Nine Month Report 1998 for Europolitan Holdings

Europolitan reports continued good growth and strong profitability, with pre- tax income of SEK 739 million 150,000 net customer additions Revenue up 52% 139% increase in operating income New wireless office customers 1998 Nine Month Report Market Overview Europolitan increased its total customer base to 574,000 as of September 30, 1998, including 73,000 sold and activated Europolitan EASY prepaid cards. A total of 150,000 (73,000) new customers were added in the first nine months of 1998, including 66,000 EASY prepaid cards activated since the beginning of the year. Customer growth extended across all market segments. For the third quarter ending September 30, 1998 Europolitan added 46,000 (28,000) new customers, of which 22,000 represented EASY prepaid cards. Recent Highlights Europolitan continued its success in developing the wireless office market, with the signing of three new customers since mid-year, Bull, PostNet and Frontec. These new business users have replaced their fixed telephony facilities with Europolitan's GSM wireless office. These additions mark the growing appeal of the wireless office solution and highlight the potential to attract incremental traffic into Europolitan's mobile network which had previously been handled through fixed line facilities. Europolitan was selected as the provider of GSM services to Scandinavian Airlines System (SAS) in Sweden. SAS has approximately 2,000 employees using mobile telephony today. (Press Release October 19, 1998). Europolitan launched its Personal Answering Service for small and medium size companies. This service assists the customer by answering incoming calls on their behalf anytime of the day or night when the customer is not able to receive calls. The customer is continuously notified of the calls answered on their behalf, for example via text message (SMS) or other means. Europolitan developed a new service in cooperation with Consafe Infotech and Karlskrona municipality which benefits home-bound patients. The service enables a caregiver to receive via mobile text telephone critical information about the home patient in an emergency. The information is then transmitted either as a data call or a text message (SMS). (Press Release September 23, 1998). Revenue Europolitan's consolidated net sales plus other income for the nine months ending September 30,1998 was SEK 2,387 million, an increase of 52% compared with the same period last year (SEK 1,574 million). Even with the larger customer base, average monthly revenue per subscriber, excluding prepaid EASY customers, increased 2% to SEK 544 (SEK 531), due to positive growth in traffic per user and value added services. Including prepaid EASY customers, average monthly revenue per customer declined only 3% to SEK 514 (SEK 531). Operating Expenses and Income With operating expenses of SEK 1,601 million (SEK 1,245 million), net of capitalized expenses for own use, operating income before financial items increased 139% to SEK 786 million (SEK 329 million), reflecting the company's improved operating efficiencies. Capital Expenditures Capital expenditures increased to SEK 499 million (SEK 333 million) to support the growth in traffic and new services and to enhance coverage. Liquidity and Financing In spite of the higher capital expenditures, free cash flow (cash flow after investing activities) increased 190% to SEK 418 million (SEK 144 million). Debt to financial institutions at September 30, 1998 was SEK 1.1 billion (SEK 733 million). Preliminary Annual Results The company's preliminary annual results for 1998 will be released on January 28, 1999. Stockholm, October 21, 1998 The Board of Directors - Europolitan Holdings AB (publ) For further information, please contact: Tomas Isaksson, President and CEO Devin Brougham, Chief Financial Officer Tel: +46 (0)8 678 09 50 Previous financial reports and additional information regarding Europolitan can also be obtained on the internet at