Annual report mobilezone holding

Transcription

1 Annual report mobilezone holding ag 2005

2 Credits Copy: mobilezone holding ag Editing: Christoph Zurfluh, Baar Design: AfIT, Buergi & Partner, Oberglatt ZH Photos: Marcel Studer, Zurich (portraits); Peter Dotzauer, Henau (BD/GM); Archive mobilezone Printing: Druckerei Horisberger, Regensdorf ZH Information: Current information from press conferences and publications on the website Link: corporate homepage mobilezone holding ag This annual report is a translation of the original version in German. The English translation is only available in form of a pdf-file from the corporate homepage mobilezone holding ag

3 mobilezone holding ag A NNUAL REPORT 2005

4 ACROSS THE SKIES. Simply lifting off and floating. Somewhere between heaven and earth. But those who want to fly should never lose their bearings. OSKY STEINER (43), HELICOPTER PILOT AND BASE LEADER IN PFAFFNAU MOTOROLA A780, CO-PILOT AT MOBILEZONE

5 mobilezone holding ag A NNUAL REPORT 2005 Table of contents Course of business Chairman s report 5 Key figures at a glance 7 Corporate governance/governing bodies 9 mobilezone 17 globalzone 21 Europea Trade 21 mobilezone net 22 Outlook consulting competence becoming ever more important 25 Financial report Table of contents 29 List of mobilezone outlets 64 Annual report 2005 mobilezone holding ag 3

6 COLLECTOR S ITEM. Every working day a sweet temptation. To sell something, you have to love it. Who can resist you then? CARLA BÜRGI (20), SALES PRO IN ZURICH SIEMENS CL75, BIG SELLER AT MOBILEZONE

7 mobilezone Group C HAIRMAN S REPORT For the first time mobilezone will distribute dividends Despite a disappointing first half of 2005, mobilezone can look back on a good second half of the year and a brisk Christmas trade. Retail sales the Group s core business area grew by more than 7 percent. However, the last year s excellent result could not be achieved again. Nevertheless, we consider the Group s consolidated result of CHF 15.4 million (previous year: CHF 16.7 million) very positive, and for that reason the Board of Directors for the first time will ask the General Meeting for a dividend distribution of CHF 0.25 per share. Due to the elimination of the business activities in Germany (previous year: CHF 20.6 million) and a decrease in wholesale business by ca. CHF 19 million, the resulting consolidated gross sales for 2005 are lower and amount to CHF million (previous year: CHF million). Reduced cost contributions from business partners and higher personnel and leasing costs led to a decrease in the operating result (EBIT) by 3.6% to CHF 18.8 million (previous year: CHF 19.5 million).the decrease of the operating cash flow to CHF 6.8 million (previous year: CHF 19.9 million) is largely due to high balances of receivables due from the network operators at the end of the reporting year. This is a direct result of significantly stronger Christmas sales than in the previous year. As in previous years, in the reporting year many existing locations were improved, and the number of stores was expanded to a current total of104 outlets. Although this development has resulted in higher personnel and leasing costs in this fiscal year, in the future it will lead to an increase in sales and income. In the current year, too, mobilezone plans to open outlets in new locations. Bulle and Brugg were added this past year to the mobilezone network of shops as new regions. In 2006, new outlets are planned for the shopping center Balexert (Geneva) and for Mythen Center (Ibach, Schwyz). In the past year mobilezone worked particularly intensively on the project service providing (MVNO). The cooperation agreement with Orange Communications AG made it possible to launch an initial offer in January The division mobilezone net ag was established to handle this new business activity. As expected, more new products have been announced for 2006 than ever before. Improved cameras (with a resolution of up to 8 megapixels) and considerably improved sound quality (MP3, ipod) combined with even larger memory capacity (up to 3 gigabytes) will continue to keep the demand for mobile phones high. In addition, the expansion of UMTS networks by all three network operators (Swisscom, Orange, and Sunrise) has made live-tv reception on cell phones a reality. For the coming year, mobilezone expects that particularly the Soccer World Cup in Germany will generate demand for live-tv devices. On the whole, mobilezone is convinced that the sales and income of fiscal year 2005 can be improved in 2006 and that its strong market position can be maintained. The company s high degree of specialization and its outstanding, dedicated staff will make it possible to achieve these ambitious goals. Charles Gebhard Ruedi Baer Chairman of the Board Delegate and CEO Annual report 2005 mobilezone holding ag 5

8 COMMUNICATOR. Communicating properly means to find ways and means to touch people. Only what is retained will have a lasting effect. PAUL WIDMER (58), ACTING HEAD OF A PUBLISHING HOUSE IN ZURICH QTEK 9100, COMMUNICATOR AT MOBILEZONE

9 mobilezone Group K EY FIGURES AT A GLANCE Facts & figures from the financial report Key figures (in CHF 000 or as noted, respectively) mobilezone Group Gross sales revenues 261, ,709 Net sales 243, ,920 Operating profit before depreciation & amortization (EBITDA) 22,524 23,387 Operating profit before interest & tax (EBIT) 18,831 19,487 (As a percentage of net sales) % Net profit 15,408 16,728 (As a percentage of net sales) % Total assets 76,890 81,670 Net cash (cash & cash equivalents) 14,485 24,593 Shareholders equity 45,698 41,783 (As a percentage of total assets) % Net cash provided by operating activities 6,799 19,855 Investment in property, plant & equipment, and intangible assets 3,783 3,357 Number of employees (FTE s) as of December Number of shops as of December mobilezone holding ag Net profit 1,250 10,505 Total assets 33,586 49,063 Shareholder s equity 27,306 47,774 (As a percentage of total assets) % Share information Weighted average number of shares outstanding Piece 35,952,000 35,437,000 Number of shares outstanding as of balance sheet date Piece 35,765,006 36,853,145 Earnings per share CHF Earnings per share (diluted) CHF Shareholders equity per share CHF Dividend per share 1 CHF Share price (highest/lowest) CHF 5.68/ /2.26 Share price on December 31 CHF : According to the Board of Directors request to the General Meeting of April 13, Annual report 2005 mobilezone holding ag 7

10 ROLE-PLAYER. Taking part in the Basel carnival costs more than a smile. It takes a lot of work and practice and under each mask a little star. BENJAMIN STÄHLI (13), STAR OF A CLIQUE IN BASEL NOKIA 6101, CELL PHONE STAR AT MOBILEZONE

11 mobilezone Group C ORPORATE GOVERNANCE Information on Corporate Governance pursuant to Swiss Exchange (SWX) guidelines 1. Group structure and shareholders 1.1 Group structure The mobilezone Group consists of two business areas: Commerce (mobilezone ag and Europea Trade AG) and Fixed Line (globalzone ag and mobilezone international ag). In January 2006 mobilezone net ag launched its business activity as provider of its own mobile communications subscription. A list of consolidated companies is provided in Note 2 to the appendix to the mobilezone holding ag annual report. The parent company is mobilezone holding ag, Riedthofstrasse124, 8105 Regensdorf, Switzerland. It is listed on the Swiss Exchange SWX (Valor no.: , ISIN: CH ). As of December 31, 2005, the market capitalization (excluding own stock) was CHF million Significant shareholders A list of significant shareholders is provided in Note 3 to the appendix to the mobilezone holding ag annual report. There is no shareholder s agreement between the significant shareholders Cross-shareholdings There are no cross-shareholdings. 2. Capital structure of the issue of equities are set forth in Articles 36 and 37 of the Articles of Association. The current Articles of Association may be viewed at any time at under the heading Corporate Governance. 2.3 Changes in capital Changes in capital made in the past three years are listed in the consolidated equity statement on page 33 and on page 31 of the previous year s annual report. 2.4 Shares and participation certificates As of December 31, 2005, there were 35,772,996 bearer shares with a par value of CHF Of these, 7,990 shares were the Group s own holdings. The shares in the Group s own holdings carry neither voting nor dividend rights. All other shares carry equal voting and dividend rights. 2.5 Profit-sharing certificates There are no profit-sharing certificates. 2.6 Limitations on transferability and nominee registrations Not applicable, as only bearer shares exist. 2.7 Convertible bonds and warrants/options As of the balance sheet date, there were no convertible bonds or options issued by Group companies outstanding. 2.1 Capital The amount of ordinary, authorized, and conditional capital is shown in Note 3 to the mobilezone holding ag single financial statements. 2.2 Authorized and conditional capital in particular Details regarding the amount of the increase in authorized and conditional capital, the group of beneficiaries, and the terms and conditions Annual report 2005 mobilezone holding ag 9

12 mobilezone Group Charles Gebhard, Chairman Ruedi Baer, Delegate Walter Heutschi Michael R. Kloter Hans-Ulrich Lehmann 3. Board of Directors 3.1 Members of the Board of Directors 3.2 Other activities and vested interests All information regarding office terms, nationality, curricula vitae, and other activities as well as vested interests can be found at under the heading Corporate Governance/Directors and Group management. Rudolf Baer is CEO and chairman of mobilezone s Group management. Currently, no other members of the Board of Directors hold executive positions in the Group s companies, nor have they held such positions during the past three years. Rudolf Baer and Hans-Ulrich Lehmann had business relationships with some of the Group s companies in the last year through companies they controlled (see Note 22 in the appendix to the consolidated financial statements). 3.3 Cross-involvement There is no cross-involvement with the Boards of other companies listed on the Stock Exchange. 3.4 Elections and terms of office The Board of Directors is elected by the General Meeting of Shareholders for a one-year term. Unlimited reelection is possible. 10 Annual report 2005 mobilezone holding ag

