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Magyar Telekom Plc. 6-K 2010

 

 

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

 

Report on Form 6-K dated April 15, 2010

 

Magyar Telekom Plc.

(Translation of registrant’s name into English)

 

Budapest, 1013, Krisztina krt. 55, Hungary

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F x  Form 40-F o

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o  No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-        

 

 

 



 

Magyar Telekom Telecommunications

Public Limited Company

 

 

Annual Report

 

FOR THE YEAR ENDED DECEMBER 31, 2009

 



 

MAGYAR TELEKOM NYRT.

 

ANNUAL REPORT

 

 

31 DECEMBER 2009

 



 

 

INDEPENDENT AUDITOR’S REPORT
(Free translation)

 

To the Shareholders and Board of Directors of Magyar Telekom Nyrt.

 

We have audited the accompanying financial statements of Magyar Telekom Nyrt. (“the Company”) which comprise the balance sheet as of 31 December 2009 (in which the balance sheet total is HUF 968,412 million, the profit per balance sheet is HUF 0, the related profit and loss account for the year then ended, and the notes to the financial statement including a summary of the main accounting policies as well as other disclosures.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the provisions of the Accounting Act and accounting principles generally accepted in Hungary. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on these financial statements based on our audit and to assess whether or not the accounting information disclosed in the business report is consistent with that contained in the financial statements. We conducted our audit in accordance with Hungarian and International Standards on Auditing and with applicable laws and regulations in force in Hungary. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Our work in respect of the business report was limited to checking it in within the aforementioned scope and did not

 



 

include a review of any information other than that drawn from the audited accounting records of the Company.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

 

During our work we have audited the components and disclosures along with the underlying accounting records and supporting documentation in the financial statements of Magyar Telekom Nyrt. in accordance with the Hungarian and International Standards on auditing and, on the basis of our audit work, we have gained sufficient and appropriate evidence that the financial statements have been prepared in accordance with the provision of the accounting law and with accounting principles generally accepted in Hungary. In our opinion, the accompanying financial statements give a true and fair view of the financial position of Magyar Telekom Nyrt. as of 31 December 2009, and of the results of its operations for the year then ended. The business report is consistent with the disclosures in the financial statements.

 

Budapest, April 7, 2010

 

Manfred Krawietz

 

Hegedűsné Szűcs Márta

Partner

 

Statutory auditor

PricewaterhouseCoopers Kft.

 

Licence number: 006838

1077 Budapest, Wesselényi u. 16.

 

 

License Number: 001464

 

 

 

Translation note:

 

The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in jurisdictions other than Hungary.

 



 

Magyar Telekom Plc.

 

MAGYAR TELEKOM TELECOMMUNICATIONS

PUBLIC LIMITED COMPANY

 

BALANCE SHEET AND PROFIT AND LOSS STATEMENT

TO THE 2009 ANNUAL REPORT

 



 

Magyar Telekom Plc.

 

BALANCE SHEET AS OF DECEMBER 31, 2009

(All amounts in millions of HUF)

 

ASSETS

 

 

 

 

Note

 

December 31, 2008

 

Self-revision

 

December 31, 2009

 

 

 

 

 

 

 

 

 

 

 

A.  FIXED ASSETS AND FINANCIAL INVESTMENTS

 

 

 

827,970

 

-2,458

 

835,103

 

 

 

 

 

 

 

 

 

 

 

I. Intangible assets

 

5

 

212,582

 

-83

 

201,746

 

Capitalised costs of foundation and restructuring

 

 

 

0

 

0

 

0

 

Capitalised costs of research and development

 

 

 

0

 

0

 

0

 

Rights

 

 

 

60,561

 

-80

 

57,982

 

Intellectual property

 

 

 

3,600

 

-3

 

4,044

 

Goodwill

 

 

 

148,421

 

0

 

139,720

 

Advance payments on intangible assets

 

 

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

II. Tangible assets

 

6

 

421,738

 

-529

 

440,377

 

Land and buildings and related rights

 

 

 

228,367

 

3,550

 

242,792

 

- Land

 

 

 

2,437

 

-1

 

2,338

 

- Buildings

 

 

 

63,793

 

1,914

 

65,175

 

- Telecommunication network

 

 

 

151,134

 

1,319

 

164,343

 

- Other properties

 

 

 

9,761

 

290

 

9,897

 

- Real estate related rights

 

 

 

1,242

 

28

 

1,039

 

Technical equipment, machinery and vehicles

 

 

 

155,165

 

3,904

 

160,917

 

- Telecommunication equipment and machinery

 

 

 

153,230

 

3,814

 

159,141

 

- Other technical equipment, machinery and vehicles

 

 

 

1,935

 

90

 

1,776

 

Other equipment and vehicles

 

 

 

12,720

 

2,580

 

13,243

 

Construction-in-progress

 

 

 

25,486

 

-10,563

 

23,418

 

Advance payments on construction-in-progress

 

 

 

0

 

0

 

7

 

 

 

 

 

 

 

 

 

 

 

III. Financial investments

 

 

 

193,650

 

-1,846

 

192,980

 

Non current investments in related parties

 

7

 

173,211

 

-1,846

 

174,974

 

Non current loans granted to related parties

 

8

 

15,798

 

0

 

13,147

 

Other investments

 

 

 

0

 

0

 

0

 

Other non current loans granted

 

9

 

4,641

 

0

 

4,859

 

Non current bonds and other securities

 

 

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

B.  CURRENT ASSETS

 

 

 

108,069

 

443

 

100,098

 

 

 

 

 

 

 

 

 

 

 

I. Inventories

 

10

 

8,267

 

-199

 

6,912

 

Raw materials

 

 

 

882

 

0

 

1,072

 

Work in progress and semi-finished products

 

 

 

149

 

0

 

212

 

Finished products

 

 

 

0

 

0

 

0

 

Goods resale

 

 

 

7,236

 

-199

 

5,628

 

Advance payments on inventories

 

 

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

II. Receivables

 

 

 

61,995

 

642

 

81,827

 

Accounts receivable

 

11

 

36,596

 

413

 

39,664

 

Receivables from subsidiaries

 

12

 

18,123

 

32

 

6,893

 

Bills receivable

 

 

 

0

 

0

 

0

 

Receivables from other related companies

 

13

 

0

 

0

 

29,500

 

Other receivables

 

14

 

7,276

 

197

 

5,770

 

 

 

 

 

 

 

 

 

 

 

III. Securities

 

15

 

1,179

 

0

 

1,179

 

Investments in related parties

 

 

 

0

 

0

 

0

 

Other investments

 

 

 

0

 

0

 

0

 

Treasury stock, quotas

 

 

 

1,179

 

0

 

1,179

 

Marketable securities

 

 

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

IV. Liquid assets

 

 

 

36,628

 

0

 

10,180

 

Cash and cheques

 

 

 

96

 

0

 

106

 

Bank deposits

 

 

 

36,532

 

0

 

10,074

 

 

 

 

 

 

 

 

 

 

 

C.  PREPAYMENTS

 

16

 

29,213

 

-249

 

33,211

 

 

 

 

 

 

 

 

 

 

 

Accrued income

 

 

 

28,133

 

-213

 

31,098

 

Prepayments for costs and expenses

 

 

 

1,080

 

-36

 

2,113

 

Deferred expenses

 

 

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

965,252

 

-2,264

 

968,412

 

 

Budapest, April 7, 2010

 

 

 

GRAPHIC

 

Christopher Mattheisen

 

Thilo Kusch

 

Chairman and Chief Executive Office,

 

Chief Financial Officer,

 

Chairman of the Board

 

Board member

 

The supplement forms an integral part of these financial statements.

