Annual report mobilezone holding

Transcription

1 Annual report mobilezone holding ag 2004

2 mobilezone holding ag Financial report

3 mobilezone holding ag Financial report 2004 Group financial statements Consolidated income statement 28 Consolidated balance sheet 29 Consolidated cash flow statement 30 Consolidated statement of changes in equity 31 Notes to the consolidated financial statements 32 Report of the Group Auditors 53 mobilezone holding ag financial statements Income statement 54 Balance sheet 55 Notes to the financial statements 56 Proposal by the Board of Directors 59 Report of the Statutory Auditors 60 Annual report 2004 mobilezone holding ag 27

4 mobilezone Group Consolidated income statement for the years ended December Notes Total Group Continuing Discontinuing operations operations Revenues 288, , , ,965 20,615 74,905 Sales deductions including VAT 19,789 28,371 17,433 20,116 2,356 8,255 Net sales 1 268, , , ,849 18,259 66,650 Other operating income 855 1, , Cost of materials and merchandise 209, , , ,822 15,700 57,265 Personnel costs 2 25,375 31,171 23,692 23,355 1,683 7,816 Other operating costs 3 11,281 16,204 9,975 11,199 1,306 5,005 Operating profit before depreciation & amortization (EBITDA) 23,387 21,709 23,555 24, ,981 Depreciation of property, plant & equipment 8 2,747 3,611 2,650 3, Amortization of intangible assets 10 1,326 1,152 1,326 1, Net result of discontinuing operations Operating profit before interest & tax (EBIT) 19,487 16,994 19,579 20, ,528 Share of the results of associated companies Other financial income Financial expense , Profit/loss before income taxes 20,439 15,959 20,604 20, ,093 Income tax expense 7 3,711 4,826 3,711 4, Net profit/loss 16,728 11,133 16,893 15, ,093 (in CHF) (in CHF) Earnings per share Earnings per share diluted Annual report 2004 mobilezone holding ag

5 mobilezone Group Consolidated balance sheet as of December 31, Notes ASSETS Property, plant & equipment 8 5,385 6,004 Investments in associated companies Intangible assets 10 2,413 2,981 Deferred tax assets Other financial assets Non-current assets 8,173 9,640 Inventories 21,796 22,641 Trade accounts receivable 12 22,030 32,044 Other accounts receivable 13 5,078 6,335 Cash & cash equivalents 14 24,593 11,941 Current assets 73,497 72,961 TOTAL ASSETS 81,670 82,601 LIABILITIES AND SHAREHOLDERS EQUITY Share capital ,560 Additional paid-in capital (share premium) 20,628 21,317 Retained earnings 20,786 3,392 Shareholders equity 41,783 28,269 Deferred tax liabilities 7 2,206 2,297 Advances received Non-current provisions Non-current liabilities 2,582 3,953 Trade accounts payable 27,285 40,587 Current tax liabilities 5,366 4,167 Current provisions Other current liabilities 17 3,804 5,625 Current liabilities 37,305 50,379 TOTAL LIABILITIES AND SHAREHOLDER S EQUITY 81,670 82,601 Annual report 2004 mobilezone holding ag 29

6 mobilezone Group Consolidated cash flow statement for the years ended December Notes Profit/loss before income taxes 20,439 15,959 Interest income and expenses, net Depreciation & amortization 8,10 4,073 4,763 Loss/(Gain) on sale of property, plant & equipment Changes in provisions, net Changes in allowances, net 360 1,305 Income from associates accounted for using the equity method Gain on sale of investments in associates Other (income)/expenses not involving the movement of funds ,386 22,675 Changes in trade accounts receivable 9,982 2,599 other accounts receivable 946 1,017 inventories 829 3,353 trade accounts payable 10,980 1,627 other current liabilities 668 2,936 Income taxes paid 2,982 1,164 Net cash provided by operating activities 19,855 17,885 Acquisitions of property, plant & equipment 8 2,599 3,126 intangible assets ,108 Proceeds from disposals of property, plant & equipment investments in associated companies 9 1,000 0 other financial assets Cash flow relating to acquisitions and disposals of subsidiaries 1 1,537 1,530 Interest received Net cash used in investing activities 3,827 6,246 Repayment of bank loans 0 3,480 Repayment of shareholder loans 0 7,000 Decrease in other interest-bearing liabilities 0 62 Interest paid Capital increase 15 9,592 0 Partial repayment of nominal value of shares 15 3,216 0 Purchase of treasury shares 15 10,646 0 Sale of treasury shares Issuance of call-options on own shares Net cash used in financing activities 3,350 11,083 Translation adjustments on cash & cash equivalents Net increase/(decrease) in cash & cash equivalents 12, Cash & cash equivalents at January 1 11,941 11,173 Cash & cash equivalents at December ,593 11,941 1 Details on assets and liabilities acquired and disposed of are disclosed in the notes under Scope of consolidation on page Annual report 2004 mobilezone holding ag

