Quarterly Report • Sep 23, 2015
Quarterly Report
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For the period from January 1, 2009 to June 30, 2009
(TRANSLATED FROM THE GREEK ORIGINAL)
In accordance with Article 5 of Law 3556/2007
I. STATEMENTS OF MEMBERS OF THE BOARD OF DIRECTORS STATEMENTS OF MEMBERS OF OF DIRECTORS
The members of the Board of Directors of HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A.:
We confirm that to the best of our knowledge:
Maroussi, August 5, 2009
Chairman & Managing Director Vice-Chairman Board Member
Panagis Vourloumis Haralambos Dimitriou Panagiotis Tabourlos
The two members of the Board of Directors, who have signed the above statements, have been authorised to do so in accordance with the decision of the Company's Board of Directors of August 5, 2009.
II. HALF YEAR REPORT OF THE BOARD OF DIRECTORS REPORT OF OF DIRECTORS LF DIRECTORS
The report of the Board of Directors of the HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. (hereinafter referred to as "OTE" or the "Company") was prepared in accordance with article 5 of Law 3556/2007 and refers to the Interim Condensed Financial Statements (Separate and Consolidated) as of June 30, 2009, and the six month period then ended. The OTE Group (the "Group") apart from the Company also includes subsidiaries over which OTE has direct or indirect control. The Separate and Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (I.F.R.S.), as adopted by the European Union (E.U.)
This report includes a financial assessment of the results of the first half of 2009, including the significant events which took place in the first half of 2009, a presentation of the main risks and uncertainties for the second half of the year, as well as the material transactions between the Company and its related parties.
OTE Group Turnover decreased by 5.9% in 1 OTE Turnover st Half 2009, compared to the related period of 2008 and reached Euro 2,942.1 million. This decrease in revenues is mainly due to the following variations:
OTE's Revenues, reached Euro 1,195.8 million, refle OTE's Revenues cting a decrease of 6.9% compared to the same period last year. This is a result of the decrease in revenues from domestic telephony of 10.9%, as well as the decrease in revenues from international telephony by 21.0% and the decrease in sales of telecommunication equipment, ISDN, interconnection charges, leased lines, prepaid cards and other revenues. These decreases were partially offset by the increase in revenues from ADSL and Internet by 31.3%, the increase in revenues from co-location and from access to the local loop (Local Loop Unbundling - LLU) by 70.2%, the increase in revenues from Metro Ethernet & IP CORE by 33.8%.
The Group's Operating Expenses reached Euro 2,419.8 Group's Operating Expenses million and reflect a decrease of 6.9% compared to the same period last year. This decrease is mainly due to the decrease in cost of telecommunications equipment by 28.7% , the decrease in charges from domestic operators by 18.0% and the decrease in depreciation and amortization by 3.9%. These decreases were partially offset by the increase in payroll and employee benefits by 3.0%, the increase in provision for staff retirement indemnities and youth account by 2.6%, the increase for charges from international operators of 4.2% and the increase of other operating expenses by 7.2%. Furthermore, the Group's operating expenses for the 1st half year 2009 include OTE' s and ROMTELECOM's early retirement programs' costs of Euro 166.9 million, which are offset by Euro 201.9 million, that derive from the transfer of 4% share capital held by the Hellenic State to IKA-ETAM. In the previous related period, operating expenses were charged with Euro 44.8 million relating to costs of early retirement program for the previous related period.
The Company's Operating Expenses were Euro 1,022.3 Expenses million and reflect a decrease of 7.7% compared to the same period last year. The decrease in operating expenses is mainly due to the following:
As a result Operating Profit before Financial Operating Profit before Financial before Activities of the Activities of the Group Activities of the Group for the 1 Group st half of 2009 reached Euro 522.3 million compared to Euro 527.8 million in the same period last year reflecting a decrease of 1.0%. Operating P Profit before Financial rofit before Activities of the Company for the 1 of Company st half of year 2009 reached Euro 173.5 million, compared to Euro 177.0 million from the same period last year, reflecting a decrease of 2.0%.
The Group's Operating Profit before Depreciation an Operating before and Amortization rofit for the d Amortization 1st half of 2009 reached Euro 1.084,5 million compared to Euro 1,112.6 million in the same period last year, reflecting a decrease of 2.5%. The respective margin on revenues reached 36.9% compared to 35.6% in the same period last year. Excluding early retirement program costs, the Group's Operating Profit before Depreciation and Am Group's Operating before Depreciation Amortizati ortization for the 1st half of 2009 reached Euro 1,049.5 million compared to Euro 1,157.4 million in the same period last year. The respective margin on revenues reached 35.7% compared to 37.0% in the same period last year.
The Company's Operating Profit before Depreciation and Amortization for the 1 and st half of 2009 reached Euro 389.5 million compared to Euro 416.2 million in the same period last year, reflecting a decrease of 6.4%. The respective margin on revenues reached 32.6% compared to 32.4% in the same period last year. Excluding early retirement program costs, the Company's Operating Profit before Depreciation and Operating and Amortizati Amortization for the 1 on st half of 2009 amounted to Euro 350.6 million compared to Euro 428.4 million in the same period last year. The respective margin on revenues reached 29.3% compared to 33.3% in the same period last year.
In relation to the Group's Financial Act Group's Act Activities ivitiesivities, for the 1st half of 2009 interest expense was Euro 177.7 million, reflecting an increase of 6.9% compared to the same period last year, which is the result of the increased discounted cost of early retirement program. Interest income amounted to Euro 39.6 million for the 1st half of 2009, remaining nearly stable compared to the 1st half 2008. Income from dividends decreased by 20.7% due to the lower dividend from TELECOM SRBJIA in the current period. Gains from investments reached Euro 24.4 million for the 1st half of 2009 and reflect the total gain derived from the sale of COSMOFON and GERMANOS TELECOM AD SKOPJE (GTS).
Income Tax (expense) of the Group increased by 2.1% Tax of Group compared to the same period last year and amounted to Euro 143.5 million.
The Non-Controlling ControllingControlling Interests in the Group's Income Statement Income Statement Statementfrom Euro 3.0 million (income) in the 1st half 2008 reached Euro 7.0 million (loss) in the 1st half of 2009, mainly due to the increased profitability of ROMTELECOM between the two periods.
As a result of the above, the Group's Profit after Group's Profit after Group's Non-Controlling Controlling Controllinginterests interests interests for the 1st half of 2009 amounted to Euro 271.4 million compared to Euro 300.4 million in the same period last year, reflecting a decrease of 9.7%.
The Group's Cash flow flows provided by op provided op operating activities erating activities decreased by 6.3% from 1st half 2008, amounting to Euro 717.3 million, mainly reflecting the timing of interest payments associated with debt for the buyout of COSMOTE's minorities. Cash provided by operating activities before interest and tax payments increased by 3.9% from Euro 938.5 million for the 1st half of 2008 to Euro 974.9 million for the 1st half of 2009. This achievement was due to improved trade receivables and accounts payable in the first half of 2009 compared to the respective period last year.
The Group's Capital Expenditure (CAPEX) (CAPEX) for the 1st half 2009 amounted to Euro 441.5 million from Euro 375.0 million the same period last year reflecting an increase of 17.7%. The increase is mainly due to the increased capital expenditure of COSMOTE and ROMTELECOM.
The Group's Total Debt Group's Total Debt Debt at June 30, 2009 was Euro 6,015.3 million compared toEuro 6,047.7 million at December 31, 2008, reflecting a decrease of 0.5%, whereas the Group's Group's Net Debt Net Debt(interest bearing loans less cash and cash equivalents) at June 30, 2009, reached to Euro 4,391.1 million from Euro 4,619.9 million at December 31, 2008, reflecting an decrease of 5.0%. This decrease is mainly due to the increase of cash from Euro 1,427.8 million at December 31, 2008, to Euro 1,624.2 million at June 30, 2009.
On December 18, 2008, the amendment to article 5 of OTE ESTATE's charter was finalized following the decision by the General Assembly of Shareholders. After the amendment OTE Estate's share capital was reduced by Euro 102.2 million as a result of a reduction in the nominal amount of the shares from Euro 2.93 to Euro 2.43. On April 1, 2009, OTE received from OTE ESTATE the amount of Euro 102.2 million from the reduction of its share capital.
On April 27, 2009 OTE announced that its 100% subsidiary COSMOTE completed the acquisition process of a 12.6% interest held by the Albanian State, in its subsidiary AMC following the approvals of the relevant authorities in Albania. The cash consideration for the related acquisition amounted to Euro 48.4. Following the official conclusion of the transaction, COSMOTE owns directly or indirectly (through its 97% owned subsidiary COSMO-HOLDING ALBANIA S.A.) a 95% interest in AMC.
