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Magyar Telekom Plc. 6-K 2011

Documents found in this filing:

  1. 6-K
  2. Graphic
  3. Graphic
  4. Graphic

Table of Contents

 

 

 

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 August 4, 2011

 

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-                   

 

 

 



Table of Contents

 

GRAPHIC

 

Company name:

 

Magyar Telekom Plc.

 

Company address: e-mail address:

 

H-1013 Budapest Krisztina krt. 55.
investor.relations@telekom.hu

IR contacts:

 

Position:

 

Telephone:

 

E-mail address:

Krisztina Förhécz

 

Head of Investor Relations

 

+36-1-457-6029

 

forhecz.krisztina@telekom.hu

Linda László

 

IR manager

 

+36-1-457-6084

 

laszlo.linda@telekom.hu

Márton Szot

 

IR manager

 

+36-1-458-0453

 

szot.marton@telekom.hu

Márton Teremi

 

IR manager

 

+36-1-457-6229

 

teremi.marton@telekom.hu

 

Magyar Telekom Group 2011 Half-year financial report

Growth in underlying margins, reflecting continued focus on cost discipline

 

Budapest — Aug 4, 2011 — Magyar Telekom (Reuters: MTEL.BU and Bloomberg: MTELEKOM HB), the leading Hungarian telecommunications service provider, has today reported its consolidated financial results for the first half of 2011, in accordance with International Financial Reporting Standards (IFRS).

 

Highlights:

 

·      Revenues were down 3.9%, from HUF 297.8 bn to HUF 286.1 bn in the first half of 2011 compared with the same period in 2010. This was mainly due to lower fixed and mobile voice revenues in all three countries. In Hungary,  SI/IT revenues also declined. These declines were partly offset by growth in TV and mobile internet revenues. Appreciation of the Hungarian forint had a slightly negative effect on revenue contribution from international subsidiaries.

 

·      EBITDA declined by 18.2%, from HUF 119.5 bn to HUF 97.8 bn, with an EBITDA margin of 34.2%. Underlying EBITDA, excluding investigation-related costs and provisions, severance expenses and the special telecom tax, increased by 0.8% to HUF 123.3 bn. The underlying EBITDA margin was 43.1% in the first half of 2011 compared to 41.1% in the same period of 2010. The higher underlying EBITDA margin reflects strong cost-cutting measures undertaken in employee-related and other operating expenditure, as well as a decrease in handset subsidies. In addition to this, Q1 2011 results were also supported by a HUF 1.4 bn gain on real estate sales in Hungary.

 

Details of special influences, telecom tax
and EBITDA performance (HUF bn)

 

Q2 2010

 

H1 2010

 

Q2 2011

 

H1 2011

 

Investigation-related costs and provisions

 

0.8

 

1.3

 

10.6

 

11.0

 

Severance expenses

 

0.4

 

1.5

 

0.3

 

1.8

 

Telecom tax

 

0

 

0

 

6.3

 

12.7

 

Total special influence

 

1.3

 

2.8

 

17.2

 

25.5

 

Reported EBITDA

 

61.8

 

119.5

 

44.6

 

97.8

 

Underlying EBITDA

 

63.1

 

122.3

 

61.8

 

123.3

 

 

·      Magyar Telekom has been subjected to a special telecom tax charged on the company’s annual revenues, retrospectively from January 1, 2010. As this was only introduced in Q4 2010, the impact of the tax was only seen in the Q4 results of both the Group and its segments in 2010. However, the reported EBITDA of the Hungarian segments (Telekom Hungary and T-Systems Hungary) now includes the special telecom tax for both H1 2010 and H1 2011 to allow for a more accurate comparison of the year-on-year performance of the segments. H1 2010 Group numbers however, were not restated, (in line with IFRS rules), thereby making the Group’s year-on-year performance less comparable.

 

·      On June 24, 2011 the Board of Directors of Magyar Telekom approved an agreement in principle with the staff of the U.S. Securities and Exchange Commission (the “SEC”) to settle its investigation relating to the Company. In light of this agreement in principle with the SEC and the ongoing negotiations with the Department of Justice (the “DOJ”), the Company recognized in Q2 2011 a provision of HUF 11.5 bn (USD 62.4 million) in connection with these investigations: of which HUF 1.1 bn was accounted for within the net financial results, with the rest accounted for within Other operating expenses in the Telekom Hungary segment.

 

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Table of Contents

 

·      Profit attributable to owners of the parent company (net income) decreased by 39.7%, from HUF 32.4 bn to HUF 19.5 bn. This decline was driven by the fall in reported EBITDA and only partly offset by lower income tax. Income tax expense decreased in H1 2011 compared with H1 2010 due to a combination of lower profit before tax and a one-time booking of HUF 5.2bn in Q2 2010: this itself was due to a change in Macedonian tax law which calculates the corporate income tax payable based on the profit reserves expected to be paid out as dividends at a later date to non-resident entities.