7 mobilezone Group Consolidated statement of changes in equity Movements of shareholders equity Share Additional Retained Cumulative Total capital paid-in earnings/ translation capital accumulated adjustment deficits At December 31, ,560 21,317 7, ,161 Net profit 11,133 11,133 Translation adjustments At December 31, ,560 21,317 3, ,269 Capital increase from options exercised 43 9,549 9,592 Partial repayment of nominal value of shares 3,216 3,216 Purchase of treasury shares 18 10,238 10,256 Issuance of call-options on own shares Translation adjustments transferred to the income statement upon de-consolidation Net profit 16,728 16,728 At December 31, ,628 20, ,783 The line item Retained earnings/accumulated deficits includes legally restricted reserves in the amount of CHF 1,602,000 (2003: CHF 2,198,000) which are not available for distribution. Such legal reserves are established based on the legal requirements of the Swiss Code of Obligations. The transaction costs related to the issuance of share capital and the purchase of treasury shares of CHF 272,000 and CHF 112,000 respectively were deducted from additional paid-in capital. Additional information on the share capital is given in note15. Annual report 2004 mobilezone holding ag 31

8 mobilezone Group Segment information Consolidated income statement mobilezone Group Revenues 288, ,870 Sales deductions including VAT 19,789 28,371 Net sales 268, ,499 Other operating income 855 1,672 Cost of materials and merchandise 209, ,087 Personnel costs 25,375 31,171 Other operating costs 11,281 16,204 Operating profit before depreciation & amortization (EBITDA) 23,387 21,709 Depreciation of property, plant & equipment 2,747 3,611 Amortization of intangible assets 1,326 1,152 Net result of discontinuing operations Operating profit before interest and tax (EBIT) 19,487 16,994 Consolidated balance sheet mobilezone Group Non-current assets 8,173 9,640 Current assets 73,497 72,961 Total assets 81,670 82,601 Liabilities 39,887 54,332 Net assets 41,783 28,269 Investments in non-current assets 3,357 5,234 The segment Commerce comprises mobilezone ag and Europea Trade AG. The segment Fixed line telecommunication comprises globalzone ag and mobilezone international ag (since January 1, 2004). The segment Discontinuing operations comprises Otto Boenicke GmbH & Co. and Otto Boenicke Vertriebsgesellschaft mbh (both until June 30, 2003) as well as Tebbe Harms Kleen GmbH & Co. KG, Kleen Vertriebs GmbH & Co. KG and Kleen Handels GmbH (all until May 31, 2004). 32 Annual report 2004 mobilezone holding ag

9 Notes to the consolidated financial statements Commerce Fixed line Discontinuing Other/ telecommunication operations eliminations , ,713 16,749 16,453 20,615 74, ,274 18,687 1,159 1,429 2,356 8, , ,026 15,590 15,024 18,259 66, , , ,798 11,057 11,118 15,700 57, ,690 23, ,683 7, ,003 9,914 1,174 1,186 1,306 5,005 1, ,476 22,363 3,096 2, , ,638 3, ,135 1, ,703 18,328 2,893 2, , Commerce Fixed line Discontinuing Other/ telecommunication operations eliminations ,141 7, ,288 65,844 5,265 4, ,717 6, ,429 73,646 5,994 5, ,288 7, ,343 42,015 3,227 2, ,033 8,317 5,920 40,086 31,631 2,767 2, ,070 6,271 3,142 4, Except for Europea Trade AG, the segment operations are limited to their respective geographical markets. In 2004 gross sales of Europea Trade AG came to CHF 21.3 million (previous year CHF 17.4 million) in the EU and CHF 0 million (previous year CHF 3.2 million) in the Far East and Middle East markets. Annual report 2004 mobilezone holding ag 33

10 mobilezone Group General mobilezone Group, founded in May 1999, provides services and products in the area of mobile telecommunication.the business model is based on agreements with the three in Switzerland active providers, which pay mobilezone for the procurement of new clients (one-time commissions). Due to these commissions, mobilezone is able to provide its clients with mobile phones either for a very low price or for free. As per December 31, 2004 mobilezone ag operated 101 shops in all bigger Swiss cities. Europea Trade AG operates in the wholesale of mobile phones and equipment/accessory mainly as supplier of mobilezone ag. The segment fixed line telecommunication consists of globalzone ag and mobilezone international ag. These so-called switchless retailers offer their customers fixed line telecommunication services.the parent company is mobilezone holding ag, Riedthofstrasse124, 8105 Regensdorf/Switzerland. The Company is listed on the Swiss Exchange SWX. The consolidated financial statements of mobilezone give a true and fair view of its financial position, the results of operations and cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law.they have been prepared on a historical cost basis except for derivative financial instruments and marketable securities that are stated at fair value.the reporting currency is the Swiss franc (CHF). The significant accounting policies are set out below. Scope of consolidation The scope of consolidation is set out in note 4 to the financial statements of mobilezone holding ag on page 56. In the previous year the scope of consolidation was extended as per January 1, 2003 by the acquisitions of Europea Trade AG and Premium Time AG, and reduced by the discontinuation of both Boenicke companies as per July 1, In the year under review, the scope of consolidation was reduced as per May 31, 2004 by the sale of Tebbe Harms Kleen GmbH & Co. KG, Kleen Vertriebs GmbH & Co. KG and Kleen Handels GmbH. The transaction price amounted to CHF 15,000 and was received in cash. The companies sold in the year under review made net sales with third parties of CHF 47.3 million and an operating profit (EBIT) of nil in 2003.The corresponding amounts for 2004 (5 months) are presented separately in the column Discontinuing operations of the consolidated income statement. Assets and liabilities as of the date of acquisition and sale,respectively,consisted of: Acquisitions (in CHF million) Cash & cash equivalents 0.5 Other current assets 1.5 Total net assets acquired (purchase price) 2.0 Cash & cash equivalents acquired 0.5 Payment made in advance in Net cash used in acquisition activities Annual report 2004 mobilezone holding ag

