Europolitan Holdings AB reports quarterly results with pre-tax income of SEK 468 million

Europolitan Holdings AB reports quarterly results with pre-tax income of SEK 468 million * Net income of SEK 337 million * 27 000 net customer additions * Net sales of SEK 1 459 million * EBITDA of SEK 616 million * Continued success for The Wireless Office - customers doubled in one year * Joint venture agreement with HI3G Access AB regarding 3G build out First Quarter Report 2001/2002 Customer Growth Europolitan Vodafone's customer base increased to 1 040 000 as of 30 June 2001, including 248 000 Europolitan Vodafone prepaid cards. During the first quarter 27 000 (56 000) customers were added, being 16 000 contract customers (28 000) and 11 000 prepaid cards (28 000). The proportionate number of prepaid customers in the customer base increased during the first quarter to 24% (21%). Net sales Europolitan Vodafone's consolidated net sales for the quarter increased 12% to SEK 1 459 million compared with the equivalent period last year (SEK 1 302 million). Average monthly revenue per customer, excluding prepaid cards, was SEK 570 (SEK 551). This increase reflects relatively stable prices and increased usage per customer during the quarter, offset partly by the impact of lower termination rates. Average monthly revenue per customer, including prepaid cards, increased 1% to SEK 455 (SEK449). Cost of Sales, Operating Expenses and Net Income Cost of sales and operating expenses increased by 13% to SEK 998 million (SEK 886 million) in the first quarter. The change was largely due to: · Customer related costs and depreciation · Continuing investment in new business areas (Mobile Internet, Service Provision and Telematics) and preparation for the 3G rollout. After net financial income of SEK 7 million (SEK 1 million), income before taxes was SEK 468 million (SEK 417 million). After tax expense of SEK 132 million (SEK 117 million) and minority share of SEK 1 million (nil), net income was SEK 337 million (SEK 300 million). Capital Expenditures Capital expenditures for the first quarter amounted to SEK 248 million (SEK 216 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. In addition, investment in 3G was initiated during the quarter, although this did not represent a significant part of the total investment for the quarter. Liquidity and Financing EBITDA amounted to SEK 616 million (SEK 542 million) during the quarter, an increase of 14%. Cash flow after investments (free cash flow) increased by 7%, despite increased investment in capital expenditures and higher working capital. Parent company results The Group's parent company, Europolitan Holdings AB, had revenues in the first quarter of SEK 9 million (SEK 6 million) and posted income before taxes of SEK 2 million (kSEK 39). There were no changes in the parent company's cash (no change) and net financing (no change). 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. 2 is 1 June to 1 December 2001. Subscriptions for new shares with exercise of a part of the warrants connected to issue No. 2 have been made which increased share capital by SEK 26,390 to SEK 102,321,935 and increased the number of shares by 105,560 to 409,287,740 since 31 March 2001. 3G Early this year certain unsuccessful licence applicants appealed the award of the four licences by the PTS. The administrative court's decision was announced on 27 June 2001 and it rejected their demands for a review. The court process has not affected Europolitan Vodafone's preparations for 3G. A number of existing sites have now been prepared for the 3G installation with antennas that can manage frequency bands for both GSM and 3G. In January 2001, Europolitan Vodafone and HI3G Access AB signed a letter of intent to form a joint venture to build and operate 3G infrastructure. The letter of intent resulted in May in the formation of a joint infrastructure company, 3G Infrastructure Services AB (3GIS). The company will build and operate shared 3G infrastructure covering up to 70 percent of the population to both parties. Orange signed a letter of intent in May with Europolitan Vodafone and HI3G Access AB to co-operate on the 3G rollout. The letter of intent offers Orange co-ownership in 3GIS on the same terms. During August, the company is expecting to finalise negotiations with infrastructure suppliers both for its own 3G