13 C ORPORATE GOVERNANCE/GO VERNING BODIES Board of Directors/ Group management (from left to right): Hans-Ulrich Lehmann Ruedi Baer Charles Gebhard Michael R.Kloter Walter Heutschi Wolfgang Gross Werner Waldburger Martin Lehmann 3.5 Internal organizational structure Charles Gebhard is Chairman and Rudolf Baer is the Delegate of the Board of Directors. The individual members have no other positions, and there are no committees. The Board of Directors meets as often as required by business but at least three times a year. Last year six meetings were held; usually they lasted half a day. 3.6 Definition of areas of responsibility To the extent allowed by law, the Board of Directors has delegated managerial functions to the Group management. The breakdown of tasks and competencies is established in the bylaws and rules of organization in the form of a detailed chart. 3.7 Information and control instruments vis-à-vis the Group management Each member of the Board of Directors has the right to be informed about the course of business by the Group management, even outside of official meetings, and, subject to the Chairman s authorization, to be also informed about individual transactions. The information and control tools that the Board of Directors uses vis-à-vis the Group management include the following: Consolidated budget (annual) Quarterly reports (incl. comparison with budget) Profit and loss forecast (beginning in the 3rd quarter) Financial projections (in every meeting) Detailed reports of the Group management on the course of business (in every meeting) 4. Group management 4.1 Members of the Group management Ruedi Baer, CEO Wolfgang Gross, CFO Martin Lehmann, Sales Manager Werner Waldburger, COO Switzerland 4.2 Other activities and vested interests All information regarding nationality, education, professional background, and other activities and vested interests can be found at under the heading Corporate Governance/Directors and Group management. Annual report 2005 mobilezone holding ag 11

14 mobilezone Group C ORPORATE GOVERNANCE Former members of governing bodies did not receive any compensation in Management contracts There are no management contracts regarding the transfer of managerial functions to third parties. 5. Compensations, shareholdings, and loans 5.1 Content and method of determining the compensation and the shareholding programs The members of the Board of Directors receive compensation independent of profits in an amount set by the Board of Directors. In addition, the Board may award a bonus if the course of business warrants it. The Board of Directors determines the compensation of Group management at the request of the CEO. The Board of Directors determines the CEO s total compensation. There are no profit-sharing programs. 5.2 Compensations for acting members of governing bodies Total compensation paid to the executive member of the Board of Directors and members of Group management amounted to CHF 1,522,000. Total compensation paid to non-executive members of the Board of Directors during the reporting year was CHF 165,000. No severance payments were made to departing members of any of the governing bodies during the reporting year. 5.3 Compensations for former members of governing bodies No compensation was paid to former members of governing bodies. 5.4 Share allotments in the reporting year No shares were allocated to members of governing bodies or parties closely linked to them. 5.5 Share ownership As of December 31, 2005, the executive member of the Board of Directors and members of Group management and parties closely linked to them held a total of 3,823,833 shares in mobilezone holding ag. The non-executive members of the Board of Directors and parties closely linked to them held 5,855,600 shares. 5.6 Options As of December 31, 2005, there were no options. 5.7 Additional fees and remunerations In fiscal year 2005, the law firm Kloter Attorneys-at-Law, in which the Board member Michael Kloter is a partner, invoiced the Group s companies for fees totaling CHF 140, Loans granted by governing bodies There are no loans or securities for loans to the members of the Board and management, or to parties closely linked to them. 5.9 Highest total compensation The member of the Board of Directors with the highest total compensation was paid CHF 810,000 during the reporting year. This member was not allocated any shares or options during the reporting year. 6. Shareholders participation 6.1 Restrictions on voting rights and representation There are no restrictions on voting rights, and the rules in the Articles of Association regarding participation in the General Meeting of Shareholders do not deviate from those mandated by law. 12 Annual report 2005 mobilezone holding ag

15 PAINTING WITH SOUND. Discover worlds of sound. And create new ones. Let yourself be swept away. And carry away others. Music opens up new dimensions. For all. URS STUCKI (24), PROFESSIONAL MUSICIAN FROM EMMEN SONY ERICSSON W800i, HOBBY MUSICIAN AT MOBILEZONE

16 mobilezone Group C ORPORATE G O VERNANCE Every year the mobilezone Group publishes an annual and a semi-annual report 6.2 Statutory quorums There are no statutory voting quorums that deviate from those mandated by law. 6.3 Convocation of the General Meeting of Shareholders There are no statutory rules on convening the General Meeting of Shareholders that deviate from those mandated by law. 6.4 Agenda The procedures for adding items to the agenda are in accordance with the legal requirements. 8.3 Additional fees In the past year, KPMG did not invoice fees for any additional services such as tax and business consulting. 8.4 Supervisory and control instruments pertaining to the audit Once a year the chairman of the Board of Directors or another, non-executive member attends KPMG Fides Peat s concluding discussion of the Group audit. The auditor reports the findings from its audit in a report to the Delegate of the Board of Directors. 6.5 Inscriptions into the share register Not applicable, as only bearer shares exist. 9. Information policy 7. Changes of control and defense measures 7.1 Duty to make an offer There is an opting-out regulation Clauses on changes of control There are no change-of-control clauses. 8. Auditors 8.1 Duration of the mandate and term of office of the lead auditor Since fiscal year 2000, KPMG Fides Peat has been the auditor of the Group s Swiss companies, and since fiscal year 2001, when the new holding structure was introduced, KPMG Fides Peat has also prepared the consolidated audit report for mobilezone holding ag. The lead auditor has been responsible for the auditing mandate since fiscal year Every year the mobilezone Group publishes an annual and a semi-annual report pursuant to IFRS (International Financial Reporting Standards) rules. Additional information on important changes and essential business activities is published on an ad-hoc basis. All information, including a list of contact addresses, is available at under the heading Media/Press Room. Anyone who wishes to receive mobilezone s media information can register there under the heading Service. 8.2 Auditing fees In the past year, KPMG invoiced CHF 135,500 for auditing fees. Always up-to-date: Latest information is available under 14 Annual report 2005 mobilezone holding ag

17 WORKING EXPERIENCE. Hands-on living, even if it means getting dirty hands. Being there for your customers and always doing your best. Because reliability pays off in the end. ROBERTO TOTO (22), MECHANIC IN BUTTWIL SAMSUNG SGH-E720, ALL-ROUNDER AT MOBILEZONE

18 ENCHANTING COLORS. Making visible what one doesn t see. Showing it in a new, unfamiliar way. Art does not merely reproduce. It creates something new. For example, with a thousand colors. PETRA AMERELL (43), ART PAINTER IN MUNICH AND ZURICH MOTOROLA V3RAZR, ARTWORK AT MOBILEZONE

19 mobilezone C ONTINUING AS MOST IMPORTANT PARTNER FOR PROVIDERS mobilezone is also becoming the most important partner for contract extensions At the end of 2005, mobilezone already had more than 104 outlets. The third flagship store was opened during the reporting year in the shopping center Letzipark in Zurich,and new outlets were opened at locations of the Migros- Genossenschaft Aare in Burgdorf and Buchs. The search for new and improved locations will continue in 2006 as before. In January two new locations were already added when the new outlets in Bulle and Brugg were opened. In the first quarter the outlets in Chur, Fribourg, and Neuenburg will move to better locations. In addition, mobilezone for the first time will also have a presence in the shopping centers Balexert (Geneva) and Mythencenter (Schwyz) as well as on the Via Nassa in Lugano. 344,950 contracts for the network operators Swisscom Mobile, Orange, and Sunrise, an increase of 13 percent compared to the previous year. Compared to the development in neighboring countries, UMTS broadband, live-tv, etc. grew more slowly here. Nevertheless, following Swisscom Mobile s lead, Orange and Sunrise also expanded their UMTS networks in In fall, the first no frills prepaid offers were launched on the Swiss market, namely, M-Budget (Swisscom Mobile) and Coop Mobile (Orange). While this led to a large number of units being sold some of them Market shares of providers* Swisscom Shops 32% mobilezone 29% Marketing and advertising As before, mobilezone s catalogs continued to be the focal point for advertising in 2005 and are now published with a print run of three million copies. In the reporting year mobilezone for the first time also distributed twelve smaller additional catalogs. This marks mobilezone s growing and successful presence in the cell phone market. Brand shares in 2005 at mobilezone (quantity) Nokia 39,4% Samsung 23,8% Motorola 13,4% Sony Ericsson 12,6% Siemens 6,2% Sharp 3,1% Sagem 0,8% LG 0,4% Panasonic 0,3% Orange Shops 8% Interdiscount 7% The Phone House 7% Sunrise Shops 4% Migros 4% Die Post 3% Media Markt 3% Other 3% * An estimated 1.8 million cell phones sold, not including direct business clients of network operators Providers As before, mobilezone continued to be the most important independent partner of all three network operators in Now mobilezone is also the most important partner for contract extensions. In total, mobilezone concluded Brand shares in 2005 at mobilezone ( value) Nokia 37,3% Samsung 32,0% Sony Ericsson 13,7% Motorola 10,4% Sharp 3,8% Siemens 2,1% Panasonic 0,3% LG 0,2% Sagem 0,2% Annual report 2005 mobilezone holding ag 17