 

·      Net cash generated from operating activities increased from HUF 92.4 bn to HUF 95.5 bn. The lower reported EBITDA was more than offset by an improvement in working capital. This was driven by the special telecom tax that was accounted for in the first half of the year but paid however, only in July (tax for the second half will be paid in October), provisions in relation to the agreement in principle with the SEC and a decline in bad debts.

 

·      Investment in tangible and intangible assets (CAPEX) decreased by HUF 9.5 bn to HUF 26.7 bn in the first half of 2011 compared to the same period in 2010. Of this total number, HUF 21.3 bn related to the Telekom Hungary segment and HUF 1.2 bn to the T-Systems Hungary segment. In Macedonia and Montenegro, CAPEX spending was HUF 2.6 bn and HUF 1.4 bn, respectively.

 

·      Free cash flow (operating cash flow and investing cash flow adjusted for proceeds from / payments for other financial assets) increased by HUF 10.4 bn in the first half of 2011 to HUF 63.8 bn from HUF 53.4 bn in the same period of 2010. Improvement in working capital led to a HUF 3.1 bn increase in operating cash flow. Lower CAPEX spending and higher proceeds from real estate sales also supported the higher free cash flow.

 

·      Net debt decreased from HUF 297.4 bn at the end of June 2010 to HUF 295.1 bn by the end of June 2011. The net debt ratio (net debt to total capital) was 35.1% at the end of June 2011.

 

Christopher Mattheisen, Chairman and CEO commented: “Although we have been successful in our efforts to maintain or in some cases to even grow our market shares, the weakened Hungarian telecoms market and anemic recovery in the general economy caused the declining revenue trends to continue into the second quarter.  While we will maintain our efforts to increase revenue contribution from our growth services, this has not yet been able to offset declining fixed line and mobile voice revenues. Our focus on cost discipline continues to bear fruit and we were able to repeat our outstanding performance in the first quarter by delivering a 43% underlying EBITDA margin again in the second quarter.

We are, however, cautious on the second half of the year and expect the unfavorable economic environment to limit further household disposable income, while the competitive environment is also expected to strengthen as we approach the year end. Migration of subscribers to the Hoppá package continues to be strong; however, as indicated previously, the positive retention effect will be coupled with ARPA dilution for this year. Also, some of our expense lines are expected to show an increase in the second half, including employee-related expenses that will reflect wage increases implemented from July. Despite the slight growth in underlying EBITDA for the first half of this year, we maintain our guidance for an underlying EBITDA decline of 4-6% for 2011, although we now expect this decline to be towards the more optimistic end of this range. Our revenue target of a 3-5% decline and CAPEX reduction target of approximately 5% remain unchanged.”

 

Q2 2011 results analysis

 

Group

 

·      Revenues declined by 4.6% in Q2 2011 compared to the same quarter in 2010. Retail voice revenues decreased across all markets, reflecting the unfavorable economic environment and intensifying mobile competition in Macedonia. Lower Hungarian mobile termination rates introduced in December 2010 resulted in a wholesale mobile revenue decline which could not be offset by the increase in TV and mobile broadband revenues.

 

·      Reported EBITDA was down by 27.9% in the second quarter, while underlying EBITDA declined by 2.1%. This EBITDA decline was a direct result of lower revenues and could not be wholly offset by the cost cutting initiatives which were undertaken primarily in employee-related expenses and other cost items such as marketing and consultancy expenses. However, underlying EBITDA margin still showed an increase from 42.0% in Q2 2010 to 43.0% in Q2 2011.

 

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Table of Contents

 

Telekom Hungary Segment

 

Revenues before inter-segment elimination fell by 3.2% to HUF 104.0 bn, EBITDA was down 26.1% to HUF 27.7 bn and EBITDA margin was 26.7% in the second quarter of 2011. Excluding special influences, which mainly includes the special telecom tax and the investigation-related costs and provisions, underlying EBITDA was down by 1.0% to HUF 44.0 bn in the second quarter of 2011 compared to the second quarter of 2010. The underlying EBITDA margin grew from 41.4% to 42.3% driven by a reduction in employee-related expenses and other operating expenses largely as a result of efficiency improvements. These reductions, coupled with lower levels of voice related payments, mainly reflecting a cut in Hungarian mobile termination rates in December 2010, almost fully offset the decline in high margin voice revenues.

 

·      Lower voice revenues as a result of mobile substitution and migration towards IP-based solutions, coupled with the dilution impact of Hoppá packages, caused fixed line revenues to decline by 5.6% to HUF 45.2 bn in Q2 2011. The decline in fixed line internet revenues narrowed to -2.6%, while growth in TV revenues remained strong at 13.9%. The total number of TV customers exceeded 756,000 by the end of June, with strong migration from cable TV to the IPTV service.  Demand for satellite TV also remained strong.