On March 30, 2009, OTE announced that the agreements between COSMOTE and Telekom Slovenije have been signed in Athens regarding the transfer of 100% of COSMOFON, through the sale of COSMOTE's wholly owned subsidiary, OTE MTS HOLDING B.V., as well as GERMANOS TELECOM AD SKOPJE (GTS) to Telekom Slovenije. The transaction was completed on May 12, 2009 following approval by the relevant governmental and regulatory authorities in Skopje.
On July 1, 2009 OTE announced that its subsidiary COSMOTE signed on June 30, 2009 a share purchase agreement for the acquisition of Telemobil S.A. (Zapp) in Romania. The consideration for the shares of Zapp is estimated at approximately Euro 61 million (equity value), while COSMOTE will also assume the debt and other liabilities of Zapp, estimated at approximately Euro 146 million. The acquisition is subject, among other conditions, to the approval of relevant Romanian authorities.
On January 28, 2009, OTE's management and OME-OTE (the employee's union) signed a Collective Labor Agreement according to which employees who will have completed the number of years of service required for retirement by December 30, 2009 will be entitled to benefits providing they leave by this date. Applications by eligible employees should have submitted their irrevocable applications by February 16, 2009. The respective cost amounted to Euro 11.0 million and is included in the income statement for the six month period ended June 30, 2009.
On March 4, 2009, the Hellenic State and IKA-ETAM (general successor of TAP-OTE) signed a transfer agreement of 19,606,015 ordinary shares held by the Hellenic State to IKA-ETAM without cash consideration. These shares represent 4% of OTE's share capital, in accordance with articles 74 par. 4a of L.3371/2005 and articles 1 and 2 par. 4 and 5 of L3655/2008, in combination with the decision of May 10, 2007 of the European Community Committee (C 2/2206). The fair value of the transaction was set at Euro 10.30 (closing price of the OTE's share at Athens Exchange, the date the transfer was signed) per share. The total fair value of the transferred shares amounts to Euro 201.9 million and is included in the results of OTE for the first half of 2009.
On March 26, 2009, an amendment was submitted to a draft law of the Ministry of Employment and Social Security, according to which:
HALF YEAR REPORT OF THE BOARD OF DIRECTORS
(In accordance with the provisions of art. 5 of law 3556/2007)
• The cost that will arise from the employer's and the employee's contributions to TAYTEKO (Health Insurance Sector for OTE Personnel) for the factitious time recognized to these employees will be covered by OTE. For the Lump Sum benefits that TAYTEKO will be required to pay to these employees, OTE should grant a long-term loan to TAYTEKO.
On May 15, 2009, the above mentioned amendment was enacted by the L.3762/ FEK A75/ 15-5-2009.
On June 24, 2009, the General Assembly of OTE's Shareholders approved the distribution of a dividend from the 2008 profits of a total amount of Euro 367.6 million or Euro 0.75 per share. Pursuant to Law 3697/2008 (article 18, par. 7 – FEK A 194), from 2009 onwards all distributions of dividends will be subject to 10% withholding tax. The amount of dividends payable as at June 30, 2009 amounted to Euro 334.4 million.
Credit risk is the risk of financial loss to the Group and the Company if a counterparty fails to meet its contractual obligations.
Maximum exposure to credit risk at the reporting date to which the Group and the Company are exposed is the carrying value of financial assets.
Trade receivables could potentially adversely affect the liquidity of the Company and the Group. However, due to the large number of customers and the diversification of the customer base of the Company and the Group there is no concentration of credit risk with respect to these receivables. Concentration of risk is considered to exist for amounts receivable from the telecommunication service providers, due to their relatively small number and the high level of transactions they have with the Company and the Group.
The Company and the Group have established specific credit policies under which customers are analyzed for creditworthiness and there is an effective management of receivables in place both before and after they become overdue and doubtful. In monitoring credit risk, customers are grouped according to their credit risk characteristics, aging profile and existence of previous financial difficulties. Customers that are characterized as doubtful are reassessed at each balance sheet date for the estimated loss that is expected and an appropriate impairment allowance is established.
Cash and cash equivalents are considered to be exposed to a low level of credit risk. The Company has adopted a "deposits policy" whereby funds are only deposited with banks which have a specified minimum rating by International Rating Agencies as to their creditworthiness; in addition limits are set on the amounts deposited depending on the rating. To avoid concentrations of risks, the Company and the Group does not deposit more than 30% of available funds in any one bank.
The Company and the Group has limited exposure to financial instruments classified into the categories permitted by IAS 39 and they are not considered to expose the Company and the Group to a significant credit risk.
Loans include loans to employees which are collected either through payroll or are netted-off with their retirement indemnities, and loans and advances to Auxiliary Pension Fund mainly due to the Voluntary Leave Scheme. The above mentioned loans are not considered to expose the Company and the Group to a significant credit risk.
Liquidity risk is the risk that the Group or the Company will not be able to meet their financial obligations as they fall due. Liquidity risk is kept at low levels by ensuring that there is sufficient cash on demand and credit facilities to meet the financial obligations when due. The Group's and the Company's available cash as at June 30, 2009, amounts to Euro 1,624.2 million and Euro 421.6 million respectively, their loans amounts to Euro 6,015.3 million and Euro 3,306.1 million respectively while the Group has a long-term credit (committed) line of Euro 350.0 million. For the monitoring of liquidity risk, the Company and the Group prepares annual cash flows when drafting the annual budget and monthly rolling forecasts for three months' cash flows, in order to ensure that it has sufficient cash reserves to service its financial obligations.
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's and the Company's results or the value of their financial instruments. The objective of market risk management is to manage and control exposure within acceptable levels.
The individual risks that comprise market risk are described in further detail and the Group's policies for managing them are as follows:
Interest rate risk is the risk that payments for interest on loans fluctuate due to changes in interest rates. Interest rate risk mainly applies to long-term loans with variable interest rates.
The hedging of interest rate risk is managed through having a combination of fixed and floating rate borrowings as well as with the use of interest rate swap agreements.
Currency risk is the risk that the fair values or the cash flows of a financial instrument fluctuate due to foreign currency changes. The Group operates in many Southeastern European countries and as a result is exposed to currency risk due to changes between the functional currencies and other currencies. The main currencies within the Group is the Euro, Ron (Romania) and the Lek (Albania). The currency risk for the Group is not significant.
OTE's related parties have been identified based on the requirements of IAS 24 and comprise of its subsidiaries, its associates, the entity which controls OTE (together with its subsidiaries), the members of the Board of Directors and the key management personnel.
The Company purchases goods and services from these related parties, and provides services to them. Furthermore, OTE grants and receives loans to / from its subsidiaries and receives and pays dividends.
OTE's purchases and sales with related parties are analyzed as follows:
| 1st Half 2009 | Half 2009 | 1st Half 2008 2008 | |||
|---|---|---|---|---|---|
| Sales ΟΤΕ | Purchases ΟΤΕ | Sales ΟΤΕ Sales ΟΤΕ |
Purchases ΟΤΕ Purchases |
||
| COSMOTE | 80.9 | 48.7 | 87.5 | 59.7 | |
| OTE INTERNATIONAL INVESTMENTS LTD | 0.3 | 2.0 | 0.2 | 2.7 | |
| HELLAS-SAT | 0.3 | 0.8 | 0.3 | 0.8 | |
| COSMO-ONE | - | 0.4 | - | 0.4 | |
| VOICENET | 2.7 | 2.1 | 2.6 | 0.8 | |
| HELLASCOM | 0.1 | 4.3 | 0.1 | 3.9 | |
| OTE SAT – MARITEL | 0.6 | 1.0 | 0.4 | 0.9 | |
| ΟΤΕ PLUS | 0.2 | 17.1 | 0.2 | 18.6 | |
| ΟΤΕ ESTATE | 0.3 | 30.2 | 1.4 | 30.9 | |
| OTE-GLOBE | 14.6 | 38.6 | 13.7 | 33.0 | |
| OTE ACADEMY | - | 2.9 | 0.1 | 2.2 | |
| DEUTSCHE TELEKOM AG | 0.1 | 2.1 | - | - | |
| MAKEDONSKI TELECOMMUNIKACII A. | 0.2 | 0.4 | - | - | |
| HT HRVATSKE | - | 0.1 | - | - | |
| TOTAL | 100.3 | 150.7 | 106.5 | 153.9 |
Purchases and sales of the Group with related parties which are not eliminated in the consolidation are analyzed as follows:
| 1st Half 2009 | |||||
|---|---|---|---|---|---|
| Group's Group'sSales | Group's Purchases Group's Purchases |
||||
| DEUTSCHE TELEKOM AG | 5.1 | 5.9 | |||
| MAKEDONSKI TELEKOMMUNIKACII A. | 0.2 | 0.5 | |||
| HT HRVATSKE | 0.1 | 0.1 | |||
| COMBRIDGE | 1.4 | - | |||
| DETEKON | - | 0.3 | |||
| T-SYSTEMS | 0.5 | 0.1 | |||
| T-Mobile Deutschland | 0.7 | 0.3 | |||
| T-Mobile Czech | 0.1 | - | |||
| T-Mobile UK | 0.2 | 0.2 | |||
| T-Mobile Austria | 0.1 | - | |||
| T-Mobile Netherlands | 0.1 | - | |||
| T-Mobile USA | 0.1 | 0.2 | |||
| PCT POLSKA TELEFONIA | 0.1 | - | |||
| TEL SIM GSM | - | 0.2 | |||
| TOTAL | 8.7 | 7.8 | |||
There were no transactions between the Group and related parties during the 1st half of 2008 which are not eliminated in the consolidation.
