2.4 Position of the Company

Earnings of United Internet AG

As a pure holding company, the earnings position of United Internet AG is usually dominated by its investment and financial result. In the fiscal year 2020, sales of the parent company amounted to € 0.6 million (prior year: € 0.3 million) and result mainly from services rendered to the Group’s subsidiaries.

Other operating income amounted to € 12.3 million (prior year: € 1.0 million) and mainly results from income relating to other periods of € 9.9 million (prior year: € 0.02 million) due to sales tax effects from audits of previous years, writeups of securities amounting to € 1.4 million (prior year: € 0), cost allocations within the Group of € 1.0 million (prior year: € 0.2 million), and the reversal of accruals amounting to € 0.1 million (prior year: € 0.6 million).

Adjusted for effects from employee stock ownership programs, personnel expenses amounted to € 1.0 million (prior year: € 0.5 million).

Other operating expenses amounted to € 19.8 million (prior year: € 12.7 million) and mostly comprise expensesrelating to other periods of € 10.1 million from audits of previous years, internal charges for services rendered to Group companies of € 5.2 million, as well as legal, auditing and consulting fees of € 1.4 million.

Income from profit transfer agreements of € 87.2 million (prior year: € 122.3 million) resulted from the profit transfers of 1&1 Mail & Media Applications SE amounting to € 68.1 million (prior year: € 70.5 million), United Internet Investments Holding AG & Co. KG amounting to € 15.9 million (prior year: € 48.9 million), United Internet Corporate Services GmbH amounting to € 3.0 million (prior year: € 2.7 million), and United Internet Service SE amounting to € 0.2 million (prior year: € 0.2 million).

Income from investments amounted to € 6.7 million (prior year: € 6.5 million) and mainly comprise the dividend of 1&1 Drillisch AG.

Expenses for loss assumptions of € 0.1 million (prior year: € 37.4 million) mainly relate to the compensation expense of United Internet Corporate Holding SE and United Internet Management Holding SE.

The parent company’s result before taxes amounted to € 167.9 million (prior year: € 177.6 million).

Income taxes of € 57.2 million (prior year: € 58.9 million) comprise current taxes for 2020 of € 48.8 million (of which € 24.4 million corporation tax and the solidarity surcharge, and € 24.4 million trade tax), as well as € 9.4 million from previous years. In addition, deferred taxes liabilities of € 1.2 million were formed. Tax accruals of € 2.2 million had an opposing effect.

Net income in the separate financial statements of United Internet AG for the fiscal year 2020 amounted to € 110.6 million (prior year: € 118.7 million).

Assets and financial position of United Internet AG

The parent company’s balance sheet total fell from € 5,944.6 million as of December 31, 2019 to € 5,618.2 million on December 31, 2020.

Non-current assets of the parent company amounting to € 5,331.0 million (prior year: € 5,670.9 million) were dominated by financial assets. At € 3,763.4 million, shares in affiliated companies were unchanged from the previous year. Loans to affiliated companies declined to € 1,567.6 million (prior year: € 1,907.6 million). The decrease results in particular from the redemption of loans within the Group.

Current assets of the parent company amounting to € 287.2 million (prior year: € 273.6 million) comprise receivables due from affiliated companies and other assets. The receivables due from affiliated companies rose to € 234.9 million (prior year: € 216.2 million). These mainly comprise receivables within the United Internet Group’s internal cash management system as well as from profit transfer agreements and services received within the United Internet Group. Other assets amounting to € 36.3 million (prior year: € 14.8 million) consist mainly of receivables due from the tax office relating to audits of previous years.

Shareholders’ equity of the parent company amounted to € 3,357.3 million as of December 31, 2020 (prior year: € 3,352.5 million). The slight increase in equity during the reporting period is mainly due to net income of € 110.6 million, with an opposing effect from the dividend payout of € 93.6 million and the buyback of treasury shares of € 12.2 million, which are subtracted from equity. The equity ratio rose from 56.4% in the previous year to 59.8% as of December 31, 2020.

The parent company’s accruals of € 97.6 million (prior year: € 54.7 million) mainly comprise accrued taxes amounting to € 87.4 million (prior year: € 51.8 million) as well as other accrued liabilities for employee stock ownership plans, legal, auditing and consulting fees, bonuses, and other items totaling € 10.2 million (prior year: € 2.9 million).

The liabilities of the parent company are shaped in particular by liabilities to banks and liabilities due to affiliated companies. Liabilities to banks decreased to € 1,467.9 million in the fiscal year 2020 (prior year: € 1,740.7 million). Bank liabilities mainly comprise two promissory note loans totaling € 547.5 million, syndicated loans totaling € 750 million, and drawings from a bilateral credit facility of € 165 million. Liabilities to affiliated companies fell to € 672.6 million (prior year: € 783.9 million) and mainly comprise liabilities from balances within the United Internet Group’s cash pooling system (€ 670.8 million), from service arrangements (€ 1.2 million), and from profit transfer agreements (€ 0.1 million). Other liabilities of € 12.0 million (prior year: € 3.6 million) are mainly sales tax liabilities.

Cash flow of the parent company’s financial statements is dominated by cash flows from the profit transfer agreements, as well as the dividends of investments. There was an opposing effect under financial activities from the treasury shares purchased in the fiscal year 2020 and from the dividend payment.

Management Board’s overall assessment of the current business situation of the parent company

Due to its role as the Group’s holding company, the economic position of United Internet AG at parent company level is mainly influenced by its investment and financial result. The above statements on the Group’s economic position therefore also apply qualitatively for United Internet AG itself.