 

·      Mobile revenues decreased by 1.3% to HUF 58.5 bn in the second quarter of 2011. A slight increase in the customer base, higher mobile usage and a steady increase in the proportion of post-paid customers could not fully offset the unfavorable impact of lower effective tariff levels. As such, retail revenues were down by 2.0%. However, T-Mobile remained the clear market leader and managed to increase its market share to 45.1% amongst active customers. Voice wholesale revenues were hit by a 16% cut in mobile termination fees, effective from December 2010. Non-voice revenues grew by 9.7% as a result of a 52.8% increase in mobile broadband subscriptions that supported the growth in mobile internet revenues. Driven by an increasing ratio of higher priced smartphone sales, equipment and activation revenues grew by 6.0%. Although subsidies on these handsets are also higher, the total subsidy level decreased and the average acquisition cost per new customer was cut by 24.6%.

 

T-Systems Hungary Segment

 

Revenues before inter-segment elimination were down 9.8% to HUF 26.2 bn. EBITDA was up 6.5% to HUF 4.4 bn in the second quarter of 2011 and the EBITDA margin was 16.9%. Excluding special influences, which mainly includes the special telecom tax, underlying EBITDA declined by 5.5% to HUF 5.4 bn. The underlying EBITDA margin of 20.6%, up from 17.6% in the second quarter of 2010, reflected efforts to improve efficiency in light of the drop in high-margin voice revenues; the level of bad debts also significantly improved after the settlement of some outstanding bills in the public sector.

 

·      Fixed line revenues were down 6.3% to HUF 7.5 bn driven by lower usage and continued erosion in our customer base, principally caused by mobile substitution, coupled with significant price pressure. Voice retail revenues declined by 10.3%.

 

·      Mobile revenues decreased 4.6% to HUF 8.3 bn, driven primarily by declining average tariff levels and lower levels of usage that could not be offset by the increase in customer base. Other mobile revenues declined due to the Governmental measures announced in August 2010. To preserve profitability, in addition to other cost cutting measures, the acquisition cost per new customer was cut by 21.2%.

 

·      SI/IT revenues were down 15.6% to HUF 10.5 bn in the second quarter of 2011. Due to restrictive measures imposed by the government, no new public IT deals have been launched in the last several quarters, while earlier mandated projects are coming to an end. In addition to this, demand for SI/IT services in the corporate segment has not yet recovered to pre-recession levels, due to the ongoing difficult economic environment.

 

Macedonia

 

In Macedonia, revenues decreased by 13.1% to HUF 17.0 bn in the second quarter of 2011 compared to the same period in 2010, with EBITDA down 17.3%. The appreciation of the Hungarian forint had a slight negative effect on revenue contribution (on average, the Hungarian forint strengthened by 2.7% against the Macedonian Denar in the second quarter of 2011 compared with 2010). The EBITDA decline is due to the intense competition within mobile, resulting in significant pricing pressure and increasing level of handset subsidies: both these factors could not be offset by decreasing other operating expenses.

 

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Table of Contents

 

·      Fixed line revenues were down 8.3%. The increase in wholesale voice revenues, which was driven by growing incoming and transited traffic volumes and higher settlement prices, could not offset the strong decline in voice retail revenues. Growing demand for double and triple play packages resulted in higher TV revenues.

 

·      Mobile revenues declined by 17.0% due to the fiercely competitive environment in Macedonia. The decline in the pre-paid subscriber base as well as competition driven tariff reductions put pressure on revenues. Nevertheless, T-Mobile Macedonia remained the clear market leader with a 50.0% market share.  In addition to the slightly improved customer mix, the more widely used closed user group offers resulted in higher MOU. However, despite the increase in mobile internet usage and the higher number of SMS messages sent, non-voice revenues also declined due to promotions offering free and discounted SMS messages.

 

Montenegro

 

Revenues of the Montenegrin subsidiary stayed flat at HUF 7.8 bn in the second quarter of 2011. FX changes (on average, the Hungarian forint strengthened by 2.6% against the Euro in the second quarter of 2011 compared to the same quarter in 2010) had a slight negative impact on revenue contribution from the Montenegrin subsidiary. EBITDA increased by 14.5% to HUF 3.3 bn and the EBITDA margin improved from 36.6% to 41.8%. The increase in EBITDA was driven by lower employee related expenses after the headcount reduction in Q1 2011, further cost cutting achievements and improved debt collection.

 

·      Fixed line revenues were down 3.3% in the second quarter of 2011. Higher internet and TV revenues were offset by lower retail and wholesale voice revenues. The decrease in retail voice revenues was due to increased mobile substitution and discounts offered in flat-rate packages. The voice wholesale revenue decline was driven by a significant migration of international traffic towards Serbia where it is now transited by competitors. However, both Internet and TV revenues increased considerably as a result of strong growth in the number of ADSL and IPTV customers which was driven by a strong focus on bundled services.

