Annual results Europolitan Holdings AB 200/2001

Europolitan Holdings AB reports annual results with pretax income of SEK 1 757 million * Net income of SEK 1 260 million * 128 000 net customer additions * Net sales of SEK 5 313 million * EBITDA of SEK 2 289 million * Launch of Europolitan Vodafone brand and first pan European tariff and short code dialling * Launch of Sweden's first voice portal Annual results for the year ended 31 March 2001 Customer Growth Europolitan Vodafone's customer base increased to 1 013 000 as of 31 March 2001, including 237 000 Europolitan Vodafone EASY prepaid cards. A total of 128 000 new customers were added in the year (219 000), including 62 000 contract customers. During the final quarter 19 000 (39 000) customers were added, including 10 000 contract customers (19 000). Net sales Europolitan Vodafone's consolidated net sales for the year increased 15% to SEK 5 313 million compared with the prior year (SEK 4 640 million). Average monthly revenue per customer, excluding EASY prepaid cards, was SEK 550 (SEK 565). This decline reflects the impact of lower termination rates, which was partially offset by increased usage per customer. Average monthly revenue per customer, including EASY prepaid customers, declined 7% to SEK 445 (479). The proportionate number of prepaid customers in the customer base increased during the year to 23% (19%). Their lower average usage, compared with contract customers, contributed to the decline in ARPU. Cost of Sales, Operating Expenses and Net Income Cost of sales and operating expenses increased by 18% to SEK 3 592 million (SEK 3 040 million) in the year. The change was largely due to: * Customer related costs and depreciation * New business areas (Doberman, Ocom, Mobile Internet and Telematics) however not included for the full prior year After net financial income of SEK 10 million (expense SEK 11 million), income before taxes was SEK 1 757 million (SEK 1 608 million). After tax expense of SEK 498 million (SEK 452 million) and minority share of SEK 1 million (nil), net income was SEK 1 260 million (SEK 1 156 million). Capital Expenditures Capital expenditures for the year amounted to SEK 983 million (SEK 841 million). This reflects the company's continued investment in its GSM network, now enhanced with GPRS technology, to ensure that both the highest quality and most advanced technology are available to its customers. Liquidity and Financing Cash flow after investing activities (free cash flow) amounted to SEK 1 019 million (SEK 1 200 million) in the year. The slightly lower level compared to the prior year is due principally to the company paying tax on its earnings, the increased investment in capital expenditures and higher working capital, due to a change in the company's billing policy. Parent company results The Group's parent company, Europolitan Holdings AB, had revenues in the year of SEK 25 million (SEK 27 million) and posted income before taxes of SEK 187 million (SEK 1 292 million). The parent company's cash increased by SEK 1 thousand (decrease of SEK 12 thousand). Net financing decreased by SEK 1 million (SEK 487 million). In 1997 Europolitan Holdings AB issued three debentures (issue Nos. 1, 2 and 3) each with detachable warrants with a right to subscribe to new shares. Warrants were detached and transferred to senior management of the Europolitan Group. The exercise period according to the warrants connected to issue No.1 was 1 June to 1 December 2000. Subscriptions for new shares in connection with exercises of the warrants attached to issue No.1 have been made which increased the share capital outstanding to SEK 102 295 545 and the number of shares to 409 182 180. Market overview UMTS On 16 December 2000 the company was awarded a licence to operate a UMTS network by the Swedish National Post and Telecom Agency (PTS). Certain unsuccessful licence applicants have appealed the award of the four licences by the PTS. It is difficult to predict the length of the appeals process. However, Europolitan Vodafone is confident that its licence award will be upheld. Europolitan Vodafone continues to progress with its detailed rollout plans as submitted in its licence application in order to fulfill the licence conditions. In January 2001, Europolitan Vodafone and HI3G Access AB signed a letter of intent to form a joint venture to build and operate UMTS infrastructure, mainly outside the three metropolitan areas of Stockholm, Gothenburg and Malmoe. Discussions with HI3G Access AB are progressing well with detailed network rollout planning including vendor selection for the joint network continuing according to plan. Customers A number of customers connected during the equivalent quarter last year after a promotional campaign were disconnected during this quarter in line with the company's disconnection policy. In line with its previous announcements, the company continued to maintain commission levels below those of its competitors, which resulted in lower growth during the final quarter. Customer satisfaction In January 2001, Svenskt Kvalitetsindex published the results of its survey which sought to measure customer satisfaction and quality improvement in, among others, the fixed and mobile telephony sectors. As with previous surveys, Europolitan Vodafone stood out as the leader in terms of customer satisfaction in both the private and business customer segments of the mobile telecommunications sector. Traffic Traffic in Europolitan Vodafone's GSM network increased significantly to 31 March 2001, though at a slower rate than the prior period due to the high penetration level in the market. Total minutes carried over the network increased by 23% (41%), while average minutes of use per subscriber (excluding EASY prepaid customers) grew 5% (9%). Value added services continued to grow strongly as well. The volume of SMS messages generated increased by 146% (163%) over the same period. Services During the fourth quarter of the financial year, the company was the first mobile operator in Sweden to launch a voice-activated portal. In addition to the services already offered on the company's Hantera mobile website, customers can now "surf" the internet using voice commands, to access services such as the latest weather forecasts, share prices, sports and financial updates. The company also announced a collaboration with Volvo Cars to provide in- car telematics solutions, initially focusing on navigation and safety