20 Accessories Cell phones not only offer increasingly better sound quality, but also include digital cameras that take pictures of outstanding quality. It is thus only logical that mobilezone now also sells photo printers and the required conmobilezone More than 500,000 cell phones sold speak for mobilezone s consulting competence cell phones at rock-bottom prices in terms of value this had hardly any impact on the market. Even though prepaid is not mobilezone s core business, in cooperation with yallo (a subsidiary of Sunrise) a low-price prepaid offer was implemented. In 2005 mobilezone prepared for its new role as service provider (MVNO), and in January 2006 the company began offering its own subscriptions (see also page 22/ mobilezone net) and is thus the first Swiss service provider. Range While all manufacturers again increased the number of new cell phone models they offer, the demands on storage and logistics have also grown. Since there are more and more preprogrammed cell phones especially in the area of UMTS every model must be offered in several configurations and, to some extent, also in several languages. The total of 525,000 cell phones sold in 2005 constitutes an increase in sales of 4.2 percent over the previous year. SEAL LIVE AT THE MOBILE AWARD2004 CEREMONY IN REGENSDORF sumables. A strong revenue increase also came from the sale of memory cards; however, the prices in this segment are steadily falling. Services In fiscal year 2005 a total of 52,165 repairs were carried out. Thanks to the excellent technical know-how of its consultants, mobilezone is increasingly being asked to repair even cell phones that were purchased elsewhere. This builds customer loyalty, from which mobilezone is highly likely to benefit directly when customers buy their next cell phone. Staff, training, and continuing education As of December 31, 2005, mobilezone had 317 full-time employees (previous year: 309). In connection with the location optimization and the new, larger outlets, personnel costs rose. In 2005 sales personnel was increasingly trained in cooperation with manufacturers and network operators. This allows mobilezone to provide its customers with even better advice and consultation regarding new technical functions. IT and logistics Cooperation with a new logistics partner has led to a cost reduction and at the same time also to quality improvement. In the area of IT, projects were developed to expand the 18 Annual report 2005 mobilezone holding ag

21 N ETWORK OF OUTLETS CONTINUES TO BE OPTIMIZED mobilezone outlets in April 2006 POS terminals. For the first six months of 2006, investments are planned that will allow mobilezone to charge the prepaid cards of all network operators electronically with the EFT/POS devices. mobile awards 2004 The gathering of the mobile communications industry was again a resounding success in 2005 not only because of the eight mobile awards the presenter, Kurt Aeschbacher, awarded on the occasion, but also because of the performance of the English soul star Seal, who literally rocked the large auditorium of the Mövenpick Hotel in Regensdorf. Outlets opened in 2005 Bachenbülach, Migros Zentrum Brig, Bahnhofstrasse Burgdorf, Neumarkt Geneva-Carouge, Einkaufszentrum La Praille Frauenfeld, Einkaufszentrum Passage Pfäffikon, Seedamm-Center Schaffhausen, Herblinger Markt Steinhausen, Einkaufszentrum Zugerland St.Gallen, Multergasse (flagship store) Villars-sur-Glâne, Centre Carrefour Zurich, Letzipark (flagship store) Outlets closed in 2005 Brig, Rhonesandstrasse Geneva, Rue Rousseau St.Gallen, Hauptbahnhof St.Gallen, Neugasse Vevey, Rue du Simplon Yverdon-les-Bains, Centre Bel-Air Zurich, Kasernenstrasse Openings planned in 2006 Brugg, Zürcherstrasse Neumarktplatz Buchs, Einkaufszentrum Wynecenter Chur, Einkaufszentrum CityShop Bulle, Grand-Rue Fribourg, Rue de Romont 12 Geneva, Einkaufszentrum Balexert Glarus Kriens, Einkaufszentrum Pilatusmarkt Lugano, Via Nassa Neuchâtel, Rue du Seyon 6 Oftringen, Einkaufszentrum A1 Sarnen, Sarnen-Center Schwyz, Mythen-Center Wettingen, Zentrumsplatz Delémont Basel Solothurn Aarau Schaffhausen Kreuzlingen Frauenfeld Winterthur Baden St. Gallen Regensdorf Zürich Rapperswil St. Margrethen Closures planned in 2006 Chur, Bahnhofstrasse Fribourg, Rue de Romont 6 Geneva, Place du Molard Kriens, Einkaufszentrum Hofmatt Neuchâtel, Rue du Seyon 5 La Chaux-de-Fonds Biel/Bienne Luzern Zug Neuchâtel Bern Yverdon Fribourg Thun Chur Lausanne Nyon Montreux 52 outlets in city centers Genève Martigny Sierre Locarno Bellinzona 53 outlets in shopping centers 2 shop-in-shop outlets Outlet addresses on page 64 Annual report 2005 mobilezone holding ag 19

22 EMERGENCY ASSISTANCE. Almost 4,000 children were born with her help. And throughout her fulfilling life she was where she was needed. For God s reward. DEACONESS SR. ELISA (89), RETIRED DISTRICT NURSE IN UNTERÄGERI MOTOROLA PEBL U6, ON DUTY AT MOBILEZONE

23 globalzone T HE PREVIOUS YEAR S POSITIVE RESULT WAS MAINTAINED Price reductions led to a loss in sales but not in profit globalzone ag For globalzone ag 2005 was an eventful year. Due to the sale of parts of SOLPA, globalzone s partner in the fixed-line segment, to Cablecom, a new provider of fixed-line services had to be found. After an intensive evaluation phase, globalzone chose COLT Telecom AG. At the same time, changes at the billing partner made it necessary to look for a new provider in this area too. Here, the independent provider Ergon Informatik AG was chosen and has taken on the cally reduced. In addition, in many countries the high capacity of fiber-optic connections led to further price reductions. This also affected globalzone s sales. Despite its stable customer base, sales fell to CHF 13.2 million (previous year: CHF 16.7 million). However, thanks to higher margins it was still possible to maintain the positive result of the previous year. Since January 2006 globalzone s customers also profit from the attractive ADSL offers globalzone has developed in cooperation with green.ch. Irresistible times two High-speed at great savings: globalzone s current ADSL offers are especially attractive. And so are the discount calling cards, by the way customers save up to 86% on landline phone calls. Save up to 86% responsibility for globalzone s billing in January In the course of 2005 the connection fees of the cell phone operators, especially those of Swisscom Mobile, were drasti- Calling Card Value CHF Calling Card Value CHF 20 powered by mobilezone Save up to 86% Calling Card Value CHF Calling Card Value CHF 50 powered by mobilezone Europea Trade AG The increase in operator-specific models, such as Signature Device and Co- Branding (including on foreign markets), led to a drastic decline in trading sales from CHF 34 million (previous year) to CHF 15 million (2005). With declining opportunities for sales to third parties, Europea Trade was mostly used for mobilezone s parallel imports. While fluctuating trading sales must also be expected in the future, they do not affect the Group s result. Annual report 2005 mobilezone holding ag 21

24 mobilezone net F IRST S WISS SERVICE PROVIDER As service provider, too, mobilezone will achieve a strong market position In the past year mobilezone was able to conclude a cooperation agreement with Orange Communications AG, and thanks to that, the company was able to launch its own offer as service provider (MVNO) for cellular telephony in January The Group s business as service provider is managed by mobilezone net ag, which was founded specifically for this purpose. Since the communication costs of mobilezone subscribers are also billed by mobilezone, a growth in sales will necessarily result for the whole Group. In the coming years, funds from free cash flow will be invested in systematically cultivating a regular clientèle. Of course, mobilezone will offer its customers especially attractive minute rates. The first post-pay price plan fair value has been offered successfully since the middle of January In April/May 2006 a prepaid offer will be on the market under the name light, and for the second half of the year the introduction of the post-pay price plan freedom is planned. mobilezone lets you be mobile: with individual subscriptions and attractive price plans, we will provide you with new impulses. Customer Care With individual subscriptions and attractive price plans globalzone will stand out against other providers and will thus also achieve and maintain a strong market position as service provider. 22 Annual report 2005 mobilezone holding ag

25 ASIAN STYLE. The recipe for success: take authentic ingredients, create a pleasant atmosphere, and serve everything with a smile. JOHN WONG (49), RESTAURATEUR IN BÜLACH SAMSUNG SGH-D600, A DELICACY AT MOBILEZONE

26 CAMERA! ACTION! At some point the camera feels like lead on your shoulder. But in the end only the result counts. And the sure knowledge that moving pictures move people. ROMAN HEER (44), VIDEO PRODUCER IN LUCERNE NOKIA N70, VIDEO PRODUCER AT MOBILEZONE