 



 

Magyar Telekom Plc.

 

BALANCE SHEET AS OF DECEMBER 31, 2009

-All amounts in millions of HUF)

 

LIABILITIES AND SHAREHOLDER’S EQUITY

 

 

 

Note

 

December 31, 2008

 

Self-revision

 

December 31, 2009

 

 

 

 

 

 

 

 

 

 

 

D. SHAREHOLDER’S EQUITY

 

17

 

358,437

 

-1,061

 

355,002

 

 

 

 

 

 

 

 

 

 

 

I.

 Common stock

 

 

 

104,275

 

0

 

104,274

 

 

 - of this treasury stock at par value

 

 

 

150

 

0

 

150

 

II.

 Unpaid share capital (-

 

 

 

0

 

0

 

0

 

III.

 Capital reserves

 

 

 

58,289

 

0

 

58,952

 

IV.

 Retained earnings

 

 

 

172,244

 

0

 

189,097

 

V.

 Restricted reserves

 

 

 

2,056

 

0

 

2,679

 

VI.

 Valuation reserves

 

 

 

0

 

0

 

0

 

VII.

 Net income

 

 

 

21,573

 

-1,061

 

0

 

 

 

 

 

 

 

 

 

 

 

E. PROVISIONS

 

18

 

20,082

 

0

 

19,495

 

 

 

 

 

 

 

 

 

 

 

 

 Provision for expected obligations

 

 

 

18,948

 

0

 

18,972

 

 

 Provision for expected expenses

 

 

 

988

 

0

 

447

 

 

 Other provisions

 

 

 

146

 

0

 

76

 

 

 

 

 

 

 

 

 

 

 

F. LIABILITIES

 

 

 

536,772

 

-440

 

545,646

 

 

 

 

 

 

 

 

 

 

 

I.

 Subordinated liabilities

 

 

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

II.

 Non current liabilities

 

 

 

262,481

 

0

 

291,056

 

 

Non current borrowings

 

 

 

0

 

0

 

0

 

 

Convertible bonds

 

 

 

0

 

0

 

0

 

 

Debt from issuance of bonds

 

 

 

122

 

0

 

121

 

 

Investment and development loans

 

 

 

0

 

0

 

0

 

 

Other non current loans

 

19

 

18,326

 

0

 

23,120

 

 

Non current liabilities to related parties

 

 

 

0

 

0

 

0

 

 

Non current liabilities to other related parties

 

20

 

242,531

 

0

 

267,017

 

 

Other non current liabilities

 

 

 

1,502

 

0

 

798

 

 

 

 

 

 

 

 

 

 

 

III.

Liabilities

 

 

 

274,291

 

-440

 

254,590

 

 

Current borrowings

 

 

 

71

 

0

 

70

 

 

- of this convertible bonds

 

 

 

0

 

0

 

0

 

 

Current loans

 

21

 

32,541

 

0

 

32,809

 

 

Advances received

 

 

 

274

 

5

 

311

 

 

Accounts payable

 

 

 

32,555

 

-271

 

29,534

 

 

Bills of exchange payable

 

 

 

0

 

0

 

0

 

 

Current liabilities to related parties

 

22

 

29,279

 

0

 

43,314

 

 

Current liabilities to other related parties

 

23

 

87,486

 

0

 

59,799

 

 

Other current liabilities

 

24

 

92,085

 

-174

 

88,753

 

 

- of this dividends payable

 

 

 

77,052

 

0

 

77,052

 

 

 

 

 

 

 

 

 

 

 

G. ACCRUED EXPENSES

 

25

 

49,961

 

-763

 

48,269

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income

 

 

 

4,259

 

40

 

4,821

 

 

Accrued expenses

 

 

 

45,367

 

-820

 

43,151

 

 

Other deferred revenue

 

 

 

335

 

17

 

297

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABLITIES AND SHAREHOLDER’S EQUITY

 

 

 

965,252

 

-2,264

 

968,412

 

 

Budapest, April 7, 2010

 

 

 

GRAPHIC

 

Christopher Mattheisen

 

Thilo Kusch

 

Chairman and Chief Executive Office,

 

Chief Financial Officer,

 

Chairman of the Board

 

Board member

 

The supplement forms an integral part of these financial statements.

 



 

Magyar Telekom Plc.

 

INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER, 2009

(All amounts in millions of HUF

 

 

 

Note

 

2008

 

Self-revision

 

2009

 

 

 

 

 

 

 

 

 

 

 

1.    Domestic sales

 

26

 

482,529

 

163

 

456,437

 

2.    Export sales

 

27

 

18,275

 

31

 

18,832

 

I.                            Sales revenues

 

 

 

500,804

 

194

 

475,269

 

 

 

 

 

 

 

 

 

 

 

3.    Change in self-manufactured inventories

 

 

 

117

 

0

 

63

 

4.    Capitalised value of self-manufactured assets

 

 

 

21,413

 

22

 

21,417

 

II.                        Own work capitalized

 

 

 

21,530

 

22

 

21,480

 

 

 

 

 

 

 

 

 

 

 

III.                    Other revenues

 

28

 

26,698

 

-27

 

24,633

 

       of which: reversal of impairment

 

 

 

0

 

0

 

0

 

 

 

 

 

 

 

 

 

 

 

5.    Costs of raw material

 

 

 

30,000

 

-12

 

27,664

 

6.    Costs of services

 

30

 

99,065

 

-1,160

 

96,628

 

7.    Costs of other services

 

 

 

13,782

 

14

 

13,994

 

8.    Cost of goods sold

 

 

 

34,605

 

1

 

34,126

 

9.    Costs of services sold (intermediated

 

31

 

79,138

 

-48

 

73,595

 

IV.                   Material-type expenses

 

 

 

256,590

 

-1,205

 

246,007

 

 

 

 

 

 

 

 

 

 

 

10.  Salaries and wages

 

32

 

45,070

 

-3

 