ΟΤΕ's financial activities with its related parties comprise interest on loans granted and received and are analyzed as follows:
| Half | 1st Half 2009 | 1st Half 2008 | |||
|---|---|---|---|---|---|
| Finance income ΟΤΕ | Finance expense ΟΤΕ expense ΟΤΕ |
Finance income ΟΤΕ income ΟΤΕ |
Finance expense ΟΤΕ expense ΟΤΕ |
||
| COSMOFOΝ | 1.1 | - | 1.7 | - | |
| OTE PLC | - | 89.6 | 0.9 | 98.0 | |
| TOTAL | 1.1 | 89.6 | 2.6 | 98.0 |
OTE's dividend income from its related parties, are analyzed as follows:
| 1st Half 2009 | 1st Half 2008 Half 2008 |
|
|---|---|---|
| COSMOTE | 282.2 | 245.2 |
| ΟΤΕ ESTATE | 18.9 | 30.3 |
| OTE SAT – MARITEL | 1.0 | 0.5 |
| OTE PLUS | 0.4 | - |
| TOTAL | 302.5 | 276.0 |
Amounts owed to and by the related parties as a result of OTE's transactions with them are analyzed as follows:
| 30/6/2009 30/6/2009 |
31/12/2008 | ||||
|---|---|---|---|---|---|
| Amounts owed | Amounts owed | Amounts owed | Amounts owed | ||
| to ΟΤΕ | by ΟΤΕ | to ΟΤΕ | by ΟΤΕ | ||
| COSMOTE | 53.4 | 40.6 | 37.9 | 50.4 | |
| OTE INTERNATIONAL INVESTMENTS LTD | 0.1 | 0.8 | 0.3 | 1.0 | |
| HELLAS-SAT | 0.3 | 0.3 | 0.5 | 0.3 | |
| COSMO-ONE | - | 0.4 | - | 0.7 | |
| VOICENET | 1.4 | 0.9 | 1.7 | 0.9 | |
| HELLASCOM | - | 2.6 | - | 2.9 | |
| OTE SAT – MARITEL | 0.7 | 0.8 | 0.3 | 0.6 | |
| ΟΤΕ PLUS | 0.1 | 17.2 | 0.2 | 15.9 | |
| ΟΤΕ ESTATE | 1.2 | 14.3 | 0.7 | 0.4 | |
| OTE-GLOBE | 17.9 | 52.1 | 68.0 | 91.8 | |
| OTE ACADEMY | 0.4 | 1.2 | - | 0.1 | |
| DEUTSCHE TELEKOM AG | 5.3 | - | 6.3 | 7.2 | |
| MAKEDONSKI TELECOMMUNIKACII A. | - | 2.6 | - | - | |
| TOTAL | 80.8 | 133.8 | 115.9 | 172.2 |
Amounts owed to and by the related parties as a result of the Group's transactions with them, which are not eliminated in the consolidation, are analyzed as follows:
| 30/6/2009 30/6/2009 |
31/12/2008 | ||||
|---|---|---|---|---|---|
| Amounts owed to Group to Group |
Amounts owed by Group by Group |
Amounts owed to Group to Group |
Amounts owed by Group by Group |
||
| DEUTSCHE TELEKOM AG | 9.4 | 3.2 | 6.5 | 7.5 | |
| MAKEDONSKI TELEKOMMUNIKACII A. | - | 2.6 | - | - | |
| MAGYAR TELECOM TELECOMMUNICATI | - | - | - | - | |
| DETEKON | - | 0.4 | - | - | |
| HT HRVATSKE | 0.1 | - | - | - | |
| COMBRIDGE | 1.1 | 0.2 | - | - | |
| T-SYSTEMS | 0.3 | 0.1 | - | - | |
| T-Mobile Deutschland | 0.6 | 0.8 | - | - | |
| T-Mobile Hungary | - | 0.1 | - | - | |
| T-Mobile Czech | 0.1 | 0.1 | - | - | |
| T-Mobile UK | 0.3 | 0.3 | - | - | |
| T-Mobile Austria | - | 0.1 | - | - | |
| T-Mobile Netherlands | 0.1 | 0.1 | - | - | |
| T-Mobile International AG | 0.7 | 4.4 | - | - | |
| T-Mobile USA | 2.4 | 2.8 | - | - | |
| TOTAL | 15.1 | 15.2 | 6.5 | 7.5 |
(In accordance with the provisions of art. 5 of law 3556/2007)
Of the entities included in the above table, as of December 31, 2008 only DEUTSCHE TELEKOM AG was a related party to OTE.
Amounts due to related parties as a result of OTE's dividend distribution are analyzed as follows:
| 30/6/2009 | 31/12/2008 31/12/2008 |
|
|---|---|---|
| DEUTSCHE TELEKOM AG | 82.7 | - |
Amounts owed by and to OTE relating to loans advanced and received, are analyzed as follows:
| 30/6/2009 | 31/12/2008 | ||||
|---|---|---|---|---|---|
| Receivable ΟΤΕ Receivable ΟΤΕ |
Payable by ΟΤΕ Payable by |
Receivable ΟΤΕ Receivable ΟΤΕ |
Payable by ΟΤΕ Payable by |
||
| COSMOFOΝ | - | - | 46.8 | - | |
| OTE PLC | - | 3,387.4 | - | 3,423.1 | |
| TOTAL | - | 3,387.4 | 46.8 | 3,423.1 |
For the Company Key Management Personnel and those closely related to them are defined in accordance with IAS 24 "Related Party Disclosures". Compensation and all employee benefits (as defined in IAS 19 "Employee Benefits") including employee benefits to which IFRS 2 "Share-based Payment" applies.
Fees to the members of the Board of Directors and OTE's key management personnel amounted to Euro 1.7 million and Euro 2.7 million for the 1st half of 2009 and 2008, respectively.
999,230 options under OTE's share based payment plan have been granted to the Company's key management personnel.
The most significant events after the financial position date are as follows:
On July 10, 2009, the Hellenic State notified DEUTSCHE TELEKOM AG of its intent to exercise the first of two put options provided by the share purchase agreement, referring to the acquisition by DEUTSCHE TELEKOM AG of an additional 5% interest in OTE's share capital in a defined price per share. On July 31, 2009, as a result of the exercise of the above put option, the Hellenic State sold to DEUTSCHE TELEKOM AG 24,507,519 shares of OTE representing 5% of its share capital. Following the above mentioned transaction, the Hellenic State's participation in OTE's share capital (direct and indirect) is 20.0% plus one share, while DEUTSCHE TELEKOM AG's participation in OTE's share capital is 30.0% plus one share.
Athens, August 5, 2009
Panagis Vourloumis Chairman and Managing Director III. AUDITORS' REPORT ON REVIEW OF INTERIM CONDENSED ON CONDENSED FINANCIAL STATEMENTS FINANCIAL STATEMENTS (SEPARATE AND CONSOLIDATED) (SEPARATE CONSOLIDATED)
ERNST & YOUNG (HELLAS) Certified Auditors Certified Auditors – Accountants S.A. Accountants S.A. Accountants S.A. 11th Km National Road Athens-Lamia 144 51 Athens, Greece
Tel: +30 210.2886.000 Fax: +30 210.2886.905 www.ey.com/eyse
We have reviewed the accompanying separate and consolidated interim condensed statement of financial position of HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. ("the Company") and its subsidiaries ("the Group") as at June 30, 2009, and the related separate and consolidated statements of income, comprehensive income, changes in equity and cash flows for the six month period then ended, as well as the selected explanatory notes which are an integral part of the six-month financial report of article 5 L. 3556/2007. Management is responsible for the preparation and presentation of this interim condensed financial information in accordance with International Financial Reporting Standards as adopted by the European Union and applicable to interim financial reporting ("IAS 34"). Our responsibility is to express a conclusion on this interim condensed financial information based on our review.
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
ERNST & YOUNG (HELLAS) Certified Auditors Certified Auditors – Accountants S.A. Accountants S.A. Accountants S.A. 11th Km National Road Athens-Lamia 144 51 Athens, Greece
Tel: +30 210.2886.000 Fax: +30 210.2886.905 www.ey.com/eyse
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34.
