©2006 mobilezone holding ag

A n n u a l r e p o r t m o b i l e z o n e h o l d i n g a g

2005

Credits

Copy: mobilezone holding ag

Editing: Christoph Zurfluh, Baar

Design: Af IT, 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

www.mobilezone.ch

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.

© 2006 mobilezone holding ag

m o b i l e z o n e h o l d i n g a g A N N U A L R E P O R T 2 0 0 5

Simply lifting off and floating. Somewhere between heaven and earth. But those who

want to fly should never lose their bearings.

ACROSS THE SKIES.

� OSKY STEINER (43) , HELICOPTER PILOT AND BASE LEADER IN PFAFFNAU

MOTOROLA A780, CO-PILOT AT MOBILEZONE �

m o b i l e z o n e h o l d i n g a g A N N U A L R E P O R T

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

2005

Annual report 2005 mobilezone holding ag 3

� CARLA BÜRGI (20) , SALES PRO IN ZURICH

SIEMENS CL75, BIG SELLER AT MOBILEZONE �

Every working day a sweet temptation.To sell something, you have to love it. Who can

resist you then?

COLLECTOR’S ITEM.

m o b i l e z o n e G r o u p C H A I R M A N ’S R E P O R T


D espite 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 activi-

ties in Germany (previous year: CHF 20.6 mil-

lion ) and a decrease in wholesale business

by ca. CHF 19 million, the resulting consoli-

dated gross sales for 2005 are lower and

amount to CHF 261.8 million (previous year:

CHF 288.7 million ). Reduced cost contri-

butions 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 mil-

lion ). The decrease of the operating cash flow

to CHF 6.8 million (previous year: CHF 19.9 mil-

lion ) is largely due to high balances of receiv-

ables 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 of 104 outlets. Although this devel-

opment 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 mobile-

zone network of shops as new regions.

In 2006, new outlets are planned for the shop-

ping 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 2006.

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 im-

proved 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 recep-

tion on cell phones a reality. For the coming

year, mobilezone expects that particularly

the Soccer World Cup in Germany will gener-

ate 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

For the first time

mobilezone

will distribute

dividends

Communicating properly means to find ways and means to touch people. Only what is retained will

have a lasting effect.

COMMUNICATOR.

� PAUL WIDMER (58) , ACTING HEAD OF A PUBLISHING HOUSE IN ZURICH

QTEK 9100, COMMUNICATOR AT MOBILEZONE �

m o b i l e z o n e G r o u p K E Y F I G U R E S A T A G L A N C E

Facts & figures

from the

financial report

Key figures 2005 2004

( in CHF ’000 or as noted, respectively )

mobilezone Group

Gross sales revenues 261,831 288,709

Net sales 243,590 268,920

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 ) % 7.7 7.2

Net profit 15,408 16,728

(As a percentage of net sales ) % 6.3 6.2

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 ) % 59.4 51.2

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 31 317 309

Number of shops as of December 31 104 101

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 ) % 81.3 97.4

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 0.43 0.47

Earnings per share (diluted ) CHF 0.43 0.46

Shareholders’ equity per share CHF 1.28 1.13

Dividend per share 1 CHF 0.25 0

Share price (highest / lowest ) CHF 5.68 / 3.70 4.78 / 2.26

Share price on December 31 CHF 5.45 4.19

1 2005: According to the Board of Directors’ request to the General Meeting of April 13, 2006.


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.

ROLE-PLAYER.

� BENJAMIN STÄHLI (13) , STAR OF A CLIQUE IN BASEL

NOKIA 6101, CELL PHONE STAR AT MOBILEZONE �

m o b i l e z o n e G r o u p C O R P O R A T E G O V E R N A N C E

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 www.mobilezoneholding.ch

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 0.01. 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. ��

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 commu-

nications 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, Riedthofstrasse 124, 8105 Regens-

dorf, Switzerland. It is listed on the Swiss

Exchange SWX (Valor no.: 1258340, ISIN :

CH 0012583404). As of December 31, 2005,

the market capitalization (excluding own

stock ) was CHF 195.0 million.

1.2 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 share-

holder’s agreement between the significant

shareholders.

1.3 Cross-shareholdings

There are no cross-shareholdings.

2. Capital structure

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

Information

on Corporate

Governance

pursuant to

Swiss Exchange

(SWX)

guidelines


m o b i l e z o n e G r o u p

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

www.mobilezoneholding.ch, 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 posi-

tions in the Group’s companies, nor have they

held such positions during the past three

Charles Gebhard,

Chairman

Ruedi Baer,

Delegate

Walter Heutschi

Michael R. Kloter

Hans-Ulrich Lehmann

years. Rudolf Baer and Hans-Ulrich

Lehmann had business relationships with

some of the Group’s companies in the

last year through companies they control-

led (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 reelec-

tion is possible.

