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Page 1: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Rückenstärke bitte anpassen!! Seite ist verkürzt auf 195 mmm

United Internet AGElgendorfer Straße 5756410 Montabaur GermanyPhone: +49 2602 96 - 1100Fax: +49 2602 96 - 1013E-Mail: [email protected]

2008 2007

Income Statement

Sales t millions 1,649m6 1,487m4EBITDA t millions 318m8 308m8Net Income t millions -121m5* 155m4

Balance Sheet Current assets t millions 235m0 243m7Non-current assets t millions 867m0 970m3Shareholders’ equity t millions 145m6 383m9Total assets t millions 1,102m0 1,214m0

EmployeesGermany number 3,618 3,127Abroad number 947 827Total number 4,565 3,954Personnel expenses t millions 171.8 145.8

ShareShare price at year end (Xetra) t 6m29 16m65Earnings per share t -0.52* 0m64

United Internet at a glance

United Internet comprises a family of strong and attractive internet brands. Each one stands for added value and success. These brands are tailored to our relevant target groups and fully utilize available market potential.

Annual Report 2008

www.united-internet.com

Uni

ted

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A

nnua

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2008

Quarterly development Q1  2008t millions

Q2 2008t millions

Q3 2008t millions

Q4 2008t millions

Q4 2007t millions

Sales 402.0 412.4 407.4 427.8 414.3

EBITDA 83.2 88.6 77.7 69.3 73.3

Net income 45.1 45.2 -103.8* -108.0* 40.1

* The figures for 2008 include total negative, non-recurring and non-cash effects of C 275.4 million – of which C 145.6 million refer to Q3 and C 129.8 million to Q4.

Page 2: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Rückenstärke bitte anpassen!! Seite ist verkürzt auf 195 mmm

United Internet AGElgendorfer Straße 5756410 Montabaur GermanyPhone: +49 2602 96 - 1100Fax: +49 2602 96 - 1013E-Mail: [email protected]

2008 2007

Income Statement

Sales t millions 1,649m6 1,487m4EBITDA t millions 318m8 308m8Net Income t millions -121m5* 155m4

Balance Sheet Current assets t millions 235m0 243m7Non-current assets t millions 867m0 970m3Shareholders’ equity t millions 145m6 383m9Total assets t millions 1,102m0 1,214m0

EmployeesGermany number 3,618 3,127Abroad number 947 827Total number 4,565 3,954Personnel expenses t millions 171.8 145.8

ShareShare price at year end (Xetra) t 6m29 16m65Earnings per share t -0.52* 0m64

United Internet at a glance

United Internet comprises a family of strong and attractive internet brands. Each one stands for added value and success. These brands are tailored to our relevant target groups and fully utilize available market potential.

Annual Report 2008

www.united-internet.com

Uni

ted

Inte

rnet

AG

A

nnua

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2008

Quarterly development Q1  2008t millions

Q2 2008t millions

Q3 2008t millions

Q4 2008t millions

Q4 2007t millions

Sales 402.0 412.4 407.4 427.8 414.3

EBITDA 83.2 88.6 77.7 69.3 73.3

Net income 45.1 45.2 -103.8* -108.0* 40.1

* The figures for 2008 include total negative, non-recurring and non-cash effects of C 275.4 million – of which C 145.6 million refer to Q3 and C 129.8 million to Q4.

Page 3: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Portal Information management

PortalInformation management

Webhosting, Internet access

Webhosting products as white label

Webhosting products as white label

Display marketing

Affiliate marketing

Domain marketingOnl

ine

Mar

ketin

gPr

oduc

ts

Consumers

Internet service providerin Germany

Advertisers

Discerning private users and small offices/home

offices (SoHos)

Segments and Brands

Portal Information management

Internet service providerin the United Kingdom

and USA

Brand Products / Services Target Group 2008 in Figures

GeneralInformation Management applications, Hosting solutions and Internet Access products for consumers, small offices/home offices. Portal marketing for e-commerce providers and advertisers

Customer contracts: 7.95 million of which 1.36 million in Information Management, 3.62 million in Hosting and 2.97 million in Internet Access Portals: No. 1 in Germany with 19.4 million unique visitors per month Webhosting: Global market leader with 3.62 million contracts, of which 1.93 million outside GermanyDSL: No. 3 in Germany with 2.82 million contracts

BrandsGMX: No. 5 among German portals with 8.5 million unique visitors WEB.DE: Second highest reach of all German websites with 12.9 million unique visitors 1&1: No. 3 in German DSL market and one of the largest hosting companiesInterNetX: No. 1 in German white-label business with over 19,000 resellersFasthosts: No. 1 in UK white-label business with over 5,700 resellers

GeneralSales and marketing solutions for advertisers Display marketing via AdLINK MediaAffiliate marketing via affilinet Domain marketing via Sedo

BrandsAdLINK Media: online advertising network with 10.3 billion ad impressions per month, thus Europe’s leading supplier of digital communication solutions affilinet: Over 470,000 registered affiliate websites and 1,500 affiliate programs, thus generating over 6.1 billion ad impressions per month Sedo: administers 15.3 million domains for sale and markets 6.2 million parked domains

Page 4: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

2 Management

2 LetterfromtheManagementBoard

4 InterviewwithRalphDommermuth

7 UnitedInternetforUNICEF

8 Locations

10 CorporateGovernanceReport

14 ReportoftheSupervisoryBoard

17 QuarterlyIncomeStatement

18 OurHigh-performanceDataCenters

20 OurStrategy

22 ProductSegment

25 OnlineMarketing

26 TheShare

28 ManagementReport

57 FinancialStatementsacc.toIFRS

125 ResponsibilityStatement

126 GlossaryandFinancialcalendar

With more than 7.9 million customer contracts, United Internet is a leading Internet Service Provider. Drawing on over 15 years’ experience in the online business, we are well positioned on the market with brands in two business segments: Products and Online Marketing. We reached new record levels in our operating business once again in 2008 with sales of C 1.65 billion, an EBITDA of almost C 319 million and an EBIT of around C 257 million.

Table of Contents

Page 5: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Dear shareholders, employees and friends of United Internet!

Despitetheonsetoftheglobalfinancialandeconomiccrisisin2008,thepastfiscalyearwasasuccessfulperiodforUnitedInternetintermsofitsoperatingactivities.WeachievedorganicgrowthinourbusinessfieldsandcontinuedtostrengthenourmarketpositionsinGermanyandabroad.Allinall,weincreasedthenumberofcustomersinallproductlinesandimprovedthereachofouradvertisingnetworks.Thenumberofourfee-basedcustomercontractsgrewby800,000to7.95million.Weadded380,000newcontractsoutsideGermanyalone,takingthetotalto1.93millioncustomercontracts.

Althoughwereachednewrecordlevelsofsales(+10.9%)andEBIT(+8.3%)inouroperatingbusiness,consolidatednetincomewasburdenedbyC275.4mil-lionfornon-cashwrite-downsoninvestments.

DespiteoperatinggainsatGrouplevel,thedevelop-mentofourtwobusinesssegments“Products”and“OnlineMarketing”differedgreatlyinfiscalyear2008.

Thankstoabusinessmodelbasedmainlyonelectronicsubscriptions,ourdominant“Products”segment–withthebrands1&1,GMX,WEB.DE,FasthostsandInterNetX–enjoyedfurthergrowthinsalesandearnings.However,thereducedspendingofouradvertisingcustomersinthesecondhalfoftheyear,andespeciallythefourthquarter,wasnoticeableinourportalmarketingbusiness.

Inthe“OnlineMarketing”segment,salesandearningswerealreadyburdenedfromthebeginningofthesecondquarterbytheproblematicdevelopmentofourDomainMarketingbusiness.Changesinthepolicyandalgorithmsofourmostimportantpartnerinthefieldofsearchengineshavebeenslowingthedevelopmentofthisbusiness,whichstillboastedhighgrowthandmarginsin2007.Sectorsalesandearningswerealsoburdenedinthesecondhalfoftheyearbythemarkedglobaldeclineinadvertisingspending.This,inturn,ledtofallingpricesandmarginsasaresultoffiercecompetitionfortheremainingbudgets.

Intotal,consolidatedsalesofUnitedInternetAGgrewby10.9%infiscalyear2008,fromC1,487.4milliontoC1,649.6million(currencyadjusted:+12.4%toC1,671.6million).Earningsbeforeinterestandtaxes(EBIT)roseby8.3%,fromC236.9milliontoC256.6million.

Ralph DommermuthCEO

Ralph Dommermuth (45) laid the foundation for today’s United Internet AG with the formation in 1988 of 1&1 Marketing GmbH in Montabaur, Germany. He originally offered systemized marketing services for smaller software suppliers. This was followed by additional marketing services for major clients, such as IBM, Compaq and Deutsche Telekom. In 1998 the qualified banker took 1&1 to the stock exchange. It was the first IPO of an internet company in Germany. In 2000, Dommermuth restructured 1&1 as United Internet.

„We are already No. 1 in many of our target mar-kets in Germany, the rest of Europe and even world-wide in some cases. With the aid of new, innovative products and increased quality standards, we aim to achieve further growth in our existing markets in 2009, as well as in new markets and countries, and to strengthen customer loyalty even further.

2

Page 6: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Againstabackdropofgreatlyreducedstockmarketpricesin2008forourstrategicinvestmentsinfreenet(viaMSPHolding),Versatel,DrillischandGoldbachMedia,wemadenon-cashwritedownsonthecarryingvaluesoftheaforementionedcompaniestotheir

marketpricesasofDecember31,2008.Itwasalsodecidedtomakefurtherwritedownsonthevaluationsofournon-listedinvestments.Theresultingnon-recurringnegativeeffectofC275.4millionledtonetincomeofC-121.5millionandanEPSofC-0.52.InviewofthebalancesheetlossintheannualfinancialstatementsofourparentcompanyUnitedInternetAGresultingfromthesewritedowns,nodividendwillbedistributedforthefiscalyear2008.

ThankstooursuccessfulandstablepositioninginthegrowthmarketsofDSL,Webhosting,PortalsandOnlineMarketing,wecontinuetoexpectgoodopportunitiesinthemediumterm.Aspredictingthefutureeconomicdevelopmentisparticularlydifficultatpresent,however,allforecastsaresubjecttouncertainty.

FortheGroupasawhole,weexpectslightgrowthinsalesfor2009.AfterreachingnewrecordlevelsforEBITDAandEBITinfiscalyear2008,weaimtomaintainourkeyearningsratiosattheprior-yearlevelinfiscal2009–despitetheweaknessoftheonlineadvertisingsectorandfurtherhighinvest-mentsinthefuture.

Wetrustyouwillcontinuetoaccompanyusalongthispath.

Norbert LangCFO

Norbert Lang (47) has been a member of the Management Board of United Internet AG since 2000 and responsible for Finance, Con-trolling, Press/Investor Relations and Human Resources since 2002. He joined 1&1 in 1994. With the foundation of 1&1 Beteiligungen GmbH, Norbert Lang was appointed as Managing Director. In his role as Head of Finance, he accompanied the transformation and realignment of United Internet AG as a management holding com-pany for all Group investments.

2008 was marked by high writedowns on our investments but also by new record figures in our operating business. In 2009, we aim to raise sales slightly and to maintain our key earnings ratios EBITDA and EBIT at their prior-year level – despite the weakness of the online advertising sector.

3

Management

Our Strategy

The Share

Management Report

Financial Statements

Lett

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Page 7: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Dommermuth:Despitetheonsetofthefinancialandeconomiccrisis,fiscal2008wasasuccessfulyearforUnitedInternetwithregardtoouroperations.Afterall,ourkeyoperatingratiosreachednewrecordlevels–eventhoughwewereunabletoescapethecrisisinonlineadvertising.Atthesametime,however,wemadewritedownsonourinvestmentsofaroundC275million,whichobviouslyhadadevastatingimpactonnetincome.

Dommermuth:Obviously,withthepowerofhindsightyou’realwayswiser.Knowingwhatwedotoday,wewouldprobablyhavesteppedbackfromoneortwoofourinvestments,asthepurchasepricewasobviouslytoohighfromthecurrentperspective.However,atthetimewehadgoodreasonstomaketheseinvestments,aswemakehealthyprofitsinourDSLbusinessandwantedtoachieveastrategicpositioningintheconsolidatingmarket.Atthesametime,however,wecurrentlydonotintendtopartwithourinvestments.

Mr.Dommermuth,in2008UnitedInternet’ssharepricefellsharply,theDSLmarketbecameincrea-singlydifficultandtheconsolidationoftheGermanDSLmarketmadelittleprogress.Howwouldyoujudgethepastfiscalyear2008?

Howdoyoucurrentlyviewyourinvestmentsinfreenet,VersatelandDrillisch?Howdoyouintendtocontinuethisinvestmentstrategy?

Interview with Ralph Dommermuth

4

Page 8: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Dommermuth:Comparedwithmanyothercompanies,ourbusinessmodelmakesusrelativelywellequippedtodealwithsuchasituation.Witharound8millionsubscription-basedcontracts,weenjoyconstantandstablerevenuestreamswhichmakeusrelativelyimmunetothecrisis.However,aglobalrecessionisboundtoleaveitsmarkevenonus–especiallyinthefieldofonlineadvertising–sothatourextremelyhighgrowthratesforsalesandearningsarenowathingofthepast,forthetimebeing.

Dommermuth:Inprinciple,webhostingisasoftwarebusinessinwhichweofferdomains,storagespace,e-mailsandmanyotherservicesforbusi-nessesandprivateusers.Bystandardizingourproducts,weenjoyeconomiesofscaleascustomerfiguresrise–nationallyandinter-nationally–whileofferingourcustomersconsiderableaddedvalueforarelativelysmallfee.Webelievewecanstillgrowstronglyinthissegment.Onereasonisthedevelopmentofso-called“cloudcomputing”,wherebyapplicationsanddataarenolongerkeptonlocalcomputersbutoninternetservers,theso-called“cloud”.Asoneoftheworld’slargestwebhosts,withhigh-securitydatacentersinEuropeandtheUSA,weseeexcellentgrowthopportunities.

Dommermuth:InourDSLbusiness,wewillcontinuetodrivetheconversionofexistingcustomerstocompletepackagesinordertoraisecustomerloyalty.Inwebhosting,wewilllaunchanewwebhostinggenera-tionandrollitoutsuccessivelyinourexistingmarkets.ViaGMX,wewillcontinuetointernationalizeoure-mailproductsinSwitzer-land,Austria,theUK,FranceandtheUSA.InourOnlineMarketingsegment,wewillfocusonexpandingouradvertisingtechnologiesandextendingthereachofouradvertisingnetworks.Andfinally,wewillonceagainintensifyourqualityandserviceeffortsin2009.

Theglobaleconomyiscurrentlyinseverecrisis.TowhatextentisUnitedInternetaffected?

Manyanalystsregardyourwebhostingbusinessasahavenofstability.Whatissospecialaboutthisbusiness?

WhichoperationalareaswillUnitedInternetfocusonin2009?

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Management

Our Strategy

The Share

Management Report

Financial Statements

Inte

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Page 9: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Dommermuth:TherapidgrowthinDSLcontractsoverthepastfewyearsandthemigrationofcustomerstocompletpackages–forwhichwehaveusedservicesfrom4differentpartnerssince2008withdifferenttechnolo-gies,platformsandinterfaces–havemeantthatnotallproducts,pro-cessesandserviceswere100%technicallymatureandstable.Wehavethereforeintroducedanumberofmeasurestooptimizetheseareasandrealignedkeytargetparametersforourservices(e.g.connectiontimes,hotlineavailabilityandquality).Wearecurrentlygivinghighprioritytoimplementingthesemeasures.WearealsoinconstantdialoguewithpartnerssuchasDeutscheTelekomandtheGermanRegulatoryAuthorities,inordertoachievefurtherimprovementsinthepre-servicequality.

Dommermuth:Intotal,weexpecttoaddaround500,000customercontractsin2009.WhereasstronggrowthincontractfiguresisexpectedfortheproductlinesWebhostingandInformationManagement,weexpectonlyslowgrowthforourDSLcustomerbasein2009–asaresultoftheconsi-stentlyhighchurnrateinresalecontracts.InourDSLbusiness,theclearfocusthisyearwillbethefurthermigrationofourcustomerstocompletepackages.Weexpectgrowthinthisareaofaround800,000contracts.

Onthesubjectofservice:in2008thepressoftencriticizedtheserviceandqualityofyourDSLbusiness.Whatdoyouintendtoimproveinfuture?

Whatlevelofcustomergrowthdoyouexpectfor2009?

6

Page 10: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Economicsuccesssecuresourfuture–notonlyforthecompanyanditsemployees,butalsoforthemajorhumanideals.Successisnotanendinitselfbutawayofsafeguardingourexistence–andthusamoralobligation.

Wearemorethanhappytomeetthisobligationandtoshareoureconomicsuccesswiththosewhodesperate-lyneedhelp.TogetherwithUNICEF,theUnitedInter-

We’re sharing our success … ... and supporting UNICEF projects around the world.

The Foundation United Internet for UNICEF

netFoundationobviouslydonatesmoney–butmorethanthis,italsogivesusapurpose.Itletsothersshareinoursuccessinordertoofferafutureperspectiveforasmanypeopleaspossible.

Ouraimistopromotelong-termdevelopmentprojectswhichsecurethesupplyofcleandrinkingwater,offerbettereducationopportunitiesandprovidesupportforAIDSorphans.

Further information at www.united-internet-for-unicef.com

Foto: UNICEF/ Giacomo Pirozzi

7

Management

Our Strategy

The Share

Management Report

Financial Statements

Uni

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Page 11: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Locations

Germany MontabaurCologneDuesseldorfHamburgHanoverKarlsruheMunichRegensburgZweibruecken

United KingdomGloucesterLondonSlough

ItalyMailand

FranceParisSaargemuend

NetherlandsHaarlem

PhilippinesCebu City

BelgiumBrussels

8

Page 12: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

RomaniaBukarest

SpainMadrid

SwitzerlandKuesnacht

AustriaWien

USAChesterbrookBoston

SloveniaLjubljana

CroatiaZagreb

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Management

Our Strategy

The Share

Management Report

Financial Statements

Loca

tions

Page 13: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

UnitedInternet’scorporategovernanceisbasedoninternationallyandnationallyrecognizedstandardsofsoundandresponsiblemanagement.InaccordancewithSec.3.10oftheGermanCorporateGovernanceCode,theManagementBoardandSupervisoryBoardhavepreparedthefollowingjointreportconcerningthecorporategovernanceofUnitedInternet:

ManagementandCorporateStructure

Inaccordancewithitslegalstatus,UnitedInternetAGoperatesadualmanagementandmonitoringstruc-turecomprisingtwocorporatebodies:theManage-mentBoardandtheSupervisoryBoard.ThethirdbodyistheShareholders’Meeting.Allthreebodiesarecommittedtoservingthecompany’sinterests.TheSupervisoryBoardiselectedbytheShareholders’Meetingandcurrentlyconsistsofthreemembers.TheSupervisoryBoardisgenerallyelectedforaperiodoffiveyears.MembersoftheSupervisoryBoardandManagementBoardshouldgenerallynotbeolderthan70.TheSupervisoryBoardmonitorsandadvisestheManagementBoardinthemanagementofthecompany.TheSupervisoryBoardregularlydiscussesbusinessdevelopment,planning,strategyanditsimplementation.TogetherwiththeManagementBoard,itdiscussesthequarterlyandhalf-yearreportsbeforepublicationandapprovesannualbudgetsaswellastheannualfinancialstatementsoftheparentcompanyandthegroup.Indoingso,italsotakesthereportsofthecompany’sexternalauditorsintoaccount.ItsresponsibilitiesalsoincludeappointingmembersoftheManagementBoardaswellasdeter-miningandregularlymonitoringtheirremuneration.

TheManagementBoardisthebodychargedwithmanagingthegroup’soperationsandcurrentlyconsistsoftwopersons.ItmanagesoperationsinaccordancewithitslegalandstatutoryobligationsaswellastherulesofprocedureapprovedbytheSupervisoryBoard.Itisresponsibleforpreparingthequarterlyandannualfinancialstatementsaswellasforappointingkeymanagerswithinthecompany.DecisionsoffundamentalimportancerequiretheapprovaloftheSupervisoryBoard.

TheAnnualShareholders’Meetingisthebodywhichformulatesandexpressestheinterestsofthecompany’sshareholders.AttheAnnualShareholders’Meeting,theannualfinancialstatementsarepresen-tedtoourshareholders.Theshareholdersvoteontheappropriationofthebalancesheetprofitandother

statutorytopics.Eachshareentitlestheownertoonevote.AllshareholderswhoregisterintimeandarelistedintheShareRegisteronthedayoftheAnnualShareholders’Meetingareentitledtoattend.Share-holdersmayalsoexercisetheirrightsattheAnnualShareholders’Meetingbymeansofaproxyvote.

Financialdisclosures

UnitedInternetprovidesitsshareholderswithfourreportseachfiscalyearonthecompany’sbusinessdevelopmentanditsfinancialandearningsposition.Thepublicationdatesofthesereportsarestatedinabindingfinancialcalendar,whichthecompanypostsonitswebsiteandregularlyupdatesinaccordancewithlegalobligations.TheManagementBoardregu-larlyinformsinvestors,analystsandthepressaboutcurrentfinancialresults.Inaddition,anyinformationwhichmightaffectthesharepriceispublishedintheformofad-hocannouncements.

Aspartofourinvestorrelationsactivities,thecompany’smanagementteamregularlymeetswithanalystsandinstitutionalinvestors.Wealsoholdanalystandpressconferencesfollowingthepublica-tionofoursemi-annualandannualfigures.Accesstofinancialinformationandfurthereconomicallyrele-vantinformationabouttheUnitedInternetGroupisprovidedonourwebsite(www.united-internet.de).

Riskmanagement

TheManagementBoardisresponsiblefortheinternalmonitoringandriskmanagementsystemaswellasfordeterminingitsstructure.Principles,guidelines,processesandresponsibilitiesaredefinedandestablis-hedinsuchawaythattheyguaranteecorrectandpromptaccountingofallbusinesstransactions,facilitateearlyidentificationofrisksandsupplyacon-stantflowofreliableinformationaboutthecompany’sfinancialsituationforinternalandexternalpurposes.Thevariouscomponentsofourriskmanagementculturearedesignedtorecognizebusinessrisksatanearlystage,tocontrolsuchrisksandtosecurethecompany’sbusinessobjectives;theycannot,however,preventsuchriskscompletelyanddonotthereforeofferabsoluteprotectionagainstlossorfraudulentactions.

Corporate Governance Report

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Page 14: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

AccountingandAuditing

Thegroup’saccountsaredrawnupaccordingtotheprinciplesoftheInternationalFinancialReportingStandards(IFRS),whereastheannualfinancialstatementsoftheparentcompany–relevantforalldividendandtaxmatters–aredrawnupaccordingtotherulesoftheGermanCommercialCode(HGB).Theannualfinancialstatementsfortheparentcompanyandthegroupareauditedbyindependentauditors.TherespectiveauditingcompanyisselectedbytheAnnualShareholders‘Meeting.Ernst&YoungAGWirtschaftsprüfungsgesellschaftSteuerberatungs-gesellschaftwaselectedtoaudittheannualfinancialstatementsforthefiscalyear2008.TheSupervisoryBoardissuestheauditingmandate,determinesauditingfocalpoints,approvestheauditingfeeandexaminestheindependenceoftheauditors.

RemunerationReport

ManagementBoard

TheSupervisoryBoardisresponsiblefordeterminingtheremunerationofManagementBoardmembers.TheremunerationreceivedbythemembersoftheManagementBoardofUnitedInternetAGisperfor-mance-orientedandconsistsoffixedandvariableelements.InthecaseofoneManagementBoardmember,thereisacomponentprovidinglong-termincentivesintheformofacompensationprogrambasedonvirtualshares(SARs).

Thesizeoftheremunerationcomponentsisregularlyreviewed.Thefixedremunerationcomponentispaidmonthlyasasalary.Thesizeofthevariableremune-rationcomponentdependsonreachingcertain,fixedfinancialtargetsagreedatthebeginningofthefiscalyear.Thesetargetsarebasedmainlyonsalesandear-ningsfigures.Thetargetattainmentcorridorisgene-rallybetween80%to120%.Nobonusispaidbelow80%oftheagreedtargetandthebonuscalculationendsat120%oftheagreedtarget.Thereisnoprovi-sionforsubsequentamendmentoftheperformancetargets.Thereisnominimumguaranteedbonus.TherearenoretirementcommitmentsfromtheCompanytomembersoftheManagementBoard.

Infiscalyear2008,remunerationofthetwomembersoftheManagementBoardamountedtoC1,000k(prior-year:C935k).Ofthistotal,C600kwasfixedandC400kvariableremuneration.

TheChiefExecutiveOfficer,Mr.RalphDommermuth,receivedtotalremunerationofC511k(prioryear:C442k).Ofthistotal,C300k(prioryear:C200k)wasfixedandC211k(prioryear:C242k)variable.TheChiefFinancialOfficer,Mr.NorbertLang,receivedtotalremunerationofC489k(prioryear:C493k).Ofthistotal,C300k(prioryear:C200k)wasfixedandC189k(prioryear:C293k)variable.

ManagementBoardremunerationin2008in C Fixed com-

ponentVariable component

Total

Management Board

Ralph Dommermuth 300,000 211,000 511,000

Norbert Lang 300,000 189,000 489,000

Total 600,000 400,000 1,000,000

Infiscalyear2008,Mr.NorbertLangwasgranted800,000virtualstockoptions(SARs)atanexercisepriceofC12.85.Theexercisehurdleis120%oftheshareprice.Paymentofvaluegrowthislimitedto100%ofthecalculatedshareprice.Whenthevirtualstockoptionsweregranted,theirfairvalueamountedtoC2,384k.TheSARprogramisdescribedinmoredetailbelow,inthesection“Stock-basedcompen-sation”.

SupervisoryBoardThemembersoftheSupervisoryBoardreceivecompensationconsistingofafixedelementandavariableelementwhichdependsontheCompany‘ssuccess.ThefixedremunerationforanordinarymemberoftheSupervisoryBoardamountstoC20kperfullfiscalyear.ThechairmanoftheSupervisoryBoardreceivestwicetheamountattributabletoanordinarymember.ThevariableelementforeachmemberoftheSupervisoryBoard,includingthechair-man,amountstoC2kforeverycentwhichexceedstheconsolidatedearningspersharevalueofC0.10forUnitedInternetAG,calculatedaccordingtoIFRS.

ThechairmanoftheSupervisoryBoard,Mr.KurtDobitsch,receivedtotalremunerationofC40k(prioryear:C112k).Ofthistotal,thefixedcomponentwasC40k(prioryear:C40k).Mr.MichaelScheerenreceivedtotalremunerationofC20k(prioryear:C92k).Ofthistotal,C20k(prioryear:C20k)wasfixed.Mr.Kai-UweRickereceivedtotalremunerationofC20k(prioryear:C0k).Ofthistotal,C20k(prioryear:C0k)wasfixed.

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Page 15: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

DuetothenegativeEPSfigure,therewasnovariableremunerationin2008.

SupervisoryBoardremunerationin2008in C Fixed

componentVariable

componentTotal

Supervisory Board

Kurt Dobitsch (Chair) 40,000 - 40,000

Kai-Uwe Ricke 20,000 - 20,000

Michael Scheeren 20,000 - 20,000

Total 80,000 - 80,000

Stock-BasedCompensation

UnitedInternetAGoperatesvariousstock-basedcompensationprogramswhichenableitsmanagerstoparticipateinthecompany’ssuccessandareaimedatenhancingstaffloyalty.Theseprogramsareeitherbasedonconvertiblebondswhichcanbeexchangedforsharesoronvirtualstockoptions,whichmayentitletheholderalsotocashpaymentsinthecaseofacorrespondingincreaseintheshareprice.

Oneconvertiblebondcanbeexchangedforoneshare,orfollowingthesharesplitof1:3in2006,for4shares.Onissuanceoftheconvertiblebond,therespectiveemployeepaysthecompanythenominalvalueoftheconvertiblebond.Thisamountaccruesinterestduringtheperiodoftheprogram.Thestrikepriceisthesharepriceatthetimeofissuanceoftheconvertiblebond.Afterexpiryofcertainminimumretentionperiods,employeescanexchangetheirconvertiblebondsforcompanyshares.Shouldtheydecidetobuytheshare,theymustpaythedifferencebetweenthestrikepriceandnominalvalueoftheconvertiblebond.Thedifferencebetweenthestrikepriceandtheshare’sprevailingmarketpricerepresentsataxablegainforemployees.Theconvertiblebondshaveamaturityofnomorethan6years.

Virtualstockoptions(so-calledStockAppreciationRights–SARs)refertothecommitmentofUnitedInternetAGtopaythebeneficiaryacashamountequivalenttothedifferencebetweenthesharepriceonthedateofgrantingtheoptionandthesharepriceonexercisingtheoption.Theexercisehurdleis120%oftheshareprice,whichiscalculatedastheaverageclosingpriceinelectronictrading(Xetra)oftheFrankfurtStockExchangeoverthetendaysprecedingissuanceoftheoption.Paymentofvaluegrowthto

theentitledpersonislimitedto100%ofthecalculatedshareprice(cap).

AnSARcorrespondstoavirtualsubscriptionrightforoneshareofUnitedInternetAG.However,itisnotasharerightandthusnota(genuine)optiontoacquiresharesofUnitedInternetAG.UnitedInternetAGretainstheright,however,tofulfillitscommitmenttopaytheSARincashbyalsotransferringUnitedInternetAGsharesfromitsstockoftreasurysharestothebeneficiary,atitsowndiscretion.Employeesmayexercisetheiroptionrightsafterexpiryofcertainminimumretentionperiods.Theincreaseinvaluerepresentsataxablegainforemployees.TheSARshaveamaturityofnomorethanfiveyears.

Detailedinformationonthecompany’svariousstock-basedcompensationprogramsisprovidedinthenotestotheconsolidatedfinancialstatementsinthisannualreport.

Director’sDealings

AccordingtoSec.15aoftheGermanSecuritiesTradingAct(Wertpapierhandelsgesetz–WpHG),membersoftheManagementBoardofUnitedInternetAGandSupervisoryBoardarelegallyobligedtodeclaretheirpurchaseandsaleofsharesinUnitedInternetAGorrelatedfinancialinstrumentswheneverthetrans-actionconductedbyanexecutivebodyorrelatedpersonsreachesorexceedstheamountofC5,000withinonecalendaryear.Thesameappliestocertainemployeeswithmanagementresponsibilityandcloselyrelatedpersons.TransactionsreportedtotheCompanyinfiscalyear2008werepublishedthroughoutEurope.

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AsofDecember31,2008themembersoftheManage-mentBoardandSupervisoryBoardheldthefollowingsharevolumes:

ShareholdingsandSubscriptionRightsasofDec.31,2008

Shareholding (units)

Virtual stock options (SAR,

units)Management Board Ralph Dommermuth 92,000,000 -Norbert Lang 576,128 800,000

Supervisory Board Kurt Dobitsch (Chair) - -Kai-Uwe Ricke - -Michael Scheeren 700,000 -

AnnualDeclarationofConformityacc.toSec.161AktG

OnJune6,2008theseventhversionoftheGermanCorporateGovernanceCodewascompletedandpublishedbythegovernment’selectronicFederalGazetteonAugust8,2008.InMarch2009,theManagementBoardandSupervisoryBoardofUnitedInternetAGsubmittedtheircurrentdeclarationofconformityaccordingtoSec.161oftheGermanStockCorporationAct(AktG).Thedeclarationofconformitycanbeaccessedatwww.united-internet.de,InvestorRelations,CorporateGovernanceandwaspublishedinthegovernment’selectronicFederalGazetteonMarch26,2009.ThecorporategovernanceprinciplesofUni-tedInternetAGanchoredinthecompany’sstatutes(includingitsarticlesandrulesofprocedure),andthusourcurrentandexpectedfuturebehavior,complywiththerecommendationsoftheGermanCorporateGovernanceCodeintheversiondatedJune6,2008,withthefollowingexceptions:

D&ODeductiblesShouldacompanytakeoutaso-calledD&Oinsurancepolicy(directorsandofficers’liabilityinsurance)foritsManagementBoardandSupervisoryBoard,theGermanCorporateGovernanceCoderecommendsthatasuitabledeductiblebeagreed.TheD&OinsurancepolicyofUnitedInternetAGdoesnothaveanyarrangementfordeductibles.UnitedInternetdoesnotplantochangeitscurrentD&Opolicies.

CommitteesTheGermanCorporateGovernanceCoderecommendsthattheSupervisoryBoardsetupanAuditCommitteewhich,inparticular,shouldhandleissuesofaccoun-ting,riskmanagement,compliance,thenecessaryindependencerequiredoftheauditor,theissuingoftheauditmandatetotheauditor,thedeterminationofauditingfocalpointsandthefeeagreement.TheGer-manCorporateGovernanceCodealsorecommendsthattheSupervisoryBoardsetupaNominationCommittee,whichshouldcompriseonlyrepresenta-tivesoftheshareholdersandshouldsuggestsuitablecandidatestotheSupervisoryBoardforitselectionproposalsattheAnnualShareholders’Meeting.TheSupervisoryBoardofUnitedInternetAGcurrentlyconsistsofthreemembers:inadditiontotheirotherduties,themembersalsodealasagroupwiththeabove-mentionedtopics.TheSupervisoryBoard’srulesofprocedurestatethatcommitteesshouldonlybeformediftherearemorethanthreemembersoftheSupervisoryBoard.

SupervisoryBoardCompensationTheGermanCorporateGovernanceCoderecommendsthatthecompensationofSupervisoryBoardmembersshouldalsotakeintoaccounttheexercisingoftheChairandDeputyChairpositionsintheSupervisoryBoardaswellasthechairandmembershipincommit-tees.InthecaseofUnitedInternetonlytheChairposi-tionintheSupervisoryBoardisconsidered–aslongastheSupervisoryBoardconsistsofnomorethanthreemembersandnocommitteesareformed.

PublicationofreportsTheGermanCorporateGovernanceCoderecommendsthattheconsolidatedfinancialstatementsshouldbepublished90daysaftertheendofthereportingperiod.AsalreadyannouncedintheFinancialCalendar2008,UnitedInternetAGpublisheditsconsolidatedfinancialstatementsforfiscalyear2007onApril4,2008.

Montabaur,March2009

Forthe FortheManagementBoard SupervisoryBoardRalphDommermuth KurtDobitsch

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ThemembersoftheSupervisoryBoard(electeduntil2010)are:

KurtDobitsch,self-employedentrepreneur,54(chair) Kai-UweRicke,ManagingPartner,47 MichaelScheeren,qualifiedbanker,51

TheSupervisoryBoardofUnitedInternetAGfulfilleditslegalandstatutoryconsultationandcontroldutiesduringtheperiodunderreview.WeregularlyadvisedtheManagementBoardandmonitoredtheirmanage-mentoftheCompany.WeweredirectlyinvolvedinalldecisionsoffundamentalsignificancefortheCompany.TheManagementBoardprovideduswithregularandcomprehensivereports,bothwrittenandoral,aboutallrelevantquestionsconcerningcorpo-rateplanningandstrategicdevelopment,aswellastheprogressofbusiness,thestatusoftheCompany,itsexposuretorisk,theriskmanagementsystem,andissuesofcompliance.TheManagementBoarddiscussedtheCompany’sstrategicalignmentwithus.Moreover,theManagementBoardpresentedtheSupervisoryBoardwithacomprehensivereporteveryquarteraboutthestateofbusiness,thedevelopmentofsalesandearnings,andthepositionoftheCompanyanditsbusinesspolicy.ThesereportsweremadeavailabletoallmembersoftheSupervisoryBoard.OnthebasisofthesereportsonUnitedInternetAG,theSupervisoryBoardwasabletomonitorallimportantbusinesstransactionsandtoprovideadvicewherenecessary.ThechairmanoftheSupervisoryBoardwasalsokeptregularlyinformedbytheManagementBoardonallbusinessactivities,alsobetweenthemeetings,andgaveadviceonquestionsofbusinesspolicy.

TheSupervisoryBoardheldfivemeetingsduringfiscalyear2008,inwhichtheManagementBoardinformedusindetailaboutthebusinesssituationandthedevelopmentoftheCompanyandGroup,aswellasconcerningsignificantbusinessevents.Themee-tingswereeachattendedbyallmembers.Inaddition,furtherresolutionswereadoptedbymeansofcircularwrittenconsent.Forexample,onMay30,2008appro-valwasgiventotheissueof400,000virtualstockoptionstothemanagementboardmembersofGroupcompaniesaspartoftheSARPlan2008,onJuly16,2008approvalwasgivenforapromissorynoteloanamountingtoC150million,andonDecember12,2008theacquisitionofunited-domainsAG,Starnberg,wasapproved.TheSupervisoryBoardconsistsofthree

membersanddidnotformanycommittees.TheSupervisoryBoardisnotawareofanyconflictofinterestofoneofitsmembers. MeetingonJanuary29,2008:ThisSupervisoryBoardmeetingfocusedonGroupplanningforfiscalyear2008andthesalesandearningstargetsoftheGroup’ssubsidiaries.TogetherwiththeManagementBoard,variousinvestmentoptionswerediscussedandaninvestmentinthemediaholdingcompanyvirtualmindsAGandintheBW2GroupAGwasadopted.ItwasalsodecidedtoraisecontributionstotheEuropeanFoundersFundGmbH&Co.BeteiligungsKGNo.1and2andtoexpandthepartnershipwiththeSamwerbrothersbyjointlyfoundingEuropeanFoundersFundGmbH&Co.BeteiligungsKGNo.3.InconnectionwithacontractextensionfortheD&Oinsurancepolicy,theManage-mentBoardexplainedtousthenewlynegotiatedconditions.

MeetingonApril2,2008:ThisSupervisoryBoardmeetingfocusedonthepresentationoftheannualfinancialstatementsandtheconsolidatedfinancialstatementsforfiscal2007ofUnitedInternetAG,aswellasthejointmanagementreportforfiscal2007andtheauditreportsandexplanationsofthechiefauditor.Inthepresenceoftheappointedchiefauditor,Ernst&YoungAGWirtschaftsprüfungsgesellschaft,theauditedannualfinancialstatementsfor2007ofUnitedInternetAGandauditedconsolidatedfinancialaccountsaccordingtoIFRSwereapproved.Atthesamemeeting,theSupervisoryBoardandManagementBoardadoptedaresolutiontorecommendtotheAnnualShareholders’Meetingthepaymentofadividendof20centspershare.TheinvitationandagendafortheAnnualShareholders‘MeetinginMayandtheremunerationreportofthechairmanoftheSupervisoryBoardwasdiscussedwiththeManagementBoardandadopted.ThetargetachievementoftheManagementBoardinthepastyearwasadoptedandthepaymentofthevariableremunerationelementsapprovedbytheSupervisoryBoard.TheManagementBoardreportedonthecourseofbusinesssofarinfiscal2008,thecurrentbusinesssituationingeneral,andthestatusofstrategiccooperationtalks.TheManagementBoardthenreportedtotheSupervisoryBoardonthecurrentdevelopmentoftheUnitedInternetforUNICEFFoundation.

MeetingonMay27,2008:ThemeetingwashelddirectlyaftertheAnnualShare-

Report of the Supervisory Board for Fiscal Year 2008

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holders’MeetingofUnitedInternetAGinFrankfurtamMain.Atthemeeting,variousstrategicoptionsinthecorebusinessfieldsofUnitedInternetAGwerediscussedandevaluatedtogetherwiththeManage-mentBoard.Aspartofthefurtherinternationaliza-tionoftheGroup’shostingbusiness,itwasdecidedtoacquiretheBritishresellerDollamoreLtd.,Melbourne/UK,viaFasthostsLtd. MeetingonAugust12,2008:ThemaintopicofthismeetingwasadetaileddiscussionoftheinterimreportasofJune30,2008togetherwiththeManagementBoard.InconnectionwiththeforthcomingextensionoftheleasesfortheMontabaurfacilities,theManagementBoardpresentedthecurrentleasesandexplainedthecurrentrentalsituation.Duetotheindicatedneedforofficespace,theSupervisoryBoardapprovedanextensionofthecurrentleasesandtherentingoffurtherfloorspace.

MeetingonNovember13,2008:InadditiontotheManagementBoard’sreportonCompanyeventsasofSeptember30,2008andadiscussionofthe9-monthreport,theforecastforfiscalyear2008wasalsodiscussedindetail.TheManage-mentBoardtheninformedusaboutthecurrentfinancesituationandtheinteresthedgingstrategyithadprepared.AspartofthenewCorporateGover-nanceCode,thegovernmentcommissionadoptedseveralchangestotheCodeasofJune6,2008.TheManagementBoardexplainedtherelevantchangesfortheCompany.TheSupervisoryBoardwasinformedaboutthestatusofcurrentcooperationtalksofUnitedInternetAGanditssubsidiariesandthedevelopmentoftheEuropeanFoundersFunds.TheManagementBoardalsoreportedonthenewrevisedservicecon-tractsforManagementBoardmembersof1&1InternetAGandtheissueofSARs(StockAppreciationRights)toManagementBoardmembersof1&1InternetAGandGroupemployees.

CorporateGovernanceTherelevantchangesarisingfromtheCodereleasedonJune6,2008werediscussedtogetherwiththeManagementBoardinthemeetingofNovember13,2008.

TogetherwiththeManagementBoard,wesubmittedthecurrentdeclarationofconformitywithSec.161AktGregardingtherecommendationsoftheGovern-mentCommissionontheGermanCorporateGover-nanceCodeinMarch2009andmadeitpermanently

accessibletotheCompany’sshareholdersontheweb-siteandthegovernment’selectronicFederalGazette.Inthisconnection,wealsoconsideredthecompen-sationsystemfortheManagementBoard.TheManagementBoardreportsseparatelyonthecorporategovernancestrategyofUnitedInternetAG,alsoonbehalfoftheSupervisoryBoard,intheCorporateGovernanceReport.

Discussionoftheannualfinancialstatements2008fortheCompanyandtheGroupTheAnnualShareholders’MeetingofUnitedInternetAGonMay27,2008electedErnst&YoungAGWirt-schaftsprüfungsgesellschaft,basedinEschborn/FrankfurtamMain,asauditorsforthefiscalyear2008.Ernst&Youngauditedtheaccountingsystem,theannualfinancialstatementsofUnitedInternetAG,theconsolidatedfinancialstatementsaccordingtoIFRSandthecombinedmanagementreportforUnitedInternetAGandtheGroupforthefiscalyear2008.Aspartofitsauditoftheannualfinancialstatements,Ernst&YoungalsoauditedandanalyzedkeyaspectsoftheCompany’sriskmanagementsystem.Theaudi-torawardedanunqualifiedcertificateineachcase.

TheSupervisoryBoardsatisfieditselfastotheindependenceoftheauditorsandreceivedawrittendeclarationtothisend.

Theaforementionedannualfinancialstatementdocu-ments,theproposalfortheappropriationofprofitandtheauditor’sreportwerepresentedtoallmembersoftheSupervisoryBoardinduetime.ThechiefauditorattendedtherelevantmeetingoftheSupervisoryBoardonMarch25,2009,whereheansweredtheSupervisoryBoard’squestionsandgavefurtherexplanationswherenecessary.Followingitsowninspection,theSupervisoryBoardcametotheconclusionthattheannualfinancialstatements,thecombinedmanagementreport,theconsolidatedfinancialstatementsandtheauditor’sreportgavenocauseforobjections.WitharesolutiononMarch25,2009,theSupervisoryBoardapprovedtheannualfinancialstatementsofUnitedInternetAG,aspreparedbytheCompanyonMarch16,2009andtheconsolidatedannualfinancialstatementsaccordingtoIFRSforfiscal2008,alsopreparedbytheCompanyonMarch16,2009.TheannualfinancialstatementsarethereforeadoptedpursuanttoSec.172AktG.TheSupervisoryBoardsupportstheproposaloftheManagementBoardconcerningtheallocationofretainedearnings.

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TheSupervisoryBoardalsoexaminedthereportpreparedbytheManagementBoardaboutrelationswithaffiliatedcompanies(DependentCompanyReport),forwhichtheauditorsawardedthefollowingcertificate:

“Onthebasisofourstatutoryexaminationandevaluation,wecanconfirmthat

1. thedetailsmadeinthereportareaccurate,

2. thecompanywascompensatedadequatelyforeachtransactionmentionedinthereport,

3. inthecaseofthosemeasuresmentionedinthereport,thereisnoevidencetosuggestasignificantlydifferentassessmenttothatprovidedbytheManagementBoard.”

TheSupervisoryBoardexaminedtheDependentCompanyReportaspreparedbytheManagementBoardandapprovesitscontent.Wealsoconcurwiththeverdictofthechiefauditor’sexamination.Onthebasisofourfinalexamination,wehavenoobjectionstoraiseregardingtheManagementBoard’sdeclara-tionattheendoftheDependentCompanyReport.

ChangesintheSupervisoryBoardMr.BernhardDorn,amemberofourSupervisoryBoardsinceMay2000,diedonFebruary10,2008.Weowehimoursinceregratitudeandwillmisshimgreatly.

FollowingaproposalbytheSupervisoryBoardandManagementBoard,Mr.Kai-UweRickewasappointedbythedistrictcourtofMontabaurasafurthermem-beroftheCompany’sSupervisoryBoardonFebruary20,2008.ThecourtappointmentwascompletedbeforethenextAnnualShareholders’Meeting,whichwasheldonMay27,2008.TheshareholdersselectedMr.Kai-UweRicketotheSupervisoryBoardfortheperioduntiltheAnnualShareholders’Meeting2010.

Montabaur,March25,2009

FortheSupervisoryBoardKurtDobitsch

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Consolidated Income Statement Quarterly development in D millions*

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2007Sales 402.0 412.4 407.4 427.8 414.3

Cost of sales -242.5 -245.4 -249.6 -269.5 -256.9

Gross profit 159.5 167.0 157.8 158.3 157.4

Selling expenses

-66.8

-65.8

-73.2

-72.8

-70.3

General administrative expenses -19.8 -20.6 -19.1 -24.1 -21.0

Other operating income / expense 3.0 0.5 4.3 -1.0 -7.8

Amortization of intangible assets resulting from company acquisitions

-5.5

-5.5

-5.6

-4.7

-5.6

Amortization of goodwill 0.0 0.0 0.0 -9.2 0.0

Operating result 70.4 75.6 64.2 46.5 52.7

Financial result -5.4 -5.3 -7.3 -11.7 -2.1

Writedowns on investments 0.0 0.0 -22.5 -19.9 0.0

Result from at-equity companies -0.2 -4.8 -122.2 -107.0 1.9

Pre-tax result 64.8 65.5 -87.8 -92.1 52.5

Income taxes -19.7 -20.3 -16.0 -15.9 -12.4

Net income (from continued operations) 45.1 45.2 -103.8 -108.0 40.1

Result from discontinued operations

0.0

0.0

0.0

0.0

-0.2

Net income (after discontinued operations) 45.1 45.2 -103.8 -108.0 39.9

Attributabel to

minority interests 0.4 0.2 0.0 -1.8 1.1

shareholders of United Internet AG 44.7 45.0 -103.8 -106.2 38.8

*This schedule is not part of the Management Report and thus unaudited.

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Our High-performance Data Centers

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Dat

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The expectations of our customers continue to grow: with the development

of innovative new products there is also a growing need for greater bandwidth,

above all for data-hungry multimedia applications. In order to be equipped to

meet future needs, we have once again expanded the bandwidths of our high-

performance data centers in Germany, Europe and the USA.

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The internet has firmly established itself as a universal medi-

um for information, communication, entertainment and e-busi-

ness. Broadband access is the motor driving the information and

knowledge society. The popularity of DSL telephony and the grow-

ing integration of varying services into a multi-functional, all-in-

one package including moving images (internet TV) are clear signs

of this development.

The internet is thus developing into a universal infrastructure

which can satisfy all information, entertainment and communica-

tion needs through a single household connection – and at the

same time act as an effective sales channel. Portals pool services

and content according to specific target group profiles and repre-

sent a universal home base within the internet.

This is exactly our vision: to supply private and commercial

users with market-oriented information, entertainment and com-

munication products from our “Internet Factory” via increasingly

powerful broadband connections.

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United Internet is active in markets offering good growth potential. With over7.9 millioncustomercontracts,wearea leadingdomesticandglobalplayer.Wecanquickly launch innovative internet products at reasonable prices. Swiftly andflexibly.

In the Product Segment, our informationmanagement, webhosting and internetaccessproductsaredirectedatprivateusers,smallofficesandsmalltomid-sizeenter-prises.ThesegroupsareserveddirectlybythebrandsGMX,WEB.DEand1&1.Inearly2009,wealsoacquiredafurtherwell-knownbrandintheGermandomainandregistrybusiness:united-domains.Inadditiontoourdirectsalesactivities,wealsomarketourwebhostingproductsaswhite-labelpackagesviathebrandsInterNetX(inGermany)andFasthosts(intheUKandtheUSA).OtherISPsthenmarkettheseproductsundertheirownnameandfortheirownaccount.Wealsoofferourownhigh-reachportalsasasalesandmarketingplatformviatheUnitedInternetMediabrand.

WearerepresentedintheOnlineMarketingsegmentbythebrandsAdLINKMedia,affilinet and Sedo.Wemarket third-party domains andwebsites, offering them toadvertisersandagenciesasonlineplatformsfortheirsalesandmarketingactivities:the product portfolio ranges from Display Marketing (AdLINK Media) to AffiliateMarketing(affilinet)andDomainMarketing(Sedo).

United Internet’s growth opportunities are clearly apparent: increasingly powerfulbroadbandconnectionswillenablenewandmoresophisticatedvalue-addedservices.Thistrendisillustratedbynewinternet-basedapplicationsforendusersandcompanies– often referred to as Software as a Service (SaaS) or Cloud Computing. With over10yearsexperienceasawebhostandapplicationprovider,UnitedInternetisatthecuttingedgeofthisdevelopment.

Duetothealmostcompleteautomationofourbusinessprocesses,costsandcustomergrowthhavebeeneffectivelyseparated. Inotherwords,everynewcustomer incursproportionatelylowercosts.Thisenablesustoutilizeeconomiesofscaleandmakeourcompanyevenmoreefficient.ThegrowingspreadofbroadbandconnectionsandflatratetariffsalsomeansmorebusinessforourOnlineMarketingsegment.Asusersarenow online more frequently and for longer periods, the internet is becomingincreasinglyattractiveforadvertisers.Italsomeansourbrandscanuseincreasinglydata-intensiveformats,suchasvideoclips,forinternetcampaigns.

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BroadspectrumofproductsUnitedInternetoffersawiderangeofinnovativeinternetproducts.Ourcustomerssignmostlysubscriptioncontractswithusbasedonfixedmonthlyfeesandvariable,volume-basedcharges.Thisbusinessmodeldeliberatelydifferentiatesusfromthosesupplierswhichfocusoninternet-by-callorcustomizedsolutions.

Weofferthreeproductlines:InformationManagementwithe-mailsolutions,messaging,addressmanagement,PocketWeband0700numbers;Webhostingwithdomains,homepages,dedicatedandvirtualservers,ande-shops;aswellasInternetAccesswithDSL(includinginternettelephony,video-on-demandandmobilephonecalls),narrowbandandmobileinternet.TheseproductsaremainlymarketedviaourcorebrandsGMX,WEB.DEand1&1–andinfuturealsoviaourdomainspecialist“united-domains”acquiredinearlyMarch2009.Thesestrongbrandsenableustoreachamassmarketandtargetspecificcustomergroups.Inadditiontoourend-userbusiness,wealsomarketourwebhostingproductsviatheInterNetXandFasthostsbrandsaswhite-labelpackagestootherISPs,whichinturnmarketthemundertheirownnameandfortheirownaccount.

OurInternetFactoryAttheheartofourbusinessmodelisour“InternetFactory”,whereweapplythemechanismsofrationalizedproduction.Ourhighlyefficientdevelopmentdepart-mentsdesignproductswhichrepresentthebackboneoftheonlinebusiness.Our“InternetFactory”enablesustoextendourproductlinesalmostatwill,aswellastobundlethem,scalethem–andexportthem.Onesuccessfactorforourstronginternationalgrowth.

Afurtherrecipeforsuccessisourdepthofproduction.Whereveritmakesgoodbusinesssense,wecovertheentirevaluechain–fromthetechnologicalbasetoself-developedsoftwareproducts,effectivesalesandmarketingandactivecustomersupport.