Based on our review we noted that the information contained in the six-month financial report prepared in accordance with article 5 Law 3556/2007 is consistent with the accompanying interim condensed financial information.
Athens, August 5, 2009
The Certified Auditors Accountants
CHRIS PELENDRIDIS GEORGE ANASTOPOULOS R.N. ICA (GR) 17831 R.N. ICA (GR) 15451
ERNST &YOUNG (HELLAS) CERTIFIED AUDITORS ACCOUNTANTS S.A. SOEL REG. No. 107
IV. INTERIM CONDENSED FINANCIAL STATEMENTS
The Interim Condensed Financial Statements presented on pages 17-41, were approved by the Board of Directors on August 5, 2009 and are signed by:
Chairman & Managing Director Vice Chairman Chief Financial Officer Chief Accounting Officer Panagis Vourloumis Charalambos Dimitriou Christini Spanoudaki Konstantinos Vasilopoulos
HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. REGISTRATION No S.A. 347/06/Β/86/10 99 KIFFISIAS AVE–151 24 MAROUSSI ATHENS, GREECE
P A G E P A E
| INTERIM CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2009 INTERIM STATEMENTS OF FINANCIAL POSITION ( SEPARATE AND CONSOLIDATED) INTERIM INCOME STATEMENT (SEPARATE) INTERIM INCOME STATEMENT (CONSOLIDATED) INTERIM STATEMENTS OF COMPREHENSIVE INCOME (SEPARATE AND CONSOLIDATED) INTERIM STATEMENT OF CHANGES IN EQUITY (SEPARATE) INTERIM STATEMENT OF CHANGES IN EQUITY (CONSOLIDATED) INTERIM STATEMENTS OF CASH FLOWS (SEPARATE AND CONSOLIDATED) NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2009 1. CORPORATE INFORMATION 2. BASIS OF PREPARATION 3. SIGNIFICANT ACCOUNTING POLICIES 4. INVESTMENTS 5. OTHER FINANCIAL ASSETS 6. SHARE CAPITAL 7. DIVIDENDS 8. LONG-TERM BORROWINGS 9. INCOME TAXES 10. REVENUE 11. PROVISION FOR EARLY RETIREMENT PROGRAM 12. OTHER OPERATING EXPENSES 13. SEGMENT INFORMATION 14. EARNINGS PER SHARE 15. RELATED PARTY DISCLOSURES 16. SHARE OPTION PLAN 17. LITIGATION AND CLAIMS 18. EVENTS AFTER THE FINANCIAL POSITION DATE |
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| 33 | |
| 34 | |
| 35 | |
| 36 | |
| 37 | |
| 37 | |
| 39 | |
| 40 | |
| 41 |
| 30/06/2009 30/06/2009 |
31/12/2008 31/12/2008 |
||||
|---|---|---|---|---|---|
| (Amounts in millions of Euro) | Notes | COMPANY | GROUP | COMPANY COMPANY | GROUP |
| ASSETS | |||||
| Non-current assets current assetsassets |
|||||
| Property, plant and equipment | 2,084.0 | 5,594.3 | 2,191.5 | 5,872.8 | |
| Goodwill | - | 518.2 | - | 530.7 | |
| Telecommunication licenses | 2.7 | 318.7 | 3.0 | 329.5 | |
| Other intangible assets | - | 538.0 | - | 556.2 | |
| Investments | 4 | 4,790.0 | 156.6 | 4,890.0 | 156.6 |
| Loans and advances to pension funds | 174.4 | 174.4 | 194.5 | 194.5 | |
| Deferred tax assets | 184.7 | 280.0 | 188.0 | 286.8 | |
| Other non-current assets | 80.5 | 134.1 | 112.4 | 120.7 | |
| Total non – – current assets assets |
7,316.3 7,316.3 | 7,714.3 7,714.3 | 7,579.4 | 8,047.8 | |
| Current assets | |||||
| Inventories | 35.7 | 232.3 | 32.2 | 201.3 | |
| Trade receivables | 605.5 | 1,149.3 | 697.5 | 1,194.2 | |
| Other financial assets | 5 | 306.3 | 324.6 | 119.6 | 135.9 |
| Other current assets | 401.4 | 309.2 | 99.8 | 261.6 | |
| Cash and cash equivalents | 421.6 | 1,624.2 | 344.5 | 1,427.8 | |
| Total current assets | 1,770.5 | 3,639.6 | 1,293.6 | 3,220.8 | |
| Assets classified as held for sale | - | - | - | 156.6 | |
| TOTAL ASSETS | 9,086.8 | 11,353.9 | 8,873.0 | 11,425.2 | |
| EQUITY AND LIABILITIES AND LIABILITIES |
|||||
| Equity attributable to own owners of the Company ers of Company |
|||||
| Share capital Share premium |
6 | 1,171.5 501.9 |
1,171.5 501.9 |
1,171.5 497.9 |
1,171.5 497.9 |
| Statutory reserve | 330.2 | 330.2 | 330.2 | 330.2 | |
| Foreign exchange and other reserves | 3.6 | (31.6) | 1.4 | 73.9 | |
| Changes in non-controlling interests | - | (3,319.9) | - | (3,315.2) | |
| Retained earnings | 1,470.8 | 2,457.4 | 1,523.0 | 2,553.6 | |
| Total e equity attributable to owners of the Company the CompanyCompany quity to owners Non-controlling trolling trolling Interests Interests |
3,478.0 - |
1,109.5 768.6 |
3,524.0 - |
1,311.9 861.3 |
|
| Total e equity | 3,478.0 | 1,878.1 1,878.1 | 3,524.0 | 2,173.2 | |
| Non – current liabilities current liabilities |
|||||
| Long-term borrowings | 8 | 3,287.2 | 5,409.7 | 3,288.2 | 5,409.6 |
| Provision for staff retirement indemnities | 245.9 | 267.3 | 233.8 | 254.9 | |
| Provision for voluntary retirement scheme | 11 | 168.2 | 168.2 | 107.2 | 107.2 |
| Provision for youth account | 281.5 | 281.5 | 286.3 | 286.3 | |
| Deferred tax liabilities | - | 109.8 | - | 116.7 | |
| Other non – current liabilities | 48.8 | 81.8 | 41.4 | 74.6 | |
| Total non – – current liabilities liabilities current liabilities |
4,031.6 4,031.6 | 6,318.3 | 3,956.9 | 6,249.3 | |
| Current liabilities Trade accounts payable |
416.9 | 831.9 | 526.1 | 943.9 | |
| Short-term borrowings | - | 4.4 | - | 5.1 | |
| Short-term portion of long-term borrowings | 8 | 18.9 | 601.2 | 18.9 | 633.0 |
| Income tax payable | 20.0 | 110.7 | 4.0 | 58.0 | |
| Deferred revenue | 187.1 | 228.4 | 158.4 | 228.4 | |
| Provision for voluntary retirement scheme | 11 | 184.9 | 184.9 | 275.8 | 275.8 |
| Dividends payable | 7 | 334.4 | 334.4 | 3.8 | 3.8 |
| Other current liabilities | 415.0 | 861.6 | 405.1 | 838.2 | |
| Total current liabilities | 1,577.2 | 3,157.5 3,157.5 | 1,392.1 1,392.1 | 2,986.2 | |
| Liabilities directly associated with the assets classified as | |||||
| held for sale | - | - | - | 16.5 | |
| TOTAL EQUITY AND LIABILITIES AND LIABILITIES |
9,086.8 | 11,353.9 11,353.9 | 8,873.0 | 11,425.2 |
| 2009 | 2008 | ||||
|---|---|---|---|---|---|
| (Amounts in millions of Euro) | Notes | 2nd Quarter | 1st Half | 2nd Quarter | 1st Half |
| Revenue | |||||
| Domestic telephony | 10 | 308.5 | 618.0 | 344.6 | 693.7 |
| International telephony | 10 | 42.0 | 81.7 | 50.5 | 103.4 |
| Other revenue | 10 | 240.3 | 496.1 | 251.7 | 487.7 |
| Total revenue revenue | 590.8 | 1,195.8 | 646.8 | 1,284.8 | |
| Operating expenses expenses |
|||||
| Payroll and employee benefits | (179.2) | (357.0) | (171.9) | (331.7) | |
| Provision for staff retirement indemnities and youth | |||||
| account | (21.1) | (42.3) | (20.4) | (40.8) | |
| Cost of early retirement program | 11 | (152.0) | 38.9 | - | (12.2) |
| Charges from international operators | (31.0) | (58.1) | (30.8) | (60.1) | |
| Charges from domestic operators | (56.7) | (111.0) | (75.7) | (147.9) | |
| Depreciation and amortization | (106.4) | (216.0) | (117.7) | (239.2) | |
| Cost of telecommunications equipment | (21.9) | (42.0) | (26.0) | (47.3) | |
| Other operating expenses | 12 | (120.4) | (234.8) | (116.8) | (228.6) |