network rollout and also the shared 3G network in 3GIS. Europolitan Vodafone expects to conclude discussions on the ownership structure of 3GIS in the same timeframe. Further financial information about the cost implications of these discussions will be provided in due course. Market overview Customers The growth in the customer base in the first quarter of the financial period was lower than the growth experienced in the same calendar quarter of 2000 due to the higher penetration in Sweden. Europolitan Vodafone continues to seek growth in its customer base only when it makes strong financial sense to do so, whilst also focusing on services for its existing customers. In line with its previous announcements, the company sought to reduce commission levels, which contributed to the modest growth during the quarter. Of its total customer base at 30 June 2001, Europolitan Vodafone had an active customer base of 89%. The proportion of active contract customers amounted to 92% and prepaid customers 80%. Active customers are defined as those who have made a chargeable outgoing call in the last three months. During the quarter, a new concept was launched based on simplicity for the customer. The concept is called Easy, and is geared to private customers and subdivided into four tariffs for different needs. All customers have access to voice mail service, SMS, number display and Europolitan Vodafone's data service at no additional cost. In May 2001, Europolitan Vodafone launched a youth concept initiative - the prepaid card CU. The prepaid card offers both prices and services adapted to the lifestyle and needs of young people. The CU concept also includes a web site - www.wannacu.com, and the aim is for it to develop into a community for young people. Services During the quarter Europolitan Vodafone extended its mobile service offerings with over 100 new WAP and SMS services. Its customers now have access to among other things, sports results directly to their mobile phone in addition to news, weather and share prices. Europolitan Vodafone's WAP portal has also been extended with new WAP services including entertainment, music, and a variety of other information. Europolitan Vodafone's three-year initiative The Wireless Office concept has seen the number of companies with wireless offices doubled in one year. Its Wireless Office service gives companies a single wireless telephony solution that replaces all previous corporate subscriptions. The result is that telephone users are no longer tied to their workplace. Staff can access the same types of switching functions as in a fixed network, e.g. short numbers, call transfer, voice mailbox and conference calls, with their mobile phones. Furthermore, users have access to a range of mobile services such as sending and receiving text messages, mobile fax and mobile data. Service Provider Agreements During the first quarter Europolitan Vodafone and LunarWorks formed a jointly owned company, LunarMobil Sverige AB. LunarMobil Sverige AB is 51 per cent owned by Europolitan Holdings AB and 49 per cent by LunarWorks 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. The mobile services and concepts will be marketed and sold under the LunarMobil brand name. Telenor Mobil Communications has through its subsidiary Zalto Communications AS signed an agreement with Europolitan Vodafone whereby Zalto will use the company's network to sell mobile services to the Swedish market with the brand "djuice". First Quarter Highlights · On 5 April Europolitan Vodafone announced that it had extended its mobile service offerings with over 100 new WAP and SMS services. The customers now have access to among other things, sports results directly to their mobile phone in addition to news, weather and share prices. (Press Release 2001-04-05). · On 18 April Europolitan Vodafone and LunarWorks announced that they had formed a jointly owned company, 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. (Press Release 2001-04-18). · Europolitan Vodafone's concept The Wireless Office has become a success. The number of companies with wireless offices has doubled in one year. At the end of the first quarter, nearly 50 companies within industry, the public sector and the IT, pharmaceutical and haulier industries currently have wireless office agreements. (Press Release 2001-04-24). · Reuters and Europolitan