 

·      Mobile revenues were up 3.7% due to a revenue reversal in Q2 2010 that related to a fraud case. Excluding this EUR 0.8 million one-off impact, revenues were down by 2.5%.  Voice retail revenues declined due to a lower pre-paid customer base and lower post-paid ARPU. Voice wholesale revenues decreased due to lower domestic traffic whilst non-voice revenues increased as a result of the growing number of mobile internet users.

 

About Magyar Telekom

 

Magyar Telekom is Hungary’s principal provider of telecom services. It provides a full range of telecommunications and infocommunications (ICT) services including fixed line and mobile telephony, data transmission and non-voice as well as IT and systems integration services. The Hungarian business activities of Magyar Telekom are managed by two segments: Telekom Hungary (the home-related services brand T-Home and the mobile communications brand T-Mobile) and T-Systems Hungary (T-Systems brand). Magyar Telekom is the majority owner of Makedonski Telekom, the leading fixed line and mobile operator in Macedonia and it holds a majority stake in Crnogorski Telekom, the leading telecommunications operator in Montenegro. Magyar Telekom’s majority shareholder (59.21%) is MagyarCom Holding GmbH, fully owned by Deutsche Telekom AG.

 

This investor news contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore should not have undue reliance placed upon them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

 

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors are described in, among other things, our Annual Report on Form 20-F for the year ended December 31, 2010 filed with the U.S. Securities and Exchange Commission.

 

In addition to figures prepared in accordance with IFRS, Magyar Telekom also presents non-GAAP financial performance measures, including, among others, EBITDA, EBITDA margin, underlying EBITDA, underlying EBITDA margin and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to

 

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Table of Contents

 

the chapter “Reconciliation of pro forma figures”, which is posted on Magyar Telekom’s Investor Relations webpage at www.telekom.hu/investor_relations.

 

For detailed information on Magyar Telekom’s Q2 2011 results please visit our website

(www.telekom.hu/investor_relations) or the website of the Budapest Stock Exchange (www.bse.hu).

 

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Table of Contents

 

MAGYAR TELEKOM

Consolidated Statements of Financial Position - IFRS

(HUF million)

 

 

 

Dec 31, 2010

 

Jun 30, 2011

 

 

 

 

 

(Audited)

 

(Unaudited)

 

% change

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

15,841

 

15,727

 

(0.7

)%

Trade and other receivables

 

114,625

 

109,582

 

(4.4

)%

Other current financial assets

 

56,560

 

38,120

 

(32.6

)%

Current income tax receivable

 

1,804

 

442

 

(75.5

)%

Inventories

 

9,592

 

10,860

 

13.2

%

Non current assets held for sale

 

2,152

 

1,539

 

(28.5

)%

 

 

 

 

 

 

 

 

Total current assets

 

200,574

 

176,270

 

(12.1

)%

 

 

 

 

 

 

 

 

Non current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

549,752

 

527,920

 

(4.0

)%

Intangible assets

 

332,993

 

326,662

 

(1.9

)%

Investments in associates and joint ventures

 

77

 

67

 

(13.0

)%

Deferred tax assets

 

913

 

897

 

(1.8

)%

Other non current financial assets

 

24,033

 

21,757

 

(9.5

)%

Other non current assets

 

664

 

625

 

(5.9

)%

 

 

 

 

 

 

 

 

Total non current assets

 

908,432

 

877,928

 

(3.4

)%

 

 

 

 

 

 

 

 

Total assets

 

1,109,006

 

1,054,198

 

(4.9

)%

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities to related parties

 

72,208

 

91,154

 

26.2

%

Other financial liabilities

 

46,647

 

55,894

 

19.8

%

Trade payables

 

88,613

 

71,702

 

(19.1

)%

Current income tax payable

 

661

 

1,815

 

174.6

%

Provisions

 

7,722

 

16,298

 

111.1

%

Other current liabilities

 

30,966

 

47,012

 

51.8

%

 

 

 

 

 

 

 

 

Total current liabilities

 

246,817

 

283,875

 

15.0

%

 

 

 

 

 

 

 

 

Non current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities to related parties

 

234,164

 

192,727

 

(17.7

)%

Other financial liabilities

 

8,828

 

9,132

 

3.4

%

Deferred tax liabilities

 

10,924

 

11,266

 

3.1

%

Provisions

 

12,298

 

10,403

 

(15.4

)%

Other non current liabilities

 

1,263

 

1,321

 

4.6

%

 

 

 

 

 

 

 

 

Total non current liabilities

 

267,477

 

224,849

 

(15.9

)%

 

 

 

 

 

 

 

 

Total liabilities

 

514,294

 

508,724

 

(1.1

)%

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity of the owners of the parent

 

 

 

 

 

 

 

Common stock

 

104,275

 

104,275

 

0.0

%

Additional paid in capital

 

27,379

 

27,379

 

0.0

%

Treasury stock

 

(307

)

(307

)

0.0

%

Retained earnings

 

385,283

 

352,695

 

(8.5

)%

Accumulated other comprehensive income

 