UnitedInternet’sbusinessmodelofferstremendousbenefits:thecontractualbasisofoursubscriptionssecuresthelong-termstabilityofsalesandearnings.Andourownin-houseproductdevelopmentandmarketinghelpuslaunchinnovationsfasterthanmostcompetitors.Asaresult,wehavebecomeabywordthroughouttheworldforhigh-performanceandinnovativewebhostingproducts.Economiesofscalerepresentafurtherkeyconceptforus.Everynewcustomerenhancestheprofitabilityofour“InternetFactory”.Investmentsinourfactoryhave

Innovative products in growing markets

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GMXtargetsthemassmarketwithe-mailandmessagingproducts.Over8millionactiveuserspermonthmakeGMXalsotooneofGermany’sleadingportals.Inadditiontoitsfreee-mailaccounts,GMXalsooffersfee-based,value-addedservices.

Witharound13millionactiveinternetuserspermonth,WEB.DEistheNo.2ontheGermanportalmarket.WEB.DEalsooffersfreebasicservicesaswellasfee-basedproductsandservices,includingthepopularWEB.DEClub.

1&1istherightaddressfordiscerningprivateusersandbusinesscustomerslookingforInformationManagement,WebhostingandAccesssolutions.1&1isNo.3inGermany’sDSLsectorandtheworld’sleadinghostingcompany,activein6countries.

beenmadeandproductsdevelopedintheformofsoftware-based,value-addedinternetservices.Nowitisaquestionofutilizingthemasfullyaspossible.Thegreaterthenumberofcustomersusingproductsdevelopedandproducedatour“InternetFactory”,thegreaterourprofitwillbe.Afurtheradvantageisourtarget-group-guidedmarketing.EveryUnitedInternetcustomergetstheexactproductheneeds.Thisismadepossiblebyourestablishedbrandsand,insomecases,exclusivesaleschannels.Andfinally,exportabilityisafurthertrumpcardforus.OurproductscanoftenbeusedanywhereintheworldandworkonthesameprincipleinFrankfurtastheydoinLondon,ParisorNewYork.

Ourbrandsnotonlygeneraterevenuesfromsubscriptions;anincreasingproportionofincomealsoresultsfromouronlineadvertisingande-commerceactivities.UnitedInternetMedia,themarketingcompanyforourGMX,WEB.DEand1&1portalsandourshoppingportalSmartShopping.de,providesadvertisersandagenciesinGermanywitheverythingtheydesire.Thisincludesastillunmatchedreachofalmost50%amongGermaninternetusers,aswellashigh-quality,targetedmarketingandinnovativeadvertisinginstruments.OurfamilyofbrandsprovidesauniquelevelofmarketcoverageinGermany.

GrowthinstablemarketsAccordingtothestudy“LIFE–DigitalesLeben”,publishedinlateFebruary,thetrendtowardbroadbandconnectionswillcontinue.Theexpertsforecastgrowthto36millionbroadbandconnectionsinGermanyby2015anddatatransmissionspeedsofover100Mbit/sinsomecases.Theexpertsalsoexpectmobilebroadbandconnections(UMTS)toquadrupleto41millionby2015.

ThesectorassociationBITKOMforecaststhattheGermanmarketforfixed-lineinternetaccesswillgrowby4.2%toC13.8billionin2009,thusreachinganewrecordlevel.Despitetheeconomicslump,itforecaststhatsaleswithprivateinternetaccessalonewillgrowby7.5%toC8.8billionin2009.

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Marketresearchersalsopredictcontinuinggrowthforthewebhostingindustry.GartnerandIDCforecastannualgrowthratesof15%and16%until2010.IntheirEuropeanManagedWebhostingForecastofOctober2007,theexpertsofIDCpredictedgrowthof10.4%toUSD4.6billionin2009–intheB-to-Bhostingsectoralone.GoodgrowthopportunitiesareforecastforallEuropeanmarketsinwhichweoperate:Germany(+8.4%),theUK(+10.4%),France(+9.9%),Austria(+11.3%)andSpain(+12.4%).Newweb-basedservices–subsumedundertheterms“software-as-a-service”and“cloudcomputing”–willfurtherstrengthenthis“outsourcingtrend”(towardinternet-basedandawayfromPC-basedapplications).

Theonlineadvertisingmarketisalsoexpectedtocontinueitsstronggrowth–althoughatemporarybutsignifi-cantdownturnisexpectedin2009asaresultoftheglobaleconomicproblems.

Theoverallimportanceofonlineadvertisinginthetotaladvertisingmixwillcontinuetorise.The“Marketers‘InternetAdBarometer2008”reportshowsthateightoutoftenEuropeanadvertiserswillinvestmoreheavilyinonlineadvertisinginthecomingyears.AlmostthreequartersofalladvertisersquestionedinEurope(73%com-paredwith52%in2006)usetheinternetincreasinglyasanadvertisingmedium.Overonethirdofthesedeci-dersregardtheinternetasanessentialchannelfortheirmarketing.In2006thisproportionwasjust17%.82%ofthosecompanieswhichraisedtheironlineadvertisingbudgetin2008,movedpartoftheirmediabudgetfromprint(40%),TV(39%)anddirectmarketing(32%)totheinternet.

AlthoughonlineadvertisingwillcontinuetogrowinimportanceinGermany,itwillnotbeabletoescapetheeffectsofthegeneraleconomicsituation.TheOVK’sgrowthforecastfor2009isthusmuchmoreconservativethaninpreviousyears.Theonlineexpertstotalgrowthof10%tojustoverC4billion.

AsoneofGermany’slargestDSLproviders,astheleadingproviderofonlineadvertisinginGermany,andfinallyastheworld’sleadingsupplierofcomplexanddata-intensivehostingapplications,UnitedInternetthereforebenefitsfromthesemarkettrendsinseveralways.

Produktgeschäft

InterNetXandFasthostsrepresenttheresellingbusinessoftheUnitedInternetGroup.Thebrandsmarketourwebhostingproductsaswhite-labelpackagestootherISPs,whichmarketthemundertheirownnameandfortheirownaccount.

InterNetXoperatesinGermanyandFasthostsintheUKandtheUSA.Thecompaniesattendedmorethan25,000resellers.

UnitedInternetMediamarketstheportalsoftheUnitedInternetGroup.Withareachofover19millionuniqueusers–andthusalmost50%ofallGermansonline–UnitedInternetMediaisGermany’sleadermarketer.

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DigitalmarketingandsalessolutionsforadvertisersThecontinuingpopularityoftheinternethasprovidedmanyadvertiserswithanewandhighlyeffectiveplatformtodisplaytheirwares.Onlinemarketingisbecominganincreasinglyimportantmarket.UnitedInternetoffersavarietyofonlinemarketingandsalessolutionsinitsOnlineMarketingsegment:DisplayMarketingviaAdLINKMedia,AffiliateMarketingviaaffilinetandDomainMarketingviaSedo.Incontrasttothemarketingofourownportalsinthe“Product”segment,thissegmentfocusesmainlyonthemarketingofthird-partydomainsandwebsites–in13EuropeannationsandtheUSA.

AdLINKMediaisoneofEurope’slargestDisplayMarketingproviders.Thebackboneofthisbusinesssegmentisanonlineadvertisingnetwork,consistingofselectedandhighlyfrequentedwebsites.Withthisnetwork,AdLINKreachesover90millionusersinalltherelevantEuropeanmarkets.Around10.3billionadimpressionsaremarketedpermonth.Advertisingspaceisbookedbydomesticandinternationalclients,whouseitforbrandingpurposesordirectproductsales.

Underthemotto“SuccessfulTogether”,affilinetoperatesanaffiliatemarketingplatformonwhichsuppliersofaffiliateprogramsandwebsiteowners(=affiliates)canmeet.Thewebsiteoperatorscurrentlyoffersome6billionadimpressionspermonth.The1,500affiliateprogramoperatorsincludenumerousmajor-namecompanies,suchasebay,DocMorris,Debitel,Sixt,mobile.deandNeckermann.affilinethandlesthemarketing,administrationandbillingoftheprogramsandprofitsfromthecontactsinitiatedviathenetworkonapurelysuccess-orientedbasis.affilinetisrepresentedonEurope’smostimportante-commercemarkets:Germany,France,Spain,theUKandtheNetherlands.

Sedooperatestheglobaldomaintradingplatform“sedo.com”,whichcurrentlytradessome15milliondomains.Sedoisthustheglobalmarketleaderinthetradingof“second-hand”internetdomains.Sedoalsooffersthepossibilityto“park”unuseddomains,i.e.Sedomarketstheseaddressestoadvertisersonbehalfofthedomainowners.Sedotakesashareoftherevenuesgeneratedfrommarketing.Domainparkingisequallyinterestingfordomainownersandadvertisersastheautomatedprocessoffersownersaddedvalueintheformofadditionaladvertisingrevenue,whileadvertisersgenerallyonlypayforcontactsactuallygenerated.Sedoservescustomersinover200countriesfromitsofficesinGermany,theUSA,andtheUK.

GreatpotentialforonlinemarketingThemarketingofthird-partydomainsandwebsitesissubjecttothesameconditionsasthemarketingofourownportals:theonlineadvertisingmarkethasdevelopedintoadynamicgrowthmarketwithtremendousgrowthpotentialinthecomingyears.

WhiletheproportionofspendingonclassicmediaformatsstagnatedorfellinGermanyin2008,thegrowthofonlineadvertisingcontinued–despitetheadverseeconomicconditions.In2008,onlineadvertisingaccountedfor14.8%ofthetotaladvertisingmarket–anincreaseof2.7%over2007.Asanadvertisingmedium,theinternethasthusgainedover10percentagepointswithinthepastfouryears,attheexpenseofclassicadvertisingmedia.

Great prospects for Online Marketing

Online Marketing

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As for almost all listed companies, 2008 was also a difficult year on the stock exchange for United Internet AG. The stock markets were heavily influenced by the financial crisis and the global economic downturn it caused. The United Internet AG share was unable to escape this market turbulence and suffered strong losses, especially in the second half of 2008. The slump in online advertising, slower growth in our Product segment and the prospect of possible writedowns on our strategic invest-ments overshadowed the stable progress of our operating business. The United Internet AG share closed the year at C 6.29, compared with C 16.65 in the previous year.

The United Internet share was once again one of the most liquid in the TecDAX index in 2008. In fiscal 2008 an average of 1.08 million shares were traded daily (prior year: 0.97 milli-on) with an average value of C 11.5 million (prior year: C 13.9 million) via the XETRA electronic computer trading system.

Shareholder structure (as of Dec. 31, 2008)

in %

The Share

Freefloat 45.84

Kizoo AG8.83

Ralph Dommermuth36.58

Own shares8.75

Share type Registered common stock with a notional share of capital stock of C 1.00 each

ISIN DE0005089031

Ticker symbol Stock Exchange Frankfurt UTDI Reuters UTDI.DE Bloomberg UTDI GR

Segment Prime Standard

Index TecDAX Stoxx-600 GEX

Shareholdings and subscription rights of the Management Board and Supervisory Board as of December 31, 2008

Shareholding (in units)

Subscription rights (in units)

Management Board Ralph Dommermuth

92,000,000

-

Norbert Lang 576,128 800,000

Total 92,576,128 -

Supervisory Board Kurt Dobitsch (Chair)

0

-

Kai-Uwe Ricke 0 -

Michael Scheeren 700,000 -

Total 700,000 -

October

DecemberJuly

April

January

United Internet Aktie TecDAX

Development 2008 indexedin %

100

80

60

40

20

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AnnualShareholders’Meeting2008

TheAnnualShareholders‘MeetingofUnitedInternetAGwasheldinFrankfurtamMainonMay27,2008.64.03%ofcapitalstockwasrepresentedduringthevoting.Theshareholdersadoptedallresolutionsontheagendarequiringvotingwithmajoritiesofover99%.TheManagementBoardwasauthorizedbytheAnnualShareholders‘Meetingtobuybackupto10%oftheCompany’ssharesintheperioduptoNovember26,2009.

Dividend

TheAnnualShareholders’MeetingofUnitedInternetAG,heldonMay27,2008adoptedaresolutiontopayadividendof20centspershareforthefiscalyear2007.ThedividendpaymenttotalingC45.9millionwasmadeonthefollowingday.

Inviewofthebalancesheetlossintheannualfinan-cialstatementsoftheparentcompanyUnitedInternetAG–duetowritedownsonthecarryingvalueofourinvestments,especiallyinthefieldofourlistedstrategicinvestments,andtheformationofreservesfortreasuryshares–therewillbenodividendforfiscalyear2008.Thebalancesheetlosswillbecarriedforward.

CapitalstockAsofthebalancesheetdate,theCompany’scapitalstockamountstoC251,469,184dividedinto251,469,184no-parvalue,registeredshares.Thetotalnumberofvotingrightsasofthebalancesheetdateamountsto251,469,184.

Treasurysharesaccountfor8.75%ofcapitalstockTheManagementBoardwasauthorizedbytheAnnualShareholders‘MeetingofMay30,2007tobuybackupto10%oftheCompany’sshares.IntheperiodfromJuly24,2007toJanuary21,2008UnitedInternetAGboughtatotalof5,000,000treasurysharesandthusexhau-stedthesharebuybackprogramadoptedonJuly24,2007.AsofJanuary21,2008UnitedInternetAGthusheldatotalof20,000,000treasuryshares.OnJanuary22,2008theManagementBoardresolvedtolaunchanewsharebuybackprogram,duringwhichafurther2millionCompanysharesweretobeboughtbackviathestockexchange.AsofDecember31,2008theCompanyheld22.0milliontreasuryshares,corres-pondingtoaround8.75%ofcurrentcapitalstock.

InvestorRelations

Infiscal2008theManagementBoardandInvestorRelationsdepartment(IR)ofUnitedInternetAGprovidedinstitutionalandprivateinvestorswithregularandcomprehensiveinformation.Informationwasprovidedtothecapitalmarketviathequarterlyandannualreports,aswellasatpressandanalystconferences.Thecompany’smanagementandtheIRdepartmentheldnumerousone-on-onediscussionsatthecompany’sofficesinMontabaur,aswellasatroad-showsandinternationalcapitalmarketandanalystconferences,wheretheyinformedparticipantsaboutthecompany’sstrategyandfinancialresults.Over25investmentbanksinGermany,theUKandFranceareincontactwiththeIRdepartmentofUnitedInternetAGandpublishregularstudiesandcommentsonthecompany’sprogressandshareperformance.Apartfromsuchone-on-onemeetings,shareholdersandpotentialfutureinvestorscanalsoreceivethelatestnewsonthecompanyaroundtheclockviathecompany’swebsite(www.united-internet.de).

Award-winningIRactivitiesThomsonReuters,WirtschaftswocheandDIRK(TheGermanInvestorRelationsAssociation)regularlypresentawardsfortheInvestorRelationsactivitiesoflistedGermancompanies.Inthecourseofthe“ThomsonReutersExtelSurveys”,over900capitalmarketexpertsexpressedtheiropiniononthequalityoftheIRcommunicationsworkprovidedbycompaniesinvariousstockmarketindices.In2008UnitedInternetAGachievedanoutstandingresult:ourIRteamcamethirdoverallamongTecDaxcompanies.Share 2008 2007Year-high 16.83 C 16.79 C

Year-low 4.16 C 12.34 C

Year-end 6.29 C 16.65 C

Performance -62 % 33 %

Average daily turnover 11,540,697 C 13,924,220 C

Average daily turnover in units

1,082,791

969,528

Number of shares 251,469 million 251,434 million

Market value 1,582 billion C 4,186 billion C

Earnings per share (EPS) -0.52 C 0.93 C

Dividend payment – 45.9 million C

Dividend per share – 20 Cent

Share data

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Key figures 2008

Dynamic customer growth: the number of customer contracts grew by 800,000 to 7.95 million in 2008.

Strong demand for complete DSL packages: as well as increasing DSL contracts by 230,000 to 2.82 million, we also expanded the number of DSL customers with complete packages by 670,000 to 780,000.

Successful international expansion: we added 380,000 new web-hosting contracts outside Germany to reach a total of 1.93 million.

Growing user figures in portal business: the number of active e-mail users on our online portals GMX and WEB.DE grew by 3.68 million to 25.47 million.

Further operative growth: consolidated sales grew by 10.9% in 2008 to around D 1.65 billion, while EBITDA increased by 3.2% to around D 319 million.

High writedowns on investments: key earnings figures for 2008 are burdened by writedowns (impairment) on investments amounting to around D 275.4 million.

Management Report

29 Economicenvironment

32 Businessdevelopment

42 Resultsofoperation,financialpositionandnetassets

49 Subsequentevents

50 Riskreport

52 Dependentcompanyreport

53 Outlook

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Economic environmentFinancial crisis placing increasing burden on real economyAsthefinancialandbankingcrisisplacedanincreasingburdenontherealeconomyin2008,theInternationalMonetaryFund(IMF)wasforcedtomakeseveraldownwardcorrectionstoitsglobalgrowthforecastsinthecourseoftheyear.Afterpredictingglobalgrowthof4.1%for2008atthebeginningoftheyear,theIMFhadreduceditsforecastto3.4%byyear-end.Atthesametime,theIMFexpectsthattherealeconomiccrisiswillnotbefullynoticeableinindivi-dualcountriesnorgloballyuntil2009andforecastsglobalgrowthofaround0%.

Followingastrongfirstquarter,theEurozone’seco-nomyshrankinallsubsequentquartersduring2008(comparedwiththepreviousyear).At-1.5%and-1.2%,thefourthquarterinparticularwaswellbehindthepreviousquarterandprior-yearquarter,respectively.AccordingtotheEuropeanstatisticsagencyEurostat,annualgrowthin2008reachedjust0.7%–thanksabovealltothestrongfirstquarter.

Germangrowthwasalmosthalvedin2008.AccordingtoareportoftheFederalStatisticsAgency(Destatis)inFebruary2009,however,thestrongstartto2008helpedtheGermaneconomyreachgrowthof1.3%fortheyearasawhole.Thecorrespondingfigurefor2007was2.5%andasmuchas3%intheboomyear2006.Afterabuoyantfirstquarter,thedownwardtrendacceleratedtowardyear-end.Inthefourthquarter,grossdomesticproductwasdown2.1%onthepreviousquarter–followingsimilardeclinesinthesecondandthirdquarters.

Limited impact on ITC markets

TheeconomiccrisishassofaronlyhadalimitedimpactontheITCsegment(informationtechnology,telecommunicationsanddigitalconsumerelectronics)ofthehigh-techindustry.ThiswasconfirmedbyarepresentativesurveyoftheITCsector,whichtheGermanITCassociationBITKOM(BundesverbandInformationswirtschaft,TelekommunikationundneueMediene.V.)presentedontheeveoftheCeBIT2009fairinHanover.Accordingtothesurvey,55%ofcom-paniesquestionedhadsofarfeltnodirecteffectsofthecrisisontheirbusiness.Theothersreportedlowersalesorfewernewordersthanexpectedbeforethecrisis.Intotal,theGermanITCmarketgrewby1.2%in2008,frome 142.9billiontoC144.6billion.

WhereastheConsumerElectronics(+5.2%toC12.2billion)andInformationTechnology(+3.4%toC66.2billion)segmentsdisplayedrobustgrowthin2008,salesintheTelecommunicationsegmentweredown1.6%onthepreviousyeartoC66.3billion.BIT-KOMblamesthedifficultmarketsituationintheTele-communicationsegmentaboveallonfurtherpriceerosion.In2008,forexample,tariffsonaverageby3.3%.

United Internet’s target markets continue to grow

ApartfromtheITCmarketasawhole,themostimpor-tantmarketsforUnitedInternetaretheGermanDSLmarket,theGermanandEuropeanadvertisingmarketandtheglobalmarketforwebhostingservices.Alookatthesemarketsshowsthatallsegmentswereabletogrowin2008–althoughtheonlineadvertisingmarketsufferedheavilyfromreducedadvertiserspendingfrommid2008onwards,asaresultofthefinancialandeconomiccrisis.

Onthebasisofpublicationsreleasedbyactivecompa-niesintheGermanbroadbandmarket,wecalculatethatthenumberofbroadbandconnectionsgrewby3.2millionor16.1%toatotalof23.1millionin2008(includingcableinternet).TheFederalNetworkAgency’sofficialfigureswerenotavailableatthetimeofwriting.Atthesametime,thereisagrowingtrendtowardDSLcompletepackages.SuchpackagesnolongerrequireaDeutscheTelekomphoneconnection,insteadproviderssuchasUnitedInternetrent“thelast

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mile”frompre-serviceprovidersandoffereverythingfromasinglesource.AclearindicatorofthistrendistheincreaseinDeutscheTelekom’sTALconnectionsof1.95million,orover30%,to8.37millionandthedecre-aseinTelekomfixedlineconnectionsof2.49million,or8%,to28.56million.AccordingtocalculationsoftheindustryassociationBITKOM,revenuesgeneratedbyinternetconnectionsamountedtoaroundC13.2billionin2008.

Theleadingmarketresearchinstitutesallexpectedfurtherstronggrowthfortheglobalonlineadvertisingmarketandforecast–beforetheonsetoftheglobalfinancialcrisis–similarlyhighgrowthratesasinpre-viousyears.Asfearsofglobalrecessiongrew,however,advertisersbecameincreasinglycautiouswiththeirspendingandmarketresearcherswereforcedtodown-gradetheirgrowthforecastsforallmajoradvertisingmarkets.However,incontrasttothedevelopmentinmanyothereconomicsectors,onlineadvertisingwasabletocontinueitssuccessstoryofthepastfewyears.

AccordingtotheInteractiveAdvertisingBureau(IAB)andPricewaterhouseCoopers(InternetAdvertisingRevenueReportQ3/2008),onlineadvertisingrevenuescontinuetogrowintheUSA.However,therewasanoticeableslowdowninthepaceofgrowthduring2008asaresultofthefinancialandeconomiccrisis–from18.2%inthefirstquarterto12.8%inthesecondand11.0%inthethird.Atthetimeofwriting,thefiguresforthefourthquarterof2008werenotyetavailable.

AccordingtocalculationspreparedbyNielsenMediaResearch,grossonlineadvertisingrevenuesinGer-many–generatedwithgraphicadvertising–grewby26.9%in2008toC1.5billion.NielsenMediaResearchalsoreportedthattherewasamarkedslowdowninthepaceofgrowthinGermanyoverthelastquarters.TheOnlineMarketingGroup(Online-Vermarkterkreis–OVK)oftheGermanDigitalEconomyAssociation(BundesverbandDigitaleWirtschaft–BVDW)comestosimilarfigures:withgrowthof25%,OVKstatesthatonlineadvertisinginGermanyboaststhehighestgrowthratebyfarcomparedwithothermedia.Grossadvertisingrevenuesfromclassiconlineadvertising,searchwordmarketingandaffiliatenetworkstotaledC3.65billion.Classiconlineadvertisingdisplayedthestrongestgrowthin2008(+27%),generatingrevenuesofaroundC1.9billion.Searchwordmarketingachie-vedyear-on-yeargrowthof24%andclimbedtoaroundC1.48billion.Theaffiliatemarketingsegmentgrewby25%toC268million.

Despitetheadverseeconomicconditions,theGermanonlineadvertisingmarketthusonceagainconfirmedthepositivetrendoftheprecedingyearsin2008.Whiletheproportionofspendingonclassicmediaformatscontinuestostagnateorsteadilydecline,onlineadvertisingcontinuestogrowandgainfurtherground.Onlineadvertising’sshareofthetotaladverti-singmarkethasgrownfrom4.4%to14.4%inthelastfouryears.Atthesametime,mediaformatssuchasgeneral-interestmagazines(-3.3%),newspapers(-3.0%)andTV(-3.2%)havealllostmarketshare.

Althoughonlineadvertisingcontinuestogrowinsignificance–aspartoftheoverallmarketingmix–itwasnotabletoescapetheeffectsofthegeneralecono-micsituation.Thesameisstilltruetoday.Asaconse-quence,theOVK’sgrowthforecastofaround10%for2009ismuchmoreconservativethaninpreviousyears.

WhencomparingmarketgrowthascalculatedbyNielsenortheOVKwithactualmarketgrowthofcom-paniesoperatinginthemarket,itshouldbenotedthatbothNielsenMediaResearchandtheOVKonly“measure”grossspendings,andthustheofficiallistprices.Discountsgrantedontheselistprices–whichbecameincreasinglyin2008inthefaceoffiercecom-petition–arenotconsideredinthesefigures.Againstthisbackdrop,weexpectthatthegrowthinrealsalesoftheonlineadvertisingmarket–basedonspending–willfallsignificantlyintotalasaresultofstrongpressureonpricesanddiscounts.

Theinternationalwebhostingmarketalsocontinuestoenjoystronggrowth.AccordingtocalculationsofRegistrarSTATS.com,thenumberofregisteredgenerictop-leveldomainsaroundtheworld(suchas.com,.net,.org)grewby9.8millionin2008toreachatotalof107.3million–anincreaseofaround10%overDecem-ber31,2007.TheGermantop-leveldomain“.de”alsoenjoyedstrongdemandin2008–despiteacompara-tivelyhighonlinepresencealreadyachievedamongconsumersandbusinesses–andgrewby780,000(+6.7%)to12.45milliondomainsbytheendofDecem-ber.Thispurelyquantitativemarketgrowthisalsoconfirmedbyforecasts,suchasthoseofGartnerandIDCwhoexpectannualgrowthratesof15%and16%until2010.IntheirEuropeanManagedWebhostingForecastofOctober2007,theexpertsofIDCforecastgrowthof11.3%toUSD4.2billionforwesternEuropein2008–intheB-to-Bwebhostingsectoralone.GoodgrowthopportunitiesareforecastforallEuropeanmarketsinwhichweoperate:Germany(+9.4%),the

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UK(+11.3%),France(+11.0%),Austria(+12.3%)andSpain(+13.4%).

Thiswide-scalemarketgrowthisdrivenprimarilybytheglobaldemandforeverfasterinternetaccess.AccordingtofiguresoftheDeutschlandOnlinereport,maximumspeedswerestillaround3Mbits/sin2004,roseto6Mbits/sin2005andhadalreadyreached16Mbits/sin2006.For2015,expertsforecastthatover30%ofallinternetconnectionswillbebroadbandandwellbeyondthecurrent“16-Mbits/sbarrier”.ThesectorassociationBITKOMforecaststhattotalonlinedatatrafficisalreadygrowingby50-60%–wherebythedatavolumeofprivateinternetusersisgrowingparticularlyfast,asevermorephotos,videosandfilmsinhigh-resolutionqualityaretransmitted.

Thegrowingpenetrationofprivatehouseholdswitheverfasterbroadbandconnectionsenablesinternetserviceproviders(ISPs),suchasUnitedInternet,toofferincreasinglydata-intensiveandinnovativeproductsandservices,suchasvideo-on-demandorinfutureinternetTV,andcomplex,web-basedapplica-tionspreviouslyonlyknownasPCsoftware–oftenreferredtoasSoftwareasaService(SaaS)orCloudComputing–whichendcustomersorcompaniescanusewithoutanyfallinperformance.Widespreadbroadbandaccessalsoopensupnewopportunitiesforinternetadvertising,afieldinwhichwearerepresen-tedbyourportalsGMX,WEB.DEand1&1,aswellasbyourOnlineMarketingsegment.Advertisersarenowabletouseevermoredata-intensiveadvertisingformats,suchashigh-resolutionvideoclips,fortheironlinecampaigns.AccordingtotheOVK,theuseofvideoadvertisingformatsalreadygrewby236%inGermanyduring2008.

Withitswidemarketcoverage,UnitedInternetbene-fitsfromthismarketdevelopmentonseverallevels:asoneofGermany’slargestDSLproviders,astheleadingproviderofonlineadvertisinginGermany,asoneoftheleadingEuropeanmarketersofthird-partyonlineadvertisingspaceandasoneoftheworld’sleadingwebhostsofcomplex,value-addedapplicationsatourdatacenters.

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Business developmentSuccessful development of Group’s operating businessWith7.95millionfee-basedcustomercontracts,UnitedInternetAGisaleadinginternationalISP.UnitedInternet’soperationsareprimarilythroughitssub-sidiaries1&1InternetAG,includingWEB.DEGmbH,GMXGmbH,GMXInternetServicesGmbH,UnitedInternetMediaAG,FasthostsInternetLtd.,viaInterNetXGmbHandviaAdLINKInternetMediaAG,includingSedoGmbHandaffilinetGmbH.

Ourbrandsarecurrentlyactiveintwobusinessseg-ments: IntheProductsegment,ourinformationmanage-mentapplications,webhostingsolutionsandinternetaccessproductsaredirectedatprivateusers,small/homeoffices(SoHos)andsmalltomid-sizeenterprises(SMBs).Inourdirectsalesbusiness,thesegroupsareservedbythebrandsGMX,WEB.DEand1&1.OurInterNetXandFast-hostsbrandsalsoofferwebhostingproductsaswhite-labelsolutions–indirectly–viaresellers,whileUnitedInternetMediamarketsourportalstoe-commercemerchantsandadvertisers.

InourOnlineMarketingsegment,wearemainlyrepresentedbythebrandsAdLINKMedia,affilinetandSedo.Weofferadvertisersavarietyofmarke-tingandsalessolutionsinthissegment:DisplayMarketingviaAdLINKMedia,AffiliateMarketingviaaffilinetandDomainMarketingviaSedo.IncontrasttothemarketingofourownportalsintheProductsegment,weprimarilymarketthird-partydomainsandwebsitesinthissegment.

Quantitativeperformanceindicators

Inlinewithourpositioninginthe“Product”and“OnlineMarketing”segments,wemeasureourbusi-nesssuccessaboveallviathekeyindicators:sales,grossmargin,EBITDAandEBTontheonehand,andcustomercontracts,reach/activeusersandmarketabledomainsandwebsitesontheother.

Successfulinternationalexpansion

Wecontinuetomakestrongprogressinourinter-nationalexpansion.In2008,ourGroupcompanieswereactivein14differentnationsthroughtheirownlocaloffices.DespiteaverystrongEuro(especiallyagainsttheUSdollarandBritishpound),non-Germansalesgrewby4.1%duringtheperiodunderreviewandcontributedC216.2million(prioryear:C207.7million)tototalconsolidatedsalesofC1,649.6million.Adjustedforcurrencyfluctuations,foreignsalesamountedtoapproximatelyC238.2million,corres-pondingtogrowthof14.7%.IntheProductsegment,weoperateour“Webhosting”businessinGermany,France,theUK,Austria,SpainandtheUSA.WealsoservecustomersinnumerousothercountriesviaourinternationalUSwebsite.In2008,weraisedthetotalnumberofnon-Germancustomercontractsby380,000–from1.55millionasofDecember31,2007to1.93milliononDecember31,2008.AfterbeingrepresentedontheUSend-usermarketsince2004bythe1&1brand,ourresellerbrandFast-hostsalsostartedactivitiesthereinthethirdquarterof2008.Tomarkthebrand’sUSlaunch,Fasthostsofferedresellersafreehigh-qualityreseller-hostingpackagewithunlimitedstoragespaceanddatavolumeforoneyear.AsintheUK,resellersintheUSAcannowalsouseFastshosts’white-labelproductstooffertheircustomerscompletelyindependentwebhostingpackagesorpre-confectionedall-in-onepackagesundertheirownname.AlloffersarehostedatourdatafarminLenexa,Kansas.

TheinternationalpresencewehavealreadyachievedintheOnlineMarketingsegmentisakeyelementofouroverallconcept.InadditiontotheUSA,ourbrandsarerepresentedin13Europeancountries(Belgium,Germany,France,theUK,Italy,Croatia,theNether-lands,Norway,Austria,Sweden,Switzerland,SloveniaandSpain).InDisplayMarketing,weexpandedintoSouth-EastEuropeinearly2008viaourinvestmentGoldbachMedia.ThisinvolvedtheacquisitionofonlinemarketersinCroatiaandSlovenia.InAffiliateMarketing,weaddedSpainandtheNetherlandstoourinternationalplatformin2008.InourDomainMarketingbusiness,SedohasalsobeenrepresentedinLondon(UK)sincemid2008–inadditiontoCologneandBoston(USA)–viaacooperationwithAdLINKMedia.

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QualitativegrowthinDSL

IncomparisonwithDecember31,2007wesucceededinactivating230,000newDSLcontracts(net),bringingthetotaltoapproximately2.82millionDSLcustomersasofDecember31,2008.Approx.60,000furtherDSLorderswerebeingprocessedasofthisdate.Inadditiontotheacquisitionofnewcustomers,themainfocusofourDSLbusinessduringtheperiodunderreviewwastoraisecustomerloyaltyandexpandbusinesswithourcurrentclientbase.Withnowfourpre-serviceproviders(Arcor,DeutscheTelekom,QSCandTelefónica)wesucceededinconvertingalargenumberofexistingcustomerstoourcompletepackagesin2008,thusmaximizingcustomerretention.ComparedwithDecember31,2007,wewereabletoraisethenumberofourcompletepackages–whichnolongerrequireaTelekomphoneconnection–by670,000to780,000.

StrategicinvestmentsinVersatelandfreenet

VersatelUnitedInternetacquiredfurthersharesinVersatelAGduringtheperiodunderreviewandheldatotalstakeof25.21%inVersatelAGasofDecember31,2008.

freenetUnitedInternetandDrillischalsoincreasedtheirshareholdinginfreenetAGto24.52%inJanuary2008,viathejointlyheldcompanyMSPHoldingGmbH.InthecourseofthecapitalincreaseoffreenetAG,inconnectionwithitsacquisitionofDebitel,thesharesheldbyMSPHoldingGmbHinfreenetAGweredilutedfrom24.52%to18.39%asofJuly5,2008.OnDecember29,2008,UnitedInternetacquired10,798,817sharesinfreenetAGfromMSPHoldingGmbH,equivalentto8.43%ofvotingrights.TheproceedswereusedtoreducethefinancialliabilitiesofMSPHoldingGmbH.Afterexecutingthissharetransfer,MSPHoldingGmbHstillholds12,751,183sharesinfreenetAG,or9.96%ofvotingrights.DrillischAGcontinuestohold7.52%ofthevotingrightsinfreenetAG.Duetothecon-tractualvotingcommitmentbetweenUnitedInternetandDrillisch,thereisnodifferenceintheshareofvotingrightsinfreenetAGheldbyUnitedInternetAG,togetherwithDrillischandMSPHolding,whichstilltotals25.91%–asbeforethesharetransfer.

InvestmentfundwiththeSamwerbrothers

TogetherwiththeSamwerbrothers,UnitedInternethasbeeninvestingsincemid2007infundswithavarietyoffocusareas.UnitedInternethasheldastakeintheEuropeanFoundersFundGmbH&Co.Beteili-gungsKGNo.1(UnitedInternetshareholding:66.67%),afundforearly-phasefinancing,sincethemiddleof2007.Asof2008,UnitedInternetalsoholdsastakeinafurtherjointfundsetupinlate2007forso-called“later-stageinvestments”,theEuropeanFoundersFundGmbH&Co.BeteiligungsKGNo.2(UnitedInternetshareholding:90.00%).InacontractdatedMarch5,2008,UnitedInternetalsoacquiredan80.00%stakeintheEuropeanFoundersFundGmbH&Co.BeteiligungsKGNo.3.Thisfundspecializesinsmallpercentageinvestmentsin“later-stagecompanies”.In2008,UnitedInternetinvestedC24.4millioninEFFNo.1forshareholdingsinyounginternetandtechnologycompanies(portfoliocompanies).Viathefullycon-solidatedEFFNo.2andEFFNo.3funds,atotalofC24.5millionandC50.1million,respectively,wasinvestedinportfoliocompanies.ProceedsfromthesaleofportfoliocompaniestotaledC20.0millionin2008.

Newinvestmentsin2008

OnFebruary8,2008,UnitedInternetacquireda48.65%stakeinthemediaholdingcompanyvirtualmindsAGandthusalsoinADITIONtechnologiesAG.ADITIONisthethird-largestadservingsupplierontheGermanonlinemarket,afterDoubleClickandAdTech.UnitedInternet’sstrategicinvestmentisaimedatsecuringthecontinuedindependenceandcompetitiveneutra-lityofADITIONviaaminorityholding.ThiswillhelptostrengthenADITION’sroleasaneutralserviceproviderfollowingthetakeoverofDoubleClickandAdTechbyGoogleandAOL,respectively,andtheirintegrationintothecompanies’respectivemarketingsystems.

OnMarch7,2008,UnitedInternetacquired33.36%ofsharesintheSwissBW2GroupAG.BW2offersprofessionalCRMandERPbusinesssolutions.

ProSiebenSat.1MediaAGandUnitedInternetplacedtheircooperationinthefieldofvideo-on-demandonanewbasisin2008.Ajointlycontrolledcompany,maxdomeGmbH&Co.KG,wasfoundedinwhichProSiebenSat.1andUnitedInternet(via1&1InternetAG)eachhold50%ofshares.TherespectivecontractsweresignedonFebruary22,2008.Thetransactionwas

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approvedbytheanti-trustauthoritiesoftheEuropeanCommissiononApril29,2008.

OnMay30,2008,UnitedInternetacquiredallsharesintheBritishFasthostsresellerDollamoreLtd.,includingits130,000customerrelationships,viatheGroupsubsidiaryFasthostsInternetLtd.

OnJuly1,2008UnitedInternetacquireda30%stakeinJimdoGmbH.Withits“Jimdo”websitetools,thecompanyoffersaservicefortheeasycreationofprivateorcommercialhomepages.

Segment development

Productsegmentposts13.5%salesgrowth

TheUnitedInternetGroup’sdominantbusinessremaineditsProductsegmentin2008,withthebrandsGMX,WEB.DE,1&1,InterNetXandFasthosts,whichtogetheraccountfor86.9%oftotalsales.

Infiscalyear2008,salesinthissegmentgrewby13.5%,fromC1,261.9milliontoC1,432.8million(currencyadjusted:+14.7%toC1,447.3million).Earningsbeforeinterest,taxes,depreciationandamortization(EBITDA)improvedby6.9%,fromC279.4milliontoC298.6mil-lion.Earningsbeforetaxes(EBT)reachedC249.2mil-lion,representinggrowthof13.3%comparedwithC219.9millioninthepreviousyear.Despitehighexpensesforcustomeracquisitionandretention(con-versiontocompletepackages),theEBTmarginonceagainreached17.4%.Customeracquisitioncostsconti-nuetobechargeddirectlyasexpenses.Thenumberofemployeesinthissegmentgrewby16.3%to4,020(prioryear:3,456).

Ourveryhealthykeyfinancialsinthissegmentarecloselylinkedwiththedynamicgrowthofourcusto-merbase.AsofDecember31,2008wehad7.95millionfee-basedcustomercontracts(year-end2007:7.15mil-lion).ThesearedividedamongthethreeproductlinesofourProductsegment:

Information Management withprofessionale-mailsolutions,messaging,addressmanagement,PocketWeband0700number

Webhosting withdomains,homepages,dedicatedandvirtualserversande-shops

Internet Access withDSLconnections(includingtelephonyandvideo-on-demand),aswellasmobileandnarrowbandinternetaccess

Customercontractsupbyover11%Dividedaccordingtoproductlines,thecontractfigurescomprise1.36millioncustomercontractsinthefieldofInformationManagement,3.62millioninWebhosting(ofwhich1.93millionoutsideGermany)and2.97mil-lioninInternetAccess(ofwhich2.82millionDSL).ThemarketingofourDSLcompletepackages,whichnolon-gerrequireaTelekomphoneconnection,madeverygoodprogressin2008.Thenumberofcompletecusto-mersgrewby670,000in2008tostandat780,000byyear-end.

LeadingsupplierofinternetadvertisinginGermanyWitharound19.8millionactiveusers,theUnitedInternetAGportals(GMX,WEB.DEand1&1)areusedbymorethan47%ofallGermaninternetusers.Accor-dingtothecurrent“internetfacts2008-III”oftheonlineresearchworkinggroupAGOF,themarketingcompanyforourportals“UnitedInternetMedia”onceagainrepresentsthelargestsupplierofinternetadvertisinginGermany,intermsofbothreachandadvertisingspacevolume.UnitedInternet’sportalsrank2nd(WEB.DE),5th(GMX)and34th(1&1)amongthe500onlinemediameasuredinGermany.

KeyplayeringlobalwebhostingbusinessWith3.62millionwebhostingcustomersaroundtheworld,over65,000servers,andmorethan13milliondomains,UnitedInternetAGanditswebhostingbrandsisoneoftheworld’sleadingsharedanddedicatedhostsandaleadingglobaldomainregistry.Wesucceededinfurtherenhancingourpositionandwinningnewcustomersinallourforeignmarketsduring2008.Inadditiontoorganicgrowth,wealsoacquiredourUKresellerDollamoreandits130,000customerrelationshipsinthepastyear.

HanaunuclearpowerplanttobecomegreenserverfarmUnitedInternetisbuildingoneofEurope’sbiggestdatacentersonthesiteoftheSiemensTechnoparkinHanau,Germany.Inthebuildingoftheformer“NeueMOX”fuelelementfactory,UnitedInternetwillsetupaninternetdatacenteron10,000squaremetersofbuildingspacewhichwillbegraduallyexpandedaccordingtoneedsandwillultimatelyofferspaceforupto100,000servers.Byplacingthenewfacilityfarawayfromthecompany’sexistingdatacentersintheKarlsruheregion,thecompanycanguaranteethe

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availabilityofitsservicesinthecaseofcatastrophes.Sincelate2008,thebuilding–originallyplannedasanuclearplant–hasbeengraduallyconvertedintoa“green”datacenter,asitsenergyneedswillbesuppliedinfutureexclusivelyfromregenerativesources,aswithallotherdatacenters.ThefirststageoftheHanau-baseddatacenterisexpectedtogointooperationinlate2009.

No.3ontheGermanDSLmarketInitsGermanDSLbusiness,UnitedInternetisthemarket’sthirdlargestproviderafterDeutscheTelekomandVodafone/Arcor.Intheperiodunderreview,weactivated230,000newcustomercontracts(net)andhadaround2.82millioncontractsasofthebalancesheetdate.Approx.60,000furthercontractswerestillbeingprocessedonthisdate.

Inadditiontotheacquisitionofnewcustomers,themainfocusofourDSLbusinessin2008wastoraisecustomerloyaltyandexpandbusinesswithourcurrentclientbase.Withnowfourpre-serviceprovi-ders(Arcor,DeutscheTelekom,QSCandTelefonica)we

succeededinconvertingalargenumberofexistingcustomerstoourall-inclusivepackagesin2008,thusmaximizingcustomerretention.ComparedwithDecember31,2007,wewereabletoraisethenumberofourcompletepackages–whichnolongerrequireaseparatephoneconnection–by670,000to780,000.

Quarterly development in C millions

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q4 2007Sales 346.0 356.6 359.1 371.1 346.4

EBITDA 77.2 85.1 73.5 62.8 75.0

EBT 64.9 73.0 60.9 50.4 56.7

Customer contracts by product line in millions – without DSL backlog

Customer contract 31.12.2007 31.12.2008 Growth

Information Management

1.21

1.36

+0.15

Webhosting 3.21 3.62 +0.41

of which abroad 1.55 1.93 +0.38

Internet Access 2.73 2.97 +0.24

of which DSL 2.59 2.82 +0.23 of which Resale- /T-DSL 2.48 2.04 -0.44

of which complete DSL 0.11 0.78 +0.67

Total 7.15 7.95 +0.802006 2007 2008

6,31

7,15

7,95

Costumer contractsin millions – without DSL backlog

279.4219.9

20071.261.9

298.6249.2

Sales EBITDA EBT

in D millions

2008Financial figures Product segment

1.432.8

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InadditiontoUnitedInternetMedia,theonlinemar-keterofourportals,wearerepresentedby5brandsinourProductsegment:

GMXisoneoftheleadingsuppliersofcommunicationserviceGMXtargetsprivateuserswithitsInformationManagementproducts.With8.7millionuniqueuserspermonth,GMXisoneofGermany’sleadingsuppliersofmail,messagingandcommunicationsolutions.Inadditiontoitsfreee-mailaccounts,GMXalsooffersfee-based,added-valueservicesandinparticularprofessional,web-basede-mailsolutions.

Highlights2008: GMXroll-outinUKandUSA.Followingextensivepreparations,GMXlauncheditse-mailproductsintheUSAandUKatthebeginningof2008.

LaunchofGMX.atandGMX.ch.Followingtheroll-outofGMX.atandGMX.ch,e-mailusersinAustriaandSwitzerlandnowalsohaveaccesstohigh-quality,country-specificcontentandserviceareas.

ExpansionofMultiMessenger.TheGMXMultiMessengerwasfurtherdevelopedintoacommunicationscenterin2008,combiningvariouscommunicationchannelsandaggregatedthematacentralplace.

WEB.DE,Germany’sNo.2portalWEB.DEisGermany’ssecondlargestportalwith12.8millioninternetuserspermonth.Inadditiontoitsfreebasicservices,WEB.DEalsooffersfee-basedproducts–includingthepopularWEB.DEClub.

Highlights2008: Softwareandfreewaredownloads.InJanuary2008WEB.DEexpandeditsrangeofportalserviceswiththeadditionofaplatformforthelegaldown-loadofaround800fee-basedand10,000freecomputerprograms.

ExpansionofUnifiedMessagingServices.Withthechangeto032numbers,WEB.DEaddedconvenientfaxandanswerphonefunctionalitytoitsUnifiedMessagingService.

HomebankingwithWEB.DE.IncooperationwiththemarketleaderStarFinanzGmbH,WEB.DElaunchedthesafeandconvenientonlinebankingsoftwareStarMoneyinSeptember2008.

1&1,aleadingISPinGermanyandaroundtheworld1&1offersawiderangeofreliableonlineapplicationsforconsumersandsmallbusinesses.Servicesrangefromwebhosting(websites,domains,webshops,pay-mentsystems,servers)tofastDSLconnections(withDSLtelephony,video-on-demandandmobiletele-phony),mobileandnarrowbandinternetaccessandpersonalinformationmanagement(PIM)viatheinter-net(e.g.PocketWebandProfessional-e-Mailaccounts).1&1isGermany’sthird-largestDSLsupplierandoneoftheworld’slargestwebhostingcompanies,withoperationsin6countries.

Highlights2008: Expansionofdatanetwork.Withtheexpansionofitsnetworkin2008,1&1’sdatacentersinGermanyandtheUSAnowenjoyinternetconnectionswithbandwidthsofover120Gigabit/s.

Roll-outof1&1MediaCenter.TheMediaCentercentrallyaggregatespersonalmedia(photos,videoandmusicfiles)andinternetofferings(e.g.max-domeorZDFMediathek)foruseviatheTVorhi-fisystem.

1&1introducesHomeserver.TheHomeservercombinessixdevices(networkserver,router,mediaserver,telephonesystem,DECTbasisstationandDSLmodem)forjointlyusedapplicationsthroughoutthehouse.

Expansionofmobiledataservices.Inthefieldof“MobileInternet”,1&1launchedanumberofnewtariffoptions(includingflatrates)andend-userdevices(suchasUMTS)forconsumersandprofessionalsin2008.

Webhosting customers by country in millions

31.12.2007 31.12.2008 GrowthGermany / Austria

1.66

1.69

+0.03

UK 0.74 0.94 +0.20

France 0.17 0.21 +0.04

USA 0.64 0.74 +0.10

Spain - 0.04 +0.04

Total 3.21 3.62 +0.41

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InterNetX–theprovider’sproviderinGermanyInterNetXcomprisesallUnitedInternet’sresellingactivitiesinGermany.InterNetXmarketswebhostingproductstoISPsandmultimediaagencies(resellers),whointurnmarketthemundertheirownnameandfortheirownaccount.

Highlights2008: Expansionofresellernetwork.In2008,InterNetXsucceededingainingfurthernewsalespartners.Thecompanynowservessome19,100resellers(prioryear:17,700),forwhichithosts2.4milliondomainsand1,100servers.

Portfolioexpanded.Apartfromexpandingitsportfolioofdomains(.cz,.vn,.pe,.cn,.me,.telandothers),InterNetXalsolaunchedatrusteeservicein2008formanytop-leveldomains,suchas.de,.eu,.frand.nl.

Fasthosts–theprovider’sproviderintheUKandUSAFasthostsisourresellerbrandintheUKandUSA.LikeInterNetX,Fasthostsmarketswebhostingproductstoover5,700ISPsandmultimediaagencies,whointurnmarketthemundertheirownname.Fasthostsalsooperatesitsowndirectbusinesswithconsumersandcompanies.

Highlights2008: AcquisitionofDollamore.In2008Fasthostsacquiredapprox.130,000customerrelationshipsofitsformerresellerDollamoreLtd.,aswellastheStreamline.netbrand.

USroll-out.Fasthostslauncheditsresellerpro-ductsintheUSAduringthethirdquarterof2008.Inthecourseofthemarketlaunch,salespartnerswereallowedanunlimitedandfreetestoftheproductsforaperiodofoneyear.

Difficultyearforonlinemarketing

InourOnlineMarketingsegment,weofferadvertisersavarietyofmarketingandsalessolutions:DisplayMarketingviaAdLINKMedia,AffiliateMarketingviaaffilinetandDomainMarketingviaSedo.IncontrasttothemarketingofourownportalsintheProductseg-ment,wemarketthird-partydomainsandwebsitesinthissegment–in13EuropeancountriesandtheUSA.

InadditiontotheproblematicdevelopmentoftheDomainMarketingsegmentsincethesecondquarter

of2008,thestrongfallindemandforDisplayAdverti-singespeciallyinthethirdandfourthquartershadasignificantnegativeimpactonkeysalesandearningsfiguresintheOnlineMarketingsegmentin2008.Thereluctanceofourcustomerstospendonadvertisingledtofallingsalesvolumesaswellasfiercecompeti-tionfortheremainingbudgets,whichinturnincrea-sedthepressureonpricesandmargins.IncontrasttothesalesandearningsfiguresinourDomainandDis-playbusiness,whichfellwellshortofexpectations,ourAffiliateMarketingbusinessperformedasexpected.

Againstthisbackdrop,salesintheOnlineMarketingsegmentfellby3.9%,fromC224.8millioninthepreviousyeartoC216.1million.Adjustedforcurrencyfluctuations,segmentsalesremainedvirtuallystableatC223.6million–despitetheadversemarketcondi-tions.Withoutadjustment,theOnlineMarketingsegmentaccountedfor13.1%oftheUnitedInternetGroup’stotalsalesintheperiodunderreview.EBITDAfellby70.2%,fromC43.3millioninthepreviousyeartoC12.9million–wherebytheprior-yearfigurecon-tainspositivenon-recurringeffectsofC16.8millionfromthecontributionofoursharesinAdLINKSwitzer-landandAdLINKAustriatoGoldbachMediaAG.EBTdecreasedfromC29.6milliontoC-7.9million–wherebyprior-yearEBTcontainspositivenon-recur-ringeffectsofC7.4million(C16.8millionincomefromthecontributionofcompanysharestoGoldbachandC9.4millionexpensesforgoodimpairmentcharges),whileEBTin2008wasburdenedbynegativespecialitemstotalingC17.1million(C7.9millionwritedownonourGoldbachinvestmentandC9.2mil-liongoodimpairmentchargesinGermanyandFrance).AsofDecember31,2008thesegmentemployed516people(prioryear:472).

AdLINKMedia–independentonlinemarketerinEuropeAdLINKMediaisoneofEurope’slargestindependentonlinemarketers.Thecompany‘sbusinessmodelisbasedonanonlineadvertisingnetworkconsistingofhigh-reachwebsitesgeneratingover10billionAdImpressionspermonth,whichitmarketstoadvertisersforDisplayMarketing(brandingpurposesordirectproductsales).PaymentiseitheronaCPMbasis(costperthousandcontacts)and/orperformance-basedpay-per-clickbasis.

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Highlights2008: ExpansionintoSouth-EastEurope.In2008,AdLINKcontinueditsexpansionintoSouth-EastEurope–viaitsinvestmentinGoldbachMedia–withtheacquisitionofonlinemarketersinCroatiaandSlovenia.

LaunchofTGPopen.Inthesecondhalfof2008,thetargetingstandardTGPopenofsistercompanyUnitedInternetMediawasintroducedinthecompany’sGermanDisplayMarketingbusiness.

Portfolioexpanded.Anumberoftop-qualitywebsitesweregainedformarketingduringtheyear,includingCinemaxXandZattoointhefieldofentertainment,andeBayBelgiuminthefieldofe-commerce.

Reachextended.Intheperiodunderreview,thenumberofAdImpressionsgeneratedviathenetworkgrewfrom8.5billion(averageinQ4/2007)toover10.3billion(averageinQ4/2008).