Vodafone have signed a collaboration agreement that will make Europolitan Vodafone the first mobile operator in Sweden to offer its customers Reuters' financial news directly to their mobile phones. (Press Release 2001-05-02). · Europolitan Vodafone announced that a wireless communications solution for parking fees had been developed with Parking Partners. Europolitan Vodafone's customers can now easily pay parking fees with their mobile phone via SMS, WAP, and GPRS or by calling a special phone number. (Press Releases 2001-05-08 and 2001-05-30). · On 14 May Europolitan Vodafone and HI3G Access AB announced that they had founded a 50:50 owned joint venture company - 3G Infrastructure Services AB - that will provide the two companies with 3G infrastructure covering up to 70% of the population. (Press Release 2001- 05-14). · Europolitan Vodafone launched a new subscription concept for private customers on 14 May. The concept is called Easy, and is subdivided into four tariffs for different needs: Easy Kontant, Easy Fritid, Easy SMS and Easy Alltid. (Press Release 2001-05-14). · Orange signed a Letter of Intent with Europolitan Vodafone and HI3G Access AB regarding infrastructure co-operation. (Press Release 2001-05-16). · Europolitan Vodafone launched a new prepaid card, CU that is specially designed for young people in the 15-25 age group. (Press Release 2001-05-22). · Europolitan Vodafone applied for a licence to provide fixed radio access. Fixed radio access is a wireless broadband variant. (Press Release 2001-05-29). · In June Europolitan Vodafone announced that it had signed a service provider agreement with Zalto Communications AS, a subsidiary of Telenor Mobile Communications whereby Zalto will use Europolitan Vodafone's network to sell mobile services to the Swedish market. (Press Release 2001-06-18). · Ericsson and Europolitan Vodafone announced in June that a working partnership was initiated relating to Ericsson's new digital pen - Chatpen - which enables direct communication via mobile phones, computers and the Internet. (Press Release 2001-06-18). Regulatory Update Interconnection Tariffs On 29 May 2001, Telia Mobile was ordered by the Swedish National Post and Telecommunications Agency (PTS) to reduce its interconnection charge from fixed to mobile in the mobile network from SEK 1.18 per minute to SEK 0.98 per minute. Telia Mobile appealed against this decision with the administrative court. On 31 May, the court granted an injunction to stop the reduction until such time as the appeals process has been completed. Telia Mobile's termination charge therefore remains at SEK 1.18. Quarterly and Half Year Report Europolitan Holdings AB Second Quarter and Half Year Report for 2001/2002 will be published on 25 October 2001. Stockholm 17 July 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. The same accounting principles and calculation methods have been applied in the quarterly report as in the full year report to 31 March 2001. 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 Stockholm Stock Exchange's Attract 40. The company's principal owner is Vodafone, with 71 per cent of Europolitan Holdings AB. The remaining 29 per cent is owned by approximately 30,000 private shareholders, unit trust funds and insurance companies. The Vodafone group is represented on 5 continents and has around 93 million customers (proportionate customers). For more information, please visit www.europolitan.se and www.vodafone.com. KEY FINANCIAL DATA Three Months Change Percen t FIRST QUARTER 30 June 2001 30 June 2000 Number of customers end of 1 040 000 941 000 99 000 11% period Net customer additions 27 000 56 000 -29 000 -52% Average monthly revenue per 455 449 6 1% customer * (SEK) Average monthly revenue per 570 551 19 3% subscriber * (excluding prepaid EASY cards) (SEK) Net sales (SEK mil) 1 459 1 302 157 12% EBITDA** (SEK mil) 616 542 74 14% EBITDA margin (%) 42% 42% - - Income before taxes (SEK 468 417 51 12% mil) Capital expenditures (SEK 248 216 32 15% mil) Free cash flow*** (SEK mil) 111 104 7 7% Share price (end of period) 67 112 -45 -40% (SEK) Number of shares outstanding 409 287 740 408 660 000 627 740 0.2% - undiluted Number of shares outstanding 409 871 935 409 884 948 -13 013 - - diluted Number of shares outstanding 409 205 685 408 660 000 545 685 0.1% (weighted average) undiluted Number of shares