14,882

 

7,932

 

(46.7

)%

Total Equity of the owners of the parent

 

531,512

 

491,974

 

(7.4

)%

Non-controlling interests

 

63,200

 

53,500

 

(15.3

)%

Total equity

 

594,712

 

545,474

 

(8.3

)%

 

 

 

 

 

 

 

 

Total liabilities and equity

 

1,109,006

 

1,054,198

 

(4.9

)%

 

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Table of Contents

 

MAGYAR TELEKOM

Consolidated Statements of Comprehensive Income - IFRS

(HUF million, except per share amounts)

 

 

 

6 months ended June 30,

 

 

 

 

 

2010

 

2011

 

%

 

 

 

(Unaudited)

 

(Unaudited)

 

change

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice - retail

 

54,706

 

46,412

 

(15.2

)%

Voice - wholesale

 

9,648

 

10,368

 

7.5

%

Internet

 

27,035

 

25,900

 

(4.2

)%

Data

 

13,289

 

13,235

 

(0.4

)%

TV

 

13,555

 

15,505

 

14.4

%

Equipment

 

2,101

 

1,831

 

(12.9

)%

Other fixed line revenues

 

3,635

 

4,332

 

19.2

%

 

 

 

 

 

 

 

 

Fixed line revenues

 

123,969

 

117,583

 

(5.2

)%

 

 

 

 

 

 

 

 

Voice - retail

 

91,605

 

86,836

 

(5.2

)%

Voice - wholesale

 

18,066

 

15,576

 

(13.8

)%

Voice - visitor

 

1,961

 

1,555

 

(20.7

)%

Non-voice

 

27,290

 

29,840

 

9.3

%

Equipment and activation

 

9,254

 

10,658

 

15.2

%

Other mobile revenues

 

4,269

 

3,782

 

(11.4

)%

 

 

 

 

 

 

 

 

Mobile revenues

 

152,445

 

148,247

 

(2.8

)%

 

 

 

 

 

 

 

 

System Integration/Information Technology revenues

 

21,420

 

20,243

 

(5.5

)%

 

 

 

 

 

 

 

 

Total revenues

 

297,834

 

286,073

 

(3.9

)%

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice-, data- and Internet-related payments

 

(32,170

)

(29,269

)

9.0

%

Material cost of equipment sold

 

(17,746

)

(17,766

)

(0.1

)%

SI/IT-related payments

 

(9,712

)

(9,938

)

(2.3

)%

Other direct costs

 

(13,825

)

(12,658

)

8.4

%

Direct costs

 

(73,453

)

(69,631

)

5.2

%

Employee-related expenses

 

(46,400

)

(43,659

)

5.9

%

Depreciation and amortization

 

(49,425

)

(48,018

)

2.8

%

Hungarian telecommunications and other crisis taxes

 

0

 

(12,686

)

n.a.

 

Other operating expenses

 

(59,116

)

(65,566

)

(10.9

)%

 

 

 

 

 

 

 

 

Total operating expenses

 

(228,394

)

(239,560

)

(4.9

)%

 

 

 

 

 

 

 

 

Other operating income

 

641

 

3,272

 

410.5

%

 

 

 

 

 

 

 

 

Operating profit

 

70,081

 

49,785

 

(29.0

)%

 

 

 

 

 

 

 

 

Net financial result

 

(14,286

)

(16,491

)

(15.4

)%

 

 

 

 

 

 

 

 

Share of associates’ and joint ventures’ losses

 

(18

)

(1

)

94.4

%

 

 

 

 

 

 

 

 

Profit before income tax

 

55,777

 

33,293

 

(40.3

)%

 

 

 

 

 

 

 

 

Income tax

 

(16,902

)

(8,100

)

52.1

%

 

 

 

 

 

 

 

 

Profit for the period

 

38,875

 

25,193

 

(35.2

)%

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

12,260

 

(9,836

)

n.m.

 

Other comprehensive income for the period, net of tax

 

12,260

 

(9,836

)

n.m.

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

51,135

 

15,357

 

(70.0

)%

 

 

 

 

 

 

 

 

Profit attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

32,389

 

19,529

 

(39.7

)%

Non-controlling interests

 

6,486

 

5,664

 

(12.7

)%

 

 

38,875

 

25,193

 

(35.2

)%

 

 

 

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

40,989

 

12,579

 

(69.3

)%

Non-controlling interests

 

10,146

 

2,778

 

(72.6

)%

 

 

51,135

 

15,357

 

(70.0

)%

 

 

 

 

 

 

 

 

Basic and diluted earnings per share (HUF)

 

31.11

 

18.74

 

(39.8

)%

 

7



Table of Contents

 

MAGYAR TELEKOM

Consolidated Statements of Comprehensive Income - IFRS

(HUF million, except per share amounts)

 

 

 

3 months ended June 30,

 

 

 

 

 

2010

 

2011

 

%

 

 

 