| Total operating expenses operating expenses |
(688.7) | (1,022.3 1,022.3) | (559.3) | (1,107.8) | |
| Operating income / (loss) (loss) before financial activities before activities |
(97.9) | 173.5 | 87.5 | 177.0 | |
| Income and expense from financial activities and expense |
|||||
| Interest expense | (48.5) | (119.2) | (48.0) | (101.0) | |
| Interest income | 3.7 | 10.8 | 9.2 | 18.3 | |
| Foreign exchange differences, net | 1.5 | 1.2 | (1.2) | (0.7) | |
| Dividend income | 4 | 312.1 | 312.1 | 288.1 | 288.1 |
| Gains/ (losses) from investments | - | - | 0.5 | (1.0) | |
| Total profit (loss) from financial activities profit oss) from financial activities |
268.8 | 204.9 | 248.6 | 203.7 | |
| Profit before tax | 170.9 | 378.4 | 336.1 | 380.7 | |
| Income tax expense | (8.1) | (63.0) | (22.9) | (38.8) | |
| Profit for the period period | 162.8 | 315.4 | 313.2 | 341.9 |
| 2009 | 2008 | ||||
|---|---|---|---|---|---|
| (Amounts in millions of Euro, except for the per share data) | Notes | 2nd Quarter Quarter | 1st Half | 2nd Quarter | 1st Half |
| Revenue | |||||
| Domestic telephony | 10 | 413.6 | 823.7 | 462.3 | 928.3 |
| International telephony | 10 | 62.3 | 118.9 | 70.8 | 149.7 |
| Mobile telephony | 10 | 599.7 | 1,178.7 | 603.0 | 1,162.8 |
| Other revenue | 10 | 412.0 | 820.8 | 454.4 | 887.2 |
| Total revenue revenue | 1,487.6 | 2,942.1 2,942.1 | 1,590.5 | 3,128.0 | |
| Operating expenses expenses |
|||||
| Payroll and employee benefits | (302.2) | (595.6) | (298.8) | (578.3) | |
| Provision for staff retirement indemnities and youth | |||||
| account | (21.3) | (43.0) | (20.9) | (41.9) | |
| Cost of early retirement program | 11 | (152.6) | 35.0 | (3.0) | (44.8) |
| Charges from international operators | (48.6) | (97.4) | (45.4) | (93.5) | |
| Charges from domestic operators | (132.0) | (258.6) | (159.7) | (315.3) | |
| Depreciation and amortization | (284.4) | (562.2) | (290.5) | (584.8) | |
| Cost of telecommunications equipment | (119.6) | (221.3) | (157.0) | (310.3) | |
| Other operating expenses | 12 | (347.4) | (676.7) | (326.9) | (631.3) |
| Total operating expenses operating expenses |
(1,408.1) | (2,419.8) | (1,302.2) | (2,600.2) | |
| Operating income before financial activities activities | 79.5 | 522.3 | 288.3 | 527.8 | |
| Income and expense from financial activities and expense |
|||||
| Interest expense | (74.7) | (177.7) | (79.1) | (166.2) | |
| Interest income | 13.7 | 39.6 | 21.5 | 40.0 | |
| Foreign exchange differences, net | 0.3 | 3.7 | 1.3 | 7.1 | |
| Dividend income | 4 | 9.6 | 9.6 | 12.1 | 12.1 |
| Gains from investments | 4 | 24.4 | 24.4 | 3.4 | 17.2 |
| Total profit (loss) from financial activities profit from financial |
(26.7) | (100.4) | (40.8) | (89.8) | |
| Profit before tax | 52.8 | 421.9 | 247.5 | 438.0 | |
| Income tax expense tax expense expense |
(45.0) | (143.5) | (87.0) | (140.6) | |
| Profit for the period period | 7.8 | 278.4 | 160.5 | 297.4 | |
| Attributable to: | |||||
| Owners of the parent | 4.7 | 271.4 | 159.3 | 300.4 | |
| Non-controlling interests | 3.1 | 7.0 | 1.2 | (3.0) | |
| 7.8 | 278.4 | 160.5 | 297.4 | ||
| Basic earnings per share ings share |
14 | 0.0096 | 0.5537 | 0.3250 | 0.6129 |
| Diluted earnings per share | 14 | 0.0094 | 0.5436 | 0.3229 | 0.6090 |
| 2009 | 2008 | |||
|---|---|---|---|---|
| (Amounts in millions of Euro) | 2nd Quarter Quarter | 1st Half | 2nd Quarter Quarter | 1st Half |
| Profit for the period period | 162.8 | 315.4 | 313.2 | 341.9 |
| Available for sale financial assets | 4.1 | 2.2 | (6.8) | (20.6) |
| Other comprehensive income / (loss) for the period income / comprehensive income / (loss) for the period |
4.1 | 2.2 | (6.8) | (20.6) |
| Total comprehensive income for the period comprehensive income period |
166.9 | 317.6 | 306.4 | 321.3 |
| 2009 | 2008 | |||
|---|---|---|---|---|
| (Amounts in millions of Euro) | 2nd Quarter | 1st Half | 2nd Quarter Quarter | 1st Half |
| Profit for the period period | 7.8 | 278.4 | 160.5 | 297.4 |
| Foreign currency translation | 8.2 | (151.5) | 35.7 | (44.0) |
| Net loss on cash flow hedge | (2.2) | (2.2) | - | - |
| Available for sale financial assets | 4.1 | 2.2 | (6.8) | (20.6) |
| Other comprehensive income / (loss) for the period comprehensive income / (loss) for the period income / |
10.1 | (151.5) | 28.9 | (64.6) |
| Total comprehensive income for the period comprehensive income period |
17.9 | 126.9 | 189.4 | 232.8 |
| Αttributable to: | ||||
| Owners of the parent | 11.0 | 165.9 | 178.5 | 249.8 |
| Non-controlling interests | 6.9 | (39.0) | 10.9 | (17.0) |
| 17.9 | 126.9 | 189.4 | 232.8 |
| ( Am in i l l ion f Eu ) nts ou m s o ro |
S ha re i i l ta ta l ca ca p p |
S ha re ium ium p p rem rem |
S S ta ta tu tu to to ry ry res e res erv erv e |
Fo ig ha d ng re n e xc e a n he t o r r res es erv erv es es |
Re Re ine ine d d ta ta ing ing ea s ea rn rn s |
To l ta i ty eq u |
|---|---|---|---|---|---|---|
| Ba lan Ja Ja Ja 1, 2 0 0 8 t ce as a nu nu ary ary ary nu |
1, 1 7 1. 5 |
4 8 5. 9 |
3 1 2. 1 |
3 6. 2 |
1, 5 4 3. 3 |
3, 5 4 9. 0 |
| Pro f i fo he io d t t r p er |
- | - | - | - | 3 4 1. 9 |
3 4 1. 9 |
| O he he ive inc / ( los ) t r c om p re ns om e s |
- | - | - | 2 0. 6 ( ) |
- | 2 0. 6 ( ) |
| To ta l c he he ive ive inc inc co om mp p re re ns ns om om e e |
- | - | - | 2 0. 6 ( ) |
3 4 1. 9 |
3 2 1. 3 |
| D iv i de ds n |
- | - | - | - | 3 6 6 ( 7. ) |
3 6 6 ( 7. ) |
| S ha ba d p t re- se ay me n |
- | 3. 0 |
- | - | - | 3. 0 |
| Ba lan Ju Ju 3 3 0, 0, 2 0 0 8 t ce as a ne ne |
1, 1 7 1. 5 |
4 8 8. 9 |
3 1 2. 1 |
1 5. 6 |
1, 5 1 7. 6 |
3, 5 0 5. 7 |
| Ba lan Ja Ja 1, 2 0 0 9 t ce as a nu nu ary ary |
1, 1, 1 1 7 7 1. 1. 5 5 |
4 9 7. 9 |
3 3 0. 2 |
1. 4 |
1, 2 3. 0 5 |
3, 2 4. 0 5 |
| Pro f i fo he io d t t r p er |
- | - | - | - | 3 1 4 5. |
3 1 4 5. |
| O he he ive inc / ( los ) t r c om p re ns om e s |
- | - | - | 2. 2 |
- | 2. 2 |
| To l c he he ive ive inc inc ta co om mp p re re ns ns om om e e |
- | - | - | 2. 2 |
3 1 5. 4 |
3 1 7. 6 |
| D iv i de ds n |
- | - | - | - | ( 3 6 7. 6 ) |
( 3 6 7. 6 ) |
| S ha ba d p t re- se ay me n |
- | 4. 0 |
- | - | - | 4. 0 |
| Ba lan Ju Ju 3 3 0, 0, 2 0 0 9 t ce as a ne ne |
1, 1 7 1. 5 |
5 0 1. 9 |
3 3 0. 2 |
3. 6 |
1, 4 7 0. 8 |
3, 4 7 8. 0 |
| A A i i bu bu d d i i ho l de f f he t t tr tr te te to ty ty t t t eq eq u u rs o o p p ar ar en en |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| f ( Am ts in i l l ion Eu ) ou n m s o ro |
S ha re l ca i i l ta ta ca p p |
S ha re Pr Pr ium ium em em |
S S ta ta tu tu to to ry ry res e res erv erv e |