47,276

 

11.  Other payroll related costs

 

32

 

13,266

 

-108

 

13,408

 

12.  Payroll related contributions

 

 

 

17,794

 

-125

 

17,753

 

V.                       Payroll and related expenses

 

 

 

76,130

 

-236

 

78,437

 

 

 

 

 

 

 

 

 

 

 

VI.                   Depreciation

 

 

 

87,828

 

527

 

82,132

 

 

 

 

 

 

 

 

 

 

 

VII.               Other expenses

 

34

 

34,805

 

31

 

40,573

 

       of which: impairment

 

 

 

3,219

 

49

 

11,120

 

 

 

 

 

 

 

 

 

 

 

A. PROFIT FROM OPERATING ACTIVITIES

 

 

 

93,679

 

1,072

 

74,233

 

 

 

 

 

 

 

 

 

 

 

13.  Dividends and profit sharing (received or due

 

 

 

37,476

 

0

 

31,409

 

       of which: received from related parties

 

 

 

37,476

 

0

 

31,409

 

14.  Foreign exchange gains on sale of investments

 

 

 

0

 

0

 

0

 

       of which: received from related parties

 

 

 

0

 

0

 

0

 

15.  Interest income and gains on financial investments

 

 

 

1,689

 

0

 

1,352

 

       of which: received from related parties

 

 

 

1,689

 

0

 

1,352

 

16.  Other interest income received

 

 

 

1,788

 

0

 

3,565

 

       of which: received from related parties

 

 

 

895

 

0

 

1,940

 

17.  Other revenues from financial activities

 

 

 

8,648

 

-196

 

6,898

 

VIII.           Revenues from financial transactions

 

 

 

49,601

 

-196

 

43,224

 

 

 

 

 

 

 

 

 

 

 

18.  Loss on the sale of financial investments

 

 

 

3

 

0

 

0

 

       of which: related to related parties

 

 

 

0

 

0

 

0

 

19.  Interest expense

 

 

 

33,256

 

-13

 

33,980

 

       of which: related to related parties

 

 

 

891

 

0

 

966

 

                      related to other related party

 

 

 

26,684

 

0

 

28,801

 

20.  Impairment of investments, securities and bank deposits

 

 

 

196

 

0

 

476

 

21.  Other expenses refinancial activities

 

 

 

4,121

 

-157

 

4,199

 

IX.                   Expenses from financial transactions

 

 

 

37,576

 

-170

 

38,655

 

 

 

 

 

 

 

 

 

 

 

B. FINANCIAL RESULTS

 

35

 

12,025

 

-26

 

4,569

 

 

 

 

 

 

 

 

 

 

 

C. PROFIT FROM ORDINARY ACTIVITIES

 

 

 

105,704

 

1,046

 

78,802

 

 

 

 

 

 

 

 

 

 

 

X.                       Extraordinary revenues

 

36

 

5,233

 

360

 

1,933

 

XI.                   Extraordinary expenses

 

37

 

9,504

 

2,688

 

4,320

 

 

 

 

 

 

 

 

 

 

 

D. PROFIT FROM EXTRAORDINARY ACTIVITIES

 

 

 

-4,271

 

-2,328

 

-2,387

 

 

 

 

 

 

 

 

 

 

 

E. PROFIT BEFORE TAXES

 

 

 

101,433

 

-1,282

 

76,415

 

 

 

 

 

 

 

 

 

 

 

XII.               Corporate income tax

 

39

 

2,808

 

-221

 

2,188

 

 

 

 

 

 

 

 

 

 

 

F. NET INCOME

 

 

 

98,625

 

-1,061

 

74,227

 

 

 

 

 

 

 

 

 

 

 

22.  Use of retained earnings for dividends

 

 

 

0

 

0

 

2,825

 

23.  Dividend paid (approved

 

40

 

77,052

 

0

 

77,052

 

 

 

 

 

 

 

 

 

 

 

G. BALANCE SHEET NET INCOME

 

 

 

21,573

 

-1,061

 

0

 

 

 

 

GRAPHIC

 

Christopher Mattheisen

 

Thilo Kusch

 

Chairman and Chief Executive Office,

 

Chief Financial Officer,

 

Chairman of the Board

 

Board member

 

The supplement forms an integral part of these financial statements.

 



 

Magyar Telekom Plc.

 

 

MAGYAR TELEKOM TELECOMMUNICATIONS

PUBLIC LIMITED COMPANY

 

 

NOTES

 

TO THE 2009 ANNUAL REPORT

 



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

 

(All amounts in millions of HUF, unless otherwise indicated)

 

0. Note Added For Translation

 

This annual report for December 31, 2009 is the English translation of the annual report issued in Hungarian language and prepared in accordance with Act C/2000 on accounting and with generally accepted accounting principles in Hungary.

 

These principles may be different from International  Financial Reporting Standards or accounting principles of any other country. No adjustments have been made to conform the annual report with any accounting principles other than Hungarian.

 

The auditors’ report is a translation of the auditors’ report issued in Hungarian language on the Hungarian annual report as outlined above.

 

In the event of any discrepancy, whether in the auditors’ report or in the annual report, the Hungarian original version prevails.

 



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

1. Background and General Information

 

Official name of the Company: Magyar Telekom Telecommunications Public Limited Company

Short name of the Company: Magyar Telekom Plc.

Headquarter of the Company: 1013 Budapest, Krisztina krt. 55.

The Company’s main activity is telecommunication.

 

The Hungarian Telecommunications Company (“Matáv Rt.”), the legal predecessor of Magyar Telekom Telecommunications Public Limited Company (“Magyar Telekom Plc.” or the “Company”) was founded by the Ministry of Transport, Communications and Construction on January 1, 1990. The Company was transformed by the Board of directors of State Asset Holding Ltd. into a wholly owned company limited by shares as of December 31, 1991.

 

The Company was privatized on December 22, 1993, when the MagyarCom consortium acquired a 30.1 per cent stake in the Company. At the second stage of the privatization, which took place in December 1995, MagyarCom became the majority owner.

 

On November 14, 1997 the Company was the first in the Central-Eastern European region to be listed on both the Budapest and the New York Stock Exchanges.

 

In June 1999, the State Privatization and Holding Company sold its remaining stake (5.75 per cent) through a secondary offering. After this transaction, the proportion of publicly traded shares increased to 40.47 per cent. Share of MagyarCom Holding GmbH (Friedrich-Ebert-Alle 140, 53113 Bonn, Germany) in the Company decreased to 59.53 per cent.

 

In 2000, the Company increased its common stock through issuing new shares in the amount of HUF 63 million, which were held mainly within the Magyar Telekom Group. As a result of this transaction, the proportion of publicly traded shares increased to 40.51 per cent and MagyarCom’s ownership changed to 59.49 per cent.