Sedo–World’sleadingdomainmarketingcompanySedooperatestheglobaldomaintradingplatformsedo.com,wheresome15.3milliondomainsarecurrentlytraded.Initsdomainparkingbusiness,Sedomarketssomeofthesedomainstoadvertisersfordomainmarke-tingpurposesonbehalfofthedomainowners.Sedotakesashareoftherevenuesgeneratedfrommarketingonapay-per-clickbasis.

Highlights2008 Portfolioexpanded.Intheperiodunderreview,thecompany’sportfolioofmarketabledomainsgrewfrom5.1millionatyear-end2007to6.2milliondomainsattheendof2008.

InvestmentinDomainsBotS.r.l.EffectiveJanuary1,2008,Sedoacquireda40%stakeintheItaliancompanyDomainsBotS.r.l.,aspecialistforinnovativedomainsearchtechnology.

Platformoptimized.Certificationsforcustomersandbidderswereintroducedin2008,inordertoenhancethequalityoftheadvertisingofferontheonehandandguaranteeasafemarketplaceforsellersontheother.

Furtherinternationalization.SedohasbeenrepresentedbyanofficeinLondon(UK)sincemid2008–inadditiontoitsofficesinCologneandBoston(USA)–viaacooperationwithAdLINKMedia.

Affilinet–KeyplayerincoreEuropeanmarketsaffilinetisactiveinthefieldofAffiliateMarketingandoperatesanetworkforsuppliersofaffiliateprogramsandwebsiteownerswishingtointegratesuchpro-gramsintotheirwebsites.affilinetprofitsfromthecontactsandsalesinitiatedviathenetworkonapurelyperformance-orientedbasis.

Highlights2008 Roll-outintheNetherlandsandSpain.In2008,affilinetcontinueditsinternationalexpansionpolicywithitsentryintotwofurtherEuropeannations–theNetherlandsandSpain.

PublisherCommunicationCenter.ThenewPublisherCommunicationCenterenablesmoreefficientadministrationforadvertisersandoptimumcommunicationwiththeironlinesalespartners.

Quarterly development in C millions

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q4 2007Sales 55.8 55.6 48.1 56.6 67.8

EBITDA 5.3 4.7 1.2 1.7 8.4

EBT 4.3 4.2 0.1 -16.5** 7.3* EBITDA and EBT 2007 include a non-recurring positive effect of C 16.8 million

(EBITDA) and C 7.4 million (EBT)

** EBT 2008 and EBT Q4 2008 include a non-recurring negative effect of C 17.1 million

Financial figures Online Marketing segment

224.8

43.3*29.6*

216.1

12.9-7.9**

Sales EBITDA EBT

2007in C millions

2008

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InternationalDeveloperPortal.InSeptember,affilinetlaunchedanInternationalDeveloperPortal.Theaimoftheportalistodevelopinnova-tivewebapplicationsandthusraiseprogramrevenues.

Theoverwhelmingmajorityofourproductdevelop-mentsandimplementationsin2008wereforourPro-ductsegment.Thesefocusedinparticularonexpan-dinglineandcomputingcapacitiesaswellasonthefieldsofinternetentertainmentandmobileinternet.

Datanetworkexpanded

TheexpansionofourWideAreaNetwork(WAN)hasprovidedourhigh-performancedatacentersinGermanyandtheUSAwithinternetconnectionsofover120Gigabit/s.Wealsomadeourfirstdirectcon-nectionwithamajorexchangenodeoutsideEurope–EquinixinChicago.Asaresult,ourexternalband-widthtripledwithinjusttwelvemonths.Atthesametime,theEuroparing,whichconnectsourKarlsruhe-baseddatacenterswiththemostimportantinternetnodesinFrankfurt,LondonandAmsterdam,wasexpandedtoastandardlevelofatleast10Gigabit/s.TheexpansionofinternetbandwidthensuresthatthecontentandapplicationsofourwebhostingcustomersinEuropeandtheUSAcancontinuetobedeliveredreliablyandathighspeedandthatwearepreparedalreadyforthedemandforgreaterbandwidth,dueabovealltomultimediaapplicationssuchasvideostreams.

AtthesametimeastheexpansionofourWideAreaNetwork,wealsochangedtheunderlyingtechnology.InsteadofSDH(SynchronousDigitalHierarchy),wenowuseEthernettechnology–asknownfromuseincompaniesandhomes.Thisalsoenablesustoachievecostsavingsbyusingmorepowerfulrouters.Improvedexternalconnectionsalsosavesfurthercosts,asthedatastreamscanbedistributedoptimallywiththeaidofnewpeeringsandroutingalternatives.

TGP®becomesseparateproductunderTGPopenbrand

OurmediatargetingtoolTGP®,withwhichadvertiserscantailortheircampaignstospecifictargetgroupsthroughouttheentireUnitedInternetMediaportfolio,wasexpandedandrefinedagainin2008.TGP®ena-blesdirectandefficientcustomertargeting,withouttheneedforaids,suchastopicenvironments,andwithoutanyrestrictionsregardingadvertisingformatortargets.TargetingwithTGP®isbasedonahugedatabaseusingfourdatasources:socio-demographics,surfingbehavior,psychographicsandalsoreal-lifepurchasebehaviordatafromGfK’sConsumerScan.

Research and development

R&Dresultsquicklytranslatedintomarketableproducts

UnitedInternetisnotonlyasupplierofinternetser-vices,butalsostandsforinnovationsdevelopedbyitsownteamofspecialists.Oursuccessisrootedinanabilitytodeveloporadaptinnovativeproductsandservicesandlaunchthemonmajormarkets.Inthefuture-orientedinternetmarket,itisparticularlyimportanttoimplementmarketableideasasswiftlyaspossible.Withourowndevelopmentteams,weareabletoquicklytranslateideasintomarketablepro-ductsandcontinuallyenhanceproductsalreadyonthemarket.Ourexpertiseinproductdevelopmentandmarketroll-outminimizesourrelianceonthirdpartydevelopmentsandsuppliesinmanyareasandthusgivesusadecisivecompetitiveedgeonthemarket.AtourdevelopmentcentersinKarlsruheandBucharest,over450developersusemainlyopensourcecode(Linux).Wealsousethird-partyprogrammingservicesinordertoswiftlyandefficientlyimplementspecificprojects.Wecanthusquicklychangeexistingbasicapplicationsofourproductsandadaptthemtochan-gingcustomerneeds.Themodulesofthissystemcanbeeasilycombinedandprovidedwithproduct-specificorcountry-specificuserinterfacesinordertocreateawidevarietyofpowerfulsolutions.

Duetooursteadygrowthincustomerfigures,thedemandsplacedonourproductswithregardtoreliabi-lityandavailabilityarealsoconstantlyrising.WemeetthesedemandswithITsolutionswhichwedeve-lopourselvesorpurchasefrompartners,andthenmodifyandintegrateintooursystems.Inadditiontothedevelopmentofnewproducts,wealsofocusoncontinuallyenhancingexistingprocessesinordertoraisecustomersatisfaction.Forexample,weareper-manentlyworkingonimprovementstotheinterfaceswithourpre-serviceproviders.

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Thisvarietyofdatasourcesallowsdetailedtargetgroupprofilingandanalysis.TheTGP®adsystemshowseachpersonofatargetgroup,wherevertheyareonourportals,theadvertisingwhichisexactlyrele-vanttothemwhentheycallupawebsite.Thismeansthattargetgroupscanbecontactedprecisely,irrespec-tiveoftheirmomentarysurfingenvironment.Adver-tisingisthusnolongerregardedasannoying.Thisenhancestheimpactandthustheefficiencyoftheadvertiser’scampaign.Inadditiontocontinualdevelopmentofthesystem,workonTGP®in2008focusedinparticularondevelopingthesystemasaseparateproduct“TGPopen”,whichcanalsobeprovi-dedtoothermarketerswiththeaidofalicensingmodel.OursistercompanyAdLINKMediabecamethefirstpartnerforTGPopeninthesecondhalfof2008.

mediaCenterlinksinternetandTV

Withthenew1&1MediaCenterbox,internetentertain-mentcannowbeenjoyedtogetherwithotherpersonalmediainthecomfortoftheconsumer’slivingroom.TheMediaCenterprovidesaconnectionbetweentheconsumer’sTVandhi-fiequipmentandtheinternet.Usingtheremotecontrol,userscanaccesswebcontent–suchasvideos,breakingnews,songs,audioandvideopodcastsandGermany’slargestonlinevideorentalservicemaxdome–aswellasprivatephotosandvideos,andtheirownMP3filesstoredontheirhomePC.

The1&1MediaCenterisalsothefirstdevicetoenableviewerstowatchthe7-daycatch-upserviceofGermany’sZDFMediathekontheirTV.Thiswasprevi-ouslyonlypossibleonPCs.Theprogramsonofferalsoincludenews,businessmagazines,talkshows,sportsbroadcastsandselectedseries.ThenewsandservicesofN24canalsobeaccessedasafreeandup-to-datesourceofinteractiveinformationfromthefieldofpolitics,businessandsport.Inaddition,thelatestregionalandnationalweatherforecastsareprovidedbywetter.com.

1&1MailXchangeforSymbiancellphones

1&1expandeditsprofessionale-mailsolution1&1MailXchangesothatitisnowalsoavailablewithfreeclientsoftwareforSymbiancellphones.Thesoftwareenablesuserstoorganizepersonale-mail,dates,contactsandtaskswithextensivefunctionsforefficientteamworkandfileadministration,andto

synchronizetheminrealtime.Symbianisthemostwidelyusedoperatingsystemforso-calledsmart-phones.WithWindowsMobileandSymbian,1&1MailXchangenowsupportstheoverwhelmingmajo-rityofallinternet-capablecellphonesandexpandsthetargetgroupforthereasonablypricedmobilecommu-nicationsolution1&1MailXchange,especiallywithregardtofreelancers,smallfirmsandsalesrepresenta-tives.

InternationalizationofGMXe-mailproduct

Withtheroll-outofthee-mailservicesgmx.com,gmx.co.ukandgmx.fr,GMXlaidthefoundationfortheexpansionofitsinternationalpresencein2008,parti-cularlywithregardtotheUSA,theUKandFrance.Thee-mailproductforthesecountriesincludesanewtypeofe-mailclient.Thenewclientwasdevelopedwiththeaidofqooxdoo,aframeworkbasedonAjaxpro-grammingtechnology,whichwasinitiatedandisbeingdrivenby1&1andGMXasanopen-sourcepro-ject.Theclientprovidesprivateandprofessionale-mailuserswithaninnovativeandconvenientinter-face,whichisadaptedtothefunctionsofdesktopapplications.Theproductalsoincludesastate-of-the-artorganizer,offeringfullOutlookcompatibility,aswellasafilestorewith5GBofstoragespaceforfiling,archivingandbackingupfiles.

Employees

AsofDecember312008,theUnitedInternetGroupemployedatotalof4,565people–anincreaseof15%overthepreviousyear(3,954).Therewere4,020emplo-yeesintheProductsegment,516intheOnlineMarke-tingsegmentand29employedattheGroup’shead-quarters.Ournon-Germansubsidiariesemployed947people(prioryear:827).Personnelexpensesroseby17.8%,fromC145.8milliontoC171.8million.

Principles of the remuneration system for the Management Board and Supervisory Board

TheSupervisoryBoardisresponsiblefordeterminingtheremunerationoftheManagementBoard.ThemembersoftheManagementBoardofUnitedInternet

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AGarecompensatedaccordingtoperformance.Thiscompensationconsistsofafixedandavariableele-ment.InthecaseofoneManagementBoardmember,thereisacomponentprovidinglong-termincentivesintheformofStockAppreciationRights(SARs).Theexer-cisehurdleforthisprogramis120%ofthestrikeprice.Paymentofvaluegrowthislimitedto100%ofthecal-culatedshareprice.

Theamountoftheseremunerationcomponentsisregularlyreviewed.Thefixedremunerationcompo-nentispaidmonthlyasasalary.Thesizeofthevaria-blecomponentdependsonreachingcertain,fixedfinancialtargetsagreedatthebeginningofthefiscalyear.Thesetargetsarebasedmainlyonsalesandear-ningsfigures.Thetargetattainmentcorridorisgene-rallybetween80%and120%.Nobonusispaidbelow80%oftheagreedtargetandthebonuscalculationendsat120%oftheagreedtarget.Subsequentamend-mentoftheperformancetargetsisnotprovidedfor.Thereisnominimumguaranteedbonus.In2008,thefixedcomponentaccountedfor60%andthevariablecomponentfor40%ofManagementBoardremunera-tion.TherearenoretirementcommitmentsfromtheCompanytomembersoftheManagementBoard.

ThemembersoftheSupervisoryBoardreceivecom-pensationconsistingofafixedelementandavariableelementwhichdependsontheCompany‘ssuccess.ThefixedremunerationforanordinarymemberoftheSupervisoryBoardamountstoC20kperfullfiscalyear.ThechairmanoftheSupervisoryBoardreceivestwicetheamountattributabletoanordinarymember.ThevariableelementforeachmemberoftheSupervi-soryBoard,includingthechairman,amountstoC2kforeverycentwhichexceedstheconsolidatedearningspersharevalueofC0.10forUnitedInternetAG,calcu-latedaccordingtoIFRS.Therearenostockoptionpro-gramsformembersoftheSupervisoryBoard.Therewasonlyfixedremunerationin2008.

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Result of operations, financial position and net assets Growth in operating business; ear-nings burdened by high impairment charges for strategic investments DespitethestrengthoftheeuroagainsttheUSdollarandUKpound,andthegrowingweaknessoftheonlineadvertisingmarketduring2008,consolidatedsalesofUnitedInternetAGgrewby10.9%,fromC1,487.4millioninthepreviousyeartoC1,649.6millionin2008.Adjustedforcurrencyfluctuations,consolidatedsalesgrewby12.4%toC1,671.6million.

Asexpected,thesubscription-basedbusinessofthedominant“Products”segment–withthebrands1&1,

GMX,WEB.DE,FasthostsandInterNetX–notonlypro-vedstablebutenjoyedfurthergrowth.However,salesinthe“OnlineMarketing”segment–withthebrandsAdLINKMedia,affilinetandSedo–wereburdenedini-tiallybyproblemsinthefieldofDomainMarketingand,especiallyinthesecondhalfoftheyear,bythereducedspendingofadvertisersinourmediabusinessinthewakeoftheglobalfinancialandeconomiccrisis,aswellbyfallingpricesduetofiercecompetitionforremainingadvertisingbudgets.

InourProductbusiness,webenefitedfromrisingcustomerfiguresinallproductlines(+800,000custo-mercontractsin2008)andwereabletoconvertthisgrowthintoincreasingsalesandearningsfigures.However,thereducedspendingofouradvertisingcustomersinthesecondhalfoftheyear,andespeciallythefourthquarter,wasalsonoticeableinthissegment–forthemarketingofourportals.Withregardtoexpenses,weinvestedingainingnewcustomersforourDSLbusiness(+230,000contracts),butaboveallalsoinstrengtheningcustomerloyalty.WemadeverystrongprogressinthemarketingofourDSLcompletepackagesin2008.Thesepackages,forwhichcustomersnolongerrequireaseparatephoneconnection,areofgreatimportanceforcustomerretention.Thenumberofcompletecustomersgrewby670,000in2008toatotalof780,000atyear-end.

Consolidated financial figures

1,649.6

318.8

-49.6 -121.5 -121.5

Sales EBITDA EBT* Netincome*fromcontinuedoperations

Netincome*fromdiscontinued

operations

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308.8234.5

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2008

* The figures for 2008 include total negative, non-recurring and non-cash effects of C 275.4 million.

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InOnlineMarketing,salesandearningswerealreadyburdenedfromthebeginningofthesecondquarterbytheproblematicdevelopmentinthefieldofDomainMarketing.Changesinthepolicyandalgorithmsofourmostimportantpartnerinthefieldofsearchengineshavesincebeenslowingdownthedevelop-mentofthisbusiness,whichstillboastedhighgrowthandmarginsin2007.SalesandearningsintheOnlineMarketingsegmentwerealsoburdenedbytheincrea-singweaknessoftheonlineadvertisingmarketinthesecondhalfoftheyear,whichdeterioratednoticeablyfromquartertoquarter.TheweaknessoftheUKpoundandUSdollaragainsttheeuroalsohadanadverseeffect.

Allinall,consolidatedgrossmarginfellfrom39.8%inthepreviousyearto39.0%intheperiodunderreview.ThemainreasonwasthestrongergrowthofourDSLbusinessandtherelatedchangeintheproductmix.Comparedwithotherproducts,suchaswebhostingandinformationmanagement,theDSLbusinesshashighersalesbutalowergrossmargin.

Duetohighcostsforcustomeracquisitionandincrea-sedspendingoncustomerretention,salesandmarke-tingexpensesgrewfromC248.2million(16.7%ofsales)toC278.6million(16.9%ofsales).Thankstoeco-nomiesofscale,administrativeexpensesgrewmoreslowlythansales,fromC82.5million(5.5%ofsales)in2007toC83.7million(5.1%ofsales)intheperiodunderreview.

Earningsbeforeinterest,taxes,depreciationandamor-tization(EBITDA)roseby3.2%toC318.8million,com-paredwithC308.8millioninthepreviousyear.ItshouldbenotedthatEBITDAinthepreviousyearcon-tainedapositivespecialitemofC16.8millionintheOnlineMarketingsegment,whichresultedfromthecontributionofAdLINKSwitzerlandandAustriatoGoldbachMedia.

Quarterly development in C millions

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q4 2007Sales 402.0 412.4 407.4 427.8 414.3

EBITDA 83.2 88.6 77.7 69.3 73.3

Net income 45.1 45.2 -103.8* -108.0* 40.1* The figures for 2008 include total negative, non-recurring and

non-cash effects of C 275.4 million – of which C 145.6 million refer to Q3 and C 129.8 million to Q4.

Againstabackdropofgreatlyreducedstockmarketpricesin2008forourstrategicinvestmentsfreenet(alsoviaMSPHolding),Versatel,DrillischandGoldbachMedia,theManagementBoardandSuper-visoryBoardresolvedtowritedownthecarryingvaluesoftheaforementionedcompaniestotheirmarketpricesasofDecember31,2008andtomakefurtherwritedownsonthevaluationofnon-listedinvestments.Thesewritedownsareincludedinparti-cularintheitems“Resultfromassociatedcompanies”(C-234.2million)and“Writedownsoninvestments”(C-42.4million).Theseimpairmentchargesresultedintotalnon-cash,andnon-tax-effectivespecialitemstotalingC-275.4million,whichinturnledtonetincomeofC–121.5millionandearningspershare(EPS)ofC-0.52.Adjustedforthesenegativespecialitems,netincomeremainedvirtuallystableatC153.9million,comparedwiththepreviousyear.

Cashflow,investmentandfinance

Despitehighexpensesforcustomeracquisitionandretention,operativecashflowwasslightlyabovetheprior-levelatC210.5million(prioryear:C209.8mil-lion).ThedeclineincashflowfromoperatingactivitiesfromC291.9millioninthepreviousyeartoC153.0wasprimarilyduetotheincreaseintradepayablesofC73.3millioninthepreviousyear,duetothebalancesheetdate,comparedwithadecreaseintradepayablesofC62.1millionin2008.

Intermsofcapitalexpenditures,theGroupinvestedatotalofC237.2millionin2008(prioryear:C343.4million).Asinthepreviousyear,themainitemwasthepurchaseofsharesinassociatedcompanies/jointventuresamountingtoC160.7million(prioryear:C309.3million).Thisresultedmainlyfromtheacquisi-tionofsharesinVersatelandfreenetaswellascontri-butionstoEFFFundsNo.1andNo.2.Thesaleoftwen-ty4helpin2007resultedinproceedsofC85.2million.

InvestmentsintangibleandintangibleassetsamountingtoC42.0million(prioryear:C58.8million)focusedmainlyontheProductsegment,andinparticularonthescheduledexpansionofdatacenters,infrastructureandservercapacities.AnamountofC50.9millionwasinvestedinotherfinancialassetsin2008(mainlyforinvestmentsaspartofEFFFundNo.3).ThiswasopposedbycapitalrepaymentsfromEFFFundNo.1andproceedsfromthesaleofourinvestmentBigpointamountingtoC32.3million.ThedisbursementofC31.5millioninthepreviousyear

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resultedmainlyfromtheacquisitionofsharesinDrillischAG.

Withregardtocashflowfromfinancingactivities,proceedsfromnewloanstotalingC172.5million(prioryear:C250.7million)wereoffsetmainlybydisburse-mentsfortheacquisitionoftreasurysharesamountingtoC51.6million(prioryear:C133.8million)anddividendpaymentsofC45.9million(prioryear:C42.5million)

Assetsandequity

In2008,theGroup’soverallassetstructurewasinflu-encedinparticularbythedecreaseinsharesheldinassociatedcompaniesandjointventuresfromC309.0millioninthepreviousyeartoC221.7million–asaresultofimpairmentchargesonthecarryingvaluesofthesecompanies.Thesharesheldinassociatedcompa-niesconsistmainlyofourstakeinVersatelAG(C116.4million)andfreenetAG(C44.8million)aswellastheinvestmentinMSPHoldingGmbH(freenetAG)amountingtoC16.8million.Cashandcashequiva-lentsamountedtoC55.4millionasofthebalancesheetdate(prioryear:C59.8million).Totalconsolida-tedassetsdecreasedfromC1,214.0millioninthepreviousyeartoC1,102.0million,ofwhichgoodwillaccountedforC388.8millionatyear-end2007andC378.9millionatyear-end2008.

FurtherdetailsonfinancialinstrumentsusedbytheGroupareprovidedinsection41ofthenotestotheconsolidatedfinancialstatements.

NetborrowinggrewfromC311.3millionin2007toC489.0millionin2008.Thiswasmainlytheresultoflargelydebt-financedacquisitionsandthepurchaseoftreasuryshares.BankliabilitiesgrewfromC371.1mil-liontoC544.4million.Duetothedeductionoftrea-surysharesfromshareholders’equity,andhighimpairmentchargesonthecarryingvaluesofourinvestments,theconsolidatedequityratiofellfrom31.6%to13.2%.Mainlyasaresultofwritedowns,theGroup’saccumulatedprofitfellfromC171.7millionin2007toC5.6million.

FurtherdetailsontheobjectivesandmethodsoftheGroup’sfinancialriskmanagementareprovidedinsection43ofthenotestotheconsolidatedfinancialstatements.

AnnualfinancialstatementsoftheparentcompanyUnitedInternetAG

EarningsofUnitedInternetAG

Intheperiodunderreview,salesofUnitedInternetAGamountedtoC3.8million(prioryear:C9.2million)andmainlycompriseservicesprovidedtotheGroup’ssubsidiaries.Inthepreviousyear,salesalsoincludedcostallocationswithintheGroupforsponsoringactivitiesinconnectionwiththeAmerica’sCup.

Otheroperatingincomeinthepreviousyearamoun-tingtoC77.2millionresultedmainlyfromthecontri-butionofAdLINKsharestoa100%subsidiaryofUnitedInternetAG(C69.7million)andfromthesaleofsharesinNTplus(C6.2million).

Duemainlytoincreasedinvestmentincomefromtheoperatingsubsidiary1&1InternetAG,incomefromprofittransferagreementsincreasedtoC250.9million.ThiswasopposedbythelosstransferfromUnitedInternetBeteiligungenofC93.4milliondueabovealltowritedownsonfinancialassets.

AsaresultofthenegativesharepriceperformanceofourlistedinvestmentsinfreenetAG(viaMSPHolding)andVersatelAG,aswellasthetreasurysharesheldbyUnitedInternetAG,therewritedownsonfinancialassetsandmarketablesecuritiesofC342.6millionintheperiodunderreview.

AsaresultofthesewritedownsonfinancialassetsandmarketablesecuritiesofC342.6million(prioryear:C0),pre-taxearningsoftheparentcompanyamountedtoC-218.4million(prioryear:C249.7million).Theparentcompany’snetlossamountedtoC279.3million–comparedwithanetprofitofC182.0millioninthepreviousyear.

AssetsandfinancialpositionofUnitedInternetAG

Theparentcompany’sbalancesheetismainlyinflu-encedbysharesinaffiliatedcompaniesamountingtoC403.1million(prioryear:C393.6million)aswellasbyinvestmentsofC169.6million(prioryear:C291.8million).Thedeclineininvestmentsresultsmainlyfromwritedownsonthecarryingvaluesofinvest-mentsamountingC216.0million.Themainadditionstoinvestmentsin2008weretheinvestmentinVersatelAG(C57.3million)andfreenetAG(C36.5million).AsofDecember31,2008,UnitedInternetheld22,000,000

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treasuryshares(prioryear:18,000,000).Asaresultofthesharepricevalueonthebalancesheetdate,trea-suryshareswerewrittendownbyC126.6million.

BankliabilitiesofUnitedInternetAGresultfromarevolvingsyndicatedloan,C380millionofwhichhadbeendrawnasofthebalancesheetdate(prioryear:C370million),aswellasapromissorynoteloanofC150millionplacedin2008.Theequityratiofellto31.0%asofDecember31,2008(prioryear:58.4%),dueinparticulartopartiallydebt-financedinvestmentsandhighwritedowns.

TheAnnualShareholders’MeetingofUnitedInternetAGfollowedtherecommendationoftheManagementBoardandSupervisoryBoardofUnitedInternetAGandresolvedonMay27,2008topayadividendof20centspershare(prioryear:18cents).Thetotaldividendpay-mentofC45.9millionwasmadeonMay28,2008.Nodividendpaymentisplannedforthefiscalyear2008.

Additionaldisclosuresonfinancialinstrumentsandfinancialriskmanagementoftheparentcompany

Themainfinancialliabilitiesincurredbytheparentcompanytofinanceitsactivitiesincludebankloans,promissorynotes,overdraftfacilities,convertiblebondsandotherfinancialliabilities.

UnitedInternetAGholdsvariousfinancialassetswhichresultdirectlyfromitsbusinessactivities.Theyconsistmainlyofsharesinaffiliatedcompaniesandinvestments,aswellasreceivablesfromaffiliatedcompanies.Asofthebalancesheetdate,theCompanyheldderivativefinancialinstrumentsresultingmainlyfromanobligationtodeliversharesinlistedcompa-niesandinterest-hedgingagreements.

Theaimoffinancialriskmanagementistolimittheserisksthroughongoingoperatingandfinancialactivi-ties.TheCompanyisherebyexposedtocertainriskswithregardtoitsassets,liabilitiesandplannedtrans-actions,especiallyliquidityrisksandmarketrisks,asdescribedbelow.

Liquidityrisk

ThegeneralliquidityriskofUnitedInternetconsistsofthepossibilitythattheCompanymaynotbeableto

meetitsfinancialobligations,suchastheredemptionoffinancialdebts.TheCompany’sobjectiveistomaintaincontinualcoverageofitsfinancialneedswhilesecuringflexibilitybyusingoverdraftfacilitiesandloans.

Ourglobalcashrequirementsandsurplusesaremanagedcentrallybyourcashmanagementsystem.BynettingthesecashrequirementsandsurpluseswithintheGroup,wecanminimizetheamountofexternalbanktransactions.Nettingismanagedviaourcashpoolingprocess.TheCompanyhasestablishedstandardizedprocessesandsystemstomanageitsbankaccountsandinternalnettingaccountsaswellasfortheexecutionofautomatedpaymenttransactions.

Inadditiontooperatingliquidity,UnitedInternetalsoholdsotherliquidityreserveswhichareavailableatshortnotice.Theseliquidityreservesconsistofsyndi-catedcreditlineswithvaryingterms.

TheCompanyhasnosignificantconcentrationofliqui-dityrisks.

Marketrisk

TheactivitiesofUnitedInternetaremainlyexposedtofinancialrisksfromchangesininterestrates,exchangeratesandstockexchangeprices.

Interest riskTheCompanyisexposedtointerestrisksasthemajorshareofitsborrowingasofthebalancesheetdatebearsvariableinterestrateswithvaryingterms.Aspartofliquidityplanningweconstantlymonitorthevariousinvestmentpossibilitiesandborrowingterms.Borrowingrequirementsaremetbyusingsuitableinstrumentstomanageliquidity,whilesurpluscashisinvestedonthemoneymarkettoachievethebestpossiblereturn.Duetodevelopmentsontheglobalfinancemarkets,theinterestriskhasincreasedsincethepreviousyear.

Marketinterestratechangesmighthaveanadverseeffectontheinterestresultandareincludedinourcalculationofsensitivefactorsaffectingearnings.Inordertopresentmarketrisks,UnitedInternethasdevelopedasensitivityanalysiswhichshowstheimpactofhypotheticalchangestorelevantriskvariablesonpre-taxearnings.Thereportingperiodeffectsareillustratedbyapplyingthesehypothetical

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changesinriskvariablestothestockoffinancialinstrumentsasofthebalancesheetdate.

TwointeresthedgingagreementstotalingC200mil-lionwereconcludedintheperiodunderreviewtocovertheriskfrominterestratechanges.

Currency riskThecurrencyriskofUnitedInternetresultsmainlyfromoperatingactivities(ifrevenuesand/orexpensesareinadifferentcurrencythantheGroup’sfunctionalcurrency)andnetinvestmentsinforeignsubsidiaries.Therewerenoforeignexchangeriskswithasignifi-cantimpactoncashflowintheperiodunderreview.

Stock exchange risk (valuation risk)Astockexchangeriskresultsmainlyfrominvestmentsinlistedcompanies.Theseinvestmentsarevaluedatcost.Assoonasthe(prorata)stockexchangevalueofaninvestmentliespermanentlybelowitsacquisitioncost,theCompanyrecognizestheimpairmentofthisfinancialinstrumentinitsresultfortheperiod.

Capitalmanagement

Inadditiontothelegalprovisionsforstockcorpora-tions,theCompanyhasnofurtherobligationstomaintaincapitalaccordingtoitsstatutesorotheragreements.ThekeyfinancialindicatorsusedbytheCompany(sales,grossprofit,EBITDAandEBT)aremainlyperformance-oriented.Thetargets,methodsandprocessesofcapitalmanagementarethussub-ordinatetotheseperformance-orientedfinancialindicators.

Inordertomaintainandadaptitscapitalstructure,theCompanycanadjustdividendpaymentsorpaycapitalbacktoitsshareholders,canissuenewsharesorpurchasetreasuryshares.AsofDecember31,2008andDecember31,2007,nochangesweremadetotheCompany’stargets,methodsandprocesses.

Dividend

AttheAnnualShareholders‘MeetingonMay27,2008,itwasvotedtoaccepttheproposaloftheManagementBoardandSupervisoryBoardofUnitedInternetAGconcerningthepaymentofadividendof20centspershare(prioryear:18cents).ThepaymentofC45.9mil-lionintotalwaseffectedonMay28,2008.Inviewofthebalancesheetlossintheannualfinancialstate-

mentsoftheparentcompanyUnitedInternetAG,nodividendwillbepaidforthefiscalyear2008.

InvestmentsasofDecember31,2008

Inadditiontoitscorebrands,UnitedInternetalsoholdsinvestmentsinanumberofothercompanies.

funcommunicationsGmbH(UnitedInternetstake:49.00%)postedapositiveoperatingresultintheperiodunderreview.

TogetherwiththeSamwerbrothers,UnitedInternethasbeeninvestingsincemid2007infundswithavarietyoffocusareas.In2008,UnitedInternetinve-stedinaround60companiesviathethreefunds.Wri-tedowns/impairmentsweremadeonthecarryingvaluesofcertainportfoliocompaniesasattheendof2008.

OnFebruary8,2008,weacquireda48.65%stakeinthemediaholdingcompanyvirtualmindsAG.virtualmindspostedapositiveoperatingresultin2008.

OnMarch7,2008,UnitedInternetacquired33.36%ofsharesinBW2GroupAG.BW2offersprofessionalCRMandERPbusinesssolutions.Thecompanyiscurrentlyintheprocessofrealigningitsbusinessmodel.

OnJuly1,2008UnitedInternetacquireda30%stakeinJimdoGmbH.Withits“Jimdo”websitetools,thecom-panyoffersaservicefortheeasycreationofprivateorcommercialhomepages.Thecompanyisstillintheprocessofestablishingitsbusiness.

ThecellphoneproviderDrillischAG,inwhichwehavehelda9.68%stakesinceNovember2007,postedasignificantlossforitsfiscalyear2008astheresultofhighimpairmentcharges.

UnitedInternetacquiredfurthersharesinVersatelAGduringthefirsthalfof2008andheldatotalstakeof25.21%inVersatelAGasofDecember31,2008.Thecom-panyisexpectedtopostasignificantlossforitsfiscalyear2008.

InJanuary2008,UnitedInternetandDrillischraisedtheirshareholdinginfreenetAGto24.52%viatheirjointlyheldcompanyMSPHolding,inwhicheachcom-panyholdsa50%stake.InthecourseofthecapitalincreaseoffreenetAG,inconnectionwithitsacquisi-tionofDebitel,thesharesheldbyMSPHoldingGmbH

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infreenetAGweredilutedfrom24.52%to18.39%asofJuly5,2008.OnDecember29,2008,UnitedInternetacquired10,798,817sharesinfreenetAGfromMSPHol-dingGmbH,equivalentto8.43%ofvotingrights.TheproceedswereusedtoreducethefinancialliabilitiesofMSPHoldingGmbH.Afterexecutingthissharetrans-fer,MSPHoldingGmbHstillholds12,751,183sharesinfreenetAG,or9.96%ofvotingrights.DrilischAGconti-nuestohold7.52%ofthevotingrightsinfreenetAG.DuetothecontractualvotingcommitmentbetweenUnitedInternetAGandDrillischAG,thereisnodiffe-renceintheshareofvotingrightsinfreenetAGheldbyUnitedInternetAG,togetherwithDrillischandMSPHolding,whichstilltotals25.91%–asbeforethesharetransfer.Asaresultofhighimpairmentchargesonthecarryingvalueofthefreenetshares,MSPHoldingpostedasignificantlossforitsfiscalyear2008.

Explanation of disclosures acc. to Secs. 289 (4), 315 (4) German Commercial Code (HGB)

CompositionofcapitalThesubscribedcapitalofUnitedInternetAGasofDecember31,2008,amountstoC251,469,184dividedinto251,469,184no-parvalue,registeredshares.Eachshareentitlestheownertoonevote.Therearenoothersharecategories.Inthecaseofacapitalincrease,thecommencementofdividendentitlementfornewsharesmaybedeterminedseparatelyfromthemomentofcon-tribution.

TheManagementBoardisnotawareofanylimitationsaffectingvotingrightsorthetransferofshares.

Directandindirectparticipationsincapital,specialrightsTheCompany’sCEO,Mr.RalphDommermuth,Monta-baur,owns92,000,000sharesor36.58%oftotalsharesinUnitedInternetAG.Mr.DommermuthispersonallyentitledtonominateamemberoftheSupervisoryBoard.ThisrightisexercisedbynamingapersonfortheSupervisoryBoardtotheCompany’sManagementBoard.ThenominationbecomeseffectiveassoonasthenominatedpersondeclareshisacceptanceoftheSuper-visoryBoardseattotheManagementBoard.Arequire-

mentfortheaforementionednominationrightisthatMr.RalphDommermuthholdsshareshimselforviacompaniesaffiliatedwithhimpursuanttoSec.15ff.GermanStockCorporationLaw(AktG)representingatleast25%oftheCompany’svotingcapitalandcanproveasmuchtotheManagementBoardonnomina-tionoftheSupervisoryBoardmemberbyprovidingdepositoryaccountstatementsorsimilardocuments.Mr.Dommermuthhassofarnotmadeuseofthisnominationright.TheManagementBoardisnotawareofanyfurthershareholdingsinexcessof10%ofvotingrights,orofanyshareswithspecialrights.

AppointmentanddismissalofManagementBoardmembers,amendmentstoCompanyarticles

TheappointmentanddismissalofManagementBoardmembersisdeterminedbySecs.84,85AktGincon-junctionwithsection1oftherulesofprocedurefortheSupervisoryBoard.AccordingtoSec.6(1)oftheCompany’sarticles,theManagementBoardconsistsofatleastoneperson.TheSupervisoryBoardappointsanddismissesthemembersoftheManagementBoard,determinestheirnumberandcanappointonememberoftheManagementBoardasChairman.Eachamend-mentoftheCompany’sarticlesrequirestheadoptionofashareholders’meetingresolutionwithamajorityofatleastthreequartersofcapitalrepresentedatthevote.PursuanttoSec.22oftheCompany’sarticlesinconjunctionwithSec.179(1)Sentence2AktG(Changesincapitalstockandnumberofshares),theSupervisoryBoardisauthorizedtomakeamendmentstotheCompany’sarticlesinsofarastheyonlyconcernformulation.

PowersoftheManagementBoardtoissueshares

TheManagementBoardisentitledtoissuenewsharesunderthefollowingcircumstances:

TheManagementBoardisauthorized,subjecttoappro-valbytheCompany’sSupervisoryBoard,toincreasetheCompany’scapitalstockononeormoreoccasionsbeforeJune12,2011byatotalofC124,550,402.00byissuingnewno-parsharesforcashand/ornon-cashcontributions.TheManagementBoardisalsoautho-rized,incertaincasesstatedinSec.5.4oftheCompany’sarticles,toexcludethestatutoryrightofshareholderstosubscribetonewshares.Thisappliesinparticularinthecaseoffractionalamountsandwhengrantingsubscriptionrightsfornewsharestobearers

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ofwarrants,convertiblebondsorwarrantbonds.TheManagementBoardisalsoauthorized,subjecttotheapprovaloftheSupervisoryBoard,torestrictsubscrip-tionrightsinthecasethattheissuepriceofthenewsharesisnotsubstantiallylowerthanthequotedmar-ketpriceandtheissuedsharesdonotexceedintotal10%ofcapitalstock.

TheManagementBoardisauthorized,subjecttotheapprovaloftheSupervisoryBoard,toexcludesubscrip-tionrightsinthecaseofacapitalincreaseinreturnfornon-cashcontributions,especiallyinconnectionwiththeacquisitionofcompanies,investmentsorassets.

CapitalstockhasbeenconditionallyincreasedbyuptoafurtherC92,000,000.00,dividedinto92,000,000no-parshares.Theconditionalcapitalincreaseisearmar-kedforsharestobegrantedtobearersorholdersofwarrantorconvertiblebonds,whichtheshareholders’meetingonMay18,2005authorizedtheCompanyorasubordinatedGroupcompanytoissuebyMay17,2010,providingtheissueisinreturnforcashandthewar-rantorconvertiblebondsarenotservicedfromthestockoftreasurysharesorapprovedcapital.

CapitalstockhasbeenincreasedconditionallybyuptoC4,868,364.00,dividedinto4,868,364no-parregisteredshares.Theconditionalcapitalincreaseservestograntconversionoptionstobearersofconvertiblebonds,fortheissueofwhichanauthorizationresolutionwaspassedbytheshareholders’meetingonMay16,2003.

CapitalstockhasbeenincreasedconditionallybyuptoC3,000,000.00,dividedinto3,000,000no-parshares.Theconditionalcapitalincreaseservestograntconver-sionoptionstobearersofconvertiblebonds,fortheissueofwhichanauthorizationresolutionwaspassedbytheshareholders’meetingonMay18,2005.

PowersoftheManagementBoardtobuybackshares

InaccordancewithSec.71(1)No.8AktG,theAnnualShareholders‘MeetingofMay27,2008authorizedtheManagementBoardtoacquire,sellorcanceltreasurysharesofuptotenpercentofitscapitalstockintheperiodendingNovember26,2009.Thepricefortheacquisitionofthesesharesmaynotbemorethan10%lowerorhigherthanthestockmarketprice.Theautho-rizationmaybeexercisedbytheCompanywhollyorininstallments,onceorseveraltimesforthepursuitofoneormorepurposes;itcan,however,alsobeexer-

cisedbydependentormajority-ownedcorporationsoftheCompanyorbythirdpartiesfortheCompany’sortheirownaccount.TheauthorizationmaynotbeusedforthepurposesoftradingwithCompanyshares.

TheManagementBoardisauthorized,subjecttotheapprovaloftheSupervisoryBoard,tousetheseacquiredsharesforalllegallypermissiblepurposes,inparticularasaleoftreasurysharesotherthanviathestockexchangeorbyofferingtoallshareholdersorforcashcompensation.Thisauthorizationisreducedbythatproportionofcapitalstockattributabletosharesexcludedfromsubscriptionrightsindirectorcorre-spondingapplicationofSec.186(3)Sentence4AktG.

Moreover,theManagementBoardisauthorizedtousetheacquiredtreasuryshares,subjecttotheapprovaloftheSupervisoryBoard,tograntsharestomembersoftheManagementBoardandotherCompanyemplo-yees,shouldsuchpersonsbeentitledtosubscriptiononthebasisofemployeestockownershipplans.Inso-farastreasurysharesaretobetransferredtomembersoftheCompany’sManagementBoard,thedecisionshallbeincumbentupontheCompany’sSupervisoryBoard.

TheManagementBoardisfurtherauthorizedtousetheacquiredtreasuryshares,subjecttotheapprovaloftheSupervisoryBoard,tofulfillconversionandwar-rantrightsorconversionobligations.

TheManagementBoardisalsoauthorizedtoretireandcanceltreasuryshares,subjecttotheapprovaloftheSupervisoryBoard,withoutanyfurtherresolutionoftheAnnualShareholders‘Meeting.

Therightofshareholderstosubscribetotreasurysharesshallbeexcludedtotheextentthatthesesharesareusedinaccordancewiththeaforementionedaut-horizations.

AttheAnnualShareholders’MeetingofMay27,2008,theManagementBoardwasalsoauthorizedtousebidsandequityderivativesinthepurchasingoftreasurystockinaccordancewithSec.71(1)No.8AktGandtoexcludesubscriptionandtenderrights.

TheManagementBoardisauthorized,subjecttotheapprovaloftheSupervisoryBoard,toconductbuy-backsbymeansofbids,and/ortoconductbuybacksbyusingequityderivatives,andtoselloptionswhichobligetheCompanytopurchaseUnitedInternetshareswhensuchoptionsareexercised(“putoptions”),to

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acquireoptionswhichgranttheCompanytherighttobuyUnitedInternetshareswhensuchoptionsareexercised(“calloptions”)andtobuyUnitedInternetsharesbyusingacombinationofputandcalloptions.

ThepriceforthepurchaseofUnitedInternetsharesbymeansofbidscanbesettledbyacashpaymentorbytransferofsharesinalistedcompanypursuanttoSec.3(2)AktG(“exchangeshares”).

Allsharepurchasesusingequityderivativesarelimi-tedtonomorethanfivepercentofcapitalstock.ThetermoftheoptionsmustbeselectedinsuchawaythatthepurchaseofUnitedInternetshareswhenexerci-singtheoptionsdoesnotoccurbeforeNovember26,2009.

Ifsharesareacquiredusingequityderivativesincom-pliancewiththeaboveregulations,therightsofshare-holderstoconcludesuchoptiontransactionswiththeCompanyareexcluded,underthecorrespondingappli-cationofSec.186(3)Sentence4AktG.Shareholdersalsohavenorighttoconcludeoptiontransactionsinsofarasfortheconclusionofoptiontransactionsthereisapreferentialofferfortheconclusionofoptiontransac-tionswithregardtosmalllotsofshares.ShareholdersonlyhavearighttotendertheirUnitedInternetsharesiftheCompanyhasanobligationtowardthemfromoptiontransactionstopurchasetheshares.Anyfur-thertenderrightsareexcluded.

Theuseoftreasurysharesacquiredbymeansofbidsand/orequityderivativesissubjecttotheregulationsandsubscriptionrightexclusionsdeterminedforthepurchaseoftreasurysharespursuanttoSec.71(1)N0.8AktG.

Subsequent eventsAccordingtoleadingmarketanalysts,thepredomi-nantlypositiveconditionsforthosetargetmarketsofrelevancetoUnitedInternetremainunchangedin2009–despiteglobalrecessionarytendencies.

OnFebruary25,2009,UnitedInternet’ssubsidiarySedoacquiredallsharesinitsUScompetitorRevenueDirect.Atthesametime,Sedoagreedaclosestrategicalliancewiththepreviousowner,Dotster.TheacquisitionofRevenueDirectwillenableSedoGmbHtosignificantlyexpanditsshareoftheNorthAmericanmarket.SedoexpectsitsalliancewithDotster–oneofthe“heavy-weights”ontheUSdomainregistrymarketwithoverthreemillionregistereddomains–toofferfurtherstra-tegicbenefitswithregardtoitsfurtherexpansiononthefiercelycompetitiveUSdomainparkingmarket.

Subjecttoapprovalfromtherespectiveanti-trustauthorities,UnitedInternetsignedanagreementonDecember12,2008withtheownerofunited-domainsAG,LYCOSEuropeNV,concerningUnitedInternet’sacquisitionofunited-domains.Followingapprovalfromtheanti-trustauthorities,theacquisitionwasconcludedonFebruary27,2009.united-domainsisaspecialistforthefastandsimpleregistrationofdomainnameswithover150internationaldomainendings.Theprofitablecompanywasfoundedbyayoungteamofsoftwaredevelopers,businessspecia-listsandlawyersinAugust2000andhassincebecomeoneofEurope’sleadingdomainregistries.united-domainscurrentlyadministersover1.1milliondomainsofaround180,000customers.ThecompanyisstillrunbythefoundersFlorianHuber(CEO),AlexanderHelmandMarkusEggensperger,whowillretainashareholdingofaround15%aftertheacquisi-tion.Intherun-uptothetransaction,thevalueofunited-domainsAGwassetataroundC34million.Thefinalpurchasepricewillbedeterminedafteruni-teddomainsAGhasposteditsannualfinancialstate-mentsforfiscalyear2008andanaccrualaccountbasedonthedateofcompletion.Thepurchasepricewassettledfullyincash–wherebyC7millionwillbeheldinescrowasasecurityguaranteeforUnitedInternet.

Therehavebeennofurthersubsequenteventssinceyear-endwhichhavesignificantlyalteredthebusinesssituationofUnitedInternet.

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Risk reportRisk management system

Theaimofriskmanagementistosystematicallydealwithpotentialrisksaswellastopromotearisk-orien-tedapproachthroughouttheentireorganization.Thiscontrolledapproachtorisksisaimedatutilizingexis-tingopportunitiestothefullandenhancingthecompany‘ssuccess.Theconcept,organizationandtaskofEnterpriseRiskManagementwasdefinedbytheManagementBoardandSupervisoryBoardofUnitedInternetAGanddocumentedaspartofariskmanualavailabletoallmembersoftheGroup.Theserequire-mentsarecontinuallycomparedwiththechanginglegalconditionsandadaptedordevelopedfurtherasrequired.

TheriskmanagementsystemisbasedontheCOSOERMframework,whichwehaveadaptedtotheneedsofUnitedInternetAG.Aspartofourriskmanagementprocess,weidentify,classifyandevaluatecompanyrisksinastandardizedgroup-widesystemwithclearallocationofresponsibilities.WeuseEnterpriseRiskManagementnotonlytoidentifyriskswhichmayendangertheGroup’scontinuedexistence,butalsotoidentifyandmonitorthoseriskswhichdonotjeopar-dizeourexistencebutwhichmayhaveasignificantnegativeimpactontheGroup’snetassets,financialsituationandresultsofoperations.

TheidentifiedrisksofUnitedInternetAGaregivenamonetaryratingwherepossibleandassessedaccor-dingtotheprobabilityoftheiroccurrence.Whereversensible,risk-limitingmeasuresweredefinedforeachsignificantrisk.Thecurrentriskstatusiscommunica-tedtotheManagementBoardandSupervisoryBoardonaquarterlybasis.Suddenriskoccurrencesorsignifi-cantchangesintherisksituationtriggeranad-hocreportingobligation.Therespectiveriskiscommunica-tedimmediatelytotheManagementBoard,andwherenecessarybythemtotheSupervisoryBoard.

Risks for future business development

ThemostsignificantrisksanduncertaintiestowhichtheUnitedInternetGroupisexposedarepresentedbelow.

Externalrisks

ThreatpotentialoftheinternetUnitedInternetAGgeneratesitscommercialsuccesslargelywithintheenvironmentoftheinternet.Ourproductportfoliocompriseshigh-qualityinternetandtelecommunicationapplications,aswellastechnicallycomplexvalue-addedproducts.Inordertoprovideourproductsandservices,weuseinformationandtelecommunicationtechnologies(datacenters,trans-missionsystems,connectionnodesetc.)inourbusinessprocesseswhicharecloselynetworkedwiththeinternet.

Thereisageneralriskofhackerattackswiththeaimofstealing,deletingcustomerdataorusingservicesfraudulently.Wecounterthisriskwiththeaidofvirusscanners,firewallingconceptsandvarioustechnicalmonitoringmechanisms.UnitedInternetAGiscommittedtocontinuallyenhancingandupdatingitssecurityconceptwiththeaidofitsITSecurityManage-mentsystem.However,despiteourITsecuritymea-sures,thepossibilityofhackersgainingaccesstocom-panynetworks,orcustomeraccounts,andfraudulentlyusingservices(e.g.internettelephony)cannotberuledoutcompletely.Tothisend,emergencyconceptshavebeendevelopedaimedatminimizingpossibledamageandprotectingtheinterestsofourcustomers.

Overthepastyearstherehasbeenasteadyincreaseintheamountofspame-mailsontheinternet.ForthemailingsystemsofUnitedInternetAG,thishasresultedinasignificantriseinourcapacityutilizationwiththeeffectthatprocessesmaybeimpeded.Wecontinuallymonitormailtrafficandtakeprecautionstokeepspamtoaminimum.Ouractiveparticipationincross-borderworkinggroupsenablesustoplayaroleinthedefinitionofmailsecuritystandards,forexample.

Shouldanyoftheaboverisksoccur,thiscouldhaveanegativeimpactonourimageandreducethetrustplacedinUnitedInternetAG.Inaddition,thefraudu-lentuseofourservicescancauseconsiderabledamage.

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MarketregulationInthefieldofinternetaccess,thedecisionsoftheFederalNetworkAgencyandFederalCartelOfficeinGermanyhaveaninfluenceonthepricingofinternetaccesstariffsintheProductsegment.PriceincreasesofnetworkprovidersfromwhomUnitedInternetpurchasespre-servicesforitsowncustomerscanhaveanegativeimpactontheprofitabilityofthesetariffs.Ontheotherhand,thereisalsothepossibilitythatalackofregulationmayleadtoadeteriorationofmar-ketcircumstancesforUnitedInternetAGundercertaincircumstances.UnitedInternetattemptstocounterthisregulationriskbycooperatingwithseveralsupplypartnersinourDSLbusiness.DecisionstakenbytheFederalNetworkAgencyinthefieldofinternettelephony(VoIP)alsohaveanimpactonourbusinessprocesses.Externalrequirementsofexistingprocessesandnewregulatoryconditionscouldresultinhighercosts,whichmighthaveanegativeimpactonthecompetitivenessofUnitedInternetandthusalsoonitsprofitability.

CompetitionTheGermanDSLmarketisinaphaseofmarketshareallocation,duringwhichitsformerstronggrowthissubsiding.Weassumethatfiscalyear2009willconti-nuetobemarkedbytakeoversandcompanymergersalongthevaluechain.Inadditiontoourmajorcompe-titors,localtownnetworkoperators,cablenetworkoperatorsandothernetworkoperatorswiththeirowninfrastructureareactiveonthemarket.Thereisariskthattheachievablelevelofend-userpricesmayconti-nuetofalland/orthatcustomeracquisitioncostsmayrisefurther.Increasingcompetitionand/orfallingpricesmightnegativelyimpactourtargetedmarketshareofnewcustomersand/orournetassets,financialsituationandresultsofoperations.UnitedInternetattemptstocountertheserisksby,forexample,develo-pinginnovativeandhigh-valueproducts,usingexclu-sivesaleschannels,andcreatinghighcustomerwithcompletepackagesandavarietyofaddedvalues.

Dependencyoncustomers/businesspartnersTheadvertisingbudgetsofadvertisersarehighlydependentontheeconomicdevelopment,whichiscurrentlysubjecttomanyuncertainties.Moreover,advertisingbudgetsareoftenawardedonlyforasinglecampaign.IntheOnlineMarketingsegment,aconsi-derableproportionofsalesisgeneratedwithindivi-dualkeyaccounts.Businessrelationsareonceagaindueforrenegotiationinfiscalyear2009.Shouldthesebusinesspartnerslimitorcanceltheirrelationswithus,thiswouldleadtoasignificantdeteriorationofour

netassets,financialpositionandearningsintheOnlineMarketingsegment.Oursub-groupOnlineMarketingattemptstoreducethisriskbyusingexpe-riencedkeyaccountmanagers,bymaintainingclosecooperationwithourbusinesspartners,bywideningourcustomerbase,andinparticularbyofferingacompellingrangeofproductsandservices.

