155 thousand euros in the book value com value euros in book the thousand of 155 reduction .The . . de GmbH, Hamburg, which was shown with a carrying which with shown a carrying was Hamburg, GmbH, de No purchase price adjustments were agreed purchase price adjustments .No The Group owned a 50 percent stake in this a50 company owned Group .The . There were no further sales of other sales further were no . There . .interest) amounted to . . . . - - - - . . .

The overhang of deferred tax assets which are recognised (170 assets tax overhang ofThe deferred are in following consolidated shown the The amounts balance sheet: 29 year: (previous Group result from discontinued operations discontinued result from Group Taxes on income €’000s in Figures euros) are in consolidated shown the as income follows: statement 51,092 thousand year: euros (previous thousand amounting income income from to tax 39,085 The Other accruals and liabilities Other Provisions carry-forwards Loss assets Financial assets Intangible equipment and plant Property, €’000s in Figures liabilities and in 2012 assets tax in deferred Changes followingthe table: liabilities and assets financial tax the for Change are inshown deferred inyear2012 the as aresult anticipated of the carry-forwards loss of use tax 37 130 year: liabilities tax Deferred assets tax Deferred €’000s in Figures bilities were calculated using with rate atotal liability of the 29 tax method and lia- taken were differences assets tax intodeferred consideration, temporary After Borrowings . 7 million euros) long-term and (128 . 9 million euros) is classified as short-term (41

. 4 percent) Consolidated financial statements financial Consolidated . . 9 million 93 year: previous euros; : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . 1 million year: previous euros; .

. 2012 12. 31. 0 million previous euros; 169,985 169,985 –126,980 39,085 130,900 39,085 1.1.2012 247,794 –1,216 2012 1,615 2,669 7,343 –322 0 0 –3

. 2 million euros)

Change in group group in Change of consolidated consolidated of . 3 percent 2011 12. 31. 130,900 companies 130,900 51,092 51,092 2011 0 0 0 0 0 0 0 0 0 0 0

Shown directly directly Shown in other result other in 20. Deferred tax assets and liabilities and assets tax Deferred 0 0 0 0 0 0 0 0 0

taxes on income on taxes expenses from freenet AG · Annual Report 2012 Report AG ·Annual freenet Income and and Income 39,085 30,998 –1,098 8,917 –327 344 188 55 8

31.12.2012 169,985 256,711 –95,982 2,342 1,670 6,245 –872 –134 155 5

Consolidated financial statement Consolidated financial statement 156 freenet AG · Annual Report 2012 Report AG ·Annual freenet Other Borrowings accruals and liabilities Other equipment and plant Property, €’000s in Figures liabilities and in 2011 assets tax in deferred Changes Provisions carry-forwards Loss assets Financial assets Intangible Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes (previous year: 119,157 thousand euros) carry-forwards loss thousand tax to istrade attributable 119,157 year: (previous euros thousand 122,746 and euros) carry-forwards loss tax to corporation is attributable euros)sand cumulative sum forecast the oftion exceed the result following of the financial years any without restric forward carried that be can carry-forwards loss existing tax The 1.1. of As €’000s in Figures is in taxes following: shown the of deferred summarised development net The 2011: year liabilities as tax in follows financial the deferred and developed assets tax deferred The to continued solely operations attributable was income tax to continued discontinuedincome and attributable operations on taxes to sum deferred the of income the correspond and expenses income tax The been created 1 in consolidatedbeen the balance sheet, had assets tax deferred which no for carry-forwards, loss figure for the other shown Of thatto realised it that extent is this the be considered probable will to asset be indeed Accordingly, asset consolidated tax the only financialrecognisedeferred statements a - 247,794 thou year: (previous created ineuros been relation had to carry-forwards loss dateas balance of the sheet result applicable pre-tax for forecast Company’s the on are results based expected The As of 31.12. of As Tax income result in other directly Shown Change in group of consolidated companies in of consolidated Change group Of this figure, 133,965 thousand euros (previous year: 128,637 thousand thousand 128,637 (previous year: euros thousand this133,965 figure, .Of

–160,790 223,696 1.1.2011 79,828 –2,136 1,111 8,902 9,529 –460 –24

As of 31 December 2012, deferred taxes of 256,711 thousand thousand of 256,711 taxes deferred 2012, December of 31 .As Change in group group in Change of consolidated consolidated of companies –36 –36 0 0 0 0 0 0 0

Shown directly directly Shown in other result other in . 9 billion euros relate to corporation 16 16 0 0 0 0 0 0 0

. taxes on income on taxes expenses from In 2012, the income on the .In 2012, Income and and Income 169,985 130,900 39,085 51,092 –6,233 33,846 24,098 –2,186 2012 504 138 920 0 0

31.12.2011 –126,980 130,900 130,900 247,794 51,092 –1,216 79,828 1,615 2,669 7,343 –322 2011 –36 16 –3 - . . .

Other Bundles and vouchers and Bundles tax and 1 and tax SIM cards SIM business customers, dealers and sales partners sales and dealers business customers, ble significantaccounts receiva most item the are trade Group, thisin category freenet Additional information concerning financialwe refer to item instruments 35, euros) thousand 485,852 year: (previous 2012 of 31 December euros as thousand amounted to 510,254 recognised, allowancesless which been had financial assets, non-derivative other the and accounts receivable total ofThe trade services and internet network fixed and sales equipment to fees, attributable bles comprise and mainly receiva- Trade parties, are accounts from receivable external due Advance payments assets Other receivable Trade accounts €’000s in Figures are broken as follows: down assets other and Receivables recognised in relation to year-end of inventories stocks euros) thousand has been 3,206 year: euros (previous thousand impairmentAn of 3,714 Mobile devices/accessories €’000s in Figures Inventories are broken as follows: down to in near reverse future the that are they not expected in fact view of the 46 purposes) of approx tax for shown ments of invest according amounts equity is to higher carrying IFRS corresponding than the basis differences outside shareholders’ (net are there temporary 2012, December of 31 As Tax Income 1clause (Einkommensteuergesetz) German 2of the paragraph Act 4h clause with in accordance carry-forwards interest unreported no were there date, 1 and tax . These are due mainly from end customers, and to a lesser extent they are they from due extent to and a lesser are mainly due customers, . These from end 7 million euros) . . 4 billion euros relate to trade tax (previous year: 2 4 billion year: euros(previous relate tax to trade 6 billion tax) euros trade

No deferred taxes have been recorded in relation recorded differences have to taxes these been deferred . No Consolidated financial statements financial Consolidated As was the case on the previous year previous the on balance case sheet the was .As .40 . Other assets and advance payments of payments advance and assets .Other 7 million approx year: euros (previous : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . . 0 billion euros corporation 2012 12. 31. 2012 12. 31. For further information .For further 528,306 492,674 56,586 22,409 13,223 45,364 2,663 8,559 0

. 2011 12. 31. 2011 12. 31. . .In the 520,593 471,510 51,537 10,003 22,411 26,672 37,966 . 3,348 220 - - .

22. 21. Inventories Receivables and other assets other and Receivables freenet AG · Annual Report 2012 Report AG ·Annual freenet 157

Consolidated financial statement Consolidated financial statement 158 freenet AG · Annual Report 2012 Report AG ·Annual freenet Other non-derivative financial assets receivable Trade accounts €’000s in Figures Total Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes receivable and non-derivative financial assets non-derivative and receivable following accounts The information of trade relates of this to age category the structure buyer to the were transferred associated receivables with ownership of these opportunities euros) of 0thousand costs year: (previous of receivables sale the have who in past the not defaulted customers are various from due receivables euros) thousand are overdue are but not impaired 8,010 2011: December euros (31 thousand 13,699 financialof Trade assets non-derivative other and accounts receivable impaired overduether nor euros) thousand are nei 253,669 2011: December euros (31 thousand of 432,378 assets financial non-derivative other and accounts receivable trade 2012, December of 31 As renegotiationsnot overdue, no in were relation held to existing receivables year, previous In the that accounts receivable were not impaired of and trade in case the days term of 30 invoiceimmediately the after is raised invoicesWhere due are they itself, mostly Group by are the issued to customers end Telekom of Deutsche AG (DTAG) services collection the services, are utilised for narrowband Other, invoicessegment some itself; issued by Group are the partially Invoices Communications itself are in issued Group by Mobile segment the the 2012 held-for-sale non-financialDecember or financial derivative assets 31 assets as of euros) thousand 34,741 consist year: euros (previous of assets, other 18,052 thousand In the course of the financial year, income of 1,279 thousand euros was generated fromwaseuros generated thousand financial of the course In the year,1,279 of income not have to any does it which provided Group securities haveThe been accounts receivable trade above-mentioned the of value risk maximum date to default as balance book ofThe the the sheet corresponds . . 31.12.2012 510,254 492,674 Carrying Carrying amount 17,580 . impaired nor nor impaired date neither On closing closing On 432,378 415,154 Thereof: Thereof: overdue 17,224 The invoices .The to submitted DTAG have apayment Thereof: On closing date not impaired and overdue by overdue and impaired not date closing On Thereof: . .

less than 13,251 13,017 90 days90 234

and 180 days 180 and between 91 between

All major risks and major .All risks 313 257 56 . .

. more than than more . 180 days180

.In the These .These 135 135 0 .

- . banks at cash and in hand Cash €’000s in Figures are broken as follows: down equivalents cash and Cash parties related with tions Transac euros) refer to please item thousand to 36, 238 related is parties; attributable (previous year: euros thousand 248 assets, other and figure for the receivables shown Of toimpairments allocations Net 2011 31 of as December recorded Allowances 2010 31 of as December recorded Allowances €’000s in Figures toimpairments reductions Net 2012 31 of as December recorded Allowances 2011 31 of as December recorded Allowances €’000s in Figures financial as accounts wellassets: receivable as non-derivative of trade category the information out concerning movement for in following sets the impairments The table Other non-derivative financial assets receivable Trade accounts €’000s in Figures Total

. Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Carrying amount Carrying 2012 12. 31. 205,224 205,224 31.12.2011 485,852 471,510 14,342

neither impaired impaired neither 2011 12. 31. 135,865 132,651 nor overdue nor Thereof: On closing date closing 185,673 –3,214 185,673 129,018 135,865 253,669 239,332 6,847 14,337

Thereof: On closing date not impaired and overdue by overdue and impaired not date closing On Thereof: 23. less than Cash and cash equivalents cash and Cash 90 days90 7,031 7,026 5 freenet AG · Annual Report 2012 Report AG ·Annual freenet and 180 days 180 and between 91 between

670 670 0

more than than more 180 days180 309 162 147 159

Consolidated financial statement Consolidated financial statement 160 freenet AG · Annual Report 2012 Report AG ·Annual freenet 25. 24. subsidiaries of sale and operations discontinued

Non-current assets held-for-sale,Non-current assets Current tax assets tax Current Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes in the following as “freeXmedia”) to Media Ventures Cologne to Media GmbH, in following the as “freeXmedia”) (referred Hamburg to GmbH, holding in freeXmedia 100-percent its sold Group the 2013, January 1 from with and effect 2012 of purchase 4December agreement the With income operating other which the is under euros, shown thousand 322 2012 company December as of 31 consolidated thatso the liabilities and did not balance include any sheet assets of this euros amounting to thousand 456 euros as well as thousand debt amounting to of assets other 316 euros, thousand of 218 in financial the 2015 2013 to years year 2012 paidwaseuros financialthe in thousand any100 adjustments); of this subsequent figure, purchaseprice the as waseuros agreed (whichtothousand notis subject A figure 400 of torial site web games “4Players in following the as “4Players”) Fürth AG, to Media Computec (referred Hamburg to percent holding in 4Players GmbH, 100 its sold Group the 2012, December 31 from with and effect 2012 of 3December purchase agreement the With consolidated of flows) cash statement shown thein been ID” not had (and “Next business the to area were attributable inflows 2011 January 1 from with effect sold been had ID”, which “Next business finaldeconsolidation area the from former the of operations discontinued of results in the euros thousand 140 of income subsequent included still as year previous of the case referencethe date also was 2012—as December as of discontinued in were 31 Group no the There operations years previous from balances credit ting net tax to mainly corporation attributable comprise assets receivables current tax The non-current assets held-for-sale to euros are attributable thousand 2,732 and toeuros liquid are attributable assets, thousand 205,224 equivalents, cash figurecash for the in shown and liquid assets Of banks to due scheduling finance current of part as Liabilities operations continued of assets Liquid €’000s in Figures with an original term of up to months: three liquidated which be market can at paper any time as well as current financial liabilities 7, current and ance money with consisting IAS cheques incash hand, of atcash banks, followingThe is areconciliation in accord equivalents with of cash and liquid cash assets “4Players Liga” The remaining 300 thousand euros will paid (and thousand be recognised remaining in flow) cash .The 300

In segment reporting, this company is included in the “Other” segment this company is in “Other” the included reporting, .In segment . de” as well “4Netplayers” the as and the de” services server . The deconsolidation of 4Players .The resulted inof aprofit The sale of 4Players led to an outflow of liquid offunds 4Players to sale an led outflow .The 4Players was deconsolidated as of 31 December 2012, 2012, .4Players December deconsolidated as was of 31 . . In 2012—as was the case in 2011—, no cash no in 2011—, case the was .In 2012—as However, in 2011, the income . However, statement the in 2011, 4Players operates the edi . 4Playersthe operates 2012 12. 31. 207,956 207,956 0 .

In the field of field .In the 2011 12. 31. –100,000 185,673 85,673 - - - .

Annual General Meeting on 6 July 2010, with the approval of the Supervisory Board, to Board, Supervisory of approval with the the 6July 2010, on Meeting Annual General 1no Pursuant paragraph to clause 71 rights equal with ofvalue 1 nominal theoretical a with each shares no-par-value registered 128,061,016 of consists euros thousand is 128,061 company the of capital share issued The 26.1 of business communications/mobile mobile internet folio streamlining as and aresult process decision of the to concentrate core our on area of continuing policy of the strategic port the as part were sold 4Players freeXmedia and 2013 of quarter income in first operating other the whichthe will under shown euros, be thousand 4,009 deconsolidation company of the The will result inof probably aprofit equipment and plant Property, assets Non-current €’000s in Figures Assets 2012 December 31 of as GmbH liabilities and freeXmedia of Assets 2012 liabilitiesand December as of 31 of freeXmedia assets” of non-current as well disposal with the as “Liabilities in assets” connection “Held-for-sale non-current item albeit balance in separate the sheet 2012, December dated as of balance 31 sheet 2013 in2014 financial the and 2013 years year 2012 paidwaseuros financialthe in thousand adjustments); of this500 subsequent figure, purchase price as (which the euros agreed was to any is not subject of 4,080 thousand media freenet living active as interest and well general as portal the sport ment, issues the of on automotive, focuses digitalonline marketing, entertain freeXmedia Liquid assets receivable Trade accounts Current assets . Accordingly, liabilities and are in consoli assets disclosed the the of freeXmedia Share capital Share In segment reporting, this company is included in the “Other” segment this company is in “Other” the included reporting, .In segment . The remaining .The purchase price will received recognised and in flow cash be 00 euro 00

. The entire .The share is capital fully paid up The following table sets out abreakdown out individual of the assets following sets .The table Consolidated financial statements financial Consolidated 2012 12. 31. 7,329 7,350 4,598 2,731 8 AktG, the Executive Board was authorised by the authorised was Board Executive the .8AktG, freeXmedia will be deconsolidated as of 1 January will deconsolidated as of 1January be .freeXmedia 21 21

Equity and liabilities and Equity deferred items deferred and liabilities Other payable accounts Trade liabilities Current €’000s in Figures . . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes All shares .All issued have been

. The share capital capital share The . de and social de and 2012 12. 31. .Afigure 7,325 7,325 6,839 486

- - - . 26. Shareholders’ equity Shareholders’ freenet AG · Annual Report 2012 Report AG ·Annual freenet 161