(Unaudited)

 

(Unaudited)

 

change

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice - retail

 

26,994

 

22,730

 

(15.8

)%

Voice - wholesale

 

5,340

 

5,362

 

0.4

%

Internet

 

13,515

 

13,091

 

(3.1

)%

Data

 

6,559

 

6,583

 

0.4

%

TV

 

6,819

 

7,802

 

14.4

%

Equipment

 

989

 

847

 

(14.4

)%

Other fixed line revenues

 

1,401

 

2,055

 

46.7

%

 

 

 

 

 

 

 

 

Fixed line revenues

 

61,617

 

58,470

 

(5.1

)%

 

 

 

 

 

 

 

 

Voice - retail

 

46,852

 

44,379

 

(5.3

)%

Voice - wholesale

 

9,554

 

8,064

 

(15.6

)%

Voice - visitor

 

985

 

941

 

(4.5

)%

Non-voice

 

13,884

 

15,099

 

8.8

%

Equipment and activation

 

4,833

 

5,392

 

11.6

%

Other mobile revenues

 

2,144

 

1,923

 

(10.3

)%

 

 

 

 

 

 

 

 

Mobile revenues

 

78,252

 

75,798

 

(3.1

)%

 

 

 

 

 

 

 

 

System Integration/Information Technology revenues

 

10,591

 

9,298

 

(12.2

)%

 

 

 

 

 

 

 

 

Total revenues

 

150,460

 

143,566

 

(4.6

)%

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice-, data- and Internet-related payments

 

(16,680

)

(15,156

)

9.1

%

Material cost of equipment sold

 

(8,802

)

(9,286

)

(5.5

)%

SI/IT-related payments

 

(4,478

)

(4,042

)

9.7

%

Other direct costs

 

(6,825

)

(6,376

)

6.6

%

Direct costs

 

(36,785

)

(34,860

)

5.2

%

Employee-related expenses

 

(23,063

)

(21,482

)

6.9

%

Depreciation and amortization

 

(25,285

)

(24,024

)

5.0

%

Hungarian telecommunications and other crisis taxes

 

0

 

(6,345

)

n.a.

 

Other operating expenses

 

(29,205

)

(37,467

)

(28.3

)%

 

 

 

 

 

 

 

 

Total operating expenses

 

(114,338

)

(124,178

)

(8.6

)%

 

 

 

 

 

 

 

 

Other operating income

 

433

 

1,145

 

164.4

%

 

 

 

 

 

 

 

 

Operating profit

 

36,555

 

20,533

 

(43.8

)%

 

 

 

 

 

 

 

 

Net financial result

 

(5,783

)

(8,051

)

(39.2

)%

 

 

 

 

 

 

 

 

Share of associates’ and joint ventures’ losses

 

(9

)

0

 

100.0

%

 

 

 

 

 

 

 

 

Profit before income tax

 

30,763

 

12,482

 

(59.4

)%

 

 

 

 

 

 

 

 

Income tax

 

(11,152

)

(5,156

)

53.8

%

 

 

 

 

 

 

 

 

Profit for the period

 

19,611

 

7,326

 

(62.6

)%

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

16,434

 

(87

)

n.m.

 

Revaluation of available-for-sale financial assets — before tax

 

0

 

0

 

n.a.

 

Revaluation of available-for-sale financial assets — tax effect

 

0

 

0

 

n.a.

 

Other comprehensive income for the period, net of tax

 

16,434

 

(87

)

n.m.

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

36,045

 

7,239

 

(79.9

)%

 

 

 

 

 

 

 

 

Profit attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

15,943

 

4,362

 

(72.6

)%

Non-controlling interests

 

3,668

 

2,964

 

(19.2

)%

 

 

19,611

 

7,326

 

(62.6

)%

 

 

 

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

27,255

 

4,165

 

(84.7

)%

Non-controlling interests

 

8,790

 

3,074

 

(65.0

)%

 

 

36,045

 

7,239

 

(79.9

)%

 

 

 

 

 

 

 

 

Basic and diluted earnings per share (HUF)

 

15.31

 

4.18

 

(72.7

)%

 

8



Table of Contents

 

MAGYAR TELEKOM

Consolidated Statements of Cash Flows - IFRS

(HUF million)

 

 

 

6 months ended June 30,

 

 

 

 

 

2010

 

2011

 

%

 

 

 

(Unaudited)

 

(Unaudited)

 

change

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

38,875

 

25,193

 

(35.2

)%

Depreciation and amortization

 

49,425

 

48,018

 

(2.8

)%

Income tax expense

 

16,902

 

8,100

 

(52.1

)%

Net financial result

 

14,286

 

16,491

 

15.4

%

Share of associates’ and joint ventures’ losses

 

18

 

1

 

(94.4

)%

Change in assets carried as working capital

 

(4,666

)

5,616

 

n.m.

 

Change in provisions

 

(3,068

)

5,770

 

n.m.