Operatingrisks

ProductdevelopmentAsignificantsuccessfactorofUnitedInternetAGisthedevelopmentofnewproductsandservicesforourcorebrandsinordertoprovidenewandexistingcustomerswithtop-qualityandinnovativevalue-addedinternetservicesandthusraisethetotalnumberofcustomercontracts.Thereisalwaysarisk,however,thatnewdevelopmentsmightbelaunchedtoolateonthemarketornotaccepted.UnitedInternetAGattemptstominimizesuchrisksbycloselyobservingmarkettrendsandundertakingextensiveproductdevelop-ment.IncooperationwiththeSamwerbrothersandthejointlyheld“EuropeanFoundersFund”,UnitedInternetAGalsosupportsEuropeaninternetandtechnologycompaniesinordertoprofitinfuturefromtheirinnovations.

UseofhardwareandsoftwareOurproductsandrelatedbusinessprocessesarebasedonacomplextechnicalinfrastructureandanumberofsuccess-criticalsoftwaresystems(servers,customerrelationshipdatabasesandstatisticssystemsetc.).Thisinfrastructureissubjecttovariousmalfunctionrisks,e.g.fromoverloadingortechnicaldefects.ThereisalsotheriskoftargetedattacksfrominsideandoutsidetheCompany,e.g.fromhackersorwillfulmanipulationbystaff.Theintegrationofpurchasedbusinesssystemsintotheexistingsystemlandscapealsobearstherisksofinterruptionsandmalfunctionsduetotheinherentcomplexityofoursystems.Non-availabilityordeteriorationofourservicescouldhaveasustainednegativeimpactontheimageandthustheoperatingbusinessofUnitedInternetAG.Awidevarietyofsoft-ware-andhardware-basedsafetyprecautionshavethereforebeentakentoprotectourinfrastructureanditsavailability.Bydividingresponsibilities,wehavemadesurethatactivitiesorbusinesstransactionsinvolvingrisksarenotcarriedoutbysingleemployees.Accessrestrictionsalsoensurethatemployeesmayonlyoperatewithintheirparticulararea.Asaprecau-tionarymeasure,alldataareregularlybackedupandhostedinseparatedatacenters.

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Legalrisks

PropertyrightsBothUnitedInternetAGanditscompetitorsattempttoprotecttheirpropertyrightsandproprietarytechno-logiesbymeansofpatents,trademarksandcopyrights.Aninfringementofourpatents,trademarksandcopy-rightsbycompetitors,however,cannotbeexcluded.Thismayreducethecompetitiveadvantagewehaveachieved.Inthesameway,UnitedInternetAGmayalsofacedamageclaimsforinfringingrightsorpatentsofwhichwehadnoknowledge.

DataprotectionUnitedInternetAGhoststhedataofseveralmillioncustomersonitsservers.Thesedataaresubjecttocertainlegalregulations.Weareawareofthisrespon-sibilityandattachgreatimportancetodataprotection,whichisgivenparticularlyhighprioritythroughouttheCompany.Byusingstate-of-the-arttechnologyandcontinuallymonitoringalldata-protectionregulations,weendeavortoguaranteeahighstandardofsecurity.Shouldemployeesorthirdpartiessucceed,however,inwillfullybreakingthroughthevarioussecuritymea-suresandstealingpersonaldata,UnitedInternetAGmightbemadeliableforanyabuse.

Otherrisks

AcquisitionsOurlong-termgrowthstrategyalsoinvolvestheoptionofquicklyachievingcriticalmassincertainmarketsbymeansofacquisitionorutilizingfavorablemarketopportunities.Shouldtheacquiredcompaniesnotful-filltheexpectationsweplacedinthem,orshouldtheintegrationprocessestoleveragesynergiesprovemoredifficultthanplanned,thismayhaveanegativeimpactontheprofitabilityandfinancialpositionofUnitedInternetAG.Wegenerallycounterthisriskbymeansofextensiveduediligenceauditspriortoacqui-sitions,butcannotexcludesuchrisks.

Writedowns/impairmentThesameappliesfor–generallystrategic–invest-mentsinlistedcompanies.Achangeinthevaluationbasiscausedbyfallingglobalshareprices–asin2008–mayrequireextensivewritedownsonexistinginvestments.Dependingonthefurthersharepricedevelopmentofourlistedinvestments,theremaybefurthernon-cash-effectiveburdensonouroperatingbusinessfromwritedowns/impairment.

Assessment of the overall level of risk

ThemainrisksfortheCompany’scurrentandfuturenetassets,financialsituationandresultsofoperationsfocusontheareasofpotentialthreatsviatheinternet,marketregulation,competition,theuseofhardwareandsoftware,andacquisitions.Thefurtherexpansionofourriskmanagementsystemenablesustoproac-tivelycountersuchrisksandtolimitthemtoamini-mum,wheresensible,byintroducingvariousmea-sures.Wejudgetheprobabilityofsuchoccurrencesasverylowtolimited.TherewerenoriskswhichdirectlyjeopardizedthecontinuedexistenceofUnitedInternetAGinthefiscalyear2008,neitherfromindividualriskpositionsnorfromtheoverallrisksituationfortheUnitedInternetGroup.

Dependent Company Report IncompliancewithSec.312(1)AktG,theManagementBoardofUnitedInternetAGpresentedtheSupervisoryBoardwithaDependentCompanyReportdealingwiththeCompany’spossibledependenceonitsCEOandmajorshareholderMr.RalphDommermuth.ItcloseswiththedeclarationthattheCompanyreceivedade-quatecompensation(quidproquo)foreachlegaltrans-actioninaccordancewiththecircumstancesknownatthetimewhensuchtransactionswerecarriedout,orthemeasureinvolvedwasexecutedoromitted,andthattheCompanywasnotdisadvantagedbysuchmeasuresbeingexecutedoromitted.

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lowersalesorfewernewordersthanexpectedbeforethecrisis.

Accordingtothelatestsurvey,46%ofcompaniesexpectaturnaroundintheirsectoralreadyin2009.42%expectamarkedimprovementin2010andonly5%notuntil2011.

Despitethedifficulteconomicconditions,theassocia-tionhasconfirmeditssalesforecastfor2009.Inotherwords,itexpectsthetotalGermanmarketforinfor-mationtechnology,telecommunicationsanddigitalconsumerelectronicstomaintainitsprior-yearlevelofaroundC144.6billion.Inviewoftheuncertainecono-micsituation,however,theassociationannouncedthatitwouldreviewitsforecastsafterthefirstquarter.

BITKOMexpectssalesgrowthof1.5%toaroundC67billionfortheinformationtechnologysegmentin2009.Theoutsourcingmarketinparticularisexpectedtobuckthetrendwithgrowthof7%toC14.6billion,asmorecompaniesoutsourceITtaskstoexternalserviceproviderstosavecostsandgainliquidity.Inthefieldoftelecommunication,BITKOMexpectssalestofallby1.2%toaroundC65billionin2009.However,theassociationbelievesthatthisfallinsaleswillbeduelesstotheeconomiccrisisandmoretofailedEUinterventionandfiercepricecompetition.In2008,forexample,tariffsfellbyanaverageof3.3%.However.therearealsosegmentswhicharestilldisplayingstronggrowth,suchasfixed-linedataservicesandmobiletelephony.Inthedigitalconsumerelectronicssegment,themarketisexpectedtodeclinein2009,aftermanyyearsofstronggrowth.Totalsalesareexpectedtoshrinkby2.5%toaroundC12billionin2009.AccordingtoBITKOM,aninnovationcyclewillcometoanendforconsumerelectronicsin2009.However,withinternetTV(IP-TV)andthenewmega-trendtowardhomenetworking,therearealreadynewtechnologieswaitingfortheirmass-marketbreak-through.

Boominbroadbandconnectionscontinues

Accordingtothestudy“LIFE-DigitalesLeben”,publishedinlateFebruary,thetrendtowardbroadbandconnectionswillcontinue.Theexpertsforecastgrowthto36millionbroadbandconnectionsinGermanyby2015anddatatransmissionspeedsofover100Mbit/sinsomecases.Theexpertsalsoexpectmobilebroadbandconnections(UMTS)toquadrupleto41millionby2015.

OutlookGlobal economy 2009 near to zero growth

TheInternationalMonetaryFund(IMF)hasreduceditseconomicforecastfor2009onceagain.TheIMFnowexpectstheglobaleconomytogrowbyjust0.5%inthecurrentyear.ThatwouldbethelowestgrowthratesincetheendofWorldWarTwo,accordingtotheupdated“WorldEconomicOutlook”reportpublishedinlateJanuary2009.InNovember2008theIMFwasstillexpectinggrowthof2.2%:itthereforereduceditsownforecastby1.7percentagepointswithinjusttwomonths–wherebyIMFManagingDirectorDominiqueStrauss-Kahndidnotexcludefurtherreductionstoward“zero”inmidFebruary2008.For2010,theIMFexpectsglobalgrowthof3.0%.

Thefinancialproblemsremainacuteandwillalsoaffecttherealeconomy–statestheIMFreport.Accor-dingtotheIMF,asustainedeconomicrecoverywillnotbepossibleuntilthefinancesectorisfullyfunctionalagainandthecreditcrunchhasbeenresolved.

EvenworsethantheIMF’sforecastfortheUSA(-1.6%)isitsexpectationfortheEurozone(-2.0%).

AllleadinginstitutesalsoforecastasteepdownturnfortheGermaneconomyin2009.Thegeneralviewisthateconomicoutputwillfallbyaround2%.Atthesametime,Germanyfacesaconsiderableincreaseinborrow-ingin2009,dueinparttothedirectconsequencesoftheeconomiccrisisandinparttothecostofthegovernment’srecoverypackages.TheGermangovern-menthopestosupportindustryandconsumerswithinvestments,economicaidandtaxbreaksinordertodampentheeffectsoftheexpectedrecession.

ProspectsforITCmarketsremainhealthy

Theeconomiccrisishassofaronlyhadalimitedimpactonthehigh-techindustry.ThiswasconfirmedbyarepresentativesurveyoftheITCsector,whichthesectorassociationBITKOMpresentedontheeveoftheCeBITfairinHanover.Accordingtothesurvey,55%ofcompaniesquestionedhadsofarfeltnodirecteffectsofthecrisisontheirbusiness.Theothersreported

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Broadbandmeanseconomicstrength!InnovativebroadbandinternetapplicationswillcontinuetodrivethedevelopmentoftheWorldWideWebinfuture.Broadbandinternetthereforeplaysanextremelyimportantroleforoureconomy.Inthestudy“GermanyOnline”,expertspredictthatinformationtechnologiesandtelecommunicationapplicationswillgrowsignifi-cantlyoverthecomingyears.Theirshareofgrossdomesticproductisexpectedtoalmostdoubletoaround12%by2015.

BasedonthelatestfiguresofmarketresearchinstituteEITO,BITKOMforecastinlateFebruarythattheGer-manmarketforfixed-lineinternetaccesswouldgrowby4.2%toC13.8billionin2009,thusreachinganewrecordlevel.Despitetheeconomicslump,itforecastthatsaleswithprivateinternetaccessalonewouldgrowby7.5%toC8.8billionin2009.

Aboveall,thisrapidgrowthmeansincreasingband-widthsandthusanimprovedperformanceofthebroadbandnetwork.Withoutthisdevelopment,attrac-tiveapplicationslikeinternettelephony,internetTVorvideo-on-demandwouldsimplynotbepossible.Thecustomerequatesincreasedspeedwithgreaterconve-nienceandnewapplicationpossibilities.Thismarketdriverwillcontinuetoplayakeyroleforweb-basedapplications–suchassoftware-as-a-serviceandcloudcomputing.Bandwidthsmust,andwill,continuetogrow.Already,theinternet’sglobaldatavolumeisgrowingatanannualrateof50-60%–statesBITKOM.

Whereasbroadbandconnectionsofover16Mbit/sarestillrestrictedtoveryfewhouseholds,suchspeedsareexpectedtobeavailabletoover30%ofallhouseholdsby2015.Incontrast,themarketshareofthemostwidespreadbandwidthsunder6Mbit/swillfallinthecomingyears.Thetrendisthusclear:thestrongdeclineinlower-speedinternetconnectionswillgohand-in-handwithanincreaseinultra-highbandwidthconnec-tions.

Theongoingboominbroadbandconnectionswillalsopositivelyimpactmanyothermarketsinwhichweoperate.Withgrowinghouseholdpenetrationofbroad-bandinternet,wecanoffernewandinnovativepro-ductsandserviceswhichuserscanaccesswithoutanydropinperformance.Atthesametime,ouronlinepor-talsGMX,WEB.DEund1&1andmarketingbrandsAdLINKMedia,Sedoandaffilinetwillbeabletouseincreasinglydata-intensiveadvertisingformats.

FurthergrowthforwebhostingandonlineadvertisingMarketresearchersalsopredictcontinuinggrowthforthewebhostingindustry.GartnerandIDCforecastannualgrowthratesof15%and16%until2010.IntheirEuropeanManagedWebhostingForecastofOctober2007,theexpertsofIDCpredictedgrowthof10.4%toUSD4.6billionin2009–intheB-to-Bhostingsectoralone.GoodgrowthopportunitiesareforecastforallEuropeanmarketsinwhichweoperate:Germany(+8.4%),theUK(+10.4%),France(+9.9%),Austria(+11.3%)andSpain(+12.4%).Newweb-basedservices–subsumedundertheterms“software-as-a-service”and“cloudcomputing”–willfurtherstrengthenthis“out-sourcingtrend”(towardinternet-basedandawayfromPC-basedapplications).

Theonlineadvertisingmarketisalsoexpectedtocon-tinueitsstronggrowth–althoughatemporarybutsignificantdownturnisexpectedin2009asaresultoftheglobaleconomicproblems.

Theoverallimportanceofonlineadvertisinginthetotaladvertisingmixwillcontinuetorise.The“Marke-ters‘InternetAdBarometer2008”reportshowsthateightoutoftenEuropeanadvertiserswillinvestmoreheavilyinonlineadvertisinginthecomingyears.ThestudycommissionedbytheEuropeanInteractiveAdvertisingAssociation,theassociationofpan-Euro-peanonlinemarketersandtechnologyserviceprovi-ders,questionedmarketingexecutivesofleadingEuro-peancompanies.Accordingtothereport,almostthreequartersofalladvertisersquestionedinEurope(2008:73%;2006:52%)usedtheinternetincreasinglyasanadvertisingmedium.Overonethirdofthesedecidersregardtheinternetasanessentialchannelfortheirmarketing.In2006thisproportionwasjust17%.82%ofthosecompanieswhichraisedtheironlineadverti-singbudgetin2008,movedpartoftheirmediabudgetfromprint(40%),TV(39%)anddirectmarketing(32%)totheinternet.

AlthoughonlineadvertisingwillcontinuetogrowinimportanceinGermany,itwillnotbeabletoescapetheeffectsofthegeneraleconomicsituation.TheOVK’sgrowthforecastfor2009isthusmuchmorecon-servativethaninpreviousyears.Theonlineexpertstotalgrowthof10%.Thiscorrespondstosegmentgrowthof10%inbothclassiconlineadvertisingandsearchwordmarketing,and15%intheaffiliatenet-works.TheOVKforecastsanincreaseintotaltojustoverC4billion.

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OpportunitiesforUnitedInternetdespitelessencouragingenvironment

ThankstooursuccessfulpositioninginthegrowthmarketsofDSL,Webhosting,PortalsandOnlineMarketing,weexpectgoodgrowthopportunitiesinthemediumterm.Duetodifficultyofforecastingthefutureeconomicdevelopment,however,allsuchfore-castsaresubjecttouncertainty.

Inviewofthecontinuedslumpinadvertisingspen-ding,andtheresultingpressureonpricesandmargins,aswellasthesignificantreductionsintheforecastsofmarketresearchers,weexpectadifficultyearforourOnlineMarketingbusinessin2009.

InourProductsegment,weareconfidentthatourinternationalexpansionstrategyinthefieldofweb-hostingwillcontinuetomakegoodprogressinthecomingyearsandthatwecanmaintainourdynamicgrowth–thanksinparttofurtherproductinnovationssuchasthe1&1SectorHomePage,andentryintofurthermarkets.

Inviewofourinnovativeproducts,such1&1DSLHomeNet,andattractiveprice-performanceratio,wealsoseegoodopportunitiesforourDSLbusiness.Inparticular,weexpectfurthersuccessfulgrowthfromthemigrationofourcustomerstocompletepackages–ofgreatimportancetouswithregardtocustomerretention.

Allinall,weexpectfurthergrowthinthenumberofcustomercontractsinallproductlines,asthetrendcontinuestowardbroadbandconnectionsandtheresultingstrongincreaseinweb-basedapplicationsofferedbyourdatacenters.

TheprospectsforfurthergrowtharealsoencouragingforthemarketingofourportalsGMX,WEB.DEand1&1–albeitataslowerpaceduetothecurrentcyclicalweaknessofthemarket.

Allinall,weexpectslightgrowthinconsolidatedsalesfor2009.AfterreachingnewrecordlevelsforEBITDAandEBITin2008,weaimtoholdEBITDAandEBITattheprior-yearlevelinfiscalyear2009despitetheweaknessoftheonlineadvertisingmarket.

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58 BalanceSheet

59 IncomeStatement

60 DevelopmentofSegments

62 CashFlowStatement

64 DevelopmentofFixedAssets

66 ChangesinShareholders’Equity

68 Notes

124 AuditOpinionoftheIndependentAuditor

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Consolidated Balance Sheetas of December 31, 2008 in Ek

ASSETS

Notes

December 31, 2008

December 31, 2007

Current assets Cash and cash equivalents 20 55,372 59,770Accounts receivable and other assets 21 119,066 123,788Inventories 22 19,048 16,785Prepaid expenses 23 28,791 23,020Loans to joint ventures 42 0 4,007Other assets 24 12,737 16,371

235,014 243,741Non-current assets Shares in associated companies / joint ventures 25 221,684 309,023Other financial assets 26 72,785 67,867Property, plant and equipment 27 86,494 77,105Intangible assets 28 97,512 120,031Goodwill 29 378,876 388,822Deferred tax asset 16 9,632 7,437

866,983 970,285Total assets 1,101,997 1,214,026

LIABILITIES AND EQUITY Liabilities Current liabilities Trade accounts payable 31 170,743 232,421Liabilities due to banks 32 16,069 2,056Advance payments received 6,453 6,069Accrued taxes 33 33,855 30,172Deferred revenue 34 106,401 102,200Other accrued liabilities 35 4,513 7,683Other liabilities 36 , 42 61,765 60,243

399,799 440,844Non-current liabilities Convertible bonds 37 74 245Liabilities due to banks 32 528,301 369,049Deferred tax liabilities 38 17,351 19,061Other liabilities 36 10,892 886

556,618 389,241Total liabilities 956,417 830,085

Equity Capital stock 39 251,469 251,434Additional paid-in capital 40 163,896 160,095Accumulated profit 5,619 171,688Treasury stock 39 -264,987 -213,338Revaluation reserves 40 10,002 9,411Currency translation adjustment -28,692 -7,726Equity attributable to shareholders of the parent company 137,307 371,564

Minority interests 8,273 12,377Total equity 145,580 383,941Total liabilities and equity 1,101,997 1,214,026

58

Page 62: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Consolidated Income Statement from January 1, 2008 to December 31, 2008 in Ek

2008 2007Notes January - December January - December

Sales 4 1,649,571 1,487,429

Cost of sales 5 , 9 , 11 -1,006,951 -896,001Gross profit 642,620 591,428

Selling expenses

6 , 9 , 11

-278,564

-248,234

General administrative expenses 7, 9 , 11 -83,652 -82,470Other operating expenses 8 -39,879 -34,380Other operating income 8 46,567 42,386

Amortization of intangible assets resulting from company acquisitions

9

-21,283

-22,494

Amortization of goodwill 10 -9,244 -9,373Operating result 256,565 236,863

Interest and similar expenses

12

-33,498

-6,674

Interest and similar income 13 3,928 2,049Result from associated companies 14 -42,379 0Result from at-equity companies 15 -234,193 2,284Pre-tax result -49,577 234,522

Income taxes

16

-71,886

-79,119

Net income before minority interests (from continued operations)

-121,463

155,403

Result from discontinued operations

17

-

68,098

Net income before minority interests (after discontinued operations)

-121,463

223,501

Attributabel to - minority interests - shareholders of United Internet AG

-1,280-120,183

3,283220,218

Result per share of shareholders of United Internet AG (in D) - basic 18 -0.52 0.93- diluted 18 -0.52 0.93 thereof result per share (in C) from continued operations - basic 18 -0.52 0.64- diluted 18 -0.52 0.64 thereof result per share (in C) from discontinued operations- basic 18 - 0.29- diluted 18 - 0.29 Weighted average shares (in million units)- basic 18 229.79 235.76- diluted 18 229.79 236.63

59

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Page 63: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

2008 Product segment

Online Marke-ting segment

Head Office / Investments

Reconciliation

United Internet Group

Dk Dk Dk Dk DkTotal revenues 1,446,323 222,472 5,033 - -

- thereof internal revenues 13,497 6,400 4,360 - -

External revenues 1,432,826 216,072 673 - 1,649,571

- thereof domestic 1,308,074 124,594 673 - 1,433,341

- thereof non-domestic 124,752 91,478 0 - 216,230

EBITDA 298,575 12,912 7,281 - 318,768

Result from at-equity companies -1,626 -60 -232,507 - -234,193

Segment result 249,224 -7,913 -290,888 - -49,577

Tax expense

-71,886

-71,886

Net income (from continued operations)

-121,463

Result from discontinued operations - -

Net income (after discontinued operations)

-121,463

Operative segment assets 632,491 167,632 453,695 -161,453 1,092,365

- thereof domestic 503,571 110,510 408,312 -161,453 860,940

- thereof non-domestic 128,920 57,122 45,383 231,425

Deferred tax claims 9,632 9,632

Total assets 1,101,997

Proportion from at-equity companies / joint ventures

0

1,153

220,531

221,684

Operative segment liabilities 376,264 101,149 589,066 -161,268 905,211

Accrued taxes 33,855 33,855

Deferred tax liabilities 17,351 17,351

Total liabilities 956,417

Investments in tangible and intangible assets

40,474

1,353

215

42,042

- thereof domestic 29,178 971 215 30,364

- thereof non-domestic 11,296 382 0 11,678

Amortization/depreciation of tangible and intangible assets

50,508

2,220

232

52,960

Amortization of goodwill 0 9,244 0 9,244

Write-downs on investments 0 7,894 34,485 42,379

Number of employees 4,020 516 29 4,565

- thereof domestic 3,304 285 29 3,618

- thereof non-domestic 716 231 0 947

Development of Segments

60

Page 64: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

2007 Product segment

Online Marke-ting segment

Head Office / Investments

Reconciliation

United Internet Group

Dk Dk Dk Dk DkTotal revenues 1,274,326 229,191 10,514 - -

- thereof internal revenues 12,469 4,299 9,834 - -

External revenues 1,261,857 224,892 680 - 1,487,429

- thereof domestic 1,156,204 122,885 680 - 1,279,769

- thereof non-domestic 105,653 102,007 0 - 207,660

EBITDA 279,287 43,301 -13,761 - 308,827

Result from at-equity companies - 173 2,111 - 2,284

Segment result 219,966 29,602 -15,046 - 234,522

Tax expense

-79,119

-79,119

Net income (from continued operations)

155,403

Result from discontinued operations 68,098 68,098

Net income (after discontinued operations)

223,501

Operative segment assets 637,465 192,279 463,293 -86,443 1,206,594

- thereof domestic 498,065 94,732 463,293 -86,443 969,647

- thereof non-domestic 139,400 97,547 0 236,947

Deferred tax claims 7,437 7,437

Total assets 1,214,031

Proportion from at-equity companies / joint ventures

-

-

309,023

309,023

Operative segment liabilities 347,835 111,683 407,394 -86,060 780,852

Accrued taxes 30,172 30,172

Deferred tax liabilities 19,061 19,061

Total liabilities 830,085

Investments in tangible and intangible assets

55,201

3,150

426

58,777

- thereof domestic 33,441 1,912 426 35,779

- thereof non-domestic 21,760 1,238 0 22,998

Amortization/depreciation of tangible and intangible assets

60,334

1,885

372

62,591

Amortization of goodwill 0 9,373 0 9,373

Number of employees 3,456 472 26 3,954

- thereof domestic 2,849 252 26 3,127

- thereof non-domestic 607 220 0 827

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Page 65: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Consolidated Cash Flow Statementfrom January 1, 2008 to December 31, 2008 in Ek

Notes

2008 January - December

2007 January - December

Cash flow from operating activities

Net income (from continued operations) -121,463 155,403

Net income (from discontinued operations) 0 68,098

Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization of intangible assets and property, plant and equipment

9

31,677

40,097Amortization of intangible assets resulting from company acquisitions

9

21,283

22,494

Amortization of other financial assets 14 42,379 0Amortization of goodwill 10 9,244 9,373Compensation expenses from employee stock option plans 37 4,020 1,605Results of at-equity companies 25 234,193 -2,284Distributed profit of associated companies 25 392 950Income from deconsolidation of affiliated companies 17 0 -65,746Income from deconsolidation of associated companies 25 -3,894 -4,591Non-cash result from contribution aof assets 3 0 -16,808Change in deferred taxes -4,882 -742Non-cash expenses / income -2,448 1,928Operative cash flow 210,501 209,777

Change in assets and liabilities Change in receivables and other assets 9,621 -20,144Change in inventories -2,264 -593Change in deferred expenses -5,148 -4,695Change in trade accounts payable -62,061 73,296Change in advance payments received 384 629Change in other accrued liabilities -4,381 5,984Change in accrued taxes 3,470 5,688Change in other liabilities -5,910 10,626Change in deferred income 8,774 11,347Change in assets and liabilities, total -57,515 82,138Cash flow from operating activities 152,986 291,915

62

Page 66: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Notes

2008 January - December

2007 January - December

Cash flow from investing activities

Capital expenditure for intangible assets and property, plant and equipment

-42,042

-58,777

Purchase of further shares in affiliated companies 3 -9,538 -37,949

Purchase of shares in affiliated companies 3 -10,323 0

Payments for additional refunding company acquisition costs

3

0

3,436

Payments from deconsolidation of affiliated companies 17 0 85,248

Purchase of shares in associated companies 25 -160,696 -309,299

Payments from deconsolidation of associated companies 25 12,268 6,881

Investments in other financial assets 26 -50,937 -31,465

Payments of loans granted to joint ventures 42 4,007 -4,000

Payments of loans granted -400 -58

Disposal of assets 423 2,580

Repayments of associated companies 20,037 0

Cash flow from investment activities -237,201 -343,403

Cash flow from financing activities

Purchase of treasury stock 39 -51,649 -133,777

Change in bank liabilities 32 172,465 250,688

Repayed loans to associated companies 42 -2,800 2,800

Dividend payments 19 -45,886 -42,516

Minority interests 12,987 0

Payments to minorities -66 -149

Capital increase 144 3,509

Payment of convertible bonds -155 -230

Cash flow from financing activities 85,040 80,325

Net increase in cash and cash equivalents 825 28,837

Cash and cash equivalents at beginning of fiscal year 59,770 32,723

Currency translation adjustments of cash and cash equivalents

-5,223

-1,790

Cash and cash equivalents at end of fiscal year 55,372 59,770

Deposit of interests

2,036

1,206

Payments for interests -27,632 -7,246

Deposit of taxes 16 830

Payments for taxes -74,062 -71,389

Dividend payments received 1,768 623

63

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Page 67: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Development of Consolidated Fixed Assetsin Fiscal Year 2008 and 2007 in Ek

2007 ACQUISITION AND PRODUCTION COSTS ACCUMULATED DEPRECIATION NET BOOK VALUE

Jan. 1, 2007

Additions from

initial consoli-

dation

Additions

Disposals

Reclassi-fications

Currency trans-lation

Disposals

from decon-

solidation

Dec. 31, 2007

Jan. 1, 2007

Additions from

initial consoli-

dation

Additions

Dispo-sals

Reclas-si-fica-

tions

Currency trans-lation

Disposals

from deconso-

lidation

Dec. 31, 2007

Jan. 1, 2007

Dec. 31, 2007

Intangible assets Licenses 33,781 0 2,399 197 -371 0 -8,150 27,462 21,953 0 7,630 384 -5 -7 -6,782 22,405 11,828 5,057Order backlog 2,141 0 0 0 0 0 0 2,141 1,128 0 552 0 0 0 0 1,680 1,013 461Software 31,585 0 8,227 474 9 -99 -4,881 34,367 20,780 0 9,673 436 5 -63 -4,535 25,424 10,805 8,943Trademark 22,282 0 0 0 0 -378 0 21,904 0 0 0 0 0 0 0 0 22,282 21,904Customer base 47,098 0 0 0 0 -1,573 0 45,525 7,361 0 7,491 0 0 -318 0 14,534 39,737 30,991Portal 72,240 0 0 0 0 0 0 72,240 10,535 0 9,030 0 0 0 0 19,565 61,705 52,675Goodwill 375,366 0 33,927 3,623 0 -5,168 -628 399,874 1,679 0 9,373 0 0 0 0 11,052 373,687 388,822Total (I) 584,493 0 44,553 4,294 -362 -7,218 -13,659 603,513 63,436 0 43,749 820 0 -388 -11,317 94,660 521,057 508,853

Property, plant and equipment Land and buildings 6,986 0 0 0 0 0 0 6,986 3,609 0 268 0 0 0 0 3,877 3,377 3,109Operational equipment 149,782 0 41,291 8,490 4,426 -3,018 -27,086 156,905 95,119 0 27,947 7,831 0 -1,525 -20,574 93,136 54,663 63,769Payments in advance 8,256 0 6,860 0 -4,405 -484 0 10,227 0 0 0 0 0 0 0 0 8,256 10,227Total (II) 165,024 0 48,151 8,490 21 -3,502 -27,086 174,118 98,728 0 28,215 7,831 0 -1,525 -20,574 97,013 66,296 77,105Total 749,517 0 92,704 12,784 -341 -10,720 -40,745 777,631 162,164 0 71,964 8,651 0 -1,913 -31,891 191,673 587,353 585,958

2008 ACQUISITION AND PRODUCTION COSTS ACCUMULATED DEPRECIATION NET BOOK VALUE

Jan. 1, 2008

Additions from

initial consoli-

dation

Additions

Disposals

Reclassi-fications

Currency trans-lation

Disposals

from decon-

solidation

Dec. 31, 2008

Jan. 1, 2008

Additions from

initial consoli-

dation

Additions

Dispo-sals

Reclas-sifica-tions

Currency trans-lation

Disposals

from deconso-

lidation

Dec. 31, 2008

Jan. 1, 2008

Dec. 31, 2008

Intangible assets Licenses 27,462 0 701 0 133 41 0 28,337 22,405 0 2,770 0 29 7 0 25,211 5,057 3,126Order backlog 2,141 0 0 0 0 0 0 2,141 1,680 0 461 0 0 0 0 2,141 461 0Software 34,367 0 3,633 10 -12 -283 0 37,695 25,424 0 5,496 8 15 -252 0 30,675 8,943 7,020Trademark 21,904 820 0 0 0 -1,301 0 21,423 0 0 44 0 0 0 0 44 21,904 21,379Customer base 45,525 2,661 0 0 1 -5,260 0 42,927 14,534 0 7,354 0 0 -1,303 0 20,585 30,991 22,342Portal 72,240 0 0 0 0 0 0 72,240 19,565 0 9,030 0 0 0 0 28,595 52,675 43,645

Goodwill 399,874 9,302 7,399 0 0 -17,403 0 399,172 11,052 0 9,244 0 0 0 0 20,296 388,822 378,876Total (I) 603,513 12,783 11,733 10 122 -24,206 0 603,935 94,660 0 34,399 8 44 -1,548 0 127,547 508,853 476,388

Property, plant and equipment Land and buildings 6,986 0 1,061 0 0 0 0 8,047 3,877 0 151 0 0 0 0 4,028 3,109 4,019Operational equipment 156,905 53 36,537 1,032 6,912 -2,730 0 196,645 93,136 26 27,654 925 -44 -2,213 0 117,634 63,769 79,011Payments in advance 10,227 0 110 0 -6,966 93 0 3,464 0 0 0 0 0 0 0 0 10,227 3,464Total (II) 174,118 53 37,708 1,032 -54 -2,637 0 208,156 97,013 26 27,805 925 -44 -2,213 0 121,662 77,105 86,494Total 777,631 12,836 49,441 1,042 68 -26,843 0 812,091 191,673 26 62,204 933 0 -3,761 0 249,209 585,958 562,882

64

Page 68: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

2007 ACQUISITION AND PRODUCTION COSTS ACCUMULATED DEPRECIATION NET BOOK VALUE

Jan. 1, 2007

Additions from

initial consoli-

dation

Additions

Disposals

Reclassi-fications

Currency trans-lation

Disposals

from decon-

solidation

Dec. 31, 2007

Jan. 1, 2007

Additions from

initial consoli-

dation

Additions

Dispo-sals

Reclas-si-fica-

tions

Currency trans-lation

Disposals

from deconso-

lidation

Dec. 31, 2007

Jan. 1, 2007

Dec. 31, 2007

Intangible assets Licenses 33,781 0 2,399 197 -371 0 -8,150 27,462 21,953 0 7,630 384 -5 -7 -6,782 22,405 11,828 5,057Order backlog 2,141 0 0 0 0 0 0 2,141 1,128 0 552 0 0 0 0 1,680 1,013 461Software 31,585 0 8,227 474 9 -99 -4,881 34,367 20,780 0 9,673 436 5 -63 -4,535 25,424 10,805 8,943Trademark 22,282 0 0 0 0 -378 0 21,904 0 0 0 0 0 0 0 0 22,282 21,904Customer base 47,098 0 0 0 0 -1,573 0 45,525 7,361 0 7,491 0 0 -318 0 14,534 39,737 30,991Portal 72,240 0 0 0 0 0 0 72,240 10,535 0 9,030 0 0 0 0 19,565 61,705 52,675Goodwill 375,366 0 33,927 3,623 0 -5,168 -628 399,874 1,679 0 9,373 0 0 0 0 11,052 373,687 388,822Total (I) 584,493 0 44,553 4,294 -362 -7,218 -13,659 603,513 63,436 0 43,749 820 0 -388 -11,317 94,660 521,057 508,853

Property, plant and equipment Land and buildings 6,986 0 0 0 0 0 0 6,986 3,609 0 268 0 0 0 0 3,877 3,377 3,109Operational equipment 149,782 0 41,291 8,490 4,426 -3,018 -27,086 156,905 95,119 0 27,947 7,831 0 -1,525 -20,574 93,136 54,663 63,769Payments in advance 8,256 0 6,860 0 -4,405 -484 0 10,227 0 0 0 0 0 0 0 0 8,256 10,227Total (II) 165,024 0 48,151 8,490 21 -3,502 -27,086 174,118 98,728 0 28,215 7,831 0 -1,525 -20,574 97,013 66,296 77,105Total 749,517 0 92,704 12,784 -341 -10,720 -40,745 777,631 162,164 0 71,964 8,651 0 -1,913 -31,891 191,673 587,353 585,958

2008 ACQUISITION AND PRODUCTION COSTS ACCUMULATED DEPRECIATION NET BOOK VALUE

Jan. 1, 2008

Additions from

initial consoli-

dation

Additions

Disposals

Reclassi-fications

Currency trans-lation

Disposals

from decon-

solidation

Dec. 31, 2008

Jan. 1, 2008

Additions from

initial consoli-

dation

Additions

Dispo-sals

Reclas-sifica-tions

Currency trans-lation

Disposals

from deconso-

lidation

Dec. 31, 2008

Jan. 1, 2008

Dec. 31, 2008

Intangible assets Licenses 27,462 0 701 0 133 41 0 28,337 22,405 0 2,770 0 29 7 0 25,211 5,057 3,126Order backlog 2,141 0 0 0 0 0 0 2,141 1,680 0 461 0 0 0 0 2,141 461 0Software 34,367 0 3,633 10 -12 -283 0 37,695 25,424 0 5,496 8 15 -252 0 30,675 8,943 7,020Trademark 21,904 820 0 0 0 -1,301 0 21,423 0 0 44 0 0 0 0 44 21,904 21,379Customer base 45,525 2,661 0 0 1 -5,260 0 42,927 14,534 0 7,354 0 0 -1,303 0 20,585 30,991 22,342Portal 72,240 0 0 0 0 0 0 72,240 19,565 0 9,030 0 0 0 0 28,595 52,675 43,645

Goodwill 399,874 9,302 7,399 0 0 -17,403 0 399,172 11,052 0 9,244 0 0 0 0 20,296 388,822 378,876Total (I) 603,513 12,783 11,733 10 122 -24,206 0 603,935 94,660 0 34,399 8 44 -1,548 0 127,547 508,853 476,388

Property, plant and equipment Land and buildings 6,986 0 1,061 0 0 0 0 8,047 3,877 0 151 0 0 0 0 4,028 3,109 4,019Operational equipment 156,905 53 36,537 1,032 6,912 -2,730 0 196,645 93,136 26 27,654 925 -44 -2,213 0 117,634 63,769 79,011Payments in advance 10,227 0 110 0 -6,966 93 0 3,464 0 0 0 0 0 0 0 0 10,227 3,464Total (II) 174,118 53 37,708 1,032 -54 -2,637 0 208,156 97,013 26 27,805 925 -44 -2,213 0 121,662 77,105 86,494Total 777,631 12,836 49,441 1,042 68 -26,843 0 812,091 191,673 26 62,204 933 0 -3,761 0 249,209 585,958 562,882

65

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Page 69: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Consolidated Statement of Changes in Shareholders’ Equityfrom January 1, 2007 to December 31, 2008 in Ek

Total net income

Capital stock

Additional paid-in capital

Accumulated profit

Capital stock

Revaluationreserves

Currency translation

Equity attributable to

shareholders of the parent

company

Minority interests

Total equity

attributable to share-

holders of United

Internet AG

Minorityinterests

Share Dk Dk Dk Share Dk Dk Dk Dk Dk Dk Dk Dk

Balance as of January 1, 2007 250,235,176 250,235 156,447 -6,014 8,226,072 -79,561 1,373 930 323,410 11,605 335,015 113,575 6,954

Exercise of convertibles 1,198,796 1,199 2,043 3,242 3,242Employee stock ownership programme AdLINK

311

311

311

Employee stock ownership programme United Internet

1,294

1,294

1,294

Market value changes of available for sale securities after taxes

8,038

8,038

1,149

9,187

8,038

1,149

Withdrawal of treasury shares 9,773,928 -133,777 -133,777 -133,777Dividend payments -42,516 -42,516 -42,516Currency translation adjustment -8,656 -8,656 -35 -8,691 -8,656 -35Net income 2007 220,218 220,218 3,283 223,501 220,218 3,283Dividend payments 0 -75 -75Change amount of holding 0 -3,550 -3,550Balance as of December 31, 2007 251,433,972 251,434 160,095 171,688 18,000,000 -213,338 9,411 -7,726 371,564 12,377 383,941 219,600 4,397 thereof result directly included in equity

-618

1,114

Balance as of January 1, 2008 251,433,972 251,434 160,095 171,688 18,000,000 -213,338 9,411 -7,726 371,564 12,377 383,941 220,749 4,397Exercise of convertibles 35 118 153 153Employee stock ownership programme AdLINK

1,269

1,269

153

1,422

Employee stock ownership programme United Internet

2,598

2,598

2,598

Market value changes of available for sale securities after taxes

591

591

-1,053

-462

591

-1,053

Others -184 -184 -184Withdrawal of treasury shares 4,000,000 -51,649 -51,649 -51,649Dividend payments -45,886 -45,886 -45,886

Currency translation adjustment -20,966 -20,966 93 -20,873 -20,966 93Net income 2008 -120,183 -120,183 -1,280 -121,463 -120,183 -1,280Dividend payments 0 -66 -66Change amount of holding 0 -1,951 -1,951Balance as of December 31, 2008 251,433,972 251,469 163,896 5,619 22,000,000 -264,987 10,002 -28,692 137,307 8,273 145,580 -140,558 -2,240 thereof result directly included in equity

-20,375

-960

66

Page 70: Annual Report 2008 - United Internet AG · increased the number of customers in all product lines and improved the reach of our advertising networks. The number of our fee-based customer

Total net income

Capital stock

Additional paid-in capital

Accumulated profit

Capital stock

Revaluationreserves

Currency translation

Equity attributable to

shareholders of the parent

company

Minority interests

Total equity

attributable to share-

holders of United

Internet AG

Minorityinterests

Share Dk Dk Dk Share Dk Dk Dk Dk Dk Dk Dk Dk

Balance as of January 1, 2007 250,235,176 250,235 156,447 -6,014 8,226,072 -79,561 1,373 930 323,410 11,605 335,015 113,575 6,954

Exercise of convertibles 1,198,796 1,199 2,043 3,242 3,242Employee stock ownership programme AdLINK

311

311

311

Employee stock ownership programme United Internet

1,294

1,294

1,294

Market value changes of available for sale securities after taxes

8,038

8,038

1,149

9,187

8,038

1,149

Withdrawal of treasury shares 9,773,928 -133,777 -133,777 -133,777Dividend payments -42,516 -42,516 -42,516Currency translation adjustment -8,656 -8,656 -35 -8,691 -8,656 -35Net income 2007 220,218 220,218 3,283 223,501 220,218 3,283Dividend payments 0 -75 -75Change amount of holding 0 -3,550 -3,550Balance as of December 31, 2007 251,433,972 251,434 160,095 171,688 18,000,000 -213,338 9,411 -7,726 371,564 12,377 383,941 219,600 4,397 thereof result directly included in equity

-618

1,114

Balance as of January 1, 2008 251,433,972 251,434 160,095 171,688 18,000,000 -213,338 9,411 -7,726 371,564 12,377 383,941 220,749 4,397Exercise of convertibles 35 118 153 153Employee stock ownership programme AdLINK

1,269

1,269

153

1,422

Employee stock ownership programme United Internet

2,598

2,598

2,598

Market value changes of available for sale securities after taxes

591

591

-1,053

-462

591

-1,053

Others -184 -184 -184Withdrawal of treasury shares 4,000,000 -51,649 -51,649 -51,649Dividend payments -45,886 -45,886 -45,886

Currency translation adjustment -20,966 -20,966 93 -20,873 -20,966 93Net income 2008 -120,183 -120,183 -1,280 -121,463 -120,183 -1,280Dividend payments 0 -66 -66Change amount of holding 0 -1,951 -1,951Balance as of December 31, 2008 251,433,972 251,469 163,896 5,619 22,000,000 -264,987 10,002 -28,692 137,307 8,273 145,580 -140,558 -2,240 thereof result directly included in equity

-20,375

-960

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSas of December 31, 2008

1 Information on the company

Natureofthebusiness

Accordingtoitsarticlesofincorporation,thebusinessofUnitedInternetAG(herein-afterreferredtoas“UnitedInternetAG”,the“UnitedInternetGroup”orthe“Company”)istoprovidemarketing,salesorotherservices,especiallyinthefieldsoftelecommunica-tions,informationtechnology,includingtheinternet,anddataprocessingorrelatedareas.TheCompany’spurposealsoincludestheacquisition,holdingandmanagementofinvestmentsinothercompanies,especiallythoseoperatingintheaforementionedbusinesssegments.TheCompanyisentitledtobringcompaniesinwhichitholdsaninvestmentunderitscommoncontrolandmayrestrictitselftothemanage-mentoradministrationofitsinvestments.

TheCompanyisauthorizedtoacquireorholdinvest-mentsinalltypesofcompaniesinGermanyandothercountriesandtotransactallbusinessthatisconducivetoitspurpose.TheCompanyisalsoauthorizedtocon-ductitsbusinessthroughsubsidiaries,associatedcom-paniesandjointventures.Itmayoutsourceortransferallorpartofitsoperationstoaffiliatedcompanies.

Inthelastfewyears,UnitedInternetAGhaschangeditsstrategicalignment,evolvingfromapureproviderofinternetandITmarketingservicestoanoperatingmanagementholdingcompanyforinvestmentsinvariousinternettargetsegments,inparticularinthefieldofinternetserviceprovision.

TheCompanyisregisteredin56410Montabaur,Elgen-dorferStrasse57,Germany,andhasbranchesorsub-sidiariesinDüsseldorf,Hanover,Karlsruhe,Cologne,Munich,Regensburg,Zweibrücken,Boston,Brussels,CebuCity,Chesterbrook,Gloucester,Haarlem,LasVegas,Melbourne,Levallois-Perret,London,Madrid,Milan,Saargemünd,Slough,ViennaandZug.WiththeexceptionofthebuildingatZweibrücken,alloftheCompany’sbuildingsareleased.

Thereportingcompany

Theparentcompany,UnitedInternetAG,wasfoundedonJanuary29,1998as1&1Aktiengesellschaft&Co.KGaA.Asaholdingcompany,itassumedthefunctionsof1&1HoldingGmbH,whichwasmergedinto1&1Akti-engesellschaft&Co.KGaAwitheffectfromJanuary1,

1998.UntilitsgeneralmeetingofshareholdersonFebruary22,2000,ittradedunderthenameof1&1Aktiengesellschaft&Co.KGaA.AtthisgeneralmeetingitwasdecidedtochangetheCompany’snametoUnitedInternetAktiengesellschaft&Co.KGaAandthentotransformtheCompanyintoastockcorporationnamedUnitedInternetAG.UnitedInternetAGisregisteredatthedistrictcourtofMontabaurunderHRB5762.

2 Accounting and valuation principles

2.1 Basisofpreparation

InaccordancewithArticle4oftheso-calledIASOrdi-nance(Ordinance(EU)No.1606/2002oftheEuropeanParliamentandCouncilofJuly19,2002concerningtheapplicationofinternationalaccountingstandards,ABl.EUNo.L243p.1),theUnitedInternetGrouppreparesitsconsolidatedannualfinancialstatementsaccordingtoIFRS(InternationalFinancialReportingStandards).TheCompanyalsoobservedandappliedthesupple-mentaryregulationsofSection315a(1)GermanCom-mercialCode(HGB).AllIFRSstandardsvalidonthebalancesheetdateandasappliedwithintheEuropeanUnionwereobserved.

Thereportingcurrencyiseuro(C).Amountsstatedinthenotestothefinancialstatementsareineuro(C),thousandeuro(Ck)ormillioneuro(Cm).Theconsoli-datedfinancialstatementsarealwaysdrawnuponthebasisofhistoricalcosts.Theexceptiontothisrulearederivativefinancialinstrumentsandavailable-for-salefinancialinvestments,whicharestatedatfairvalue.

ThebalancesheetdateisDecember31,2008.

TheSupervisoryBoardapprovedtheconsolidatedfinancialstatementsfor2007atitsmeetingonApril2,2008.TheconsolidatedannualfinancialstatementswerepublishedintheGermanFederalGazette(“Bundesanzeiger”)onApril9,2008.

Theconsolidatedfinancialstatementsfor2008werepreparedbytheCompany’sManagementBoardonMarch16,2009andsubsequentlysubmittedtotheSupervisoryBoard.Theconsolidatedfinancialstate-mentswillbepresentedtotheSupervisoryBoardforapprovalonMarch25,2009.

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2.2 Consolidationprinciples

TheconsolidatedgroupcomprisesUnitedInternetAGandalldomesticandforeignsubsidiaries(majorityshareholdings)controlledbyit.Acompanyisdeemedtobecontrolled,iftheCompanycandetermineitsfinancialandbusinesspoliciesinordertogainaneconomicbenefit.Theannualfinancialstatementsofsubsidiariesarepre-paredastothesamebalancesheetdateandusingthesamestandardizedaccountingandvaluationmethodsasthoseappliedbytheparentcompany.

Allintercompanybalances,transactions,income,expenses,profitsandlossesfromintercompanytrans-actionscontainedinthecarryingvalueofassetsarefullyeliminated.

Subsidiariesarefullyconsolidatedfromthepointofacquisition,i.e.fromthedateonwhichtheCompanygainedcontrol.Consolidationendsassoonastheparentcompanynolongerhascontroloverthesub-sidiary.

MinorityinterestsrepresenttheproportionoftheresultandnetassetswhichisnotattributabletotheGroup.Minorityinterestsaredisclosedseparatelyintheconsolidatedbalancesheet.Minorityinterestsaredisclosedintheconsolidatedbalancesheetaspartofshareholders’equity,butseparatetotheequitycapitalattributabletotheshareholdersoftheparentcompany.Theacquisitionofminorityshareholdingsisaccountedforusingtheso-called“parent entity extension method”.Thedifferencebetweenpurchasepriceandbookvalueoftheproportionofnetassetsacquirediscarriedasgoodwill.

TheGroupincludesthefollowingsubsidiariesinwhichUnitedInternetAGholdsadirectorindirectmajorityinterest(asindicatedbytheshareholdingsinbrackets).Unlessotherwisestated,theshareholdingcorrespondstotheproportionofvotingrights:1&1Internet: 1&1InternetAG,Montabaur(100.00%) 1&1InternetInc.,Chesterbrook/USA(100.00%)– A1MediaLLC,Chesterbrook/USA(100.00%)

1&1InternetLtd.,Slough/UK(100.00%) 1&1InternetS.A.R.L.,Saargemünd/France(100.00%)

1&1InternetEspanaS.L.U.,Madrid/Spain(100.00%)

1&1InternetServiceGmbH,Montabaur(100.00%) – 1&1InternetServiceGmbH,Zweibrücken

(100.00%) 1&1InternetServices(Philippines)Inc.,CebuCity,Phillipines(100.00%)

1&1UKHoldingsLtd.,Slough/UK(100.00%) – FasthostsInternetLtd.,Gloucester/UK

(100.00%)• DollamoreLtd,Melbourne/UK(100.00%)• FasthostsInternetInc.,Chesterbrook/

USA(100.00%) A1MarketingKommunikationundneueMedienGmbH,Montabaur(100.00%)

GMXGmbH,Munich(100.00%) GMXInternetServicesInc.,Chesterbrook/USA(100.00%)

GMXInternetServicesGmbH,Munich(100.00%)

ImmobilienverwaltungABGmbH,Montabaur(100.00%)

ImmobilienverwaltungNMHGmbH,Montabaur(100.00%)

UnitedInternetMediaAG,Munich(100.00%) UIMUnitedInternetMediaAustriaGmbH,Vienna/Austria(100.00%)

WEB.DEGmbH,Montabaur(100.00%)

UnitedInternetBeteiligungen: UnitedInternetBeteiligungenGmbH,Montabaur(100.00%) UnitedInternetBeteiligungenInternationalGmbH,Montabaur(100.00%)

InterNetXGmbH,Regensburg(95.56%)– SchlundTechnologiesGmbH,Regensburg

(100.00%)– PSIUSAInc.,LasVegas/USA(100.00%)

AdLINK: AdLINKInternetMediaAG,Montabaur(90.71%) AdLINKInternetMediaS.A.,Levallois-Perret/France(100.00%)

AdLINKInternetMediaN.V.,Brussels/Belgium(100.00%)

AdLINKInternetMediaS.L.U.,Madrid/Spain(100.00%)

AdLINKInternetMediaLtd.,London/UK(100.00%)

AdLINKInternetMediaB.V.,Haarlem/Nether-lands(100.00%)

AdLINKInternetMediaSrl.,Milan/Italy(100.00%)

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AdLINKInternetMediaGmbHDeutschland,Düsseldorf(100.00%)– net:dialogsGmbH,Montabaur(100.00%)– SedoGmbH,Cologne(75.94%)• Sedo.comLLC,Cambridge(Boston)/USA(100.00%)• DomCollectWorldwideIntellectualPropertyAG,Zug/Switzerland(100.00%)• IntellectualPropertyManagementCompanyInc.,Dover/USA(100.0%)

affilinetGmbH,Munich(100.00%)– affilinetLtd.,London/UK(100.00%)– CibleClickPerformancesS.A.,Levallois

Perret/France(100.00%)• affilinetSAS,LevalloisPerret/France(100.00%)

Sonstige: MIPMultimediaInternetParkGmbH,Zweibrücken(100.00%)

InsonHOLDINGGmbH,Montabaur(100.00%) EuropeanFoundersFundNr.2VerwaltungsGmbH,Munich(90.00%)

EuropeanFoundersFundNr.2GeschäftsführungsGmbH,Munich(90.00%)

EuropeanFoundersFundGmbH&Co.BeteiligungsKGNr.2,Munich(90.00%)

EuropeanFoundersFundNr.3VerwaltungsGmbH,Munich(80.00%)

EuropeanFoundersFundNr.3ManagementGmbH,Munich(80.00%)

EuropeanFoundersFundGmbH&Co.BeteiligungsKGNr.3,Munich(80.00%) EuropeanFoundersFundNr.3BeteiligungsGmbH,Munich(100.00%)

Duetothecontractuallyagreedunanimityofvotingonallshareholderresolutions,theGroupcannotexertacontrollinginfluenceonEFFNo.2andEFFNo.3com-paniesbasedonitsvotingmajorityalone.However,astheGroupexertscontrolaccordingtotheindicatorsstatedinSIC12Consolidation – Special Purpose Entities,thesecompaniesareconsolidated.