11 Notes to the consolidated financial statements Disposals (in CHF million) Cash & cash equivalents Other current assets Property, plant & equipment Bank and other interest-bearing liabilities Liabilities (excluding Group loans) Translation adjustments (Gain)/Loss on de-consolidation Net cash outflow from de-consolidation (cash & cash equivalents de-recognized) Jamba! AG (Schweiz), which was included in the consolidated financial statement using the equity method, was sold as of October1, 2004 for CHF1million, at a gain of CHF145,000. Discontinuing operations On January 20, 2004, mobilezone informed in a press release about its decision to discontinue from the German activities. In June 2004 the remaining companies in Germany were sold (Kleen Group). Accordingly this segment is presented as in the previous year as a discontinuing operation.the result of this unit is disclosed separately in the income statement. Cash flows from discontinuing operations (in CHF million) Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities with third parties The de-consolidation of the discontinuing operations caused in the year under review a net gain of CHF 173,000 (previous year CHF 48,000) included in the income statement under Net result of discontinuing operations. The net result did not have any income tax effect. Annual report 2004 mobilezone holding ag 35

12 mobilezone Group Significant accounting policies Principles of consolidation The consolidated financial statements of mobilezone include the financial statements of mobilezone holding ag and all the subsidiaries it controls directly or indirectly by majority of voting rights. Those entities are fully consolidated, whereby assets, liabilities, income and expenses are incorporated at 100% in the consolidated accounts. Investments and joint ventures,on which mobilezone exercises significant influence but no control,are recorded according to the equity method and disclosed as investments in associated companies.the share in the profit or loss of associates is presented separately in the income statement. Significant positions and transactions with such investments and joint ventures are disclosed separately as items in respect of associated companies. Capital consolidation is based on the purchase method, whereby the acquisition cost of subsidiaries is eliminated at the time of acquisition against the fair value of net assets acquired, determined according to uniform corporate valuation principles. During the year under review, companies acquired or disposed of are consolidated at the date of acquisition and de-consolidated at the date of disposal. Any gain or loss on de-consolidation is recognized in the income statement. Accounts payable to, accounts receivable from, and income and expenses between the companies included in the scope of consolidation are eliminated. Intercompany profits within the Group are also eliminated upon consolidation. Discontinuing operations The net result of discontinuing operations is presented separately in the income statement. Foreign currency translation The consolidated financial statements are prepared in Swiss francs. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rates prevailing at the balance sheet date.transactions in foreign currencies are recorded using exchange rates prevailing at the time of the transaction. Gains or losses arising from the settlement of these transactions are included in current year s income. Assets and liabilities of subsidiaries, which do not report in Swiss francs, are translated into Swiss francs for consolidation purposes at the exchange rate in effect at the balance sheet date.the income statement, cash flow statement and other movements are translated at the average rate of the reporting period. Currency translation differences resulting from the translation of the balance sheet and income statements of subsidiaries and from the translation of equity-like corporate loans denominated in foreign currencies are recognized directly in equity and presented separately as cumulative translation adjustment. 36 Annual report 2004 mobilezone holding ag

13 Notes to the consolidated financial statements Financial risk management and derivative financial instruments Approximately 60% of mobilezone s purchases for Switzerland are paid in Euro. Due to the short-term nature of payments and the high inventory turnover, the Group does generally not hedge any foreign currency risks on purchases. Accordingly, the Group used only to a small degree derivative financial instruments with a short duration during the year under review. At the balance sheet date any open contracts are measured at fair value with any fair-value changes recognized in the income statement. Property, plant & equipment Property,plant & equipment are stated at historical cost less accumulated depreciation and impairment losses. Property, plant & equipment acquired by way of finance leases are stated at an amount equal to the lower of the present value of the minimum lease payments and their fair value.the corresponding finance lease liabilities are presented as a liability on the balance sheet. Depreciation is charged to the income statement on a straight-line basis over the following estimated useful lives of items of property, plant & equipment: Administration buildings Office equipment and furniture incl. EDP Shop equipment Vehicles 22 years 2 to 5 years 5 to 8 years 3to5 years Intangible assets Acquired rights such as contracts with clients, lessors, suppliers and similar rights that are generating a positive cash flow are capitalized and amortized over 5 years at maximum. Goodwill arising on an acquisition, determined as the difference between the purchase price and the fair value of the net assets acquired, is capitalized and amortized on a straight-line basis over its estimated useful life, but limited to 20 years at maximum. IFRS 3 that is applied to business combinations for which the agreement date is on or after March 31, 2004, did not have any impact on the consolidated financial statements for lack of acquisitions. From the financial year 2005, goodwill will no longer be amortized on a straight-line basis under IFRS 3, but will be tested annually for impairment. Impairment The carrying amounts of the Group s non-current assets, including goodwill and other intangible assets,are reviewed at each balance sheet date to determine whether there is any indication of impairment.if any such indication exists,the asset s recoverable amount is estimated.whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized in the income statement in that amount.the recoverable amount is the higher of the expected discounted cash flows and the estimated net selling price. Inventories Inventories are stated at the lower of cost and net realizable value.the cost of inventories is calculated using the weighted average method. Goods with long storage periods and obsolete stocks are written Annual report 2004 mobilezone holding ag 37