27 Outlook N O LIMITS TO INNOVATION Innovations will keep the demand for cell phones and accessories high also in 2006 More pixels, more memory, more music: innovative solutions will continue to have a positive effect on the cell phone business also in The most important trends are already beginning to emerge. From the simple cell phone to full-feature digital camera. As a result of the announced introduction of 3.2-megapixel cameras (Sony Ericsson), 5-megapixel (LG) and even 8-megapixel cameras (Samsung), cell phones are gradually pushing digital cameras out of the market. Better lenses, auto-focus, and zoom and flash are just a few developments in this industry sector. Music ever more important. In addition to good MP3 players, Bluetooth stereo continues to improve the cell phone music-listening experience, which is especially important to the young. Groundbreaking developments will also take place in the area of music downloading. Cell phones with integrated ipod are already on the market. More and more memory. The first models with 3-gigabyte memory are expected to be on the market before the end of Models with replaceable memory cards with a capacity of up to 2 gigabytes are already on the market. In the future, cell phone users will not only carry a telephone but also a photo album, music library, and all sorts of data with them. A veritable flood of novelties. For 2006 manufacturers have announced more new products than ever before. Moreover, with LG and BenQ-Siemens new providers are crowding into the Swiss market. LG Leo Flat enough for any pocket: high-quality cell phone in an extremely flat design with 5-megapixel (!) digital camera. Annual report 2005 mobilezone holding ag 25

28 Outlook C ONSULTING COMPETENCE BECOMING EVER MORE IMPORTANT Cell phones are turning into multimedia devices before our eyes Live TV moves. Watching TV via cell phone has already become almost commonplace. Live TV can be received via UMTS or EDGE and in either case at lower and lower rates. For sure, the upcoming soccer World Cup will have a positive effect on the TV cell phone. More s on the road. More and more, people read and answer their via their cell phones. Increasingly, cell phones come equipped with Windows Mobile, a software many cell phone users are already familiar with. Accessory business increasingly important. Improved digital cameras are practically crying out for photo printers. Bluetooth stereo will boost demand for highquality stereo headphones. And the MP3/ ipod function makes external speakers a hot topic. Result: the accessory business will become even more important. Essentially, mobilezone is confident that both sales and revenue can be increased in 2006, not only because of its product range, but above all because of the outstanding consulting competence of its employees. The rapid technical development not only creates more opportunities where cell phones and services are concerned, but also makes their use more complex. Technical know-how will pay off in the future. Additional impulses are also expected from mobilezone s new activities from service providing and from the subsidiary mobilezone net. BenQ/Siemens EF81 Smart all-round talent: With 2-megapixel camera, sharp display, large memory, and of course UMTS. Sony Ericsson W810i Soundstation: The walkman for telephoning or music freaks! Comes with lots of memory too! Nokia 6280 Top-seller: 2-megapixel camera and a high-resolution large display the camera cell phone with class. Motorola PEBLU6 A jewel: Captivating design with solid inner life the cell phone for showing off! Samsung SGH-D800 Stylish slider: Its predecessor was mobilezone s top-seller in Annual report 2005 mobilezone holding ag

29 CONTENDER FOR THE TITLE. Stamina. Determination. Desire for peak performance. To be successful always also means to believe in oneself. And sometimes also to rise above oneself. SARAH SCHÜTZ (27), TRI-ATHLETE FROM DÜBENDORF SONY ERICSSON K750i, ALL-ROUND TALENT AT MOBILEZONE

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31 mobilezone holding ag F INANCIAL REPORT 2005 Group financial statements Consolidated income statement 30 Consolidated balance sheet 31 Consolidated cash flow statement 32 Consolidated statement of changes in equity 33 Notes to the consolidated financial statements 34 Report of the Group Auditors 55 mobilezone holding ag financial statements Income statement 56 Balance sheet 57 Notes to the financial statements 58 Proposal by the Board of Directors 61 Report of the Statutory Auditors 62 This Financial Report is published in German and English. The German original is binding. The English version is a translation. Annual report 2005 mobilezone holding ag 29

32 mobilezone Group C ONSOLIDATED INCOME STATEMENT for the years ended December (in CHF 000) Notes Total Group Continuing Discontinuing operations operations Gross sales revenues 261, , , ,094 20,615 Sales deductions including VAT 18,241 19,789 18,241 17,433 2,356 Net sales 1 243, , , ,661 18,259 Other operating income Cost of goods and materials 183, , , ,032 15,700 Personnel costs 2 25,672 25,375 25,672 23,692 1,683 Other operating costs 3 12,091 11,281 12,091 9,975 1,306 Operating profit before depreciation & amortization (EBITDA) 22,524 23,387 22,524 23, Depreciation of property, plant & equipment 8 2,467 2,747 2,467 2, Amortization of intangible assets 10 1,226 1,326 1,226 1,326 0 Net result of discontinued operations Operating profit before interest & tax (EBIT) 18,831 19,487 18,831 19, Share of the results of associated companies Other financial income Financial expense Profit/loss before income taxes 19,276 20,439 19,276 20, Income tax expenses 7 3,868 3,711 3,868 3,711 0 Net profit/loss 15,408 16,728 15,408 16, (in CHF) (in CHF) (in CHF) (in CHF) (in CHF) Earnings per share Earnings per share diluted Annual report 2005 mobilezone holding ag

33 mobilezone Group C ONSOLIDATED BALANCE SHEET as of December (in CHF 000) Notes ASSETS Property, plant & equipment 8 5,168 5,385 Intangible assets 10 2,697 2,413 Deferred tax assets Securities 11 1,635 0 Other accounts receivable Fixed assets 9,791 8,173 Inventories 12 20,568 21,796 Trade accounts receivable 13 28,111 22,030 Other accounts receivable 14 3,935 5,078 Cash & cash equivalents 15 14,485 24,593 Current assets 67,099 73,497 Total Assets 76,890 81,670 LIABILITIES AND SHAREHOLDERS EQUITY Share capital Additional paid-in capital (share premium) 9,737 21,219 Retained earnings 35,603 20,195 Shareholders equity 45,698 41,783 Deferred tax liabilities 7 1,980 2,206 Advances received Long-term liabilities 2,188 2,582 Trade accounts payable 20,884 27,285 Current tax liabilities 4,284 5,366 Current provisions Other current liabilities 18 3,736 3,804 Current liabilities 29,004 37,305 Total Liabilities and shareholders equity 76,890 81,670 Annual report 2005 mobilezone holding ag 31

34 mobilezone Group C ONSOLIDATED CASH FLOW STATEMENT for the years ended December (in CHF 000) Notes Profit/loss before income taxes 19,276 20,439 Interest income and expenses, net Depreciation & amortization 8,10 3,693 4,073 Gain on sale of property, plant & equipment 0 2 Changes in provisions, net Changes in value adjustments, net Income from associates accounted for using the equity method Gain on sale of investments in associates Other expenses not involving the movement of funds ,652 24,386 Changes in trade accounts receivable 13 6,081 9,982 other accounts receivable 14 1, inventories trade accounts payable 6,401 10,980 other current liabilities Income taxes paid 5,161 2,982 Net cash from operating activities 6,799 19,855 Acquisitions of property, plant & equipment 8 2,273 2,599 intangible assets 10 1, securities in fixed assets 11 1,635 0 Proceeds from disposals of property, plant & equipment investments in associated companies 9 0 1,000 Cash flow relating to divestiture of subsidiaries 1 0 1,537 Interest received Net cash from investing activities 5,354 3,827 Interest paid Capital increase ,592 Reduction in par value ,216 Purchase of treasury shares 16 12,366 10,646 Sale of treasury shares Issuance of call-options on own shares Net cash from financing activities 11,553 3,350 Translation adjustments on cash & cash equivalents 0 26 Net decrease/increase in cash & cash equivalents 10,108 12,652 Cash & cash equivalents at January 1 24,593 11,941 Cash & cash equivalents at December ,485 24,593 1 Details on assets and liabilities acquired and disposed of are disclosed in the notes under Scope of consolidation on page Annual report 2005 mobilezone holding ag

35 mobilezone Group C ONSOLIDATED STATEMENT OF CHANGES IN EQUITY Movements of shareholders equity (in CHF 000) Share Additional Retained Cumulative Total capital paid-in earnings translation capital adjustment At December 31, ,560 21,317 3, ,269 Capital increase from options exercised 43 9,549 9,592 Reduction in par value 3,216 3,216 Purchase of treasury shares 18 10,238 10,256 Issuance of call-options on own shares Translation adjustments from deconsolidation Net profit 16,728 16,728 At December 31, ,219 20, ,783 Capital increase from employee options exercised Purchase of treasury shares 18 12,112 12,130 Net profit 15,408 15,408 At December 31, ,737 35, ,698 The previous year s line items Additional paid-in capital and Retained earnings have been adjusted by the reclassification of CHF 591,000 (income from issuance of call-options on own shares). The line item Retained earnings includes legally restricted reserves in the amount of CHF 1,597,000 (2004: CHF 1,602,000) that are not available for distribution. Such legal reserves are established based on the legal requirements of the Swiss Code of Obligations. The transaction costs and taxes of CHF 108,000 (2004: CHF 272,000) related to the issuance of share capital were deducted from additional paid-in capital.the transaction costs of CHF 121,000 (2004: CHF 112,000) related to the purchase of treasury shares were debited to the reserves. Additional information on the share capital is provided in Note 16. Annual report 2005 mobilezone holding ag 33