Shareholdingsinjointventuresarerecognizedusingtheequitymethodandcomprisethefollowingcompanies:

MaxdomeGmbH&Co.KG,Unterföhring(50.00%) MSPHoldingGmbH,Maintal(50.00%)

AllinvestmentsforwhichtheCompanycanhaveasignificantinfluenceontheirfinancialandbusiness

policiesarerecognizedasassociatedcompaniesaccor-dingtoIAS28usingtheequitymethod.Theyconsistofthefollowingmaincompanies:

EuropeanFoundersFundVerwaltungsGmbH,Munich(66.67%)

EuropeanFoundersFundManagementGmbH,Munich(66.67%)

EuropeanFoundersFundGmbH&Co.BeteiligungsKGNr.1,Munich(66.67%)

funcommunicationsGmbH,Karlsruhe(49.00%) VirtualMindsAG,Freiburg(48.65%) DomainsBotSrl,Rom/Italy(40.00%) BW2GroupAG,Lachen/Switzerland(33.36%) EuropeanFoundersFundInvestmentGmbH,Munich(33.33%)

JimdoGmbH,Hamburg(30.00%) VersatelAG,Berlin(25.21%) Travel-TrexGmbH,Cologne(25.00%) getAbstractAG,Luzern/Switzerland(22.00%) internetstoresAG,Esslingen(20.00%) freenetAG,Büdelsdorf(8.43%)

Duetothecontractuallyagreedunanimityofvotingonallshareholderresolutions,theGroupcannotexertacontrollinginfluenceonEFFNo.1companies,butonlyasignificantinfluence.Incontrasttoitsshareincapitalof66.67%,theGroup’sparticipationinannualnetprofitisbetween33.33%and66.67%ofEFFNo.1,dependingonthefund’sinternalrateofreturn.

Despiteholding8.63%ofvotingrightsinfreenetAG,theCompanybelievesitexertsasignificantinfluenceonthebusinesspolicyoffreenetAGduetoavotingcommitmentagreedwithDrillischAGandMSPHoldingGmbH.

CompaniesinwhichtheCompanyhasinvestedandoverwhosefinancialandbusinesspoliciesithasnosignificantinfluence(<20%ofvotingshares)areincludedasfinancialinstrumentspursuanttoIAS39andheldasavailable-for-salefinancialassets:

GoldbachMediaAG,Küsnacht-Zürich/Switzerland(14.99%)

AfiliasLtd,Dublin/Ireland(10.37%) DrillischAG,Maintal(9.68%) SilverpopSystemsInc.,Atlanta/USA(5.91%) XactlyCorporation,SanJose/USA(5.26%) BecomeInc.,Sunnyvale/USA(5.06%)

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2.3 Changesinaccountingandvaluationmethods

Initialapplicationofnewaccountingstandardsintheperiodunderreview

InOctober2008theIASBreleasedamendmentstoIAS39Financial Instruments: Recognition and Measure-mentandIFRS7Financial Instruments: Disclosures.TheamendmentsReclassification of Financial AssetswereintegratedbytheEuropeanUnionintoEUlawinOcto-ber2008.TheamendmenttoIAS39allowsthereclassi-ficationofcertainoriginatedfinancialassetsatfairvalueintoadifferentvaluationcategory.Inthecaseofreclassification,additionaldisclosuresarerequiredviatheamendmenttoIFRS7.TheamendmentsbecameeffectiveretroactivelyasofJuly1,2008.Intheperiodunderreview,theUnitedInternetGrouphadnofinan-cialassetswhichcouldbereclassifiedviatheamend-menttoIAS39.TheapplicationoftheamendmentstoIAS39andIFRS7thereforehasnoeffectonthepresen-tationoftheUnitedInternetGroup’snetassets,finan-cialsituationandresultsofoperationsnoronitscashflows.

Therewerenootherchangestotheaccountingandvaluationmethodscomparedwiththepreviousyear.

Newaccountingstandardswithnoearlyadoptionintheperiodunderreview

TheIASBandIFRIChavealsoreleasedthefollowingstandardsandinterpretationswhoseadoptionwasnotmandatoryinfiscalyear2008andwhichwerenotvoluntarilyappliedbytheCompany.

AlreadyadoptedasEUlawunderthecomitologyprocedure:

IFRS8–OperatingSegments IAS23–BorrowingCosts IAS1–PresentationofFinancialStatements AmendmentstoIFRS1andIAS27–AcquisitionCostsofanInvestmentinaSubsidiary,JointlyControlledEntityorAssociatedCompany

AmendmentstoIFRS2–VestingConditionsandCancellations

AmendmentstoIAS32andIAS11–PuttableFinancialInstrumentsandObligationsArisingonLiquidation

ThemaineffectsoftheseamendmentsfortheUnitedInternetGroupwereasfollows:

IFRS8–OperatingSegmentsIFRS8wasreleasedinNovember2006andistobeappliedforthefirsttimeinthereportingperiodbegin-ningonorafterJanuary1,2009.IFRS8requiresthedisclosureofinformationaboutacompany’soperatingsegmentsandreplacestheobligationofIAS14tospe-cifyprimaryandsecondarysegmentreportformatsforacompany.IFRS8followstheso-calledmanagementapproachaccordingtowhichsegmentreportingonlyconformstothefinancialinformationthecompany’sexecutivesusefortheinternalmanagementofthecompany.Decisivearetheinternalreportingandorga-nizationalstructuresaswellassuchfinancialvaluesconsideredwhendecidingontheallocationofresour-cesandtheevaluationofprofitability.

ThenewstandardwillinfluencethemodeofthepresentationoffinancialinformationontheGroup’sbusinesssegmentsbutwillnotaffecttheinclusionandvaluationofassetsandliabilitiesintheconso-lidatedfinancialstatements.

IAS23–BorrowingCostsRevisedstandardIAS23wasreleasedinMarch2007andisapplicableinthereportingperiodbeginningonorafterJanuary1,2009.Thestandardendstheformeroptionrightandrequiresborrowingcoststhatcanbeattributedtoaqualifiedassettobecapitalized.Anassetisdefinedasaqualifiedassetifaconsiderableperiodoftimeisnecessarytoputtheassetinitsinten-dedconditionforuseorsale.Thetransitionalprovisi-onsprovidefortherevisiontobeappliedprospectively.

AstheGroupdoesnotholdanyqualifiedassets,theapplicationofthisstandardhasnoeffectontheconsolidatedfinancialstatements.

IAS1–PresentationofFinancialStatementsTherevisedstandardIAS1wasreleasedinSeptember2007andisapplicableforthereportingperiodbegin-ningonorafterJanuary1,2009.Therevisedversionofthestandardincludesmaterialchangestothepresen-tationanddisclosureoffinancialinformationinthefinancialstatements.Infuture,onlytransactionswithshareholdersintheircapacityasprovidersofequitycapitalmaybedisclosedinthestatementofchangesinequity.Otherchangesinequityaretobedisclosedinthepresentationof“comprehensiveincome”fortheperiod,whichcanbepresentedeitherinonesinglestatementorintheformoftwostatements:aprofit

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andlossstatementandacomprehensiveincomestate-ment.Furthermore,thestandardrequiresthatacom-panyincludesabalancesheetinitsannualfinancialstatementsoftheearliestcomparisonperiodifitretroactivelyappliesanaccountingmethod,orretroac-tivelycorrectsorreclassifiesanitem.

ThenewstandardwillhaveaneffectonthemodeofpublicationoftheGroup’sfinancialinformation,yetitwillnotaffecttheinclusionandvaluationofassetsandliabilitiesintheconsolidatedfinancialstatements.

AmendmentstoIFRS1andIAS27–Acquisitioncostsofaninvestmentinasubsidiary,jointlycontrolledentityorassociatedcompany

TheamendmentstoIFRS1andIAS27werereleasedinMay2008andarefirstapplicableinthereportingperiodbeginningonorafterJanuary1,2009.TheamendmentstoIFRS1allowacompanytodeterminetheacquisitioncostofaninvestmentinasubsidiary,jointlycontrolledentityorassociatedcompanyinitsIFRSopeningbalancesheetalsobyusingthecarryingamountsorfairvaluesofthepreviousGAAPasasub-stituteforacquisitioncost(deemedcost).Theamend-mentstoIAS27onlyaffecttheseparateannualfinan-cialstatementsofaparentcompanyandrequireinparticularthatalldividendsofsubsidiaries,jointlycontrolledentitiesorassociatedcompaniesaretoberecognizedinprofitandlossoftheseparateannualfinancialstatements.Thetransitionalprovisionsprovidefortherevisiontobeappliedprospectively.

AstheregulationsconcerninginitialadoptionofIFRSandtheregulationsforseparateannualfinancialstatementsofaparentcompanyarenotpertinentfortheGroup,thisrevisionwillhavenoimpactontheconsolidatedfinancialstatements

AmendmentstoIFRS2–VestingConditions andCancellationsTheamendmentofIFRS2wasreleasedinJanuary2008andisfirstapplicableforthereportingperiodbegin-ningonorafterJanuary1,2009.Therevisionclarifiestheterm“vestingconditions”andalsoregulatesaccountingproceduresontheterminationofshare-basedcompensationplansbyemployees.Thetransi-tionalprovisionsprovideforretrospectiveapplicationoftherevision.

DuetotheGroup’sinsignificantamountofshare-basedcompensation,theinitialapplicationofthisrevisioninfuturewillhavenosignificanteffectontheconso-lidatedfinancialstatements.

AmendmentstoIAS32andIAS1–PuttableFinancialInstrumentsandObligationsArisingonLiquidation

TheamendmentsofIAS32andIAS1werereleasedinFebruary2008andareapplicableinthereportingperiodbeginningonorafterJanuary1,2009.Therevi-sionintroducesanexceptionwhichallowsputtablefinancialinstrumentstobeclassifiedasequityiftheymeetcertaincriteria.Disclosuresaboutthesefinancialinstrumentsarestillmandatory.

TheamendmentstothesestandardsarenotexpectedtoaffecttheGroup’snetassets,financialsituationandearnings,astheparentcompanyhasnotissuedsuchinstruments.

ImprovementstoIFRS2008TheamendmentsfromtheImprovementProject2008werereleasedinMay2008and–withtheexceptionofIFRS5(herefromJuly1,2009)–arefirstapplicableforfiscalyearsbeginningonorafterJanuary1,2009.InthecourseoftheImprovementProject2008,anumberofmaterialamendmentswerereleasedwhichaffectaccountingandmeasurementmethods,aswellaspurelyeditorialamendments.Thelatterconcern,forexample,individualdefinitionsandformulationsaimedatmaintainingconsistencywithotherIFRSstandards.TheCompanyhasnotyetadoptedthefollowingamendments:

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Itwasclarifiedthatallassetsandliabilitiesofasubsidiarywhosesalewouldresultinalossofcontrolofthissubsidiaryarealsotobeclassifiedasavailable-for-saleifthecompanymaintainsanon-controllinginterestinitsformersubsidiaryafterthesale.

IAS 1 Presentation of Financial Statements Itwasclarifiedthatfinancialinstrumentsclassi-

fiedasheld-for-tradingarenotnecessarilytobeclassifiedascurrentassetsorliabilitiesinthebalancesheet.Theterm“current”isbasedsolelyontheaccrualcriteriacontainedinIAS1.

IAS 10 Events after the Reporting Period Itwasclarifiedthatdividendsdecidedaftertheend

ofthereportingperiod,butbeforeapprovaltopublishtheannualfinancialstatements,donotrepresentanobligationasofthebalancesheetdateandshouldthereforenotberecognizedintheannualfinancialstatementsasaliability.

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IAS 16 Property, Plant and Equipment Revenuefromproperty,plantandequipmentheld

forlettingpurposeswhicharenormallysoldafterlettingaspartofordinaryoperations,istobedisclosedundersalesrevenue.

IAS 19 Employee Benefits Inadditiontotherevisionofseveraldefinitions,it

wasclarifiedthatplanchangeswhichresultinareductionofbenefitsforservicestoberenderedinfutureperiods,aretoberecognizedasaplancurtailment.Planchangesforwhichthecurtail-mentreferstoservicesalreadyrendered,however,aretoberecognizedasapastservicecost.

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance

Inthecaseoflow-orzero-interestloans,companiesmustcalculatetheinterestbenefitinfuture.Thedifferencebetweentheamountreceivedandthediscountedamountistobecarriedasagovern-mentgrant.

IAS 23 Borrowing Costs Thedefinitionofborrowingcostswasrevised

insofarastheguidelinesinIAS39regardingtheeffectiveinterestratewereadopted.

IAS 27 Consolidated and Separate Financial Statements acc. to IFRS

ItwasclarifiedthattheaccountingofasubsidiaryatfairvaluepursuanttoIAS39intheseparateannualfinancialstatementsofaparentcompanymustalsobemaintainedifthesubsidiaryisclassifiedasanassetheldforsale.

IAS 28 Investments in Associates Asthegoodwillcontainedinthecarryingvalueof

aninvestmentinanassociatedcompanyisnotseparatelydisclosed,itisnotseparatelytestedforanyimpairment.Instead,theentirecarryingvalueoftheinvestmentistestedforimpairmentasasingleassetandwrittendownasnecessary.Itwasnowclarifiedthatalsothereversalofanimpair-mentlossrecognizedforaninvestmentinanassociatedcompanyinanearlierreportingperiodistoberecognizedasanincreaseinvaleofthisinvestmentasawholeandnotallocatedtothegoodwillitcontains.Afurtheramendmentconcernsthedisclosureobligationsforsuchinvestmentsinassociates,whicharecarriedatfairvalueinaccordancewithIAS39.Infuture,onlytherequirementsofIAS28areappliedwhichstipulate

thatthetypeandscopeofsignificantrestrictionsintheabilityoftheassociatetotransferfinancetothecompanyintheformofcashorloanredemp-tionaretobespecified.

IAS 29 Financial Reporting in Hyperinflationary Economies

Itwasclarifiedthatinannualfinancialstatementspreparedonthebasisofhistoriccost,assetsandliabilitieswhichareorcanbemeasuredatfairvaluearenotnecessarilyrestrictedtoproperty,plantandequipmentandfinancialinvestments.

IAS 31 Interests In Joint Ventures Theamendmentonlyconcernsdisclosureobliga-

tionsforthoseinterestsinjointventurescarriedatfairvalueinaccordancewithIAS39.Infuture,onlythoserequirementsofIAS31areappliedtotheseinterestsinwhichtheobligationsofthepartnercompanyandofthejointventurearetobestatedtogetherwithasummaryoffinancialinformationconcerningtheassets,liabilities,incomeandexpenditure.

IAS 34 Interim Financial Reporting Itwasclarifiedthatdilutedandundilutedearnings

persharemustonlybestatedintheinterimfinancialreportifthecompanyissubjecttotheapplicationareaofIAS33.

IAS 36 Impairment of Assets Thedisclosurerequirementsweresimplifiedforthe

determinationof“valueinuse”and“fairvaluelesstransactioncosts”,calculatedonthebasisofadiscountedcashflowmodel.

IAS 38 Intangible Assets Expenditureforgoodsandservicesusedfor

advertisingcampaignsandsalespromotionactivities(includingmailordercatalogs)arerecognizedasanexpenseinfutureiftheGrouphasreceivedtherighttoaccessthegoodsorservices.Theapplicationoftheperformance-relateddepreciationmethodforintangibleassetsisstillallowedwithoutrestriction.

IAS 39 Financial Instruments: Recognition and Measurement

Afterinitialrecognition,derivativescanbedesignatedas“atfairvaluethroughprofitorloss”orremovedfromthiscategoryduetoachangeincircumstances,asthisdoesnotqualifyasareclassificationasdefinedbyIAS39.Thereference

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toa“segment”,regardingwhetheraninstrumentfulfilledthecriteriaforahedgeinstrument,wasalsocancelled.Itwasalsoclarifiedthatthenewlycalculatedeffectiveinterestrateistobeusedforthevaluationofadebtinstrumentwhenthehedgingrelationshipisnolongercarriedinthebalancesheettohedgeagainstfairvalue.

IAS 40 Investment Property Propertyunderconstruction,whichisproducedor

developedforuseasaninvestment,isnottobeclassifiedasproperty,plantandequipmentinfuturebutasan“investmentproperty”measuredatcostorfairvalue.Ifthecompanyusesthefairvaluemodel,andiffairvaluecannotbereliablymeasured,thepropertyunderconstructionisvaluedatcostuntilfairvaluecanbemeasuredorconstructioniscompleted.

IAS 41 Agriculture Thelimitationontheuseofadiscountratebefore

taxformeasuringfairvaluewascancelled.Moreover,theprohibitiontoconsidercashflowsfromadditionalbiologicaltransformationsandotherfuturecompanytransactionswhenestimatingfairvaluewasalsocancelled.

TheUnitedInternetGroupexpectsthattheamend-mentsfromtheImprovementProjectwillhavenosignificanteffectsontheconsolidatedfinancialstatements.

IFRIC 13 Customer Loyalty Programs IFRICInterpretation13wasreleasedinJune2007

andisinitiallyapplicableinthereportingperiodbeginningonorafterJuly1,2008.Accordingtothisinterpretation,benefitsgrantedtocustomersaretoberecognizedasaseparateelementoftherevenueactivityinwhichtheyweregranted.Partofthefairvalueoftheproceedsreceivedisthereforeallocatedtocustomerbenefitsanddeferredasaliability.Revenueisrecognizedintheperiodinwhichthecustomerbenefitsgrantedareexercisedorexpire.

AstheGroupdoesnotcurrentlyoperatesuchcustomerloyaltyprograms,thisinterpretationhasnoeffectontheconsolidatedfinancialstatements.

IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interac-tion

IFRICInterpretation14wasreleasedinJuly2007andistobeappliednolaterthaninthefirstfiscal

yearbeginningafterDecember31,2008.Thisinterpretationprovidesguidelinesforthedetermi-nationofthelimitontheamountofthesurplusfromadefinedbenefitplanthatcanbecapitalizedasanassetaccordingtoIAS19:Employeebenefits.

AstheGrouphasnotestablishedanydefinedbenefitplans,noeffectontheconsolidatedfinancialstatementsisexpectedfromthisinter-pretation.

NotyetadoptedasEUlawunderthecomitologyprocedure:

IFRS1–First-timeAdoptionofIFRS IFRS3–BusinessCombinations IAS27–ConsolidatedandSeparateFinancialStatementsacc.toIFRS

AmendmenttoIAS39–EligibleHedgedItems IFRIC12–ServiceConcessionArrangements IFRIC15–AgreementsfortheConstructionofRealEstate

IFRIC16–HedgesofaNetInvestmentinaForeignOperation

IFRIC17–DistributionsofNon-cashAssetstoOwners

IFRIC18–TransfersofAssetsfromCustomers

Themaineffectsofthesechangeswereasfollows:

IFRS1–First-timeAdoptionofIFRSTherevisedstandardIFRS1wasreleasedinNovember2008andistobeappliedforthefirsttimeforfiscalyearsstartingonorafterJanuary1,2009.Therevisionofthestandardonlyincludededitorialamendmentsandarestructuringofthestandard.Therearenoamendmentstoaccountingandvaluationregulationsforthefirst-timeadoptionofIFRSresultingfromtherevision.

IFRS3–BusinessCombinationsTheamendedstandardIFRS3wasreleasedinJanuary2008andisapplicableforthefiscalyearsbeginningonorafterJuly1,2009.Withinthecontextofaconver-genceprojectofIASBandFASB,thisstandardwassub-jectedtoathoroughrevision.Theessentialchangesparticularlyconcerntheintroductionofarighttochooseforthevaluationofminorityinterestbetweenaccountingoftheproportionateidentifiablenetasset(so-calledpurchased goodwillmethod)andtheso-calledfull goodwillmethod,accordingtowhichfullgoodwillisrecognized,includingtheportionattributa-bletominorityequityholders.Furthermore,thereva-

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luationofexistinginvestmentsuponfirst-timeobtain-mentofcontrolintheincomestatement(successivebusinessacquisition),themandatoryaccountingofaconsiderationtiedtotheoccurrenceoffutureeventsatthetimeofacquisition,andthetreatmentoftransac-tioncostsasin-come-effectiveareparticularlyworthmentioning.Thetransitionalprovisionsprovidefortherevision’sprospectiveapplication.Nochangesariseforassetandliabilitiesresultingfrombusinesscombina-tionspriortothefirst-timeapplicationofthenewstandard.

AstheCompanywillprobablycontinuetoapplythepurchasedgoodwillmethodforfuturebusinesscombi-nations,therewillbenoeffectsfromthenewregula-tion.Re-valuationinthecourseofsuccessivecompanyacquisitionsandthemandatoryrecognitionofcondi-tionalcompensationatthetimeofpurchasemayleadtohighergoodwillvalues.Thetreatmentoftrans-actioncostsasincome-effectivewillhaveaneffectonfutureresults.

IAS27–ConsolidatedandSeparateFinancial Statementsacc.toIFRSRevisedstandardIAS27wasreleasedinJanuary2008.Thechangesareapplicableforthefiscalyearsbegin-ningonorafterJuly1,2009.ThechangesresultfromajointprojectofIASBandFASBfortherevisionofaccoun-tingregulationsforbusinesscombinations.Thechangesprimarilyconcerntheaccountingofinvestmentswithnocontrolovertheentity(minorityinterest),participa-tingintheGroup’slossestothefullamountinthefuture,andoftransactionsthatleadtoalossofcontroloverasubsidiaryandwhoseconsequencesshallberecognizedintheincomestatement.Theconsequencesofthesaleofinvestmentsnotresultinginalossofcontrolshallberecognizedinequity,notaffectingnetincome.Thetransitionalprovisions,generallyrequiringaretrospectiveapplicationofrealizedchanges,provideforaprospectiveapplicationwithrespecttotheabove-mentionedcases.Thereforenochangesariseforassetsandliabilitiesresultingfromsuchtransactionspriortothefirst-timeapplicationofthenewstandard.

Inthecaseoffutureacquisitions,aswellastransactionsandsalesofminorityshareholdingsresultinginthelossofacontrollinginterest,thenewregulationswillhaveacorrespondingeffectonfutureresultsandthesizeofequitycapital.

AmendmentstoIAS39–EligibleHedgedItemsTheamendmentstoIAS39werereleasedinJuly2008andareapplicableretrospectivelyforfiscalyears

beginningonorafterJuly1,2009.TheamendmentspecifieshowtheprinciplescontainedinIAS39regar-dingthedesignationofhedginginstrumentsofaone-sidedriskinahedgeditemandthedesignationofinflationrisksasahedgeditemaretobeapplied.Theamendmentclarifiesthatitispermissibletodesignateonlypartofthechangesinfairvalueorofcashflowfluctuationsofafinancialinstrumentasahedgeditem.

TheGroup’saccountingofhedginginstrumentsisnotaffectedbythisamendment.

IFRIC12–ServiceConcessionArrangementsIFRICInterpretation12wasreleasedinNovember2006andisgenerallyapplicableforfiscalyearsbeginningonorafterJanuary1,2008.ThisinterpretationhasnotyetbeenadoptedasEUlaw.Theinterpretationgovernstheaccountingofobligationsassumedandrightsgran-tedwithinthecontextofserviceconcessionarrange-mentsinthelessee’sfinancialstatements.

ThecompaniesincludedintheconsolidatedfinancialstatementsarenotlesseesofconcessionspursuanttoIFRIC12.ThisinterpretationwillthereforehavenoeffectontheGroup.

IFRIC15–AgreementfortheConstruction ofRealEstateIFRICInterpretation15wasreleasedinJuly2008andisapplicableforthefiscalyearsbeginningonorafterJanuary1,2009.Thisinterpretationprovidesguide-linesaboutthetimeandscopeofincomerecognitionfromprojectstoconstructrealestate.

IFRIC15willnotaffecttheconsolidatedfinancialstate-mentsasIFRIC15isnotapplicabletotheGroup.

IFRIC16–HedgesofaNetInvestmentinaForeignOperationIFRICInterpretation16wasreleasedinJuly2008andisapplicableforthefiscalyearsbeginningonorafterOctober1,2008.IFRIC16providesguidelinesforreco-gnizinghedgesofanetinvestment.Theinterpretationprovidesguidelinesforidentifyingforeignexchangeriskswhichcanbehedgedagainstaspartofahedgeofanetinvestment,whichGroupcompaniescanholdthehedginginstrumentsofthenetinvestment,andhowacompanyshouldmeasureforeigncurrencygainsorlosseswhichistobereclassifiedfromequitytoprofitandlosswhensellingthehedgedforeignoperation.Thisinterpretationistobeappliedprospectively.

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IFRIC16willnothaveanysignificantimpactontheconsolidatedfinancialstatements.

IFRIC17–DistributionsofNon-cashAssets toOwnersIFRICInterpretation17wasreleasedinNovember2008andisapplicableforthefiscalyearsbeginningonorafterJuly1,2009.Thisinterpretationgivesguidelinesontheaccountingandmeasurementofobligationswhichprovideforthedistributionofnon-cashassetstotheowners.Inparticular,theinterpretationclarifiesthetime,valuationanddisclosureofsuchobligations.Itstipulatesthatsuchanobligationistobecarriedandmeasuredatfairvalueifthecompanycannolongeravoidsuchobligations.Themeasurementoftheobligationandanychangesinfairvalueoftheassetconcernedaretobecarriedinequity.Aneffectonprofitorlossintheamountofthedifferencebetweenfairvalueandtheasset’scarryingvalueonlyoccursatthetimewhenthisassetistransferredtotheowner.Thisinterpretationistobeappliedprospectively.

IFRIC17willhavenoeffectontheconsolidatedfinan-cialstatements,asnodistributionofnon-cashassetswithintheGroupisexpected.

IFRIC18–TransfersofAssetsfromCustomersIFRICInterpretation18wasreleasedinJanuary2009andisapplicableforthefiscalyearsbeginningonorafterJuly1,2009.Thisinterpretationgivesguidelinesontheaccountingofagreementsinwhichanentityreceivesfromacustomeranitemofproperty,plant,andequipmentorcashwhichtheentitymustthenusetoconnectthecustomertoanetworkand/ortoprovidethecustomerwithongoingaccesstoasupplyofgoodsorservices.Inparticular,theinterpretationprovidesguidanceonhowtoaccountforcustomercontributionsaswellasthetimeandscopeofincomerecognitionfromsuchbusinesstransactions.Thisinterpretationistobeappliedprospectively.

IFRIC18willhavenoeffectontheconsolidatedfinan-cialstatements,astheGroupdoesnotconductsuchbusinesstransactions.

2.4 Significantaccountingjudgments, estimatesandassumptions

Theapplicationofaccountingandvaluationmethodsinpreparingtheconsolidatedfinancialstatementsrequiresmanagementtomakecertainaccountingjudgments,estimatesandassumptions.Thesehavean

effectonthedisclosedamountsofearnings,expen-diture,assetsandliabilities,aswellascontingentliabilities,asofthebalancesheetdate.Actualamountsmaydifferfromtheseestimatesandassumptions,whichmayleadinfuturetosignificantadjustmentstothecarryingvaluesoftheassetsandliabilitiesconcerned.

Accountingjudgments

Intheapplicationofaccountingandvaluationmethods,managementmadethefollowingaccountingjudgmentswhichsignificantlyaffectamountsintheannualfinancialstatements.

Special-purposeentitiestheGroupacquiredsharesinthespecial-purposeentitiesEuropeanFoundersFundNo.1toNo.3.OnanalysisofthecontractualtermsofthebylawsunderconsiderationofSIC-12Consolidation – Special Purpose Entities,itwasnotedthat: UnitedInternetAGdoesnotcontrolEuropeanFoundersFundNo.1,but

UnitedInternetAGcontrolsEuropeanFoundersFundNo.2and

UnitedInternetAGcontrolsEuropeanFoundersFundNo.3

EuropeanFoundersFundNo.2andNo.3werethusincludedintheconsolidatedfinancialstatementsasasubsidiarywhileEuropeanFoundersFundNo.1istreatedasanassociatedcompany,duetothesignifi-cantinfluencewhichUnitedInternetAGcanexert.

Estimatesandassumptions

Themostimportantforward-lookingassumptionsandothermajorsourcesofuncertaintyasofthebalancesheetdate,whichinvolvetheriskofsignificantadjust-mentstothecarryingvaluesofassetsandliabilitiesinthecomingfiscalyear,areexplainedbelow.

Impairmentofnon-financialassetsTheCompanyassessesoneverybalancesheetdatewhetherthereisanyindicationofimpairmentofitsnon-financialassets.Goodwillandotherintangibleassetswithundefinedusefullivesareassessedatleastonceayearoronindicationofimpairment.Othernon-financialassetsaretestedforimpairmentifthereisanyindicationthatthecarryingvalueexceedstherecoverableamount.

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Inordertoestimatevalue-in-use,managementmustestimateexpectedfuturecashflowsoftheassetorcash-generatingunitandselectasuitablediscountratetoassessthepresentvalueofthesecashflows.Furtherdetails,includingasensitivityanalysisofsignificantassumptions,arepresentedintheNote“Impairmentofgoodwillandintangibleassetswithunlimitedusefullives”.

Impairmentofavailable-for-salefinancial investmentsTheCompanyclassifiescertainassetsasavailable-for-saleandrecognizeschangesintheirfairvaluedirectlyinequity.Ifthefairvaluefalls,managementmakesassumptionsaboutthelossinvalueinordertodeter-minewhetheritconstitutesanimpairmentwhichmustbeexpensedintheincomestatement.Asignifi-cantorpersistentdecreaseinthefairvalueofanequityinstrumentbelowitsacquisitioncostmayconstituteanobjectiveindicationofimpairment.Thecarryingvalueofavailable-for-salefinancialinvest-mentsamountedtoC70,498k(prioryear:C62,472k)asofDecember31,2008.

Calculatingtheprofitcontributionofassociated companiesandjointventuresInvestmentsinassociatedcompaniesandjointven-turesarevaluedaccordingtotheequity methodandcarriedintheconsolidatedfinancialstatements.Asthefinancialinformationfromassociatedcompaniesandjointventuresisinpartincompleteasofthebalancesheetdate,theproratedtransferofresultsconsidersinpartassumptionsmadebythemanagementoftheUnitedInternetGroup.Theseassumptionsconcern,forexample,adaptationstostandardaccountingandvalu-ationmethods(IAS28.26),effectsfrompurchasepriceallocationstobeconducted(IAS28.23)andtheunder-lyingperiodresults.Inthecourseofsuchestimationsthereareareasofdiscretionanduncertainty.

Estimationsoftheprofitcontributionoflistedassocia-tedcompaniesandjointventuresaresubjectinparttotheprofitforecastsofexternalfinancialanalysts.ThecarryingvalueofinvestmentsinassociatedcompaniesandjointventuresamountedtoC221,684k(prioryear:C309,023k)asofDecember31,2008.

Impairmenttestforinvestmentsinassociated companiesandjointventuresAsofthebalancesheetdate,theUnitedInternetGroupholdsinvestmentsinvariousassociatedcompaniesandjointventures.InaccordancewithIAS28.31,theCompanyexaminesonthebalancesheetdatewhether

thenetinvestmentoftheUnitedInternetGroupintherespectiveassociatedcompanyorjointventurerequiresanadditionalimpairmentcharge.

Inthecaseofcapitalmarket-orientedcompanies,thecalculationoftherecoverableamountsisbasedmainlyontherespectivesharespriceonthebalancesheetdate.Therecoverableamountsofnon-listedcompaniesisbasedbothonavailablepastexperiencefortherespectivecompanyandexpectationsofitsfuturedevelopment.Astheseexpectationsarebasedonnumerousassumptions,thecalculationofrecoverableamountsdependsondiscretionaryfactors.AsofDecember31,2008,thefairvalueofinvestmentsinassociatedcompaniesandjointventuresamountedtoC221,684k(prioryear:C309,023k).

Share-basedpaymentsTheGroupmeasuresthecostofgrantingequityinstru-mentstoemployeesbyusingthefairvalueoftheseequityinstrumentsatthemomenttheyweregranted.Asuitablevaluationmodelmustbeusedtoestimatefairvaluewhengrantingequityinstruments;thisdependsonthecontractualterms.Suitabledatamustalsobechosenforthevaluationprocess,includingtheexpectedoptionterm,volatilityanddividendyield,aswellasthecorrespondingassumptions.

DeferredtaxassetsDeferredtaxassetsarerecognizedforallunusedtaxlosscarryforwards,totheex-tentforwhichitisproba-blethatfuturetaxableprofitwillbeavailable.Inordertoassesstheamountofdeferredtaxassets,manage-mentmustmakesignificantjudgmentsbasedonthelikelytimingandleveloffuturetaxableincomeaswellasfuturetaxplanningstrategies.AsofDecember31,2008,thecarryingvalueofdeferredtaxassetsfortaxlossesconsideredamountedtoC2,712k(prioryear:C6,097k).FurtherdetailsareprovidedinNote16.

TradeaccountsreceivableTradereceivablesarecarriedinthebalancesheetlessimpairmentchargesmade.Allowancesfordoubtfulclaimsaremadeonthebasisofasystematicreviewaswellasvaluationsconductedaspartofcreditmonito-ring.Assumptionsconcerningthepaymentbehaviorandcreditworthinessofcustomersaresubjecttosignificantuncertainties.ThecarryingvalueoftradereceivablesamountedtoC119,066k(prioryear:C123,788k)asofDecember31,2008.

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TangibleandintangibleassetsProperty,plantandequipmentandintangibleassetsarevaluedatcostoninitialrecognition.Property,plantandequipmentandintangibleassetswithlimitedusefullivesarethendepreciatedovertheirexpectedeconomicusefullivesusingthestraight-linemethod.Expectedusefullivesarebasedonhistoricalexperienceandthussubjecttosignificantuncertain-ties,especiallywithregardtounforeseentechnologicaldevelopments.ThecarryingvalueoftangibleandintangibleassetsamountedtoC162,627k(prioryear:C175,232k)asofDecember31,2008.

ProvisionsProvisionsareformediftheGrouphasalegaloractualobligationresultingfromapasteventwhichwillpro-bablygiverisetotheoutflowofresourceswithaneco-nomicbenefittofulfilltheobligation,providedthattheleveloftheobligationcanbereliablyestimated.Suchestimatesaresubjecttosignificantuncertainties.ThecarryingvalueofprovisionsamountedtoC4,513k(prioryear:C7,683k)asofDecember31,2008.

2.5 Summaryofsignificantaccountingand valuationmethodsRevenuerecognition

RevenueisrecognizedseparatelyforeachoftheGroup’sdifferentsegments(seeNote4).

RevenueisrecognizedwhenitisprobablethattheGroupwillreceiveaneconomicbenefitandtheamountofrevenuecanbereliablydetermined.Reve-nueismeasuredatthefairvalueofthecompensationreceived.Discounts,rebates,salestaxorotherchargesarenotconsidered.Therecognitionofrevenuemustalsofulfillthefollowingmeasurementcriteria.

Revenuesintheseparatesegmentsarerecognizedaccordingtothefollowingprinciples:

ProductsegmentTheProductbusinessmainlycomprisestheproductlinesInternetAccess(narrowband,mobileinternetaccessandDSLproductswithinternettelephony,video-on-demandandmobiletelephony),sharedanddedicatedwebhostingandtheportalbusinesswithadvertisingande-commercerevenuesaswellaspaidmainlyportal-basedvalue-addedservices.

Internet access IntheInternetAccessproductline,theCompany

generatesrevenuemainlyfromtheprovisionofnarrowbandandmobileinternetconnectionsandDSLaccess,bundledwithinternettelephony,video-on-demandandmobiletelephony.Revenueconsistsoffixedmonthlybasicfees,aswellasvariableusagefeesforinternetconnectionsandaccess,provisionfeesandmarketdevelopmentcostsubsidiesfornewcustomers,proceedsfromthesaleoftherespectivehardwareandsoftware,fixedmonthlybasicfeesforsubscriptionstovideo-on-demandpackages,aswellasvariableusagecharges,e.g.fortheindividualprovisionofvideosorforeignandmobilephoneconnectionsaspartofourinternetandmobiletelephonyoffers.

Revenueisrecognizedaccordingtoserviceprovi-sion,whichgenerallycorrespondstothereceiptofmonthlyfeespaidbycustomers(usagechargesandbasicfees).Revenuefromthesaleofhardwareisrecognizedontransferofrisk.Paymentismainlybydirectdebit.

Web hosting solutions Inthefieldofwebhostingfordiscerningprivate

customersandsmalltomedium-sizedcompanies,revenueismainlyrecognizedfromthehostingofwebsites.Thisprimarilyinvolvesfixedmonthlyrevenuefromtheadministrationandstorageofcustomercontentonsharedordedicatedservers,ore-shops,revenuefromthebrokerageandadminis-trationofdomainsandchargesforprofessionalinternet-basedcommunicationsolutions.Inadditiontofixedmonthlyfeesforstorageandtheprovisionoffunctionalities,one-offfeesarealsochargedforset-upservicesorsoftwareproducts(e.g.forwebsitecreation).

WebhostingcustomersgenerallypayinadvancefortheservicesprovidedbytheCompanyforafixedtimeperiod.Customerpre-paymentsarecarriedasdeferredrevenue.Revenueisrecognizedprorataovertheperiodofserviceprovision.Paymentisgenerallymadebydirectdebit.

Portal/club business RevenuesfromtheportalbusinessofWEB.DE,1&1,

GMXandsmartshoppingconsistmainlyofadvertisingincome,e-commercecommissionsandrevenuesforso-called“paidservices”.Theseincludeincomefromsponsoredlinksduringinternetsearches,SMSandfreephonecharges,

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brokeragecommissionforDSLconnections,ande-commercecommissions.Inthefieldofonlineadvertising,spaceisofferedonthewebsitesofportals.Realizedrevenuesdependontheplacingandnumberofscreeningsoraccordingtoclickrates.Paidservicesconsistmainlyoffee-basede-mailproducts,suchastheWEB.DECluborGMX-ProMail,forwhichrevenuesaregeneratedfromcontinuousmonthlysubscriptionfees.

Revenuesarerealizedaccordingtoservicesrendered.Advancecustomerpaymentsarecarriedasdeferredincome.Paidservicesaregenerallypaidforbydirectdebit.

InaccordancewithSIC31,revenuefromtheexchangeofadvertisingservicesisonlyrecognizediftheadvertisingservicesexchangeddifferintypeandvalue.Revenueisrecognizedatthemarketvalueofthesubmittedassetorrenderedserviceandadjustedwherenecessaryforadditionalcashpayment.UnitedInternetmarketsadvertisingspaceonitsportalstoasmallextentinexchangeforadvertisingtimeinotheradvertisingmedia.

OnlineMarketingsegmentInitsOnlineMarketingsegment,theCompanyoffersadvertisingcustomersavarietyofonlinemarketingandsalessolutionsinthefieldofdisplay,affiliate,domain,e-mail,directanddialogue-basedmarketing.

AdLINK Media AdLINKMediacomprisesthefieldsofdisplay

marketing,e-mailmarketing(viatheCompositebrand)andonlinedirectanddialogue-basedmarketingviathebrandnet:dialogs.AdLINKMediaassumestheindependentmarketingofthird-partywebsitesande-maildatabases.Dependingonthetypeofcampaignandtheadvertiser’scampaignobjectives,revenueisgeneratedonthebasisofcostperthousandcontacts(CPM)oracost-per-clickbasis.Inthecaseofdirectanddialogue-basedmarketingbillingisalsoonacost-per-lead/salebasis.

Customersaremostlybilledonamonthlybasis.Revenueisrecognizedaccordingtothedegreeofcompletion.Amountsinvoicedinadvancearerecognizedasadvancepaymentsreceived.

Domain Marketing Sedooperatesatradingplatformforthesecondary

domainmarket.Inaddition,thecompanyoffersdomainownersthepossibilitytomarketunuseddomainsforadvertisingpurposes(domainparking).Thecompanyalsoholdsitsownportfolioofmarketableandsalabledomains.Sedogeneratessalescommissionfromthesuccessfulsaleofdomainsviatheplatformandrevenueforservicesrelatingtodomainvalueassessmentsanddomaintransfers.Thesalescommissionsandservicesaregenerallybasedonapercentageofthesalespriceachieved,whereasfixedpricesarechargedfortheotherservices.Inthefieldofdomainparking,domainsaremarketedviacooperationagreementswithsearchengines,mainlyusingtextlinks,i.e.linksontheparkeddomainstooffersoftheadvertisers.TheCompanyreceivesperformance-basedpaymentonamonthlybasisfromthecooperationpartneronapay-per-clickbasis,accordingtothenumberofclickscountedbythecooperationpartner.TheCompanyalsooperatesaportfolioofitsowndomains.Theseareavailableforsaleandmarketedinthemeantimeaspartofdomainparking.

TheCompanyrecognizessalescommissionsasrevenueoninvoicing.Revenueisthusrecognizedoncompletionofthetransactionorprovisionoftheservice.Inthecaseofdomainparking,themonthlypaymentscreditedbycooperationpartnersarerecognizedasrevenue.

Affiliate Marketing Affiliatemarketingisaperformance-basedonline

salessolutionbywhichadvertisersormerchantscangain,controlandpaytheirsalespartners,inthiscasewebsiteoperators,viaajointplatform.Aspartoftheaffiliateprogramofthemerchant(advertiser),availableviatheplatform,thewebsiteoperator(affiliate)incorporatestheadvertiser’smessagetopromotesalesofgoodsandservicesonhiswebsiteandgenerallyreceivesacommissionforthesuccessfulbrokerageofcustomersorcontacts.Theaimoftheplatformistocreateanefficientlinkandcommunicationbetweenadvertisersandwebsiteoperators.TheCompanyiscompensatedbythemerchantsfortheuseofadministrationandmanagementtoolswithintheaffiliateprograms,aswellasforthecalculationoftransactionsandthemonthlypaymentstowebsiteoperators.Invoicingisbasedontheamounttobe

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paidtotheaffiliate.Thiscanbeonacost-per-click,cost-per-actionorcost-per-salebasis,oramixtureofthesethree.

Invoicingiseitherinadvanceoronamonthlybasisfollowingcompletionofperformance.Revenueisrecognizedoncompletionofperformance.Amountsinvoicedinadvancearerecognizedlessperformancecompletedasadvancepaymentsreceived.Inthosecasesinwhichperformanceisnotbilledmonthly,performancecompletediscalculatedandrecognizedasrevenueatthepricesagreedwiththecustomer.

Foreigncurrencytranslation

Theconsolidatedfinancialstatementsarepreparedineuro,theCompany’sfunctionalandpresentationcurrency.EachcompanywithintheGroupdeterminesitsownfunctionalcurrency.Theitemsintheannualfinancialstatementsoftherespectivecompanyarevaluedusingthisfunctionalcurrency.Foreigncurrencytransactionsareinitiallytranslatedtothefunctionalcurrencyattheprevailingspotrateonthedayoftransaction.Monetaryassetsandliabilitiesinaforeigncurrencyaretranslatedtothefunctionalcurrencyoneverybalancesheetdateusingtheclosingrate.Allcurrencydifferencesareexpensedintheincomestatement.Theexceptiontothisrulearecurrencydifferencesresultingfromforeigncurrencyloans,providingtheyareusedtohedgeagainstanetinvestmentinaforeignoperation.Thesearereco-gnizeddirectlyinequityuntilthenetinvestmentissoldandonlyrecognizedinprofitorlossondisposal.Deferredtaxesarisingfromsuchcurrencydifferencesarealsorecognizeddirectlyinequity.Non-monetaryitemsvaluedathistoricalcostinaforeigncurrency,aretranslatedattheexchangerateprevailingonthedayofthetransaction.Non-monetaryitemsstatedatfairvalueinaforeigncurrencyaretranslatedattheexchangerateprevailingatthetimefairvaluewasassessed.Allgoodwillitemsresultingfromtheacqui-sitionofaforeignoperationandalladjustmentstofairvalueofthecarryingvaluesofassetsandliabilitiesresultingfromtheacquisitionofthisforeignopera-tion,arecarriedasassetsandliabilitiesoftheforeignoperationandtranslatedattheclosingrate.

Theassetsandliabilitiesofforeignoperationsaretranslatedintoeuroattheclosingrate.Incomeandexpenditureistranslatedattheexchangerateprevailingonthedateofthetransaction(forpractical

considerations,aweightedaveragerateisusedfortranslation).Theresultingtranslationdifferencesarerecognizedseparatelyinequity.Thecumulativeamountforaforeignoperationwhichisstatedinequityisreversedwithaneffectontheincomestatementwhentheforeignoperationissold.

Property,plantandequipment

Property,plantandequipmentiscarriedatcostlesscumulativescheduleddepreciation.Inthecaseofmajormaintenancework,costsarerecognizedinthecarryingvalueasreplacement,providingthemeasure-mentcriteriaaremet.

Landandbuildingsarecarriedatcostlessscheduleddepreciationforbuildingsandimpairment.

Itemsofproperty,plantandequipmentareeliminatedeitherontheirdisposalorwhennofurthereconomicuseisexpectedfromthecontinueduseorsaleoftheasset.Gainsandlossesfromthedisposalofanassetareassessedasthedifferencebetweennetsalesproceedsandtheasset’scarryingvalue.Theyarerecognizedintheincomestatementintheperiodinwhichtheassetiseliminated.

Theresidualvalues,usefullivesanddepreciationmethodsarereviewedattheendofeachfiscalyearandadjustedwherenecessary.

Property,plantandequipmentassetsaredepreciatedovertheirexpectedeconomicusefullifeusingthestraight-linemethod.Inthecaseofoperationalandofficeequipment,serversusedforwebhostingaredepreciatedoverausefullifeof3years.OtherserversusedbytheCompanyaredepreciatedover5years,duetotheircomparativelylowerusage.

Theusefullifeperiodscanbefoundinthefollowingsummary:

Property, plant and equipment Useful life in yearsLeasehold improvements Up to 10 (depending on

lease period)

Buildings 10 or 50

Vehicles 5 to 6

Other operational and office equipment

3 to 10

Office furniture and fixtures 5 to 13

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Borrowingcosts

Borrowingcostsareexpensedintheperiodincurred.

Businesscombinationsandgoodwill

Businesscombinationsareaccountedforusingthepurchasemethod.Thisinvolvestherecognitionofallidentifiableassetsandliabilitiesoftheacquiredoperationatfairvalue.

Goodwillarisingfromabusinesscombinationisini-tiallymeasuredatcost,beingtheexcessoftheacqui-sitioncostoftheoperationoverthefairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesacquired.Followinginitialrecognition,goodwillisvaluedatamortizedcost.Goodwillissubjectedtoanimpairmenttestatleastonceannuallyorwheneverthereisanyeventorchangeincircumstanceswhichmightindicateimpairment.

Inordertotestwhetherthereisanyimpairment,good-willacquiredinthecourseofabusinesscombinationmustbeallocatedfromthedateofacquisitiontoeachofthecash-generatingunitsoftheGroupwhicharetoprofitfromthesynergyeffectsofthecombination.ThisdoesnotdependonwhetherotherassetsandliabilitiesoftheGrouparealreadyallocatedtothesecash-generatingunits.Theimpairmentneedisdeterminedonthebasisoftherecoverableamountofthecash-generatingunitstowhichgoodwillrefers.Therecoverableamountofanassetisthehigheroffairvalueoftheassetorcash-generatingunitlesstransactioncostsanditsvalue-in-use.Ifthecarryingamountofanassetexceedsitsrecoverableamount,theassetisregardedasimpairedandiswrittendowntoitsrecoverableamount.

Intangibleassets

Individuallyacquiredintangibleassetsarecarriedatcostoninitialrecognition.Theacquisitioncostofintangibleassetsresultingfromthebusinesscombi-nationcorrespondstoitsfairvalueatthetimeofacqui-sition.Inthefollowingperiods,intangibleassetsarevaluedatcostlesscumulativeamortizationandcumu-lativeimpairmentcharges.Withtheexceptionofthosedevelopmentcostswhichcanbecapitalized,costsforinternallygeneratedintangibleassetsareexpensedintheperiodincurred.

Adifferenceismadebetweenintangibleassetswithlimitedandthosewithunlimitedusefullives.

Intangibleassetswithlimitedusefullivesareamor-tizedovertheireconomicusefullifeandtestedforpossibleimpairmentifthereisanyindicationthattheassetmaybeimpaired.Theusefullivesandamortiza-tionmethodsofintangibleassetswithlimitedusefullivesarereviewedatleastattheendofeachfiscalyear.Necessarychangestothedepreciationmethodanduse-fullifearetreatedaschangestoassumptions.Amorti-zationofintangibleassetswithlimitedusefullivesarerecognizedintheincomestatementundertheexpensecategorycorrespondingtothefunctionoftheintangi-bleassetintheCompany.

Inthecaseofintangibleassetswithunlimitedusefullives,animpairmenttestisperformedatleastonceannuallyfortheindividualassetoronthelevelofthecash-generatingunit.Suchintangibleassetsarenotamortizedinscheduledamounts.Theusefullifeofanintangibleassetwithanunlimitedusefullifeisreviewedannuallytoascertainwhethertheassump-tionofanunlimitedusefullifeisstilljustified.Ifthisisnotthecase,aprospectivechangeismadefromunlimitedusefullifetolimitedusefullife.

Theusefullifeperiodscanbefoundinthefollowingsummary:

Intangible assets Useful life in yearsTrademarks Unlimited

Portals 8

Customer base 5 to 13

Licenses and other rights 3 to 6

Software 3

Investmentsinassociatedcompanies

Investmentsinassociatedcompaniesarevaluedaccordingtotheequity method.AnassociatedcompanyisanentityoverwhichtheGrouphassignificantinfluenceandthatisneitherasubsidiarynoraninterestinajointventure.

Usingtheequity method,investmentsinassociatedcompaniesarecarriedinthebalancesheetatcostasadjustedforpost-acquisitionchangesintheCompany’sshareofthenetassetsoftheassociatedcompany.Goodwillconnectedwithanassociatedcompanyis

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includedinthecarryingvalueoftheinvestmentandnotsubjectedtoscheduledamortization.TheincomestatementincludestheCompany’sportionofthesuccessoftheassociatedcompany.Changesrecognizeddirectlyintheequitycapitaloftheassociatedcom-panyarerecognizedbytheCompanyinproportiontoitsshareholdingand–whereapplicable–reportedin“Changesinshareholders’equity”.ProfitsandlossesfromtransactionsbetweentheCompanyandtheassociatedcompanyareeliminatedinproportiontotheshareholdingintheassociatedcompany.

Theannualfinancialstatementsoftheassociatedcompanyaregenerallypreparedastothesamebalancesheetdateasthoseoftheparentcompany.Wherenecessary,adjustmentsaremadetobringthemethodsinlinewithstandardgroup-wideaccountingandvaluationmethods.

Sharesinjointventures

TheCompanyholdsinvestmentsintwojointventurecompanies.Thereisacontractualagreementbetweenthepartnercompaniestojointlymanagethebusinessactivitiesofthecompany.TheGrouprecognizesitsinvestmentsinthejointventuresusingtheequity method.Theannualfinancialstatementsofthejointventuresarepreparedastothesamebalancesheetdateasthoseoftheparentcompany.Wherenecessary,adjustmentsaremadetobringthemethodsinlinewithstandardgroup-wideaccountingandvaluationmethods.

Impairmentofnon-financialassets

Ateachbalancesheetdate,theCompanyreviewsthecarryingamountsofitsassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.Ifanysuchindicationexists,orifanannualimpairmenttestisnecessary,therecover-ableamountoftheassetisestimated.Therecoverableamountofanassetisthehigheroffairvalueoftheassetorcash-generatingunitlesstransactioncostsanditsvalue-in-use.Therecoverableamountofeachassetmustbedetermined,unlessanassetdoesnotgeneratecashflowswhicharelargelyindependentofotherassetsorothergroupsofassets.Ifthecarryingamountofanassetexceedsitsrecoverableamount,theassetisregardedasimpairedandiswrittendowntoitsrecoverableamount.Inordertodeterminethevalue-in-use,expectedfuturecashflowsarediscountedto

theirpresentvalueusingapre-taxdiscountratewhichreflectscurrentmarketexpectationsregardingtheinteresteffectandthespecificrisksoftheasset.Asuitablevaluationmodelisusedtodeterminefairvaluelesssalescosts.Thisisbasedonvaluationmulti-pliers,thesharepricesoflistedsubsidiariesorotheravailableindicatorsforfairvalue.

