Group Management Report

audited pursuant to section 269 of the Austrian Business Enterprise Code (‘UGB’)

The Group Management Report and the Consolidated Financial Statements are a translation from the original German versions, which are solely valid.

Information on financial reporting

The Telekom Austria Group reports on five business segments: Austria, Bulgaria, Croatia, Belarus and Additional Markets. The segment Corporate & Other performs strategic and management functions for all segments in addition to financing agendas.

The Telekom Austria Group reports the financial performance indicators EBITDA comparable and EBITDA including effects from restructuring and impairment tests to present the operational development of individual business units transparently. EBITDA is defined as the net result excluding financial result, income tax, depreciation and amortisation. EBITDA comparable is defined as EBITDA adjusted for the expenses of the restructuring programme and, where applicable, of impairment charges as well as for income from the reversal of impairment losses.

The restructuring programme includes social plans for employees in Austria whose employment contracts are being terminated in a socially responsible manner and future expenses for civil servants who no longer provide services to the Telekom Austria Group, but whose employment contracts cannot be terminated due to their civil servant status. EBITDA comparable also takes into account expenses for the transfer of civil servants to the Austrian government.

The use of automated calculation systems when adding up rounded figures can give rise to rounding differences.

Application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’

Taking into account macroeconomic developments, Belarus was classified as a hyperinflationary economy in December 2011, which is why the provisions for financial reporting in hyperinflationary economies as per IAS 29 were then applied for the first time to the Telekom Austria Group’s 2011 Consolidated Financial Statements. IAS 29 defines the following indicators of a hyperinflationary economy:

  • Wealth is kept in non-monetary assets, and amounts of local currency held are immediately invested to maintain purchasing power.
  • Prices are quoted in foreign currencies; sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period.
  • Interest rates, wages and prices are linked to a price index.
  • The cumulative inflation rate over three years approaches, or exceeds, 100%.

The provisions concerning ‘Financial Reporting in Hyperinflationary Economies’ affect several areas of the Consolidated Financial Statements of the Telekom Austria Group as at 31 December 2014, 2013, 2012 and 2011, in addition to—indirectly—those for subsequent periods. Further information can be found in Note (1) to the Consolidated Financial Statements.