Vodafone Final Report 2001/2002

Vodafone* reports annual results with pre-tax income of SEK 1 887 million * Net income of SEK 1 350 million * 150 000 net customer additions * Net sales of SEK 5 854 million * EBITDA of SEK 2 510 million * Launch of Vodafone brand * Contract ARPU increased by 4% on like-for-like basis** Annual results for the year ended 31 March 2002 Customer Growth Vodafone's customer base increased to 1 163 000 at 31 March 2002, including 322 000 prepaid customers. A total of 150 000 new customers were added in the year (128 000), including 65 000 (62 000) contract customers. During the final quarter, 54 000 (19 000) customers were added, including 26 000 contract customers (10 000). Of the closing base, 62,000 are connected through Service Providers, of which 39,000 are contract customers. Net sales Vodafone's consolidated net sales for the year increased 10% to SEK 5 854 million compared with the prior year (SEK 5 313 million). Sales in the final quarter were SEK 1 445 million (SEK 1 342 million). Adjusting for Service Provider customers in the base this year, average monthly revenue per customer for contract customers increased by 4% on a like-for-like basis and inclusive of prepaid customers was flat versus last year. Average monthly revenue per customer for the year, excluding prepaid customers, increased by 2% to SEK 559 (SEK 550). Average monthly revenue per customer for the year, including prepaid customers, declined 2% to SEK 437 (445). The number of prepaid customers in the customer base increased during the year to 28% (23%). Their lower average usage, compared to contract customers, contributed to the decline in ARPU. * In this report, unless otherwise stated "Vodafone" refers to the activities of Europolitan Holdings AB and its subsidiaries in Sweden. ** Excluding Service Provider customers Average monthly revenue per customer in the final quarter, excluding prepaid customers was SEK 533 (SEK 545), a decrease of 2%. This is partly as a result of Easter falling in the 4th quarter this year and the resulting lower number of working days in the quarter. In addition, this year's final quarter includes a greater proportion of Service Provider customers. Cost of Sales, Operating Expenses and Net Income Cost of sales and operating expenses increased by 13% to SEK 4 051 million (SEK 3 592 million) in the year. In the final quarter, cost of sales and operating expenses were SEK 1 023 million (SEK 943 million). The changes were largely due to: · Increases in costs for the brand conversion and related marketing costs · Increased costs relating to future product and service development After net financial income of SEK 44 million (SEK 10 million), income before taxes was SEK 1 887 million (SEK 1 757 million). After tax expense of SEK 540 million (SEK 498 million) and minority interests of SEK 3 million (SEK 1 million), net income was SEK 1 350 million (SEK 1 260 million). Capital Expenditures Capital expenditures for the year amounted to SEK 1 471 million (SEK 983 million). This included the company's increasing investment in its 3G rollout, as well as ongoing upgrades and service development to its GSM / GPRS network. Capital expenditures above include Vodafone's one third share of the 3G infrastructure invested by its joint venture 3GIS AB during the year, which is accounted for using the proportionate consolidation method. On 20 December 2001, Vodafone opened its 3G network in Karlskrona, thereby meeting the deadline set by the Regulator with regards to public access to 3G networks from 1 January 2002. Liquidity and Financing EBITDA amounted to SEK 2 510 million (SEK 2 289 million) during the year ended 31 March 2002, an increase of 10%. Free cash flow (cash flow after investments) decreased by 8% to SEK 937 million (SEK 1 019 million), due mainly to increased capital expenditures. Vodafone Sverige AB has made a short-term loan to Vodafone Group Plc of SEK 1 535 million (SEK 760 million) at an annual interest rate equal to LIBID (London Interbank Bid Rate). Collaboration agreement with the Vodafone Group As previously announced Vodafone has signed an agreement with the Vodafone Group designed to increase their joint economies of scale and competitiveness in a number of different areas. The agreement covers collaboration in the areas of product management and innovation, IT and technology management, supply chain management, brand management and multinational account management. Product management and innovation relates to the joint development of new services, such as mobile payment services and multimedia services. As part of an international group, Vodafone will be able to offer its customers advanced services that will work across