Consolidated financial statement Consolidated financial statement 162 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes basis of the authorisation adopted by the annual general meeting of 7 July 2009 under basis annual by of 7 July the 2009 meeting authorisation adopted of general the and/or of convertible which are the issued on granted to bonds option holders the be 2009) 1 for accounting share value no-par registered with value each individual shares, no-par new of issuing up to 15,000,000 share the for by out capital way euros carried was increasecapital of up to 15,000,000 acontingent ofAccording 7July 2009, Meeting to Annual of General aresolution the company of the 9May Meeting 2012 on of votesmajority Annual at General the to aresolution adopting for this cancel contingent to not able was receive capital a which in financial however expired the mobilcom AG, former year2011 the 2007) capital (contingent euros to up by 318,447 increased was Company the of capital contingent the July 2007, of 20 Meeting In accordance Annual of General resolution the with the 26.5 2012 December as existed of capital 31 authorised No 26.4 shares MFE the of percent 49 remainingthe for offering in following), the (“MFE” Berlin shares in Energie MFE GmbH, acquisition of the percent of the as part ofgranted to 51 non-controlling shareholders the which to was were option recognised, the euros attributable thousand 4,768 year 2011, payments AG dividend the of less freenet shareholders the earnings retained consistThe mainly cumulative to of the attributable group results (349 to due acquisition the debitel of Group the increase capital the incomprised 2008 2012 December as of 31 additional of paid-in the reported capital components Major 26.2 Gazette Federal in electronic the ing 2010 items Meet agenda in invitationunder the the 8on 7and Annual to General the attend complete 21 May wording 2010 on authorisation published resolutionsThe was of these may inutive to derivatives additionally order Board acquire equity use shares treasury 1no toIn paragraph addition authorisation pursuant to the clause 71 authorisation is valid until 5July 2015 regulations to legal the subject permissible purpose isation is forevery exercised, or—if this is amount lower—the share existing capital time at at the which this author ital existing time at at the regarding which resolution the this authorisation is adopted acquire shares to equivalent atotal treasury use and share percent of the of cap up to 10 less, the contingent capital 2007 still existed as of 31 December 2012 after the proposal proposal the after 2012 still December as existed of 31 contingent the 2007 capital less, 26.3 freenet sharesminority in former the relatedthe acquisition and 2007) in theof AG effective to (which freenet form became

. 8 million euros) as well as the merger between mobilcom euros) AG freenet and 8 million as between well merger as the Retained earnings Retained Contingent capital Contingent Additional paid-in capital paid-in Additional Authorised capital Authorised The purpose of the contingent of the increase capital purpose is .The to registered enable shares to This contingent capital had been created for the stock option scheme of .This created contingent scheme option stock the for been had capital . . . . 00 euro of the share capital (contingent capital (contingent capital capital share the of euro 00

de AGde (134 . . 7 million euros) . In the previous financial previous .In the .

8 AktG, the Exec the .8AktG, .Neverthe . . de AGde The .The . - - - - - starting with 1 April 2009 for the first tranche (programme 2) and on 31 August August of 31 eachon 2) (programme and tranche first the for 2009 with 1April starting April of each on 1 1 5), yearand (programme tranche first the for 2006 with 7November November of each starting yearon 7 ends entitled is toation rights which a beneficiary still Company, by employed the appreci stock percent of the for20 shut-out the period total return for the shareholder approach strike the from price in accordance are each deducted with recognized holders methods sharethe for benefits other and to shareholders the payments of value dividend The in following strikeindividual areout the the and set price table caps eachfor programme average sharedaysto trading exercise prior the price company of the 30 last for the to in individualprice acap however the is programmes subject strike the strikewhereupon value, the price base a and between alent to difference the appreciation each for payment acash right stock equiv specify shares;for they instead, any not provide do appreciation authorisation to right stock subscribe programmes The 5 programme 1 separateprogramme to a from sake reclassified of have simplicity, been SARs these Mr granted to that been had SARs 300,000 life the still of the outstanding 2011, 1 January 4) (programme Board to Executive the issued to Mr 3) AG of freenet (programme tive Board occasion of- his the on to Execu appointment the chim 2008 Preisig September as of 30 were granted to Mr SARs 400,000 issued to executives 2008; senior as of 1April were SARs 720,000 2, In aprogramme were issued in 2008: programmes SAR further in following) the 1” (“programme Board Executive of the including members former (SARs) appreciation rights stock to executives, senior by issuing atotal of 5,145,000 appreciation programme stock AG aso-called introduced freenet of 2006, course In the 27.1 ■ ■ programmes: followingthe participation employee offers Group The increase capital contingent the out carrying in which are they created ment settle acash not provide Company if the or does shares settlement for are not used with conversion their conversion obligationsholders meet obligations if treasury and to to out extent which the conversioncarried are rights utilized option or to or which of association articles 9of the clause 4paragraph in registered issue regulations new the shares the for amount on forth The is set based shares to these tion registeredthe shares Company of the which or establish aconversion obligation in rela- A) which and aconversion provide letter right option or in relation to agenda item 10 ■ ■ Stephan Esch as part of programme 1 was extended until 31 December 2014 until December 31 extended 1was of programme .Stephan as part Esch LTIP AG of freenet programme AGStock of appreciation freenet rights Stock appreciation rights of freenet AG freenet of rights Stock appreciation The new shares participate in the profits from the beginning the from financial the of shares in new profits participate year the .The Christoph Vilanek as of 1 May 2009 on the occasion of his the on appointment as .Christoph of Vilanek 1May 2009 . .

The Executive Board is authorised to fix the further details for further to isthe fix authorised Board Executive . The Consolidated financial statements financial Consolidated In the financial year 2011, and with effect from effect with and financial .In the year2011, In the financial year 2009, 400,000 SARs were SARs 400,000 financial . In the year2009, Subject to condition the is thatemployee the . Subject . The contingent .The increase capital is only : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes The strike price .The is the .For the - .Joa .Two The . The - - - - . programmes 27.

Employee participation participation Employee freenet AG · Annual Report 2012 Report AG ·Annual freenet 163

Consolidated financial statement Consolidated financial statement Tranche 5 Tranche Tranche 3 Tranche Tranche 4 Tranche 164 freenet AG · Annual Report 2012 Report AG ·Annual freenet 1 Tranche 1 Programme Tranche 2 Tranche Consolidated financial statements financial Consolidated

price € price 10 10 10 10 10 Strike Strike . . . . . 16 16 16 16 16

price € price Target Target 11 11 12 12 10 .18 .68 .19 .67 . 70

02 02 02 02 02 lowing table: lowing in fol issued out are the set which appreciation of have rights stock Details been far so exercising this 2 is means that still only programme of all running SARs; terminated 3to to been due 5had the programmes and term, a result of its end of the terminated been as 1had programme the 2012, date balance December the sheet 31 On until term of the end the shut-out corresponding of the end the Company of period the after Meeting General Annual first of the end the am Main after exchange stock daystrading the on in Frankfurt exchangestock which31 period commences the inas each instance is defined period 5) respectively (programme 2014 December 4) 31 and (programme 2015 1May 3), on (programme 2014 2), 1September on (programme 2014 to 1April on due end 1) is or (programme 2012 2February on term of all ended appreciationThe rights stock however, are applicable; longer retained targets profit the If a change of control takes place Company,at the above shut-out are the no periods 4) 3and 2, in relation to 5(programmes strike the price tranche for percent increase 5) 1and 50 and in relation to 5(programmes strike the price tranche for 4) 3and up to a25 2, percent increase (programmes tranche per ten percentage points 1 and 5)(programmes or by tranche per centage ispercentagepoints incremented by five relevant program of the exercisable ending and expiry with the become appreciation rights stock sponding immediately corre the when starting 4)occasion 3 and in period one at on the least 2, 1 or 5)and percent(programmes by least at (programmes percent ten by at five least strike shares the ny’s exceed price must (under total-shareholder-return the approach) target price relevant the that is - the the of compa programme, of a tranche For each first attained have 4), providing been targets that certain (programme 2010 with 29 April of each 29 3), April yearon or starting (programme 2009 August with 31 year starting . . . . . 02 02 02 02 02 Maturity . . . . . 2012 2012 2012 2012 2012

1,949,832 31.12.2011 485,208 485,208 485,208 485,208 Balance Balance 9,000 SARs SARs For the stock appreciation rights of the tranches two to five, the per the to five, two tranches of appreciation the rights stock .For the

. Issued 0 0 0 0 0 0

Exercised 427,459 427,459 0 0 0 0

Disposals 7,000 7,000 0 0 0 0

1,515,373 485,208 485,208 485,208 57,749 . Expiry 2,000

31.12.2012 . Balance Balance SARs SARs . 0 0 0 0 0 0 The exercise .The

31.12.2012 Provisions in €’000s . 0

- - - Tranche 5 Tranche Tranche 2 Tranche Tranche 4 Tranche Tranche 3 Tranche Tranche 2 Tranche 5 Programme 1 Tranche 4 Programme 1 Tranche 3 Programme 2 Tranche 1 Tranche 2 Programme Tranche 5 Tranche 4 Tranche 3 Tranche

price € price € price € price € price Strike Strike Strike Strike Strike 8 8 8 8 5 . 9 . 9 . 9 . 9 . 9 . 9 . 9 . .96 .96 .96 .96 13 13 13 13 13 80 26 26

price € price € price € price € price Consolidated financial statements financial Consolidated Target Target Target Target Target 11 11 11 10 12 . 10 . 10 . 10 13 10 6 9 . .04 . . . . .78 . . 96 86 11 19 87 30 38 20 70 75

21 21 21 18 21 21 21 21 . 27 . 27 . 27 . 27 Cap € Cap € Cap € Cap € Cap ...... 00 00 00 00 00 00 46 00 00 00 00 46

01 01 01 01 01 01 01 01 31 31 31 31 ...... 04 04 04 04 04 05 09 09 Maturity Maturity Maturity Maturity 12 12 12 12 ...... 2015 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes 31.12.2011 31.12.2011 31.12.2011 31.12.2011 160,000 300,000 100,000 129,085 100,000 Balance Balance Balance Balance Balance 80,000 80,000 75,000 75,000 75,000 75,000 25,817 25,817 25,817 25,817 25,817 SARs SARs SARs SARs SARs

Issued Issued Issued Issued 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

300,000 160,000 100,000 Exercised Exercised Exercised Exercised 100,000 26,268 80,000 80,000 75,000 75,000 75,000 75,000 5,567 5,567 7,567 7,567 0

Disposals Disposals Disposals Disposals 2,000 2,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Expiry Expiry Expiry Expiry freenet AG · Annual Report 2012 Report AG ·Annual freenet 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

31.12.2012 31.12.2012 31.12.2012 31.12.2012 100,817 Balance Balance Balance Balance Balance 18,250 18,250 20,250 20,250 23,817 SARs SARs SARs SARs SARs 0 0 0 0 0 0 0 0 0 0

31.12.2012 31.12.2012 31.12.2012 31.12.2012 Provisions Provisions Provisions Provisions in €’000s in €’000s in €’000s in €’000s 470 165 0 0 0

Consolidated financial statement Consolidated financial statement 166 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes employment agreement of each beneficiary for this component of compensation; as of compensation; this for component beneficiary each of agreement employment datethe shares which new on are the issued on net dilution effect to effective the are proportionately adjusted earningsthe targets get parameter tar the as financial with the basisyearyears2011, the on starting business of the plan, involved afour-year four financial next of the EBITDA with Group agreement target Board Executive of the members LTIPs)(so-called with the in were relation concluded agreements to employment the components salary variable long-term granting agreements 2011, year financial the In 27.2 taken into consideration have relative programme also ofthe the been individual of the success tranches targets remaining waiting of the end the time is term after attained remaining asmined the waiting time as valuation of the reference date plus half of the remaining deter was appreciationis term rights stock of still the expected running, the 2 of programme tranches in arisk-free 0 interest rate of between date as balance of the sheet Bonds man Federal risk-free of Ger curve interest basis the on structure rate determined yield was of the matching maturities as well implied as volatility the shares of the of freenet AG historical the Company volatilityof the taking account of of between amean value cent—it using determined share was of the price an estimate future of the performance referencepany the date on (14 2 which is still running programme were fixed as for follows price option model of the valuation parameters The 3 appreciation of range prices each for option right stock isThe between 2 of appreciation programme rights stock outstanding of 100,817 (namely appreciation 1to rights stock 4) tranches were exercisable the total of the out 2012 December 2as ofciation 31 programme from rights euros (exclusively of ashort-term appre nature) stock outstanding the for recorded was were appreciation granted in rights stock 2012 new No euros an for averagewell thousand exercise as 793 price of 11 euros an for average exercise price of 11 3,571 thousand euros foran average 2,375 thousand exercisegramme price of 12 euros an for average thousand exercise price of 12 1,98 programme exercising euros an for average thousand exercise to amount price of 51 10 2011 provision December compared with 31 euros thein 949 thousand of a less reduction financial of the in course the year2012, account on euros to of which payments is thousand attributable 1,887 expenses, sonnel eurosper this resultedprogramme in financialthousand in an increase 938 of year2012, in accordance 2using (Black-Scholes with IFRS an price option model model) obligation determined was arising The programme appreciation rights stock the from 3 . 78 euros for programme 2 euros programme for 78 LTIP AG freenet of programme In the event .In the of acquisitions which are financed by new shares, issues of The share price has been defined as the sharethe priceas Com the of defined share price .The has been . For each of the measured tranches of the programme which programme of the .For each measured tranches of the . . 00 euros)00 In addition to the annual target agreement, this to .In addition annual the agreement, target The expected volatility was defined as 23 volatility defined was expected .The . 03 percent and 0 percent and 03 The payments made in 2012 as aresult in of 2012 made payments .The A basic amount has been defined thein defined .Abasic has amount been As of 31 December 2012, this resulted 2012, December of 31 .As As of 31 December 2012, 77,000 77,000 2012, December of 31 .As .Aprovision of 470 thousand . 99 euros for programme 4 as euros programme 4 for 99 . 10 percent for the individual percent the for 10 Further parameters such as parameters .Further . 60 euros for programme 5 euros programme for 60 . 44 euros for programme euros programme for 44 . . 86 euros pro for 86 . 72 euros and 72 . 28 euros for28 .In the . 6 per The .The ------. the basic amount, equivalent to a total of 1,180 thousand euros, have been paid into have euros, the been thousand to equivalent atotal basicthe amount, of 1,180 percent of that so 200 percent, is 120 2011 for established attainment target actual The rate discount tual estimates) previous accounts (derived two the from as well estimate as the of the year, estimate the of future estimate the vir of the share out of future prices, payments financialdate, estimate respective the the for attainment percentage of of target the in this areincluded share AG the price valuation of as freenet balance of the model sheet accordance 2in line with IFRS with arecognised valuation model obligation arisingThe LTIP at the from determined fair in value has been programme years subsequent the year or subsequent the by out success cancelled for in has attaining parameters been target corresponding the will amount Board negative only receive Executive the of the when a(further) payment member balance anegative the at point shows at which the is apayment made, to due be share the on have value in calculation the included todepend be tion stipulations in event are the which applicable of financial marketable instruments as well as circumstances payments dividend which for dilution shares, virtual protec recognised up to ashare price of 25 relevant financial for the yearstatements are approved day market the price 20 which of consolidated days on trading the the after financial sharesof virtual is in into turn converted basis the on cash average of the Xetra closing annually account if the a credit balance shows financial accountyear, respective the for percent account 25 the of balance paidoutis in relation to crediting the of a positive debiting or of in amount a virtualnegative the thisof of financial compensation, second the component of introduction the year after relevant financialthe for financialstatements year approved are closing exchange day price 20 of the the which consolidated days on trading the after account is into converted shares virtual less) or target is account to debited virtual the of up to max financial year nothing account in is virtual is the respective target recorded of the for the attained, which a linearis on reduced basis percent is credited account;to if onlyvirtual 90 the percentagebasic a the of percent, amount 100 percenttarget 90 and fixed the between credited account to virtual the account basicpercent of the amount is credited to virtual get is the attainment 200 achieved, is credited account to virtual the basic in the of is afinancial target amount EBITDA attained Group If the year,100% beneficiaries the for year financial for each defined euros in have each case thousand totalling been Basic amounts 590 assuming in future the value, on development depending that a credit balance is shown is and in paid out annual instalments, Board, Executive of the member respective of the year, this basic as is amount apositive in amount account negative or recorded avirtual in in following, and the accordance in attainment described target each with financial the If the 120 percent target is exceeded, only 200 percent of the basic percent of the is amount only 200 is percent target exceeded, 120 .Ifthe 200 percent of the basic amount (if Group EBITDA is 80 percent of the basic is percent of the EBITDA (if amount 80 Group .200 . If Group EBITDA fails to meet the 90 percent target, a negative amount anegative percent target, 90 fails the EBITDA to .IfGroup meet Consolidated financial statements financial Consolidated If the target attainment for the defined Group EBITDA Group EBITDA is defined the for attainment target .Ifthe . If the Group EBITDA defined for 120 percenttar 120 for defined EBITDA Group .Ifthe . 00 euros (cap)00 The basis . The thisfor calculation is average the Xetra . For this purpose, the respective balance respective the .For this purpose, The respective amount in amount virtual the respective .The For the purpose of conversion into purpose .For the : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes The share price . The increase is only Starting with the end with the .Starting The main .The parameters If the virtual account virtual .Ifthe - - - . freenet AG · Annual Report 2012 Report AG ·Annual freenet 167