14 mobilezone Group down. Net realizable value is the estimated selling price in the ordinary course of business, less selling expenses. The proceeds from the sale of inventories normally comprise both the price for the mobile communication product and the commission due from the telecommunication provider for the introduction of a new subscriber. The price of the mobile communication product is determined based on whether the product is sold on a stand-alone basis or in conjunction with a subscription. Net realizable value therefore takes into account both components. In addition, the Company benefits from price protection arrangements with certain suppliers that are also considered in determining the need for any write-off. Trade and other accounts receivable Trade and other accounts receivable are stated at their nominal amounts less any valuation adjustments for credit risks. Cash & cash equivalents Cash & cash equivalents are stated at nominal value. They include cash on hand, postal and bank accounts, and money market deposits with original due dates of 3 months or less. Provisions A provision is recognized on the balance sheet when the Group has a legal or constructive obligation as a result of a past event; it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount can be estimated reliably. The provisions are determined based on the best possible estimate. If the effect is material, provisions are determined by discounting the expected future cash flow at the balance sheet date at a rate that reflects current market assessments of the time value of money and the risks specific to the liability. Contingent liabilities are disclosed if a future obligation is possible or a present obligation exists, but an outflow of resources embodying economic benefits is not probable or the amount cannot be reliably estimated. Leasing Lease contracts are recognized when the significant risks and rewards of ownership are assumed by the Group. Lease payments are divided according the annuity method into interest and principal payments. Leased assets are depreciated over the lower of the lease term and the estimated useful life. Payments made under operating leases are recognized in the income statement on a straight-line basis over the term of the lease. Lease incentives are recognized in the income statement as an integral part of the total lease expense. Revenue-based and other contingent leases are accrued on an estimated basis. 38 Annual report 2004 mobilezone holding ag

15 Notes to the consolidated financial statements Retirement benefits No retirement benefit plan existed for the employees in Germany (employed by mobilezone until May 2004). The mobilezone Group s Swiss companies have joined with all relevant risks a multi-employer plan established under Swiss law as a defined contribution plan.the plan is funded by employees and employers contributions and has certain characteristics of a defined benefit plan.the financial impact of this plan on the consolidated financial statements is determined based on the projected unit credit method. In accordance with IAS19, the difference between plan assets and defined benefit obligation is principally recognized as an asset or a liability on the consolidated balance sheet.however,a pension surplus is recognized as an asset only if the asset embodies future economic benefits that are actually available to the Group in the form of refunds or reductions in future contributions. Actuarial gains and losses arising from the periodical reassessments by external actuaries are recognized, if and to the extent that they exceed10% of the higher of the projected benefit obligation and the fair value of plan assets. The amount exceeding this corridor is amortized over the expected average remaining working lives of the employees participating in the plan. Revenue The net sales include all revenues from the sale of goods and services,less rebates,discounts,vatand write-downs of trade accounts receivable. Revenue from sale of goods is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. One-time commissions from providers are recognized at the time of the conclusion of the contract. The recurring airtime profit-sharing commissions are normally based on the subscribers monthly payments of phone bills to the providers. They are accrued and recognized in the income statement based on the respective revenues generated and communicated by the providers for a specific period. Income tax Current tax is determined on the taxable income for the year, and recognized in the income statement. Deferred tax is recognized using the balance sheet liability method, on any temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred tax is calculated using tax rates enacted or substantially enacted at the balance sheet date and based on the expected manner of realization and settlement. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the unused tax losses and credits can be utilized. Annual report 2004 mobilezone holding ag 39

16 mobilezone Group Notes to the consolidated income statement 1 Net sales Mobile communication products 121, ,732 One-time commissions and recurring airtime profit-sharing commissions from providers 116, ,572 Fixed line telecommunication revenues and telephone cards 14,903 14,876 Kiosk assortment 15,459 50,319 Total net sales 268, ,499 2 Personnel costs Wages and salaries 22,408 27,067 Social security costs 2,067 3,198 Pension costs Other employee benefit costs Total personnel costs 25,375 31,171 Number of employees at balance sheet date (based on full-time employment) Option program In 2003 the existing option program for the members of the Board of Directors,the executive and upper management was replaced by a bonus agreement. In the years 2001 and 2002, the following options were granted according to the conditions set out below: Grant year Number 989,000 1,720,000 Expiry April15, 2005 Nov. 29, 2004 Exercise ratio 1:1 1:1 Exercise price Due to the partial reduction of nominal value and the repurchase of shares during the year under review, the exercise price was reduced in accordance with the provisions of the program by CHF 0.16 per option. 40 Annual report 2004 mobilezone holding ag