10 Annual report 2005 mobilezone holding ag

C O R P O R A T E G O V E R N A N C E / G O V E R N I N G B O D I E S

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

3.7 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 manage-

ment on the course of business

( in every meeting )


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 posi-

tions, 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.

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, educa-

tion, professional background, and other

activities and vested interests can be found

at www.mobilezoneholding.ch, under the

heading “Corporate Governance/Directors

and Group management”. ��


4.3 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 govern-

ing bodies or parties closely linked to them.

Former members

of governing bodies

did not receive

any compensation

in 2005

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 140,700.

5.8 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. ��


Discover worlds of sound. And create new ones. Let yourself be swept away. And carry away others. Music

opens up new dimensions. For all.

PAINTING WITH SOUND.

URS STUCKI (24) , PROFESSIONAL MUSICIAN FROM EMMEN �

� SONY ERICSSON W800i, HOBBY MUSICIAN AT MOBILEZONE


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.

6.5 Inscriptions into the share register

Not applicable, as only bearer shares exist.

7. Changes of control and defense measures

7.1 Duty to make an offer

There is an opting-out regulation.

7. 2 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 compa-

nies, 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 2000.

8.2 Auditing fees

In the past year, KPMG invoiced CHF 135,500

for auditing fees.

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.

9. Information policy

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

www.mobilezoneholding.ch under

the heading “Media /Press Room”.

Anyone who wishes to receive mobilezone’s

media information can register there under

the heading “E-mail Service”.

Always up-to-date :

Latest information is available under

www.mobilezoneholding.ch

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.

WORKING EXPERIENCE.

� ROBERTO TOTO (22) , MECHANIC IN BUTTWIL

SAMSUNG SGH-E720, ALL-ROUNDER AT MOBILEZONE �

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.

ENCHANTING COLORS.

� PETRA AMERELL (43) , ART PAINTER IN MUNICH AND ZURICH

MOTOROLA V3 RAZR, ARTWORK AT MOBILEZONE �

m o b i l e z o n e C O N T I N U I N G A S M O S T I M P O R T A N T P A R T N E R F O R P R O V I D E R S

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.

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 mobile-

zone for the first time also distributed twelve

smaller additional catalogs. This marks

mobilezone’s growing and successful pres-

ence in the cell phone market.

Providers As before, mobilezone continued to be the

most important independent partner of all three

network operators in 2005. Now mobilezone

is also the most important partner for contract

extensions. In total, mobilezone concluded

mobilezone

is also

becoming the

most important

partner for

contract

extensions


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 2005.

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 %

• 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

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%

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%


cell phones at rock-bottom prices – in terms

of value this had hardly any impact on the mar-

ket. 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 consti-

tutes an increase in sales of 4.2 percent over

the previous year.

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.

Accessories Cell phones not only offer increasingly better

sound quality, but also include digital cam-

eras that take pictures of outstanding quality.

It is thus only logical that mobilezone now

also sells photo printers and the required con-

m o b i l e z o n e

More than

500,000

cell phones sold

speak for

mobilezone’s

consulting

competence

sumables. A strong revenue increase also

came from the sale of memory cards ; however,

the prices in this segment are steadily falling.

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 tech-

nical 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

SEALLIVE AT THE MOBILE AWARD 2004 CEREMONY IN REGENSDORF

mobilezone outlets in April 2006

N E T W O R K O F O U T L E T S C O N T I N U E S T O B E O P T I M I Z E D


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 communi-

cations industry was again a resounding

success in 2005 – not only because

of the eight “mobile awards” the

presenter, Kurt Aeschbacher,

awarded on the occa-

sion, 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

Closures planned in 2006 • Chur, Bahnhofstrasse

• Fribourg, Rue de Romont 6

• Geneva, Place du Molard

• Kriens, Einkaufszentrum Hofmatt

• Neuchâtel, Rue du Seyon 5

52 outlets in city centers

2 shop-in-shop outlets

Outlet addresses on page 64

53 outlets in shopping centers

Chur

St. GallenSt. Margrethen

Kreuzlingen

Winterthur

RapperswilZürich

Luzern

Solothurn

Neuchâtel

Biel/Bienne

Fribourg

Thun

Martigny

Sierre

Montreux

Lausanne

Aarau

Basel

Bellinzona

Locarno

Delémont

Genève

Yverdon

Bern

Baden

Schaffhausen

Regensdorf

Frauenfeld

La Chaux-de-Fonds

Nyon

Zug

Almost 4,000 children were born with her help. And throughout her fulfilling life she was where she

was needed. For God’s reward.