Consolidated financial statement Consolidated financial statement 168 freenet AG · Annual Report 2012 Report AG ·Annual freenet accruals liabilities and 28. Trade other payable, accounts Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes to the recognised book value after discounting after value book recognised the to For long-term liabilities other market the accruals, is and value approximately equivalent ber 2012 euros recognised was this for thousand as option of 31 Decem liabilityother of 4,952 anremaining tothe option offer Group percent 49 freenet of sharesthe on percent of shares inwere acquired MFE 51 in 2011 accruals and liabilities sundry the under thanof five more years years euros) year thousand one five and have amaturity of between 36,976 year: (previous euros)sand months twelve are within due next the - thou 524,145 (previous year: euros thousand figure 531,280 the for shown liabilities,Of parties related with tions Transac euros) refer to please item to 36, related is parties; attributable 389 thousand accruals”ties and liabili broken into down asals” well has as“Advancebeen received” “Other payments liabilities accru and item balance the sheet “Sundry above table, of the purposes For the accruals and liabilities Other received payments Advance payable accounts Trade €’000s in Figures follows: as well accounts payable as liabilities other trade The accruals and are broken as down date sheet euros as balance of the thousand created—this has amounted to been a total of 2,528 to change the corresponds in provision the expenses which personnel these 2012, ber 2012 euros in thousand of 1,582 LTIPThe expenses has resulted programme in personnel financial the for 120 percent year2012 Mr for Board Executive of the members accounts the for virtual for the financial year 2011 based on an financial the for average based share price year 11 2011 of this into converted was amount approved, shares virtual been had 2011 cial statements resulted in the contribution of 50,633 virtual shares virtual Mr for resulted in contribution the of 50,633 Since no payments had been made out of the LTIP of the out made Decem as of 31 been programme had .Since payments no Liabilities of 33 thousand euros (previous year: 39 thousand euros) thousand 39 have year: .Liabilities amaturity euros (previous thousand of 33 Preisig and 15,190 virtual shares virtual Mr for .Preisig 15,190 and . .

Of the figure shown for liabilities, 701 thousand euros (previous (previous year: euros figure for the thousand shown liabilities,701 .Of The advance payments received are in balance shown the sheet payments advance .The . .

. . .Esch The non-controlling shareholder has non-controlling shareholder .The Liabilities of 288 thousand euros .Liabilities thousand of 288 .Target will attainment also be After the consolidated the finan .After Vilanek, 33,755 virtual shares virtual 33,755 .Vilanek, 2012 12. 31. . 531,601 413,053 85 euros 85 72,127 46,421

For 2011, this .For 2011, .Ashort-term 2011 12. 31. 561,160 399,777 82,484 78,899 ------

interest of the corporate bond is paid annuallyinterest bond corporate of in the arrears rateinterestmethod using over life effective the the bond of the compounded and debt the from which are issued, deducted was bond 2011) which the were when incurred attributable to the one-off charges to(amounting one-off the attributable to 4 Liabilities from finance leasing finance from Liabilities to banks due Liabilities notes Liabilities promissory from out in December 2012; after the deduction of one-off costs of 0 costs of one-off deduction the after 2012; inout December note with anominal of amount a In 120 promissory addition deducted chargeswhich havebeen one-off less instalment paid in to the 2014, shows be 2011 September 30 on starting a life years of three which taken was in out repayment loan, anominal of amount 240 fromcreditalso institutions raised is in long-term the included in2011 debt April of repayment 39 loan of the difference of 3 with anominal of value issued in2011 400 April bond corporate 396 2012, December long-term figure the for shown financial 31 Of Group asdebt of the in leasing finance from Liabilities to banks due Liabilities notes Liabilities promissory from Liabilities from corporate bonds Current Liabilities from corporate bonds Non-current €’000s in Figures as follows: is structured Debt financial previous for payments years tax trade and liabilities tax Current income tax additional corporation mainly comprise expected closing the dateafter euros) thousand 39 is than five year: more years due euros (previous thousand 33 and year euros) one five and years, thousand is between due 36,976 year: euros (previous euros) thousand is within due year, one 434,785 thousand year: euros (previous 288 sand financial other liabilities non-derivative and ble accruals and are as 457,292 thou follows: maturities liabilitiesThe of those accounts paya which are in categories trade shown the . 5 million 395 year: euros (previous

. 5 million euros between the nominal value and the carrying amount is amount nominal carrying the the and value 5 million euros between .It is of repaid 40 in instalments . Consolidated financial statements financial Consolidated . 9 million 118 year: euros (previous Accordingly, on 31 December 2012, the long-term the element .Accordingly, 2012, December 31 on . 6 million euros) to five-year the is attributable . . 4 million euros December as of 31 . 0 million six months, euros every : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes In addition, the long-term part long-term the part .In addition, . . 0 million euros taken was 5 million euros) which was 2012 12. 31. 100,449 556,105 396,525 119,280 . 7 million this euros, is 80,101 39,887 19,988 . 0 million euros . 0 million has euros, 138 222 413

2011 12. 31. 514,777 200,302 118,511 180,155 395,631 19,934 .This The .The The .The 213 635 0 0 - - .

29. Debt 30. Current income tax liabilities tax income Current freenet AG · Annual Report 2012 Report AG ·Annual freenet 169

Consolidated financial statement Consolidated financial statement 170 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Present values of the total liabilities from finance leasing finance from liabilities total the of values Present years five than More Between one and five years five and one Between Within one year one Within Interest component of future leasing payments year one Within €’000s in Figures payments lease Minimum as follows: due minimum become The payments lease euros) hardware for thousand 477 year: (previous euros thousand 349 and euros) software for thousand 369 year: (previous euros thousand to 270 amounted finance leasingunder of fixed assets amounts carrying the 2012, December of 31 As as well as arevolving credit line (0 as well as interest accruals 2012 note in taken relation in out December to promissory the year (80 repayment loan the for next yearlast (20 cash-effective tive interest which not yet had in become relation bond to corporate the the cumula2012comprises financial December short-termdebt asThe classified 31 as of 19 asfor aseven-year tranche fixed 44 for tranche is afinancingwhichfalls maturity, instrument upon due which five-year a comprises fixed as shown 119 More than five years five than More years five and one Between equipping for chain shop our items various for agreement of hardware software and financelease The liabilitiesbalance date as the shown of sheet relate to a hirepurchase as of 31 December 2012 (previous year: 529 year: (previous 2012 December as of 31 financial net debt of with451 liquid assets, Netted revolving 2012 credit line not utilised was December as of 31 ofsation this short-term revolving under shown credit financial line been debt—this had 100 an additional figure of 2011, December of 31 . . 3 million 2012 euros in December long-term 31 on debt

0 million 19 year: previous euros; . 5 million euros, a five-year variable tranche for 56 5 millionfor variable afive-year tranche euros, . . 2 million 0 year: previous euros; 5 million euros . 0 million 80 year: previous euros; . 4 million euros) . 9 million euros), principal the payment . 0 million euros resulting utili the from . 3 million euros is in Groupshown the .

. .

. 0 million euros as well The promissory note promissory .The 2012 . 636 676 246 430 –23 –17 1 million euros) . 0 0

. 0 million euros) 2011 As .As 848 921 –40 246 675 –33 . 0 0 - -

Provision shown in balance sheet Fair value of plan assets plan of Fair value of obligations value present Sub-total obligations of unfunded value Present Unrealised actuarial losses actuarial Unrealised Present value of funded obligations of funded value Present €’000s in Figures financed by a benevolent reinsuredfund partly are benefits pension dependants to surviving of payment benefits the and 65 or reaching age the of 60 payment case provided of a in the each is lifetimepension retirement upon sion benefit commitments obligations pension pension are ofThe aconsequence direct is 4 payments lease figurevalueminimum balance equivalent the of present sheet contractual is The the to years five than More years five and one Between year one Within €’000s in Figures maturitiesThe overall of the financelease liabilities are following: shown the in It is expected that these obligations long that willthe fulfilled term in these be It is expected provision of amount the The in consolidated the is balance calculated sheet as follows: Company at the time of the service and are of amount always by salary determined mitments the . 4 percent 4 .

. The interest rate .The recognising for resulting the financelease liabilities Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes 2012 12. 31. 31.12.2012 –18,789 26,197 48,880 –3,894 39,103 9,777 636 223 413 . All pension com . All pension 0

The pen .The 2011 12. 31. 31.12.2011 25,428 –6,477 34,922 29,154 –3,017 The .The 5,768 848 213 635 0 - -

31.

Pension provisions Pension freenet AG · Annual Report 2012 Report AG ·Annual freenet 171

Consolidated financial statement Consolidated financial statement Present value of unfunded obligations of unfunded value Present Net loss for the plan the for loss Net 172 Experience-based adjustments of the assets of the plan the of assets the of adjustments Experience-based plan the of liabilities the of adjustments Experience-based assets plan of Fair value obligations of funded value Present freenet AG · Annual Report 2012 Report AG ·Annual freenet €’000s in Figures Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Employees' contributions expense Interst As of 31.12. of As assets plan from income actual and expected between Difference costs service Current Employer's contribution to plan assets to plan contribution Employer's assets plan from income Expected 1.1. of As €’000s in Figures in fair value: development the out sets table euros); thousand are they shares investedand units fund in equity 3,018 2011: 31, euros (December thousand with atotal up for thisset fair of value 3,894 purpose consist fund plan assets reinsurance of several benevolent byThe the concluded policies periods: reporting previous the and period reporting plansthe currentfor defined-benefit the for shown have following been The amounts losses Actuarial costs service Past 1.1. of As €’000s in Figures non-funded obligations: and funded of value the in present the development the out following sets The table Effects due to plan changes plan to due Effects made Payments As of 31.12. of As

44,986 –3,894 39,103 9,777 2012 51 35

31,905 29,154 –3,017 5,768 2011 –21 25

29,535 –2,294 27,187 4,642 2010 230 9

48,880 34,922 12,625 28,768 3,894 3,017 26,457 –1,389 1,552 –680 2012 2012 3,700 660 166 –214 426 2009 44 –9 –79 51 0

The following . The 34,922 22,119 31,829 21,411 –1,122 2,294 3,017 1,560 1,830 1,559 –625 2008 2011 2011 115 368 –97 629 155 –21 –5 76 0

Future pension increases (programme freenet) (programme increases Future pension Future pension increases (programme debitel) (programme increases Future pension freenet) (programme increases Future salary debitel) (programme increases Future salary Expected income from plan assets plan from income Expected Discount rate Discount In percent mainThe actuarial assumptions are as follows: Employees' contributions made Payments statement income consolidated in the Total recognised cost 1.1. of As €’000s in Figures recognised as provisions in amounts the are in following: shown Movements the (realised) losses Actuarial expense Interest cost service past and Current €’000s in Figures followingThe items are recognised in consolidated the income statement: euros sand - thou pensions for of 950 plan assets of the out euros as659 thousand well as payments ofinto planpayments the assets expecting is freenet financialFor the year2013, losses or actuarial profits the and planeuros), assets income the from are and calculated sum as expected the of the thousand 94 euros (2011: to amount thousand 217 plan assets income the from actual The As of 31.12. of As plans benefit defined of Total cost assets plan from income Expected

Thereof recognised in personnel expenses in personnel recognised Thereof Thereof recognised in interest and similar and in interest expenses recognised Thereof

Consolidated financial statements financial Consolidated . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes 2012 12. 31. 25,428 26,197 –1,340 2,065 2,065 1,552 1,552 –166 2012 2012 1 2 0 3 . 3 . 1 513 253 426 .00 .00 . . 44 00 00 50 75

2011 12. 31. 24,638 25,428 –1,254 1,968 1,560 1,560 1,968 –115 2011 2011 1 2 2 4 . 0 5 . 408 523 .00 .00 .00 . 00 50 50 76 0

freenet AG · Annual Report 2012 Report AG ·Annual freenet 173

Consolidated financial statement Consolidated financial statement Other 174 freenet AG · Annual Report 2012 Report AG ·Annual freenet costs Storage Warranty/guarantee programmes incentive Employee Dismantling obligations risks Litigation losses Contingent €’000s in Figures 32. Other provisions Other Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes outflow of funds is expected to be 1,303 thousand euros in 2013 and 1,169 thousand euros thousand 1,169 eurosand 2013 in thousand 1,303 be to funds of expected is outflow Group of the locations administration and technical various and improvements dismantling leasehold provision the stated figurefor The for dismantlingobligations relates obligationsto for in 2013 is expected of assets outflow probable the tariffs; negative-margin from expected euros losses for finally, thousand And provisions 8,004 the for contingentfigure a include losses of euros)—a rate of 1 thousand (5,399 euros) to thousand 2018 2014 as well (1,821 asin in period 2013 the expected is assets of euros);thousand outflow the buildings (7,220 office and shops Provisions of rented costs contingent for created have losses vacancy for also been euros)(1,089 thousand euros) to thousand to take (289 place2019 in in years and 2014 the 2013 is expected funds euros),of thousand (1,378 outflow Group the whereby oflandline the activities provisionsThe with the contingent for in connection relate losses to services pending provisions: of the amounts carrying of the abreakdown out development of the sets followingThe overview until plan term pension of of the the end the plan assets of the average performance as well anticipated historical as underlying the ofsideration the plan assets prices of the basis the on determined of acon anticipated has been The plan assets income the from basis of Dr tables mortality 2005G RT The to achieve reconciliation with term alonger of obligations subordinate bonds at Moody´s date watch balance on the put sheet also downgrade for and securities and as of downgraded whichadjusted been securities by alreadyhad been figure has The discountThe rate of 3 in this respect 2012 1. 1. 33,361 . 19,198 2,365 2,475 7,631 546 725 421 Following the probable expiry of the underlying rental agreements, the rental agreements, underlying of the expiry .Following probable the .