outstanding 409 789 881 409 884 948 -95 067 - (weighted average) diluted * Europolitan AB Revenue ** Earnings before interest, taxes, (net sales) depreciation and amortisation *** Cash flow after investing activities Of its total customer base at 30 June 2001, Europolitan Vodafone had an active customer base of 89%. The proportion of active contract customers amounted to 92% and prepaid customers 80%. Active customers are defined as those who have made a chargeable outgoing call in the last three months. Consolidated Income Statements Amounts in SEK millions 2001- 2000- 04-01- 04-01- 2001- 2000- 06-30 06-30 (3 (3 months months ) ) Net sales 1 459 1 302 Cost of sales -741 -720 Gross profit 718 582 Selling expenses -153 -97 Administrative expenses -108 -73 Other operating income 6 8 Other operating expenses -2 -4 Operating income before 461 416 financial items Financial income 9 3 Financial expense -2 -2 Income before taxes 468 417 Taxes -132 -117 Minority interests 1 0 Net income 337 300 Weighted average 0.82 0.73 undiluted net income per share (SEK) Weighted average diluted 0.82 0.73 net income per share (SEK) The financial statements have been presented with costs classified on a "functional basis" in order to provide a more meaningful analysis to readers. Prior year amounts have been restated to conform to the 2001 presentation. Consolidated Balance Sheets Amounts in SEK millions 2001-06- 2001-03- 2000-06- 30 31 30 ASSETS Intangible fixed assets 54 58 69 Tangible fixed assets 3 027 2 918 2 628 Construction-in-progress 289 303 235 Financial fixed assets 3 3 0 Total fixed assets 3 373 3 282 2 932 Inventories 46 32 86 Accounts receivable 520 440 423 Other current assets 516 465 467 Short-term loan to majority 910 760 0 owner Cash and bank deposits 53 58 61 Total current assets 2 045 1 755 1 037 Total assets 5 418 5 037 3 969 SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES Restricted equity 1 881 1 759 1 430 Unrestricted equity 1 528 1 310 665 Total shareholders' equity 3 409 3 069 2 095 Minority interests 4 4 0 Allocation to pension fund 25 21 15 reserve (FPG/PRI) Deferred taxes 683 636 512 Other provisions 8 9 0 Total provisions 716 666 527 Long-term liabilities to 93 57 8 financial institutions Total long term liabilities 93 57 8 Short-term liability to 0 0 210 majority owner Short-term liabilities to 4 9 18 financial institutions Accounts payable 277 258 209 Tax liabilities 296 283 272 Other liabilities 619 691 630 Total current liabilities 1 196 1 241 1 339 Total shareholders' equity, 5 418 5 037 3 969 provisions and liabilities Consolidated Statements of Cash Flows 2001- 2000- 04-01- 04-01- Amounts in SEK millions 2001- 2000- 06-30 06-30 (3 (3 months months ) ) Income before taxes 468 417 Depreciation and 155 126 amortisation Other items 9 5 Taxes paid -72 -75 Cash provided by operations 560 before changes in working 473 capital Changes in working capital -201 -153 Cash flows from operating 359 320 activities Investments in tangible -248 -216 assets Cash flows after investing 111 104 activities Advances from majority 0 210 shareholder Proceeds from long-term 36 0 borrowings Repayment of loan -5 -19 Exercise of options 3 0 Dividends paid 0 -450 Cash flows from financing 34 -259 activities Change in cash and cash 145 -155 equivalents Cash and cash equivalents - 818 216 opening balance Cash and cash equivalents - 963 61 closing balance Statements of changes in shareholders' equity Total Total Share Restric restric Unrestri sharehol Amounts in SEK capit ted ted cted ders' millions al reserve equity equity equity s Balance at 31 March 102 1 220 1 322 923 2 245 2000 Reclassification 0 108 between restricted and unrestricted 108 -108 0 reserves Dividends paid 0 0 0 -449 -449 Net income 3 months 0 0 0 299 299 Balance at 30 June 102 1 328 1 430 665 2 095 2000 Exercise of options 0 13 13 0 13 Reclassification 0 between restricted and unrestricted 316 316 -316 0 reserves Net income 9 months 0 0 0 961 961 Balance at 31 March 102 1 657 1 759 1 310 3 069 2001 Exercise of options 0 3 3 0 3 Reclassification 0 119 -119 between restricted and unrestricted 119 0 reserves Net income 3 months 0 0 0 337 337 Balance at 30 June 102 1 779 1 881 1 528 3 409 2001 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/07/17/20010717BIT00050/bit0001.doc http://www.waymaker.net/bitonline/2001/07/17/20010717BIT00050/bit0001.pdf