EMERGENCY ASSISTANCE.

� DEACONESS SR. ELISA (89) , RETIRED DISTRICT NURSE IN UNTERÄGERI

MOTOROLA PEBL U6, ON DUTY AT MOBILEZONE �

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%

g l o b a l z o n e T H E P R E V I O U S Y E A R ’ S P O S I T I V E R E S U LT W A S M A I N T A I N E D

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 seg-

ment, 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

responsibility for globalzone’s billing in

January 2006.

In the course of 2005 the connection

fees of the cell phone operators, especially

those of Swisscom Mobile, were drasti-

Price reductions

led to a loss

in sales but not

in profit

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 mil-

lion (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 custom-

ers also profit from the attractive

ADSL offers globalzone has developed in

cooperation with green.ch.

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 declin-

ing 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.

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.


m o b i l e z o n e n e t F I R S T S W I S S S E R V I C E P R O V I D E R

I n 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 2006.

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 mobile-

zone subscribers are also billed by mobile-

zone, 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

As service

provider, too,

mobilezone

will achieve a

strong market

position

will offer its customers especially attrac-

tive minute rates.

The first post-pay price plan “fair value”

has been offered successfully since the

middle of January 2006. 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.

With individual subscriptions and attrac-

tive price plans globalzone will stand out

against other providers and will thus

also achieve and maintain a strong market

position as service provider.


Customer Care

0900 700 800

mobilezone

lets you be mobile :

with individual

subscriptions and

attractive price plans,

we will provide you

with new impulses.

The recipe for success : take authentic ingredients, create a pleasant atmosphere, and serve

everything with a smile.

ASIAN STYLE.

� JOHN WONG (49) , RESTAURATEUR IN BÜLACH

SAMSUNG SGH-D600, A DELICACY AT MOBILEZONE �

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.

CAMERA! ACTION!

� ROMAN HEER (44) , VIDEO PRODUCER IN LUCERNE

NOKIA N70, VIDEO PRODUCER AT MOBILEZONE �


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 2006.

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.

O u t l o o k N O L I M I T S T O I N N O V A T I O N

M ore pixels, more memory, more music:

innovative solutions will continue to have

a positive effect on the cell phone business

also in 2006. The most important trends are

already beginning to emerge.

From the simple cell phone to full-featuredigital camera. As a result of the announced

introduction of 3.2-megapixel cameras (Sony

Ericsson ), 5-megapixel ( LG ) and even 8-mega-

pixel 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

LG Leo

Flat enough for

any pocket :

high-quality cell phone

in an extremely flat

design with

5-megapixel ( ! )

digital camera.

Innovations

will keep

the demand

for cell phones

and acces-

sories high

also in 2006

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 oppor-

tunities 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 sub-

sidiary mobilezone net.

O u t l o o k C O N S U LT I N G C O M P E T E N C E B E C O M I N G E V E R M O R E I M P O R T A N T

Live TV moves. Watching TV via cell phone

has already become almost common-

place. 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 e-mails on the road. More and

more, people read and answer their e-mail 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 high-

quality stereo headphones. And the MP3/

Cell phones

are turning into

multimedia

devices before

our eyes

BenQ/Siemens EF81

Smart all-round

talent : With 2-mega-

pixel camera,

sharp display, large

memory, and –

of course – UMTS.

Sony Ericsson W810i

Soundstation :

The walkman for tele-

phoning – or music

freaks ! Comes with

lots of memory too !

Samsung SGH-D800

Stylish slider :

Its predecessor was

mobilezone’s

top-seller in 2005.

Motorola PEBL U6

A jewel :

Captivating design with

solid inner life – the cell

phone for showing off !


Nokia 6280

Top-seller :

2-megapixel

camera and a

high-resolution

large display –

the camera

cell phone with

class.

Stamina. Determination. Desire for peak performance. To be successful always also means to believe in oneself.

And sometimes also to rise above oneself.

CONTENDER FOR THE TITLE.