Consumption . 20 percent has been used for compounding purposes in this respect compounding for purposes used percent has20 been In addition, the figure has been extrapolated by swap rates swap orderin by extrapolated been figure the has .In addition, . 5,629 1,061 1,611 2,695 . 0 percent has been determined on the basis of the iBoxx index basis the on determined iBoxx of the 0 percent has been .Arate of 1 262 0 0 0 . 20 percent has been used for compounding purposes compounding for purposes used percent has20 been Reversal 2,348 Klaus Heubeck have been used as the biometric biometric as the used have been .Klaus Heubeck 809 813 133 328 265 0 0 Compounding 856 744 80 32 0 0 0 0 . Allocation 6,090 1,960 3,405 167 555 0 0 3 2012 12. 31. 32,330 16,601 2,999 2,472 8,616 368 725 549 . - . .

bases, building services engineering as well as the network infrastructure engineering as well network building as the services bases, relate mainly maintenanceagreements the for to agreements - hardware of data and IT ditions agreements of the options extension are in to negotiable identical current or these freely all the con cases leasing and of leases majority the agreements options for extending asbuildings well shops and as hardware leasing obligations rental relate from leasing and The mainly agreements to rental of the office leasing obligations and Rent €’000s in Figures in obligationsfollowing commitments other the order and amounts: and as leasingterminated) and well leases from as maintenance, agreements support financial of the end At the year,obligationslease there areoperating be(whichcannot programmes participation 27, item Employee under documented are grammes details concerningFurther creation the of provisions pro participation employee for position the for negotiating and legal is position thereby creating of ahead time, not announced arisk during financial the year2013 settled be of competition law as well as customers and issuesvisions related to partners litigation trade with former disputescompanies as well with third as outstanding other parties against group actions of provision various costs The litigation for relates to expected the in thisposes respect to 2024 in years 2014 the

obligations other and support Maintenance,

commitments Order

Due within one and five years five and one within Due year one within Due Due term greater than five years greater five term than Due Due within one year one within Due Due within one and five years five and one within Due Due term greater than five years greater five term than Due Regarding property, plant and equipment and plant property, Regarding assets intangible Regarding Regarding inventories, expenses and services

The Group expects that the majority of the disputed of will the questions majority that the expects Group .The . The obligations arising .The other and maintenance, from support .Arate of 1 Consolidated financial statements financial Consolidated . 20 percent has been used for compounding for pur used percent has20 been More information is .More not given that so the here As of the balance sheet date, balance were of there the sheet .As : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes 2012 12. 31. 112,792 129,185 34,816 73,764 8,617 7,776 4,212 1,076 7,560 7,541 Most of these pro of these .Most 130 The conditions of .The 86 0

. 2011 12. 31. . 128,236 139,629 12,388 79,938 35,910 8,658 2,735 1,911 8,037 618 824 3 0 - - - -

contingencies, securities for loans 33.

Other financial obligations, obligations, financial Other freenet AG · Annual Report 2012 Report AG ·Annual freenet 175

Consolidated financial statement Consolidated financial statement 176 freenet AG · Annual Report 2012 Report AG ·Annual freenet statement cash flow 34. Notes to the consolidated to the Notes Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes from data centre data from services valuable hardware and the relatedvaluable hardware the and increase in arising receivables hardware from sales of increased sales further the and regard to operator communications a mobile network resulting as distribution from well rights als as with with to regard partners contractual of liabilities is reduction to mainly in planned accrucapital and - the 2012 attributable increase of 45 figure2011 corresponding for (with an 46 increase of investing activities) sale of subsidiaries(the the from inflows associatedand companies are under shown of subsidiaries sale the from included nue as of well associated sale ascompanies the overall reve byeuros including adjusted the for the Group discontinued operations, improved EBITDA improved by 18 c the to comparison the period, respect With 34.1 activities operating from activities financing investingand activities activities, brokenare operating down as flows cash The 2013) January 1 of as which sold was GmbH to (inable held-for-sale this freeXmedia assets case: non-current of 2 discontinuedfrom operations year,previous not include any do equivalents cash and cash equivalents cash and cash bilities, each with an original maturity than months of three less liquidated which be can market atterm any money papers time current and financial lia- short- and cheques in cash consist hand, equivalents of cash at and cash banks, Cash exclusively were flows to operations continued attributable (continued discontinued and operations) the for Group overall figures the arereported consolidatedstatement, In the flow cash date balanceof the sheet euros) thousand as 18,921 year: euros (previous thousand amounted to and 16,439 rents financial guarantees forand obligations Further exist of as a resultcomfort letters of e resale, for purchased as well as products with ongoing in projects connection to services euros) thousand mainly relate 8,037 year: euros (previous obligations thousand of 7,560 euros) thousand 621 of fixed assets to procurement the is attributable euros) thousand 8,658 year: (previous commitment financialeuros of order the end at the The thousand year amounted to 7,776 euros) refunds and payments to due tax 24 of were outflows there also net In 2012, . g mobile phones and accessories and phones .mobile .

7 million 0million year: euros (previous euros) which liquid for are attribut assets Cash flow from operating activities operating from flow Cash The indirect calculation method has been used for presenting the cash flow cash forpresenting the used has been calculation method indirect .The . 7 million euros in 2011) . 5 million euros to 280 Compared with the previous year, previous with the .Compared increased by EBITDA 15 The development in net working capital in 2012 was in was line in in working capital with 2012 net the development .The . . . All purchase obligations from orders are within purchase .All obligations due year orders from one .However, include a figure equivalents cash and cash the .This item also financial includes obligations arising . The increase of 46 .The Of this figure, 216 thousand euros (previous (previous year: euros thousand this 216 figure, .Of 5 million this euros; is to primarily the attributable . In 2012, as was also the case in 2011, the cash the in as 2011, case also was the . In 2012, . 7 million 29 year: euros (previous a s h f . low f 8 million compared with an euros, . 8 million euros in working net rom op . As was the case in thecase the was . As eratin Further purchase .Further g a c . . 7 million 3 million tivitie s - - . .

activities in 2012 (previous year: 102 year: (previous in 2012 activities of 153 payments Dividend financingstructure its diversify to able was further and issued in 2011, bond the of corporate 2016 final financingthe beyond April to maturitythus its able in secure year,previous with the pared –16 from namely of 80 ofamount 120 of 119 repayment of financialdebt as aswell aresultthe 2011 Group euros refinancingApril the of from the in arrangement to –149 tranche and 4 and tranche of 2 iable coupon of 3 up with afixed coupon 56 44 for tranche a five-yearfixed prises note is afinancingit promissory whichfalls com maturity; The instrument upon due f year, previous of the period corresponding with the Compared c the 34.3 euros by 2 declined activitiesflow cashfrom shown the in investing from payments interest inflows The communications mobile our as hardware in well shops EDP as investments of fittings of extension and the renewal the systems, of IT our development further the mainly and withentirely related in of funds, own out connection to self-created software fully was cash-effective plant equipment, and property, and assets in intangible investments for 2012 for assets in non-current of movements statement figure (21 20 are as shown of disposal such assets, the from proceeds with the netted equipment, plant and also and property, in in for intangibleinvestments assets outflows cash The subsidiaries of sale held-for-sale, assets discontinued and as non-current item operations notes, 25 of these as well financial assets, Other Shares in item associates, 19, in item comments our 18, of subsidiaries,year associates sales investments the from other and of 8 to mainly inflows was cash the development attributable c the In 2012, 34.2 which were to mainly of extension adistribution the right attributable 46 of investments non-cash-effective as well as additions cash-effective the year,ous reported assets in consolidated the non-current of movements statement inan . . 0 million19 euros as well asfor aseven-year tranche fixed 6 million are they euros; thus roughly to year previous equivalent corresponding the

. Cash flow from financing activities financing from flow Cash . Cash flow from investing activities investing from flow Cash . 0 million euros in relation to in repayment loan 2012 the c 3 million euros from the promissory note taken out in December 2012 (nominal 2012 note3 million taken in out December promissory euros the from . in 1 million euros . g 1 million euros) a c a . tivitie . . 1 million euros year, previous compared with the to namely 2 14 percent per seven-yearannum fixed percent for the per 14 tranche 0 million euros less one-off costs),0 millionprincipal with paymentin conjunction one-off euros less s h . 82 percent per annum for the first six month of the variable five-yearvariable month the of six annum first the for percent per 82 f . low s improved by 41 In the previous year, there was a net cash outflow of 69 year, previous .In the of outflow cash anet was there f rom inve . The figure of 21 .The 6 millionflow cashfrom financing euros influenced negatively Consolidated financial statements financial Consolidated . 27 percent per annum for the fixed five-year tranche, a var a five-yeartranche, annum fixed the for percent per 27 On the other hand, the freenet Group received flow cash Group freenet the hand, other the .On s tin . 4 million euros) . 3 million –190 from namely euros, . 5 million euros, a five-year variable tranche 5 millionfor variable afive-year tranche euros, g a c . 3 million euros in consolidated shown the tivitie . 2 million euros to –9 s increased by 7 .

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . 5 million euros . . 2 million received last They were financed . They . 1 million euros com . 1 million euros . The Group was Group . The a .Please refer to . . s 5 million euros, million5 euros, 4 million euros h f In the previ .In the It was taken .It was . low f low . . 0 million 1 million . This rom - - - - freenet AG · Annual Report 2012 Report AG ·Annual freenet 177

Consolidated financial statement Consolidated financial statement 178 freenet AG · Annual Report 2012 Report AG ·Annual freenet instruments financial 35.

Additional information concerning concerning information Additional Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes IAS 39: IAS tocation reconciliation classes and valuation corresponding with the categories under related the allo 2011, December as and of 31 2012 December as of in 31 Group the ments We following have the financial of out the information set presentation - the for instru cial instruments additional information provides items and balance on Group, sheet which include finan significance of the the for of financial an overview provides instruments This section operations of continued similar and expenses payable Interest operations continued of taxes before Earnings €’000s in Figures interest relation to long-term bank loans of 34 interestIn payments addition, Interest payable and similar income of continued operations continued of income similar and payable Interest of continued and discontinued operations (EBIT) taxes and interest before Earnings Taxes on income of discontinued operations Result from discontinued operations discontinued from Result made in year previous the made is taken in paid annually out 2011 rate bond in this were arrears; means that payments no 35.1 refer to item fromdiscontinued (please 25) operations period the for of this result consolidated from the breakdown the and result income of statement the interest (EBIT) taxes and before operations tinued statement resultthe is flow cash the of the for disconcontinued point and starting The statement 34.4 recorded been had euros Calculation of the starting point for determining the consolidated cash flow flow cash consolidated determining the for point starting the of Calculation Disclosures in accordance 7 Disclosures with IFRS The increase interest that is the .The mainly in due relation to to fact corpo the the

. . Instead a non-cash-effective interestaccrual 20 of .Instead anon-cash-effective In the previous year, previous .In the 19

. 5 million euros were reported in 2012, mainly in in 2012, 5 million euros were reported The following calculation the .The shows . 0 million euros were paid as 2012 12. —31. 209,006 2012 1. 1. 166,918 44,783 –2,695 . 0 0

2011 12. —31. . 5 million 168,644 2011 1. 1. 117,339 –4,956 56,102 140 19 - - - -

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

Consolidated financial statements financial Consolidated

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 2012 year financial the for AG freenet of statements financial consolidated to the : Notes –1,113,532 31.12.2012 118,548 205,224 655,918 492,674 205,224 715,478 413,053 655,918 Carrying Carrying 29,832 35,632 44,561 amount 14,356 73,987 26,197 17,580 1,605 2,999 1,027 5,301 3,696 636 578 0 0 0

–1,113,532 Amortised Amortised 205,224 492,674 purchase 205,224 715,478 413,053 655,918 44,561 17,580 cost of of cost 636 purchase Cost of of Cost 578 578 Approach

statement in income income in Fair value value Fair 26,197 2,999 0 0 0 freenet AG · Annual Report 2012 Report AG ·Annual freenet Fair value value Fair in equity 4,723 1,027 3,696

–1,165,964 2012 12. 31. Fair Value 205,224 708,350 492,745 715,549 205,224 708,350 413,053 44,561 26,197 17,580 2,999 4,723 1,027 3,696 636 179 0 0 0 -

Consolidated financial statement Consolidated financial statement Pension provisions according to IAS 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 categories according to IAS 39 toIAS according categories by valuation aggregated Thereof 7 IFRS of scope by the covered not Sum of financial instruments 2 to IFRS according programmes participation employee for Provisions Derivative financial liabilities financial Derivative shareholders) and banks to due (liabilities debt Financial payable accounts Trade Liabilities assets other and receivables of Sum assets Non-financial assets financial Derivative assets other Held-for-sale Other non-derivative financial assets receivable Trade accounts Total other financial assets Other non-derivative financial liabilities financial non-derivative Other 7 IFRS of scope the within liabilities financial of Sum 180 cost of purchase (FLAC) of purchase cost at amortised liabilitiesFinancial measured (FIPL)loss or profit through at value fair measured instruments Financial (LR) receivables and Loans freenet AG · Annual Report 2012 Report AG ·Annual freenet fairvalue) at (measured assets financial Other purchase) of at cost (measured assets financial Other equivalents cash and Total cash equivalents cash and Cash Assets €’000s in Figures 2011 according December 31 of as to classes Financial instruments Held-for-sale financial instruments (HFS) instruments financial Held-for-sale Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 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 FIPL HFS HFS HFS HFS LR LR LR LR 31.12.2011 –1,186,031 Carrying Carrying 714,231 161,383 471,510 185,673 671,525 714,231 185,673 399,777 amount 28,641 49,083 14,342 89,360 72,023 25,428 30,976 1,915 5,668 2,365 1,033 3,753 848 882 12 12

–1,186,031 Amortised Amortised purchase 471,510 185,673 671,525 714,231 185,673 399,777 cost of of cost 14,342 72,023 848 purchase Cost of of Cost 882 882 Approach

statement in income income in Fair value value Fair 25,428 2,365 12 12 0 Fair value value Fair in equity 4,786 1,033 3,753

31.12.2011 –1,203,733 Fair Value 731,431 185,673 471,676 671,525 185,673 399,777 731,431 14,342 72,525 25,428 2,365 4,786 1,033 3,753 848 12 12

- value remaining recognised figures terms; the arethus approximatelyequivalentfair the to Trade financial other and accounts payable liabilitiesaccruals and normally have short internally calculated been market compared with the which values are have periodically partners external the from are discountedand then to closing the date curves are forward instrument and basis calculated the on relevant rate of the structure pricemodels)option or method flow (discounted basis the on Group by ofdetermined recognised the actuarial methods cash which financial fair derivative of value exchange-traded not the are is The instruments date as balance of the sheet of this bond corporate basis the on market of the established was price and bond, valuationthe corporate of the 2012 euros December as of 31 thousand byamount 52,432 amount carrying the to fairmaturity current of value the the involved, the financialDue to debt corresponds market active fairpricevalue the the as in an defines Group the held-for-sale other For the assets, are recognised these ues, assets are plans to no at present sell these for them shares market are not listed exists exchange, active a stock no on and to reliably fairmeasured determine financialare value the purchaseat of cost assets market fair as value the active price the Group in uses anmeasured fairthe financialvalue, at For those instruments financialis approximately of these instruments fairequivalentamounts values the to eters with consideration due given being to relevant interest the ated assets, with param the associ payments of the values toterms year present than of the one more correspond with financial other and remaining receivables assets non-current of fair the values The instruments value toequivalent book the current payable accountsother and financial obligations trade roughly is financial assets, current other accounts receivable, trade fair of equivalents, value cash and cash The 7 not covered of IFRS scope by deferrals” ties and the non-financial The liabilities liabili“Other balance item the of constitute sheet that part 7 not covered of IFRS scope by the assets” other and bles - receiva “Other balance item the of constitute sheet non-financial assets The thatpart The other financial assets measurednormally financialarefair other valueat The assets Since the discounting carried out using the effective interest method, the carrying carrying the .Sincemethod, interest discounting the using out effective the carried .

. The fair value of the long-term financial debt exceeded the carrying carrying fair long-term of value the the .The financialexceeded debt . .

Consolidated financial statements financial Consolidated This is due to the short remaining .This is financial to terms due short the of these .

The expected future cash flows from the financialthe future from flows cash expected .The If there are .Ifthere any indications of fair lower val The market confirmations value .The obtained . . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . This difference is attributable . In case it is .In case not possible There . There The .The .

