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 2024, sales of the parent company amounted to € 0.6 million (prior year: € 1.1 million) and result mainly from services rendered to the Group’s subsidiaries.

Other operating income amounted to € 6.4 million (prior year: € 221.4 million). In addition to non-period income and internal charges to Group companies, this mainly resulted from the disposal of financial investments of € 5.6 million (prior year: € 219.1 million) from the conditional purchase price receivables of United Internet AG vis-à-vis the IONOS co-shareholder Warburg Pincus from the sale of shares in IONOS Group SE. In the previous year, the high income from the disposal of financial investments resulted mainly the sale of shares in the course of the IPO of Group subsidiary IONOS Group SE.

Other operating expenses amounted to € 15.5 million (prior year: € 31.3 million including high costs in connection with the IPO of Group subsidiary IONOS Group SE in 2023) and mainly include expenses relating to internal charges for services rendered to Group companies, legal, auditing, and consulting fees, as well as non-period expenses.

Income from profit transfer agreements of € 112.7 million (prior year: € 101.9 million) resulted from profit transfers of 1&1 Mail & Media Applications SE amounting to € 110.0 million (prior year: € 98.9 million), United Internet Corporate Services GmbH amounting to € 2.5 million (prior year: € 2.8 million), and United Internet Service SE amounting to € 0.2 million (prior year: € 0.1 million).

Income from investments amounted to € 13.8 million (prior year: €0) and mainly comprised dividends of 1&1 AG for the fiscal year 2023 and – due to same-period profit recognition – additionally the dividend for the fiscal year 2024. Due to same-period profit recognition for the fiscal year 2022 in the fiscal year 2022, no income from investments was recognized in the previous year.

Expenses for loss assumptions of € 486.5 million (prior year: € 19.2 million) related to the compensation expense of United Internet Investments Holding AG & Co. KG amounting to € 337.7 million (prior year: € 19.2 million), of United Internet Management Holding SE amounting to € 148.8 million (prior year: € 0.04 million), and of United Internet Corporate Holding SE amounting to € 0.03 million (prior year: € 0.04 million).

The year-on-year increase in the loss of United Internet Investments Holding mainly results from the decrease in the shareholding in Kublai GmbH from 40% to around 5% in the fiscal year 2024. On June 14, 2024, United Internet AG announced that it would make no further investments in Kublai GmbH, which holds 95% of shares in Tele Columbus AG. United Internet thereby waived the right to increase its stake in Kublai to 40% again after it was diluted to around 5% in the course of a capital increase in the first quarter of 2024. Against this backdrop, the annual financial statements of United Internet Investments Holding as of December 31, 2024 included a non-scheduled loss from the dilution of shares in Kublai of € 316.0 million.

United Internet is convinced that the valuation of Tele Columbus AG on which the capital increase was based is far too low, resulting in an excessive dilution of United Internet’s stake. A further shareholder of Kublai is Hilbert Management GmbH, an indirect subsidiary of Morgan Stanley Infrastructure Inc (MSI), an infrastructure fund managed by the investment bank Morgan Stanley. Its majority of votes at the shareholders’ meeting enabled MSI to conduct the capital increase on the basis of a valuation determined by MSI. Via United Internet Investments Holding, United Internet has since indirectly initiated the contractually stipulated anti-dilution proceedings and arranged for a review of MSI’s valuation by the German Arbitration Institute (“Deutsche Institution für Schiedsgerichtsbarkeit” - DIS). Should DIS agree with United Internet’s assessment, United Internet Investments Holding might be awarded compensation of approx. € 300 million, which would be passed on to United Internet AG via the existing profit transfer agreement. If the court reaches a different conclusion, the awarded claim or compensation amount could be correspondingly lower.

The year-on-year increase in the loss of United Internet Management Holding results mainly from the assumption of the loss of 1&1 Versatel GmbH based on the profit transfer agreement signed with 1&1 Versatel GmbH in November 2024.

Income taxes amounted to tax income of € 17.0 million (prior year: tax loss of € -44.1 million).

Due to high expenses for loss assumptions, the net loss in the separate financial statements of United Internet AG for the fiscal year 2024 amounted to € -365.3 million (prior year: € 274.0 million).

Assets and financial position of United Internet AG

The parent company’s balance sheet total decreased from € 5,865.6 million as of December 31, 2023 to € 5,777.2 million on December 31, 2024.

Non-current assets of the parent company amounting to € 5,442.3 million (prior year: € 4,832.2 million) were dominated by financial assets. Due in particular to the transfer of € 370.0 million to capital reserves of 1&1 Versatel GmbH pursuant to section 272 (2) no. 4 HGB, shares in affiliated companies increased to € 4,502.2 million (prior year: € 4,132.2 million). Loans to affiliated companies rose to € 940.0 million (prior year: € 700.0 million). The change in loans results mainly from the increase in loans to subsidiary 1&1 Versatel GmbH as well as opposing repayments from the subsidiary IONOS Group SE.

Current assets of the parent company amounting to € 254.9 million (prior year: € 1,033.4 million) comprise receivables due from affiliated companies and other assets. The receivables due from affiliated companies decreased to € 222.0 million (prior year: € 1,010.6 million). They mainly comprise receivables as part of the cash management system of € 500.1 million (prior year: € 973.3 million), from sales tax grouping of € 59.0 million (prior year: € 54.8 million) as well as – with an opposing effect – liabilities due to affiliated companies from profit transfer agreements of € 335.0 million (prior year: € 16.2 million). The decrease in receivables due from affiliated companies is mainly the result of the decline in receivables from cash management due from the subsidiary 1&1 Versatel GmbH, resulting from the change to long-term financing. The increase in liabilities due to affiliated companies from profit transfer agreements is primarily attributable to the loss of United Internet Investments Holding AG & Co. KG, which in turn mainly results from the loss from dilution of its shareholding in Kublai GmbH in fiscal year 2024 from 40% to around 5%. Other assets amounting to € 33.0 million (prior year: € 22.7 million) consist mainly of receivables due from the tax office.

Shareholders’ equity of the parent company amounted to € 3,066.2 million as of December 31, 2024 (prior year: € 3,517.4 million). The decrease in equity during the reporting period is mainly due to the dividend payout of € 86.4 million and the net loss of € -365.3 million. The equity ratio declined from 60.0 % in the previous year to 53.1 % as of December 31, 2024.

The parent company’s accruals of € 9.9 million (prior year: € 7.7 million) mainly comprise accrued taxes amounting to € 6.2 million (prior year: € 5.0 million), as well as other accrued liabilities for employee stock ownership plans, legal, auditing and consulting fees, bonuses, and other items totaling € 3.7 million (prior year: € 2.6 million).

The liabilities of the parent company are shaped in particular by liabilities due to banks and to affiliated companies. In the fiscal year 2024, liabilities to banks increased to € 2,027.2 million (prior year: € 1,668.3 million). Bank liabilities mainly comprise four promissory note loans totaling € 1,217 million (prior year: € 1,162 million), various syndicated loans totaling € 700 million (prior year: € 150 million), credit facilities of € 94 million (prior year: € 295 million), bilateral credit agreements of € 0 million (prior year: € 50 million), and interest of € 16 million (prior year: € 11 million). Liabilities to affiliated companies rose to € 608.1 million (prior year: € 564.0 million). They mainly comprise liabilities from the United Internet Group’s cash pooling system, liabilities due to affiliated companies from profit transfer agreements, and liabilities from sales tax grouping. Other liabilities of € 65.9 million (prior year: € 89.8 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.

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.