www.europolitan.se. COMPARISON OF KEY FIGURES NINE MONTHS Nine Months Ended Change Percent Sept 30,Sept 30, 1998 1997 Customers (End of Period) 574 000 354 000 220 000 62% Net Customer Additions 150 000 73 000 77 000 105% Average Monthly Revenue per (SEK) 514 531 -17 -3% Customer * Average Monthly Revenue per (SEK) 544 531 13 2% Subscriber * (excluding prepaid EASY cards) Net sales plus other income (SEK mil) 2 387 1 574 813 52% Operating Cash Flow ** (SEK mil) 1 039 528 511 97% Operating Cash Flow Margin (%) 44% 34% 10% - Pre-tax Income (SEK mil) 739 304 435 143% Capital Expenditures (SEK mil) 499 333 166 50% Free Cash Flow *** (SEK mil) 418 144 274 190% THIRD QUARTER Three Months Ended Change Percent Sept 30, Sept 30, 1998 1997 Customers (End of Period) 574 000 354 000 220 000 62% Net Customer Additions 46 000 28 000 18 000 64% Average Monthly Revenue per (SEK) 522 551 -29 -5% Customer * Average Monthly Revenue per (SEK) 568 551 17 3% Subscriber * (excluding prepaid EASY cards) Net sales plus other income (SEK mil) 882 585 297 51% Operating Cash Flow ** (SEK mil) 421 213 208 98% Operating Cash Flow Margin (%) 48% 36% 12% - Pre-tax Income (SEK mil) 318 135 183 136% Capital Expenditures (SEK mil) 172 111 61 55% Free Cash Flow *** (SEK mil) 246 122 124 102% * Europolitan AB Revenue (net sales plus other income) ** Cash Supplied from Operations, excluding financial items *** Cash Flow after Investing Activities CONSOLIDATED INCOME STATEMENT (Unaudited in SEK million) Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 Net sales plus other income 882 585 2 387 1 574 Capitalized expenses for own use 6 6 22 15 Total Operating Revenue 888 591 2 409 1 589 Operating Expenses - - -1 -1 260 555 447 623 Operating Income before Financial 333 144 786 329 Items Financial items, Net - 15 - 9 - 47 - 25 Income after Financial Items 318 135 739 304 Tax * - 90 0 - 155 0 Net Income 228 135 584 304 Net Income per Share (SEK) 5.56 3.06 14.19 6.54 (fully diluted, adjusted for preference share dividends) Share Price (SEK) - end of period 667 210 667 210 * Tax calculated by applying corporate tax rate of 28% to year-to-date pre-tax income less estimated tax loss carry forward available. CONSOLIDATED BALANCE SHEET (Unaudited in SEK million) September 30, 1998 1997 ASSETS Fixed Assets 2 088 1 722 Construction in Progress 159 124 Total Fixed Assets 2 247 1 846 Accounts Receivable 209 164 Other Current Assets 297 197 Cash and Bank Deposits 34 24 Total Current Assets 540 385 TOTAL ASSETS 2 787 2 231 SHAREHOLDERS' EQUITY, PROVISIONS, AND LIABILITIES Total Shareholders' Equity 1 076 1 138 Provisions Pension Fund 5 3 Deferred Tax 155 0 Total Provisions 160 3 Long Term Liabilities to Financial 1 076 702 Institutions Short Term Liabilities to Financial 29 31 Institutions Total Liabilities to Financial 1 105 733 Institutions Accounts Payable 110 150 Other Liabilities 336 207 Total Current Liabilities 446 357 TOTAL SHAREHOLDERS' EQUITY, 2 787 2 231 PROVISIONS, AND LIABILITIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited in SEK million) Three Months Nine Months September 30, September 30, 1998 1997 1998 1997 Cash Supplied from Operations Net income 228 135 584 304 Deferred tax 90 0 155 0 Depreciation and amortization 85 66 241 189 Loss on disposal of fixed assets 2 2 9 7 Allocation to pension fund reserve 1 1 3 3 Total Cash Supplied from Operations 406 204 992 503 Change in Working Capital 12 29 - 75 - 26 Cash Flow from Operating Activities 418 233 917 477 Capital Expenditures - 172 - 111 - 499 - 333 Cash Flow after Investing 246 122 418 144 Activities Redemption of preference shares 0 0 - 536 - 300 Cash dividend 0 0 - 184 0 Change in liabilities to financial - 232 - 132 314 157 institutions Cash Flow from Financing Activities - 232 - 132 - 406 - 143 Change in Liquid Funds 14 - 10 12 1 ------------------------------------------------------------ http://www.bit.se/bitonline/1998/10/21/19981021BIT00150/9MENGFIN.pdf http://www.bit.se/bitonline/1998/10/21/19981021BIT00150/9MENGFIN.doc