36 mobilezone Group N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS Segment information Consolidated income statement (in CHF 000) mobilezone Group Commerce Fixed-line Discontinued Other/ telecommunications operations eliminations Gross sales revenues with third parties 261, ,709 Gross sales revenues with other segments 0 0 Sales deductions including VAT 18,241 19,789 Net sales 243, ,920 Other operating income Cost of goods and materials 183, ,732 Personnel costs 25,672 25,375 Other operating costs 12,091 11,281 Operating profit before depreciation & amortization (EBITDA) 22,524 23,387 Depreciation of property, plant & equipment 2,467 2,747 Amortization of intangible assets 1,226 1,326 Net result of discontinuing operations Operating profit before interest and tax (EBIT) 18,831 19, , ,031 13,063 16,063 20, ,322 16, ,159 2, , ,757 12,319 15,590 18, , ,510 7,421 11,057 15, ,048 22, ,683 1, ,077 10,003 1,185 1,174 1,306 1,171 1,202 19,422 20,476 3,339 3, ,455 2, , ,027 16,703 3,041 2, Consolidated balance sheet (in CHF 000) mobilezone Group Commerce Fixed-line Discontinued Other/ telecommunications operations eliminations Fixed assets 9,791 8,173 Current assets 67,099 73,497 Total Assets 76,890 81,670 7,364 7, , ,472 61,288 6,758 5, ,131 6,944 72,836 68,429 7,331 5, ,277 7,247 Liabilities 31,192 39,887 22,393 28,343 1,765 3, ,034 8,317 Net assets 45,698 41,783 50,443 40,086 5,566 2, ,311 1,070 Investments in fixed assets 5,418 3,357 3,641 3, ,635 0 The segment Commerce consists of mobilezone ag and Europea Trade AG. The segment Fixed line telecommunications includes globalzone ag and mobilezone international ag. The segment Discontinued operations consisted of the German companies Tebbe Harms Kleen GmbH & Co. KG, Kleen Vertriebs GmbH & Co. KG, and Kleen Handels GmbH (all until May 31, 2004). Except for the trading activities in the segment Commerce, the segment operations are limited to their respective geographical markets. In 2005 in the segment Commerce trading revenues in the EU markets came to CHF 0.8 million (previous year CHF 21.3 million). 34 Annual report 2005 mobilezone holding ag Annual report 2005 mobilezone holding ag 35

37 mobilezone Group Principles of the Group accounting General The mobilezone Group conducts business in the area of mobile and fixed-line telecommunications.the core activity lies in the segment Commerce with mobilezone ag, which was established in May 1999 and now has a total of 104 retail stores with locations in every bigger Swiss city, and Europea Trade AG, which is active in the wholesale business. The business model is based on agreements with the three providers active in Switzerland that pay mobilezone for finding new clients for them (one-time commissions). Due to these commissions, mobilezone is able to provide its clients with mobile phones at very low prices or even at no charge. The segment fixed-line telecommunications consists of globalzone ag and mobilezone international ag. These so-called switchless retailers offer their customers fixed-line telecommunications services. Under the brand name fair value the newly founded mobilezone net ag has been offering mobile subscription service based on its own pricing plan since January The parent company of mobilezone Group is mobilezone holding ag, Riedthofstrasse 124, 8105 Regensdorf/Switzerland. The company is listed on the Swiss Exchange SWX. The consolidated financial statements of mobilezone provide a true and fair picture 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 listed at fair market value. The reporting currency is the Swiss franc (CHF). The preparation of financial statements in conformity with IFRS requires assessments, estimates, and assumptions on the part of management that affect the reported amounts on the reporting date of the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and also in future periods if the revision affects them. No positions with a significant risk of material adjustment due to changes in assessments and estimates are known. In 2003 the International Accounting Standards Board (IASB) published a revised version of IAS 32 Financial Instruments:Disclosure and Presentation,a revised version of IAS 39 Financial Instruments: Recognition and Measurement as well as Improvements in International Accounting Standards, which affected 14 existing Standards. In 2004 the IASB published IFRS 2 Share-based payments, IFRS 3 Business Mergers, IFRS 4 Insurance Contracts, IFRS 5 Fixed Assets held for Sale and Discontinued Operations, the revised IAS 36 Impairment of Assets, and IAS 38 Intangible Assets and additional changes in IAS 39. The Group has adopted all of the new and revised Standards and Interpretations as of January 1, 2005.The adoption of these new and revised Standards and Interpretations had no material effect on the Group s shareholders equity, net income, or cash flow statement. No adjustments in prior years figures were necessary, but the changes required additional disclosures in the Notes. 36 Annual report 2005 mobilezone holding ag

38 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following IFRS standards were adopted in 2005, but they will not take effect until later and were not yet used in preparing this set of consolidated financial statements. No material effects on the financial statements of mobilezone are expected. Standard/Interpretation First-time adoption: Changes to IAS 19, Employee Benefits January 1, 2006 Changes to IAS 39, Financial Instruments January 1, 2006 Changes to IAS 21, Foreign exchange rates January 1, 2006 IFRS 6, Exploration for and Evaluation of Mineral Resources January 1, 2006 IFRIC 4, Determining whether an Arrangement Contains a Lease January 1, 2006 IFRIC 6, Waste Electrical and Electronic Equipment January 1, 2006 IFRIC 7, Financial Reporting in Hyperinflationary Economies January 1, 2007 IFRIC 8, Scope of IFRS 2 January 1, 2007 IFRS 7, Financial Instruments: Disclosures January 1, 2007 Changes to IAS 1, Presentation of Financial Statements: Disclosures regarding Equity January 1, 2007 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 reduced as per May 31, 2004, when Tebbe Harms Kleen GmbH & Co.KG,Kleen Vertriebs GmbH & Co.KG and Kleen Handels GmbH were sold. The transaction price amounted to CHF 15,000 and was received in cash. These companies 2004 (5 months) contribution to operating income are presented separately in the column "Discontinued Operations" of the consolidated income statement. Assets and liabilities as of the date of disposal consisted of: Disposals 2004 (in million CHF) Cash & cash equivalents 1.5 Other current assets 1.6 Property, plant & equipment 0.4 Bank and other interest-bearing liabilities 0.0 Liabilities (excluding Group loans) 3.9 Translation adjustments 0.0 (Gain)/Loss from deconsolidation 0.4 Net cash outflow from deconsolidation (cash & cash equivalents derecognized) 1.5 Jamba! AG (Schweiz), which was included in the consolidated financial statement using the equity method, was sold as of October 1, 2004, for CHF 1 million, at an accounting profit of CHF 145,000. Annual report 2005 mobilezone holding ag 37

39 mobilezone Group Discontinued operations On January 20, 2004, mobilezone announced in a press release that it had decided to discontinue its German activities.in June 2004 the remaining companies in Germany were sold (Kleen Group). Accordingly, this segment was presented in the previous year as a discontinued operation. The result of this unit is disclosed separately in the income statement. Cash flows from operating activities, from investing activities, and from financing activities in 2004 amounted to CHF 0.0 million. In the previous year the deconsolidation of the discontinued operations led to a net gain of CHF 173,000, which was included in the income statement under Net result of discontinued operations. The net result did not have any effect on income taxes. 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 votes or other means. Those entities are fully consolidated, whereby assets, liabilities, income, and expenses are incorporated fully 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 associated companies is presented separately in the income statement. Significant positions and transactions with such investments and joint ventures are disclosed separately as items relating to associated companies. Capital consolidation is based on the purchase method, whereby the acquisition cost of subsidiaries is offset at the time of acquisition against the fair market value of the net assets acquired, determined according to uniform corporate valuation principles. During the year under review companies acquired or disposed of are consolidated as of the date of acquisition and deconsolidated as of the date of disposal. Any gain or loss from deconsolidation is recognized in the income statement. Accounts payable to, accounts receivable from, and income and expenses between the companies included in the consolidation are eliminated. Intercompany profits within the Group are also eliminated upon consolidation. 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 effective on 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 statement. Assets and liabilities of subsidiaries that do not report in Swiss francs are translated into Swiss francs for consolidation purposes at the exchange rate in effect on the balance sheet date.the income statement, cash flow statement, and other movements are translated at the average rate of the reporting 38 Annual report 2005 mobilezone holding ag

40 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 capital and presented separately as cumulative translation adjustments. Financial risk management and derivative financial instruments Approximately 55% 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 generally does not hedge any foreign currency risks on purchases. Accordingly,the Group used only few derivative financial instruments with a short maturity during the year under review. As of the balance sheet date, any open contracts are valued at fair market value with any changes in fair market value recognized in the income statement. Property, plant & equipment Property, plant, and equipment are stated at historical cost less accumulated depreciation. Depreciation is charged to the income statement on a straight-line basis over the following estimated useful lives of items of property, plant, and equipment: Office equipment and furniture incl. EDP Shop equipment Vehicles 2 to 5 years 5 to 8 years 3 to 5 years Intangible assets Acquired rights such as contracts with clients, lessors, and suppliers and similar rights that are generating a positive cash flow are capitalized and amortized over the estimated useful live of 5 years. Goodwill arising from acquisitions, determined as the difference between the purchase price and the fair market value of the net assets acquired, and other intangible assets with an indefinite useful live are not amortized but will be tested annually for impairment. Securities Initially, securities are recognized at fair market value. Subsequent changes in fair market value are recognized in the income statement. If there is no active market or the fair market value cannot be determined reliably, securities are stated at amortized cost less necessary valuation adjustments. Impairment of fixed assets The value of property, plant, and equipment and other fixed assets, including goodwill and other intangible assets, is reexamined whenever changes in circumstances or events make an overvaluation of the book values appear likely. When the book value exceeds the realizable value, an accelerated depreciation is recorded on the income statement against the value that seems recoverable based on discounted, anticipated future revenues or on the estimated net sale value. Annual report 2005 mobilezone holding ag 39