services, such as emergency service notification after an accident. Europolitan Vodafone signed a partnership agreement with Anoto during the fourth quarter to provide paperless communication solutions to its customers. These services, to be launched later in 2001 and during 2002, will enable customers to send messages written with a specially enabled pen direct to a computer, mobile phone or fax machine. In April 2001, the company launched a broad range of gaming and entertainment services directly for mobile phones. Europolitan Vodafone's gaming and entertainment suppliers are currently Bluefactory, Picofun and Aspiro, but the company is also conducting ongoing discussions with other content providers. These services will stimulate the use of mobile phones for more than just speech and they will be easier to use with GPRS technology. Service Provider Agreements In addition to the agreements announced previously, Europolitan Vodafone has signed service provider agreements with LunarWorks and Mobyson. After the end of the period, Europolitan Vodafone and LunarWorks announced that they are forming a company known as LunarMobil Sverige AB. LunarWorks is currently managing an on-line meeting place for young people - Lunar Storm - with more than half a million active members. The collaboration is designed to help LunarWorks' youth portal to go mobile. Glocalnet launched mobile phone services to its customers as a complement to their fixed line service package during the fourth quarter. A number of the service providers with whom Europolitan Vodafone has already announced agreements are planning to launch mobile services during the first quarter of the financial year which began on 1 April 2001. Fourth Quarter Highlights * During the final quarter of the financial year, Europolitan Vodafone announced that it had signed service provision agreements with HemEl (which has over 800 000 private customers), ICA (which has a loyal cardholder base of over 3 million users in Sweden), LunarWorks (which operates Lunar Storm, a website for young people which has attracted over 500 000 active members since its launch) and Mobyson (which has a target group of young people and specialises in gaming and entertainment) - See Press Releases 2001-01-19, 2001-01-22, 2001-02-13 and 2001-02-21 respectively. * On 23 January, Europolitan Vodafone signed a letter of intent with HI3G to set up a joint venture which will co-build and operate up to 70% of the population coverage (Press Release 2001-01-23). * Europolitan Vodafone and Volvo Cars announced a collaboration on 6 March to provide in-car telematics solutions, including safety and navigational services (Press Release 2001-03-06). * On 19 March, Europolitan Vodafone was launched, highlighting the company's membership of the Vodafone Group, the world's largest mobile company which will enable the company to provide its customers with a broader range of international services (Press Release 2001-03- 19). * Europolitan Vodafone announced a collaboration with Anoto to provide paper-based wireless communication services to its customers (Press Release 2001-03-20). * On 27 March, Europolitan Vodafone launched its first international service, enabling its customers to benefit from uniform prices when travelling to 38 European countries (Press Release 2001-03- 27). * On 28 March, Europolitan Vodafone became the first mobile operator in Sweden to launch a voice portal service on the Internet for its customers, enabling them to "surf" weather forecasts, share prices and news direct from their mobile phone using voice commands (Press Release 2001-03-28). * Europolitan Vodafone announced on 29 March a broad range of entertainment and gaming services available to its customers using their mobile phones, either by SMS or WAP (Press Release 2001-03-29). Regulatory Update Interconnection Tariffs On 28 February 2001, the Administrative Court announced that it had upheld the claim by PTS for Telia to charge lower interconnection rates, instructing Telia to charge an average of SEK 1,18 per minute for mobile call termination. This decision has been appealed by Telia. Employee Profit Sharing Trust The Board has decided to pay a profit-related bonus to all qualifying employees by providing 0.6% of the company's income before taxes for the financial year ended 31 March 2001 to an employee profit sharing trust investing in Europolitan shares. Annual General Meeting The Annual General Meeting will be held at 3:00pm on Tuesday 26 June 2001 at Moderna Muséet, on Skeppsholmen in Stockholm. Dividend The Board of Directors will propose at the Annual General Meeting that the company not pay a dividend for the financial year ended 31 March 2001 (SEK1,10 per share). In coming to this decision, the Board has given consideration to the significant investment required in its UMTS network rollout in the coming financial years. Annual Report The company's 2000/2001 Annual Report will be distributed to the shareholders and will be available at the Head Office of Europolitan Holdings AB, Biblioteksgatan 11, Stockholm from 12 June 2001. Quarterly Report Europolitan Holdings AB First Quarter Report for 2001/2002 will be published on 17 July 2001. Stockholm 26 April 2001 The Board of Directors - Europolitan Holdings AB (publ) For more information, please contact: Jon Risfelt, President and CEO, +46708331001 Mark Carey, CFO, +46708331803 Monica Enderstein, Investor Relations, +46708331802 Tel: +46 (0) 8 678 09 50 This report has not been audited. Europolitan Holdings AB is the holding company of the mobile operator Europolitan Vodafone. The group operates a GSM network in Sweden and has a licence to build a 3G mobile telecoms network. Europolitan Vodafone employs some 1 400 people. Europolitan Holdings AB is listed on the O- list of the OM Stock Exchange's Attract 40. The company's principal owner is Vodafone, with 71 per cent of Europolitan Holdings. The remaining 29 per cent is owned by approximately 30,000 private shareholders, investment companies and pension funds. The Vodafone group is represented on 5 continents and has around 80 million customers (proportionate customers). For more information, please visit www.europolitan.se and www.vodafone.com. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/26/20010426BIT00530/bit0001.doc Full Annual Report http://www.bit.se/bitonline/2001/04/26/20010426BIT00530/bit0002.pdf Full Annual Report

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