 

In 2002, the Company carried out an additional increase in common stock in the amount of HUF 490 million, which shares were repurchased. As a result of this transaction, the proportion of publicly traded shares changed to 40.32 per cent, the proportion of repurchased treasury stock to 0.47 per cent and MagyarCom’s ownership decreased to 59.21 per cent. MagyarCom is 100 per cent owned by Deutsche Telekom A.G.

 

The Extraordinary General Meeting of the Company held on February 22, 2005 approved the decision of the Board of Directors to change the official name of Magyar Telecommunications Company Ltd. into Magyar Telekom Telecommunications Company Ltd., with short name of Magyar Telekom Rt. The change was registered by the Court of Registry on May 6, 2005.

 

On February 28, 2006 the name of Magyar Telekom Telecommunications Company Ltd. changed to Magyar Telekom Telecommunications Public Limited Company, with short name of Magyar Telekom Plc. (“Magyar Telekom Plc.” or the “Company”). The change was registered by the Court of Registry on February 28, 2006.

 

Persons authorised to sign the annual report:

Christopher Mattheisen - Chairman and Chief Executive Officer and Board member (residence: Budapest) 

Thilo Kusch - Chief Financial Officer and Board member (residence: Budapest)

 

The Company’s bookkeeping services are provided by EurAccount Pénzügyi és Számviteli Szolgáltató Kft. (its register number is 01-09-737269, its taxation number is 13477541-2-42).

 

The accounting services provided by EurAccount Kft. are supervised by Beáta Bálintné Pál Managing Director (her certificate number: 132224. Area of speciality: entrepreneurial activity. State: registered. Residence: Budapest).

 

The Company is subject to compulsory audit. The Company’s auditor is PricewaterhouseCoopers Kft. (its register number is 01-09-063022, its taxation number is 10256121-2-44). The person authorized to represent the auditor is Márta Hegedűsné Szűcs (her certificate number: 006838, legal status: full-time. Residence: Páty).

 

Magyar Telekom Plc.’s corporate website: www.magyartelekom.hu

 

2



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

Investigation into certain consultancy contracts

 

In the course of conducting their audit of the Company’s 2005 financial statements, PricewaterhouseCoopers, the Company’s auditors, identified two contracts the nature and business purposes of which were not readily apparent to them. In February 2006, the Company’s Audit Committee retained White & Case, as its independent legal counsel, to conduct an internal investigation into whether the Company had made payments under those, or other contracts, potentially prohibited by U.S. laws or regulations, including the U.S. Foreign Corrupt Practices Act (“FCPA”) or internal Company policy. The Company’s Audit Committee also informed the United States Department of Justice (“DOJ”), the United States Securities and Exchange Commission (“SEC”) and the Hungarian Financial Supervisory Authority of the internal investigation.

 

Based on the documentation and other evidence obtained by it, White & Case preliminarily concluded that there was reason to believe that four consulting contracts entered into in 2005 were entered into to serve improper objectives, and further found that during 2006 certain employees had destroyed evidence that was relevant to the investigation. White & Case also identified several contracts at our Macedonian subsidiary that warranted further review. In February 2007, our Board of Directors determined that those contracts should be reviewed and expanded the scope of the internal investigation to cover these additional contracts and any related or similarly questionable contracts or payments.

 

For further information about the internal and governmental investigations, please refer to the Company’s quarterly reports for the first, second and third quarters of 2009 and the Company’s annual reports on Form 20-F for the year ended December 31, 2008 filed with the SEC.

 

Findings and conclusions relating to the internal investigation of the Audit Committee

 

On December 2, 2009, the Audit Committee provided the Company’s Board of Directors with a “Report of Investigation to the Audit Committee of Magyar Telekom Plc.” dated November 30, 2009 (the “Final Report”). The Audit Committee indicated that it considers that, with the preparation of the Final Report based on currently available facts, White & Case has completed its independent internal investigation.

 

The Final Report includes the following findings and conclusions, based upon the evidence available to the Audit Committee and its counsel:

 

· The information obtained by the Audit Committee and its counsel in the course of the investigation “ demonstrates intentional misconduct and a lack of commitment to compliance at the most senior levels of Magyar Telekom, TCG, and MakTel during the period under investigation.”

 

· As previously disclosed, with respect to Montenegrin contracts, there is “insufficient evidence to establish that the approximately EUR 7 million in expenditures made pursuant to four consultancy contracts were made for legitimate business purposes”, and there is “affirmative evidence that these expenditures served improper purposes.”  These contracts were not appropriately recorded in the books and records of the Company and its relevant subsidiaries. As previously disclosed, the Company has already reclassified, in the Company’s financial statements, the accounting treatment relating to certain of these contracts to more accurately account for these expenditures.

 

· As previously disclosed, there is evidence that certain former employees intentionally destroyed documents relating to activities undertaken in Macedonia by the Company and its affiliates.

 

· Between 2000 and 2006 a small group of former senior executives at the Company and the Company’s Macedonian affiliates, authorized the expenditure of approximately EUR 24 million through over twenty suspect consultancy, lobbying, and other contracts (including certain contracts between the Company and its subsidiaries on one hand, and affiliates of a Cyprus-based consulting company on the other hand). The Final Report concludes that “the available evidence does not establish that the contracts under which these expenditures were made were legitimate.”

 

3



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

· “The evidence shows that, contrary to their terms, a number of these contracts were undertaken to obtain specific regulatory and other benefits from the government of Macedonia.  The Companies generally received the benefits sought and then made expenditures under one or more of the suspect contracts. There is evidence that the remaining contracts were also illegitimate and created a pool of funds available for purposes other than those stated on the face of the agreements.”

 

· In entering into these contracts and approving expenditures under them, the former senior executives knowingly caused, structured, or approved transactions that shared most or all of the following characteristics:

 

·                  intentional circumvention of internal controls;

 

·                  false and misleading Company documents and records;

 

·                  lack of due diligence concerning, and failure to monitor performance of, contractors and agents in circumstances carrying a high risk of corruption;

 

·                  lack of evidence of performance; and

 

·                  expenditures that were not for the purposes stated in the contracts under which they were made, but rather were intended to obtain benefits for the Companies that could only be conferred by government action.

 

The Final Report states that “the Investigation did not uncover evidence showing receipt of payments by any Macedonian government officials or political party officials.” However, the Audit Committee’s counsel did not have access to evidence that would allow it to identify the ultimate beneficiaries of these expenditures.

 

Nothing in the Final Report implicates any current senior executive or Board member of the Company in connection with any wrongdoing.

 

As previously disclosed, the Company has taken remedial measures to address issues previously identified by the independent investigation. These measures included steps designed to revise and enhance the Company’s internal controls as well as the establishment of the Corporate Compliance Program.