- - - - freenet AG · Annual Report 2012 Report AG ·Annual freenet 181

Consolidated financial statement Consolidated financial statement 182 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Use of input factors which are not based on observable market measuring for data the observable on which are not based ofUse input factors ■ the financial the financialthe or asset liability Derivative financialDerivative receivables assets financial Other assets other Held-for-sale €’000s in Figures Fair hierarchy 2011 value Total financialDerivative receivables assets financial Other assets other Held-for-sale €’000s in Figures Fair hierarchy 2012 value data) market observable financial on financialthe or based not asset liabilityfactors (input (i directly which are listed which not but the are prices recognised in ofUse input Level factors 1, ■ liabilities or financial financial for identical markets of use assets active prices on Unchanged measuredfair financialvalueat instruments basis as the used valuing for major parameters the the shows followingThe overview Total ■ 7as follows: ance with IFRS ■ ■ ■ Level 3: Level Level 2: Level Level 1: Level . . e in the form of .in aprice) form the (i indirectly or

4,723 1,027 3,696 4,798 1,033 3,753 Total Total 12 0 . The individual levels are defined individualaccordin levels .The are defined . e Level 1 Level 1 derived from prices) observable for prices) from .derived observable 4,723 1,027 3,696 4,786 1,033 3,753 Level 2 Level 2 12 12 0 0 Level 3 Level 3 - Total (FLAC) cost amortised at liabilities Financial measured (FIPL) loss or profit through value fair at measured instruments Financial Loans and receivables (LR) receivables and Loans impairments of held-for-sale category the from gains financial losses comprise and Net instruments interesttion of the rate cap arisingexpenses market the valua from the and loss income or include - through profit measuredfair of financialvalueat category instruments from the gains losses and Net receivables and loans written-off derecognition from as well recoveries losses and and value aspreviously inflows of the in gains include changes receivables and in loans from allowances, gains the losses and Net (HFS) instruments financial Held-for-sale Valuation category 2011 categories by valuation result Net (HFS) instruments financial Held-for-sale Valuation category €’000s in Figures 2012 categories by valuation result Net in were financial shown previouslowing results the net and year: the in year2012 fol the individualFor the 39, categories of financialaccordancein instruments withIAS Figures in €’000s in Figures amortised cost (FLAC) cost amortised at liabilities Financial measured Loans and receivables (LR) receivables and Loans Total fair value through profit or loss (FIPL) loss or profit through value fair at measured instruments Financial .

Consolidated financial statements financial Consolidated

. From interest From interest –33,893 –36,489 –36,163 –41,086 2,596 4,923 : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes 0 0

0 0 At fair value value fair At statement) At fair value value fair At statement) (income (income –792 –12 –792 –12 From subsequent measurement From subsequent measurement 0 0 0

0 0 0 At fair value value fair At At fair value value fair At (equity) (equity) –45 –45 –53 –53 - 0 0 0

0 0 0 Impairment/ Impairment/ receivables receivables receivables receivables –31,610 –31,610 –37,160 –37,160 losses losses 0 0 0

0 0 0

From disposals From disposals freenet AG · Annual Report 2012 Report AG ·Annual freenet 1,279 1,279 329 329 0 0 0

0 0 0 Net result Net –64,281 –36,489 Net result Net –27,735 –73,839 –41,086 –31,908 –45 –792 –12 –53 183

Consolidated financial statement Consolidated financial statement 184 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes between net debt of the Group and Group EBITDA) Group and Group of the debt net between (ratio interest net income),Group as factor well Group debt of as ratio the the equity the covenants might involve in immediately called being loans the failure where financialsuch meet to loan agreements, cialthe in covenants specified risk capital Group’s of management the is to objective monitor finan the primary The key consolidatedthe derived and figures balance sheet risk capital in shown is managementThe Group ofequity related the to shareholders’ partners sales and to failure the customers impairment end from or attributable due of receivables costs department Management Receivables the risks internal these for risk reporting as well partners) asB2B other regularand dealers distributors, (indebtors particular is of Treasury monitoringmajor for responsible risks Group default the The department by maintaining of in credit form lines the adequatereserves positions of an adequatecommitment of credit possibility lines the of and closing market open possibility the of obtaining financeway by equivalents, cash of and cash quate reserve involvesmanagement Treasury controlled Group by holding an the ade department basisular extent the and on risks internal which of the degree analyses risk reporting by way Group of of the reg liquidity segments and associated risks operating with the dinates access to financial the markets co-or and segments to operating the services provides Treasury Group The department Board Executive of approval require the prior the Board Executive the by are defined ing section explained follow the in components with of financialits policy aspects fundamental The activities limit finance-oriented and by operational them of financialrisk objective management The is risks and monitorto to constantly these ticular risks liquidity todefault and risks market risks, in par is Group exposed freenet the liabilities transactions, planned assets, and its With 35.2 rateinterestmethod effective application of the financialand liabilitiesthe on measurednotlossfair or based are valueat profit through Information concerning financial of interest the interest income and assets expenses interest expenses financial from gains losses and Net purchase liabilities of cost consist of at amortised risk; a further important objective is to optimise objective interest net income important afurther risk; is of principle minimising Treasury the Group the for overridingThe priority department enants are defined in relation are the defined to enants interest andGroup EBITDA cover between (ratio Principles and objectives of financial risk management risk financial of objectives and Principles Liquidity risks are reduced by permanently monitoring by finance are .Liquiditystatus permanently risks the reduced and .

. Receivables due from end users are monitored in users end from due .Receivables In addition, it manages monitors and market .In the addition, One of its main objectives is to main minimise of its objectives .One the In addition, certain financial transactions financial certain transactions .In addition, . . For further information we refer to . For further . . . . The main .The financial cov Prudent liquidity .Prudent ------.

the effects equity of changes in rates interestresultthe on shareholders’ and effects the asensitivity analysis uses Group the which market shows to the In order risks, present result-related sensitivities calculating process of iable-interest arethe financialin and theincluded instruments in market interest rates interest could havenet on incomeoriginally on an impact var as disposal well options available various at as its the debt scheduling for the basis investing for the on ble daily debt of and the liquid the liquidity assets planning availa opportunities various the monitors constantly Treasury department Group The accordingly debt cial interest the reduces and rate risknatural arising hedge, variable-interest finan the from as a acts basis EURIBOR) the invested or on of in EONIA variable-interest instruments however, explicitly hedged; interest not been rate had risks in cash (which hand is mainly nominal amount interest prevailing agreed the and tractually (higher) rates in variable relation to the the con between difference the premium—thatintervals it receive would at defined with of third payment a agreed Group parties—against the interest taken was cap out, are 2012) limited of use by aneuros December interest as the of 31 rate cap (shown loan variable-interest as syndicated in the from 80 balance the sheet to interest rate is risks Group exposed the this respect, variable-interest financial liabilities175 of variable-interest tranche one and fixed-interest tranches two which comprises bilities 2012, note inarising raised December promissory from a new 2012 utilisedcredit December line, as which of 31 not been had bond alsoand to afixed-income corporate liabilities to loan The avariable-interest are syndicated attributable debt under shown 35.3.1 exchange rates currency and in rates changes interest to financialto are of primarily Group our risks attributable exposed activities The 35.3 Board tosented Executive the followingthe preon information The informationrisks based is concerning specific the shares new in to in order debt reduce this way, is and also to entitled take measures such as issuing to management sell assets is permitted manage structure, to capital In order the actively 0 year: vious of risk capital parameter management is relevant another (gearing) equity Group and debt net Group between ratio The agement report man in Group the management” and objectives Group chapter direction, the “Strategic Market risk Market

Interest rate riskInterest . . 45) All covenants .All date as balance are of the met sheet The interest is cap .The to July 2013 due 31 expire on . .

. Consolidated financial statements financial Consolidated . Gearing was 0 was .Gearing . 9 million euros as of 31 December 2012 9 million euros December as of 31 There is also .There avariable-interest revolving . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . 38 as closing of the 38 date (pre The interest rate arising .The risks The Group has reported has reported Group .The There are further lia- are further .There After that the time, .After .

When the .When . .Changes

. 0 million .In ------freenet AG · Annual Report 2012 Report AG ·Annual freenet 185

Consolidated financial statement Consolidated financial statement 186 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Overall, the Group considers that the foreign currency risk considers foreign that Group is the the of currency negligibleOverall, significance currency in foreign denominated holdings cash of means by risk futures concluding is or, generallyhedged currency currency by if necessary, to within aminor extent are Group conducted the trades Foreign currency 35.3.2 liabilities risk ofThe interest rate changes is negligible interest-bearing other the for and assets euros) thousand –169 year: (previous equity shareholders’ on euros thousand of 5percent in have of price –166 would the shift downward an impact euros a ),and thousand 169 year: (previous equity euros shareholders’ on thousand 166 5percent in price acquired ofan the the upward shift shares have of would an impact as well financial other as under assets other and assets, receivables sundry the other the under in balance shown the sheet market in bonds and money funds investments change any and inpayments price instrument of the the dividend maturity datesor dates;interestadjustment a the from defined return tractually results short-term invested trading) for in basis avery on funds been (held always apossibility of price losses to marginal market are funds subject Money interestthatso there rate fluctuations is euros) –353 thousand year: (previous tax after results euros the on thousand of –201 have would in basis interest the an of impact 50 rate points curve allel shift downward euros), thousand apar and 353 year: (previous tax of 201 thousand after euros results on have would inbasis interest ofthe an 50 impact rate points upward curve shift parallel a fair taking which taken and value account have out, hedging instruments of been the euros thousand 33,924 entire the for amountwould financial 2013 to debt in outflows the 1 variable-interestfor lies loans in between arange in relation liabilities to these requirement for a isprincipal of payment a approxmandatory as current debt euros are shown thousand 100,449 2012, December 31 debt as figureof for the shown Of 7 of dateas balance of the sheet bank borrowings interestable rates 175 thereof 2012, December long-term asand of 31 borrowings liabilities balanceIn the sheet, of 656 to financial the bles holdings as closingthe of instrument reference date determined are by changesrelatingrisk theoretical the variain the - effects periodic The . 1 percent 1

Based on the net position of variable-interest assets and liabilities and of position variable-interest net assets the on measured at .Based Foreign currency risk currency Foreign . . At the point at which these financial statements were prepared, there prepared, were financial at point .At whichstatements the these .Variable interest in of arange 1 On the basis of market estimates, the expected interest basis the .On of expected market the estimates, .However, is there significant no risk hasmoney the as . 6 million short-term the euros are under shown The corporate bond comes with comes a coupon bond corporate . The . 7 to 4 . 7 and 4 7 and . 1 percent was charged on these these on charged 1 percent was .

. 1 percent . . 80 million . 80 euros in 2013 9 million euros with vari Based on the financial the on .Based There are con no .There .This means that .

The foreign .The . . - - - of the Group at the end of the financial years 2012 and 2011: financial ofand the end at the 2012 Group of years the undiscountedagreed original of interest the principal and payments financial liabilities shareholdings in and particular of assets, companyunder law, provision the of collateral as well as any acquisitions disposals and measures of internal conduct structural the to Group, of the changes in operations the agreements loan the regulations by ofcertain Group is the restricted of scope financial operational The and interests market capital as is there organised these for no difficult more notice be possibly would at their short sale holdings, to sell these essary notice uidated at short account) (money deposit in securities Securities liq the market be bonds can and funds investments for instance in to order finance agreements future loan the strategic outside raise debt provided lion euros which has been utilised had date, revolving Group balance of the the the sheet credit lineAs of 100 flows cash also and by actual and constantlyat monitoring banks forecast the also credit manages lines Group liquidity byThe risks holdingappropriate at cash banks, data current followingTreasury liaison with Accounting department Controlling and basis the on of daily basis following for the months three ranging up to year one itor control and liquidity Group Comprehensivemon to financingthe throughout planning are used instruments chase obligations obligations and arising leasing from agreements financialpay pur for its obligations, instance it tobe mightable to notdebt, meet repay risk the as that Company liquiditythe risk isbe mightThe able Group defined ofnot the 35.4 cash flows and the proceeds of maturingproceeds the financialand flows cash assets anticipates Group The obligations other of operating thatout its it to will able meet be participate Group nies freenet of the basisthe in existing of several which main internal the agreements compa- pooling cash investment the of and for liquid are in managed Group funds Demand centrally the on risk liquidity of range different thereducefinancing awide order in to uses Group The instruments and financial the of maturityliabilities profiles the for assets iations are also performed Liquidity risk . . . These for instance impose restrictions on the Company the on in relation restrictions instance for impose .These There are plans no to .There sell any holdings of the The short-term .The liquidity planning control a and on are done Different planning .Different horizons are considered thisin respect, Consolidated financial statements financial Consolidated Within narrow limits, the Company is permitted to Company the .Within is narrow limits, permitted . The following tables show the contractually the show following .The tables The planning . The is daily updated by Group the : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . . . If it became nec .Ifit became .Reconcil . 0 mil ------. freenet AG · Annual Report 2012 Report AG ·Annual freenet 187

Consolidated financial statement Consolidated financial statement Debt (liabilities due to banks) due (liabilities Debt 188 Financial liabilities Financial liabilities Financial liabilities financial non-derivative Other freenet AG · Annual Report 2012 Report AG ·Annual freenet liabilities financial non-derivative Other to banks) due (liabilities Debt payable accounts Trade €’000s in Figures payable accounts Trade €’000s in Figures Consolidated financial statements financial Consolidated

31.12.2012 31.12.2011 656,554 413,053 Carrying Carrying 44,561 399,777 715,079 amount Carrying Carrying amount 72,023 : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Interest 30,674 Interest (fixed) 28,500 (fixed) due from dealers and franchise partners and from dealers due with to regard is ongoing process accountsAn also dunning operated collection debt and risking default in the Group our monitoring monitoring ascollection well as are high-spender key measures minimis for companies long-term in and collection with benchmarking several process collection and regular and of arapid dunning entered into, performance has been the acontract Once customer is with the agreed acontract areas customer before major contract the assets other and with to regard risks default his is to not able obligations meet within period partner agreed the contractual if the cash loss or of revenue A creditunexpected the as risk is defined 35.5 Where appropriate, a delivery restriction is imposed if the limit if the is imposed is reached restriction adelivery appropriate, Where Trade are main the customers item from end Group accounts receivable in freenet the Cash flows 2012 flows Cash Cash flows 2013 flows Cash creditworthiness of customers and sales partners sales and of customers creditworthiness Risk of default default of Risk (variable) (variable) Interest Interest 3,250 6,143 Repayment 100,449 412,781 200,302 In the mass business of our Group, particular attention is mass givenparticular .In business the of to Group, our 44,512 399,370 Repay 35,415 ment - Interest 30,664 For further information we refer to item 22, Receivables information we refer to item .For further 22, Interest (fixed) 28,500 (fixed) . Cash flows 2014 flows Cash Cash flows 2013 flows Cash (variable) (variable) Interest Interest 1,923 5,171 Credit limits are also defined and monitored and . Credit limits are also defined Repayment 40,119 Repay 36,467 80,111 ment 272 407 16 Credit checks are carried out for out are carried . Credit checks - Interest 65,337 Interest (fixed) 85,500 (fixed) Cash flows 2014 and later and 2014 flows Cash Cash flows 2015 and later and 2015 flows Cash . This risk materialises (variable) (variable) Interest Interest 5,063 406 .

. Repayment 515,986 Repay 43,666 ment 141 33 . -

- .

terparty default is equivalent to the book value of these instruments of value these is to default equivalent book the terparty available-for-saleand maximumthe riskcredit financialcase of coun the in investments, equivalents cashcash such Group, as and to regard the financialof other With the assets their obligations payment not meet are indications there no date as balance of will the sheet payment, for debtors that the which accounts receivable are impaired neither overdue nor trade to regard With those investments of the future yields constantly current monitors Treasury expected the and Group department significantly has been limited as a resultbeingrisk the of banks spread variousover are liquid and mainlySecurities assets invested banks at major German is receivable considers irrecoverable the Group are if the derecognised appropriate allowanceAn takes account risks of default are correlations there no because and is base customer broad the credit risk because date balance were the grantedment and sheet at point which terms the the of pay taken between of any change in creditworthiness toIn order account intrinsic determine due the accounts receivable, is of value trade not established rating have accounts business with to apoor the is or pay general, tem—in in advance, to accountsutable which are not insured are limited by means of an internal limit sys insurer this uses calculate notification to be sales volume insured to the the insurer notifies sales of current each the Treasuryof keyaccount department accounts (dealers distributors and in communications) mobile minimise has with insured keypercentage ofGroup sales the credit risk, the a certain credit are risks alsoMajor covered by way of commercial credit insurance . . Consolidated financial statements financial Consolidated . There is significant no .There concentration of : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Receivables and other assets assets other and .Receivables Every month, the Group the month, .Every . The risks attrib risks .The The default risk default .The . In order to .In order The .The The .The . - - - - freenet AG · Annual Report 2012 Report AG ·Annual freenet 189

Consolidated financial statement Consolidated financial statement 190 freenet AG · Annual Report 2012 Report AG ·Annual freenet 36.