Impairmentchargesofcontinuedoperationsarerecognizedaccordingtotheexpensecategorycorres-pondingtothefunctionoftheimpairedassetintheCompany.

Areviewismadeofassets,withtheexceptionofgood-will,oneachbalancesheetdatetodeterminewhetherthereisanyindicationthatapreviouslyrecognizedimpairmentlossnolongerexistsorhasdecreasedinsize.Inthecaseofsuchanindication,theCompanymakesanestimateoftherecoverableamount.Aprevi-ouslyrecognizedimpairmentlossisonlyreversediftherehasbeenachangeintheassumptionusedtodeterminetherecoverableamountsincerecognitionofthelastimpairmentloss.Ifthisisthecase,theasset’scarryingvalueisraisedtoitsrecoverableamount.Thisamountmaynotexceedthecarryingamount,lessdepreciation,thatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognizedfortheassetinprioryears.

Thefollowingadditionalcriteriaaretobeconsideredforcertainassets:

GoodwillAteachbalancesheetdate,theCompanyreviewswhetherthereisanyindicationthatanassetmightbeimpaired.Impairmentofgoodwillisreviewedatleastonceayear.Atestisalsoperformedifeventsorcircumstancesindicatethatthevaluemaybediminis-hed.Impairmentisdeterminedbyassessingthereco-verableamountofthecash-generatingunittowhichgoodwillhasbeenallocated.Iftherecoverableamountofthecash-generatingunitislessthanthecarryingamountofthisunit,animpairmentlossisexpensed.Animpairmentlossrecognizedforgoodwillmaynotbereversedinthefollowingreportingperiods.TheGroupperformsitsannualimpairmenttestforgood-willonthebalancesheetdate.

IntangibleassetsAnimpairmenttestofintangibleassetswithunlimi-tedusefullivesismadeatleastonceperyearonthebalancesheetdate.Dependingontheindividualcase,

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thereviewisperformedforasingleassetoronthelevelofthecash-generatingunit.

AssociatedcompaniesOnapplicationoftheequitymethod,theCompanyascertainswhetheritisnecessarytorecognizeanaddi-tionalimpairmentlossfortheCompany’sinvestmentsinassociatedcompanies.Oneachbalancesheetdate,theCompanyassesseswhetherthereareobjectiveindicationsfortheimpairmentofaninvestmentinanassociatedcompany.Ifthisisthecase,thedifferencebetweenthefairvalueoftheassociatedcompanyandtheacquisitioncostisrecognizedasanimpairmentloss.

Financialinvestmentsandotherfinancialassets

FinancialinvestmentsandotherfinancialassetsasdefinedbyIAS39areclassifiedasfollows: Financialassetsheldatfairvaluethroughprofitorloss

Held-to-maturityfinancialinvestments Loansandreceivables Available-for-salefinancialinvestments

TheGroup’sfinancialassetscomprisecashandshort-termdeposits,tradereceivables,receivablesfromloansandotherreceivables,listedandnon-listedfinancialinstrumentsandderivativefinancialinstruments.

Financialassetsarecarriedatfairvalueoninitialrecognition.Inthecaseofotherfinancialinvestmentsthanthoseclassifiedasheldatfairvaluethroughprofitorloss,transactioncostsdirectlyattributabletotheacquisitionoftheassetarealsoconsidered.

Financialassetsareclassifiedaccordingtovaluationcategoriesatthemomentofinitialrecognition.Wherenecessaryandpermissible,reclassificationsaremadeattheendofeachfiscalyear.

Allstandardmarketpurchasesandsalesoffinancialassetsarerecognizedonthetradingday,i.e.onthedayonwhichtheCompanyenteredintotheobligationtopurchasetheasset.Standardmarketpurchasesandsalesarepurchasesandsalesoffinancialassetswhichprescribethedeliveryoftheassetswithinaperiodspecifiedbymarketregulationsorconventions.

Financialassetsheldatfairvaluethrough profitorlossThecategoryoffinancialassetsheldatfairvaluethroughprofitorlossincludesheld-for-tradingfinan-cialassetsandfinancialassetswhichareclassifiedasfinancialassetsheldatfairvaluethroughprofitorlossoninitialrecognition.Financialassetsareclassifiedasheld-for-tradingiftheywereacquiredwiththeinten-tionofsellingtheminthenearfuture.ThiscategorycomprisesderivativefinancialinstrumentsarrangedbytheCompanywhichdonotmeettheaccountingcriteriaforhedgingtransactionspursuanttoIAS39.Derivatives,includingseparatelyrecognizedembeddedderivatives,arealsoclassifiedasheld-for-trading,withtheexceptionofderivativesdesignatedasahedginginstrumentandeffectiveassuch.

Financialassetsheldatfairvaluethroughprofitorlossarestatedinthebalancesheetatfairvalue,wherebyprofitorlossesarerecognizedintheincomestatement.TheGrouphasonlyclassifieditsderivativefinancialinstrumentsasheldatfairvaluethroughprofitorloss.

LoansandreceivablesLoansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepayments,whicharenotquotedinanactivemarket.Followinginitialrecognition,loansandreceivablesarecarriedatamortizedcostusingtheeffectiveinterestmethodlessallowancesforimpairment.Profitsandlossesarerecognizedintheperiodwhentheloansandreceiv-ablesoreliminatedorimpairedoraspartofamorti-zation.

Available-for-salefinancialinvestmentsAvailable-for-salefinancialassetsarenon-derivativefinancialassetswhichareclassifiedasbeingavailableforsaleandwhichhavenotbeenassignedtoanyofthethreecategoriesabove.Afterinitialrecognition,available-for-salefinancialassetsarecarriedatfairvalue,wherebynon-realizedprofitsorlossesarerecognizeddirectlyinequityinthereservefornon-realizedprofit.Ondisposaloffinancialinvestments,thecumulativeprofitorlosspreviouslyrecognizedinequityisreclassifiedtotheincomestatement.

FairvalueThefairvalueoffinancialinvestmentstradedonorga-nizedmarketsisdeterminedbythequotedmarketprice(buyingrate)onthebalancesheetdate.Thefairvalueoffinancialinvestmentsforwhichthereisnoorganizedmarketisdeterminedusingvaluationmethods.Thesevaluationmethodsincludetheuseof

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recenttransactionsbetweencompetent,willingandindependentbusinesspartners,acomparisonwiththefairvalueofanother,generallyidenticalfinancialinstrument,ananalysisofdiscountedcashflowsandtheuseofothervaluationmethods.

AmortizedcostHeld-to-maturityfinancialinvestments,aswellasloansandreceivables,arecarriedatamortizedcost.Thisiscalculatedusingtheeffectiveinterestmethodlessallowancesforimpairmentandunderconsidera-tionofdiscountsandpremiumsonpurchaseandincludesallfeeswhichareanintegralpartoftheeffectiveinterestrate.

Impairmentoffinancialassets

Oneachbalancesheetdate,theCompanyassesseswhethertherehasbeenanyimpairmentofafinancialassetorgroupoffinancialassets.

FinancialassetscarriedatamortizedcostIfthereisanobjectiveindicationthatloansandreceivablescarriedatamortizedcostareimpaired,thelossiscalculatedasthedifferencebetweentheasset’scarryingvalueandthepresentvalueoftheexpectedfuturecashflows(withtheexceptionofexpectedfuturecreditlossesnotyetoccurred),discountedwiththeoriginaleffectiveinterestrateofthefinancialasset(i.e.theeffectiveinterestrateoninitialrecognition).Theasset’scarryingvalueisreducedusinganimpair-mentaccount.Theimpairmentlossisrecognizedintheincomestatement.

Ifthescaleoftheimpairmentisreducedinoneofthefollowingreportingperiodsandthisreductioncanbeobjectivelyattributedtoaneventoccurringafterrecognitionofimpairment,theallowanceisreversed.Thiswrite-backislimitedinscaletoamortizedcostatthetimeofthewrite-back.Thewrite-backisrecognizedintheincomestatement.

Inthecaseoftradereceivables,ifthereareobjectiveindications(e.g.theprobabilityofinsolvencyorsigni-ficantfinancialdifficultiesofthedebtor)thatnotalldueamountswillbereceivedaccordingtotheorigi-nallyagreedinvoiceterms,awrite-downismadeusingtheappropriateallowanceaccount.Thewrite-downamountsareeliminatedwhentheyareclassifiedasuncollectible.Allowancesaremadeonthebasisofexperiencevaluesbyclassifyingreceivablesaccording

toageandonthebasisofotherinformationregardingtheimpairmentofcustomer-specificreceivables.

Available-for-salefinancialinvestmentsIfthevalueofanavailable-for-salefinancialassetisimpaired,anamountrecognizedinequityamountingtothedifferencebetweenacquisitioncost(lessanyredemptionandamortization)andcurrentfairvalue,lessanypreviousallowancesexpensedforthisfinan-cialasset,isreclassifiedtotheincomestatement.Write-backsofequityinstrumentsclassifiedasavailable-for-sale,arenotrecognizedintheincomestatement.

Inordertoascertainimpairmentrequiringrecogni-tion,informationconcerningalladversechangesinthetechnological,market-related,economicorlegalenvironmentisconsidered.Asignificantorpersistentdecreaseinthefairvalueofequityinstrumentbelowitsacquisitioncostisalsoanobjectiveindicationofimpairment.

Write-backsofdebtinstrumentsclassifiedasavailable-for-sale,arerecognizedintheincomestatementiftheincreaseintheinstrument’sfairvalueobjectivelyresultsfromaneventwhichoccurredafterrecognizinganimpairmentcharge.

Inventories

Inventoriesarevaluedatthelowerofcostandnetrealizablevalue.Netrealizablevaluecomprisestheestimatedsalesproceedslessestimatednecessarysellingcosts.Adequatevaluationallowancesforexcessinventoriesaremadetoprovideforinventoryrisks.

Write-downsforslow-movingproductsareusedwhencalculatingthenetrealizablevaluesofdomainsheldforresale.Alongerholdingperiodindicatesalessattractive/marketabledomain.Thereducedmarket-abilityofadomainisinterpretedasadecliningsalesprospect,whichreducesthenetrecoverablesalesreve-nueasaresultofhighercostsuptothetimeofsaleinconjunctionwithlowersalespriceexpectations.Thewrite-downsarefirstmadeattheendofthefiscalyearfollowingpurchase.Afteraholdingperiodofsevenyears,theCompanyregardstheprobabilityofsaleasalmostzeroandthuszeroisassumedforthesakeofsimplicity.Inadditiontosuchwrite-downsforslow-movingproducts,theCompanyalsoteststhedomainportfoliooneachbalancesheetdateforsignsofasharperfallinthenetrealizablevaluethanwhich

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indicatedbytheunderlyingwrite-downsforslow-movingproducts.

Treasuryshares

Treasurysharesaredeductedfromshareholders’equity.Thepurchase,sale,issueorretirementoftrea-surysharesisnotrecognizedintheincomestatement.

Cashandcashequivalents

Cashandcashequivalentsconsistofbankbalances,otherinvestments,checksandcashinhand,whichallhaveahighdegreeofliquidityandmaturitiesoflessthan3months–calculatedfromthedateofpurchase.

Financialliabilities

Loansarerecognizedinitiallyatthefairvalueoftheperformancereceivedlesstransactioncostsinvolvedwithborrowing.Followinginitialrecognition,interest-bearingloansarevaluedusingtheeffectiveinterestmethodatamortizedcost.Profitsandlossesarereco-gnizedwhenthedebtsareeliminatedandinthecourseofamortization.

Financialliabilitiescarriedatfairvaluethroughprofitorlossincludeheld-for-tradingfinancialliabilitiesandotherfinancialliabilitiesclassifiedoninitialrecogni-tionasfinancialliabilitiescarriedatfairvaluethroughprofitorloss.

Financialliabilitiesareclassifiedasheld-for-tradingiftheywereacquiredwiththeintentionofsellingtheminthenearfuture.Derivatives,includingseparatelyrecognizedembeddedderivatives,arealsoclassifiedasheld-for-trading,withtheexceptionofderivativesdesignatedasahedginginstrumentandeffectiveassuch.Profitorlossfromheld-for-tradingfinancialliabilitiesarerecognizedintheincomestatement.

Derecognitionoffinancialassetsandfinancialliabilities

FinancialassetsAfinancialasset(orpartofafinancialassetorpartofagroupofsimilarfinancialassets)isderecognizedwhenoneofthethreefollowingconditionsaremet:

Thecontractualrightstoreceivecashflowsfromafinancialassethaveexpired.

TheCompanyreservestherightstoreceivecashflowsfromafinancialasset,butassumesacontractualobligationtoimmediatelypaythecashflowstoathirdpartyaspartofanagreementwhichfulfillstheconditionsofIAS39.19(pass-through arrangement).

TheCompanytransfersitsrightstoreceivecashflowsfromafinancialassetandeither(a)transfersvirtuallyallopportunitiesandrisksconnectedwithowningthefinancialassetor(b)retainsauthoritytodisposeoftheasseteventhoughithasneithertransferrednorretainedvirtuallyallopportunitiesandrisksconnectedwithowningthefinancialasset.

FinancialliabilitiesAfinancialliabilityisderecognizedwhentheunder-lyingcommitmentofthisliabilityhasbeenfulfilledorterminatedorexpired.

Ifanexistingfinancialliabilityisreplacedbyadifferentfinancialliabilityofthesamelenderwithsubstantiallydifferentcontractualtermsorifthetermsofanexistingliabilityaresignificantlychanged,suchanexchangeorchangeistreatedasderecognitionoftheoriginalliabilityandrecognitionofanewliabi-lity.Thedifferencebetweentherespectivecarryingvaluesisrecognizedintheincomestatement.

Provisions

ProvisionsareformediftheCompanyhasalegaloractualobligationresultingfromapasteventwhichwillprobablygiverisetotheoutflowofresourceswithaneconomicbenefittofulfilltheobligation,providedthattheleveloftheobligationcanbereliablyestima-ted.Suchestimatesaresubjecttosignificantuncer-tainties.IftheGroupexpectsatleastpartialcompen-sationforarecognizedprovision,thiscompensationisonlyrecognizedasaseparateassetifthereimburse-mentisvirtuallycertain.Theexpensetoformtheprovisionisonlyrecognizedintheincomestatementafterdeductionofthereimbursement.Iftheinteresteffectfromdiscountingissignificant,provisionsarediscountedatapre-taxinterestratewhichreflectsthespecificriskofthedebt,ifsorequiredbytheindividualcase.Intheeventofadiscount,theincreaseinprovisi-onscausedbythepassageoftimeisrecognizedasafinancialexpense.

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micsubstance(e.g.becausethecompanyislegallyforbiddentoissueshares),orcashsettlementwascommonbusinesspracticeorthedeclaredcompanyguidelineinthepast,orthecompanygenerallysettlesincashifthebeneficiarysodesires.Thistransactionisaccountedforinaccordancewiththeregulationsforequity-settledpaymenttransactions.

Thedilutiveeffectofoutstandingequity-settledtrans-actionsandthosetransactionssettledincashorviaequityinstrumentsisreflectedasanadditionalsharedilutioninthecalculationofearningspershare.

Earningspershare

“Undiluted”orbasic earnings per sharearecalculatedbydividingtheresultattributabletotheholdersofregisteredsharesbytheweightedaveragenumberofsharesoutstandingduringtheperiod.

Diluted earnings per sharearecalculatedsimilarlytobasicearningspersharewiththeexceptionthattheaveragenumberofsharesoutstandingincreasesbytheportionwhichwouldresultiftheexercisableconver-sionrightsofconvertiblebondsissuedhadbeenexer-cised.Netincomeisalsoadjustedforinterestexpensesaftertaxes,payableonpotentiallyexchangedconvert-iblebonds.

Leases

Thedeterminationofwhetheranarrangementcon-tainsaleaseisbasedontheeconomicsubstanceofthearrangementatthetimeofsigningandrequiresanassessmentofwhetherthefulfillmentofthearrange-mentisdependentontheuseofaspecificassetorassetsandthearrangementconveysarighttousetheasset.

Financeleases,whichtransfertotheCompanysub-stantiallyalltherisksandbenefitsincidentaltoownershipoftheleaseditem,arecapitalizedattheinceptionoftheleaseperiod.Theleasedpropertyiscarriedatfairvalueor,iflower,atthepresentvalueoftheminimumleasepayments.Leasepaymentsareapportionedbetweenthefinancechargesandreductionoftheleaseliabilitysoastoachieveaconstantrateofinterestontheremainingbalanceoftheliability.Financeexpensesarechargeddirectlyagainstincome.

Share-basedpayment

Groupemployeesreceiveshare-basedpaymentsasremunerationfortheirworkintheformofequityinstrumentsandthegrantingofvaluegrowthrights,whichmaybesettledincashorviaequityinstrumentsattheCompany’sdiscretion.

Equity-settledtransactionsThecostofgrantingequityinstrumentsissuedafterNovember7,2002ismeasuredusingthefairvalueofsuchequityinstrumentsonthedateofgranting.Fairvalueismeasuredusingasuitableoptionpricemodel.Withtheaidoftherespectivevaluationprocess,thevaluecomponentisdeterminedatthetimeofgran-ting,alsoforsubsequentvaluationuntiltheendoftheterm.Oneveryvaluationdate,however,theexpectedexercisevolumeistobereassessedwithacorrespon-dingadjustmentoftheadditionalamountunderconsi-derationofadditionsalreadymade.Anynecessaryadjustmentbookingsaretobemadeintheperiodinwhichnewinformationabouttheexercisevolumebecomesavailable.

Themeasurementofcostfromthegrantingofequityinstrumentsandthecorrespondingincreaseinequityoccursovertheperiodinwhichthevestingorperfor-manceconditionshavetobesatisfied(theso-calledvestingperiod).Thisperiodendsafterthevestingdate,i.e.thedateonwhichtheemployeeconcernedhasgainedirrevocableentitlement.Thecumulativeexpensesrecognizedoneachbalancesheetdateforequity-settledtransactionsuntilthevestingdatereflecttheextenttowhichthevestingperiodhasexpiredandthenumberofequityinstrumentswhich,accordingtotheGroup’sbest-possibleestimate,willactuallybevestedafterthevestingperiod.Theincomeorexpenserecognizedintheincomestatementrepre-sentsthedevelopmentofcumulativeexpensesreco-gnizedatthebeginningandendofthereportingperiod.Noexpenseisrecognizedforpaymentrightswhicharenotvested.

Transactionswithsettlementincashorvia equityinstrumentsattheCompany’sdiscretionInthecaseofshare-basedremunerationplanswhichgranttheCompanythecontractualchoiceofsettlingincashorissuingequityinstruments,theCompanymustdeterminewhetherthereisacurrentcashsettle-mentcommitmentanddisclosethestock-basedrem-unerationtransactioncorrespondingly.Thereisacur-rentcashsettlementcommitmentifthepossibilitytosettlebymeansofequityinstrumentshasnoecono-

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Capitalizedleasedassetsarefullydepreciatedovertheshorteroftheestimatedusefullifeoftheassetandtheleaseterm,ifthereisnoreasonablecertaintythattheCompanywillobtainownershipbytheendoftheleaseterm.

Operatingleasepaymentsarerecognizedasanexpenseintheincomestatementonastraight-linebasisovertheleaseterm.

TheCompanycurrentlyclassifiesallleasingcontractsasoperatingleases,wherebytheCompanyactsexclusivelyaslessee.

Financialincome

Interestincomeisrecognizedasinterestaccrues(usingtheeffectiveinterestrate,i.e.theratewhichdiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialinstrumenttothenetcarryingamountofthefinancialasset).Dividendincomeisrecognizedwiththeinceptionofthelegalrighttopay-ment.

Governmentgrants

GovernmentgrantsarerecognizedwherethereisreasonablecertaintythatthegrantwillbereceivedandtheCompanywillsatisfyallattachingconditions.Wherethegrantsrelatetoanexpenseitem,theyarerecognizedasincomeinscheduledamountsovertheperiodnecessarytomatchthegrantstothecoststheyareintendedtocompensate.Grantsrelatingtoanassetitemreducethecarryingvalueofthatitem.

Taxes

Actualclaimstoincometaxrefundsand incometaxdueActualclaimstotaxrefundsandtaxdueforthecurrentperiodandforpreviousperiodsarevaluedattheamountatwhicharefundfromthetaxauthoritiesorapaymenttothetaxauthoritiesisexpected.Theamountiscalculatedonthebasisofthetaxratesandtaxlawsapplicableonthereportingdate.

Actualtaxesrelatingtoitemsdirectlyrecognizedinequityarenotrecordedintheincomestatement,butinshareholders’equity.

DeferredtaxesTheliabilitymethodisusedtocreatedeferredtaxesonalltemporarydifferencesexistingonthereportingdatebetweenthecarryingvalueofanassetoraliabi-lityinthebalancesheetandthefiscalcarryingvalue.

Deferredtaxesarerecognizedforalltaxabletemporarydifferences,except: wherethedeferredtaxliabilityfrominitialrecognitionofgoodwillorofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss,and

inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatedcompaniesandinterestsinjointventures,wherethetimingofthereversalofthetemporarydifferencescanbecontrolledanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.

Deferredtaxassetsarerecognizedforalldeductibletemporarydifferences,carryforwardofunusedtaxcreditsandunusedtaxlosses,totheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,andthecarryforwardofunusedtaxcreditsandunusedtaxlossescanbeutilized,except: wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss,and

inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatedcompaniesandinterestsinjointventures,deferredtaxassetsarerecognizedonlytotheextentthatitisprobablethatthetemporarydifferenceswillreverseintheforeseeablefutureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilized.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxablepro-fitwillbeavailabletoallowallorpartofthedeferredtaxassettobeutilized.Unrecognizeddeferredtaxassetsarereassessedateachbalancesheetdateandarerecognizedtotheextentthatithasbecomeprobablethatfuturetaxableprofitwillallowthedeferredtaxassettoberecovered.

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Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheyearwhentheassetisrealizedortheliabilityissettled,basedontaxrates(andtaxlaws)thathavebeenenactedasofthebalancesheetdate.Futurechangesintaxratesaretobeconsideredonthebalancesheetdate,providingmaterialeffectivenessconditionsaremetaspartofthelegislativeprocess.

Deferredtaxrelatingtoitemsrecognizeddirectlyinequityisrecognizedinequityandnotintheincomestatement.

Deferredtaxassetsanddeferredtaxliabilitiesareoffset,ifalegallyenforceablerightexiststosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandthedeferredtaxesrelatetothesametaxableentityandthesametaxationauthority.

SalestaxRevenues,expensesandassetsarerecognizednetoftheamountofsalestax,except: wherethesalestaxincurredonapurchaseofassetsorservicesisnotrecoverablefromthetaxationauthority,inwhichcasethesalestaxisrecognizedaspartofthecostofacquisitionoftheassetoraspartoftheexpenseitemasapplicable,and

receivablesandpayablesthatarestatedwiththeamountofsalestaxincluded.

Thenetamountofsalestaxrecoverablefrom,orpay-ableto,thetaxationauthorityisincludedunder“Othercurrentassets”or“Otherliabilities”intheconsolidatedbalancesheet.

Derivativefinancialinstrumentsandhedgingrelationships

TheGroupusesderivativefinancialinstrumentsintheformofinterestswaps,inordertohedgeagainstinterestrisks.Derivativefinancialinstrumentsarerecognizedatfairvalueonthedateoftheagreementandcarriedatfairvalueinthesubsequentperiods.Derivativefinancialinstrumentsarerecognizedasassetsiftheirfairvalueispositiveandasliabilitiesiftheirfairvalueisnegative.

Profitorlossresultingfromchangesinthefairvalueofderivativefinancialinstrumentswhichdonotmeet

thecriteriaforrecognitionashedgingrelationshipsarerecognizedimmediatelyintheincomestatement.

Thefairvalueofderivativefinancialinstrumentsismeasuredusingacceptedvaluationmethods.

3 Investments and business combinations

EffectiveJanuary1,2008,SedoGmbHacquiredashare-holdingof40%inDomainsBotS.r.l.,Rome/Italy.Acalloptionwasalsoagreedforthepurchaseofafurther20%ofsharesnosoonerthan2010.TheacquisitioncostsamountedtoatotalofC839kandcompriseddirectlyassignablecostsofC89k.

InacontractdatedFebruary8,2008,UnitedInternetBeteiligungenGmbHacquiredashareholdingof48.65%inVirtualMindsAG,FreiburgimBreisgau.Theacquisitionwasmadeinpartinthecourseofacapitalincrease.TheacquisitioncostsamountedtoatotalofC9,131kandcompriseddirectlyassignablecostsofC132k.

InacontractdatedMarch5,2008,UnitedInternetBeteiligungenGmbHacquired80%ofsharesinthenewlyfoundedEuropeanFoundersFundGmbH&Co.BeteiligungsKGNo.3.ThecompanywillbeincludedintheGroup’sannualfinancialstatementsasafullycon-solidatedsubsidiary.Infiscalyear2008,EuropeanFoundersFundGmbH&Co.BeteiligungsKGNr.3inturnacquiredinterestsinanumberofcompanies.TheacquisitioncostsforinvestmentsintheseportfoliocompaniesamountedtoC50,071k.

OnMarch7,2008,UnitedInternetBeteiligungenGmbHacquired33.36%ofsharesinBW2GroupAG,Lachen/Switzerland,inthecourseofacapitalincre-ase.TheacquisitioncostsamountedtoC5,826k.

ProSiebenSat.1MediaAGand1&1InternetAGplacedtheircooperationonanewbasisbyfoundingthejointlycontrolledjointventuremaxdomeGmbH&Co.KG,Unterföhring.TherespectivecontractsweresignedonFebruary22,2008.Thetransactionwasapprovedbytherespectiveanti-trustauthoritiesonApril29,2008.ThecooperationwithProSiebenSat.1MediaAGhasbeencarriedsofarasajointactivityasdefinedbyIAS31.

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InacontractdatedMay30,2008,FasthostsLtd.acquireda100%interestinDollamoreLtd.,Melbourne/UK.TheacquisitionofthesharesinDollamoreLtd.wasaccountedforusingthepurchasemethod.Thepurchasepricewassettledincash;thepreliminaryacquisitioncostsamounttoC10,477kandcomprisedirectlyassignablecostsofC274k.Thepreliminaryfairvaluesofidentifiableassetsandliabilitiesasofthedateofacquisitionareasfollows:

DkPurchase price 10,203

Ancillary acquisition costs 274

Preliminary acquisition costs 10,477

Fair values

Dk

Carrying values

DkBrand 820 0

Customer base 2,662 0

Property, plant and equipment 23 23

Cash and cash equivalents 154 154

Other assets 839 839

Customer receivables 426 426

Prepaid expenses 623 623

Deferred tax liabilities -975 0

Deferred revenue -2,564 -2,564

Trade payables -328 -328

Other liabilities -292 -292

Accrued taxes -213 -213

1,175 -1,332

Goodwill

9,302

Preliminary acquisition costs 10,477

GoodwillofC9,302kresultsfromexpectedsynergiesfromthecompanyacquisition.

Cashdisbursementsresultingfromthecompanyacquisitionareasfollows:

DkCash disbursements 10,477

Assumed cash and cash equivalents 154

Actual cash disbursements 10,323

TheprofitofDollamoresincethetimeofacquisitionrecognizedintheannualresultamountedtoC227kinfiscalyear2008.

Undertheassumptionthatthecompanyacquisitionhadalreadybeenmadeatthebeginningoffiscalyear2008,consolidatedsaleswouldhaveincreasedbyC1,623kandnetincomebyC632k.

InanagreementdatedJuly1,2008,UnitedInternetBeteiligungenGmbHacquired30%ofsharesinJimdoGmbH,Hamburg.Thesharepurchasewaseffectedinpartinthecourseofacapitalincrease.TheacquisitioncostsamountedtoatotalofC985kandalsocompriseddirectlyassignablecostsofC20k.Initialrecognitionwasmadeonaprovisionalbasis.

OnDecember29,2008UnitedInternetAGacquired10,798,817sharesinfreenetAGfromMSPHoldingGmbH,correspondingto8.43%ofvotingrights,atapriceofC3.38pershare.TheacquisitioncostsonthebasisoffairvalueasoftheacquisitiondateamountedtoC46,111k.Initialrecognitionwasmadeonaprovisio-nalbasis.WerefertoNote42forfurtherdetails.

Attheendoffiscalyear2007,UnitedInternetAGacquired50%ofsharesinMSPHoldingGmbH,Maintal.TheacquisitioncostamountedtoC165,428kandalsocompriseddirectlyassignablecostsofC26k.Theacqui-sitioncostwassettledincash.OnJanuary23,2008,UnitedInternetAGandDrillischAGincreasedtheirshareholdinginfreenetAGto24.52%viathejointlyheldcompanyMSPHoldingGmbH.FollowingacapitalincreaseoffreenetAGinconnectionwithitstakeoverofDebitel,theshareholdingofMSPHoldingGmbHinfreenetAGwasdilutedfrom24.52%to18.39%asofJuly5,2008.

Attheendoffiscalyear2007,UnitedInternetAGacquired19.5%ofsharesinVersatelAG,Berlin.Thisshareholdingwasincreasedduringfiscalyear2008to25.21%.Theacquisitionoftheadditionalshareswasdependentontheapprovaloftheanti-trustauthori-ties.ThisapprovalwasgrantedonDecember20,2007.TotalacquisitioncostsamountedtoC183,639kandalsocompriseddirectlyassignablecostsofC2,823k.

Attheendoffiscalyear2007,UnitedInternetBeteili-gungenGmbHacquired90%ofsharesinthenewlyfoundedEuropeanFoundersFundGmbH&Co.Beteili-gungsKGNo.2.ThecompanywillbeincludedintheGroup’sannualfinancialstatementsasafullyconsoli-datedsubsidiary.Infiscalyear2008,EuropeanFoun-

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dersFundGmbH&Co.BeteiligungsKGNr.2inturnacquiredinterestsinassociatedcompanies.Theacqui-sitioncostsforinvestmentsintheseportfoliocompa-niesamountedtoC24,452k.

Infiscalyear2007,UnitedInternetBeteiligungenGmbHacquiredashareholdingof66.67%intheEuro-peanFoundersFundGmbH&Co.BeteiligungsKGNo.1.ThetotalacquisitioncostamountedtoC34,403k.Duetocompanylawregulations,UnitedInternetBeteili-gungenGmbHcannotexertacontrollinginterestinthecompany–despiteholdingamajorityofvotingrights.Instead,itexertsamaterialinterestandthecompanyisthusconsolidatedasanassociatedcom-panypursuanttoIAS28.

Infiscalyear2007,theshareholdingsheldbyAdLINKInternetMediaAGinAdLINKSwitzerland(50%)andAdLINKAustria(30%)weretransferredtoGoldbachMediaAGKüsnacht-Zürich,Switzerland,asanon-cashcontribution.Inreturn,AdLINKInternetMediaAGreceived89,897sharesinGoldbachMediaAGascom-pensation,correspondingtoashareholdingof19.4%.AsaresultofGoldbach’sIPOandcapitalincrease,thisshareholdingwasdilutedto14.99%.Thecompanytransactionresultedinproceedsfrominitialrecogni-tionofC19,941k.ThesharesinGoldbachareclassifiedasavailable-for-salefinancialassetsanddisclosedundertheitem“Otherfinancialassets”.

Uptofiscalyear2005,80%ofsharesinInternetXGmbHwereacquired.TheoriginalshareholderswereinterestedinsuccessivelysellingfurthersharesinInterNetXGmbHtoUnitedInternetBeteiligungenGmbHupto2015.Infiscalyear2007,therefore,theshareholdinginInterNetXGmbHwasraisedfrom80%to85.09%.ThepurchasepriceforthisadditionalstakeamountedtoC627k.Afurther10.46%ofsharesweresoldtoUnitedInternetBeteiligungenGmbHinfiscalyear2008.ThepurchasepriceoftheseadditionalsharesamountedC1,833k.ThepurchaseofsharesinInterNetXtodateandfromtheforwardpurchaseagreementshasresultedingoodwillofC5,032k.

InanagreementdatedJuly10,2007,UnitedInternetBeteiligungenGmbHincreaseditsshareholdinginfuncommunicationsGmbHfrom33.33%to49.%.Theacqui-sitioncostwassettledincashandamountedtoC593k.

InacontractdatedDecember22,2006,UnitedInternetBeteiligungenGmbHacquireda12.51%shareholdingine-sportGmbH(now:BigpointGmbH),Hamburg.Theacquisitionofsharesoccurredaspartofacapitalincre-

aseofthecompanyinFebruary2007andwascondi-tionalonapprovaloftheanti-trustauthorities.Despiteholding12.51%ofshares,UnitedInternetBeteiligungenGmbHwasassigned25.02%ofvotingrights.Asaresult,thecompanywasincludedintheconsolidatedfinancialstatementsasanassociatedcompany.Theanti-trustauthoritiesapprovedtheshareacquisitiononFebruary5,2007.TheacquisitioncostamountedtoC6,296kandalsocompriseddirectlyassignablecostsofC46k.Theacquisitioncostwassettledincash.ThesesharesweresoldwitheffectfromAugust26,2008.

InMay2006,1&1UKHoldingsLtd.,Slough/UK,acquired100%ofsharesinFasthostsInternetLtd.,Gloucester/UK.ThepreliminaryacquisitioncostofthebusinesscombinationamountedtoC96,866kandalsocompriseddirectlyassignablecostsofC1,214k,settledincash.Duetoacontractuallyagreedpurchasepricereduction,whichalsodependedonthecompany’searningsinfiscalyear2006,thepurchasepricewasreducedbyC3,436kinfiscalyear2007.Thereductionwasassignedinfulltogoodwill.

Infiscalyear2005AdLINKInternetMediaAGacquiredthesharesheldbyUnitedInternetAGinSedoGmbH.Inaddition,AdLINKInternetMediaAGboughtfurthersharesfromaManagementBoardmemberofSedoGmbH.InNovember2006,AdLINKInternetMediaGmbHDeutschlandpurchasedafurther23.80%ofsharesinSedoGmbH.Atthesametime,AdLINKInternetMediaAGtransferredthesharesitalreadyheldasanon-cashcontributiontoAdLINKInternetMediaGmbHDeutschland,sothatasofDecember31,2006,75.94%ofsharesinSedoGmbHwereheld.TheacquisitioncostsoftheadditionalsharesamountedtoC34,606kandcomprisedcostsdirectlyallocatedtotheacquisitionamountingtoC100k.Theacquisitioncostwassettledincash.GoodwillfromthisacquisitionamountedtoC30,949k.InthecourseoftheincreaseinsharesheldinSedoGmbH,aprofittransferagreementwasconcludedbetweenAdLINKInternetMediaGmbHDeutschlandandSedoGmbH,effectivefromJanuary1,2007.Onthebasisofthisprofittransferagreement,SedoGmbHtransfersitscompleteresulttoAdLINKInternetMediaGmbHDeutschland.Ascompensationfortheminorityshareholders,thecontractallowsforadividendpaymentofC250kperfiscalyear.Thecon-tractcannotbeterminatedbeforeDecember31,2011.Aspartofthepurchaseofadditionalshares,theminorityshareholdersweregrantedaconditionalputoption,whichcanbeexercisedintheperiodfromJanuary1,2009toDecember31,2015,wherebytheoptioncanonlybeexercisedjointlyin2009and2010byallminority

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shareholders.TheoptionisconditionalinasfarasAdLINKhastherighttoopposetheexercisingoftheputoption.Thepurchasepricesdependmainlyonthecompany’sprofitdevelopment.

Explanations to the Income Statement

4 Sales revenue / Segment reportingSegmentreportingincludestheprimaryandsecon-daryreportingformatsinaccordancewithIAS14.TheCompanyhaschosentheorganizationalstructurealignedtoproducts/customersasitsprimaryreportingformat.ItrelatestotheProductsegment,Outsourcingsegment,OnlineMarketingsegmentandHeadOffice/Investmentssegment.SalesrevenueincludesrevenuefromexchangetransactionsamountingtoC2,290k(prioryear:C0)

Thesecondaryreportingformatdifferentiatesbetweendomesticandforeignbusiness.

Transactionsbetweensegmentsarechargedatmarketprices.

SegmentreportingofUnitedInternetAGinfiscalyear2008wasasshownonpage60.

SegmentreportingofUnitedInternetAGinfiscalyear2007wasasshownonpage61.

5 Cost of sales

2008 Dk

2007 Dk

Cost of services 806,076 726,953

Cost of goods 107,802 93,850

Personnel expenditure 52,086 42,099

Depreciation 25,055 28,531

Others 15,932 4,568

Total 1,006,951 896,001

Costofsalesincreasedinrelationtosalesrevenuefrom60.2%to61.0%,comparedwiththepreviousyear.This

resultedinadeteriorationofgrossmarginfrom39.8%to39.0%.ThemainreasonwasstronggrowthinnewcustomersforDSL,themigrationofexistingcustomerstocompletepackagesandlowermarginsinOnlineMarketing.

Amortizationofintangibleassetsresultingfromcom-panyacquisitionsisdisclosedseparatelyintheincomestatementandnotcontainedincostofsales.PleaserefertoNote9.

6 Selling expensesDuetohighcostsincurredfornewcustomeracquisi-tionandcostsinconnectionwithcustomerretention,sellingexpensesgrewfromC248,234ktoC278,564k.However,theirratiotosalesgrewonlyslightlyto16.9%(prioryear:16.7%).

Amortizationofintangibleassetsresultingfromcom-panyacquisitionsisdisclosedseparatelyintheincomestatementandnotcontainedinsellingexpenses.PleaserefertoNote9.

7 General and administrative expenses

Generalandadministrativeexpensesrosemoreslowlythansales,fromC82,470k(5.5%)toC83,652k(5.1%).

Amortizationofintangibleassetsresultingfromcompanyacquisitionsisdisclosedseparatelyintheincomestatementandnotcontainedingeneralandadministrativeexpenses.PleaserefertoNote9.

8 Other operating income / expenses

Otheroperatingincomeinfiscalyear2008resultmainlyfromthesubsequentvaluationofderivativefinancialinstrumentsinconnectionwiththeacqui-sitionoracceptanceofsharesinlistedcompanies(C12,274k),aswellasfromthesaleofsharesinBigpoint(C3,840k).Otheroperatingincomeinfiscal

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year2007wasmainlyinfluencedbythecontributionofsharesaspartoftheacquisitionofashareholdinginGoldbach(C16,808k)andthesaleofsharesinNTplus(C4,591k).

Lossesduetoaccountreceivablesof1&1amountedtoC21,465k(prioryear:C12,212k),whileincomefromdunningandreturndebitchargestotaledC11,270k(prioryear:C9,933k).

Duetothenegativefairvalueofaderivativefinancialinstrument,otheroperatingexpensesofC6,425k(prioryear:C2,663k)wererecognized.

Inthepreviousyear,anindemnityobligationtoajointventurecompanyresultedinotheroperatingexpensesofC10,000k.

Currencygains(net)infiscalyear2008amountedtoC777k,whilecurrencylosses(net)inthepreviousyearamountedtoC371k.

ExpensesrelatingtootheraccountingperiodstotaledC1,830k(prioryear:C2,112k).

9 Depreciation and amortization Depreciationandamortizationofintangibleassetsandproperty,plantandequipmentconsistofthefollowing:

2008 Dk

2007 Dk

Cost of sales 25,055 28,531

Selling expenses 1,915 2,496

General and administrative expenses

4,706

9,070

Total 31,676 40,097

Amortizationofcapitalizedintangibleassetsresultingfrombusinesscombinationsincludesthefollowingitems:

2008 Dk

2007 Dk

Portal 9,030 9,030

Customer base 7,350 7,280

Software 3,311 4,010

Licenses 1,132 1,412

Order backlog 460 762

Total 21,283 22,494

AmortizationofcapitalizedgoodwillofC18,100k(prioryear:C19,004k)resultedfromtheacquisitionoftheportalbusinessofWEB.DEAG(today:KizooAG),anamountofC2,247k(prioryear:C2,882k)fromtheacquisitionofFasthosts,anamountofC383k(prioryear:C0k)fromtheacquisitionofDollamore,andC553k(prioryear:C608k)fromtheacquisitionofCibleClick.

Asreliableallocationofamortizationofcapitalizedintangibleassetsresultingfrombusinesscombina-tionstoindividualfunctionaldivisionsisnotpossible,itisdisclosedseparatelyintheincomestatement.

10 Goodwill amortization

Inthecourseofimpairmenttests,goodwillwasamor-tizedbyC9,244kduringtheperiodunderreview.Ofthistotal,goodwillwrite-downsforaffilinetFranceaccountedforC6,430k,AdLINKGermanyforC1,631kandAdLINKFranceforC1,183k.

DuetorestructuringatCibleClickFranceandAdLINKUK,thegoodwillofbothcompanieswassubjectedtoanon-scheduledimpairmenttestinfiscalyear2007.Inconnectionwiththisimpairmenttest,goodwillofCibleClickFrancewaswrittendownbyC7,662kandofAdLINKUKbyC1,711kinthepreviousyear.FurtherdetailsareprovidedinNote30.

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11 Personnel expensesPersonnelexpensesaredividedamongthevariousdivisionsasfollows:

2008 Dk

2007 Dk

Cost of sales 52,086 42,099

Selling expenses 83,852 71,569

General and administrative expenses

35,843

32,176

Total 171,781 145,844

Thenumberofemployeesincreasedfrom3,954to4,565atyear-end2008,representinggrowthof15.5%:

2008 Dk

2007 Dk

Germany 3,618 3,127

Outside Germany 947 827

Total 4,565 3,954

Theaveragenumberofemployeesinfiscalyear2008amountedto4,341(prioryear:3,669),ofwhich3,418(prioryear:2,884)wereemployedinGermanyand923(prioryear:785)abroad.

12 Financial expenses

2008 Dk

2007 Dk

Loans and overdraft facilities 26,783 6,437

Expense from interest hedging transactions

6,671

-

Guaranteed dividend to minority interests

44

54

Expense for loans from an associated company

-

183

Total financial expenses 33,498 6,674

Theexpensefrominteresthedgingtransactionscon-cernsthevaluationofinterestswapsconductedinfis-calyear2008atmarketvalue.Theexpensefromtheguaranteeddividendreferstotheaccruedinterestexpenseforaliabilityduetominorityshareholders.

13 Financial income

2008 Dk

2007 Dk

Interest income from credit balances with banks

1,095

1,419

Income from financial investments 1,768 623

Income from purchase price install-ments from the sale of shares in an associated company

517

-

Income from loans to a joint venture 548 7

Total financial income 3,928 2,049

14 Amortization of investmentsAmortizationofinvestmentsamountedtoC42,379k(prioryear:C0).PleaseseeNote26forfurtherdetails.

15 Result from associated companies

2008 Dk

2007 Dk

Result from associated companies -234,193 2,284

Total -234,193 2,284

FurtherdetailsontheresultfromassociatedcompaniesareprovidedinNote25.

16 Income taxesTheincometaxexpensefromcontinuedoperationsiscomprisedasfollows:

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2008 Dk

2007 Dk

Current income taxes

– Germany 64,926 71,550

– Abroad 10,765 8,390

Total (current period) 75,691 79,940

Deferred taxes

- Due to tax loss carryforwards 3,385 852

- Tax effect on temporary differences -6,938 515

- Due to tax rate changes -252 -2,188

Total deferred taxes -3,805 -821

Total tax expense 71,886 79,119

UnderGermantaxlaw,incometaxescomprisecorporateincometaxandtradetax,aswellasthesolidaritysurcharge.

Germantradetaxonincomeisleviedonacompany’staxableincomeadjustedforcertainrevenueswhicharenotsubjecttosuchtaxandforcertainexpenseswhicharenotdeductibleforpurposesoftradetaxonincome.Theeffectivetradetaxratedependsonthemunicipalityinwhichthecompanyoperates.AspartoftheGermanCorporateTaxReform2008,passedbytheGermangovernmentin2007,tradetaxisnolongerdeductibleasanoperatingexpense.Ascompensation,thetradetaxbaseratewasreducedfrom5%atpresentto3.5%.Asaresult,theaveragetradetaxrateinfiscalyear2008amountedtoapprox.13.8%(prioryear:16.2%).

Germancorporateincometaxwasleviedat25%forthetaxassessmentyear2007–irrespectiveofwhethertheresultwasretainedordistributed.Inaddition,asolida-ritysurchargeof5.5%isimposedontheassessedcorporateincometax.WiththeintroductionoftheCorporateTaxReform2008,thecorporateincometaxratewasdecreasedfrom25%to15%.

Deferredtaxassetsarerecognizedfortaxlosscarry-forwardsandtemporarydifferences,ifitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferencecanbeutilized,

Deferredtaxassetsfortaxlosscarryforwardsincertaincountriesareshowninthetablebelow:

2008 Dk

2007 Dk

USA 1,425 2,848

Germany 1,068 2,120

Italy 219 110

France 0 1,019

2,712 6,097

Taxlosscarryforwardsandtemporarydifferencesforwhichnodeferredtaxassetshavebeenformed,refertothefollowingcountries:

2008 Dk

2007 Dk

France 13,345 9,109

UK 4,750 3,521

Spain 4,659 1,855

Germany 3,836 3,836

Switzerland 1,305 956

27,895 19,277

InaccordancewithIAS12,deferredtaxassetsarereco-gnizedforthefuturebenefitsassociatedwithtaxlosscarryforwards.Thetimelimitforthenetlosscarryfor-wardsindifferentcountriesisasfollows: Belgium: indefinite Spain: 15years UnitedKingdom: indefinite France: indefinite Sweden: indefinite Italy: 5years Switzerland: 7years USA: 20years Germany: indefinite,butminimum taxation

InGermany,thelosscarryforwardscanbeclaimedforanindefiniteperiod.Asinthepreviousyear,theserelatetolosscarryforwardsasofDecember31,2008ofAdLINKInternetMediaAGandAdLINKInternetMediaGmbHDeutschland.Deferredtaxesresultedfromthefollowingitems:

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2008 2007

Defer-red tax assets

Dk

Defer-red tax liabili-

ties Dk

Defer-

red tax assets

Dk

Defer-red tax liabili-

ties Dk

Trade receivables 234 0 356 0

Other financial assets - current

4,141

0

0

0

Other financial as-sets – non-current

1,360

125

46

133

Property, plant and equipment

0

66

0

0

Intangible assets 193 15,248 0 16,206

Other liabilities 953 0 900 0

Gross value 6,881 15,439 1,302 16,339

Tax loss carryfor-wards

2,712

0

6,097

0

Adjustments for consolidation

0

1,809

10

1,757

Other items 39 103 28 965

Consolidated balance sheet

9,632 17,351 7,437 19,061

DeferredtaxliabilitiesofC15,248k(prioryear:C16,206k)resultmainlyfromthedifferenttreatmentofcapitalizedintangibleassetsfrombusinesscombi-nationsintheconsolidatedaccountsandthetaxbalancesheet.

DeferredtaxliabilitiesincludedeferredtaxeswithoutaneffectonprofitandlossamountingtoC150k(prioryear:C133k).

Theaggregatetaxrateisreconciledtotheeffectivetaxrateofcontinuedoperationsasfollows:

2008 %

2007 %

Anticipated tax rate 29.6 38.5

- Goodwill amortization non- deductible for tax purposes

-5.5

1.5

- Amortization of investments non-deductible for tax purposes

-25.3

0.0

- Tax-reduced profit from disposals 2.7 -2.9

- Differences in foreign tax rates 1.6 -0.7

- Employee stock ownership plan -1.3 -0.2

- Tax losses of the fiscal year, for which no deferred taxes have been capitalized

-4.1

1.1

- First-time capitalization of tax losses not used in prior years

0.0

-1.9

- Utilization of non-capitalized tax loss carryforwards

0.0

-0.7

- Non-taxable at-equity results -139.5 -0.4

- Change in tax rates 0.5 -0.9

- Allowance for tax loss carryforwards capitalized in previous years

-2.0

0.1

- Allowance for deferred tax assets on temporary differences

-0.5

0.0

- Balance of other tax-free income and non-deductible expenses

-1.2

0.2

Effective tax rate -145.0 33.7

Theexpectedtaxratecorrespondstothetaxrateoftheparentcompany,UnitedInternetAG.

17 Result from discontinued operations

InacontractdatedJanuary19,2007,UnitedInternetAG,Montabaur,reachedanagreementwithTeleper-formanceSA,Paris,concerningthesaletoTeleper-formanceoftheUnitedInternetGroupmembertwenty4helpKnowledgeServiceAG,Montabaur.Teleperformancepaidthefullpurchasepriceincash.Thebusinesscombinationwasapprovedbytherespec-tiveantitrustauthoritiesonFebruary22,2007.TheeconomictransferoftheshareswascompletedonMarch13,2007.ThepurchasepriceamountedtoC79,619k(aftertransactioncosts).

TheresultfromdiscontinuedoperationsaftertaxofC68,098kcomprisedthecurrentperiodresult(infiscalyear2007untilthetimeofdisposal)ofC2,352kandincomefromthesaleofC65,746k.

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Asofthebalancesheetdate,therewerecommitmentsfromdiscontinuedoperationsofC2,153kduetotransac-tioncosts,whichweredisclosedunder“Otherliabilities”.

18 Earnings per share

AsofDecember31,2008,capitalstockwasdividedupinto251,469,184registeredno-parshareseachwithatheoreticalshareinthecapitalstockofC1.OnDecem-ber31,2008,theCompanyheld22,000,000treasuryshares(prioryear:18,000,000).ThesetreasurysharesdonotentitletheCompanytoanyrightsorproportio-naldividendsandarethusdeductedfromequity.Theweightedaveragenumberofsharesoutstandingusedforcalculatingundilutedearningspersharewas229,790,031forfiscalyear2008(prioryear:235,759,855).

AdilutiveeffectmustbetakenintoconsiderationforconversionrightsresultingfromtheemployeestockownershipprogramofUnitedInternetAGwhichwerecontainedincashasofDecember31,2008.Allconver-sionrightsexistingonDecember31,2008wereconsi-deredinthecalculationofdilutedearningspershare,usingthetreasury stock method,insofarastheconver-sionrightswereinmoneyandirrespectiveofwhethertheconversionrightswereactuallyexercisableonthebalancesheetdate.Thecalculationofthedilutiveeffectfromconversionismadebyfirstdeterminingthetotalofpotentialshares.Onthebasisoftheave-ragefairvalue,thenumberofsharesisthencalculatedwhichcouldbeacquiredfromthetotalamountofpay-ments(parvalueoftheconvertiblebondplusadditio-nalpayment).Ifthedifferencebetweenthetwovaluesiszero,thetotalpaymentisexactlyequivalenttothefairvalueofthepotentialsharesandnodilutiveeffectneedbeconsidered.Ifthedifferenceispositive,itisassumedthattheseshareswillbeissuedwithoutconsideration.

Thecalculationofdilutedearningspersharewasbasedon158,804(prioryear:2,196,756)potentialshares(fromtheassumeduseofconversionrights).BasedonanaveragemarketpriceofC10.95(prioryear:C14.47),thiswouldresultintheissuanceof95,678(prioryear:869,914)shareswithoutconsideration.DuetothenegativeresultattributabletoshareholdersofUnitedInternetAGforfiscalyear2008,thereisnodilutiveeffectfrompotentialshares.Thenumberofsharesforthedilutedearningspersharecalculationcorrespondstothatfortheundilutedearningspersharecalcula-

tion.Theweightedaveragenumberofsharesusedtocalculatedilutedearningspershareinthepreviousyearwas236,629,769.

Thefollowingtableshowstheunderlyingamountsforthecalculationofundilutedanddilutedearnings:

2008 Dk

2007 Dk

Profit attributable to the share-holders of United Internet AG

-120,183

220,218

Earnings per share (in C)

– undiluted -0.52 0.93

– diluted -0.52 0.93

Thereof result from continued operations

-120,183

152,120

Earnings per share (in C)

– undiluted -0.52 0.64

– diluted -0.52 0.64

Thereof result from discontinued operations

-

68,098

Earnings per share (in C)

– undiluted - 0.29

– diluted - 0.29

Weighted average number of out-standing shares (in million units)

– undiluted 229.79 235.76

– diluted 229.79 236.63

Thecalculationofundilutedanddilutedearningspersharefordiscontinuedoperationswasbasedontheweightedaveragenumberofshares,asdescribedabove.