 

Due to these measures, no modifications to the Corporate Compliance Program were viewed as necessary in response to the Final Report. This conclusion has been discussed with the Audit Committee and the Audit Committee has not made recommendations either relating to the Company’s compliance program or internal controls.

 

The Company is continuing to assess the nature and scope of potential legal remedies available to the Company against individuals or entities that may have caused harm to the Company.

 

Other related issues

 

As previously announced, the DOJ, the SEC and the Ministry of Interior of the Republic of Macedonia have commenced investigations into certain of the Company’s activities that were the subject of the internal investigation. Also, as previously announced, the Hungarian National Bureau of Investigation (“NBI”) has begun a criminal investigation into alleged misappropriation of funds relating to payments made in connection with the Company’s ongoing internal investigation and the possible misuse of personal data of employees in the context of the internal investigation. These governmental investigations are continuing, and the Company continues to cooperate with those investigations. The Company cannot predict what the final outcome of those investigations may be or the impact, if any, they may have on its financial statements or results of operations. Furthermore, government authorities could seek criminal or civil sanctions, including monetary penalties, against the Company or its affiliates as well as additional changes to its business practices and compliance programs.

 

4



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

2. Effect of merger on the comparability of figures in 2009

 

The Extraordinary General Meeting of Magyar Telekom Plc. held on June 29, 2009 decided to merge T-Kábel Magyarország Kft. and Dél-Vonal Kft. into Magyar Telekom Plc. The merger was registered by the Court of Registry with effect from September 30, 2009.

 

In the course of the merger T-Kábel Magyarország Kft. and Dél-Vonal Kft. prepared Annual reports according to the Hungarian Act on Accounting as of September 30, 2009 by closing their analytical and general ledgers. Magyar Telekom Plc. managed the takeover of assets and liabilities (including provisions, accruals and deferred incomes and expenses as well) and the resulting shareholders’ equity being the difference, with continuous bookkeeping.

 

Due to the takeover of assets and liabilities the balance sheet lines of December 31, 2008 and 2009 are not completely comparable. In order to ensure comparability the merger balance sheets disclosed in summarised form in the Notes.

 

Due to the merger the income statement of Magyar Telekom Plc. contains the revenues and expenses of the activities taken over for the period started October 1, 2009 ended on December 31, 2009. As a consequence, the income statements as of 2008 and 2009 are not completely comparable. For the purpose of ensuring the comparison the income statements of T-Kábel Magyarország Kft. and Dél-Vonal Kft. for the period started January 1, 2009 ended September 30, 2009 are disclosed in summarised forms in the Notes. Compared to Magyar Telekom Plc.’s result for the period January-December, 2009 the two merged companies’ result for the period January-September, 2009 is not significant neither in total nor in composition.

 

3. Accounting policies

 

The accounting policies of Magyar Telekom Plc. include basic accounting principles, measurement methods and procedures as well as methods and tools used for enforcing the provisions of the Hungarian Accounting Regulations.

 

Magyar Telekom Plc. maintains its records both in accordance with the Hungarian Accounting Regulations (HAR) and International Financial Reporting Standards (IFRS). The differences between the two reports are solely due to differences in the respective accounting principles.

 

The closing day of the Company’s business year is December 31. In 2009 the balance sheet preparation date is the first working day of the following year.

 

Magyar Telekom Plc. uses version “A” of the balance sheet and version “A” of the income statement (total cost method) when preparing its annual report in accordance with the Hungarian Accounting Regulations. Amounts in the annual report are stated in HUF millions. The currency of accounting is the Hungarian Forint (HUF).

 

The Hungarian Act on Accounting allows for certain captions in the balance sheet to be broken-down or omitted, what is adopted by the Company both in case of the balance sheet and the income statement.

 

Since January 1, 2005 the Company has complied with its obligation to prepare consolidated annual report in such a way that it prepares its consolidated annual report in accordance with the International Financial Reporting Standards.

 

Deutsche Telekom Group’s consolidated annual report prepared by Deutsche Telekom AG (DT) (Friedrich-Ebert-Alle 140, 53113 Bonn, Germany) includes Magyar Telekom Plc. as a subsidiary of Deutsche Telekom AG.

 

5



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

Definition of the accounting principles, guidelines and methods

 

Classification of accounting matters:

 

Magyar Telekom Plc. applies the materiality and significance guidelines for limits set forth in the Hungarian Accounting Regulations in preparing its annual report.

 

Material error

 

An error revealed must be treated as a material error in every case it results in at least 20 per cent change in prior year’s shareholder’s equity.

 

Significant error

 

Items must be considered as significant in every case if in the year the error was discovered the cumulative absolute amount of the errors and their effects on net income and shareholder’s equity exceeds the lower of 2 per cent of total assets of the year they relate to or HUF 500 million.

 

If the Company reveals a significant error through self-revision, then modifications relating to prior years are presented next to the prior years’ figures for each balance sheet and income statement item.

 

The Company has set up regulations for valuation of assets and liabilities, scrapping, cost calculation, stocktaking, cash management, and system of documentation as required by the Hungarian Accounting Regulations.

 

Until further decision, the Company does not use the allowed alternative treatment in the Hungarian Accounting Regulations for the valuation of fixed assets as market value and valuation of certain financial instruments as fair value.

 

The Company qualifies every unrealized foreign exchange rate difference resulting from foreign exchange translation as significant, therefore all unrealized foreign exchange gains and losses are recorded in the subledger as well as in the general ledger.

 

Valuation methods used for the preparation of the Balance Sheet

 

ASSETS

 

Recognition and measurement of non current assets

 

Intangible and tangible fixed assets

 

Magyar Telekom Plc. carries intangible and tangible fixed assets at historical cost less accumulated depreciation. Property, plant and equipment includes the capitalized value of improvements and refurbishment that extend the useful life of the asset, increase its capacity and/or modify its functionality.

 

Costs connected directly to loans taken for acquisition or production of the asset are capitalized.

 

Depreciation policy

 

In case of tangible fixed assets the depreciation is based on the gross value of the asset reduced by its residual value.

 

The method of depreciation: straight-line based on gross value using rates originated from useful lives.

 

6



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

Depreciation is based on a daily calculation and recorded once in a month.

 

Depreciation starts on the day when the asset was placed into operation and it is over when the useful life of the asset elapsed or the day the asset cancelled from the books for any reason. The Company recorded the depreciation monthly in proportion to the days of the given month.

 

The Company determines residual values for those groups of assets where the residual values are considered to be significant. Residual value is considered to be significant if the expected realizable value exceeds the expected scrap value when the asset is taken out of service. The Company determines residual value for buildings and vehicles. Residual value is not considered to be significant for intangible assets and other groups of the tangible fixed assets. The Company applies residual values only for assets capitalized after January 1, 2001. No residual value is calculated for additional capitalization on assets purchased before January 1, 2001.