 

Change in liabilities carried as working capital

 

(3,771

)

5,336

 

n.m.

 

Income tax paid

 

(4,458

)

(5,718

)

(28.3

)%

Dividend received

 

93

 

23

 

(75.3

)%

Interest and other financial charges paid

 

(14,130

)

(13,975

)

1.1

%

Interest received

 

2,901

 

1,898

 

(34.6

)%

Other cashflows from operations

 

(54

)

(1,289

)

n.m.

 

 

 

 

 

 

 

 

 

Net cash generated from operating activities

 

92,353

 

95,464

 

3.4

%

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in tangible and intangible assets

 

(36,176

)

(26,656

)

26.3

%

Adjustments to cash purchases

 

(3,797

)

(7,948

)

(109.3

)%

Purchase of subsidiaries and business units

 

(96

)

(1,263

)

n.m.

 

Cash acquired through business combinations

 

0

 

455

 

n.a.

 

Proceeds from other financial assets - net

 

17,120

 

11,413

 

(33.3

)%

Proceeds from disposal of subsidiaries and associates

 

780

 

0

 

(100.0

)%

Proceeds from disposal of property, plant and equipment (PPE) and intangible assets

 

361

 

3,786

 

948.8

%

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(21,808

)

(20,213

)

7.3

%

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid to shareholders and Non-controlling interest

 

(77,031

)

(63,337

)

17.8

%

Net proceeds from / (repayment of) loans and other borrowings

 

5,028

 

(11,654

)

n.m.

 

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

(72,003

)

(74,991

)

(4.1

)%

 

 

 

 

 

 

 

 

Exchange gains / (losses) on cash and cash equivalents

 

867

 

(374

)

n.m.

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

(591

)

(114

)

80.7

%

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

34,270

 

15,841

 

(53.8

)%

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

33,679

 

15,727

 

(53.3

)%

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

(591

)

(114

)

80.7

%

 

9



Table of Contents

 

MAGYAR TELEKOM - Consolidated Statements of Changes in Equity (unaudited)

 

 

 

 

 

in HUF millions

 

 

 

pieces
Shares of
common stock

 

Common
stock

 

Additional
paid in
capital

 

Treasury
stock

 

Retained
earnings

 

Cumulative
translation
adjustment

 

Revaluation
reserve for AFS
financial assets —
net of tax

 

Reserve for
equity settled
share-based
transactions

 

Equity of the
owners of the
parent

 

Non-
controlling
interests

 

Total Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2009

 

1,042,742,543

 

104,275

 

27,379

 

(1,179

)

398,250

 

9,768

 

(62

)

49

 

538,480

 

66,940

 

605,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend

 

 

 

 

 

 

 

 

 

(77,052

)

 

 

 

 

 

 

(77,052

)

 

 

(77,052

)

Dividend declared to Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

(5,768

)

(5,768

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

32,389

 

8,600

 

 

 

 

 

40,989

 

10,146

 

51,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2010

 

1,042,742,543

 

104,275

 

27,379

 

(1,179

)

353,587

 

18,368

 

(62

)

49

 

502,417

 

71,318

 

573,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

(1

)

 

 

(1

)

Dividend declared to Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

(12,475

)

(12,475

)

Share-based compensation program

 

 

 

 

 

 

 

872

 

(292

)

 

 

 

 

 

 

580

 

 

 

580

 

Total comprehensive income for the year

 

 

 

 

 

 

 

 

 

31,989

 

(3,435

)

11

 

(49

)

28,516

 

4,357

 

32,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2010

 

1,042,742,543

 

104,275

 

27,379

 

(307

)

385,283

 

14,933

 

(51

)

0

 

531,512

 

63,200

 

594,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend

 

 

 

 

 

 

 

 

 

(52,117

)

 

 

 

 

 

 

(52,117

)

 

 

(52,117

)

Dividend declared to Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

(12,478

)

(12,478

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

19,529

 

(6,950

)

 

 

 

 

12,579

 

2,778

 

15,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2011

 

1,042,742,543

 

104,275

 

27,379

 

(307

)

352,695

 

7,983

 

(51

)

0

 

491,974

 

53,500

 

545,474

 

 

10



Table of Contents

 

Summary of key operating statistics

 

GROUP

 

June 30, 2010

 

June 30, 2011

 

% change

 

 

 

 

 

 

 

 

 

EBITDA margin

 

40.1

%

34.2

%

n.a.

 

Operating margin

 

23.5

%

17.4

%

n.a.

 

Net income margin

 

10.9

%

6.8

%

n.a.

 

CAPEX to Sales

 

12.1

%

9.3

%

n.a.

 

ROA

 

5.6

%

3.6

%

n.a.

 

ROE

 

12.4

%

7.6

%

n.a.

 

Net debt

 

297,405

 

295,060

 

(0.8

)%

Net debt / total capital

 

34.1

%

35.1

%

n.a.