� SARAH SCHÜTZ (27) , TRI-ATHLETE FROM DÜBENDORF

SONY ERICSSON K750i, ALL-ROUND TALENT AT MOBILEZONE �

2005


m o b i l e z o n e h o l d i n g a g F I N A N C I A L R E P O R T

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.

m o b i l e z o n e G r o u p C O N S O L I D A T E D I N C O M E S T A T E M E N T


for the years ended December 31 2005 2004 2005 2004 2005 2004

( in CHF 000) Notes Total Group Continuing Discontinuing operations operations

Gross sales revenues 261,831 288,709 261,831 268,094 20,615

Sales deductions including VAT – 18,241 – 19,789 – 18,241 – 17,433 – 2,356

Net sales 1 243,590 268,920 243,590 250,661 18,259

Other operating income 291 855 291 593 262

Cost of goods and materials – 183,594 – 209,732 – 183,594 – 194,032 – 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 23,555 – 168

Depreciation of property, plant & equipment 8 – 2,467 – 2,747 – 2,467 – 2,650 – 97

Amortization of intangible assets 10 – 1,226 – 1,326 – 1,226 – 1,326 0

Net result of discontinued operations 4 0 173 0 0 173

Operating profit before interest & tax (EBIT) 18,831 19,487 18,831 19,579 – 92

Share of the results of associated companies 9 0 272 0 272 0

Other financial income 5 770 894 770 892 2

Financial expense 6 – 325 – 214 – 325 – 139 – 75

Profit / loss before income taxes 19,276 20,439 19,276 20,604 – 165

Income tax expenses 7 – 3,868 – 3,711 – 3,868 – 3,711 0

Net profit / loss 15,408 16,728 15,408 16,893 – 165

( in CHF ) ( in CHF ) ( in CHF ) ( in CHF ) ( in CHF )

Earnings per share 16 0.43 0.47 0.43 0.47 0.00

Earnings per share – diluted 16 0.43 0.46 0.43 0.46 0.00

as of December 31 2005 2004

( in CHF 000) Notes

ASSETS

Property, plant & equipment 8 5,168 5,385

Intangible assets 10 2,697 2,413

Deferred tax assets 7 219 303

Securities 11 1,635 0

Other accounts receivable 14 72 72

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 16 358 369

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 208 376

Long-term liabilities 2,188 2,582

Trade accounts payable 20,884 27,285

Current tax liabilities 4,284 5,366

Current provisions 17 100 850

Other current liabilities 18 3,736 3,804

Current liabilities 29,004 37,305

Total Liabilities and shareholders’ equity 76,890 81,670

m o b i l e z o n e G r o u p C O N S O L I D A T E D B A L A N C E S H E E T


for the years ended December 31 2005 2004

( in CHF 000) Notes

Profit / loss before income taxes 19,276 20,439 Interest income and expenses, net – 90 – 10 Depreciation & amortization 8,10 3,693 4,073 Gain on sale of property, plant & equipment 0 2 Changes in provisions, net 17 – 750 130 Changes in value adjustments, net 523 360 Income from associates accounted for using the equity method 9 0 – 272 Gain on sale of investments in associates 9 0 – 145 Other expenses not involving the movement of funds 0 – 191

22,652 24,386 Changes in

trade accounts receivable 13 – 6,081 9,982 other accounts receivable 14 1,143 946 inventories 12 705 – 829 trade accounts payable – 6,401 – 10,980 other current liabilities – 58 – 668

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 – 1,510 – 758 securities in fixed assets 11 – 1,635 0

Proceeds from disposals of property, plant & equipment 8 23 30 investments in associated companies 9 0 1,000

Cash flow relating to divestiture of subsidiaries1 0 – 1,537 Interest received 41 37 Net cash from investing activities – 5,354 – 3,827

Interest paid – 60 – 61 Capital increase 16 637 9,592 Reduction in par value 16 0 – 3,216 Purchase of treasury shares 16 – 12,366 – 10,646 Sale of treasury shares 16 236 390 Issuance of call-options on own shares 0 591 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 31 15 14,485 24,593

1 Details on assets and liabilities acquired and disposed of are disclosed in the notes under “Scope

of consolidation” on page 37.

m o b i l e z o n e G r o u p C O N S O L I D A T E D C A S H F L O W S T A T E M E N T


Movements of shareholders’ equity

( in CHF 000) Share Additional Retained Cumulative Total capital paid-in earnings translation

capital adjustment

At December 31, 2003 3,560 21,317 3,467 – 75 28,269

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 591 591

Translation adjustments from deconsolidation 75 75

Net profit 16,728 16,728

At December 31, 2004 369 21,219 20,195 0 41,783

Capital increase from employee options exercised 7 630 637

Purchase of treasury shares – 18 – 12,112 – 12,130

Net profit 15,408 15,408

At December 31, 2005 358 9,737 35,603 0 45,698

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 l ine item “Retained earnings” includes legally restr icted 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.

m o b i l e z o n e G r o u p C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y


Commerce Fixed-line Discontinued Other / telecommunications operations eliminations