 

Applied residual value:

 

Buildings:

 

Determined individually based on the location of the building as well as the expected future useful life and usage of the building.

 

 

 

Vehicles:

 

personal cars for personal use: 30 per cent of the acquisition cost
passenger cars for business use: 30 per cent of the acquisition cost
trucks under 3.5 tons: 30 per cent of the acquisition cost
trucks above 3.5 tons: 20 per cent of the acquisition cost
transport vehicles: 10 per cent of the acquisition cost.

 

Useful lives are determined based on generally accepted international telecommunication industry practices and development potentials. Magyar Telekom Plc. regularly reviews the useful lives of fixed assets and modifies them if necessary. The Company records the value of all tangible fixed assets below HUF 50,000 immediately as depreciation expense, except for those that are serving the operation of the telecom network directly; are part of the subscriber network; those installed telecom software operating solely on telecom hardware and in addition the categories of assets defined in the asset accounting module of SAP.

 

The Company records extraordinary depreciation in cases where the value of the assets permanently decreased due to the fact that it is no longer needed, spoiled or destroyed, or if the book value is permanently and significantly in excess of the market value. In the absence of other reliable estimates the market value of the asset is determined using expected discounted cashflow analysis.

 

In case the market value of the individual asset that has been impaired before significantly exceeds its carrying value, the Company records a reversal of extraordinary depreciation and classifies the related income as other revenue.

 

Capitalized value of foundation and restructuring

 

The Company does not capitalize foundation and restructuring costs.

 

Capitalized value of research and development

 

The Company does not capitalize research and development costs.

 

7



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

Goodwill

 

That part of the cost of an acquisition of a subsidiary with qualified majority (at least 75 per cent ownership) which is calculated as the difference between the fair value of the acquired assets less the assumed liabilities (valued according to the Hungarian Act on Accounting) and the acquisition cost is recorded as goodwill if the acquisition cost is higher. The Company does not record amortization on goodwill recognized after January 1, 2005 unless impairment is required. The Company applies the straight-line amortization method for goodwill recognized earlier.

 

Intellectual property

 

Since 2005 only those assets have been recorded as intellectual property which are in the ownership of the Company. The useful life of intellectual property is generally 5 years.

 

Those intellectual properties where the Company has only the rights of use are recorded as Rights. Their useful life are those of intellectual property.

 

Own work capitalized

 

Direct costs incurred in the construction of property, plant and equipment manufactured by the Company are capitalized. The Company records materials provided to subcontractors at delivery as construction in progress.

 

Financial investments

 

Long term investments in subsidiaries are recorded at cost when established or at original purchase price less goodwill when acquired. At the end of the financial year, the Company’s investments are impaired if the market value of the equity investment is permanently and significantly lower than its book value. The impairment review is carried out on an individual basis.

 

Loans granted include loans to subsidiaries, associated companies and other companies as well as long term loans given to employees for housing purposes.

 

Recognition and measurement of current assets

 

Inventories

 

Goods are valued at cost using standard price method and raw materials using the weighted average cost formula. Inventories include materials and assets whose future usage can not be determined at the time of purchase (i.e. whether they will be used for an investment project or maintenance). Inventories also include advance payments on inventories and assets held for sale reclassified from tangible fixed assets.

 

Tangible fixed assets reclassified to inventories are valued on an individual basis. Besides these assets Magyar Telekom Plc. considers its inventories as low value items. Impairments of inventories purchased within a year are determined by a so-called Price Trend Report. If the current average price is higher by 20 per cent than the last month average price invoiced then the article has to be impaired to the average price of the last month.

 

Inventories purchased over a year ago are impaired in proportion to a percentage of their book value.

 

Measure of impairment on new materials:

 

· inventories from 12 to 24 months

 

35 per cent impairment

· inventories from 24 months

 

60 per cent impairment

 

Measure of impairment on used or repaired materials:

 

· inventories from 6 to 12 months

 

5 per cent impairment

· inventories from 12 to 24 months

 

50 per cent impairment

· inventories from 24 months

 

100 per cent impairment

 

8



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

Trade receivables and other receivables

 

The balance of trade receivables reflects invoiced amounts accepted by the customers and does not include any unrecoverable and unaccepted receivables.

 

Impairment of trade receivables is assessed on two levels. Trade receivables that are individually significant and the ones that are not individually significant are separated. Magyar Telekom Plc. decided to consider items above HUF 200 million to be individually significant for the purposes of assessing accounts receivables for impairment.

 

In case of items that are individually not significant it is also assessed individually whether objective evidence of impairment exists. These items have to be assessed individually and amount of impairment have to be calculated on them.

 

Magyar Telekom Plc. considers the following items to be included in this category:

 

·                  receivables from domestic and international fixed line service providers

·                  receivables from domestic and international mobile service providers (roaming, interconnect, interworking)

·                  receivables under liquidation, bankruptcy proceedings

·                  other (non trade) receivables

 

Based on the Section 55. (2) of Act C/2000 on accounting the amount of loss in value may also be established as a percentage of the amount of such receivables registered in the books (collective assessment of impairment). Magyar Telekom Plc. evaluates the telecommunications customers - concerning their high volume - with the method of collective assessment (ageing) and the impairment is set out in percentages.

 

The Company set up the impairment categories according to customer groups with similar credit risk exposure.

 

In case of invoices with instalments the amount of impairment is based on due dates of each instalment.

 

The Company does not impair receivables from related parties and non current loans granted to related parties except in case an individual item having an objective evidence for impairment.

 

Accounts receivable and payable related to international telecommunications traffic are stated at gross value, even though the financial settlement of the balance is performed on a net basis.

 

Magyar Telekom Plc. measures its foreign currency receivables at year-end at the official exchange rate of the Hungarian National Bank (“MNB”) as of December 31.

 

Securities

 

Securities in current assets include the original cost of bonds, shares, other securities held for sale and the repurchase value of treasury stock.

 

LIABILITIES AND SHAREHOLDER’S EQUITY

 

Valuation reserve

 

Until further decision, Magyar Telekom Plc. does not apply the allowed alternative treatment in the Hungarian Accounting Regulations for the recognition of the valuation reserve.

 

9



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

Restricted reserve

 

Magyar Telekom Plc. records restricted amounts from capital reserves and retained earnings as restricted reserve. The repurchase value (acquisition cost) of the repurchased treasury stock is recorded in restricted reserve and the amount of development reserves according to the Corporate Tax Act.

 

Provisions

 

Main items include:

 

·                  early retirement payment liabilities

·                  severance payment liabilities

·                  contingent liabilities and commitments

·                  environmental liabilities

·                  guarantee liabilities determined by law

·                  future demolition or recovery liabilities deriving from a contract

·                  provision related to valuation of derivatives

 

Valuation of items in foreign currencies

 

Receivables and liabilities denominated in foreign currencies are valued at the official exchange rate of MNB on December 31.