Fo ig re n ha d ng ex c e a n he t o r res res erv erv es es |
C ha in ng es no n l l l l ing ing tro tro co co n n in in te te ts ts res res |
Re ine d ta ing ing ing ea ea sar rn n s s rn |
To l ta |
No n l l ing tro co n In In te te t t res res |
To l Eq Eq i i ta ty ty u u |
| Ba lan Ja 1, 2 0 0 8 t Ja t ce as a a nu nu ary ary |
1, 1 7 1. 5 1, 1 7 1. 5 |
4 8 5. 9 |
3 1 2. 1 |
2 5 8. 3 |
( 2, 2, 5 5 3 3 3. 3. 8 8 ) ( 2, 5 3 3. 8 |
3 3 7. 5 2, |
2, 0 3 1. 5 |
1, 0 2 3. 1 |
3, 0 5 4. 6 |
| Pro f i fo he io d t t r p er |
- | - | - | - | - | 3 0 0. 4 |
3 0 0. 4 |
( 3. 0 ) |
2 9 7. 4 |
| O he he ive inc / ( los ) t r c om p re ns om e s |
- | - | - | ( 5 0. 6 ) |
- | - | ( 5 0. 6 ) |
( 1 4. 0 ) |
( 6 4. 6 ) |
| To l c he he ive ive inc / ( ( los los ) ) ta ) / ( los co om mp p re re ns ns om e s s s |
- | - | - | ( 5 0. 6 ) |
- | 3 0 0. 4 |
2 4 9. 8 |
( 1 7. 0 ) |
2 3 2. 8 |
| D iv i de ds n |
- | - | - | - | - | ( 3 6 7. 6 ) |
( 3 6 7. 6 ) |
- | ( 3 6 7. 6 ) |
| S ha ba d p t re- se ay me n |
- | 3. 0 |
- | - | - | - | 3. 0 |
- | 3. 0 |
| Ne ha f p ic ip ion in bs i d iar ies t c t t ng e o ar a su |
- | - | - | - | ( 7 7 7. 4 ) |
- | ( 7 7 7. 4 ) |
( 6 5. 8 ) |
( 8 4 3. 2 ) |
| 3 0, 2 0 0 8 Ba lan Ju Ju t ce as a ne ne |
1, 1 1. 7 5 |
4 8 8. 9 |
3 1 2. 1 |
2 0 7. 7 |
3, 3 1 1. 2 ( ) |
2, 2 0. 3 7 |
1, 1 3 9. 3 |
9 4 0. 3 |
2, 0 9. 6 7 |
| 1, 2 0 0 9 Ba lan Ja t t ce as a nu ary a |
1, 1 1. 1, 1 7 7 1. 5 5 |
4 9 9 7. |
3 3 0. 2 |
3. 9 7 |
3, 3 1 2 ( 5. ) |
2, 3. 6 5 5 |
1, 3 1 1. 9 |
8 6 1. 3 |
2, 1 3. 2 7 |
| f fo Pro i t t he io d r p er |
- | - | - | - | - | 2 1. 4 7 |
2 1. 4 7 |
0 7. |
2 8. 4 7 |
| O he he ive inc / ( los ) t r c om p re ns om e s |
- | - | - | ( 1 0 5. 5 ) |
- | - | 1 0 5. 5 ) ( |
( 4 6. 0 ) |
1 5 1. 5 ) ( |
| To To l c l he ive inc inc / ( ( los los ) ) ta ta ) / ( los om p re ns om om e e s s s |
- | - | - | ( 1 0 5. 5 ) |
- | 7 1. 4 2 |
1 6 5. 9 |
3 9. 0 ) ( |
6. 1 1 2 2 6. 9 |
| D iv i de ds n |
- | - | - | - | - | ( 3 6 7. 6 ) |
( 3 6 7. 6 ) |
- | ( 3 6 7. 6 ) |
| S ha ba d p t re- se ay me n |
- | 4. 0 |
- | - | - | - | 4. 0 |
- | 4. 0 |
| Ne ha f p ic ip ion in bs i d iar ies t c t t ng e o ar a su |
- | - | - | - | ( 4. 7 ) |
- | ( 4. 7 ) |
( 4 3. 7 ) |
( 4 8. 4 ) |
| O b l ig ion ire l l ing in t to tro te ts a ac q u no n-c on res |
- | - | - | - | - | - | - | ( 1 0. 0 ) |
( 1 0. 0 ) |
| Ba lan Ju Ju 3 0, 2 0 0 9 t ce as a ne ne |
1, 1 7 1. 5 |
5 0 1. 9 |
3 3 0. 2 |
3 1. 6 ) ( |
( 3, 3 1 9. 9 ) |
2, 4 5 7. 4 |
1, 1 0 9. 5 |
6 8. 6 7 |
1, 8 7 8. 1 |
INTERIM CONDENSED FINANCIAL STATEMENTS AS OF JUNE 30, 2009
| 1/1/2009- 1/1/2009-30/6/2009 |
1/1/200 1/1/2008-30/6/2008 | |||
|---|---|---|---|---|
| (Amounts in millions of Euro) | COMPANY | GROUP | COMPANY | GROUP |
| Cash flows from operating activities | ||||
| Profit before tax | 378.4 | 421.9 | 380.7 | 438.0 |
| Adjustments for: | ||||
| Depreciation and amortization | 216.0 | 562.2 | 239.2 | 584.8 |
| Share-based payment | 1.7 | 4.0 | 3.0 | 3.0 |
| Cost of early retirement program | (38.9) | (35.0) | 12.2 | 44.8 |
| Provision for staff retirement indemnities and youth account | 42.3 | 43.0 | 40.8 | 41.9 |
| Other provisions | 26.4 | 62.6 | 30.1 | 47.6 |
| Foreign exchange differences, net | (1.2) | (3.7) | 0.7 | (7.1) |
| Interest income | (10.8) | (39.6) | (18.3) | (40.0) |
| Dividend income, (gains)/losses and impairment of | ||||
| investments | (312.1) | (34.0) | (287.1) | (29.3) |
| Release of EDEKT fund prepayment | 17.6 | 17.6 | 17.6 | 17.6 |
| Interest expense | 119.2 | 177.7 | 101.0 | 166.2 |
| Working capital adjustments: | ||||
| Decrease/ (increase) in inventories | (3.5) | (36.4) | 13.9 | 9.7 |
| Decrease / (Increase) in accounts receivable | 31.8 | (58.4) | (30.7) | (169.6) |
| (Decrease) in liabilities (except bank liabilities) | (129.3) | (123.6) | (116.0) | (169.1) |
| Plus/(Minus): | ||||
| Interest and related expenses paid | (113.1) | (179.1) | (30.1) | (91.3) |
| Income taxes paid | (13.4) | (78.5) | (21.3) | (81.3) |
| Settlement of receivables due from disposed subsidiaries | - | 16.6 | - | - |
| Total cash flows from operating activities cash from operating |
211.1 | 717.3 | 335.7 | 765.9 |
| Cash flows from investing activities activities | ||||
| Acquisition of non-controlling interest and participation in | ||||
| subsidiaries' share capital increase | - | (48.4) | (848.9) | (848.9) |
| Purchase of financial assets | (290.4) | (298.2) | - | - |
| Sale or maturity of financial assets | 108.2 | 115.0 | - | 5.1 |
| Loans granted | - | - | (0.3) | (0.3) |
| Loans proceeds | 51.1 | 4.8 | - | - |
| Loans proceeds in conjunction with disposal of subsidiaries | - | 78.5 | - | - |
| Purchase of property plant and equipment and intangible | ||||
| assets | (114.1) | (441.5) | (116.0) | (375.0) |
| Proceeds from disposal of subsidiaries | - | 84.8 | 2.5 | - |
| Interest received | 9.0 | 31.5 | 13.7 | 26.4 |
| Dividends received | 0.3 | 0.3 | 4.9 | 4.9 |
| Return of capital invested in subsidiary | 102.2 | - | - | - |
| Total cash flows used in investing activities cash in investing activities |
(133.7) | (473.2) | (944.1) | (1,187.8) |
| Cash flows from financing activities financing activities |
||||
| Proceeds from non-controlling interests for their participation in | ||||
| subsidiaries' share capital increase | - | - | - | 16.9 |
| Proceeds from loans granted and issued | - | 15.2 | 2,700.0 | 2,701.3 |
| Repayment of loans | - | (50.9) | (2,100.0) | (2,155.4) |
| Dividends paid to Company's owners | (0.3) | (0.3) | (0.6) | (0.8) |
| Dividends paid to non-controlling interests | - | (1.2) | - | - |
| Total cash flows from cash flows from cash from/(used in) /(used in) /(used in) financing activities financing activities activities |
(0.3) | (37.2) | 599.4 | 562.0 |
| Net increase/(decrease) in cash and cash equivalent Net increase/(decrease) in d equivalents equivalents |
77.1 | 206.9 | (9.0) | 140.1 |
| Cash and cash equivalents, at the beginning of the period | 344.5 | 1,429.7 | 459.2 | 1,316.3 |
| Net foreign exchange differences Net foreign exchange |
- | (12.4) | - | - |
| Cash and cash equivalents, at the end of the period | 421.6 | 1,624.2 | 450.2 | 1,456.4 |
Hellenic Telecommunications Organization S.A. ("Company" or "OTE"), was incorporated as a société anonyme in Athens, Greece in 1949, and is listed in the Greek Register of Sociétés Anonymes (M.A.E.) with the unique number (ΑΡ. ΜΑΕ) 347/06/Β/86/10. The registered office is located at 99 Kifissias Avenue – 151 24 Maroussi Athens, Greece, and the website is www.ote.gr. The Company is listed on the Athens Exchange and New York Stock Exchange.