17 Notes to the consolidated financial statements The allocated options vest over 3 years from grant date. The issuance of the options, except for the social security contribution, is not recognized in the consolidated financial statements. Until December 31, 2004, the following option had been exercised: Grant year 2002 Number Exercise price On June 2, , On December 7, , Grant year 2001 Number Exercise price On December 7, ,720, Employee benefits The actuarial calculation performed in accordance with IAS19 as of December 31, 2004, and resulted in the following situation: Components of pension costs Current service costs 987 1,010 Interest costs Expected return on plan assets Recognized actuarial loss in the current year 13 0 Pension cost, gross 1,091 1,021 Less employee s contributions Pension costs, net Funded status and recognized asset/(liability) Present value of defined benefit obligation 5,914 6,432 Fair value of plan assets 5,214 5,947 Excess of funded obligation over assets Unrecognized actuarial losses Adjustment due to IAS 19 para Recognized pension asset/(liability) as of December Annual report 2004 mobilezone holding ag 41

18 mobilezone Group Roll-forward of the amount recognized Pension asset/(liability) as of January Pension costs 1,092 1,021 Contributions 951 1,129 Change of adjustment due to IAS19 para Pension asset/(liability) as of December The following assumptions were applied: Discount rate 3.25% 3.50% Expected return on plan assets 2.25% 3.25% Future salary increases 0 1.5% 0 1.5% Future benefit increases 0% 0% Fluctuation rate up to 21.9% up to 21.9% Average remaining service years 7.3 years 7.7 years Number of insured employees at December Other operating costs Operating lease costs 6,556 9,090 Marketing 15,763 15,596 General and administrative costs 6,802 8,533 less: contributions received from third parties 17,840 17,015 Total other operating costs 11,281 16,204 Marketing costs are mostly and operating lease costs to a lesser extent borne by cost contributions and location contributions of business partners. 4 Net result of discontinuing operations Gain on disposal of investments 423 1,322 Provision made for litigation claims Partial purchase price refund Boenicke Group 0 1,870 Total net result of discontinuing operations The net result did not have any income tax effect. 42 Annual report 2004 mobilezone holding ag

19 Notes to the consolidated financial statements 5 Other financial income Interest on bank accounts Gain on disposal of Jamba! AG (Schweiz) Foreign exchange differences Total other financial income Financial expenses Interest on bank loans Other interest expenses Bank commissions and foreign exchange differences Total financial expenses 214 1,544 In the year under review, there were not any significant interest-bearing liabilities. The average interest rate on the interest-bearing liabilities existing in 2003 was 5.7% on bank loans (EUR), 5.5% on shareholder loans (CHF) and 6.3% on financial lease liabilities (EUR). 7 Income tax expense Current income tax expense 4,104 4,501 Deferred income tax expense Total income tax expense 3,711 4,826 Current income tax expense solely relates to the profit of the year under review. Deferred income tax expense solely relates to changes in temporary differences and the recognition of tax loss carryforwards. Taxes on capital are included in Other operating costs. Annual report 2004 mobilezone holding ag 43

20 mobilezone Group Income tax expense reconciliation (in CHF 000 or as indicated) Profit before income taxes 20,439 15,959 Expected average applicable tax rate 21.1% 21.4% Income tax at the expected average applicable rate 4,310 3,409 Items that increase/reduce income tax expense: Tax exempt income Effect of previously unrecognized tax losses utilized Unrecognized tax loss carry-forwards on current losses 125 1,640 Recognition of tax loss carry-forwards of previous periods Effect of tax rate changes Effective income tax expense 3,711 4,826 Deferred tax assets Tax benefits of loss carry-forwards The Group disposes of tax benefits of loss carry-forwards of CHF 368,000 (2003: CHF 2,399,000) that were not recognized due to the uncertainty as to whether future taxable profit will be available against which the Group will be able to utilize such benefits. The related tax losses of CHF 4,715,000 expire in Deferred tax liabilities Intangible assets Inventories 1,670 1,788 Trade accounts receivable Provisions Total deferred tax liabilities 2,206 2, Annual report 2004 mobilezone holding ag