 

Number of employees (closing full equivalent)

 

10,324

 

10,070

 

(2.5

)%

 

 

 

 

 

 

 

 

Telekom Hungary

 

June 30, 2010

 

June 30, 2011

 

% change

 

 

 

 

 

 

 

 

 

Fixed line operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice services (1)

 

 

 

 

 

 

 

Total voice access

 

1,772,962

 

1,633,276

 

(7.9

)%

Total outgoing traffic (thousand minutes)

 

1,493,534

 

1,474,070

 

(1.3

)%

Blended MOU (outgoing)

 

146

 

158

 

8.2

%

Blended ARPA (HUF)

 

3,551

 

3,189

 

(10.2

)%

 

 

 

 

 

 

 

 

Data products

 

 

 

 

 

 

 

Retail DSL market share (estimated) (2)

 

60

%

65

%

n.a.

 

Cable broadband market share (estimated) (2)

 

19

%

21

%

n.a.

 

Number of retail DSL customers

 

464,151

 

490,538

 

5.7

%

Number of cable broadband customers

 

162,493

 

192,905

 

18.7

%

Number of fiber optic connections

 

13,663

 

23,183

 

69.7

%

Total retail broadband customers

 

640,307

 

706,626

 

10.4

%

Blended broadband ARPU (HUF)

 

4,346

 

3,971

 

(8.6

)%

Number of wholesale DSL access

 

142,697

 

114,584

 

(19.7

)%

 

 

 

 

 

 

 

 

TV services

 

 

 

 

 

 

 

Number of cable TV customers

 

398,767

 

330,548

 

(17.1

)%

Number of satellite TV customers

 

221,213

 

262,402

 

18.6

%

Number of IPTV customers

 

87,070

 

163,824

 

88.2

%

Total TV customers

 

707,050

 

756,774

 

7.0

%

Blended TV ARPU (HUF)

 

2,894

 

3,035

 

4.9

%

 

 

 

 

 

 

 

 

Mobile operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile penetration (3)

 

118.6

%

117.4

%

n.a.

 

Mobile SIM market share (2)

 

43.2

%

44.5

%

n.a.

 

Number of customers (RPC)

 

4,714,628

 

4,773,270

 

1.2

%

Postpaid share in the RPC base

 

41.7

%

44.5

%

n.a.

 

MOU

 

147

 

158

 

7.5

%

ARPU (HUF)

 

3,404

 

3,329

 

(2.2

)%

Postpaid

 

6,031

 

5,698

 

(5.5

)%

Prepaid

 

1,568

 

1,474

 

(6.0

)%

Overall churn rate

 

19.8

%

18.8

%

n.a.

 

Postpaid

 

16.0

%

15.3

%

n.a.

 

Prepaid

 

22.4

%

21.5

%

n.a.

 

Ratio of non-voice revenues in ARPU

 

18.0

%

20.7

%

n.a.

 

Average acquisition cost (SAC) per gross add (HUF)

 

7,047

 

5,314

 

(24.6

)%

Number of mobile broadband subscriptions

 

454,312

 

693,991

 

52.8

%

Mobile broadband market share based on total number of subscriptions (2)

 

48.9

%

48.7

%

n.a.

 

Mobile broadband market share based on traffic generating subscribers (2)

 

50.2

%

49.4

%

n.a.

 

Population-based indoor 3G coverage (2)

 

65.5

%

66.0

%

n.a.

 

 

 

 

 

 

 

 

 

T-Systems Hungary

 

June 30, 2010

 

June 30, 2011

 

% change

 

 

 

 

 

 

 

 

 

Fixed line operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice services

 

 

 

 

 

 

 

Business

 

45,039

 

42,761

 

(5.1

)%

Managed leased lines (Flex-Com connections)

 

3,815

 

2,841

 

(25.5

)%

ISDN channels

 

142,580

 

137,504

 

(3.6

)%

Total lines

 

191,434

 

183,106

 

(4.4

)%

Total outgoing traffic (thousand minutes)

 

175,151

 

148,730

 

(15.1

)%

MOU (outgoing)

 

216

 

194

 

(10.2

)%

ARPU (HUF)

 

5,120

 

4,675

 

(8.7

)%

 

11



Table of Contents

 

Data products

 

 

 

 

 

 

 

Number of retail broadband access

 

15,463

 

15,894

 

2.8

%

Retail DSL ARPU (HUF)

 

9,695

 

8,616

 

(11.1

)%

 

 

 

 

 

 

 

 

Mobile operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of customers (RPC)

 

416,591

 

435,748

 

4.6

%

Overall churn rate

 

3.5

%

6.6

%

n.a.

 

MOU

 

293

 

289

 

(1.4

)%

ARPU (HUF)

 

5,437

 

4,941

 

(9.1

)%

Ratio of non-voice revenues in ARPU

 

32.0

%

34.5

%

n.a.

 

Average acquisition cost (SAC) per gross add (HUF)

 

5,312