19 Dividend per share

AdividendofC0.20persharewaspaidforthefiscalyear2007.ThisrepresentedatotaldividendpaymentintheperiodunderreviewofC42,886k.Treasurysharesreduceequityandhavenodividendentitle-ment.Nodividendwillbepaidforfiscalyear2008.

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Explanations to the Balance Sheet

20 Cash and cash equivalents Cashandcashequivalentsconsistofbankbalances,short-terminvestments,checksandcashinhand.Bankbalancesbearvariableinterestratesforcallmoney.Short-terminvestmentsaremadeforvariousperiods,dependingontheGroup’srespectivecashneeds,ofbetweenonedayandthreemonths.

Thedevelopmentandapplicationofcashandcashequivalentsisstatedintheconsolidatedcashflowstatement.

21 Trade accounts receivable

2008 Dk

2007 Dk

Trade accounts receivable 135,705 133,677

Less

Bad debt allowances -16,639 -9,889

Trade accounts receivable, net 119,066 123,788

AsofDecember31,2008tradeaccountsreceivableamountingtoC16.639k(prioryear:C9,889k)wereimpaired.Thedevelopmentofthebaddebtallowancescanbeseenbelow:

2008 Dk

2007 Dk

As of January 1 9,889 8,223

Additions charged to the income statement

15,815

7,765

Utilization -6,609 -4,057

Reversals -2,221 -1,720

Exchange rate differences -235 -297

Disposal from deconsolidation 0 -25

As of December 31 16,639 9,889

Additionschargedtotheincomestatementofeachperiodunderreviewdonotcomprisereceivablesari-singduringtheyearandeliminatedbeforethebalancesheetdate.Asofthebalancesheetdatethereisnorecognizableindicationthatpaymentobligationsforreceivablesnotadjustedcannotbemet.

Themaximumcreditriskasofthebalancesheetdatecorrespondstothenetcarryingvalueoftheabovetradeaccountsreceivable.

Tradeaccountsreceivablearealwaysstatedatnominalvalue.Overduereceivablesaretestedforpossibleimpairment.Individualallowancesaremainlyformedbyclassifyingreceivablesaccordingtotheirageprofile.WerefertoNote43.

Alloverduereceivablesnotadjustedindividuallyaresubjectedtolump-sumallowances.

AsofDecember31,theageprofileoftradeaccountsreceivablelesstheaforementionedallowanceswasasfollows:

2008 Dk

2007 Dk

Trade accounts receivable, net

< 30 days 104,599 111,468

30 - 60 days 5,641 4,067

60 - 90 days 3,673 6,759

90 - 120 days 1,674 1,045

> 120 days 3,479 449

Trade accounts receivable, net 119,066 123,788

22 InventoriesInventoriesconsistofthefollowingitems:

2008 Dk

2007 Dk

Merchandise

- DSL hardware 6,999 7,975

- Mobile internet hardware 6,194 4,611

- Mobile telephony hardware 2,703 1,503

- Web hosting hardware 860 990

- Video-on-demand hardware 828 2,162

- Other 318 566

Domain stock held for sale

- Domain stock 5,370 3,624

23,272 21,431

Less

Allowances -4,224 -4,646

Inventories, net 19,048 16,785

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TheimpairmentofinventoriesexpensedintheperiodunderreviewamountedtoC1,581k(prioryear:C3,352k).Thischargeisdisclosedin“Costofsales”.AllowancesofC4,224k(prioryear:C4,646k)weremadeforinventorieswithanetcarryingvalueofC6,735k(prioryear:C2,177k).

23 Prepaid expensesPrepaidexpensesofC28,791k(prioryear:C23,020k)consistmainlyofprepaymentsfordomainfees,whichweredeferredandchargedtotheincomestatementonthebasisoftheunderlyingcontractualperiodofcusto-mersintheProductsegment.

24 Other current assets

2008 Dk

2007 Dk

Accounts receivables from the tax office 3,722 2,880

Outstanding purchase price installment 3,621 3,621

Payments on account 1,244 4,282

Premium claims 586 2,883

Other 3,564 2,705

Other assets, net 12,737 16,371Accountsreceivablesfromthetaxofficeresultmainlyfromcreditbalancesfromsalestax.

Theoutstandingpurchasepriceinstallmentreferstoapaymentdueattheendof2009fromthesaleofsharesinNTplusAG,tobesettledfullyincash.

Paymentsonaccountconsistmainlyofdownpay-mentsfordomains.

ThepremiumclaimsrepresentclaimsfromacooperationagreementwithDeutscheTelekomAGandVodafoneAG.Theyrelatetoperformance-basedpay-mentsfortheacquisitionofnewcustomersforthecooperationpartner.

25 Shares in associated companies / joint ventures

2008 Dk

2007 Dk

Carrying amount at the beginning of the fiscal year

309,023

11,006

Additions 170,307 309,299

Adjustments

- Dividends -392 -950

- Shares in result -169,338 2,284

- Impairment losses -64,855 0

- Other 1,729 0

Disposals -24,790 -12,616

221,684 309,023

TheadditiontosharesinassociatedcompaniesresultsmainlyfromtheacquisitionoffurthersharesinVersatel(C57,257k),fromtheacquisitionofsharesinfreenet(C46,111k)andfromtheinvestmentinEFFNo.1(C24,367k).FurtheradditionsofC24,452kresultfromthepurchaseofsharesinassociatedcompaniespurchasedbyEFFNo.2andtheacquisitionofsharesinVirtualMinds(C9,131k)andBW2(C5,826k).

TheresultfromassociatedcompaniesamountingtoC-169,338kwasmainlycausedbyproratedimpairmentlossesonsharesinfreenetheldbyMSPHoldingGmbH(C-158,886k).Thesewrite-downsweremadeasaresultofasharpdeclineinsharepricesinfiscalyear2008.

OtheradjustmentstotalingC1,729kresultfromprofitcontributionstoassociatedcompanieswithaninvest-mentvalueofC0(C1,613k)andprofitcontributionsrecognizeddirectlyinequityofassociatedcompanies(C116k).ThenegativeprofitcontributionsofassociatedcompanieswithaninvestmentvalueofC0areonlyconsiderediftheassociatedcompanieswereprovidedwithlong-termloansoriftherearecredit/liabilitycommitments.

Thefollowingtableprovidesanoverviewofdirectimpairmentlossesinfiscalyear2008:

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2008 Dk

2007 Dk

Versatel 50,194 -

EFF Nr. 2 7,169 -

BW2 4,389 -

Other 3,103 -

64,855 0

TheimpairmentlossofVersatelresultsfromasharpdeclineinitssharepriceduringfiscalyear2008.

ImpairmentlossesofC7,169krefertosharesinassociatedcompaniesheldbyEFFNo.2.

ThedisposalresultsfromcapitalrepaymentsoftheinvestmentEFFN0.1(C20,037k)andfromthesaleofsharesinBigpoint(C4,753k).

Duetothecontractuallyagreedunanimityofvotingonallshareholderresolutions,theGroupcannotexertacontrollinginfluenceonEFFNo.1companies,butonlyasignificantinfluence.Incontrasttoitsshareincapitalof66.67%,theGroup’sparticipationinannualnetprofitofEFFNo.1isbetween33.33%and66.67%,dependingonthefund’sinternalrateofreturn.

TheCompanyitselfholds8.43%ofsharesinfreenetAG.Duetoacontractualvotingcommitment,theCompanybelievesitexertsasignificantinfluenceonthebusinesspolicyoffreenetAG.

ThefollowingtablecontainssummarizedfinancialinformationontheCompany’sinvestmentinMSPHoldingGmbH:

2008 Dk

2007 Dk

Current assets 311 21,792

Non-current assets 55,468 317,176

Current liabilities 19,715 8,248

Non-current liabilities 0 0

Shareholders’ equity 36,064 330,720

Sales revenue

0

0

Net profit -294,657 -80ThechangeintheconsolidatedbalancesheetandtheconsolidatedincomestatementofMSPHoldingGmbHcomparedwiththepreviousyearislargelyduetotheimpairmentlossonsharesinfreenetAG.

ThefollowingtablecontainssummarizedfinancialinformationontheCompany’sinvestmentinVersatelAG:

2008 Dk

2007 Dk

Current assets 179,123 225,022

Non-current assets 966,949 964,946

Current liabilities 182,576 205,859

Non-current liabilities 634,897 623,696

Shareholders’ equity 328,599 360,413

Sales revenue

576,718

700,646

Net profit -32,245 -89,005

Thefinancialinformationfor2008ofVersatelAGisbasedonpublishedfiguresasofSeptember30,2008.

Basedonthestockexchangepriceasofthebalancesheetdate,thesharesheldbyUnitedInternetAGinVersatelAGhaveafairvalueofC116,355k.

ThefollowingtablecontainssummarizedfinancialinformationontheCompany’sinvestmentinfreenetAG:

2008 Dk

2007 Dk

Current assets 896,496 369,315

Non-current assets 2,383,529 533,285

Current liabilities 967,511 491,182

Non-current liabilities 1,400,421 39,333

Shareholders’ equity 912,093 372,085

Sales revenue

1,800,738

1,863,284

Net profit 160,595 16,530Thefinancialinformationfor2008offreenetAGisbasedonpublishedfiguresasofSeptember30,2008.Thefinancialinformationfor2007isbasedonpublis-hedfiguresoffreenetAGforthefiscalyear2007.

Basedonthestockexchangepriceasofthebalancesheetdate,thesharesheldbyUnitedInternetAGinfreenetAGhaveafairvalueofC44,815k.ThefollowingtablecontainssummarizedfinancialinformationontheCompany’sinvestmentinotherassociatedcompaniesandjointventuresasofthebalancesheetdate:

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2008 Dk

2007 Dk

Current assets 19,802 17,044

Non-current assets 31,491 19,984

Current liabilities 12,906 5,000

Non-current liabilities 800 15,002

Shareholders’ equity 37,586 17,027

Sales revenue

27,186

13,471

Net profit -11,740 5,751

Thesummarizedfinancialinformationonassociatedcompaniesisbasedonthe100%figuresofthesecompanies.

26 Other financial assetsThedevelopmentoftheseshareswasasistshowninthetablebelow.

Thenewlyfounded,fullyconsolidatedinvestmentfundEFFNo.3madeinvestmentsofC50,071kinatotalof24companies(portfoliocompanies)infiscalyear2008.Asthefundholdslessthan20%ofvotingshares,theseinvestmentsareclassifiedasavailable-for-salefinancialassetspursuanttoIAS39.

Againstthebackdropofasharpdeclineinsharepricesinfiscalyear2008,thelistedsharesinGoldbachandDrillischwerewrittendownduetoimpairment,aswereotherinvestments(portfoliocompanies)ofEFFNo.3.

Amortization of revalua-tion reserve not

recognized in income

01.01.2008 Dk

Additions

Dk

Recycling

Dk

Addition

Dk

Impair-ment loss

Dk

Reclassifi-cation

Dk

Disposal

Dk

31.12.2008

DkGoldbach shares 28,794 -8,853 -7,894 12,047

Drillisch shares 28,325 3,090 -22,506 8,909

Afilias shares 5,353 2,373 7,726

Portfolio compa-nies of EFF No. 3

0 50,071 3,371 -11,626 41,816

Purchase price in-stallment NTplus

3,621 -3,621 0

Others 1,774 866 -353 2,287

67,867 50,937 -5,763 5,744 -42,379 -3,621 0 72,785

Amortization of revalua-tion reserve not

recognized in income

01.01.2007 Dk

Additions

Dk

Recycling

Dk

Addition

Dk

Impair-ment loss

Dk

Reclassifi-cation

Dk

Disposal

Dk

31.12.2007

DkGoldbach shares 0 19,941 8,853 28,794

Drillisch shares 0 31,415 -3,090 28,325

Afilias shares 1,842 3,511 5,353

Purchase price in-stallment NTplus

0 3,621 3,621

Others 1,853 -79 1,774

3,695 54,977 0 9,274 0 0 -79 67,867

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ThepurchasepriceinstallmentNTplus,resultsfromthe2ndpurchasepriceinstallmentinconnectionwiththesaleofsharesinNTplusAGinfiscalyear2007,whichistobefullysettledincashbytheendof2009.Inthepreviousyear,thisitemwasdisclosedunder“Non-currentassets”.

Otherfinancialassetsaremainlyotherdepositsandloansforwhommarketvaluecoincidedwithcarryingvalue.

27 Property, plant and equipment

2008 Dk

2007 Dk

Acquisition costs

- Land and buildings 8,047 6,986

- Furniture and fixtures 196,645 156,905

- Payments on account 3,464 10,227

208,156 174,118

Less

Accumulated depreciation -121,662 -97,013

Property, plant and equipment, net 86,494 77,105

Analternativepresentationofthedevelopmentofproperty,plantandequipmentinthefiscalyears2007and2008isshownintheexhibittothenotesoftheconsolidatedfinancialstatements(assetsmovementschedule).

28 Intangible assets (without goodwill)

2008 Dk

2007 Dk

Acquisition costs

- Licenses 28,337 27,462

- Order backlog 2,141 2,141

- Software 37,695 34,367

- Trademarks 21,423 21,904

- Customer base 42,927 45,525

- Portal 72,240 72,240

204,763 203,639

Less

Accumulated amortization and impairment

-107,251

-83,608

Intangible assets, net 97,512 120,031

Analternativepresentationofthedevelopmentofintangibleassetsinthefiscalyears2007and2008isshownintheexhibittothenotesoftheconsolidatedfinancialstatements(assetsmovementschedule).

Intangibleassetswithunlimitedusefullives(trade-marks),aremostlyallocatedtotheProductsegment.ThecarryingvaluesamounttoC21,379k.Intangibleassetswithunlimitedusefullivesweresubjectedtoanimpairmenttestonthebalancesheetdate.Animpair-mentlossofC44k(prioryear:C0)wasrecognizedintheOnlineMarketingsegment.Thefurtherdeclineresultedfromcurrencytranslationeffects.

Inthepreviousyear,animpairmenttestwascon-ductedonsoftwareintheProductsegmentwhichresultedinanimpairmentlossofC3,536k.

29 Goodwill

2008 Dk

2007 Dk

gross net gross netProduct segment 289,570 289,570 297,670 297,670

Online Marketing segment

109,602

89,306

102,204

91,152

399,172 378,876 399,874 388,822

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Analternativepresentationofthedevelopmentofgoodwillinthefiscalyears2007and2008isshownintheexhibittothenotesoftheconsolidatedfinancialstatements(assetsmovementschedule).

TotalgoodwillfellonbalancebyC9,946ktoC378,876k.TheincreaseingoodwillofC9,302kresultsfromtheacquisitionofDollamoreandthepurchaseoffurthersharesinAdLINK(C7,399k).Currencytransla-tioneffectsintheProductsegmentresultedinadeclineingoodwillofC17,403k.Afurthernegativeeffectresultedfromnon-scheduledamortizationofgoodwillforAdLINKofC9,244k.Wereferinthiscon-nectiontothefollowingsection.

30 Impairment of goodwill and intangible assets with unlimited useful lives

Thegoodwillandintangibleassetswithunlimitedusefullivesaresubjectedtoanimpairmenttestatleastonceperyear.Withreferencetoitsinternalbud-getingprocess,theCompanyhaschosenthelastquar-terofitsfiscalyeartoconductitsstatutoryannualimpairmenttest.

Thescheduledannualimpairmenttestconductedinthe4thquarterof2008resultedinamortizationofC9,244k(prioryear:C0).Ofthistotal,goodwillwrite-downsforaffilinetFranceaccountedforC6,430k,AdLINKGermanyforC1,631kandAdLINKFranceforC1,183kandreferexclusivelytotheOnlineMarketingsegment.Themaincauseforthewrite-downswasadeteriorationofearningsoftherespectivecash-gene-ratingunit.Theimpairmentlosswasdisclosedsepara-telyintheincomestatement.

DuetosignsofadeteriorationinearningsofCibleClickFranceandAdLINKUKandsubsequentrestructuring,thegoodwillofthesecash-generatingunitswassubjectedtoanimpairmenttestinthepreviousyear.Therecoverableamountsofthecash-generatingunitsconcernedweremeasuredusingcashflowforecasts.Theassumptionsusedwerethesameasthosefortheannualimpairmenttestofcash-generatingunitsintheOnlineMarketingsegment,asdescribedbelow.Asaresultofthisimpairmenttest,goodwillofCibleClickFrancewaswrittendownbyC7,662kandofAdLINK

UKbyC1,711kinthepreviousyear.Theimpairmentlosswasdisclosedseparatelyintheincomestatement.

Goodwillacquiredinthecourseofbusinesscombina-tionsisallocatedforimpairmenttestpurposestocash-generatingunits,whicharedistributedamongtheCompany’ssegmentsasfollows:

Cash-generatingunitsintheProductsegmentTheProductsegmentconsistsofthefollowingthreecash-generatingunitstowhichgoodwillwithcarryingvaluestotalingC289,570k(prioryear:C297,670k)hasbeenallocated:

2008 Dk

2007 Dk

WEB.DE 228,493 228,493

Fasthosts / Dollamore 56,045 64,145

InterNetX 5,032 5,032

289,570 297,670

Therecoverableamountsofthecash-generatingunitsintheProductsegmentarecalculatedonthebasisofavalue-in-usecalculationusingcashflowforecasts.ThecashflowforecastsarebasedontheCompany’sbud-getsforfiscal2009.Thesebudgetswerepreparedbymanagementonthebasisofexternalmarketstudiesandinternalassumptions,extrapolatedforaperiodoffiveyears.Followingthisperiod–andasintheprevi-ousyear–managementassumesanannualincreaseincashflowof1.5%to2.0%,correspondingtolong-termaveragegrowthofthesectorinwhichtherespectivecash-generatingunitoperates.Thediscountedpre-taxinterestrateusedintheperiodunderreviewforthecashflowforecastsamountsto11%(prioryear:11%and13%).

TheProductsegmentalsohastrademarkswithatotalcarryingvalueofC21,314k(prioryear:C21,795k).Thestatedtrademarksrefertothefollowingcash-genera-tingunits:

2008 Dk

2007 Dk

WEB.DE 17,098 17,098

Fasthosts / Dollamore 4,216 4,697

21,314 21,795

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Inthecourseofbusinesscombinations,thetrademarkswerevaluedattheirfairvaluesusingtheso-called“royaltyrelief”methodandtestedagainforimpair-mentonthebalancesheetdate.Thetrademark-rele-vantcashflowsweremultipliedwiththetrademark-relevantroyaltyrates.Theseremainedunchangedatbetween1%and2%.Theforecastoftrademark-relevantcashflowswasbasedonthesameassumptionsregar-dingmarketdevelopmentanddiscountratesasusedforthecalculationofvalue-in-useofthecash-genera-tingunits.

Cash-generatingunitsintheOnlineMarketing segmentTheOnlineMarketingsegmentconsistsofthirteencash-generatingunitstowhichgoodwilltotalingC89,306k(prioryear:C91,152k)hasbeenallocated.GoodwillintheOnlineMarketingsegmentreferstothefollowingsummarizedcash-generatingunits:

2008 Dk

2007 Dk

AdLINK Media 3,630 6,444

Affiliate Marketing 9,554 15,984

Domain Marketing 31,635 31,635

Minority interests 44,487 37,089

89,306 91,152

GoodwillfromtheacquisitionofminorityinterestsinAdLINKInternetMediaAGaretestedbytheCompanyforimpairmentonasub-grouplevel.

Therecoverableamountsofthecash-generatingunitsintheOnlineMarketingsegmentarealsocalculatedonthebasisofavalue-in-usecalculationusingcashflowforecasts.ThecashflowforecastsfortheOnlineMarketingsegmentarebasedonthebudgetforfiscal2009approvedbytheSupervisoryBoard.AnexpectedestimatemadebytheManagementBoardwasusedfortheyears2010to2013,aswellasexternalmarketstu-dies.Asinthepreviousyear,annualcashflowincre-asesafterthisfive-yearperiodarebasedonanexpectedinflationrateof2%.Asinthepreviousyear,thediscountedpre-taxinterestratesusedforthecashflowforecastsarebetween12%and14%,dependingonthecash-generatingunit.

TheOnlineMarketingsegmentalsoincludestrade-markswithatotalcarryingvalueofC65k(prioryear:C109k).Inthecourseofbusinesscombinations,thesewerealsovaluedattheirfairvaluesusingtheroyalty

reliefmethod.ThetestresultedinimpairmentofC44k(prioryear:C0).Thewrite-downsarerecognizedin“Costofsales”.

Basicassumptionsforthecalculation ofvalue-in-useThereareuncertaintiesinvolvedwiththeunderlyingassumptionsusedforthecalculationofvalue-in-useforthecash-generatingunits:

SalesrevenueThemanagementoftherespectivecash-generatingunitexpectsafurtherincreaseinsaleswithinitsplanninghorizon.Forthecash-generatingunitsoftheProductsegment,anincreaseofbetween4%and23%isexpectedforthefiscalyears2009to2013(prioryear:6%and19%).Forthecash-generatingunitsoftheOnlineMarketingsegment,manage-mentexpectssalestogrowbybetween-59%and28%(prioryear:2%and39%).

GrowthratesGrowthratesarebasedonpublishedsector-specificmarketforecasts.Inthecasethatsuchforecastsarenotavailable,internalassumptionsaremade.

GrossmarginTheplannedgrossmarginsarebasedonmarketassumptionsmadebythemanagementoftherespectivecash-generatingunit.IntheOnlineMarketingsegment,areductionofbetween0%and2%perannumwasassumedwithintheplanninghorizon,inordertoaccountforgrowingcompetiti-on.ManagementexpectsconstantgrossmarginsintheProductsegment.

DiscountratesDiscountratesreflectmanagementassumptionsregardingthespecificrisksattributabletotherespectivecash-generatingunits.ThechoiceofsuitablediscountratesintheProductsegmentisbasedonavirtuallyrisk-freeinterestrate,whichisincreasedbyaspecificriskpremium.

SensitivityofassumptionsThesensitivityoftheassumptionsmadewithrespecttotheimpairmentofgoodwillortrademarksdependsontherespectivecash-generatingunits.

Productsegment

Forthecash-generatingunitsoftheProductsegment,theCompany’smanagementbelievesthat,onthebasisofreasonablejudgment,nogenerallypossiblechange

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inoneofthebasicassumptionsusedtodeterminethevalue-in-useofacash-generatingunitcouldcausethecarryingvaluetosignificantlyexceeditsrecoverablevalue.Theeffectsofchangestothebasicassumptionsisexplainedbelow:

DiscountratesAchangeinthevirtuallyrisk-freeinterestrateorspecificriskpremiumalsochangestheunderlyingdiscountratesoftheimpairmenttest.Achangeinthediscountratesusedof1%-point,however,wouldnothaveanyeffectontheimpairmenttest.

GrowthratesManagementrecognizesthatthegrowthoftheProductsegment,andthusthegrowthofthosecash-generatingunitsoperatinginthissegment,dependsheavilyonthedevelopmentofinternetusageandthusitsacceptanceasamediumusedinprivateandbusinesslife.Theentryofnewcompe-titorsandtheprojectedmarketconsolidationintheProductsegmentarenotexpectedtohaveanynegativeeffectonforecastsusedinthebudgets.Apossiblechangeonthebasisofreasonablejudg-ment,however,mayleadtogrowthrateswhichdifferfromthoseusedinthebudgetsoftherespectivecash-generatingunit.Adeclineingrowthrates,withinthepossibleparametersofreasonablejudgment,wouldnotresultinareductionofvalue-in-usetobelowcarryingvalue.

OnlineMarketingsegment

DiscountratesAchangeinthevirtuallyrisk-freeinterestrateorspecificriskpremiumalsochangestheunderlyingdiscountratesoftheimpairmenttest.Achangeinthediscountratesusedof1%-point,wouldresultinadditionalimpairmentofC725k.

GrowthratesAdeclineintheunderlyinggrowthrateof1%-point,wouldresultinadditionalimpairmentofC1,020k.

31 Trade accounts payableTradeaccountspayableamountingtoC170,743k(prioryear:C232,421k)areowedtoindependentthirdpartieswithtermsoflessthanoneyear.

32 Liabilities due to banksa)Liabilitiesduetobanks

2008 Dk

2007 Dk

Bank loans 528,301 369,223

less

Current portion of liabilities to banks 0 -174

Non-current portion of liabilities to banks

528,301

369,049

Current portion of non-current liabilities to banks

0

174

Short-term loans/overdrafts 16,069 1,882

Current portion of liabilities to banks 16,069 2,056

Total 544,370 371,105

InSeptember1997theCompanyraisedtwolong-termloansofC2,045kandC2,250ktofinancetheMultime-diaInternetParkinZweibrücken.Thefirstloanwasrepaidinfullonexpiryofthefixed-interestperiodonJuly30,2007.Afterthefixed-interestperiodofthesecondloanendedonJuly30,2008,theremainingdebtofC961kwasrepaidinfull.

Non-currentbankliabilitiesresultmainlyfromasyndicatedloanwithatotalamountcommittedofC500.0million.ThesyndicatedloanagreementwasconcludedonSeptember14,2007.ThetotalcreditfacilityisdividedintoTrancheAamountingtoC300.0millionandTrancheBtotalingC200.0million.

Asofthebalancesheetdate,C300.0millionhavebeenusedfromTrancheAandC80.0millionfromTrancheB.

TrancheAhasatermoffiveyears.RepaymentismadefromMarch14,2010insixequalhalf-yearlyinstallments.TrancheBisarevolvingsyndicatedloan,whichisalsousedtorefinancethesyndicatedloanofOctober13,2005amountingtoC125.0million.ThesyndicatedloanexpiresonSeptember13,2012.

Theloanshavevariableinterestrates.Theeffectiveinterestratesfortheinterestperiodsofone,two,three,sixortwelvemonthsaretiedtotheEURIBORrateplusamarginp.a..Thismargindependsonkeyperfor-manceindicatorsoftheUnitedInternetGroup.Asofthebalancesheetdate,theinterestratesrangebet-ween3.25%and4.38%(prioryear:5.05%and5.18%).Nocollateralwasprovidedforthesesyndicatedloans.

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Furtherliabilitiesduetobanksresultfromapromis-sorynoteloanofC150.0million.ThepromissorynoteloanwasissuedonJuly23,2008.ThepromissorynoteisabulletloananddividedintoaTrancheAofC78.0millionwithatermendingJuly23,2011andaTrancheBofC72.0millionwithatermendingJuly23,2013.Noseparatecollateralwasprovidedforthispromissorynoteloan.Theloanshavevariableinterestrates.TheeffectiveinterestratefortheinterestperiodofthreemonthsistiedtotheEURIBORrateplusamarginp.a..Asofthebalancesheetdate,theinterestratesrangebetween6.04%and6.24%.

CurrentbankliabilitiesmainlyresultfromacreditlineusedbyAdLINK.Asofthebalancesheetdate,theinterestratesrangebetween2.92%und3.70%.Thecre-ditlinesofAdLINKInternetMediaAGamounttoC53.4million.ThematuritydateforC20.0millionisMay2009,forC15.0millioninNovember2009andafur-therC18.4millionareavailableuntilfurthernotice.

Thefairvaluesoftheseloansamountmainlytotheircarryingvalues.

Acashpoolingagreement(overdraftservice)hasbeeninplacebetweenUnitedInternetAG,certainsubsidia-riesandWestLBAG,Düsseldorf,sinceOctober1,2002.Undertheagreement,creditanddebitbalancesarenettedwithintheCompanyeachbankingdayandsummarized.

b)CreditlinesUnitedInternetAGhasthefollowingcreditlinesforadvancesoncurrentaccountsandothershort-termloanswiththreebanks:

2008 Dm

2007 Dm

Available credit lines 55.0 55.0

Utilization (guarantees only) 9.2 7.1

Average interest rate (in %) n.a. n.a.

Unutilized credit facilities 45.8 47.9

Thecreditfacilitieshavebeengrantedbythebanksforlimitedperiods.C15.0millionexpireinJune2009,C25.0millionexpireinSeptember2009andafurtherC15.0millionareavailableatfurthernotice.

AfurtheramountofC120millionisalsoavailableuntilSeptember13,2012fromtheunutilizedproportionofthesyndicatedloan.

WithregardtocreditlinesgrantedtothecompaniesoftheUnitedInternetGroupbyonebank,UnitedInternetAGisliableasco-debtor.Thecreditfacilitieshadonlybeenutilizedthroughguaranteesasofthebalancesheetdate.Forthisreason,noaverageinterestratehasbeengiven.

33 Accrued taxesAccruedtaxesconsistofthefollowingitems:

2008 Dk

2007 Dk

Germany 30,601 27,333

United Kingdom 2,823 2,049

Spain 201 0

Belgium 196 135

France 34 57

USA 0 598

33,855 30,172

34 Deferred revenueIntheProductsegment,customerspayforcertaincontractsinadvanceforamaximumof24months.

Theprepaidchargesareallocatedandrecognizedasrevenuesovertheunderlyingcontractualperiod.

35 Other accrued liabilitiesThedevelopmentofaccrualsinfiscalyear2008wasasfollows:

Litigation risks

Dk

Others

Dk

Total

DkJan. 1, 2008 2,573 5,110 7,683

Utilization 705 5,000 5,705

Reversal 577 0 577

Addition 445 2,667 3,112

Dec. 31, 2008 1,736 2,777 4,513

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Litigationrisksconsistofvariouslegaldisputesof1&1InternetandAdLINK.

Otheraccrualsreferredmainlytoprovisionsforimpendinglossesandobligationstojointventures.Inthepreviousyear,otheraccruedliabilitiesreferredmainlytoanindemnitycommitmentforajointventure.

36 Other liabilities

2008 Dk

2007 Dk

Other current liabilities

- Liabilities to the tax office 20,929 19,222

- Salary and social security liabilities 11,027 11,764

- Liability from interest hedging 6,671 0

- Option agreement 6,425 2,663

- Marketing and selling expenses / commissions

6,133

7,387

- Transaction costs for sale of shares 2,153 2,153

- Legal and consulting fees, auditing fees

1,816 3,125

- Indemnity commitment 0 5,000

- Loans received from associated companies

0

2,983

- Purchase price for acquisition of shares

0 1,836

- Others 6,611 4,110

Total 61,765 60,243

Liabilitiestothetaxofficemainlyrelatetosalestaxliabilities.

Theliabilityfrominteresthedgingresultsfromanegativemarketvalueasofthebalancesheetdate.

Theliabilityfromanoptionagreementinfiscalyear2008isinconnectionwiththevaluationofawrittencalloptionregardingtheacquisitionofsharesinfree-netAG.PleaseseeNote42formoredetails.

Transactioncostsforthesaleofsharesrefertothesaleofsharesintwenty4helpKnowledgeServiceAG.

Forfurtherdetailsontheindemnitycommitmentforajointventureandtheloanreceivedfromanassociatedcompany,pleaserefertoNote42.

Thepurchasepricefortheacquisitionofsharesrefer-redtoaforwardpurchaseagreementinconnectionwiththepurchaseoffurthersharesinInterNetXGmbH.,whichwassettledincashinfiscalyear2008.

Thenon-currentliabilitiesofC10,892k(prioryear:C886k)resultmainlyfromminorityinterestsofthepartnershipsEFFNo.2andEFFNo.3.

37 Employee stock ownership plansTheUnitedInternetGrouphasvariousplanswhichallowexecutivesandmanagerstoparticipateintheCompany’sprofits.Alloftheseplansaretreatedasequity-settledshared-basedpaymenttransactions.

UnitedInternetAG

Convertible bondsInaccordancewiththeresolutionpassedbytheshare-holders’meetingonMay16,2003,convertiblebondsmaybeissuedtoemployeesoftheCompanyandofsubsidiariesoftheCompanyandtoexecutivebodymembersofsubsidiariesoftheCompany.ConditionalcapitalofC6,000kwascreatedforthispurpose.

Theconvertiblebonds,whichbearinterestof3.5%perannum,maybeexchangedasawholeorinpartforsharesinUnitedInternetAG.EachC1nominalamountoftheconvertiblebondscanbeexchangedfor4regis-teredshares(followingthesharesplit).

Theauthorizedsubscribersareentitled,afterspecifiedperiods,toconverttheconvertiblebondsinfullorparttosharesintheCompany.Intheeventthatthiscon-versionoptionisexercised,anadditionalpaymentincashistobemadetoacquireeachno-parshare;thisistheamountbywhichtheconversionpriceexceedsonequarterofthenominalamountoftheconvertiblebond(followingthesharesplit).

Upto25%maybeconvertedattheearliest24monthsafterthedateofissueoftheconvertiblebonds;upto50%(i.e.includingthepreviouslyexercisedconversionoptions)attheearliest36monthsafterthedateofissueoftheconvertiblebonds.Atotalofup75%maybeexercisedattheearliest48monthsafterthedateofissueoftheconvertiblebonds;thefullamountmaybe

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exercisedattheearliest60monthsafterthedateofissueoftheconvertiblebonds.

UsinganoptionpricingmodelinaccordancewithIFRS2,thepersonnelexpenseforconvertiblebondsamoun-tedtoC129k(prioryear:personnelincomeofC48k).Thecompensationexpenseforthisemployeestockownershipplanisincludedinadministrativeexpenses.

UsinganoptionpricingmodelinaccordancewithIFRS2(“Black-Scholes”stockoptionpricingmodel),thefairvalueofoptionsconnectedwiththeconversionrightswasdeterminedasisshowninthetableabove.

AdLINKInternetMediaAG

Convertible bondsInaccordancewiththeresolutionpassedbytheextra-ordinaryshareholders’meetingonApril4,2000,convertiblebondsmaybeissuedtomembersoftheManagementBoardandotherexecutivesoftheCompanyandofsubsidiariesoftheCompanyandtoexecutivebodymembersofsubsidiariesoftheCompany.

EverynominalamountofC1ofapartiallyconvertiblebondcanbeconvertedintoano-parshareinAdLINKInternetMediaAGhavinganaccountingshareinthecapitalstockofC1.Ifconverted,acashpremiumintheamountofthedifferencebetweenC1andtheconver-sionpricehastobepaid.TheconversionpriceisthecashsettlementpriceoftheAdLINKInternetMediaAGshareasrecordedduringtradeintheelectronictradingsystemofDeutscheBörseAGatthetimetheconvert-iblebondwasissued.

A20%portionofthecompany’sconvertiblebondsmaybeconvertedintosharesinthecompanynoearlier

than12monthsafterthedateofissue.Upto40%maybeconvertednoearlierthan24months,upto70%noearlierthan36months,andthewholeamountnoearlierthan48monthsaftertheywereissued.

Inaccordancewiththeresolutionpassedbytheannualshareholders’meetingonMay17,2004,convertiblebondsmaybeissuedtoemployeesofthecompanyandofsubsidiariesofthecompany,aswellastomembersofthecompany’sManagementBoardandexecutivebodymembersofsubsidiariesofthecompany.

EverynominalamountofC1ofapartiallyconvertiblebondcanbeexchangedfor10no-parshareshavinganaccountingshareinthecapitalstockofC1each.Iftheconversionoptionisexercised,anadditionalcashpay-menthastobemadeintheamountbywhichthecon-versionpriceexceedsonetenthoftheparvalueoftheconvertiblebond.Theconversionpricecorrespondsto120%ofthemarketprice,calculatedastheaverageoftheclosingpriceofthecompanyshareinfloortradingoftheFrankfurtstockexchangeonthelastfivetradingdaysbeforetheconvertiblebondsareissued.

Upto25%maybeconvertedattheearliest24monthsafterthedateofissueoftheconvertiblebonds;upto50%(i.e.includingthepreviouslyexercisedconversionoptions)attheearliest36monthsafterthedateofissueoftheconvertiblebonds.Atotalofup75%maybeexercisedattheearliest48monthsafterthedateofissueoftheconvertiblebonds;thefullamountmaybeexercisedattheearliest60monthsafterthedateofissueoftheconvertiblebonds.

UsinganoptionpricingmodelinaccordancewithIFRS2,thepersonnelexpenseforconvertiblebondsamoun-tedtoC70k(prioryear:C180k).Thecompensationexpenseforthisemployeestockownershipplanisincludedinadministrativeexpenses.

Valuation parametersIssue date 25.03.2003 31.08.2003 15.08.2004 27.05.2005

Fair value 1,141 Ck 3,211 Ck 411 Ck 932 Ck

Average market value per convertible bond

0.82 C

1.68 C

1.29 C

1.55 C

Dividend yield 0.5 % 0.5 % 1.0 % 1.0 %

Volatility of the share 61 % 52 % 45 % 39 %

Expected term (years) 4 5 5 5

Risk-free interest rate 3.66 % 3.85 % 3.85 % 2.86 %

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UsinganoptionpricingmodelinaccordancewithIFRS2(“Black-Scholes”stockoptionpricingmodel),thefairvalueofoptionsconnectedwiththeconversionrightswasdeterminedshowninthetableabove.

Thechangesintheconvertiblebondsgrantedandout-standingareshownintablebelow.

Asinthepreviousyear,theexercisepriceforoutstan-dingconvertiblebondsofUnitedInternetAGattheendofthereportingperiodwasC4.35.

TheweightedaveragesharepriceforconvertiblebondsofUnitedInternetAGexercisedintheperiodunderreviewamountedtoC4.87.

TheexercisepriceforoutstandingconvertiblebondsofAdLINKInternetMediaAGattheendofthereportingperiodwasbetweenC3.24andC3.60(prioryear:C1.71andC3.60).

TheweightedaveragesharepriceforconvertiblebondsofAdLINKInternetMediaAGexercisedintheperiodunderreviewamountedtoC13.47.

UnitedInternetAG

Option agreementIn2004,anoptionagreementwasconcludedbetweenMr.StéphaneCordierandUnitedInternetAG.Under

United Internet AG AdLINK Internet Media AGAverage Average

Convertible bond strike price (C) Convertible bond strike price (C)

Outstanding as of December 31, 2006 2,702,292 3.81 778,000 3.08

Exercised -278,796 4.35 -85,000 1.71

Exercised -880,000 2.13 -100,000 3.24

Exercised -40,000 3.82 -54,740 3.60

Expired -26,740 4.35 -51,000 1.71

Expired -80,000 3.82 -25,630 3.60

Expired -600,000 5.26 - -

Outstanding as of December 31, 2007 796,756 4.35 461,630 3.37

Exercised -35,212 4.35 -51,250 3.60

Expired -602,740 4.35 -58,250 3.60

Outstanding as of December 31, 2008 158,804 4.35 352,130 3.29

Exercisable as of December 31, 2007

352,508

750

Exercisable as of December 31, 2008 158,804 101,880

Weighted average remaining term (in months)

6

28

Valuation parametersIssue date 02.01.2004 20.04.2005 23.05.2005

Fair value 209 Ck 364 Ck 614 Ck

Average market value per convertible bond

1.23 C

0.91 C

1.71 C

Dividend yield 0.0 % 0.0 % 0.0 %

Volatility of the share 88 % 68 % 68 %

Expected term (years) 4 5 5

Risk-free interest rate 3.85 % 3.50 % 3.50 %

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theprovisionsofthisagreement,Mr.Cordierhastherighttoacquire400,000sharesofAdLINKInternetMediaAGfromtheUnitedInternetAG,dividedintofouroptionsof100,000shares.ThestrikepriceamountstoC1.50pershare,whereby25%ofsharescannotbeacquiredbeforeJuly1,2004,50%notbeforeMarch30,2005,75%notbeforeMarch30,2006and100%notbeforeMarch30,2007.Theoptionsmayonlybeexercisedinfull.Partialexerciseisnotpossi-ble.Nooptionshadbeenexercisedasofthebalancesheetdate.

UsinganoptionpricingmodelinaccordancewithIFRS2,thepersonnelexpenseforoptionsissuedamountedtoC0k(prioryear:C14k).Thecompensationexpenseisincludedinadministrativeexpenses.

UsinganoptionpricingmodelinaccordancewithIFRS2(“Black-Scholes”stockoptionpricingmodel),thefairvalueoftheoptionswasdeterminedasfollows:

Valuation parametersIssue date 24.04.2004

Fair value 543 Ck

Average market value per convertible bond

1.36 C

Dividend yield 0.0 %

Volatility of the share 79 %

Expected term (years) 3

Risk-free interest rate 3.85 %

UnitedInternetAG

Virtual stock optionsTheemployeestockownershipplans2006and2008employvirtualstockoptions(so-calledStockApprecia-tionRights-SARs).SARsrefertothecommitmentofUnitedInternetAG(orasubsidiary)topaythebenefi-ciaryacashamountequivalenttothedifferencebetweenthesharepriceonthedateofgrantingtheoption(strikeprice)andthesharepriceonexercisingtheoption.Theexercisehurdleis120%oftheshareprice,whichiscalculatedastheaverageclosingpriceinelectronictrading(Xetra)oftheFrankfurtStockExchangeoverthetendaysprecedingissuanceoftheoption.Paymentofvaluegrowthtotheentitledpersonislimitedto100%ofthecalculatedshareprice.

AnSARcorrespondstoavirtualsubscriptionrightforoneshareofUnitedInternetAG.However,itisnota

sharerightandthusnota(genuine)optiontoacquiresharesofUnitedInternetAG.UnitedInternetAGretainstheright,however,tofulfillitscommitment(orthecommitmentofasubsidiary)topaytheSARincashbyalsotransferringoneUnitedInternetAGshareperSARfromitsstockoftreasurysharestothebenefi-ciary,atitsowndiscretion.

Inthecaseofstock-basedremunerationplanswhichgranttheCompanythecontractualchoiceofsettlingincashorissuingequityinstruments,theCompanymustdeterminewhetherthereisacurrentcashsettle-mentcommitmentanddisclosethestock-basedremunerationtransactioncorrespondingly.Thereisacurrentcashsettlementcommitmentifthepossibilitytosettlebymeansofequityinstrumentshasnoecono-micsubstance(e.g.becausethecompanyislegallyforbiddentoissueshares),orcashsettlementwascommonbusinesspracticeorthedeclaredcompanyguidelineinthepast,orthecompanygenerallysettlesincashifthebeneficiarysodesires.

Thistransactioniscarriedinthebalancesheetaccor-dingtotheregulationsforstock-basedremunerationplanswithsettlementviaequityinstruments.

Upto25%oftheoptionrightmaybeconvertedattheearliest24monthsafterthedateofissueoftheoption;upto50%(i.e.includingthepreviouslyexercisedoptions)attheearliest36monthsafterthedateofissueoftheoption.Atotalofup75%maybeexercisedattheearliest48monthsafterthedateofissueoftheoption;thefullamountmaybeexercisedattheear-liest60monthsafterthedateofissueoftheoption.

UsinganoptionpricingmodelinaccordancewithIFRS2,thepersonnelexpenseforoptionsissuedamountedtoC2,469k(prioryear:C1,342k).

Usinganoptionpricingmodelonthebasisofabino-minalmodelinaccordancewithIFRS2,thefairvalueofoptionsissuedwascalculatedasisshowninthetableabove.

AdLINKInternetMediaAG

Virtual stock optionsTheemployeestockownershipplan2007employsvir-tualstockoptions(so-calledStockAppreciationRights-SARs).SARsrefertothecommitmentofAdLINKInter-netMediaAG(orasubsidiary)topaythebeneficiaryacashamountequivalenttothedifferencebetweenthe

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issuepriceonthedateofgrantingtheoptionandthemedianclosingpriceoftheCompany’sshareinelectro-nictrading(Xetra)oftheFrankfurtStockExchangeonthelast10tradingdaysbeforeexercisingtheoption.TheissuepriceisthemedianclosingpriceoftheCompany’sshareinelectronictrading(Xetra)oftheFrankfurtStockExchangeonthelast10tradingdaysbeforeexercisingtheoption,plusasurchargeof20%.Paymentofvaluegrowthtotheentitledpersonislimi-tedto100%ofthestrikeprice.

Thistransactioniscarriedinthebalancesheetaccor-dingtotheregulationsforstock-basedremunerationplanswithsettlementviaequityinstruments.

Upto25%oftheoptionrightmaybeconvertedattheearliest24monthsafterthedateofissueoftheoption;upto50%(i.e.includingthepreviouslyexercisedoptions)attheearliest36monthsafterthedateofissueoftheoption.Atotalofup75%maybeexercisedattheearliest48monthsafterthedateofissueoftheoption;thefullamountmaybeexercisedattheear-liest60monthsafterthedateofissueoftheoption.

Asopposedtostandardconditions,differenttimehurdleswereagreedforthetrancheofMarch6,2008.Upto50%oftheoptionrightmaybeexercisedatthe

earliestonApril1,2008andthefullamountattheearliestonApril1,2009.

UsinganoptionpricingmodelinaccordancewithIFRS2,thepersonnelexpenseforoptionsissuedamountedtoC1,352k(prioryear:C117k).

Usinganoptionpricingmodelonthebasisofabino-minalmodelinaccordancewithIFRS2,thefairvalueofoptionsissuedwascalculatedasisshownbelow.

Thechangesinthevirtualstockoptionsgrantedandoutstandingareshowninthetableabove.

ThemeanweightedsharepriceforStockAppreciationRightsofUnitedInternetAGexercisedintheperiodunderreviewamountedtoC13.89.

Assumptionsusedinevaluatingoptions

Theanticipatedmaturitiesofconversionrightsfromconvertiblebondsandvirtualstockoptionsarebasedonhistoricaldataanddonotnecessarilycorrespondtotheactualexercisebehaviorofthebeneficiaries.Expectedvolatilityisbasedontheassumptionthathistoricalvolatilityisanindicatoroffuturetrends.

Valuation parametersIssue date 30.05.2006 14.08.2006 14.03.2007 12.11.2007 29.01.2008 30.05.2008 20.11.2008

Fair value 1,000 Ck 1,790 Ck 1,200 Ck 1,394 Ck 596 Ck 1,309 Ck 1,424 Ck

Average market value per convertible bond

2.50 C

2.24 C

3.00 C

3.49 C

2.98 C

3.27 C

0.95 C

Dividend yield 1.0 % 1.0 % 1.4 % 1.6 % 1.5 % 1.4 % 0.0 %

Volatility of the share 36 % 39 % 44 % 46 % 46 % 46 % 55 %

Expected term (years) 5 5 5 5 5 5 5

Risk-free interest rate 3.65 % 3.84 % 3.83 % 3.91 % 3.64 % 4.30 % 2.63 %

Valuation parametersIssue date 03.09.2007 28.11.2007 22.02.2008 06.03.2008 30.10.2008

Fair value 863 TC 723 TC 231 TC 870 TC 12 TC

Average market value per convertible bond

3,75 C

3,61 C

3,86 C

4,35 C

1,65 C

Dividend yield 0,0 % 0,0 % 0,0 % 0,0 % 0,0 %

Volatility of the share 52 % 55 % 40 % 39 % 53 %

Expected term (years) 5 5 5 5 5

Risk-free interest rate 4,00 % 3,86 % 3,61 % 3,51 % 3,24 %

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Actualvolatilitycanthusdifferfromtheassumptionsmade.

38 Deferred tax liabilities

PleaserefertoNote16fordetailsondeferredtaxliabilities.

39 Capital stock

Onthebalancesheetdate,fullypaidcapitalstockamountedtoC251,469,184,dividedinto251,469,184registeredshareseachhavingatheoreticalshareinthecapitalstockofC1.

Throughpartialuseofconditionalcapital,thecapitalstockoftheCompanywasincreasedinDecember2008byC35,212,fromC251.433.972toC251,469,184,byissu-ing35,212new,no-parregisteredsharesforcashcontri-bution.Thecashcontributionrepresentedtheconver-sionofconvertiblebondsinfiscalyear2008issuedundertheCompany’semployeestockownershipplan.

Infiscalyear2008,UnitedInternetAGacquired22,000,000treasuryshares(prioryear:18,000,000),or8.75%(prioryear:7.16%)ofcurrentcapitalstock(prioryear:3.29%).Treasurysharesreduceequitycapitalarebearnodividendrights.

Authorizedcapital

TheCompany’sManagementBoardisauthorized,subjecttotheapprovaloftheSupervisoryBoard,toincreasethecapitalstockbyJune12,2011byamaxi-mumofC124,550,402byissuingononeormoreoccasionsnewno-parcommonsharesinreturnforcashand/ornon-cashcontributions.

Inthecaseofacapitalincreaseinreturnforcashcontributions,theshareholdersshallbegrantedsubscriptionrights.However,theManagementBoardisauthorized,subjecttotheapprovaloftheSupervi-soryBoard,toexcludetherighttosubscribeinthecaseoffractionalamountsandalsotoexcludetherighttosubscribetotheextentthatthisshouldbenecessaryinordertograntsubscriptionrightsfornewsharestobearersofwarrants,convertiblebondsorwarrantbondsissuedbytheCompanyorsubordinatedGroupcompaniesintheamounttowhichtheyareentitledonconversionoftheirconversionorwarrantrightsorfulfillmentoftheirconversionobligation.TheManage-mentBoardisalsoauthorized,subjecttotheapproval

United Internet AG AdLINK Internet Media AGAverage Average

SAR strike price (C) SAR strike price (C)

Outstanding as of December 31, 2006 1,200,000 10.36 0

Issued 400,000 13.74 230,000 15.51

Issued 400,000 15.77 200,000 17.41

Outstanding as of December 31, 2007 2,000,000 12.21 430,000 16.39

Issued 1,000,000 12.85 60,000 18.15

Issued 400,000 13.89 200,000 18.60

Issued 1,495,000 6.07 7,200 7.43

Exercised -100,000 11.30

Expired -300,000 9.89 -70,000 15.51

Outstanding as of December 31, 2008 4,495,000 10.56 627,200 17.26

Exercisable as of December 31, 2007

0

0

Exercisable as of December 31, 2008 0 0

Weighted average remaining term (in months)

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oftheSupervisoryBoard,toexcludetherightofshare-holderstosubscribeinthecasethattheissueamountofthenewsharesisnotsubstantiallylowerthanthequotedmarketpriceofCompanyshareswiththesametermsatthetimeoffinalizingtheissueamountandthesharesissuedinaccordancewithSec.186(3)Sentence4AktGdonotexceedintotal10%ofcapitalstock.SharessoldorissuedduetootherauthorizationsindirectorcorrespondingapplicationofSec.186(3)Sentence4AktGunderexclusionofsubscriptionrightsaretobeaccountedforinthislimitation

Furthermore,theManagementBoardisauthorized,subjecttotheapprovaloftheSupervisoryBoard,toexcludetherightofshareholderstosubscribeinthecaseofcapitalincreasesinreturnfornon-cashcontri-butions,especiallyinconnectionwiththeacquisitionofcompanies,shareholdingsorassets.

Conditionalcapital

Therearethefollowinglotsofconditionalcapital: ThecapitalstockhasbeenconditionallyincreasedbyuptoafurtherC4,868,364,dividedinto4,868,364no-parregisteredshares.Theconditionalcapitalincreaseisearmarkedforconversionoptionstobegrantedtobearersofconvertiblebonds,whichtheshareholders’meetingonMay16,2003authorizedtheManagementBoardtoissue.Theshareswillparticipateinprofitsfromthebeginningofthefiscalyearinwhichtheyarecreatedbyexercisingtheconversionrights.

ThecapitalstockhasbeenconditionallyincreasedbyuptoafurtherC3,000,000,dividedinto3,000,000no-parregisteredshares.Theconditionalcapitalincreaseisearmarkedforconversionoptionstobegrantedtobearersofconvertiblebonds,whichtheshareholders’meetingonMay18,2005authorizedtheSupervisoryBoardtoissue.Theshareswillparticipateinprofitsfromthebegin-ningofthefiscalyearinwhichtheyarecreatedbyexerciseoftheconversionoption.

ThecapitalstockhasbeenconditionallyincreasedbyuptoafurtherC92,000,000,dividedinto92,000,000no-parregisteredshares.Theconditio-nalcapitalincreaseisearmarkedforsharestobegrantedtobearersorholdersofwarrantorconver-tiblebonds,whichtheshareholders’meetingonMay18,2005authorizedtheCompanyorasubordi-natedGroupcompanytoissue,providingtheissueisinreturnforcashandthewarrantorconvertible

bondsarenotservicedfromthestockoftreasurysharesorapprovedcapital.

InaccordancewithSec.71(1)No.8AktG,theCompanyisauthorizeduntilNovember26,2009toacquiretreasurysharesofuptotenpercentofitscapitalstock.Thepricefortheacquisitionofthesesharesmaynotbemorethan10%lowerorhigherthanthestockmarketprice.Asofthebalancesheetdate,theCompanyheld22,000,000treasuryshares.TreasurysharescanbeusedforallpurposesnamedintheauthorizationoftheAnnualShareholders’MeetingofMay27,2008.