21 Notes to the consolidated financial statements Notes to the consolidated balance sheet 8 Property, plant & equipment Land Shop Other Total and equipment property, buildings plant & equipment Cost: At December 31, ,863 15,993 3,999 26,855 Additions 2, ,126 Disposals 1, ,525 Changes in scope of consolidation 7,288 5,211 1,764 14,263 Translation adjustment At December 31, ,670 2,505 14,175 Additions 2, ,599 Disposals ,000 Changes in scope of consolidation 2,349 2,349 Translation adjustment At December 31, ,923 2,462 13,385 Accumulated depreciation: At December 31, ,020 7,899 2,664 12,583 Additions 2, ,611 Disposals 1, ,150 Changes in scope of consolidation 2,145 2,906 1,302 6,353 Translation adjustment At December 31, ,803 1,368 8,171 Additions 2, ,747 Disposals Changes in scope of consolidation 1,916 1,916 Translation adjustment At December 31, ,215 1,785 8,000 Carrying amount: At December 31, ,867 1,137 6,004 At December 31, , , Property, plant & equipment pledged as collateral 0 0 Fire insurance value of property, plant & equipment 30,780 31,882 Assets held under finance leases 0 0 Annual report 2004 mobilezone holding ag 45

22 mobilezone Group 9 Investments in associated companies Share of equity in associated companies At December 31, Share of results 125 At December 31, Share of results 272 Disposals 855 At December 31, It is the 49.9% investment in Jamba! AG (Schweiz). A gain of CHF 145,000 resulted from the disposal. 10 Intangible assets Acquired Acquired Customer Total shop locations goodwill list Cost: At December 31, ,109 28,980 1,510 32,599 Additions 1, ,108 Changes in scope of consolidation Translation adjustment At December 31, ,471 28,980 2,143 34,594 Additions Disposals 28,980 28,980 Changes in scope of consolidation 6 6 At December 31, , ,498 6,366 Accumulated amortization: At December 31, ,301 28, ,499 Additions ,152 Changes in scope of consolidation Translation adjustment 8 8 At December 31, ,041 28, ,613 Additions ,326 Disposals 28,980 28,980 Changes in scope of consolidation 6 6 At December 31, , , 075 3,953 Carrying amount: At December 31, , ,551 2,981 At December 31, ,423 2, Annual report 2004 mobilezone holding ag

23 Notes to the consolidated financial statements 11 Other financial assets Advance payments on acquisitions Rent deposits Total At December 31, , ,183 Disposals 1, ,111 At December 31, Additions/disposals 0 At December 31, Trade accounts receivable Accounts receivable from third parties 23,566 33,397 Accounts receivable from associated companies 0 36 Valuation allowance 1,536 1,389 Total trade accounts receivable 22,030 32, Other accounts receivable Prepaid expenses and accrued income 4,815 5,676 Other accounts receivable Total other accounts receivable 5,078 6, Cash & cash equivalents Cash on hand, at banks and on postal accounts 15,593 11,824 Fixed term deposits 9, Total cash & cash equivalents 24,593 11,941 Cash & cash equivalents are not subject to any restrictions (2003: CHF 304,000).The effective interest rate on fixed term deposits was 0.45% in the year under review. Annual report 2004 mobilezone holding ag 47

24 mobilezone Group 15 Share capital Bearer shares CHF 0.01 CHF 0.10 par value par value Issued and fully paid-in at December 31, ,000 35,599,400 Capital increase for the purpose of pooling the bearer shares 6,000 2,544 Issued and fully paid-in at December 31, ,601,944 Capital increase from employee options exercised 0 137,800 Partial reduction of nominal value from CHF 0.10 to CHF 0.01 per share 35,739,744 35,739,744 Capital increase from employee options exercised 1,895,000 0 Capital increase from shareholder options exercised 1,000,000 0 Number of shares issued at December 31, ,634,744 0 reduced by treasury shares: from share repurchase 2004, planned destruction 1,776,326 held for trading purposes 5,273 Number of shares issued and outstanding at December 31, ,853,145 As of September 6, 2004, the Company started a share repurchase program with tradable put options to the extent of 5% of the issued share capital. Until the end of the tender period on September 21, 2004, the Company was offered 1,776,326 shares for the repurchase price of CHF 5.70 per share. The Board of Directors proposes to the Annual General Meeting on April 14, 2005, a share capital reduction in the amount of the volume repurchased. On March 11, 2005, the Board of Directors intends to announce an other share repurchase program with tradable put options to the extent of 5% of the issued share capital and to propose to the Annual General Meeting on April 14, 2005, the destruction of the repurchased shares. The treasury shares do not have any dividend nor voting rights at the meeting of the shareholders. All outstanding shares are equally entitled to dividends and voting rights. Details on treasury shares and the contingent and authorized capital are included in the Note 5 to the annual financial statements of mobilezone holding ag on page Annual report 2004 mobilezone holding ag

25 Notes to the consolidated financial statements Calculation of earnings per share Consolidated net profit CHF 16,728,000 11,133,000 Weighted average number of shares outstanding Pieces 35,437,000 35,601,000 Earnings per share basic CHF Consolidated net profit CHF 16,728,000 11,133,000 Weighted average number of outstanding and potential shares Pieces 36,158,000 35,869,000 Earnings per share diluted CHF Provisions Litigation and Discontinuing Total 2004 Total 2003 warranty claims Operations At January Additions Used Reversed Changes in scope of consolidation Translation adjustments 0 21 At December Thereof current The increase in the provision for discontinuing operations consists of claims related to the discontinuing business activities in Germany.The payment of the amount is expected to take place in the first half-year of After finalizing the liquidation of former foreign TEGE entities, the related provision of CHF120,000 was released. The remaining provision for warranty claims relates to expected claims from the sale of mobile phones. 17 Other current liabilities Accrued expenses an deferred income 2,349 3,559 Other current accounts payable 1,455 2,066 Total other current liabilities 3,804 5,625 Annual report 2004 mobilezone holding ag 49