41 mobilezone Group Inventories Inventories are stated at the lower of cost or net realizable value, whichever is lower.the cost of inventories is calculated using the weighted average cost method. Goods with long storage periods are subject to appropriate value adjustments. Net realizable value is the estimated selling price in the ordinary course of business, less selling expenses. The price of the mobile communications product is determined based on whether the product is sold on a stand-alone basis or in conjunction with a provider subscription. Net realizable value therefore takes into account both components. In addition, price protection arrangements with certain suppliers are also considered in determining the need for any value adjustments. 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 maturity of three months or less. Provisions for liabilities and contingencies Provisions are set aside for current or future legal or de facto obligations when on the balance sheet date, as a result of past events, reasonable estimates regarding the future transfer of economic values are possible and when such a transfer is likely. The provisions are determined based on the best possible estimate of the expenditures.in cases of considerable importance,provisions are determined by discounting the expected future cash flow on the balance sheet date at a rate that reflects current market assessments of the risks specific to the liability. Contingent liabilities are disclosed in the attachments hereto if a future obligation is possible or if a present obligation exists, but an outflow of funds is not probable or the amount cannot be reliably estimated. Leasing Lease contracts are recognized in the balance sheet 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 either the lease term or 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 a reduction of the total lease expense. Revenue-based and other contingent leases are accrued on an estimated basis. 40 Annual report 2005 mobilezone holding ag

42 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS Retirement benefits For all relevant risks the mobilezone Group companies have joined a multi-employer plan established under Swiss law as a defined contribution plan, which has reinsured all risks at a large insurance company. The plan is funded by employees and employers contributions. Nevertheless, the plan qualifies in Switzerland as a defined benefit plan according to IAS 19.The financial impact of this plan, including accompanying provisions, on the consolidated financial statements is determined based on the projected unit credit method. In accordance with IAS 19, 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 funds 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 exceed 10% of the higher of either the projected benefit obligation or the fair market 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. Revenues Net sales include all revenues from the sale of goods and services, less rebates, discounts, VAT, and write-offs of trade accounts receivable. Revenues from sale of goods are included 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 upon conclusion of the contract. The recurring airtime profit-sharing commissions are normally based on the subscribers monthly payments of mobile phone bills to the providers. These amounts are recorded in the income statement based on the providers invoices on an accrual basis. Income tax Current income taxes are determined on the taxable income for the year and are recorded in the income statement. Deferred income taxes are calculated using the balance sheet liability method on any temporary differences between the book value of assets and liabilities for financial reporting purposes and the value used for tax purposes. Deferred tax is calculated using tax rates enacted or substantially enacted on the balance sheet date and will be offset in future tax periods. Deferred tax loss carryforwards and deferred earnings tax credits are activated only to the extent that it is probable that they will be realized in the future. Annual report 2005 mobilezone holding ag 41

43 mobilezone Group Notes to the consolidated income statement 1 Net sales (in CHF 000) Mobile communication products 96, ,745 One-time commissions and recurring airtime profit-sharing commissions from providers 135, ,813 Fixed line telecommunication revenues and telephone cards 11,452 14,903 Kiosk merchandise 0 15,459 Total Net sales 243, ,920 2 Personnel costs (in CHF 000) Wages and salaries 22,481 22,408 Social security costs 1,957 2,067 Pension costs Other employee benefit costs Total Personnel costs 25,672 25,375 Number of employees at balance sheet date (based on full-time employment) Option program An option program for members of the Board of Directors, the executive committee, and upper man-agement was in effect until In 2003 that option program was replaced with a bonus plan. In 2001 and 2002 the following options were granted to beneficiaries under the old plan according to the conditions set out below: Grant year Number 989,000 1,720,000 Maturity April15, 2005 Nov. 29, 2004 Exercise ratio 1:1 1:1 Exercise price Due to the reduction of nominal value in 2004 and the repurchase of shares during 2004 and 2005, the exercise price was reduced in accordance with the provisions of the program by a total of CHF 0.16 (grant year 2001) and CHF 0.23 respectively (grant year 2002) per option. These reductions correspond to the theoretical decline in the fair market value of these options due to the above-mentioned equity capital transactions. 42 Annual report 2005 mobilezone holding ag

44 N O TES 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. By December 31, 2005, the following options had been exercised: Grant year 2002 Number Exercise price share price By June 2, , By December 7, , By March 10, , By April 6, , Total 989,000 Grant year 2001 Number Exercise price share price On December 7, ,720, Employee retirement benefits The actuarial calculation performed in accordance with IAS 19 as of 12/31/2005 resulted in the following situation: Components of pension costs (in CHF 000) Current service costs 1, Interest costs Expected return on plan assets Recognized actuarial loss in the current year Pension cost, gross 1,187 1,091 Less employees contributions Pension costs, net Funded status and recognized net assets (in CHF 000) Present value of defined benefit obligation 7,797 5,914 Fair market value of plan assets 6,661 5,214 Excess of obligations over assets 1, Unrecognized actuarial losses 1, Adjustment due to IAS 19 para Recognized pension assets/liabilities 0 0 Annual report 2005 mobilezone holding ag 43

45 mobilezone Group Itemized changes in retirement fund assets (in CHF 000) Pension assets/liabilities as of January Pension costs 1,178 1,092 Contributions 1, Change of adjustment due to IAS 19 para Pension assets/liabilities as of December The following assumptions were applied: Discount rate 2.9% 3.25% Expected return on plan assets 2.5% 2.25% 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 Number of insured employees as of December Other operating costs (in CHF 000) Operating lease costs 6,294 6,556 Marketing 14,637 15,763 Repair and maintenance, general and administrative costs 6,062 6,802 less: contributions received from third parties 14,902 17,840 Total Other operating costs 12,091 11,281 Marketing costs are mostly covered out of cost contributions and location contributions of business partners; the same applies to operating lease costs, though to a lesser extent. 4 Net result of discontinued operations (in CHF 000) Book gain from disposal of investments Provisions made for litigation claims Total Net result of discontinued operations The net result did not affect income taxes in any way. 44 Annual report 2005 mobilezone holding ag

46 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 Other financial income (in CHF 000) Interest on bank accounts Book gain from disposal of Jamba! AG (Schweiz) Foreign exchange differences Total Other financial income Financial expense (in CHF 000) Interest on bank loans Bank commissions and foreign exchange differences Total Financial expenses In the year under review, as in the previous year, there were no significant interest-bearing debts. 7 Income tax expenses (in CHF 000) Current income taxes 4,009 4,104 Deferred income taxes Total Income tax expenses 3,868 3,711 Current income taxes are based solely on the profit of the year under review. Deferred income taxes are based solely on changes in temporary differences and the recognition of tax loss carry-forwards. Taxes on capital are included under Other operating costs. Annual report 2005 mobilezone holding ag 45

47 mobilezone Group Income tax reconciliation (in CHF 000 or as indicated) Profit before taxes 19,276 20,439 Average applicable tax rate 21.2% 21.1% Expected tax expense 4,082 4,310 Impact on tax expense from: tax-exempt income 0 65 effect of previously unrecognized tax losses now utilized unrecognized tax loss carry-forwards on current losses recognition of tax loss carry-forwards of previous periods effect of tax rate changes Effective income tax expense 3,868 3,711 Deferred tax assets (in CHF 000) Tax benefits of loss carry-forwards In addition, the Group has tax benefits of loss carry-forwards of CHF 270,000 (2004: CHF 368,000) that were not recognized previously 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 loss carryforward of CHF 3,465,000 expires in Deferred tax liabilities (in CHF 000) Intangible assets Inventories 1,509 1,670 Trade accounts receivable Provisions Total Deferred tax liabilities 1,980 2,206 As in the previous year, no income taxes were recognized directly in shareholders equity. 46 Annual report 2005 mobilezone holding ag

48 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated balance sheet 8 Property, plant & equipment (in CHF 000) Shop Other Total equipment property, plant & equipment Cost: 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 Additions 2, ,273 Disposals At December 31, ,202 2,582 14,784 Accumulated depreciation: 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 Additions 2, ,467 Disposals At December 31, ,519 2,097 9,616 Book Value: At December 31, , ,385 At December 31, , ,168 The fire insurance value of property, plant & equipment as per December 31, 2005, amounted to CHF 11,000,000 (2004: CHF 10,600,000). Annual report 2005 mobilezone holding ag 47