2005 2004 2005 2004 2005 2004 2005 2004

248,768 252,031 13,063 16,063 — 20,615 0 0

0 0 175 686 — 0 – 175 – 686

– 17,322 – 16,274 – 919 – 1,159 — – 2,356 0 0

231,446 235,757 12,319 15,590 — 18,259 – 175 – 686

284 922 – 1 23 — 262 8 – 352

– 176,183 – 183,510 – 7,421 – 11,057 — – 15,700 10 535

– 24,048 – 22,690 – 373 – 286 — – 1,683 – 1,251 – 716

– 12,077 – 10,003 – 1,185 – 1,174 — – 1,306 1,171 1,202

19,422 20,476 3,339 3,096 — – 168 – 237 – 17

– 2,455 – 2,638 – 12 – 12 — – 97 0 0

– 940 – 1,135 – 286 – 191 — 0 0 0

0 0 0 0 — 173 0 0

16,027 16,703 3,041 2,893 — – 92 – 237 – 17

Commerce Fixed-line Discontinued Other / telecommunications operations eliminations

2005 2004 2005 2004 2005 2004 2005 2004

7,364 7,141 573 729 — 0 1,854 303

65,472 61,288 6,758 5,265 — 0 – 5,131 6,944

72,836 68,429 7,331 5,994 — 0 – 3,277 7,247

22,393 28,343 1,765 3,227 — 0 7,034 8,317

50,443 40,086 5,566 2,767 — 0 – 10,311 – 1,070

3,641 3,142 142 210 — 5 1,635 0

Consolidated income statement

( in CHF 000) mobilezone Group

2005 2004

Gross sales revenues with third parties 261,831 288,709

Gross sales revenues with other segments 0 0

Sales deductions including VAT – 18,241 – 19,789

Net sales 243,590 268,920

Other operating income 291 855

Cost of goods and materials – 183,594 – 209,732

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 0 173

Operating profit before interest and tax (EBIT) 18,831 19,487

Consolidated balance sheet

( in CHF 000) mobilezone Group

2005 2004


Current assets 67,099 73,497


Liabilities 31,192 39,887

Net assets 45,698 41,783

Investments in fixed assets 5,418 3,357

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T Sm o b i l e z o n e G r o u p

34 Annual report 2005 mobilezone holding ag Annual report 2005 mobilezone holding ag 35

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 ).

Segment information

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 commis-

sions ). 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 mobile-

zone net ag has been offering mobile subscription service based on its own pricing plan since

January 2006. The parent company of mobilezone Group is mobilezone holding ag, Riedthof-

strasse 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 mate-

rial 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.



N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S


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.



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). Accord-

ingly, 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 incorpo-

rated 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 state-

ment. 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 state-

ment, 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 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. Deprecia-

tion 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 2 to 5 years

Shop equipment 5 to 8 years

Vehicles 3 to 5 years

Intangible assets Acquired rights such as contracts with clients, lessors, and suppliers and similar rights that are gen-

erating 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 intan-

gible 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.



Inventories Inventories are stated at the lower of cost or net realizable value, whichever is lower. The cost of inven-

tories 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 addi-

tion, 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 adjust-

ments 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.


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 consoli-

dated 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 contri-

butions. 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 state-

ment 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 carry-

forwards and deferred earnings tax credits are activated only to the extent that it is probable that

they will be realized in the future.




Notes to the consolidated income statement

Net sales 2005 2004

( in CHF 000)

Mobile communication products 96,984 121,745

One-time commissions and recurring “airtime”profit-sharing commissions from providers 135,154 116,813

Fixed line telecommunication revenues and telephone cards 11,452 14,903

Kiosk merchandise 0 15,459

Total Net sales 243,590 268,920

Personnel costs 2005 2004

( in CHF 000)

Wages and salaries 22,481 22,408

Social security costs 1,957 2,067

Pension costs 627 519

Other employee benefit costs 607 381

Total Personnel costs 25,672 25,375

Number of employees at balance sheet date (based on full-time employment ) 317 309

Option program An option program for members of the Board of Directors, the executive committee, and upper

man-agement was in effect until 2002. 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 2002 2001

Number 989,000 1,720,000

Maturity April 15 , 2005 Nov. 29, 2004

Exercise ratio 1:1 1:1

Exercise price 1.275 3.650

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 corre-

spond to the theoretical decline in the fair market value of these options due to the above-mentioned

equity capital transactions.

1

2



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 consoli-

dated financial statements.