OTE's principle activities are the provision of telecommunications and related services.
The OTE Group ("Group") includes other than the parent Company, all the entities which OTE controls directly or indirectly.
The Interim Condensed Separate and Consolidated Financial Statements («interim financial statements») as of June 30, 2009, were approved for issuance by the Board of Directors on August 5, 2009.
The total numbers of Group and Company employees as of June 30, 2009 and 2008 were as follows:
| GROUP | COMPANY COMPANY |
|
|---|---|---|
| June 30, 2009 | 33,160 | 11,941 |
| June 30, 2008 | 33,062 | 12,123 |
The Group includes the financial statements of OTE and the following subsidiaries which OTE controls directly or indirectly:
| 30/06/2009 | 31/12/2008 | |||
|---|---|---|---|---|
| COMPANY NAME COMPANY NAME |
LINE OF BUSINESS OF |
COUNTRY COUNTRY | OWNERSHIP INTEREST | |
| DIRECT OWNERSHIP ( OWNERSHIP (full consolidation) full consolidation) full consolidation) |
||||
| COSMOTE MOBILE TELECOMMUNICATIONS S.A. | Mobile telecommunications | |||
| ("COSMOTE") | services | Greece | 100.00% | 100.00% |
| OTE INTERNATIONAL INVESTMENTS LTD | Investment holding company | Cyprus | 100.00% | 100.00% |
| HELLAS SAT CONSORTIUM LIMITED ("HELLAS-SAT") | Satellite communications | Cyprus | 99.05% | 99.05% |
| COSMO-ONE HELLAS MARKET SITE S.A. ("COSMO | ||||
| ONE") | E-commerce services | Greece | 61.74% | 61.74% |
| VOICENET S.A. ("VOICENET") | Telecommunications services | Greece | 100.00% | 100.00% |
| HELLASCOM INTERNATIONAL S.A. ("HELLASCOM") | Telecommunication projects | Greece | 100.00% | 100.00% |
| OTE PLC | Financing services | U.K. | 100.00% | 100.00% |
| OTE SAT-MARITEL S.A. ("OTE SAT – MARITEL") | Satellite telecommunications | |||
| services | Greece | 94.08% | 94.08% | |
| OTE PLUS S.A ("OTE PLUS") | Consulting services | Greece | 100.00% | 100.00% |
| ΟΤΕ ESTATE S.A. ("ΟΤΕ ESTATE") | Real estate | Greece | 100.00% | 100.00% |
| OTE INTERNATIONAL SOLUTIONS S.A. ("OTE-GLOBE") | Wholesale telephony services | Greece | 100.00% | 100.00% |
| HATWAVE HELLENIC-AMERICAN | ||||
| TELECOMMUNICATIONS WAVE LTD. ("HATWAVE") | Investment holding company | Cyprus | 52.67% | 52.67% |
| OTE INSURANCE AGENCY S.A. ("OTE INSURANCE") | Insurance brokerage services | Greece | 100.00% | 100.00% |
| ΟΤΕ ACADEMY S.A. ("OTE ACADEMY") | Training services | Greece | 100.00% | 100.00% |
| INDIRECT OWNERSHIP ( (full consolidation) full |
||||
| ROMTELECOM S.A. ("ROMTELECOM") | Fixed line telephony services | Romania | 54.01% | 54.01% |
| S.C. COSMOTE ROMANIAN MOBILE | Mobile telecommunications | |||
| TELECOMMUNICATIONS S.A. ("COSMOTE ROMANIA") | services | Romania | 86.20% | 86.20% |
| OTE MTS HOLDING B.V. | Investment holding company | Holland | - | 100.00% |
| COSMOFON MOBILE TELECOMMUNICATIONS | Mobile telecommunications | |||
| SERVICES A.D. – SKOPJE ("COSMOFON") | services | Skopje | - | 100.00% |
| COSMO BULGARIA MOBILE EAD ("GLOBUL") | Mobile telecommunications | |||
| services | Bulgaria | 100.00% | 100.00% | |
| COSMO-HOLDING ALBANIA S.A. ("CHA") | Investment holding company | Greece | 97.00% | 97.00% |
| ALBANIAN MOBILE COMMUNICATIONS Sh.a ("AMC") | Mobile telecommunications | |||
| COSMOHOLDING CYPRUS LTD ("COSMOHOLDING | services | Albania | 95.00% | 82.45% |
| CYPRUS") | Investment holding company | Cyprus | 90.00% | 90.00% |
| GERMANOS S.A. | Retail services | Greece | 90.00% | 90.00% |
| E-VALUE S.A. | Marketing Services | Greece | 90,00% | 90,00% |
| GERMANOS TELECOM SKOPJE S.A. | Retail services | Skopje | - | 90.00% |
| GERMANOS TELECOM ROMANIA S.A. | Retail services | Romania | 90.00% | 90.00% |
| 30/06/2009 | 31/12/2008 31/12/2008 |
|||
|---|---|---|---|---|
| COMPANY NAME COMPANY NAME |
LINE OF BUSINESS OF |
COUNTRY COUNTRY | OWNERSHIP INTEREST | |
| SUNLIGHT ROMANIA S.R.L. -FILIALA | Retail services | Romania | 90.00% | 90.00% |
| GERMANOS TELECOM BULGARIA A.D. | Retail services | Bulgaria | 90.00% | 90.00% |
| MOBILBEEEP LTD | Retail services | Greece | 90.00% | 90.00% |
| OTE PROPERTIES | Real estate | Greece | 100.00% | 100.00% |
| HELLAS SAT S.A. | Satellite communications | Greece | 99.05% | 99.05% |
| ΟΤΕ INVESTMENT SERVICES S. A. | Investment holding company | Greece | 100.00% | 100.00% |
| OTE PLUS BULGARIA | Consulting services | Bulgaria | 100.00% | 100.00% |
The interim financial statements for the six months ended June 30, 2009 have been prepared in accordance with IAS 34 "Interim Financial Reporting".
These interim financial statements do not include all the information required in the annual financial statements and they should be read in conjunction with the annual audited financial statements as of December 31, 2008, which are available on the Company's website www.ote.gr.
The interim financial statements have been prepared on the historical cost basis, except for available-for-sale financial assets, financial assets classified as held for trading and derivative financial instruments which have been measured at fair values in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The carrying values of recognized assets and liabilities that are hedged items in fair value hedges that would otherwise be carried at cost, are adjusted to record changes in the fair values attributable to the risks that are being hedged.
The interim financial statements are presented in millions of Euro, except when otherwise indicated.