49 mobilezone Group 9 Investments in associated companies (in CHF 000) Share of equity in associated companies At December 31, Share of net results 272 Disposals 855 At December 31, Additions/Disposals 0 At December 31, The previous year s entry concerned the 49.9% investment in Jamba! AG (Schweiz). An accounting profit of CHF 145,000 resulted from the sale. 10 Intangible assets (in CHF 000) Acquired Acquired Customer Total shop locations goodwill list Cost: 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 Additions 1, ,510 Disposals At December 31, , ,724 7,325 Accumulated amortization: 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 Additions ,226 Disposals At December 31, , ,851 4,628 Book value: At December 31, ,423 2,413 At December 31, , , Annual report 2005 mobilezone holding ag

50 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS 11 Securities (in CHF 000) Listed capital-protected investment certificates 1 1,535 0 Shares not listed Total Securities 1, Stated at market value; maturity date: April 18, Stated at amortized cost less valuation adjustments 12 Inventories (in CHF 000) Inventories, gross 21,181 22,106 Less valuation adjustments Total Inventories 20,568 21,796 The carrying amount of inventories carried at fair value less costs to sell amounted to CHF 2,053,000 (2004: CHF 1,293,000). In the year under review value adjustments in the cost of goods and materials were made in the amount of CHF 523,000 (previous year: CHF 310,000). As in the previous year, no value adjustment transfers were made. 13 Trade accounts receivable (in CHF 000) Accounts receivable from third parties 28,352 23,555 Accounts receivable from associated companies Value adjustments 265 1,536 Total Trade accounts receivable 28,111 22,030 The value adjustment has decreased because it was set off with receivables not affecting the income statement. 14 Other accounts receivable (in CHF 000) Accruals 3,758 4,815 Other accounts receivable ,007 5,150 less: long-term accounts receivable Total Other accounts receivable (current) 3,935 5,078 Annual report 2005 mobilezone holding ag 49

51 mobilezone Group 15 Cash & cash equivalents (in CHF 000) Cash on hand, at banks and in postal accounts 14,485 15,593 Fixed-term deposits 0 9,000 Total Cash & cash equivalents 14,485 24,593 Cash and cash equivalents are not subject to any restrictions on disposal. The effective interest rate on fixed-term deposits was 0.45%. 16 Share capital Bearer shares CHF 0.01 CHF 0.10 par value par value 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 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 Less treasury shares: from share repurchase 2004, scheduled for destruction 1,776,326 Held for trading purposes 5,273 Number of shares issued and outstanding at December 31, ,853,145 Number of shares issued at December 31, ,634,744 Destruction of repurchased shares 3,537,948 Capital increase from employee options exercised 676,200 Number of shares issued at December 31, ,772,996 Less treasury shares: Held for trading purposes 7,990 Number of shares issued and outstanding at December 31, ,765,006 In 2004 and 2005 the Company bought a total of 3,537,948 of its own shares by means of a share buy-back program with tradable put options. According to the resolution of the Annual General Meeting of April 14, 2005, these shares were destroyed in the year under review. More details regarding the share repurchase are included in Note 3 to the annual financial statements of mobilezone holding ag on page 59. The treasury shares do not have any dividend or voting rights at the Annual General Meeting. All other shares issued are equally entitled to dividends and voting. 50 Annual report 2005 mobilezone holding ag

52 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS Details regarding treasury shares and contingent and authorized capital are included in Note 3 to the annual financial statements of mobilezone holding ag on page 59. Calculation of earnings per share Consolidated net profit CHF 15,408,000 16,728,000 Weighted average number of shares outstanding Pieces 35,952,000 35,437,000 Earnings per share CHF Consolidated net profit CHF 15,408,000 16,728,000 Weighted average number of outstanding and potential shares Pieces 36,141,000 36,158,000 Earnings per share diluted CHF Provisions (in CHF 000) Litigation and Discontinuing Total 2005 Total 2004 warranty claims Operations At January Additions Used Reversed At December Of these current The increase in provisions in the previous year was due to claims related to the discontinued business activities in Germany. The amount was paid in cash based on a final settlement. The provision for litigation and warranty claims is mainly for expected warranty claims from the sale of mobile phones. 18 Other current liabilities (in CHF 000) Deferrals 2,031 2,349 Other current accounts payable 1,705 1,455 Total Other current liabilities 3,736 3,804 Annual report 2005 mobilezone holding ag 51

53 mobilezone Group Other disclosures 19 Operating leases As of December 31, 2005, mobilezone Group operated 104 shops all of which 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 (in CHF 000) Less than one year 6,734 6,148 Between one and five years 19,029 16,411 More than five years 4,428 5,414 Total 30,191 27,973 The expected lease income from sublease arrangements amounts to CHF 166,000 (2004: CHF 390,000). During the year under review, CHF 6,294,000 were recognized as an expense from operating leases in the income statement (2004: CHF 6,556,000). These expenses included revenue-based rents in the amount of CHF 67,000 (2004: CHF 89,000). 20 Contingent liabilities and future commitments, capital commitments and restrictions of ownership As of December 31, 2005, and December 31, 2004, no items had to be reported under this heading. 21 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 there are relatively few receivables outstanding as compared to total sales. Since Swiss law limits the number of network operators, these outstanding receivables are due from a small number of telecommunication providers. The company meets such risks by negotiating relatively short payment terms. 52 Annual report 2005 mobilezone holding ag

54 N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS Foreign currency risk The revenues in the retail business and in the fixed-line telecommunications business are all denominated in local currency. Approximately 55% of purchases in the retail business are denominated in euro.the Group decided generally not to hedge the currency risk on purchases due to the short payment terms and the high inventory turnover. The wholesale business is not exposed to any currency risks. Open put options to sell euros In the year under review put options with short maturity were sold that give the counterpart the right to sell euros at the agreed upon-basis price. The premiums earned were used to reduce the price for the Group s euro purchases. As of December 31, 2005, there were three open contracts at a value of euro 6,000,000 (2004:none).The fair market value (price to settle the options) was minus CHF 8,454. Interest-rate risk No long-term financial liabilities exist. The interest-rate risk arising from long-term securities is insignificant. Fair market value of financial assets and liabilities The fair market values of the Group s financial assets and liabilities approximate the corresponding book values. 22 Transactions with related parties and companies Related parties are Members of the Board of Directors, Group Management, their close relatives, and key shareholders including companies controlled by them. The total cash compensation (including pension contributions) to Directors and the Group Management (including those working on a mandate basis) amounted to CHF 1,687,000 (prior year CHF 1,985,000). As in the previous year, there were no share-based payments, other long-term benefits, or severance benefits paid. Hans-Ulrich Lehmann, Member of the Board of Directors, and Rudolf Baer, CEO, are the owners of Immoplaza AG. This company rents the central warehouse and the administrative building in Regensdorf to mobilezone. Hans-Ulrich Lehmann is the owner of Autronic AG, Samtel AG, and Mobile Solutions AG. The first two companies are distributors of Nokia and Samsung mobile phones in Switzerland. They supply mobilzone ag with mobile phones and pay marketing contributions to mobilezone ag. Mobile Solutions AG develops content for mobile phone applications. All transactions are effected at arm s length. Annual report 2005 mobilezone holding ag 53

55 mobilezone Group N O TES TO THE CONSOLIDATED FINANCIAL STATEMENTS Transactions and balances with related parties (in CHF 000) Purchases of mobile phones from Autronic AG 41,054 60,006 Marketing contributions from Samtel AG Service fees from Mobile Solutions AG Operating lease expenses to Immoplaza AG Accounts payable to Autronic AG 3,419 8,220 Accounts receivable from Samtel AG Accounts receivable from Mobile Solutions AG Payments for consulting services from members of the Board of Directors or their related law offices amounted to CHF 155,000 (prior year: CHF 160,000). 23 Post-balance-sheet events There have been no events that significantly affect the consolidated financial statements. The Board of Directors approved the consolidated financial statements for publication on March 6, The consolidated financial statements must still be approved by the Annual General Meeting on April 13, Annual report 2005 mobilezone holding ag

56 mobilezone Group R EPORT OF THE G ROUP A UDITORS 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 30 to 54 (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 Swiss Auditing Standards 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 Claudius Rüegsegger Swiss Certified Accountant Zurich, March 6, 2006 Annual report 2005 mobilezone holding ag 55

57 mobilezone holding ag I NCOME STATEMENT January 1 to December (in CHF 000) Dividend income 0 7,399 Financial income 1,189 2,483 Reversal of provisions and value adjustments Gain from disposal of investments Income from services provided and other income 1,608 1,764 Total Income 3,186 12,717 Administrative expenses 1,814 1,888 Financial expenses Set aside for provisions and value adjustments Total Expenses 1,936 2,212 Net profit 1,250 10,505 The presentation of the income statement has been slightly changed in the year under review and the prior year s figures have been adjusted accordingly to allow comparison. 56 Annual report 2005 mobilezone holding ag

58 mobilezone holding ag B ALANCE SHEET BEFORE APPROPRIATION OF AVAILABLE EARNINGS as of December (in CHF 000) Notes ASSETS Cash & cash equivalents 820 7,083 Treasury shares 31 10,256 Accounts receivable from Third parties Group companies 0 1,122 Accruals and deferrals 0 1 Current assets ,487 Investments 2 31,076 30,576 Securities 1,634 0 Fixed assets 32,710 30,576 Total Assets 33,586 49,063 LIABILITIES AND SHAREHOLDERS EQUITY Current accounts payable to Third parties Group companies 5,500 2 Accruals and deferrals Current liabilities 6, Provisions Share capital General reserves 15,162 26,627 Reserve for own shares 31 10,256 Available earnings Balance brought forward 10,505 0 Net profit 1,250 10,505 Shareholders equity 3 27,306 47,774 Total Liabilities and shareholders equity 33,586 49,063 Annual report 2005 mobilezone holding ag 57