 

Derivatives

 

The Company records derivatives (forward F/X deals and swap deals) among off-balance sheet items as commitments or future receivables on transaction price.

 

The Company calculates the fair value of every derivatives as of the balance sheet date and discloses it in the Notes. In addition the Company creates provision for expected losses related to commitments from derivatives, represented by the negative fair value of the transactions.

 

Measurement principles applied in the preparation of the Income Statement

 

Based on the Section 74. (2) of Act C/2000 on accounting the exports sales revenue includes the value of sales and services supplied to non-resident customer regardless of the location of the services provided, except the customer is non-residential in the territory of Hungarian Republic and has not officially informed Magyar Telekom Plc. (e.g. nonresident customer - whose registered office, place of abode or permanent residence is situated abroad - buys phone sets in a T-Pont).

 

Revenues and expenses are recognized in line with the accrual concept of accounting. Non-realized exchange rate differences are recognized as follows:

 

·                  if the net balance of non-realized foreign exchange gain and loss is a gain, it is recorded as other revenue from financial transactions,

·                  if the net balance is a loss, it is recorded as other expenses from financial transactions.

 

The Company recognizes dividends approved by the General Meeting of the subsidiaries and associates in the year following the one they relate to. Interim dividends paid by the subsidiaries and associates are recorded as liability until final approval.

 

The fees paid by Magyar Telekom Plc. to carrier, mobile and international service providers for call termination are invoiced to the customers by Magyar Telekom Plc. Therefore the payments for calls initiated in Magyar Telekom Plc.’s network and terminated by carrier, mobile and international service providers as well as payments for leased lines

 

10



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

(both domestic and international) are recorded and disclosed as intermediated services disclosed as costs of services sold.

 

Extraordinary items are disclosed in the Notes.

 

Revenues and expenses not directly related to the ordinary operations are disclosed as extraordinary items.

 

OTHER

 

Magyar Telekom Plc. pays special attention to meeting environmental protection regulations in its activities. The necessary power supply batteries used in switches and power generators and used cell phones are stored and neutralized in accordance with the applicable environmental protection laws.

 

The Company did not incur penalty expenses due to environmental liabilities.

 

4. Summary of the Company’s financial position and liquidity

 

The Company’s financial position and liquidity as of December 31, 2008 and 2009 are represented by the following financial ratios:

 

 

 

2008

 

2009

 

Liquidity ratio (= current assets / current liabilities)

 

0.39

 

0.39

 

Operating margin (= operating profit / (sales revenues + other revenues))

 

0.18

 

0.15

 

Operating return on assets (= operating profit / total assets)

 

0.1

 

0.08

 

Leverage ratio (= non current liabilities / (non current liabilities + equity))

 

0.42

 

0.45

 

 

The increase in leverage ratio is due to the increase in owner’s loans from Deutsche Telekom Finance B .V.

 

11



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

The following is the cashflow statement for the years ended on December 31, 2008 and 2009:

 

All amounts in millions of HUF.

 

 

 

 

 

2008

 

2009

 

 

 

 

 

 

 

 

 

I. Cash flows from operating activities (lines 1-14)

 

 

 

57,074

 

29,874

 

 

 

 

 

 

 

 

 

1. Profit before income tax (before dividend received)

 

(+/-)

 

65,225

 

43,724

 

2. Depreciation and amortization

 

(+)

 

88,104

 

82,659

 

3. Impairment losses charged and reversed

 

(+/-)

 

3,245

 

11,169

 

4. Change in provisions

 

(+/-)

 

-1,966

 

-587

 

5. Profit or loss on the sale of non current assets

 

(+/-)

 

-2,323

 

-172

 

6. Change in accounts payable (1)

 

(+/-)

 

3,559

 

4,518

 

7. Change in other current liabilities (1)

 

(+/-)

 

-9,625

 

2,429

 

8. Change in accruals

 

(+/-)

 

-1,655

 

-1,692

 

9. Change in accounts receivable

 

(+/-)

 

1,627

 

-10,505

 

10. Change in current assets (without accounts receivable and cash and cash equivalents)

 

(+/-)

 

-7,860

 

-16,952

 

11. Change in prepayments

 

(+/-)

 

2,920

 

-3,998

 

12. Income tax paid

 

(—)

 

-3,046

 

-1,900

 

13. Dividend paid/payable

 

(—)

 

-77,052

 

-77,052

 

14. Other non cash items

 

(+/-)

 

-4,079

 

-1,767

 

 

 

 

 

 

 

 

 

II. Cash flows from investing activities (lines 15-17)

 

 

 

-42,141

 

-68,524

 

 

 

 

 

 

 

 

 

15. Acquisition of fixed assets and financial investments

 

(—)

 

-85,589

 

-100,437

 

16. Proceeds from sale of non current assets

 

(+)

 

5,972

 

504

 

17. Dividends and advanced dividends received

 

(+)

 

37,476

 

31,409

 

 

 

 

 

 

 

 

 

III. Cash flows from financing activities (lines 18-29)

 

 

 

17,783

 

12,202

 

 

 

 

 

 

 

 

 

18. Proceeds from issue of shares

 

(+)

 

0

 

0

 

19. Proceeds from the issuance of bonds

 

(+)

 

0

 

0

 

20. Loans received

 

(+)

 

139,979

 

198,952

 

21. Redemption from non current loans granted and bank deposits

 

(+)

 

19,287

 

11,348

 

22. Non-repayable liquid assets received

 

(+)

 

0

 

0

 

23. Share capital decrease

 

(—)

 

0

 

0

 

24. Treasury stock repurchases

 

(—)

 

0

 

0

 

25. Repayment of bonds

 

(—)

 

0

 

0

 

26. Repayment of loans

 

(—)

 

-124,467

 

-188,880

 

27. Non current loans granted and bank deposits

 

(—)

 

-14,445

 

-8,474

 

28. Non-repayable donations given

 

(—)

 

-129

 

-7

 

29. Change in liabilities to founders and other non current liabilities

 

(+/-)

 

-2,442

 

-737

 

 

 

 

 

 

 

 

 

IV. Change in liquid assets (lines I. + II. + III.)

 

(+/-)

 

32,716

 

-26,448

 

 

 

 

 

 

 

 

 

Cash at the beginning of the year

 

 

 

3,912

 

36,628

 

Cash at year-end

 

 

 

36,628

 

10,180

 

 


(1) The change in suppliers of assets in course of construction related to subsidiaries amounted to HUF 1,247 million increase in 2008 and HUF 42 million increase in 2009 are corrected in the caption of ‘Change in other current liabilities’ in 2008. In 2009 this was reviewed and corrected from the caption of ‘Change in accounts payable’. For the purpose of ensuring the comparison the 2008 year’s data was modified accordingly.