Transactions with related parties related with Transactions Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes and onward charging services Purchased

Liabilities transactions from regular Companies with a major influence on freenet AG transactions from regular Receivables €’000s in Figures 2012: December as of 31 following liabilities and from due The major receivables existed to due related parties toservices attributable income and Sales €’000s in Figures parties: related and Group the have following takenThe major place transactions between Overview 36.1 Drillisch AG, Maintal AG, Drillisch Companies with a major influence on freenet AG Pulheim GmbH, Media new siXXup venturesJoint Kiel Kommunikation, für Gesellschaft GmbH KielNET companies Associated b2c b2c SIMply Communication GmbH, Maintal (Drillisch AG Group) (Drillisch Maintal GmbH, Communication SIMply Companies with a major influence on freenet AG Drillisch AG, Maintal AG, Drillisch Companies with a major influence on freenet AG Pulheim GmbH, Media new siXXup b2c b2c AG Group) (Drillisch Maintal GmbH, Communication SIMply Hamburg GmbH, FunDorado venturesJoint Hamburg GmbH, FunDorado venturesJoint . . . . de GmbH, Munich (Drillisch AG Group) (Drillisch Munich GmbH, de de GmbH, Munich (Drillisch AG Group) (Drillisch Munich GmbH, de de GmbH, München (Drillisch AG Group) (Drillisch München GmbH, de AG Group) (Drillisch Munich GmbH, de

31.12.2012 14,874 14,782 1,500 1,005 2012 247 701 222 208 273 701 11 27 28 65 0 0 0

31.12.2011 8,841 8,737 2011 389 238 981 729 195 383 252 72 27 41 5 0 6 2 0

The members of the Executive Board have been identified as members of the manage the of members as identified have Board been Executive of the members The 2 1 Esch Stephan Preisig Joachim Christoph Vilanek Joachim Preisig Joachim Christoph Vilanek - €’000s in Figures according to IFRS 2011 compensation Executive Board €’000s in Figures according to IFRS 2012 compensation Executive Board as follows: down company of the Board is Executive of broken the members the for compensation The 36.2 following item 36 inment according key 24 functions to IAS year 2012 in financial the Board Supervisory of representatives the granted to employees’ the euros) were thousand 619 year: (previous euros thousand 294 of Total emoluments Stephan Esch Stephan

This is variable compensation from the SAR programme as well as the LTIP programme, including payments payments including LTIP programme, the as well as programme SAR the from compensation is variable This which were 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 were which which were 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 were which payments including LTIP programme, the as well as programme SAR the from compensation is variable This Executive Board compensation Board Executive All transactions were based on market on prices were based transactions .All

. 2 . Consolidated financial statements financial Consolidated Fixed com Fixed pensation Fixed com- Fixed pensation 1,514 1,510 444 445 625 444 445 621 -

compen Variable Variable compen- Variable Variable 1,104 sation . 1,370 17 sation 144 480 480 222 574 574 For further information we refer to the .For further

pensation cash com cash Sub-total pensation cash com- cash : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Sub-total 2,618 . 1,105 2,880 1,195 1,018 589 924 667 -

sation withsation long-term sation withsation incentive compen long-term Variable Variable incentive compen Variable Variable 2,380 effect1 1,044 1,225 effect2 720 616 361 533 331 Total com Total pensation Total com- Total pensation 4,998 1,644 1,205 2,149 4,105 1,200 1,349 1,556 . - . -

freenet AG · Annual Report 2012 Report AG ·Annual freenet 191

Consolidated financial statement Consolidated financial statement Stephan Esch Stephan 192 freenet AG · Annual Report 2012 Report AG ·Annual freenet Preisig Joachim Christoph Vilanek €’000s in Figures Esch Stephan Preisig Joachim Christoph Vilanek €’000s in Figures Consolidated financial statements financial Consolidated

(non-cash-effective) compensation from compensation vision under IFRS 2 (non-cash-effective) compensation from compensation change in the pro the in change vision under IFRS 2 change in the pro the in change SAR programme programme SAR SAR programme programme SAR : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes –942 –419 –332 –191 –120 279 389 10 - - to item 27 refer please “LTIP programme”; via so-called the Board Executive of the to members the with were a long-termawarded incentive components effect salary variable new In 2011, Board Executive of the members former these for shown provisions euros been had totalling appreciation thousand rights forstock 273 cash- was Mr for 2012 ber respectively Mr figures for Mr for appreciation rights stock for AG ofappreciation freenet rights item also under refer please to 27 comments our cised in 2012; which as existed yearprevious of Board the Executive of reference the date were exer Company of the Board Executive of the were withmembers along-term granted the to incentive instruments pensation effect options stockor other com stock appreciationrights, new no financialIn the year2012, 2011 with long-term incentiveVariable effect compensation 2012 with long-term incentiveVariable effect compensation tive effect: following breakdown the with ofThe shows compensation along-term variable incen Board), as all rights had been exercised in 2012 (for which a figure of 38 thousand euros (for exercised in thousand 38 which 2012 as all afigure been had of rights Board), compensation from compensation compensation from compensation actual payments SAR programme programme SAR actual payments SAR programme programme SAR effective in 2012) or had expired at the end theirof end expired the at lifeor had 2012) in effective . 2 of these notes, LTIP notes, AG2 of these of freenet programme No provisions .No Decem wereas appreciation of shown 31 rights stock for .Preisig Mr and 1,739 .Spoerr, Mr 571 793 375 0 0 0 0

(non-cash-effective) compensation from compensation change in provision provision in change (non-cash-effective) Krieger and Mr and .Krieger compensation from compensation change in provision provision in change LTIP programme Esch were 191 thousand euros and 419 thousand euros thousand euros 419 and thousand were 191 .Esch LTIP programme As of 31 December 2011, the value of the provisions of value the the 2011, December of 31 .As Vilanek was 332 thousand euros; the corresponding the euros; thousand 332 was .Vilanek 1,583 805 536 242 946 144 481 321 All stock appreciation rights of the members members of appreciation the rights stock .All Berger (former members of the Executive of the (former members .Berger . compensation from compensation compensation from compensation actual payments LTIP programme actual payments LTIP programme No payments were made out were made payments .No As of 31 December 2011, 2011, December of 31 .As 0 0 0 0 . 0 0 0 0

1 of these notes, Stock notes, 1 of these

Total variable compen variable Total sation with long-term long-term with sation Total variable compen variable Total sation with long-term long-term with sation incentive effect incentive effect 2,380 1,044 1,225 720 616 361 533 331 ------antees or other warranties were issued for any of the members of the Executive Board Executive of the were issued any for antees warranties other or members of the guar no and Board, Executive of the to any members of the were loans extended No euros),(138 thousand Mr euros), Mr Mr in 2012: following persons as aresultutive commitments pension of Board the Exec of the euros)sand members the for were recognisedexpenses in total in personnel thou 454 year: euros (previous thousand of 549 time expenses Current post-service and Mr euros); thousand figure 453 corresponding the for year: 974 euros (previous thousand obligation Mr (DBO)for benefit defined the 2012, December of 31 occasion of his as of as 1 May Chairman 2009 appointment Board Executive of the pension wascommitment Mr granted an to indirect financial year2009, commitment pension granted to was indirect Mr An contracts their of termination the clauses after euros competition for restriction thousand in of amount 400 the Board Executive of the members to as appreciation well former rights stock as payments the to euros due changes thousand in conditions the exercising for tive of compensation 587 euros), thousand - nega measured at fair time at value of the grantingprogramme (3,586 the from compensation LTIP were there also non-cash-effective euros, thousand 2,880 variable and fixedcompensation of compensation in and to addition cash-effect the 2011, 1no ance paragraph with clause 314 granted in accordance with HGB been in financial disclosed the had years whichbeen in the instruments compensation alreadyhad as elements such with compensation along-termvariable incentive effect, accordance 1no paragraph with clause 314 euros in thousand amounted to 2,618 in 2012 emoluments In Board total, Executive euros) euros), Mr for value the and euros); Mr for value the LTIP Mr for programme of in this 2012 programme euros (previous year: 468 thousand euros) thousand 468 year: euros (previous debitel AGformer AG over commitment pension took freenet the granted to Mr 2008, ber 31 December 2012 (previous year: 4,014 thousand euros) thousand 4,014 year: (previous 2012 December 31 euros as of thousand totalled 6,520 Board Executive of the members as former Berger Esch was 1,531 thousand euros (previous year: 832 thousand euros) thousand 832 year: euros (previous thousand 1,531 was . Esch . Esch (174 .Esch breakdown Mr the as was follows: euros); thousand 2011, for As of 31 December 2012, the DBO for Mr DBO the 2012, December of 31 . As Vilanek was 1,286 thousand euros (previous year: 481 thousand thousand 481 year: euros (previous thousand 1,286 was .Vilanek Preisig was 857 thousand euros (previous year: 321 thousand thousand 321 year: euros (previous thousand .Preisig 857 was .Preisig euros) (84 thousand Mr and Consolidated financial statements financial Consolidated As of 31 December 2012, the value of the provision of value the the the for 2012, December of 31 .As Esch was 386 thousand euros (previous year: 144 thousand thousand 144 year: euros (previous thousand 386 was .Esch Vilanek (250 thousand euros), thousand (250 .Vilanek Mr . In 2011, the Executive Board compensation in compensation accord Board Executive the .In 2011, 6a HGB amounted to 6,279 thousand euros thousand amounted to 6,279 HGB .6a The DBOs for Messrs DBOs . The 6a HGB .6a This figure does not any .Thisinclude figuredoes Esch in November 2004 in November .Esch .This figurewas spread overthe : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . Esch (232 thousand euros) .Esch . Preisig thousand 751 was .Preisig (125 thousand Vilanek amounted to .Vilanek Spoerr, Krieger and . Spoerr, Krieger As of 1 Septem . As Vilanek on the on .Vilanek .Preisig by the . Vilanek Also in .Also .In the As . As . - - - - - . freenet AG · Annual Report 2012 Report AG ·Annual freenet 193

Consolidated financial statement Consolidated financial statement 194 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes For each full financial year, the Supervisory Board members receive fixed basic members compen Board For each full financial year,Supervisory the ■ ■ Individualised figures for the last two financialIndividualised figureslast the years for shownfollowingtheare in tables result of exercising their aswell office for astaxes turnover as incurred a expenses for are reimbursed members Board Supervisory Furthermore, year 2012 financialthe for resolution appropriation profit the on depends paid out be will indeed as eurosa cost also was recorded sand ofance 113 fees Companyof the 405 receivedof fixed compensation Board Supervisory the of members the during financial the For theiryear activity 2012, amount ahalf and times this one chairperson deputy the this receives amount, double Board which is of in basic form payable the compensation financial previous the for year of 0 euros each for 0 in of amount compensation 500 the ble of each end financial the also receive, after year, members Board varia - Supervisory The third in of the from 2010 physical quarter participation meetings phonic committees tele for and its Board, of the meetings telephone for of attendance fees self-restraint, to remuneration in refrain the from avoluntary decided Board Supervisory committee of the meeting euros each for attended in an of addition attendance1,000 fee mungsgesetz)—receive (Mitbestim Codeterminationin Act accordance German of the with paragraph clause 27 exception the committee of the formed committee—with Board to aSupervisory belong he/she meeting Board attends eachfor Supervisory euros receives an of attendance1,000 fee member Board Supervisory every In addition, ahalf and time thisone amount chairperson deputy the this receives amount, double Board Supervisory of the person euros each for fullboard financial the on yearmembership of ofsation 30,000 ■ components: three of consists of association and articles the in is defined Board Supervisory of compensation the The 36.3 the decimal point the afterposition one to rounded beenfigures subtotalsthe have because final and totals, presenting for used format the from may result differences rounding that note Please euros sand ■ ■ ■ . Profit-linked compensation Fees for attending meetings attending for Fees Basic compensation Basic 10 euro per share company euro of per the which stock are10 distributed to shareholders the Compensation for the Supervisory Board Supervisory the for Compensation . The total compensation for Supervisory Board activities was thus was 924 activities Board total Supervisory for compensation .The . . 0 thousand euros 0 thousand . The committee chairperson receives double this receives amount double committee chairperson .The The extent of the compensation is compensation of the limited extent .The to that amount . In addition, profit-linked .In addition, 406 of compensation Whether this performance-linked compensation this performance-linked . Whether The chairperson of the Supervisory Supervisory of the chairperson .The . 0 euros thousand as well as0 euros attend thousand Supervisory Board members who members Board .Supervisory . 01 euro in in01 excess dividends . . The chair .The . . 5 thou- 5 thou The .The ------.

Niclas Rauscher Matthias Schneider Matthias Hans-Jürgen Klempau Hans-Jürgen Nicole Engenhardt-Gillé3 Dr Claudia Anderleit Claudia Dr Prof Kraemer Thorsten Joachim Halefeld Gesine Thomas Gesine 3 2 1 Dr Active members €’000s in Figures 2012 financial the year for Compensation Angela Witzmann Angela Weiss Achim Weidinger Robert Steffen Vodel Maarten Henderson2 Maarten Former members Tüngler Marc Arnold Bahlmann .Arnold . Hartmut Schenk1 .Hartmut Christof Aha Christof .Dr Employee representative in accordance with section 7 (1) clause 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 Helmut Thoma .Helmut 3 3

3 3 3 3 3 Consolidated financial statements financial Consolidated compensation 405.0 320.7 84.3 Basic Basic 21 . 20 30 30 30 30 . 19 . 19 . 19 10 . 19 . 19 10 10 10 10 . 49 45 . . .0 .0 .0 .0 .0 . . . . 7 7 1 7 0 7 3 3 2 4 3 3 3

Attendance fee Attendance . . 113.0 30.0 83.0 12 14 10 8 2 2 8 2 4 8 2 4 6 5 . 5 . 5 . 9 . 7 . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 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 .0 0 0 0 0 0

1 MitbestG of 4 May 1976 4May of .1MitbestG compensation Performance- 406.5 322.4 based based 84.1 21 . 30 . 30 . 30 . 30 20 . 19 . 19 10 . 19 . 19 . 19 10 10 10 10 45 . 49 . . .0 .0 . . . . 7 7 7 7 1 1 4 5 1 5 3 5 5 1 1 5

. 924.5 198.4 726.1 112 Total . 44 48 . 46 54 98 22 . 23 . 23 42 . 23 . 25 70 . 65 43 43 . 69 . 67 . . .1 . .1 . .6 .0 . 4 4 4 4 1 7 8 1 8 1 8 1 8 8 freenet AG · Annual Report 2012 Report AG ·Annual freenet 195

Consolidated financial statement Consolidated financial statement 196 freenet AG · Annual Report 2012 Report AG ·Annual freenet 37.