59 mobilezone holding ag Except for the comments that follow, there are no further facts that require disclosure in accordance with Art. 663b of the Swiss Code of Obligations. 1 Contingent liabilities at December (in CHF 000) Letters of postponement issued in favor of subsidiaries Additional guarantees in favor of subsidiaries 0 99 Joint and several liability from VAT group taxation p.m. p.m. 2 Scope of consolidation and significant investments in subsidiaries and associates Investment held Paid-in capital Consolidation (%) (in CHF 000) Switzerland mobilezone ag, Regensdorf 100 2,850 C Europea Trade AG, Regensdorf C mobilezone net ag, Regensdorf (since September 20, 2005) C globalzone ag, Regensdorf C mobilezone international ag, Regensdorf C Jamba! AG (Schweiz), Regensdorf (until September 30, 2004) E Germany 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 58 Annual report 2005 mobilezone holding ag

60 N O TES TO THE FINANCIAL STATEMENTS 3 Shareholders equity Share capital, authorized and conditional capital increases As of December 31, 2005, the ordinary share capital consists of 35,772,996 bearer shares at a par value of CHF 0.01 each. As of the balance sheet date, there was authorized share capital in the amount of CHF 30,000 (2004: CHF 30,000). Conditional share capital amounting to CHF 132,910 (2004: CHF 139,672) is earmarked for the exercise of employee stock options (up to CHF 22,910), 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 CHF 10,000). As of balance sheet date there were no options outstanding (2004: 676,200 options outstanding for the purchase of 676,200 bearer shares at a par value of CHF 0.01). Change in number of treasury shares Amount of Price in CHF Total bearer shares Maximum Average Minimum (in CHF 000) At January 1, Purchases from stock repurchase program , ,124 Transaction costs relating to stock repurchase program 112 Other purchases at cost 99, Disposals at sale prices 93, At December 31, ,781,599 10,256 Purchases from stock repurchase program ,761, ,997 Transaction costs relating to stock repurchase program 121 Destruction of purchased shares 3,537,948 22,355 Other purchases at cost 50, Disposals at sale prices 47, At December 31, , Annual report 2005 mobilezone holding ag 59

61 mobilezone holding ag N O TES 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 Schroders Plc., GB-London Rudolf Baer/B&B Beratungs AG 6 8 Bestinver Gestión SA, E-Madrid 6 0 Asialand Holding Corp., VG-Tortola 5 5 Martin Lehmann 5 Erich Traber 5 Total Annual report 2005 mobilezone holding ag

62 mobilezone holding ag P ROPOSAL BY THE B O ARD OF D IRECTORS Proposal by the Board of Directors (in CHF) Balance brought forward 10,505,455 0 Net profit 1,249,922 10,505,455 Available earnings at the disposal of the Annual General Meeting 11,755,377 10,505,455 The proposal of the Board of Directors of mobilezone holding ag to the Annual General Meeting, to be held on April 13, 2006, is to dispose of the available earnings as follows: Payment of a dividend of CHF 0.25 per bearer share entitled to dividends 8,943,249 0 To be carried forward 2,812,128 10,505,455 Total 11,755,377 10,505,455 In addition, the Board of Directors submit a motion to the General Meeting to assign CHF 15,062,103 from general reserves to free reserves. Annual report 2005 mobilezone holding ag 61

63 mobilezone holding ag R EPORT OF THE S TATUTORY A UDITORS Report of the Statutory Auditors to the General Meeting of mobilezone holding ag, Regensdorf As statutory auditors, we have audited the accounting records and the financial statements presented on pages 56 to 61 (balance sheet, income statement and notes) of mobilezone holding ag for the year ended December 31, These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these 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 Swiss Auditing Standards, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the company s articles of incorporation. We recommend that the financial statements submitted to you be approved. KPMG Fides Peat Fredy Luthiger Swiss Certified Accountant Auditor in Charge Claudius Rüegsegger Swiss Certified Accountant Zurich, March 6, Annual report 2005 mobilezone holding ag

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65 mobilezone branches S HOP ADDRESSES Aarau Bahnhofstrasse 11 Aigle Centre Commercial MMM Centre, Chemin sous le Grand Pré 4 Arbon Zentrum Novaseta Baden Badstrasse 7 Balerna Centro Breggia,Via San Gottardo 56 a Basel RailCity SBB Bahnhofpasserelle first floor/ Güterstrasse 115; Claraplatz/Rebgasse 2; Gerbergasse 70; Shopping-Center St.-Jakob-Park Bellinzona Via Nosetto 4 Berne Von-Werdt-Passage 3; Waaghaus-Passage 8 Biel/Bienne Bahnhofstrasse 6; Nidaugasse 60; CARREFOUR, Centre Boujean, Zürichstrasse 24 Brig Bahnhofstrasse 4 Brugg Neumarktplatz 5 Buchs SG Bahnhofstrasse 28 Bülach Marktgasse 21; MIGROS Center Süd, Feldstrasse 85 Bulle Grand-Rue 30 Burgdorf Poststrasse 7; EKZ Neumarkt Chur EKZ City Shop Collombey Centre Commercial, Parc du Rhône Crissier Centre MIGROS Delémont Avenue de la Gare 42 Dietlikon CARREFOUR, Industriestrasse 28 Écublens Centre Commercial du Croset 1 Egerkingen Gäupark, first floor Emmenbrücke Emmen-Center Frauenfeld EKZ Passage, Bahnhofstrasse 70 Fribourg Rue de Romont 12 Geneva Centre Commercial Planète Charmilles; Eaux-Vives 2000; Rue de Rive10; Rue de Carouge18; Rue du Mont-Blanc 17 Geneva-Carouge Centre Commercial La Praille, Route des Jeunes 10 Geneva-Meyrin Centre Commercial Grancia Parco Commerciale Grancia Heimberg CARREFOUR, Blümlisalpstrasse 61 Hinwil CARREFOUR,Wässeristrasse 38 Kreuzlingen Hauptstrasse 55 Kriens EKZ Pilatus-Markt La Chaux-de-Fonds Avenue Léopold-Robert 33; CARREFOUR, Boulevard des Éplatures 20 Langenthal Bärenplatz/Marktgasse Lausanne Rue de Bourg 17; Rue Mauborget 12 Liestal Rathausstrasse 29 Locarno Largo Zorzi Lucerne Kapellgasse 7; Pilatusstrasse 7 Lyss Hirschenplatz 1a Marin-Épagnier Centre Commercial MANOR Marin, Avenue Champs-Montants Martigny Centre Commercial Migros Manoir Mels Pizol Center, Grossfeldstrasse 63 Montreux Centre Forum, Place du Marché 6 Morges Grand-Rue10 Meyrin EPA, Centre Commercial Neuchâtel Rue du Seyon 6 Nyon Centre Commercial La Combe, Rue de la Morâche 6 Oftringen Perry Center, Bernerstrasse Olten Baslerstrasse 60 Pfäffikon SZ Seedamm-Center, Passage (middle salesfloor) Rapperswil Obere Bahnhofstrasse 44 Regensdorf EKZ Regensdorf; Riedthofstrasse 124 (head office) Rorschach Hauptstrasse 67 Sarnen EKZ MM Sarnen-Center, Nelkenstrasse 5 Schaffhausen Vordergasse 41; Herblinger Markt Schönbühl SHOPPYLAND, Industriestrasse 20 Sierre Noës, Centre Commercial Signy Centre Commercial, Rue des Fléchères Sion Rue de la Porte-Neuve 21 Solothurn Marktplatz 45 Spreitenbach Shopping-Center Tivoli Stans EKZ Länderpark Steinhausen EKZ Zugerland Sursee EKZ Surseepark St. Gallen Multergasse 31; EKZ Neumarkt 1 St. Margrethen Rheinpark Thun Bälliz 4; LOEB, Bälliz 39 Vernier CARREFOUR, Route de Meyrin 171 Vevey Centre Commercial Midi Coindet Villars-sur-Glâne CARREFOUR, Route de Moncor1 Visp Bahnhofstrasse 2 Volketswil VOLKI-LAND, Industriestrasse 1 Wallisellen Glattzentrum, middle salesfloor Weinfelden Zentrum-Passage 1 Wil SG Obere Bahnhofstrasse 21 Winterthur EKZ Neuwiesen, Strickerstrasse 3; Marktgasse/Obere Kirchgasse 22; Zentrum Stadttor/Bahnhofplatz 5 Wohlen Bahnhofstrasse 5 Yverdon Rue du Lac 24 Zug EKZ Metalli, Baarerstrasse 16 Zurich Bahnhofstrasse 87; Löwenstrasse 56; City Shopping, Löwenstrasse 35; EKZ Letzipark, upper salesfloor; Stauffacherstrasse 35; Theaterstrasse 12 Zurich-Oerlikon EKZ Neumarkt, Hofwiesenstrasse 350 Situation in April Annual report 2005 mobilezone holding ag

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