By December 31, 2005, the following options had been exercised :

Grant year 2002 Number Exercise price ∅ share price

By June 2, 2004 137,800 1.275 3.15

By December 7, 2004 175,000 1. 115 4.10

By March 10, 2005 543,600 1. 115 4.80

By April 6, 2005 132,600 1. 045 4.80

Total 989,000

Grant year 2001 Number Exercise price ∅ share price

On December 7, 2004 1,720,000 3.49 4.05

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 2005 2004

( in CHF 000)

Current service costs 1,121 987

Interest costs 169 225

Expected return on plan assets – 143 – 134

Recognized actuarial loss in the current year 31 13

Pension cost, gross 1,187 1,091

Less employees’ contributions – 555 – 486

Pension costs, net 623 605

Funded status and recognized net assets 2005 2004

( 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 – 1,136 – 700

Unrecognized actuarial losses 1,254 817

Adjustment due to IAS 19 para. 58 – 118 – 117

Recognized pension assets / liabilities 0 0



3

4

Itemized changes in retirement fund assets 2005 2004

( in CHF 000)

Pension assets / liabilities as of January 1 0 0

Pension costs – 1,178 – 1,092

Contributions 1,179 951

Change of adjustment due to IAS 19 para. 58 – 1 141

Pension assets / liabilities as of December 31 0 0

The following assumptions were applied : 2005 2004 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 7.3 7.3

Number of insured employees as of December 31 329 306

Other operating costs 2005 2004

( 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.

Net result of discontinued operations 2005 2004

( in CHF 000)

Book gain from disposal of investments 0 423

Provisions made for litigation claims 0 – 250

Total Net result of discontinued operations 0 173

The net result did not affect income taxes in any way.



Other financial income 2005 2004

( in CHF 000)

Interest on bank accounts 115 39

Book gain from disposal of Jamba! AG (Schweiz ) 0 145

Foreign exchange differences 655 710

Total Other financial income 770 894

Financial expense 2005 2004

( in CHF 000)

Interest on bank loans 25 29

Bank commissions and foreign exchange differences 300 185

Total Financial expenses 325 214

In the year under review, as in the previous year, there were no significant interest-bearing debts.

Income tax expenses 2005 2004

( in CHF 000)

Current income taxes 4,009 4,104

Deferred income taxes – 141 – 393

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”.

5

6

7



Income tax reconciliation 2005 2004

( 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 – 69 – 221

unrecognized tax loss carry-forwards on current losses 5 125

recognition of tax loss carry-forwards of previous periods 0 – 303

effect of tax rate changes – 150 – 135

Effective income tax expense 3,868 3,711

Deferred tax assets 2005 2004

( in CHF 000)

Tax benefits of loss carry-forwards 219 303

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 carry-

forward of CHF 3,465,000 expires in 2009.

Deferred tax liabilities 2005 2004

( in CHF 000)

Intangible assets 120 131

Inventories 1,509 1,670

Trade accounts receivable 329 382

Provisions 22 23

Total Deferred tax liabilities 1,980 2,206

As in the previous year, no income taxes were recognized directly in shareholders’ equity.

8



Notes to the consolidated balance sheet

Property, plant & equipment

( in CHF 000) Shop Other Total equipment property,

plant & equipment

Cost :

At December 31, 2003 11,670 2,505 14,175

Additions 2,446 153 2,599

Disposals – 804 – 196 – 1,000

Changes in scope of consolidation – 2,349 – 2,349

Translation adjustment – 40 – 40

At December 31, 2004 10,923 2,462 13,385

Additions 2,008 265 2,273

Disposals – 729 – 145 – 874

At December 31, 2005 12,202 2,582 14,784

Accumulated depreciation :

At December 31, 2003 6,803 1,368 8,171

Additions 2,166 581 2,747

Disposals – 804 – 164 – 968

Changes in scope of consolidation – 1,916 – 1,916

Translation adjustment – 34 – 34

At December 31, 2004 6,215 1,785 8,000

Additions 2,033 434 2,467

Disposals – 729 – 122 – 851

At December 31, 2005 7,519 2,097 9,616

Book Value :

At December 31, 2004 4,708 677 5,385

At December 31, 2005 4,683 485 5,168

The fire insurance value of property, plant & equipment as per December 31, 2005, amounted to

CHF 11,000,000 (2004: CHF 10,600,000).



9

10

Investments in associated companies

( in CHF 000) Share of equity in associated companies

At December 31, 2003 583

Share of net results 272

Disposals – 855


Additions / Disposals 0


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.