 

12



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

5. Intangible fixed assets

 

The following table is a summary of intangible fixed asset movements between January 1, 2008 and December 31, 2009:

 

 

 

Capitalized

 

 

 

Intellectual

 

 

 

 

 

 

 

costs of R&D

 

Rights

 

property

 

Goodwill

 

Total

 

GROSS BOOK VALUE

 

 

 

 

 

 

 

 

 

 

 

Opening balance as of January 1, 2008

 

0

 

146,333

 

12,267

 

218,346

 

376,946

 

Additions

 

0

 

13,311

 

949

 

1,374

 

15,634

 

Disposals

 

0

 

4,967

 

0

 

0

 

4,967

 

Reclassifications

 

0

 

-72

 

24

 

0

 

-48

 

Balance as of December 31, 2008

 

0

 

154,605

 

13,240

 

219,720

 

387,565

 

Additions

 

0

 

12,192

 

634

 

1,585

 

14,411

 

Additions due to merger

 

0

 

2,952

 

796

 

100

 

3,848

 

Disposals

 

0

 

2,591

 

13

 

0

 

2,604

 

Reclassifications

 

0

 

510

 

-15

 

0

 

495

 

Balance as of December 31, 2009

 

0

 

167,668

 

14,642

 

221,405

 

403,715

 

 

 

 

 

 

 

 

 

 

 

 

 

AMORTIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Opening balance as of January 1, 2008

 

0

 

83,802

 

8,765

 

60,279

 

152,846

 

Charge for the year

 

0

 

15,175

 

875

 

10,137

 

26,187

 

Impairment

 

0

 

0

 

0

 

883

 

883

 

Disposals

 

0

 

4,929

 

0

 

0

 

4,929

 

Reclassifications

 

0

 

-4

 

0

 

0

 

-4

 

Balance as of December 31, 2008

 

0

 

94,044

 

9,640

 

71,299

 

174,983

 

Charge for the year

 

0

 

16,212

 

562

 

10,130

 

26,904

 

Impairment

 

0

 

0

 

0

 

256

 

256

 

Additions due to merger

 

0

 

1,959

 

408

 

0

 

2,367

 

Disposals

 

0

 

2,528

 

12

 

0

 

2,540

 

Reclassifications

 

0

 

-1

 

0

 

0

 

-1

 

Balance as of December 31, 2009

 

0

 

109,686

 

10,598

 

81,685

 

201,969

 

 

 

 

 

 

 

 

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

 

 

 

 

 

 

 

as of December 31, 2008

 

0

 

60,561

 

3,600

 

148,421

 

212,582

 

 

 

 

 

 

 

 

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

 

 

 

 

 

 

 

as of December 31, 2009

 

0

 

57,982

 

4,044

 

139,720

 

201,746

 

 

13



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

Rights

 

The gross value of rights increased by HUF 15,144 million in the current year. Significant part of this increment (HUF 10,621 million) was caused by capitalizations and additional capitalizations of IT systems software rights of use (HUF 5,027 million), other software rights of use (HUF 2,332 million) and other rights (HUF 466 million), as well as the increases from the merger of T-Kábel into Magyar Telekom Plc. (Rights in the amount of HUF 2,225 million and Other rights in the amount of HUF 571 million).

 

The decrease is mainly due to inventory shortage of service supporting systems (gross value is HUF 747 million, net value is zero), the scrapping of obsolete software rights not to be used for other purposes (gross value is HUF 1,170 million, net value is zero) and software of centers linked to operating base stations (NOC-NIS) (gross value is HUF 360 million, net value is zero).

 

Intellectual properties

 

The increase is mainly due to the capitalization of other own software in the amount of HUF 600 million and the increment resulting from the merger of T-Kábel into Magyar Telekom Plc. in the amount of HUF 796 million under the same class of assets.

 

In 2009, the Company reviewed the useful lives of intangible assets similar to previous years and executed the changes in useful lives where the Company deemed it necessary. In consequence, HUF 1,032 million less amortization was charged for 2009.

 

Goodwill

 

In 2009, the Company purchased 100 per cent of the shares of KFKI Direkt Kft., ISH Informatikai Kft. and ISH Kft. In these transactions HUF 45 million (KFKI Direkt Kft.) and HUF 1,424 million (ISH Informatika Kft.) goodwill were recognized.

 

Also in 2009, connected to the subsequent correction of the purchase price of KFKI Rendszerintegrációs Zrt., IWIW Szolgáltató Kft. and M-Factory Kft. further HUF 78 million, HUF 13 million and HUF 25 million goodwill were recognized, respectively.

 

Goodwill was increased by HUF 100 million due to the merger of T-Kábel into Magyar Telekom Plc. as of September 30, 2009 in relation to Dél-Vonal Kft.

 

During 2009 HUF 10,130 million amortization was charged on goodwill.

 

Impairment in the amount of HUF 256 million was recorded on goodwill of which HUF 206 million comes from the reduction of M-Factory Kft.’s goodwill to the market value calculated on the basis of a DFC model based on a ten-year business plan and HUF 50 million comes from the reduction of Orbitel E.A.D.’s goodwill (purchased in 2007) to the return value calculated from the purchase offer on the investment.

 

14



 

Magyar Telekom Plc.

Notes to the Financial Statements prepared

in accordance with the Hungarian Act on Accounting

As of December 31, 2009

(All amounts in millions of HUF, unless otherwise indicated)

 

The movements in gross value and amortization of goodwill in 2008 and 2009 are summarized as follows:

 

 

 

 

 

Gross book

 

Accumulated

 

Net book

 

 

 

Amort’n

 

Net book

 

 

 

Remaining

 

value as of

 

amort’n as of

 

value as of

 

Goodwill

 

and reclass.

 

value as of

 

 

 

useful life

 

December

 

December

 

December

 

recorded in

 

charge in

 

December

 

Description

 

(month)

 

31, 2008

 

31, 2008

 

31, 2008

 

2009

 

2009

 

31, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T-Mobile Magyarország Távközlési Rt.

 

144

 

181,948

 

-63,725

 

118,223

 

0

 

-9,115

 

109,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KFKI Rendszerintegrációs Zrt.

 

0

 

8,718

 

0

 

8,718

 

78

 

0

 

8,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMITEL Távközlési Zrt.

 

113

 

10,501

 

-4,367

 

6,134

 

0

 

-589

 

5,545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stonebridge Communication A.D.

 

162

 

7,507

 

-1,833

 

5,674

 

0

 

-392

 

5,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dataplex Kft.

 

0

 

4,793

 

0

 

4,793

 

0

 

0

 

4,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IWIW Szolgáltató Kft.

 

0

 

1,142

 

0

 

1,142

 

13

 

0

 

1,155