the Vodafone Group and thereby giving Vodafone a significant competitive advantage in the Swedish market. New service development and brand management are financed by an annual charge. The charge is determined on market terms and conditions and is based on the relative size of each company within the Vodafone Group participating in the collaboration. Those parts of the agreement relating to brand will become effective during April 2002 after the launch of the new brand. Approximately SEK 30 million has been paid to Vodafone Group companies regarding the above-mentioned agreements including service charges for the financial year ended 31 March 2002. Parent company results The parent company, Europolitan Holdings AB, had revenues during the year of SEK 35 million (SEK 25 million) and income after financial items of SEK 14 million (SEK 187 million). The change in parent company's cash was nil (increase of SEK 1 thousand). Net financing decreased by SEK 1 million (SEK 1 million). On 31 March 2002, the company purchased the outstanding 49% minority in its subsidiary, LunarMobil Sverige AB. Market overview Branding The "How Are You" brand campaign was launched on television on New Year's Day 2002 to increase awareness of the Vodafone brand. Further campaigns to complete the migration to Vodafone will continue during the first half of 2002/2003, including widespread poster and newspaper advertising from April 2002. Brand awareness figures, which are measured independently, increased significantly during the quarter ended 31 March 2002. Customers The number of customers added during the quarter increased strongly compared with both the previous quarter and the same quarter in the previous year. A number of factors contributed to this, including increased awareness of the Vodafone brand, a number of strong gains in the corporate and SME area as well as a good performance from the Service Providers in operation this year. Customer satisfaction In September 2001, Vodafone's customer service teams were awarded first prize in the annual Grand Prix Customer Service Awards for telecommunications companies. For the third time Vodafone stood out as the leader in terms of customer satisfaction in both the private and business customer segments of the mobile telecommunications sector when Svenskt Kvalitetsindex published the results of its annual survey. The survey measures customer satisfaction and quality improvement in, amongst others, the fixed and mobile telephony sectors. Traffic Traffic in Vodafone's GSM network increased significantly during the year ended 31 March 2002, though at a slower rate than the prior year due to the high penetration level in the market. Total minutes carried over the network increased by 12% (23%), while average minutes of use for its subscribers (excluding prepaid customers) grew by 4% (5%). Value added services continued to grow strongly as well. The volume of SMS messages generated increased by 73% (146%) over the prior year and SMS usage per customer increased by over 50% compared with the previous year. Services During the fourth quarter of the financial year, Vodafone announced that its customers would be able to access GPRS services ("GPRS roaming") in several European countries. The company expects to launch roaming services with additional operators in Europe in the coming months. For Vodafone's customers the international GPRS agreements will mean much faster and simpler access to mobile data services even when on the move. Using their mobile phones, laptops or palmtops, they will be able to access their e-mail, intranets and other personal services via the GPRS network with short transfer times and a continuous on-line connection. During November 2001, Vodafone launched InfoManager, a service that will make a fundamental change for businesses that want to make information available for their mobile customers or employees. There are many situations in which mobile phones can instantly enhance business efficiency. With Vodafone's InfoManager, a salesperson with a mobile phone can for instance, check the stock status of a certain product and place an order immediately while negotiating a deal with a business partner. InfoManager also allows companies to offer customers their services directly via their mobile phones. The first Vodafone customer to use the new service is Bilia, Sweden's largest retail chain for Volvo and Renault. In October 2001, Vodafone introduced new prices and e-mail functionality for its GPRS service. Vodafone's customers will be able to have their e- mails sent automatically to their GPRS-enabled mobile phones. As an example of more advanced SMS solutions, this year's Vasalopp ski race was the first to allow