Intangible assets

( in CHF 000) Acquired Acquired Customer Total shop locations goodwill list

Cost :

At December 31, 2003 3,471 28,980 2,143 34,594

Additions 403 355 758

Disposals – 28,980 – 28,980

Changes in scope of consolidation – 6 – 6

At December 31, 2004 3,868 0 2,498 6,366

Additions 1,284 226 1,510

Disposals – 551 – 551

At December 31, 2005 4,601 0 2,724 7,325

Accumulated amortization :

At December 31, 2003 2,041 28,980 592 31,613

Additions 843 483 1,326

Disposals – 28,980 – 28,980

Changes in scope of consolidation – 6 – 6

At December 31, 2004 2,878 0 1,075 3,953

Additions 450 776 1,226

Disposals – 551 – 551

At December 31, 2005 2,777 0 1,851 4,628

Book value :

At December 31, 2004 990 0 1,423 2,413

At December 31, 2005 1,824 0 873 2,697



11

12

13

14

Securities 2005 2004

( in CHF 000)

Listed capital-protected investment certificates 1 1,535 0

Shares not listed 2 100 0

Total Securities 1,635 0

1 Stated at market value; maturity date: April 18, 2008 2 Stated at amortized cost less valuation adjustments

Inventories 2005 2004

( in CHF 000)

Inventories, gross 21,181 22,106

Less valuation adjustments – 613 – 310

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.

Trade accounts receivable 2005 2004

( in CHF 000)

Accounts receivable from third parties 28,352 23,555

Accounts receivable from associated companies 24 11

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.

Other accounts receivable 2005 2004

( in CHF 000)

Accruals 3,758 4,815

Other accounts receivable 249 335

4,007 5,150

less : long-term accounts receivable – 72 – 72

Total Other accounts receivable (current ) 3,935 5,078



15

16

Cash & cash equivalents 2005 2004

( 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%.

Share capital

Bearer shares CHF 0.01 CHF 0.10 par value par value

Issued and fully paid-in at December 31, 2003 0 35,601,944

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, 2004 38,634,744 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, 2004 36,853,145

Number of shares issued at December 31, 2004 38,634,744

Destruction of repurchased shares – 3,537,948

Capital increase from employee options exercised 676,200

Number of shares issued at December 31, 2005 35,772,996

Less treasury shares :Held for trading purposes – 7,990

Number of shares issued and outstanding at December 31, 2005 35,765,006

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.



17

18

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 2005 2004

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 0.43 0.47

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 0.43 0.46

Provisions

( in CHF 000) Litigation and Discontinuing Total 2005 Total 2004 warranty claims Operations

At January 1 100 750 850 720

Additions 0 0 0 250

Used 0 – 750 – 750 0

Reversed 0 0 0 – 120

At December 31 100 0 100 850

Of these current 100 0 100 850

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 liti-

gation and warranty claims is mainly for expected warranty claims from the sale of mobile phones.

Other current liabilities 2005 2004

( in CHF 000)

Deferrals 2,031 2,349

Other current accounts payable 1,705 1,455

Total Other current liabilities 3,736 3,804


19

20

21

Other disclosures

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 31 2005 2004

( 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 ).

Contingent liabilities and future commitments, capital commitments and restrictions of ownershipAs of December 31, 2005, and December 31, 2004, no items had to be reported under this heading.

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.


Foreign currency risk The revenues in the retail business and in the fixed-line telecommunications business are all denomi-

nated 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 in-

significant.

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.

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 Regens-

dorf 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.

22




m o b i l e z o n e G r o u p N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

23

Transactions and balances with related parties 2005 2004

( in CHF 000)

Purchases of mobile phones from Autronic AG 41,054 60,006

Marketing contributions from Samtel AG 159 410

Service fees from Mobile Solutions AG 283 159

Operating lease expenses to Immoplaza AG 284 293

Accounts payable to Autronic AG 3,419 8,220

Accounts receivable from Samtel AG 24 11

Accounts receivable from Mobile Solutions AG 51 85

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).

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, 2006.

The consolidated financial statements must still be approved by the Annual General Meeting on

April 13, 2006.

m o b i l e z o n e G r o u p R E P O R T O F T H E G R O U P A U D I T O R S

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, 2005.