26 mobilezone Group Other disclosures 18 Operating Leases As of December 31, 2004, mobilezone Group operated 101 shops of which all were leased. Leases typically have fixed terms between 3 and 5 years, with an option to renew for several years. Future payments under fixed term operating leases as of balance sheet date will become due as follows: At December Less than one year 6,148 7,098 Between one and five years 16,411 15,010 More than five years 5,414 3,760 Total 27,973 25,868 The expected lease income from sublease arrangements amounts to CHF 390,000 (2003: CHF 433,000). During the year under review, CHF 6,556,000 were recognized as an expense in the income statement in respect of operating leases (2003: CHF 9,090,000). These expenses included revenue-based rents in the amount of CHF 89,000 (2003: CHF 178,000). 19 Contingent liabilities and similar commitments, capital commitments and restrictions of ownership As of December 31, 2004 and 2003, no items had to be reported under this heading. 20 Financial instruments Credit risk The Group is exposed to credit risks in the ordinary course of its operating activities. Due to industry practice most sales are paid in cash relatively few receivables are outstanding compared to total sales. There is a concentration of credit risk due to the facts that the mobile telecommunication providers are a limited number of enterprises regulated by law. Such risks are considered in the negotiation of relatively short payment terms. Foreign currency risk The revenues in the retail business and in the fixed line telecommunication are all denominated in local currency.purchases in the retail business are denominated up to approximately 60% in Euro.The Group decided not to hedge to a great extent the currency risk on purchases due to the short payment terms 50 Annual report 2004 mobilezone holding ag

27 Notes to the consolidated financial statements and the high inventory turnover. The wholesale business is not exposed to any currency risk. In the year under review derivative financial instruments with short duration were used to a minor extent. As per December 31, 2004, there were no open contracts. Interest rate risk No long-term financial liabilities or long-term fixed interest bearing investments existed during the year under review. Fair value of financial assets and liabilities The fair values of the Group s financial assets and liabilities approximate their carrying amounts. 21 Transactions with related parties The following are considered related parties to the Group: Autronic AG, Dübendorf Morasol AG (untiljuly15, 2004), Regensdorf Immoplaza AG, Regensdorf Rudolf Baer, Watt; delegate of the Board of Directors and CEO; significant shareholder of mobilezone holding ag, Morasol AG and Immoplaza AG Hans-Ulrich Lehmann, Glattfelden; member of the Board of Directors; significant shareholder of mobilezone holding ag, Autronic AG, Morasol AG and Immoplaza AG Business relationships with related parties Autronic AG is a distributor of Nokia and Samsung mobile phones in Switzerland. Autronic AG has no exclusive delivery rights and the purchases are effected at arm s length. Until the end of 2003, Morasol AG (formerly best-buy ag) operated retail shops with an assortment of household and entertainment electronics in Switzerland. mobilezone used Morasol AG as additional sales channel for mobile phone assortments at places where an own location would not be profitable. The deliveries were effected at arm s length. Morasol AG used head office services of mobilezone at the location in Regensdorf at full cost rates. In 2003 Morasol AG successively discontinued its operations. The mobilezone Group s head office and central warehouse are located in a building of Immoplaza AG at Riedthofstrasse in Regensdorf. mobilezone benefits from special lease conditions in this related party transaction. Annual report 2004 mobilezone holding ag 51

28 mobilezone Group Notes to the consolidated financial statements Transactions and balances with related parties Purchases of mobile phones from Autronic AG 60,006 40,575 Sales of mobile phones and accessories to Morasol AG 1,233 Purchases of goods and fixed assets from Morasol AG 883 Income from head office services provided to Morasol AG 375 Operating lease expenses to Immoplaza AG Accounts payable to Autronic AG 8,220 5,608 Accounts receivable from Morasol AG Post-balance-sheet events There have been no events that would have a significant impact on the consolidated financial statements. The Board of Directors approved the consolidated financial statements for issue on March10, They are subject to approval by the Annual General Meeting as of April14, Annual report 2004 mobilezone holding ag

29 mobilezone Group Report of the Group Auditors Report of the Group Auditors to the General Meeting of mobilezone holding ag, Regensdorf As Group auditors, we have audited the consolidated financial statements presented on pages 28 to 52 (balance sheet, income statement, statement of changes in equity, cash flow statement and notes) of mobilezone holding ag for the year ended December 31, These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession and with the International Standards on Auditing (ISA), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved. KPMG Fides Peat Fredy Luthiger Swiss Certified Accountant Auditor in Charge Markus Ackermann Swiss Certified Accountant Zurich, March10, 2005 Annual report 2004 mobilezone holding ag 53