audiences to follow the progress of each individual skier directly via SMS to their mobile phones. Vodafone registered more than 10 000 SMS inquiries from customers who wished to follow the progress of friends and relatives as they tackled the course. Service Provider and Partner Agreements In February 2002, one of Vodafone's Service Provider partners, Glocalnet announced an agreement with IKEA to market mobile telephone services using Vodafone's network to its 1.1 million customers in Sweden. In March 2002, Vodafone announced that a unique concept in mobile telephony will be offered next year to Swedish grocery chain ICA's customers. The offer is being developed by Vodafone and will directly target ICA's 2.8 million active card customers. The concept is being designed with families in mind. Universal Telecom, one of Sweden's major fixed-line operators, launched mobile telecom services in the beginning of April through its service provider agreement with Vodafone. Fourth Quarter Highlights * In January Vodafone announced that Orange Sverige AB joined 3G Infrastructure Services AB, the 3G-infrastructure joint venture between the company and Hi3G. (Press release 2002-01-15). * The company reacted against inaccuracies in the Swedish Post and Telecom Agency's (PTS) press release regarding the decision to order Telia to reduce its termination tariffs. (Press Release 2002-01-31). * Vodafone appealed against the decision by the Swedish National Post and Telecom Agency to deem the company as having "significant market power" status (SMP). (Press release 2002-02-21). * Success for Vodafone's operator independent Vasalopp service. (Press release 2002-02-27). * Vodafone lodged its appeal against the decision by PTS to classify it as a mobile operator with "significant market power". (Press release 2002-03-13). * Vodafone opened GPRS roaming for its customers in UK, Germany and Italy. (Press release 2002-03-25). * The administrative court announced it had upheld Vodafone's request for an injunction on its status as an operator with significant market power. (Press Release 2002-03-25). * A family concept will be launched next year directed towards the customers of the grocery chain ICA. (Press release 2002-03-26). Regulatory Update Interconnection Tariffs On 25 March 2002, the Administrative Court announced it had upheld Vodafone's request for an injunction on the Regulator's decision that it has significant market power in both the mobile and the interconnect markets. Employee Profit Sharing Trust During the prior financial year ended 31 March 2001, the company established an employee profit sharing trust investing in the company's shares. The Board has taken a further decision 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 2002 to this trust. Annual General Meeting The Annual General Meeting will be held at 2:00pm on Tuesday 25 June 2002 at the Quality Hotel Globe, Stockholm. Dividend The Board of Directors will propose at the Annual General Meeting that the company will not pay a dividend for the financial year ended 31 March 2002 (nil). In coming to this decision, the Board has given consideration to the significant investment required in its 3G network rollout in the coming financial years. Annual Report The company's 2001/2002 Annual Report will be distributed to the shareholders and will be available at the Head Office at Åsögatan 108 in Stockholm from 11 June 2002. Quarterly Report The first Quarter Report for 2002/2003 will be published on 8 August 2002. Stockholm 30 April 2002 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 8 410 160 00 This report has not been audited. The same accounting principles and calculation methods have been applied in this report as in the full year report for the financial year ended 31 March 2001. Vodafone's operations in Sweden are carried out by Europolitan Holdings AB and its subsidiaries, Vodafone Sverige AB and Vodafone Stores AB. Europolitan Holdings AB is listed on Attract 40 on the Stockholm Stock Exchange's O list. The majority shareholder is Vodafone Group Plc, which owns 71 per cent of the shares, while private shareholders, investment companies and pension funds own the remaining 29 per cent. Our services enhance the efficiency of companies' operations and make it simpler and more fun for people to communicate. The Vodafone Group is the world's largest mobile network and is represented in 28 countries on 5 continents. It has more than 200 million mobile telecom users. Read more at www.vodafone.se and www.vodafone.com. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/04/30/20020429BIT01660/wkr0001.doc The Full Report http://www.waymaker.net/bitonline/2002/04/30/20020429BIT01660/wkr0002.pdf The Full Report