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 mis-

statement. 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 Claudius Rüegsegger Swiss Certified Accountant Swiss Certified Accountant Auditor in Charge

Zurich, March 6, 2006



m o b i l e z o n e h o l d i n g a g I N C O M E S T A T E M E N T

January 1 to December 31 2005 2004

( in CHF 000)

Dividend income 0 7,399

Financial income 1,189 2,483

Reversal of provisions and value adjustments 389 570

Gain from disposal of investments 0 501

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 92 61

Set aside for provisions and value adjustments 30 263

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.


m o b i l e z o n e h o l d i n g a g B A L A N C E S H E E T B E F O R E A P P R O P R I A T I O N O F A V A I L A B L E E A R N I N G S

as of December 31 2005 2004

( in CHF 000) Notes

ASSETS

Cash & cash equivalents 820 7,083

Treasury shares 31 10,256

Accounts receivable from

Third parties 25 25

Group companies 0 1,122

Accruals and deferrals 0 1

Current assets 876 18,487

Investments 2 31,076 30,576

Securities 1,634 0



LIABILITIES AND SHAREHOLDERS’ EQUITY

Current accounts payable to

Third parties 279 238

Group companies 5,500 2

Accruals and deferrals 501 299

Current liabilities 6,280 539

Provisions 0 750

Share capital 358 386

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


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.

Contingent liabilities at December 31 2005 2004

( in CHF 000)

Letters of postponement issued in favor of subsidiaries 0 643

Additional guarantees in favor of subsidiaries 0 99

Joint and several liability from VAT – group taxation p. m. p. m.

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 100 100 C

mobilezone net ag, Regensdorf ( since September 20, 2005) 100 500 C

globalzone ag, Regensdorf 100 100 C

mobilezone international ag, Regensdorf 100 200 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

1

2

m o b i l e z o n e h o l d i n g a g


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, 2004 0 0

Purchases from stock repurchase program 2004 1,776 326 5.70 5.70 5.70 10,124

Transaction costs relating to stock repurchase program 112

Other purchases at cost 99,229 4.40 4.13 3.81 410

Disposals at sale prices – 93,956 4.37 4.16 4.04 – 390

At December 31, 2004 1,781,599 10,256

Purchases from stock repurchase program 2005 1,761,622 6.81 6.81 6.81 11,997

Transaction costs relating to stock repurchase program 121

Destruction of purchased shares – 3,537,948 – 22,355

Other purchases at cost 50,165 5.50 4.94 4.34 248

Disposals at sale prices – 47,448 5.60 4.97 4.36 – 236

At December 31, 2005 7,990 31

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S


m o b i l e z o n e h o l d i n g a g N O T E S T O T H E F I N A N C I A L S T A T E M E N T S

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 31 2005 2004

( in %)

Hans-Ulrich Lehmann / Lehmann-Holding AG 16 22

Schroders Plc., GB-London 10 10

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 43 55

m o b i l e z o n e h o l d i n g a g P R O P O S A L B Y T H E B O A R D O F D I R E C T O R S


Proposal by the Board of Directors

2005 2004

( 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.


m o b i l e z o n e h o l d i n g a g R E P O R T O F T H E S T A T U T O R Y A U D I T O R S

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, 2005.

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 Claudius Rüegsegger Swiss Certified Accountant Swiss Certified Accountant Auditor in Charge

Zurich, March 6, 2006

m o b i l e z o n e b r a n c h e s S H O P A D D R E S S E S

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 Rive 10; Rue de Carouge 18;

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 12–14

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-Rue 10

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 Moncor 1

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 2006


Company addresses

mobilezone holding ag

Riedthofstrasse 124

CH-8105 Regensdorf

Tel. ++ 41 (0 ) 43 388 77 11

Fax ++ 41 (0 ) 43 388 77 12

E-mail: [email protected]

www.mobilezoneholding.ch

Investor Relations : Wolfgang Gross

Media Relations : Ruedi Baer

mobilezone ag

Riedthofstrasse 124

CH-8105 Regensdorf

Tel. ++ 41 (0 ) 43 388 77 11

Fax ++ 41 (0 ) 43 388 77 12


www.mobilezone.ch

Europea Trade AG

Riedthofstrasse 124

CH-8105 Regensdorf

Tel. ++ 41 (0 ) 43 388 76 70

Fax ++ 41 (0 ) 43 388 76 77


globalzone ag

Riedthofstrasse 124

CH-8105 Regensdorf

Tel. ++ 41 (0 ) 43 388 77 11

Fax ++ 41 (0 ) 43 388 77 97

E-mail : info@ globalzone.ch

www.globalzone.ch

mobilezone international ag

Riedthofstrasse 124

CH-8105 Regensdorf

Tel. ++ 41 (0 ) 43 388 77 11

Fax ++ 41 (0 ) 43 388 77 12


www.mobilezone.ch

mobilezone net ag

Riedthofstrasse 124

CH-8105 Regensdorf

Tel. ++ 41 (0 ) 43 388 77 11

Fax ++ 41 (0 ) 43 388 77 12

www.mobilezonenet.ch

Documents

©2006 mobilezone holding ag