30 mobilezone holding ag Income statement January 1 to December Notes Income from investments 1 7,585 13,874 Financial income 2, Reversal of provisions and impairment losses/allowances Gain on disposal of investments Other income 1, Total income 12,717 14,789 Administrative expenses 1,888 1,105 Financial expenses Losses on investments ,732 Total expenses 2,212 5,212 Net profit 10,505 9, Annual report 2004 mobilezone holding ag

31 mobilezone holding ag Balance sheet before appropriation of available earnings as of December Notes ASSETS Cash & cash equivalents 7, Treasury shares 10,256 0 Accounts receivable from Group companies 1,122 1,024 Third parties Prepaid expenses and accrued income Current assets 18,487 1,636 Investments 4 30,576 31,120 Non-current assets 30,576 31,120 Total assets 49,063 32,756 LIABILITIES AND SHAREHOLDERS EQUITY Current accounts payable to Third parties Group companies Accrued expenses and deferred income Current liabilities 539 1,142 Provisions Share capital 386 3,560 General reserves 26,627 38,544 Reserve for own shares 10,256 0 Unrestricted reserves Available earnings/accumulated deficits Balance brought forward 0 21,149 Net profit 10,505 9,577 Shareholders equity 5 47,774 30,894 Total liabilities and shareholders equity 49,063 32,756 Annual report 2004 mobilezone holding ag 55

32 mobilezone holding ag There are no further facts than disclosed hereafter that would require disclosure in accordance with Art. 663b of the Swiss Code of Obligations. 1 Income from investments This line item includes dividend and interest income relating to investments in subsidiaries and associates. 2 Losses on investments This line item includes the write-off of investments and accounts receivable from Group entities recognized and the provision made in relation to the discontinuing operations. 3 Contingent liabilities at December Subordination letters issued in favour of subsidiaries Additional guarantees in favour of subsidiaries 99 1,040 Joint and several liability from VAT Group taxation p.m. p.m. 4 Scope of consolidation and significant investments in subsidiaries and associates Investment held Paid-in capital Consolidation (%) Switzerland Europea Trade AG, Regensdorf C globalzone ag, Regensdorf C Jamba! AG (Schweiz), Regensdorf until Sept.30, 2004 E mobilezone ag, Regensdorf ,850 C mobilezone international ag, Regensdorf C Germany Otto Boenicke GmbH & Co. KG, Holzkirchen until June 30, 2003 C Otto Boenicke Vertriebsgesellschaft mbh, Holzkirchen until June 30, 2003 C 2 Tebbe Harms Kleen GmbH & Co. KG, Hausham until May 31, 2004 C 1 Kleen Vertriebs GmbH & Co. KG, Hausham until May 31, 2004 C 2 Kleen Handels GmbH, Hausham until May 31, 2004 C 2 C= Fully consolidated E = Included in the consolidated financial statements according to the equity method 1 Indirectly owned subsidiary of mobilezone holding ag (via Kleen Vertriebs GmbH) 2 Management company not engaged in operations 56 Annual report 2004 mobilezone holding ag

33 Notes to the financial statements 5 Shareholders equity Share capital, authorized and conditional capital increases As per December 31, 2004, the ordinary share capital comprises of 38,634,744 bearer shares at a par value of CHF 0.01 each. At balance sheet date, an authorized share capital of CHF 30,000 existed (2003: CHF 0). A conditional share capital amounting to CHF139,672 (previous year: CHF1,700,000) is earmarked for the exercise of employee stock options (up to CHF 29,672), for the exercise of conversion and option rights relating to any debenture loans (up to CHF 100,000) and for the exercise of other options (up to CHF10,000). At balance sheet date, options for the issuance of 676,200 (previous year: 3,772,750) bearer shares at a par value of CHF 0.01 were outstanding. Share repurchase, treasury shares On September 6, 2004 the Company started a share repurchase program with tradable put options to the extent of 5% of the issued share capital. Until the end of the tender period on September 21, 2004 the Company was offered 1,776,326 shares for a repurchase price of CHF 5.70 per share. The Board of Directors proposes to the Annual General Meeting on April 14, 2005, a share capital reduction in the amount of the volume repurchased. On March 11, 2005, the Board of Directors intends to announce an other share repurchase program with tradable put options to the extent of 5% of the issued share capital and to propose to the Annual General Meeting of April 14, 2005, the destruction of the repurchased shares. Change in number of treasury shares Amount of Price in CHF Total bearer shares Maximum Average Minimum As per January1, Purchases from stock repurchase program 1,776, ,125 Transaction costs relating to stock repurchase program 112 Other purchases at cost 99, Disposals at sale prices 93, As per December 31, ,781,599 10,256 Annual report 2004 mobilezone holding ag 57

34 mobilezone holding ag Notes to the financial statements Significant shareholders According to the information to the Board of Directors as per year-end, the following shareholders controlled more than 5% of the share capital: At December (in %) Hans-Ulrich Lehmann/Lehmann Holding AG Rudolf Baer/B&B Beratungs AG 8 14 Martin Lehmann 5 10 Schroders Plc., GB-London 10 Asialand Holding Corp., VG-Tortola 5 5 STW Ltd., VG-Tortola 5 Erich Traber 5 5 Total Annual report 2004 mobilezone holding ag