Press release

O2 plc Preliminary Results for the year ended 31 March 2005. Download PDF copy of the Results

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• Strong operating performance delivered across the Group⁽¹⁾:
  
  
  • Customer base grew by 3.26 million to 23.96 million (2004: 20.7 million);
  • Group revenue grew by 18.4% to £6,683 million (2004: £5,646 million);
  • EBITDA grew by 29.3% to £1,768 million (2004: £1,367 million);
  • Operating profit⁽²⁾ grew by 73.6% to £755 million (2004: £435 million).
• Group reported pre-tax profit grew to £309 million (2004: £95 million).
• Basic earnings per share of 3.5 pence (2004: 1.9 pence).
• Underlying earnings per share⁽²⁾ of 8.5 pence (2004: 5.2 pence).
• Inaugural final dividend of 2.25 pence per share proposed.
• Group net debt reduced by £288 million, to £78 million.

Comparative period is 12 months to 31 March 2004.

David Arculus, Chairman of O2 plc, commented:
"All of O2's businesses performed well during the year and the Group has delivered another year of strong revenue and profit growth, with revenue up more than 18%, and underlying earnings per share 63% ahead of last year. Following our corporate re-organisation we are pleased to be able to propose an inaugural final dividend of 2.25 pence per share, which on an annualised basis represents 40% of our underlying earnings. Our aim remains to grow the dividend towards our medium-term target pay-out ratio of 50% of underlying earnings, reflecting our confidence in the Company's ability to continue to grow revenue, earnings and cash flow and improve our return on invested capital, as well as our commitment to deliver attractive returns for shareholders."

(1) Continuing operations.
(2) Before goodwill, UMTS licence amortisation and exceptional items.

Peter Erskine, Chief Executive of O2 plc, commented:
"Last year our mobile businesses in the UK, Germany and Ireland all delivered strong, profitable customer growth, and our Airwave business successfully completed roll-out to all Britain's police forces of the largest public safety mobile communications network of its kind in Europe. Against a background of intense competition in all our mobile markets, and termination rate cuts in the UK and Germany, we grew our customer base by 16% and delivered 29% EBITDA growth. Revenue from mobile data increased to over £1.4 billion, of which non-SMS services contributed more than 12%. Our joint-ventures with Tesco and Tchibo both generated good customer growth.

In the UK we added more than a million new customers and generated higher ARPU, using the power of the O2 brand and innovative marketing to grow voice, text and new data services. Our focus now is to maintain our momentum by delivering an enhanced customer experience and building loyalty, and we are deploying significant additional resources into the customer-facing areas of our business, to drive retention.

In Germany we stepped up customer acquisition and added almost 2 million new customers, taking the total base to 8 million. We also committed substantial additional capital to infrastructure investment, to support the position we have built as a major player in Europe's largest mobile market. Going forward, we will continue to focus on exploiting the strong O2 brand and our expanding range of great customer propositions, to drive further rapid customer and service revenue growth.

Building on the continuing underlying growth in voice and data ARPU in our markets, our enhanced focus on the customer in the UK, and our accelerated investment strategy in Germany, we are confident that in 2005/06 we can deliver further strong revenue and profit growth."

PERFORMANCE HIGHLIGHTS (comparative period: 12 months to 31 March 2004)

O2 UK

• Total customer base grew by 8.4% to 14.38 million
• Service revenue grew by 13.9% to £3,627 million
• EBITDA grew by 13.6% to £1,183 million
• EBITDA margin 29.4% (2004: 30.2%)

O2 Germany

• Total customer base grew by 33% to 7.98 million
• At constant exchange rates, service revenue grew by 28%
• EBITDA grew by 52% to £341 million
• EBITDA margin increased to 18.3% (2004: 14.9%)

O2 Ireland

• Total customer base grew by 10.2% to 1.53 million
• At constant exchange rates, service revenue grew by 13.3%
• EBITDA grew by 7.2% to £223 million
• EBITDA margin 38.1% (2004: 39.3%)

O2 Airwave

• Revenue grew to £169 million (2004 : £89 million)
• EBITDA grew to £72 million (2004 : £1 million)

O2 plc Preliminary Results for the year ended 31 March 2005. Download PDF copy of the Results

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