40 Reserves

AsofDecember31,2008,capitalreservesamountedtoC163,896k(prioryear:C160,095k).TheincreaseresultsmainlyfromtheexerciseofconversionrightsfromtheemployeestockownershipplanamountingtoC118k(prioryear:C2,043k),aswellasfromthecorrespon-dingbookingofpersonnelexpensesfromtheemplo-yeestockownershipplantotalingC3,867k(prioryear:C1,605k).

Asofthebalancesheetdate,therevaluationreserveconsistedofthefollowingitems:

2008 Dk

2007 Dk

- Afilias shares 7,189 4,805

- EFF No. 3 2,697 0

- EFF No. 1 116 0

- Goldbach shares 0 7,650

- Drillisch shares 0 -3,044

Total 10,002 9,411

Thechangeintherevaluationreserveresultsmainlyfromthereclassificationoftemporaryvalueadjust-mentsrecognizeddirectlyinequityinthepreviousyear.Profitandlossfromsubsequentvaluationtofairvaluearerecognizednetinequity–i.e.lessdeferredtaxes–andafterminorityinterests.DuetothenolongertemporaryvalueadjustmentsofsharesinGoldbachandDrillisch,therewasareclassificationfromtherevaluationreserveandanexpensewasrecognizedintheincomestatement.PleaseseeNote26.

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41 Additional details on financial instruments

Thetableonthenextpageshowsthecarryingvaluesforeachcategoryoffinancialassetsandliabilitiesforfiscalyear2008.

Cashandcashequivalents,tradeaccountsreceivableandtradeaccountspayablemostlyhaveshortremai-ningterms.Theircarryingvaluesonthebalancesheetdatearethussimilartofairvalue.

Tradeaccountspayablegenerallyhaveshortremai-ningterms.Theircarryingvaluesonthebalancesheetdatearethussimilartofairvalue.

Financialliabilitiescarriedatfairvaluethroughprofitorlossmainlyrefertoaderivativefinancialinstru-mentresultingfromadeliveryobligationforsharesinlistedcompaniesandaninteresthedgingtransaction.

Thetableonthepageafternextshowsthecarryingvaluesforeachcategoryoffinancialassetsandliabilitiesforfiscalyear2007:

Derivativefinancialinstruments

TheUnitedInternetGroupholdsthefollowingderivativefinancialinstruments:

OnOctober7,2008UnitedInternetAGconcludedtwointerestswapagreements.ThenominalvolumeofeachamountstoC100,000kwithatermuntilOctober9,2013.Theinteresthedgingagreementscanbetermina-tedoncebythecreditinstitutesinvolvednosoonerthaninOctober2010.Theinteresthedgingtransac-tionswereconcludedtohedgeagainsttheinterestrisk,butdonotmeettherequirementsofIAS39onHedgeAccountingandwererecognizedatfairvaluethroughprofitandloss.ThenegativefairvalueasofthebalancesheetdateamountstoC6,671kandwasdisclo-sedunder“Currentotherliabilities”.

InacontractdatedDecember16,2008,UnitedInternetAGsubmittedanoffertoacontractualpartner,limitedtoFebruary28,2009,topurchase5,399,409sharesinfreenetAGatanagreedprice.ThenegativefairvalueofthewrittencalloptionamountstoC6,425kasofthebalancesheetdateandwasdisclosedunder“Currentotherliabilities”.Thecontractualpartnerdidnotexer-

cisethecalloptionbytheendoftheterminFebruary2009.

Inaddition,theUnitedInternetGrouphasvariousfirstrefusalrightsandcalloptionsforthepurchaseoffurthersharesincertaininvestments,someofwhicharetiedtocertainprerequisitesandconditions.Theunderlyingpurchasepricesaremainlythefairvaluesofthesharestobepurchased,sothatnosignifi-cantfinancialassetsorliabilitiesarisefromtheseagreements.

42 Transactions with related partiesIAS24definesrelatedpartiesasthosepersonsandcompaniesthatcontrolorcanexertasignificantinfluenceovertheotherparty.Accordingly,UnitedInternetAGissubjecttosignificantinfluencefromMr.RalphDommermuth,themajorshareholder,aswellasfromthemembersoftheManagementBoardandSupervisoryBoard.

UnitedInternet’spremisesinMontabaurareleasedfromMr.RalphDommermuth,theChiefExecutiveOfficerandamajorshareholderoftheCompany.ThecorrespondingleaseagreementsrununtilJune2009,February2015andDecember2016.TheresultingrentexpensesarecustomaryandamountedtoC1,609kinfiscalyear2008(prioryear:C1,561k).

Attheordinaryshareholders’meetingonMay18,2005,Mr.KurtDobitsch(chairman),Mr.BernhardDorn†andMr.MichaelScheerenwereelectedonceagainasmembersoftheCompany’sSupervisoryBoard.

Ourlong-standingSupervisoryBoardmemberMr.BernhardDorn†passedawayonFebruary10,2008.FollowingaproposalbytheSupervisoryBoardandManagementBoard,Mr.Kai-UweRickewasappointedacc.toSec.104AktGbythedistrictcourtofMontabaurasthenewmemberoftheCompany’sSupervisoryBoardonFebruary20,2008.TheappointmentwasmadefortheperioduptothenextAnnualSharehol-ders‘Meeting.AttheAnnualShareholders‘MeetingofMay27,2008,Mr.Kai-UweRickewaselectedbytheshareholderstotheSupervisoryBoard.Mr.RickewaselectedfortheperiodendingwiththeAnnualShare-holders‘MeetingwhichadoptstheresolutiontoreleasetheSupervisoryBoardmembersfromtheirresponsibi-lityforfiscalyear2009.

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Measured acc. to IAS 392008

in Ck

Valuation category acc.

to IAS 39

Carrying value on

Dec. 31, 2008

Amortized

cost

Fair value not through profit or loss

Fair value through pro-

fit or loss

Fair value on Dec. 31, 2008

Financial assets

Cash and cash equivalents lar 55,372 55,372 55,372

Trade accounts receivable lar 119,066 119,066 119,066

Loans to joint ventures lar 0 0 0

Other assets lar 12,737 12,737 12,737

Other financial assets lar/afs

Others lar 2,287 2,287 2,287

Investments afs 70,498 70,498 70,498

Financial liabilities

Trade accounts payable flac 171,423 171,423 171,423

Liabilities due to banks flac 544,370 544,370 544,370

Other liabilities flac/hft 71,977 58,881 13,096 71,977

Convertible bonds flac 74 74 74

Of which aggregated acc. to valuation categories:

Loans and receivables lar 189,462 189,462 0 0 189,462

Available-for-sale afs 70,498 0 70,498 0 70,498

Financial liabilities measured at amortized cost

flac

774,748

774,748

0

0

774,748

Held-for-trading hft 13,096 13,096 13,096

Net result acc. to valuation categories for fiscal year 2008 Valuation

category acc. to IAS 39

From in-terest and dividends

Net profits and losses from subsequent valuation

in Ck Fair valueCurrency

translationValue adju-

stedFrom

disposal Net resultLoans and receivables (lar) lar 2,160 - 544 -22,908 - -20,204

Available-for-sale (afs) afs - - - - - 0

- erfolgsneutral - -19 - - - -19

- erfolgswirksam 1,768 -42,379 - - - -40,611

Financial liabilities measured at amortised cost (flac)

flac

-33,498

-

233

-

-

-33,265

Held-for-trading (hft) hft - -822 - - - -822

-29,570 -43,220 777 -22,908 0 -94,921

Thefollowingnetresultswerestatedfortheindividualcategoriesoffinancialinstrumentsacc.toIAS39infiscalyear2008:

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Measured acc. to IAS 392007

in Ck

Valuation category acc. to IAS 39

Carrying value on Dec. 31, 2007

Amortized cost

Fair value not through profit or loss

Fair value through pro-fit or loss

Fair value on Dec. 31, 2007

Financial assets

Cash and cash equivalents lar 59,770 59,770 59,770

Trade accounts receivable lar 123,788 123,788 123,788

Loans to joint ventures lar 4,007 4,007 4,007

Other assets lar 16,371 16,371 16,371

Other financial assets lar/afs

Others lar 5,395 5,395 5,395

Investments afs 62,472 62,472 62,472

Financial liabilities

Trade accounts payable flac 233,307 233,307 233,307

Liabilities due to banks flac 371,105 371,105 371,105

Other liabilities flac/hft 60,243 57,580 2,663 60,243

Convertible bonds flac 245 245 245

Of which aggregated acc. to valuation categories

Loans and receivables lar 209,331 209,331 209,331

Available-for-sale afs 62,472 62,472 62,472

Financial liabilities measured at amortized cost

flac

662,237

662,237

662,237

Held-for-trading hft 2,663 2,663 2,663

Net result acc. to valuation categories for fiscal year 2007 Valuation

category acc. to IAS 39

From in-terest and dividends

Net profits and losses from subsequent valuation

in Ck Fair valueCurrency

translationValue

adjustedFrom

disposal Net resultLoans and receivables (lar) lar 1,426 - -260 -13,690 - -12,524

Available-for-sale (afs) afs - - - - - 0

- erfolgsneutral - 9,274 - - - 9,274

- erfolgswirksam 623 - - - - 623

Financial liabilities measured at amortised cost (flac)

flac

-6,674

-

-111

-

-

-6,785

Held-for-trading (hft) hft - -2,663 - - - -2,663

-4,625 6,611 -371 -13,690 0 -12,075

Thefollowingnetresultswerestatedfortheindividualcategoriesoffinancialinstrumentsacc.toIAS39infiscalyear2007:

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Infiscalyear2008,themembersoftheSupervisoryBoardalsoheldseatsonsupervisoryboardsorsimilarcommitteesofthefollowingcompanies:

KurtDobitsch 1&1InternetAG,Montabaur NemetschekAG,Munich(Chairman) BechtleAG,Gaildorf docuwareAG,Munich HybrisAG,Zürich/Switzerland GraphisoftS.E,Budapest/Hungary

Kai-UweRicke 1&1InternetAG,Montabaur APInvestmentEuropeLimited,Guernsey(Chairman)

AssicurazioniGeneraliS.p.A,Trieste/Italy easycashGmbH,Eschborn KabelBaden-WürttembergGmbH&Co.KG,Heidelberg

SaudiOgerTelecomLtd.,Dubai/EmiratDubai

MichaelScheeren 1&1InternetAG,Montabaur(Chairman) AdLINKInternetMediaAG,Montabaur(Chairman) UnitedInternetMediaAG,Montabaur(DeputyChairman)

GoldbachMediaAG,Küsnacht-Zürich/Switzerland

ThemembersoftheSupervisoryBoardreceivecom-pensationconsistingofafixedelementandavariableelementwhichdependsontheCompany‘ssuccess.ThefixedremunerationforanordinarymemberoftheSupervisoryBoardamountstoC20kperfullfiscalyear.ThechairmanoftheSupervisoryBoardreceivesthedoubleamount.ThevariableelementforeachmemberoftheSupervisoryBoard,includingthechair-man,amountstoC2kforeverycentwhichexceedstheconsolidatedearningspersharevalueofC0.10forUnitedInternetAG,calculatedaccordingtoIFRS.

Thefollowingtableprovidesdetailsonthecompen-sationreceivedbymembersoftheSupervisoryBoard:

2008 Fixed Dk

Variable Dk

Total Dk

Kurt Dobitsch 40 - 40

Kai-Uwe Ricke 20 - 20

Michael Scheeren 20 - 20

80 0 80

2007 Fixed Dk

Variable Dk

Total Dk

Kurt Dobitsch 40 72 112

Bernhard Dorn † 20 72 92

Michael Scheeren 20 72 92

80 216 296

Therearenosubscriptionrightsorshare-basedpaymentsformembersoftheSupervisoryBoard.

TheSupervisoryBoardisresponsiblefordeterminingtheremunerationoftheManagementBoard.ThemembersoftheManagementBoardarecompensatedaccordingtoperformance.Thiscompensationconsistsofafixedandavariableelement(bonus).Atargetremunerationfigureisagreedforthefixedcomponentandthebonus,whichisregularlyreviewed.Thelastreviewwasmadeinfiscalyear2008.Thefixedremun-erationcomponentispaidmonthlyasasalary.Thesizeofthebonusdependsonreachingcertain,fixedfinan-cialtargetsagreedatthebeginningofthefiscalyear.Thesetargetsarebasedmainlyonsalesandearningsfigures.Thetargetattainmentcorridorisgenerallybetween80%to120%.Nobonusispaidbelow80%oftheagreedtargetandthebonuscalculationendsat120%oftheagreedtarget.Nosubsequentamendmentoftheperformancetargetsisallowed.Thereisnominimumguaranteedbonus.PaymentisgenerallymadeaftertheannualfinancialstatementshavebeenadoptedbytheSupervisoryBoard.Infiscalyear2008,apreliminaryremunerationofC1,000k(prior-year:C953k)wasagreedfortheManagementBoard.Ofthistotal,C600kor60%wasfixedandC400kor40%variable.

TherearenoretirementbenefitsfromtheCompanytomembersoftheManagementBoard.

Infiscalyear2008,Mr.NorbertLangwasgranted800,000virtualstockoptions(SARs)atanexercisepriceofC12.85.Whenthevirtualstockoptionsweregranted,theirfairvalueamountedtoC2,384k.

Thefollowingtableprovidesdetailsonthecompensa-tionreceivedbymembersoftheManagementBoard:

2008 Fixed Dk

Variable Dk

Total Dk

Ralph Dommermuth 300 211 511

Norbert Lang 300 189 489

600 400 1,000

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2007 Fixed Dk

Variable Dk

Total Dk

Ralph Dommermuth 200 242 442

Norbert Lang 200 293 493

400 535 935

ThenumberofsharesinUnitedInternetAGheldbymembersoftheManagementBoardandtheSuper-visoryBoardisgiveninthetablebelow.

TheUnitedInternetGroupcanalsoexertsignificantinfluenceonitsassociatedcompaniesandjointventures.

Conditionsoftransactionswithrelatedparties

Salestoandpurchasesfromrelatedpartiesareconductedatstandardmarketconditions.Theopenbalancesatyear-endareunsecured,non-interest-bea-ringandsettledincash.Therearenoguaranteesforreceivablesfromorliabilitiesduetorelatedparties.Noallowanceswererecognizedforreceivablesfromrelatedpartiesinfiscalyear2008orthepreviousyear.Animpairmenttestisconductedannually.Thisinclu-desanassessmentofthefinancialpositionoftherela-tedpartyandthedevelopmentofthemarketinwhichtheyoperate.

Infiscalyear2008,interestincomeofC33k(prioryear:C7k)resultedfromaloanofC4,000kgrantedinthepreviousyeartoMSPHoldingGmbH.Theloanwasrepaidinfullduringtheperiodunderreview.AloangrantedduringtheyearresultedininterestincomeofC511k.TheloanofC2,800kreceivedinthepreviousyearfromEuropeanFoundersFundGmbH&Co.Betei-

ligungsKGNo.1wasrepaidinfullatthebeginningoftheperiodunderreview.Therewerenomoreinterestpaymentsinfiscalyear2008(prioryear:C183k).

TheobligationfromanindemnityobligationofC10,000ktoMSPBeteiligungsGmbH,awhollyownedsubsidiaryofMSPHoldingGmbH,wasrepaidinfulloroffsetinfiscalyear2008.

OnDecember29,2008,UnitedInternetAGacquired10,798,817sharesinfreenetAGfromMSPHoldingGmbH,equivalentto8.43%ofvotingrights,atapriceofC3.38pershare.Atthesametime,DrillischAGwasgrantedtherighttoacquire5,399,409sharesinfreenetAGfromUnitedInternetAGbyFebruary28,2009.ThiscalloptioninfavorofDrillischAGhadafairvalueofC6,425kasofDecember31,2008.Thefairvaluewascal-culatedusinganoptionpricingmodel.Avolatilityof123.11%andabasicpriceofC3.38persharewasassu-med.Asoftheacquisitiondate,thefairvalueofafree-netshareamountedtoC4.27.

AspartofthecooperationwithProSiebenSat.1MediaAG,1&1InternetAGownsaninterestinthejointventuremaxdomeGmbH&Co.KG,whichoperatesthevideo-on-demandportalmaxdome.Aspartofthiscooperation,1&1InternetAGprovideshostingandotherservices.TherevenuesgeneratedbyorderandonaccountofmaxdomewereforwardedtomaxdomeGmbH&Co.KG.Moreover,1&1InternetAGhasunder-takentoprovidemaxdomeGmbH&Co.KG,undercertaincircumstances,withsubordinatedpartnerloansofuptoC3,000k.AsofDecember31,2008,C400kofthiscreditfacilityhadalreadybeenutilized.TheloanservestofinancetheoperatingbusinessofmaxdomeGmbH&Co.KGandhasatermuntilDecem-ber31,2012.Nocollateralwasprovidedfortheloan.

Shareholding January 1, 2008 January 1, 2008 December 31, 2008 December 31, 2008Management Board direct indirect total direct indirect total

Ralph Dommermuth 17,600,000 70,400,000 88,000,000 17,600,000 74,400,000 92,000,000

Norbert Lang - 576,128 576,128 - 576,128 576,128

17,600,000 70,976,128 88,576,128 17,600,000 74,976,128 92,576,128

Supervisory Board direct indirect total direct indirect total

Kurt Dobitsch - - - - - -

Kai-Uwe Ricke - - - - - -

Michael Scheeren 700,000 - 700,000 700,000 - 700,000

700,000 - 700,000 700,000 - 700,000

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Thetablebelowpresentstheoutstandingbalancesandtotaltransactionsvolumeswithassociatedcompaniesandjointventuresintherespectivefiscalyear.

43 Objectives and methods of financial risk management

Principlesofriskmanagement

TheriskmanagementsystemintroducedbytheUnitedInternetGroupisbasedontheCOSO-ERMframeworkandisdescribedindetailintheManagementReport.

TheprinciplesoffinancepolicyaresetbytheManage-mentBoardandmonitoredbytheSupervisoryBoard.CertaintransactionsrequirethepriorapprovaloftheSupervisoryBoard.

ThemainfinancialliabilitiesusedbytheGroupincludebankloansandoverdraftfacilities,convertiblebonds,tradeaccountspayableandotherfinanciallia-bilities.

TheGroupholdsvariousfinancialassetswhichresultdirectlyfromitsbusinessactivities.Theyconsistmainlyoftradeaccountsreceivable,available-for-salefinancialinvestmentsandshort-termdeposits.Asof

thebalancesheetdate,theGroupmainlyheldprimaryfinancialinstruments.Inaddition,therearederivativefinancialinstruments,whichconsistmainlyofinterestswapsandsupplyandacquisitionobligationsforsharesinlistedcompanies.

Theaimoffinancialriskmanagementistolimittheserisksthroughongoingoperatingandfinancialactivi-ties.TheCompanyisherebyexposedtocertainriskswithregardtoitsassets,liabilitiesandplannedtrans-actions,especiallyliquidityrisksandmarketrisks,asdescribedbelow.

Liquidityrisk

Asinthepreviousyear,thegeneralliquidityriskofUnitedInternetconsistsofthepossibilitythattheCompanymaynotbeabletomeetitsfinancialobliga-tions,suchastheredemptionoffinancialdebts.TheCompany’sobjectiveisthecontinualcoverageofitsfinancialneedsandsecuringflexibilitybyusingover-draftfacilitiesandloans.

Ourglobalcashrequirementsandsurplusesaremana-gedcentrallybyourcashmanagementsystem.Bynet-tingthesecashrequirementsandsurpluseswithintheGroup,wecanminimizetheamountofexternalbanktransactions.Nettingismanagedviaourcashpoolingprocess.TheCompanyhasestablishedstandardizedprocessesandsystemstomanageitsbankaccountsandinternalnettingaccountsaswellasfortheexecu-tionofautomatedpaymenttransactions.

Inadditiontooperatingliquidity,UnitedInternetalsoholdsotherliquidityreserves,availableatshortnotice.Theseliquidityreservesconsistofsyndicatedcreditlineswithvaryingterms.

Purchases/services from related parties

Sales/services to related parties

Liabilities due to related parties

Receivables from related parties

2008 Dk

2007 Dk

2008 Dk

2007 Dk

2008 Dk

2007 Dk

2008 Dk

2007 Dk

maxdome GmbH & Co. KG 3,806 - - - 2,915 - - -

Other 1,122 508 38 - 238 30 13 1

Interest income

Interest expense

2008 Dk

2007 Dk

2008 Dk

2007 Dk

MSP Holding GmbH 544 7 - -

maxdome GmbH & Co. KG 4 - - -

EFF Nr. 1 - - - 183

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Thetablebelowshowsallcontractuallyfixedpay-mentsforredemption,repaymentsandinterestforfinancialliabilitiescarriedinthebalancesheetasofDecember31,2008and2007.

PleaserefertoNote32fordetailsoninterestandredemptionpaymentsforliabilitiestobanks.Itisassu-medthattherevolvingsyndicatedloanwillberepaidbytheendofitstermin2012.Theobligationstomino-rityshareholdersoftheCompany’sinvestmentfundsEFFNo.2andEFFN.3disclosedunder“Otherliabili-ties”areonlydueonthesaleoftheunderlyingportfo-liocompanies.

TheCompanyhasnosignificantconcentrationofliquidityrisks.

Marketrisks

TheactivitiesofUnitedInternetaremainlyexposedtofinancialrisksfromchangesininterestrates,exchangerates,stockexchangeprices,andcreditorcontingencyrisks.

InterestriskTheGroupisexposedtointerestrisksasthemajorshareofitsborrowingasofthebalancesheetdatebearsvariableinterestrateswithvaryingterms.Aspartofliquidityplanningweconstantlymonitorthevariousinvestmentandborrowingpossibilities.Borro-wingrequirementsaremetbyusingsuitableinstru-

mentstomanageliquidity,whilesurpluscashisinve-stedonthemoneymarkettoachievethebestpossiblereturn.Duetodevelopmentsontheglobalfinancemarkets,theinterestriskhasincreasedsincetheprevi-ousyear.

Infiscalyear2008,theCompanyconcludedtwointerestswapswithatotalnominalamountofC200,000kinordertoreduceitsinterestrisk.LiabilitiesduetobanksamountingtoC544,370kisthuscoveredtoaround37%.TheagreementshaveatermuntilOctober9,2013andcanbeunilaterallyterminatedbytheothercontractualpartnersnosoonerthaninOctober2010.

Marketinterestratechangesmighthaveanadverseeffectontheinterestresultandareincludedinourcal-culationofsensitivefactorsaffectingearnings.Inordertopresentmarketrisks,UnitedInternethasdeve-lopedasensitivityanalysiswhichshowstheimpactofhypotheticalchangestorelevantriskvariablesonpre-taxearnings.Thereportingperiodeffectsareillustra-tedbyapplyingthesehypotheticalchangesinriskvariablestothestockoffinancialinstrumentsasofthebalancesheetdate.

Achangeinthemarketinterestlevelhasaneffectoninterestswapsstatedatfairvaluewithaneffectonincome.Aparallelshiftintheintereststructurecurveof+/-100basispointsmighthaveresultedinacom-parableincreaseinpre-taxearningsofC5,139koradecreaseofC7,141k.

31.12.2008 Dk

2009 Dk

2010 Dk

2011 Dk

2012 Dk

>2013 DkD

Total Dk

Liabilities to banks 544,370 31,408 115,265 193,664 188,081 74,570 602,988

Convertible bonds 74 74 0 0 0 0 74

Trade accounts payable 170,743 170,743 0 0 0 0 170,743

Other liabilities 72,657 56,274 2,923 674 196 10,399 70,466

31,12,2007 Dk

2008 Dk

2009 Dk

2010 Dk

2011 Dk

2012 Dk

Total Dk

Liabilities to banks 371,105 19,124 19,071 107,332 102,009 196,132 443,667

Convertible bonds 245 0 245 0 0 0 245

Trade accounts payable 232,421 232,421 0 0 0 0 232,421

Other liabilities 61,129 60,083 250 250 296 250 61,129

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Theinterestriskisnegligibleforotherinterest-bearingliabilities.

CurrencyriskAcurrencyriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentmayfluctuateduetochangesintheexchangerates.TheGroupismainlyexposedtocurrencyrisksasaresultofitsoperations(ifrevenueand/orexpensesareinacurrencyotherthantheGroup’sfunctionalcurrency)anditsnetinvestmentsinforeignsubsidiaries.ThecurrencyriskofUnitedInternetresultsfrominvestments,financingactivitiesandoperations.Currencyriskswhichdonotaffectcashflows(i.e.risksfromtranslatingtheassetsandliabilitiesofforeignoperationsintotheGroup’sreportingcurrency)arenothedgedagainst.Intheperiodunderreview,therewerenoforeignexchangeriskswithasignificantimpactonthecashflows.

Withregardtooperatingactivities,individualGroupcompaniesperformtheirbusinessmainlyintheirrespectivefunctionalcurrencies.Asinthepreviousyear,theCompanythereforeregardsthecurrencyriskfromoperationsaslow.CertainGroupcompaniesareexposedtoforeignexchangerisksinconnectionwithplannedpaymentsoutsidetheirfunctionalcurrency.

Foreignexchangerisksarisefromfinancialinstru-mentswhicharedenominatedinadifferentcurrencytothefunctionalcurrencyandareofamonetarynature;exchangeratedifferencesfromthetranslationofannualfinancialstatementsintotheGroup’srepor-tingcurrencyarenotconsidered.Therelevantriskvariablesincludeallnon-functionalcurrenciesinwhichtheCompanyholdsfinancialinstruments.

A10-percentchangeintheUSdollarexchangerateagainsttheeuroupwards(downwards)mighthaveresultedinadecrease(increase)inpre-taxearningsofC925kbasedonthebalancesheetofDecember31,2008.A10-percentchangeintheEnglishpoundagainsttheeuroupwards(downwards)mighthaveresultedinanincrease(decrease)inpre-taxearningsofC648k.

A10percentincrease(decrease)intheexchangerateoftheUSdollaragainsttheeuro,basedonthebalancesheetvalesofDecember31,2007,wouldhaveresultedinandecrease(increase)inpre-taxearningsofC1,327k.A10percentincrease(decrease)intheexchangerateoftheUKpoundagainsttheeuro,wouldhaveresultedinanincrease(decrease)inpre-taxearningsofC3,107k.

Stockexchangerisk(valuationrisk)TheCompanyclassifiescertain(quoted)assetsasavailable-for-saleandrecordschangesintheirfairvalueinequitywithoutaneffectonprofitorloss.Ifthereisasignificantorpersistentdecreaseinthefairvalueofanequityinstrumentbelowitsacquisitioncost,theCompanyrecognizesanimpairmentofthefinancialinstrumentinitsincomestatement.ThefairvalueoftheselistedassetsamountedtoC20,956kasofthebalancesheetdate(prioryear:C57,119k).

Impairmentsmayresultfromthesharepricedevelopmentoflistedinvestments.

TheCompanyhasnosignificantconcentrationofmarketrisks.

Creditandcontingencyrisk

Inthecourseofitsoperatingactivities,theCompanyisexposedtoacontingencyrisk.Outstandingamountsarethereforemonitoredlocallyandonacontinualbasis.Individualandlump-sumallowancesaremadetoaccountforsuchcontingencyrisks.TheGroupdoesnotseeanysignificantincreaseinthecontingencyriskoverthepreviousyear.

Withregardtotradeaccountsreceivable,themaxi-mumriskinthegrossamountstatedinthebalancesheetisbeforeallowancesbutafternetting.Tradeaccountsreceivablewhicharenotimpairedasofthebalancesheetdate,areclassifiedaccordingtoperiodsinwhichtheybecomeoverdue(seeNote20).

InternalratingsystemIntheProductsegment,apre-contractualfraudcheckisconductedandcollectionagenciesarealsousedforthemanagementofreceivables.IntheOnlineMarke-tingsegment,apre-contractualcheckofcreditworthi-nessismadeinthemediasalesbusinessandcollectionagenciesarealsousedforthemanagementofreceiva-bles.

IntheProductsegment,individualallowancesforreceivablesoverduearegenerallymadeonthebasisoftherespectiveageprofile.Theseallowancesaremainlyderivedfromsuccessratesoftheagenciesusedforcoll-ectingsuchdebts.100%individualallowancesaremadeforallreceivablesoverduemorethan365days.IntheOnlineMarketingsegment,individualallowancesaremadeforeachcustomeraccordingtovariouscrite-ria(e.g.dunninglevel,insolvency,fraudcasesetc.).

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TheCompanyhasnosignificantconcentrationofcreditrisks.

Capitalmanagement

Inadditiontothelegalprovisionsforstockcorpora-tions,theCompanyhasnofurtherobligationstomaintaincapitalaccordingtoitsstatutesorotheragreements.ThekeyfinancialindicatorsusedbytheCompanyaremainlyperformance-oriented.Thetar-gets,methodsandprocessesofcapitalmanagementarethussubordinatetotheseperformance-orientedfinancialindicators.

Inordertomaintainandadaptitscapitalstructure,theCompanycanadjustdividendpaymentsorpaycapitalbacktoitsshareholders,canissuenewsharesorpurchasetreasuryshares.AsofDecember31,2008andDecember31,2008,nochangesweremadetotheCompany’stargets,methodsandprocesses.

44 Specific contingencies and commitments

Litigation

Litigationrisksmainlyrelatetovariouslegaldisputesof1&1InternetandAdLINK.

Anaccrualforlitigationwasformedforanycommit-mentsarisingfromthesedisputes(seeNote35).

Guarantees

Asofthebalancesheetdate,theCompanyhasissuednoguarantees.

45 Other financial commitments and contingencies

Operatingleasecommitments

Attheendofthefiscalyear,therewerefixed-termobli-gationsfromtherentingofbuildings,officesandmovables.

Mostleaseshaveoptionstoprolongthecontractualrelationship.Thetermsoftheseprolongationoptionsarenegotiableoridenticalwiththecurrentterms.

AsofDecember31,thefutureminimumleaseobliga-tionswereasfollows:

2008 Dk

2007 Dk

Up to 1 year 12,171 10,362

1 to 5 years 23,077 25,644

Over 5 years 3,046 3,155

38,294 39,161

Intheperiodunderreview,theseoperatingleasesincurredexpensesofC11,857k(prioryear:C9,965k).

Contingentliabilitiesandotherobligations

TheCompanyisjointlyandseverallyliableforcreditlinesgrantedtocompaniesoftheUnitedInternetGroupbyabank.Thecreditfacilitieshadonlybeenutilizedwithregardtoguaranteesasofthebalancesheetdate.

OtherfinancialcommitmentsforthefollowingtwofiscalyearstotalC4,200k(prioryear:C6,539k).

Inthepreviousyear,therewereshort-termcommit-mentsofC3,524kresultingfromapendingpurchasecontractfortheacquisitionofsharesinalistedcom-pany.

TheManagementBoardhasnoknowledgeofanyotherfactswhichcouldhaveasignificant,adverseeffectonthebusinessactivities,thefinancialsituationortheoperatingresultoftheCompany.

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46 Cash flow account

Infiscalyear2008,cashflowfromoperatingactivitiesincludesinterestpaymentsofC27,632k(prioryear:C7,246k)andinterestincomeofC2,036k(prioryear:C1,206k).Incometaxpaymentsinfiscalyear2008amountedtoC74,062k(prioryear:C71,389k).ProceedsfromdividendspaidbyassociatedcompaniestotaledC392k(prioryear:C950k).ProceedsfromdividendsdistributedbyotherinvestmentsamountedtoC1,768k(prioryear:C623k)infiscalyear2008.

AtotalofC160,696k(prioryear:C309,229k)waspaidincashforthepurchaseofsharesinassociatedcompa-niesandjointventuresinfiscalyear2008.FurtherdetailsareprovidedinNote25.

AnamountofC9,538k(prioryear:C37,949k)waspaidincashforthepurchaseofadditionalsharesofAdLINKinfiscalyear2008.TheacquisitioncostsforthepurchaseofsharesinDollamoreamountedtoC10,477k.Thepurchasepricewassettledfullyincash.AspartoftheacquisitionofDollamore,cashandcashequivalentsofC154kwerereceived.

Thesaleofsharesinassociatedcompanies(prioryear:includingaffiliatedcompanies)resultedintotalcashproceedsofC12,268k(prioryear:C92,129k)infiscalyear2008.

47 Changes in the reporting unitInadditiontothebusinesscombinationsandinvest-mentsdescribedinNote3,thefollowingcompanieswerefoundedbytheCompanyoritssubsidiariesinfis-calyear2008: DollamoreLtd.,Melbourne/UnitedKingdom(100.00%)

ImmobilienverwaltungNMHGmbH,Montabaur(100.00%)

UIMUnitedInternetMediaAustriaGmbH,Wien/Austria(100.00%)

EuropeanFoundersFundNr.3ManagementGmbH,Munich(80.00%)

EuropeanFoundersFundNr.3VerwaltungsGmbH,Munich(80.00%)

EuropeanFoundersFundGmbH&Co.BeteiligungsKGNr.3,Munich(80.00%) EuropeanFoundersFundNr.3BeteiligungsGmbH,Munich(100.00%)

Theconsolidatedgroupremainedotherwiseunchan-gedcomparedwiththeconsolidatedfinancialstate-mentsasofDecember31,2007.

48 Exemption pursuant to Sec. 264 (3) HGB

ThefollowingcompaniesofUnitedInternetAGmakeuseoftheexemptingprovisionsofSec.264(3)HGB: 1&1InternetAG,Montabaur 1&1InternetServiceGmbH,Montabaur 1&1InternetServiceGmbH,Zweibrücken A1Marketing,KommunikationundneueMedienGmbH,Montabaur

GMXInternetServicesGmbH,Munich GMXGmbH,Munich UnitedInternetBeteiligungenGmbH,Montabaur UnitedInternetMediaAG,Montabaur WEB.DEGmbH,Montabaur

49 Subsequent eventsInacontractdatedDecember12,2008,UnitedInternetBeteiligungenGmbHacquiredthesharesinunited-domainsAG–subjecttoapprovalfromtherespectiveanti-trustauthorities.Followingtheapprovaloftheanti-trustauthoritiesonJanuary30,2009,theacquisi-tionwascompletedonFebruary27,2009.united-domainsAGwillcontinuetoberunbyitsfounders,whoretainatotalshareholdingof15%inunited-domainsAGaftertheacquisition.Inthecourseofthetransaction,thevalueofunited-domainsAGwassetataroundC34million.Thepreliminarypurchasepricewassettledfullyincash,wherebyC7millionisheldinescrowasasecurityguaranteeforUnitedInternetBeteiligungenGmbH.Thefinalpurchasepricewillbedeterminedafterunited-domainsAGhasposteditsannualfinancialstatementsforfiscalyear2008.

InacontractdatedFebruary25,2009,Sedo.comLLCacquired100%ofsharesinRevenueDirect,Vancouver/USA.

Asofthebalancesheetdate,UnitedInternetAGwasthesilentpartnerofanoptionagreement(OTC)tosupplycertainlistedsecurities.TheoptionhadatermuntilFebruary28,2009andwasnotexercisedbythecontractualpartner.

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50 Auditing fees

Infiscalyear2008,auditingfeestotalingC1,651k(prioryear:C1,273k)wereexpensedintheconsolidatedfinancialstatements.TheseincludeauditingfeesofC781k(prioryear:C620k),taxconsultancyservicesofC327k(prioryear:C243k),andotherservicesofC543k(prioryear:C410k).

Inaddition,auditingfeesfortaxconsultancyservicesandotherservicesamountingtoC47k(prioryear:C46k)werecarriedintheconsolidatedfinancialstatementswithouteffectonincomeandcapitalizedastransactioncostsinconnectionwithcompanyacquisitions.

51 Corporate Governance Code

ThedeclarationpursuanttoSec.161AktGonobservanceoftheGermanCorporateGovernanceCodehasbeenmadebytheManagementBoardandSupervisoryBoardandhasmadeavailabletoshareholdersviatheinternetportalofUnitedInternetAG(www.united-internet.de)andAdLINKInternetMediaAG(www.adlink.net).

Montabaur,March16,2009

TheManagementBoard

RalphDommermuth NorbertLang

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Audit Opinion of the Independent Auditor

WehaveauditedtheconsolidatedfinancialstatementspreparedbyUnitedInternetAG,Montabaur,compri-singthebalancesheet,theincomestatement,thestatementofchangesinequity,thecashflowstate-mentandthenotestotheconsolidatedfinancialstate-ments,togetherwiththegroupmanagementreportforthefiscalyearfromJanuary1toDecember31,2008.ThepreparationoftheconsolidatedfinancialstatementsandthegroupmanagementreportinaccordancewithIFRSsasadoptedbytheEU,andtheadditionalrequire-mentsofGermancommerciallawpursuanttoSec.315a(1)HGB[„Handelsgesetzbuch“:„GermanCommercialCode“]aretheresponsibilityoftheparentcompany’smanagement.Ourresponsibilityistoexpressanopi-nionontheconsolidatedfinancialstatementsandonthegroupmanagementreportbasedonouraudit.

WeconductedourauditoftheconsolidatedfinancialstatementsinaccordancewithSec.317HGBandGer-mangenerallyacceptedstandardsfortheauditoffinancialstatementspromulgatedbytheInstitutderWirtschaftsprüfer[InstituteofPublicAuditorsinGermany](IDW).Thosestandardsrequirethatweplanandperformtheauditsuchthatmisstatementsmate-riallyaffectingthepresentationofthenetassets,financialpositionandresultsofoperationsintheconsolidatedfinancialstatementsinaccordancewiththeapplicablefinancialreportingframeworkandinthegroupmanagementreportaredetectedwithreasonableassurance.KnowledgeofthebusinessactivitiesandtheeconomicandlegalenvironmentoftheGroupandexpectationsastopossiblemisstate-mentsaretakenintoaccountinthedeterminationofauditprocedures.Theeffectivenessoftheaccounting-relatedinternalcontrolsystemandtheevidencesupportingthedisclosuresintheconsolidatedfinan-cialstatementsandthegroupmanagementreportareexaminedprimarilyonatestbasiswithintheframe-workoftheaudit.Theauditincludesassessingtheannualfinancialstatementsofthoseentitiesincludedinconsolidation,thedeterminationofentitiestobeincludedinconsolidation,theaccountingandconsoli-dationprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatementsandthegroupmanagementreport.Webelievethatourauditprovidesareasonablebasisforouropinion.

Ouraudithasnotledtoanyreservations.

Inouropinion,basedonthefindingsofouraudit,theconsolidatedfinancialstatementscomplywithIFRSsasadoptedbytheEU,theadditionalrequirementsofGermancommerciallawpursuanttoSec.315a(1)HGBandgiveatrueandfairviewofthenetassets,finan-cialpositionandresultsofoperationsoftheGroupinaccordancewiththeserequirements.Thegroupmanagementreportisconsistentwiththeconsolida-tedfinancialstatementsandasawholeprovidesasuitableviewoftheGroup’spositionandsuitablypresentstheopportunitiesandrisksoffuturedevelopment.

Eschborn/FrankfurtamMain,March17,2009

Ernst&YoungAGWirtschaftsprüfungsgesellschaftSteuerberatungsgesellschaft

Bösser GroteGermanPublicAuditor GermanPublicAuditor

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Responsibility Statement

Tothebestofourknowledge,andinaccordancewiththeapplicablereportingprinciples,theconsolidatedfinancialstatementsgiveatrueandfairviewoftheassets,liabilities,financialpositionandprofitorlossoftheGroup,andtheManagementReportandGroupManagementReportincludesafairreviewofthedeve-lopmentandperformanceofthebusinessandtheposi-tionoftheGroup,togetherwithadescriptionoftheprincipalopportunitiesandrisksassociatedwiththeexpecteddevelopmentoftheGroup.

Montabaur,March16,2009

TheManagementBoard

RalphDommermuth NorbertLang

Management

Our Strategy

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A GOFTheArbeitsgemeinschaftOnlineForschung(AGOF)[WorkingGroupforOnlineMediaResearch]isanaffiliationoftheleadingonlinemarketersinGermany.Byprovi-dingstandardizedonlinecoveragecurrencyandcomprehensivedataononlinemediaconsumption,AGOFmakestheInternetatrans-parentandplannableadvertisingmedium.

B ITKOMTheBundesverbandInformations-wirtschaftTelekommunikationundneueMediene.V.(BITKOM)[GermanAssociationforInforma-tionTechnology,Telecommunica-tionsandNewMedia]isthevoiceoftheinformationtechnology,tele-communications,andnewmediaindustryinGermany.

BVDWTheBundesverbandDigitaleWirt-schafte.V.(BVDW)[GermanAssoci-ationfortheDigitalEconomy]representstheinterestsofcompa-niesinthefieldofinteractivemar-keting,digitalcontentandinterac-tivevalueadded.

C ontentThecontentofawebsite,e.g.text,graphicsormultimedia.

CustomerCareGenerictermforallserviceswithwhichacompanycaresforitscustomers.

D edicatedServerAdedicatedserverisaserverwhichisdedicatedtoaparticularactivity(dedicatedservice)ortoasinglecustomer(dedicatedcusto-mer).Itgenerallyinvolvesprovi-dingacustomerwithaserverforhisexclusiveuse(seealsosharedhosting).

C ashflowBalanceofincomingandoutgoingcashflows

ChurnratePercentageofcustomerstermina-tingcontractsand/orchanginginternetserviceproviderwithinaspecifiedperiod

ConsolidationAnnualfinancialstatementsofagroup,preparedasifallgroupcompaniesweredependentpartsofasingleunit.Allfinancialrelati-onshipsbetweengroupcompaniesarethuseliminated.

CorporategovernanceTermusedtosignifyresponsible,long-term,value-orientedmanage-mentandcorporatecontrol.

D ilutedEarningspersharearetermed“diluted”whennotonlyallout-standingsharesareusedinthecalculation,butalsothosetheoreti-callyconvertiblesharesissuedaspartofemployeestockoptionprograms.

E BITDAEarningsbeforeinterest,taxes,depreciationandamortization.

EBTEarningsbeforetaxes

EquityratioShareholder’sequityasapropor-tionofthebalancesheettotal.

F FreefloatProportionofsharecapitalwhichisownedbymanydifferentshare-holders.

G oodwillPositivedifferencebetweenmarketvalueandnetassetsofanacquiredcompany.

H GBGermanCommercialCode(Handelsgesetzbuch)

I FRS=InternationalFinancialReportingStandards.Internationalaccoun-tingstandard.

M arketcapitalizationMarketpriceofalistedcompany.Theresultofsharepricemultipliedbynumberofshares.

R iskmanagementSystematicprocesstoidentifyandevaluatepotentialrisksaswellastoselectandimplementmeasurestodealwithsuchrisks.

T ecDAXIndexoftheFrankfurtStockExchange.TheTecDAXiscalculatedfromthemarketpriceofGermany’stop30technologyshares.

X etraElectronictradingsystemofDeut-scheBörseAG.TheoverwhelmingproportionofallsharetradingatGermanstockexchangesishandledbytheXETRAtradingsystem.exchangesishandledbytheXetratradingsystem.

Glossary Commercial terms and abbreviations:

Other terms and abbreviations:

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DomainSpecificareaofhierarchicalinter-netnamesystemadministeredbydomainnameserver.Dividedintogenerictop-leveldomains,orgTLD,(suchas.com,.net,.orgor.info)andcountry-codetop-leveldomains,inshortccTLD(suchas.deor.uk).

DownstreamDatatransferfrominternetservertouser’sPC.Oppositeofupstream.DatatransferratesforDSLconnec-tionsaregiveninMbit/sandactasayardstickforconnectionspeed.

DSL=DigitalSubscriberLine.Techno-logyforhigh-speeddatatransferviastandardcoppercablenetworksoverdistancesofuptoaboutthreekilometers.

DSLtelephony(alsocalledVoIP=VoiceoverInter-netProtocol)Technologytoesta-blishphoneconnectionsviaDSLdatanetworks.

E -commerce=Electroniccommerce.Generictermforbusinesstransactionsusingelectronicmedia,suchastheinternet.

E-mail=Electronicmail.Fastandcheapmethodofsendingandreceivingmailbetweeninternetusersviamailboxesanddatanetworks.F ederalCartelOffice(Bundeskartellamt-BKartA)Hig-herfederalauthorityforallanti-trustissues.Itsmaintasksincludeimplementingcartelbans,exami-ningbusinesscombinationreque-stsandexercisingitsantitrustmonitoringdutieswithregardtomarket-dominatingcompanies.

FederalNetworkAgency(GermanFederalNetworkAgencyforelectricity,gas,telecommunica-tions,postalandrailwaynetworks)Higherfederalauthority(formerRegulatoryAuthorityforTelecom-municationsandPost,RegTP).Itsresponsibilitiesincludeimple-mentingcartelbans,examiningbusinesscombinationrequestsandexercisingitsantitrustmonitoringdutieswithregardtomarket-domi-natingcompanies.

FlatrateLump-summonthlyfee,irrespectiveofusagetime.

G PRSGeneralPacketRadioService(GPRS)isatransmissionserviceusedinmobiletelephony.

H osting(alsowebhosting)Provisionofsto-ragespaceviatheinternet.Inaddi-tiontoregisteringandoperatingdomainsandrentingoutwebser-vers,hostingmainlyreferstotheprovisionofvalue-addedinternetservicesenablinguserstoworkmoreefficientlyontheinternet.SharedHostingmeansthatseveralcustomersshareaphysicalserver,whileinDedicatedHostingonecustomerhasexclusiveaccesstoonesever.

O KVUndertheumbrellaoftheBVDW(seeBVDW),theOnline-Ver-markterkreis(OVK)[CircleofOnlineMarketers]isGermany’scentralcommitteeforonlinemar-keting,whichthecountry’sleadingonlinemarketerscreatedtoraisetheprofileofonlineadvertising.

P ageimpressionsMeasurementunitforthenumberoftimesaninternetpage(andthusitspotentialadvertising)isviewed.Pageimpressionsareanimportantbasisforcalculatingthereachofawebsite.

PortalCentralinternetaccesspointorstartpage.Usuallycontainsawiderangeofnavigationfunctions,con-tentandadditionalservices,suchase-mail.

S haredHostingInsharedhosting,orvirtualhosting,severalcustomersshareaserver.Manyindividualcustomerwebsitesareoftenhostedononeserver.Thismakeswebhostingoffersmorecost-efficientandaccessibleforsmallerandmid-sizecompanies.

T echnicalvalue-addedservices(alsovalue-addedservices)Allservicesabovethelevelofbasicserviceprovisionareregardedasvalue-addedservices.Technicalvalue-addedservices(incontrasttocontentvalue-addedservices)aresolutionsofferingtheuseradditio-nalfunctionality.

V -DSL=VeryHighSpeedDigitalSubscri-berLine.FastestofthecurrentlyavailableDSLtechnologiesenablinghighdatatransferratesviatelephonelines.Theusabletransferwidthsinks,however,withthelengthoftheline

VideoonDemand(VoD)Serviceofaninternetproviderenablingsubscriberstoselectandwatchfilmsatanytimeformoney.

Glo

ssar

y

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VisitTermtodescribecoherentusage(visit)ofaspecificinternetofferbyauser.

W hitelabelproductsProductsorservicesofferedtothirdparties,whichmaythenmarketthemundertheirownbrand.

W-LANTermforwirelesslocalnetwork,generallyofferinghightransmis-sionperformanceandhighdatatransferrates.Severalcomputerscanalsobelinkedtogetherwire-lesslyandhaveaccesstoacentralinformationsystem,printerorscanner.

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March26,2009 Annualfinancialstatementsforfiscalyear2008

March26,2009 Pressandanalyst’sconference

May13,2009 QuarterlyReport2009

May26,2009 AnnualShareholder’sMeetinginFrankfurtamMain,AlteOper

August132009 6-MonthReport2009

August13,2009 Pressandanalyst’sconference

November12,2009 9-MonthReport2009

*Updatesavailableatwww.united-internet.comintheInvestorRelationssection,“Calendar”.

ImprintPublisherandcopyright©2009UnitedInternetAGElgendorferStraße57D-56410MontabaurGermanywww.united-internet.de

ContactInvestorRelationsPhone: +49260296-1631Fax: +49260296-1013E-mail: [email protected]:MontabaurHRB5762

ThisannualreportisavailableinGermanandEnglish.Bothversionscanbedownloadedfromwww.united-internet.de.Inallcasesofdoubt,theGermanversionshallprevail.

DisclaimerThisAnnualReportcontainscertainforward-lookingstatementswhichreflectthecurrentviewsofUnitedInternetAG’smanagementwithregardtofutureevents.Theseforwardlookingstatementsarebasedonourcurrentlyvalidplans,estimatesandexpectations.Theforward-lookingstatementsmadeinthisAnnualReportareonlybasedonthosefactsvalidatthetimewhenthestatementsweremade.Suchstatementsaresubjecttocertainrisksanduncertainties,aswellasotherfactorswhichUnitedInternetoftencannotinfluencebutwhichmightcauseouractualresultstobemateriallydifferentfromanyfutureresultsexpressedorimpliedbythesestatements.Suchrisks,uncertaintiesandotherfactorsaredescribedindetailintheRiskReportsectionoftheAnnualReportsofUnitedInternetAG.UnitedInternetdoesnotintendtoreviseorupdateanyforward-lookingstatementssetoutinthisAnnualReport.

Financial calendar 2009 *

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Portal Information management

PortalInformation management

Webhosting, Internet access

Webhosting products as white label

Webhosting products as white label

Display marketing

Affiliate marketing

Domain marketingOnl

ine

Mar

ketin

gPr

oduc

ts

Consumers

Internet service providerin Germany

Advertisers

Discerning private users and small offices/home

offices (SoHos)

Segments and Brands

Portal Information management

Internet service providerin the United Kingdom

and USA

Brand Products / Services Target Group 2008 in Figures

GeneralInformation Management applications, Hosting solutions and Internet Access products for consumers, small offices/home offices. Portal marketing for e-commerce providers and advertisers

Customer contracts: 7.95 million of which 1.36 million in Information Management, 3.62 million in Hosting and 2.97 million in Internet Access Portals: No. 1 in Germany with 19.4 million unique visitors per month Webhosting: Global market leader with 3.62 million contracts, of which 1.93 million outside GermanyDSL: No. 3 in Germany with 2.82 million contracts

BrandsGMX: No. 5 among German portals with 8.5 million unique visitors WEB.DE: Second highest reach of all German websites with 12.9 million unique visitors 1&1: No. 3 in German DSL market and one of the largest hosting companiesInterNetX: No. 1 in German white-label business with over 19,000 resellersFasthosts: No. 1 in UK white-label business with over 5,700 resellers

GeneralSales and marketing solutions for advertisers Display marketing via AdLINK MediaAffiliate marketing via affilinet Domain marketing via Sedo

BrandsAdLINK Media: online advertising network with 10.3 billion ad impressions per month, thus Europe’s leading supplier of digital communication solutions affilinet: Over 470,000 registered affiliate websites and 1,500 affiliate programs, thus generating over 6.1 billion ad impressions per month Sedo: administers 15.3 million domains for sale and markets 6.2 million parked domains

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Rückenstärke bitte anpassen!! Seite ist verkürzt auf 195 mmm

United Internet AGElgendorfer Straße 5756410 Montabaur GermanyPhone: +49 2602 96 - 1100Fax: +49 2602 96 - 1013E-Mail: [email protected]

2008 2007

Income Statement

Sales t millions 1,649m6 1,487m4EBITDA t millions 318m8 308m8Net Income t millions -121m5* 155m4

Balance Sheet Current assets t millions 235m0 243m7Non-current assets t millions 867m0 970m3Shareholders’ equity t millions 145m6 383m9Total assets t millions 1,102m0 1,214m0

EmployeesGermany number 3,618 3,127Abroad number 947 827Total number 4,565 3,954Personnel expenses t millions 171.8 145.8

ShareShare price at year end (Xetra) t 6m29 16m65Earnings per share t -0.52* 0m64

United Internet at a glance

United Internet comprises a family of strong and attractive internet brands. Each one stands for added value and success. These brands are tailored to our relevant target groups and fully utilize available market potential.

Annual Report 2008

www.united-internet.com

Uni

ted

Inte

rnet

AG

A

nnua

l Rep

ort

2008

Quarterly development Q1  2008t millions

Q2 2008t millions

Q3 2008t millions

Q4 2008t millions

Q4 2007t millions

Sales 402.0 412.4 407.4 427.8 414.3

EBITDA 83.2 88.6 77.7 69.3 73.3

Net income 45.1 45.2 -103.8* -108.0* 40.1

* The figures for 2008 include total negative, non-recurring and non-cash effects of C 275.4 million – of which C 145.6 million refer to Q3 and C 129.8 million to Q4.