Company acquisitions Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Thorsten Kraemer2 Thorsten Former members Prof Oelte Franziska euros; the exact amount of these earn-outs is based on EBITDA for the calendar year calendar the for EBITDA on is based earn-outs of amount these exact the euros; zero euros 6 and in of arange between may there earn-outs alsoaddition, be timeat consolidated at the pared which these were financial approved statements as time acquisition; of of the the pre however,been not had financialstatements these basisthe will on fixed definitively reference of be GRAVIS date of financial statements financial and cash liabilitiesacquired the purchaseof price adjustments company—these as working capital well net as the the on depending toprice is adjustments still subject A figure12 of retail market Apple German of the with dealer nationwide coverage;only Apple it has a market share of approx to Group acquire the which enabled control over this subsidiary 2013, following) the in (“GRAVIS” mbH shares voting and in rights Gravis –Computervertriebsgesellschaft acquiring for apurchase agreement concluded Group the all 2012, December 18 On Weiss Achim Steffen Vodel Schneider Matthias Henderson1 Maarten Active members €’000s in Figures 2011 financial the year for Compensation 3 2 1 Dr Niclas Rauscher Anderleit Claudia Dr Nicole Engenhardt-Gillé3 Hans-Jürgen Klempau Hans-Jürgen Joachim Halefeld Dr Hartmut Schenk .Hartmut . Arnold Bahlmann .Arnold Christof Aha Christof .Dr Employee representative in accordance with section 7 (1) clause 1no 7(1) clause section with accordance in representative Employee 2011 June 30 until Board Supervisory the of Chairman 2011 June 30 since Board Supervisory the of Chairman Helmut Thoma .Helmut 3 .

3 25 million purchase cash price as the euros agreed was Following cartel law approval, the takeover was closed as of 31 January January as of takeover 31 the law closed was approval, .Following cartel 3 3 3 3 compensation GRAVIS also operates asignificant alsoonline operates business .GRAVIS 344.2 404.1 60.0 Basic Basic . 15 . 15 . 15 . 15 28 30 30 30 30 30 30 30 30 30 45 . . .0 .0 .0 .0 .0 .0 .0 .0 .0 0 0 1 9 1 1

Attendance fee Attendance . . 148.0 183.0 35.0 11 22 . 15 16 16 . 25 . 19 8 4 6 9 . 9 . 9 . 7 . 7 . .0 .0 .0 .0 .0 .0 .0 0 0 0 0 0 0 0 0

1 MitbestG of 4 May 1976 4May of .1MitbestG compensation Performance- 344.1 403.6 based based The cash purchase cash .The 59.5 . 14 14 . 15 . 15 28 30 30 30 30 30 30 30 30 . 29 45 .9 . .0 .0 .0 .0 .0 . .0 .0 .0 8 8 9 1 1 0 GRAVIS is the .GRAVIS

14 percent . 14 . 25 million . 154.5 836.3 990.7 . 115 Total 36 81 71 38 . 65 . 33 75 76 76 . 79 . 69 . 69 . 37 . 67 . In . . .9 . .0 . . 8 8 0 2 0 0 8 2 1 0 0 0 0 - .

“Mobile Communications” “Mobile to will segment allocated the be AG GRAVIS Group, freenet of the reporting In segment Communications” unit to cash-generating attributed the “Mobile be devicesmobile with in connection products of high-valuefield lifestyle force of sales our in potential the strengthening with the in connection synergy ties and We are anticipating which is goodwill to mainly future attributable earnings opportuni acquisition the from separately disclosed of tohad liabilities transfer be the and with which to regard total also the and with to regard of amount goodwill transactions to liabilities, contingent regard with liabilities, acquired and assets acquired of group recognised time at of the acquisition amounts to primary acquired receivables, every for time atdata of the acquisition, it is to information not possible the provide with regard exemption oftage the 3 regulation of IFRS combination advan is took not complete Group time at of the this freenet the approval, initial the although were publication, for approved accountingments business the for consolidatedSince acquisition these financial the placestate before took of GRAVIS GmbH Shop of mobilcom-debitel how of know transfer is achieved to intended bycommunications adirect be branches business in GRAVIS the distribution system into GRAVIS the products service and mobile energy, of communications in field services the products digital lifestyle provider style of agenuine becoming of Group our consistent digital life strategy corporate with the communications with mobile this in internet; mobile connection and is products style aim Life acquisitionThe of the isof range our high-quality Apple to extend of GRAVIS acquiredthe company year calendar achieved 2012 the for of EBITDA the on may circumstances, also certain depend under and, of GRAVIS 2013 At the same time, we are time, planning same .At the to gradually introduce existing our . Consolidated financial statements financial Consolidated . B66 .In particular, in of absence view of the The planned expansion of mobile planned .The : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . . . The goodwill will goodwill .The . - - - - - freenet AG · Annual Report 2012 Report AG ·Annual freenet 197

Consolidated financial statement Consolidated financial statement 198 freenet AG · Annual Report 2012 Report AG ·Annual freenet HGB with clause 315a 38. Disclosures in accordanceDisclosures Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Figures in €’000s in Figures 314 paragraph 1no paragraph 314 paid euros to was in auditor the fees thousand in accordance with clause A total of 1,235 www.freenet-group.de/unternehmen/corporate-governance/entsprechenserklaerung available in Internet following at permanently to the the made shareholders address: 2012 Company of the in Board December Supervisory and utive Board Exec by submitted was the laration of in conformity accordance AktG with clause 161 In accordance 1 no paragraph with clause 314 parties related Company (clause 1 no paragraph 314 to regard disclosuresWith the of the concerning executive of compensation bodies the notes in these expenses, Personnel in shown item 8, been (clause 1no in average Group of employees the number The paragraph 314 we refer to item 26 remaining tointerest, sell its stake of 49 Group percent into MFE freenet euros thousand price of 1,000 stake inat purchase acash MFE acquired year previous In Group the the a51-percent receivables Other Inventories Current assets plant Property, assets Non-current Assets (draft) 2012 December liabilities 31 of as and GRAVIS of Assets balance sheet: are basis the as on follows of adrafted liabilities and equity) (without assets shareholders’ of GRAVIS 2012, December of 31 As relates to auditing services of RBS RoeverBroennerSusat, 503 thousand euros relates thousand to 503 relates RoeverBroennerSusat, of RBS to auditing services uary 2011 uary Liquid assets assets other and receivable Trade accounts equipment and assets Intangible Liabilities As part of the purchase agreement it was offered to MFE, as non-controlling as MFE, to it offered purchase was agreement of the part .As

9 HGB during financial the .9HGB year . 3, Retained earnings Retained 3, The companyJan on 1 .The time consolidated was first the for 2012 12. 31. 36,532 43,371 23,490 6,839 1,096 6,306 3,486 3,250 5,743 6 HGB), please refer to item 36, Transactions with refer to please item .6HGB), 36,

. 8 HGB, we hereby thatdec declare the . 8 HGB, Debt liabilities Non-current €’000s in Figures Other provisionsOther Debt liabilities tax income Current deferrals and liabilities Other payable accounts Trade liabilities Current Of this figure, 375 thousand euros thousand 375 this figure, .Of .

.In this context It has been .It has been 4 HGB) has .4HGB) 2012 12. 31. 32,678 33,553 27,221 3,828 875 161 875 875 593

- - -

MFE Energie GmbH, Berlin GmbH, Energie MFE Hamburg GmbH, Direkt freenet Hamburg GmbH, directions new S CLAROMOVIL klarmobil Hamburg GmbH, Schleswig GmbH, Multimedia MobilCom Schleswig GmbH, Logistik mobilcom-debitel Schleswig GmbH, mobilcom-debitel siXXup new Media GmbH, Pulheim GmbH, Media new siXXup 01083 Hamburg GmbH, tellfon Hamburg GmbH, Datenkommunikations freenet Netcon Media s Media Netcon Hamburg GmbH, FunDorado Proportionately consolidated companies Stuttgart GmbH, go debitel Cologne GmbH, MIDRAY Hamburg GmbH, Beteiligungs Dritte Klarcall Hamburg GmbH, callmobile Oberkrämer GmbH, Logistik DEG mobilcom-debitel Oberkrämer Shop GmbH, Oberkrämer &PR, IT für GmbH Stanniol Hamburg GmbH, Energieversorgung NRG 01050 Kiel GmbH, 01024 Telefondienste Hamburg 01019 GmbH, Telefondienste Hamburg GmbH, freeXMedia freenet Kiel Citylinefreenet GmbH, companies Fully consolidated companies in consolidated the for the included financialoverview statements following we have the provided In accordance 3HGB, 2and with paragraphs clause 313 of PricewaterhouseCoopers services certification euros relates thousand to other 357 and of PricewaterhouseCoopers auditing services . . com GmbH, Hamburg com GmbH, com GmbH, Hamburg com GmbH, . de GmbH, Hamburg GmbH, de . r . L . o . , Madrid (Spain) , Madrid . , Hlucin, Czech Republic Czech , Hlucin, Consolidated financial statements financial Consolidated . : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . Holding % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 50 % 25 % 25 51 % freenet AG · Annual Report 2012 Report AG ·Annual freenet 199

Consolidated financial statement Consolidated financial statement 200 freenet AG · Annual Report 2012 Report AG ·Annual freenet assets in non-current movements 40. date balance sheet 39. Major events after the after events Major Consolidated statement of statement Consolidated Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes ket in online the mar particularly AG’s acquisition freenet strengths, The sales strengthens consolidated up time at these drawn the accounts were approved yet been whichnot had 2012, December TM’s31 as financialat MOTION on statements based be financial liabilities and funds, cash acquired the on current company’s net assets, to depending adjustment purchaseA cash price of 4 of approx sidiary to Group acquire the which enabled control over this sub 2013, January as of 31 closed shares voting and in rights GRAVIS acquiring for apurchase agreement concluded Group the all 2012, December 18 On Please consider the tables on the following double-page spread following the on double-page Please consider tables the of major significancebalance date events the havesheet occurred Other notafter unit Communications’ larly in online the market - particu strength, of sales earnings our potential strengthening with the in connection this acquisitionWe expect will which result is in to mainly goodwill, future attributable at retail our sales partners to support tems expertise Office Cartel Federal Germany’s by procedures clearance merger usual the following) the in TM” Troisdorf (“MOTION shares TM GmbH, of the in Vertriebs MOTION 51 percent to agreement acquire signed transfer apurchase and Group the 2013, February 20 On statements financial consolidated icant online business In addition, with its sales platform “moon”, MOTION TM offers the necessary sys necessary the TM “moon”, offers MOTION platform sales with its .In addition, GRAVIS is the only Apple dealer with dealer nationwide coverage; is only it Apple has the amarket .GRAVIS share 14 percent of the German Apple retail market Apple German percent of the .14 The transaction is expected to close before the end of Q1/2013, following of Q1/2013, end the to before close is expected transaction .The The binding determination of these purchase price adjustments will binding .The determination purchase price adjustments of these . Please notes refer also in to to of these item thecomments our 37 . The goodwill will be allocated to the cash-generating ‘Mobile ‘Mobile to will cash-generating allocated the goodwill be .The . 0 million euros agreed was . Following cartel law approval, the takeover the law was approval, .Following cartel The cash purchase price is subject purchase cash price is .The subject . GRAVIS also operates asignif also operates .GRAVIS . . . . - - - - Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes freenet AG · Annual Report 2012 Report AG ·Annual freenet 201

Consolidated financial statement Consolidated financial statement 202 freenet AG · Annual Report 2012 Report AG ·Annual freenet 2011 December 31 of as assets in non-current movements Consolidated 1 2012 December 31 of as assets in non-current movements Consolidated 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 in Figures 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 in Figures The transfers refer to a reclassification to assets current to refer a reclassification transfers The Consolidated financial statements financial Consolidated

: Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes . 2,222,514 2,462,794 1,116,868 2,209,168 2,475,292 1,116,377 240,280 2012 1. 1. 228,664 486,310 109,037 335,035 266,124 2011 1. 1. 488,898 111,969 223,126 109,128 94,993 15,123 20,990 335,035 55,637 14,979 29,830 45,732 137 218 in consolidation panies included Change in com in Change in consolidation panies included Change in com in Change 1,164 1,066 –416 –308 –724 –410 –259 –49 944 122 –6 98 98 0 0 0 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 21,277 11,855 62,589 69,024 51,636 10,953 9,422 6,805 4,522 3,993 5,023 6,435 5,573 528 329 117 293 452 77 0 0 0 0 0 0 0

–60,719 –60,760 Transfers Transfers –55,743 –4,439 –1,686 –1,802 –504 –173 1,961 –796 –374 796 960 890 41 99 41 51 0 0 0 0 1 0 0 0 0 Disposals Disposals 16,441 25,490 11,373 82,686 33,173 49,513 9,049 44,412 1,364 21,767 3,701 7,950 2,060 2,588 3,892 7,490 221 878 453 24 3 0 0 0 0 0 2,224,945 2012 12. 31. 2,397,138 1,116,862 2,462,794 2,222,514 2011 12. 31. 1,116,868 172,193 485,960 224,867 335,035 240,280 228,664 486,310 15,299 62,221 109,037 19,131 335,035 87,880 49,593 94,993 15,123 20,990 55,637 290 137 211,000 831,321 620,321 2012 1. 1. 386,968 176,000 108,635 18,879 22,700 34,653 76,530 6,954 228,446 514,522 742,968 2011 1. 1. 111,219 282,101 187,495 85,687 26,624 25,175 17,849 6,365 2 0 453 0 in consolidation panies included Change in com in Change –647 –349 –298 –349 –249 154,581 Additions 167,211 –49 107,455 12,630 32,609 10,508 0 0 0 0 0 0 0 1,502 9,666 4,851 - 576 42 0 2 138.448 Additions Depreciation and impairment write-downs impairment and Depreciation Depreciation and impairment write-downs impairment and Depreciation 147,638 97,299 27,333 9,190 1,367 8,965 4,851 7,219 579 25 write-downs Impairment 0 0 1,289 1,136 write-downs 153 153 215 919 Impairment 0 0 2 0 0 0 0

1,033 113 920 113 920 0 0 0 0 0 0 0 0 Transfers –60,426 –573 –60,443 Transfers 400 136 –55,502 –4,406 37 0 0 0 0 0 0 0 0 0 –535 17 17 0 0 0 0 0 0 1 Disposals 31,212 80,147 48,935 44,257 Disposals 20,067 24,477 15,796 2,588 1,637 3,681 7,440 10,863 8,681 1,358 3,573 7,803 453 24 878 0 0 0 0 0 2 0 2012 12. 31. 2011 12. 31. 894,442 143,766 750,676 196,118 483,389 211,000 831,321 620,321 386,968 176,000 108,635 72,215 14,433 43,618 49,585 27,551 18,879 22,700 34,653 76,530 7,533 6,954 0 0 0 2 1,502,696 2012 12. 31. 1,474,269 1,116,862 1,602,193 1,631,473 2011 12. 31. 1,116,868 307,484 28,427 312,335 18,603 15,665 28,749 29,280 Net book amounts Net book amounts 18,463 52,664 20,984 99,342 2,571 4,698 7,766 2,111 8,169 290 402 135 8

1,602,193 1,631,473 1,116,868 1,694,646 1,732,324 1,115,924 2012 1. 1. 312,335 2011 1. 1. 29,280 206,797 18,463 52,664 20,984 99,342 317,186 37,678 23,441 19,108 35,631 2,111 8,169 8,614 4,655 402 135 218 750 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 in Figures 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 in Figures

2,222,514 2,462,794 1,116,868 2,209,168 2,475,292 1,116,377 240,280 2012 1. 1. 228,664 486,310 109,037 335,035 266,124 2011 1. 1. 488,898 111,969 223,126 109,128 94,993 15,123 20,990 335,035 55,637 14,979 29,830 45,732 137 218 in consolidation panies included Change in com in Change in consolidation panies included Change in com in Change 1,164 1,066 –416 –308 –724 –410 –259 –49 944 122 –6 98 98 0 0 0 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 21,277 11,855 62,589 69,024 51,636 10,953 9,422 6,805 4,522 3,993 5,023 6,435 5,573 528 329 117 293 452 77 0 0 0 0 0 0 0

–60,719 –60,760 Transfers Transfers –55,743 –4,439 –1,686 –1,802 –504 –173 1,961 –796 –374 796 960 890 41 99 41 51 0 0 0 0 1 0 0 0 0 Disposals Disposals 16,441 25,490 11,373 82,686 33,173 49,513 9,049 44,412 1,364 21,767 3,701 7,950 2,060 2,588 3,892 7,490 221 878 453 24 3 0 0 0 0 0 2,224,945 2012 12. 31. 2,397,138 1,116,862 2,462,794 2,222,514 2011 12. 31. 1,116,868 172,193 485,960 224,867 335,035 240,280 228,664 486,310 15,299 62,221 109,037 19,131 335,035 87,880 49,593 94,993 15,123 20,990 55,637 290 137 1 211,000 831,321 620,321 The transfers refer to a reclassification to assets current to refer a reclassification transfers The 2012 1. 1. 386,968 176,000 108,635 18,879 22,700 34,653 76,530 6,954 228,446 514,522 742,968 2011 1. 1. 111,219 282,101 187,495 85,687 26,624 25,175 17,849 6,365 2 0 453 0 in consolidation panies included Change in com in Change –647 –349 –298 –349 –249 154,581 Additions 167,211 –49 107,455 12,630 32,609 10,508 0 0 0 0 0 0 0 1,502 9,666 4,851 - Consolidated financial statements financial Consolidated 576 42 0 2 138.448 Additions Depreciation and impairment write-downs impairment and Depreciation Depreciation and impairment write-downs impairment and Depreciation 147,638 97,299 27,333 9,190 1,367 8,965 4,851 7,219 579 25 write-downs Impairment 0 0 1,289 1,136 write-downs 153 153 215 919 Impairment 0 0 2 0 0 0 0

1,033 . 113 920 113 920 0 0 0 0 0 0 0 0 : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Transfers –60,426 –573 –60,443 Transfers 400 136 –55,502 –4,406 37 0 0 0 0 0 0 0 0 0 –535 17 17 0 0 0 0 0 0 1 Disposals 31,212 80,147 48,935 44,257 Disposals 20,067 24,477 15,796 2,588 1,637 3,681 7,440 10,863 8,681 1,358 3,573 7,803 453 24 878 0 0 0 0 0 2 0 2012 12. 31. 2011 12. 31. 894,442 143,766 750,676 196,118 483,389 211,000 831,321 620,321 386,968 176,000 108,635 72,215 14,433 43,618 49,585 27,551 18,879 22,700 34,653 76,530 7,533 6,954 0 0 0 2 freenet AG · Annual Report 2012 Report AG ·Annual freenet 1,502,696 2012 12. 31. 1,474,269 1,116,862 1,602,193 1,631,473 2011 12. 31. 1,116,868 307,484 28,427 312,335 18,603 15,665 28,749 29,280 Net book amounts Net book amounts 18,463 52,664 20,984 99,342 2,571 4,698 7,766 2,111 8,169 290 402 135 8

Consolidated financial statement Consolidated financial statement 204 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Notes to the consolidated financial statements of freenet AG for the financial year 2012 year financial the for AG freenet of statements financial consolidated to the : Notes Christoph Vilanek Board Executive The AG freenet 2013 4March Büdelsdorf, Joachim PreisigJoachim Stephan Esch (Wirtschaftsprüfer) Driesch Wirtschaftsprüfungsgesellschaft/Steuerberatungsgesellschaft &Co GmbH RoeverBroennerSusat RBS 2013 5March Hamburg, development future of risks and opportunities the presents suitably and position Group’s of the view asuitable vides pro whole as a and statements is financial consistent consolidated the with report agement to § pursuant commercial law of German requirements additional EU the by and the as adopted IFRSs with comply statements financial the consolidated our audit, of findings the on based opinion, In our to any led reservations has not audit Our opinion basis our for areasonable provides report management group the and statements financial consolidated the of presentation well as overall as evaluatingthe management, by made estimates significant and used principles accounting consolidation the and in consolidation, included toentities be determination of the in consolidation, entities included those of statements annual financial audit of the basis framework atest within on the primarily examined are report management group the and statements financial consolidated insures the disclo the supporting evidence the and accounting of the internal related system control ness are taken into procedures of audit account determination in the misstatements as to possible expectations and Group of the environment legal and economic the and activities assurance reasonable with are detected report management group theand in framework financial reporting accordance applicable in the with statements financial the consolidated in operations of results position and financial assets, net of the presentation the materially affecting misstatements that such audit the perform and plan ards we require that in (Institute (IDW) Germany) Auditors of Public Wirtschaftsprüfer Institutder the bypromulgated statements of financial audit the for accepted standards generally German and HGB accordancein § 317 with statements financial consolidated of the audit our We conducted our audit on based report management group the on and statements financial consolidated the of managing directors board company’s parent the of responsibility Code) are Commercial the German (“Handelsgesetzbuch”: 1HGB (paragraph) Abs 315a to commercial §(Article) law pursuant of German requirements additional the EU, and by the as adopted in accordance IFRSs with report management group the and cial statements 2012 31, 1 to December yearJanuary from business the for report management group the with together statements, financial consolidated to the notesthe and statement flow equity, cashof changes in statement position, of financial ment state the income, of comprehensive statement the and of income comprising statement the Büdelsdorf, AG, freenet the by prepared statements financial We consolidated have the audited Report Auditor’s and results of operations of the Group in accordance with these requirements these in with accordance Group the of operations of results and 315a Abs 315a 1 HGB and give a true and fair view of the net assets, financial position financial assets, net of the view fair and give atrue and .1HGB . .KG . . Nommensen (Wirtschaftsprüfer) Nommensen Our responsibility is to express an opinion on an opinion is to responsibility express .Our The preparation of the consolidated finan consolidated of the preparation . The The audit includes assessing the the assessing includes audit .The Knowledge of the business of the .Knowledge We believe that our audit our that .We believe . The group man group The The effective .The Those stand .Those Consolidated financial statements financial Consolidated ------. . freenet AG · Annual Report 2012 Report AG ·Annual freenet : Auditor’s Report : Auditor’s 205

Consolidated financial statement Consolidated financial statement 206 freenet AG · Annual Report 2012 Report AG ·Annual freenet Consolidated financial statements financial Consolidated : Responsibility statement : Responsibility Christoph Vilanek Board Executive AG freenet 2013 4March Büdelsdorf, Group of the development associated expected with the risks and principal together with of the adescription opportunities Group, tion of the posi business of the the and performance and afairincludes review development of the Group managementthe report and Group, the loss financial of or positionprofit and liabilities, consolidatedfair the view assets, and financialthe of give atrue statements principles, in and accordanceTo reporting of knowledge, our applicable with the best the statement Responsibility Joachim PreisigJoachim . Stephan Esch - Consolidated financial statements financial Consolidated : Responsibility statement : Responsibility freenet AG · Annual Report 2012 Report AG ·Annual freenet 207

Consolidated financial statement

Please contact us or find out about the latest developments in the freenet Group. freenet the in developments latest the out about find us or Please contact information Further

Further information Further information shares issuable at fair value fair at issuable shares subscription at ordinary the price the valued and programmes option to stock employee attributable shares potentialordinary the between difference the as is calculated shares diluting potentially by shares increased standing weighted by the to average shareholders of shares the result number out attributable share per Diluted earnings interneton and/or smartphones lifestyle Digital telecommunication on focus others among Industry strategy; in competitive areas the market and of experience corporate, entry national project Consult Dialog DBO company while were they with that acts in event wrongful for the are they costs sued defense ofacompany, officers and itself,directors to orthe to corporation cover damages or insurance D&O Customer ownership governance rate basis the on of ethical behaviour, internal reporting corpo controls effective good and to improving dedicated quality organization the of financial in US, the private-sector tary COSO computing power, space), storage software and platforms (i infrastructure others include among and entire of range information technology B2C B2B ARPU App AktG Glossary of IT services via anetwork services of IT computingCloud assets of groups or assets other fromcash the of inflows that thatare inflows cash generates largely independent assets CGU

Business with (B2B =Business to business customers Business) Business with consumers (B2C =Business to Consumer) Short form of “application” of form Short Cash generating generatinga cash unit; Cash unit isgroup of smallest identifiable the Defined Benefit ObligationBenefit Defined German: Aktiengesetz; English: German Stock Corporation Act English: Stock Corporation German Aktiengesetz; German: Average revenue user per Committee of Sponsoring Organizations Treadway of the ofCommittee Sponsoring Commission; avolun .

. Dialog Consult GmbH; management consultancy company with inter with company consultancy management GmbH; Consult Dialog

Describes simplification of lifeeveryday via equipmentbased Describes technical Directors’ and Officers’ Liability Insurance; insurance Officers’ and the to payable Directors’ Describes the dynamic, demand-oriented offering, using offering, billing and demand-oriented dynamic, the Describes

Includes the postpaid and no-frills and segments postpaid the Includes . The services offered as part of cloud of computingcloud coverpart the as offered services .The Diluted share earnings are per calculated by dividing the ...... The number of potentially diluting potentially of number The ...... e - - - - .

Further information Further freenet AG · Annual Report 2012 Report AG ·Annual freenet : Glossary 211

Further information Further information freenet AG · Annual Report 2012 Report AG ·Annual freenet 212 Further information Further : Glossary Gross profit Gross Free flow cash FLAC ISIN companies of reporting external IFRS HGB HFS region of Hamburg metropolitan the from corporations indexHASPAX GewStG intangible and plant equipment and assets of disposal property, the from plus proceeds intangible and plant equipment and assets, in property, investments FIPL Eisenbahnen) und Post munikation, Telekom Gas, für Elektrizität, Railways and (German: Bundesnetzagentur Posts cation, Agency Network Federal EPS EBT EBITDA EBIT weightedloss the by profit/net net of averageshares number issued towhich an is individual attributable share share per Earnings kbps) nies transmitting for receiving and at data high (up transmission speed to 52,000 DSL DTAG

Earnings per share per Earnings Earnings before taxes before Earnings Digital Subscriber Line; a Digital Subscriber Line is used by households and compa and Line Line; by is aDigital households Digital Subscriber used Subscriber Held-for-sale financial instruments financial Held-for-sale International Securities Identification Number Identification Securities International loss Financial measured atand fair through value profit instruments Earnings before interest and taxes and interest before Earnings International Financial Reporting Standards; a collection of standards for the for ofInternational standards Standards; acollection Financial Reporting German: Handelsgesetzbuch; English: German Commercial Code Commercial English: German Handelsgesetzbuch; German: Financial liabilities measured at amortised cost amortised at measured liabilities Financial

Deutsche TelekomDeutsche AG

Earnings before interest, taxes, depreciation and amortisation and depreciation taxes, interest, before Earnings German: Gewerbesteuergesetz; English: Trade German Tax Gewerbesteuergesetz; German: Act

Revenue minus materials of Revenue cost

Free cash flow is defined as cash flow from operating activities, minusoperating from flow cash as Free defined flow cash is Hamburg share includingHamburg successful index 25listed the most joint stock This ratio specifies the portion of consolidated net profit or loss or of profit consolidated net portion the This specifies ratio .

Federal Network Agency for Electricity, Gas, Telecommuni Electricity, for Gas, Agency Network Federal ...... It is calculated by dividing consolidated the . . . .

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digital media subject to achargedigital subject media Pay services life battery long usage and Netbook Narrowband situations like and customers act normal shoppers, mystery so-called shopping Mystery account own in their for their and name own such as SMS, services, as well as added value phones tele mobile cards and telephony minutes, sell they mobile SIM network; mobile own provider service Mobile regular or e-mail addresses to phones mobile other phone amobile from sages MMS MitbestG of ownership inencumbrance acompany Merger & Acquisitions (M&A) tive effect LTIP second per megabit up to 300 providing mobileof UMTS in significantlycommunications withspeeds higher transfer LTE IT LR Long-Term Incentive Account KStG to within another platform one acompany migration IT communicate computers computer and software information of use electronic with the

Information Technology; describes any technology that helps to produce, store and that to helps produce, any technology describes Information Technology; Loans and receivables and Loans

Long Term Evolution; communications mobile anew future and standard successor Long Term with long-term Incentive programme compensation incen Programme; German: Körperschaftsteuergesetz; English: German Corporation Tax English: Corporation German Act Körperschaftsteuergesetz; German: Multimedia Messaging Service; provides the possibility multi the to provides send Service; Multimedia Messaging

A lightweight, portable computer, internet mobile for especially designed A lightweight, portable German: Mitbestimmungsgesetz; English: Act Codetermination German Mitbestimmungsgesetz; German:

. Pay services describes the offering and provisioning offering and the describes of digital Pay services IT migration involves moving a set of instructions or programmes, from migrationIT programmes, involves or moving of instructions aset Analogue or digital or transmission data Analogue of up to 128 kbps with aspeed

A procedure to assess service quality, in which trained observers, quality, to service A procedure assess in observers, which trained . .

Provider of mobile communications services without their without Provider communications of mobile services

Describes all processes concerning the all and transfer processes the Describes . See also LTIPSee . . . perceive real customers media mes media services in services . . . . - - - . Further information Further freenet AG · Annual Report 2012 Report AG ·Annual freenet : Glossary 213

Further information Further information freenet AG · Annual Report 2012 Report AG ·Annual freenet 214 Further information Further : Glossary e VATM only taken being user into visits with of same several time, of the accountperiod once user Unique year financial the during outstanding weighted by the to average shareholders of shares the result number the attributable share per earnings Undiluted mobile phones of communication multi-media all and applications via types which permits standard UMTS network nates acall in operator’s another Termination fee SMS internet access and/or (for e-mail) e-mail push transfer example Smartphone etc home Smart network operator,mobile user the the in which and identifies network by storing including information, allocated the various number user devices, mobile the card SIM SAR roaming) (international operators network international (national operators as well roaming) reach as to network to of various similar networks location home the different from in alocation service connectivity Roaming EBITDA Recurring requirements high transparency standard Prime Auditing consulting organisation and in Germany services PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesell such as e-mail content aggregated additional and services, functions, Portal (TV, radio and audio system etc audio and system radio (TV, . V . . ), electric appliances (washing etc), electric fridges machines, ; English: The association of telecommunications and value added service providers ; English: association service of telecommunications The added value and

Stock appreciation rights appreciation Stock Short message service message Short German: Verband Anbieter von Telekommunikations- der German: Mehr und Universal mobile telecommunications system; UMTS is a new high-performance telecommunications is mobile Universal high-performance UMTS a new system; Central web site web Central which comprises generally acomprehensive of range navigation

A feature in wireless telecommunications, which ensures of extension the Subscriber Identity Module; chip card with a processor and memory for chip memory and with card aprocessor Module; Identity Subscriber

Automatization and interconnection of inhouse electricity (light, shutters shutters (light, electricity inhouse of interconnection and Automatization . Describes the number of individual number the visitors toDescribes awebsite within acertain Mobile device with touch and/or qwertz keyboard feature device and with touchMobile and/or easy for set qwertz

Stock market segment of the Frankfurt stock exchange with with exchange stock Frankfurt the of segment market Stock

The charge whichThe atelecommunications it termi pays when operator EBITDA adjusted for one-off items one-off for adjusted EBITDA .

. . ) . Undiluted share earnings are per calculated by dividing

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. - . WKN to financeassets its holders averageon to security all its WACC WpHG

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Further information Further information freenet AG · Annual Report 2012 Report AG ·Annual freenet 216 Further information Further : calendar Financial 1 III/2013 interim of report Publication 2013 November 7 II/2013 interim of report Publication 2013 7 August Meeting General Annual 2013 23 May I/2013 interim of report Publication 2013 8 May 2012 Report Statements/Annual Financial Consolidated of Publication 2013 March 26 Financial calendar Financial Probable dates ¹ ¹ ¹ ¹ . ¹ website www.freenet-group.de/en at: Current information share concerning AG is freenet the and available freenet our on www 00 (0) 43 31/69-10 +49 Phone: 24782 Büdelsdorf 126 Hollerstraße AG freenet publications contact, Imprint, Annual Report is version English of the atranslation German The of the version Annual of Report the http://www.freenet-group.de/investor/publications/quarterly-annual-reports are also available at: interim our and reports annualThe report investor 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 . freenet-group . relations@freenet The German version of this Annual Report is binding legally version of this German Annual Report .The . de . ag ning this code this ning website Group to by freenet scan the willyou directed be recognition software, has QR-Code phone If your mobile . . .

Further information Further - : Imprint, contact, publications contact, : Imprint, freenet AG · Annual Report 2012 Report AG ·Annual freenet 217

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