The interim financial statements have been prepared using accounting policies consistent with those adopted for the preparation of the annual financial statements as of December 31, 2008 and which are comprehensively presented in the notes of the annual financial statements, except for the adoption of the following new and amended IFRS and IFRIC interpretations which became effective for the accounting periods beginning January 1, 2009 and which did not have any impact on the financial position or performance of the Group or Company:
The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning January 1, 2009 and have not been early adopted by the Company or Group:
Investments are analyzed as follows:
| 30/06/2009 30/06/2009 |
31/12/2008 | |||
|---|---|---|---|---|
| COMPANY COMPANY |
GROUP | COMPANY COMPANY |
GROUP | |
| (a) Investments in subsidiaries | 4,633.6 | - | 4,733.6 | - |
| (b) Other investments | 156.4 | 156.6 | 156.4 | 156.6 |
| T O TAL TAL | 4,790.0 | 156.6 | 4,890.0 | 156.6 |
(a) Investment in subsidiaries are analyzed as follows:
| Country of Country of incorporation incorporation |
30/06/2009 30/06/2009 |
31/12/2008 | |
|---|---|---|---|
| COSMOTE | Greece | 3,508.0 | 3,505.7 |
| OTE INTERNATIONAL INVESTMENTS LTD | Cyprus | 497.9 | 497.9 |
| HELLAS-SAT | Cyprus | 194.7 | 194.7 |
| COSMO-ONE | Greece | 0.7 | 0.7 |
| VOICENET | Greece | 4.0 | 4.0 |
| HELLASCOM | Greece | 8.4 | 8.4 |
| OTE SAT- MARITEL | Greece | 11.2 | 11.2 |
| OTE PLC | U.K. | - | - |
| ΟΤΕ PLUS | Greece | 3.8 | 3.8 |
| ΟΤΕ ESTATE | Greece | 234.0 | 336.3 |
| OTE GLOBE | Greece | 163.7 | 163.7 |
| OTE INSURANCE | Greece | 0.6 | 0.6 |
| OTE ACADEMY | Greece | 6.6 | 6.6 |
| T O TAL TAL | 4,633.6 | 4,733.6 |
On December 18, 2008, the amendment to article 5 of OTE ESTATE's charter was finalized following the decision by the General Assembly of Shareholders. After the amendment, OTE ESTATE's share capital was reduced by Euro 102.2 as a result of a reduction in the nominal amount of the shares from Euro 2.93 (absolute amount) to Euro 2.43 (absolute amount). On April 1, 2009, OTE received from OTE ESTATE an amount of Euro 102.2 from the reduction of its share capital reducing the carrying value of its investment by an equivalent amount.
On April 27, 2009 OTE announced that its 100% subsidiary COSMOTE completed the acquisition process of a 12.6% interest held by the Albanian State, in its subsidiary AMC following the approvals of the relevant authorities in Albania. The cash consideration for the related acquisition amounted to Euro 48.4. The difference arising from the acquisition of the above noncontrolling interests of Euro 4.7 was recognized directly in equity (column "Changes in non-controlling interests"), as it relates
to the acquisition of non – controlling interests in an entity where control already exists. Following the official conclusion of the transaction, COSMOTE owns directly or indirectly (through its 97% owned subsidiary COSMO-HOLDING ALBANIA S.A.) a 95% interest in AMC.
On March 30, 2009 OTE announced that the agreements between COSMOTE and Telekom Slovenije were signed in Athens regarding the transfer of 100% of COSMOFON, through the sale of COSMOTE's wholly owned subsidiary, OTE MTS HOLDING B.V., as well as GERMANOS TELECOM AD SKOPJE (GTS) to Telekom Slovenije. The transaction was completed on May 12, 2009 following approval by the relevant governmental and regulatory authorities in Skopje. COSMOFON and GERMANOS TELECOM SKOPJE are included in the consolidated financial statements until the date the Group ceased to control those companies (May 12, 2009).
The following table presents COSMOFON's and GERMANOS TELECOM SKOPJE income statements for the first half of 2008 and for the period from January 1, 2009 to May 12, 2009:
| COSMOFON COSMOFON |
GERMANOS TELECOM SKOPJE GERMANOS TELECOM OM SKOPJE |
||||
|---|---|---|---|---|---|
| 1/1-12/5/200 12/5/200 12/5/2009 |
1st Half 2008 Half |
1/1-12/5/2009 12/5/2009 12/5/2009 |
1st Half 2008 | ||
| Revenue | 19.1 | 30.0 | 2.5 | 4.6 | |
| Total operating expenses | (23.4) | (30.0) | (2.9) | (5.2) | |
| Operating income / (loss) (loss) | |||||
| before financial activities financial activities activities |
(4.3) | - | (0.4) | (0.6) | |
| Financial activities | (1.9) | (1.9) | (0.1) | (0.1) | |
| Loss before tax | (6.2) | (1.9) | (0.5) | (0.7) | |
| Income tax expense | - | - | - | - | |
| L os s for t he pe riod os s for he riod riod |
(6.2) | (1.9) | (0.5) | (0.7) |
In the consolidated interim financial statements, the gain from the sale was determined as the difference between the selling price less related expenses and the value of COSMOFON's and GERMANOS TELECOM SKOPJE net assets at the date of disposal.
The assets and liabilities of COSMOFON and GERMANOS TELECOM SKOPJE at the date of disposal are as follows:
| COSMOFON | GERMANOS TELECOM SKOPJE |
Total | |
|---|---|---|---|
| ASSETS | |||
| Non current assets | 145.5 | 6.4 | 151.9 |
| Cash and cash equivalents | 1.9 | 0.1 | 2.0 |
| Other currents assets | 31.1 | 2.9 | 34.0 |
| Total Assets Assets | 178.5 | 9.4 | 187.9 |
| LIABILITIES | |||
| Non-current liabilities | 35.0 | 2.0 | 37.0 |
| Current liabilities | 83.1 | 5.4 | 88.5 |
| Total Liabilities Liabilities |
118.1 | 7.4 | 125.5 |
| Net assets disposed Net assets disposed |
60.4 | 2.0 | 62.4 |
| Group's share in Group's 's COSMOFON & GERMANOS TELECOM SKOPJE COSMOFON GERMANOS net assets sold sold sold (100%) |
60.4 | 2.0 | 62.4 |
| Selling Price | 92.3 | 0.5 | 92.8 |
| Disposal expenses | (6.0) | - | (6.0) |
| 'Group's share inCOSMOFON & GERMANOS TELEKOM SKOPJE net assets | |||
| (100%) | (60.4) | (2.0) | (62.4) |
| Gain / (loss) from sale of investment in the c from sale of consolidated onsolidated onsolidated income statement tatement tatement |
25.9 | (1.5) | 24.4 |
As part of the agreement Telekom Slovenije undertook to settle COSMOFON's and GERMANOS TELECOM SKOPJE intra-group liabilities. The total effect of the above transaction on the interim consolidated cash flow statement is as follows:
| COSMOFON COSMOFON |
GERMANOS TELECOM SKOPJE |
Total | |
|---|---|---|---|
| Selling Price | 92.3 | 0.5 | 92.8 |
| Less cash and equivalents disposed | (1.9) | (0.1) | (2.0) |
| Less disposal expenses | (6.0) | - | (6.0) |
| Net inflow from the sale of subsidiary | 84.4 | 0.4 | 84.8 |
| Loans proceeds in conjunction with disposal of subsidiaries | 76.3 | 2.2 | 78.5 |
| Settlement of receivables due from disposed subsidiaries | 14.0 | 2.6 | 16.6 |
| Total consideration | 174.7 | 5.2 | 179.9 |
On July 1, 2009, OTE announced that its subsidiary COSMOTE signed on June 30, 2009, a share purchase agreement for the acquisition of TELEMOBIL S.A. (ZAPP) in Romania. The consideration for the shares of ZAPP is estimated at approximately Euro 61 (equity value), while COSMOTE will also assume the debt and other liabilities of ZAPP, estimated at approximately Euro 146. The acquisition is subject, among other conditions, to the approval of relevant Romanian authorities.
(b) Other investments :
| 30/06/2009 | 31/12/200 1/12/2008 |
|
|---|---|---|
| TELEKOM SRBJIA | 155.1 | 155.1 |
| OTHER | 1.3 | 1.3 |
| T O TAL TAL | 156.4 | 156.4 |
OTE's dividend income is analyzed as follows:
| COMPANY | 2009 | 2008 | ||
|---|---|---|---|---|
| 2nd Quarter | 1st Half | 2nd Quarter Quarter | 1st Half | |
| COSMOTE | 282.2 | 282.2 | 245.2 | 245.2 |
| ΟΤΕ ESTATE | 18.9 | 18.9 | 30.3 | 30.3 |
| OTE SAT- MARITEL | 1.0 | 1.0 | 0.5 | 0.5 |
| OTE PLUS | 0.4 | 0.4 | - | - |
| TELEKOM SRBIJA | 9.3 | 9.3 | 11.2 | 11.2 |
| Other available for sale investments | 0.3 | 0.3 | 0.9 | 0.9 |
| T O TAL TAL | 312.1 | 312.1 | 288.1 | 288.1 |
Pursuant to Law 3697/2008 (article 18, par. 7 – FEK A 194), dividends approved by General Meeting convened after January 1, 2009 will be subject to 10% withholding tax. As a result, dividend income receivable as of June 30, 2009 amounted to Euro 279.0 (net of withholding tax) and is included in "Other current assets" in the accompanying separate statement of financial position as of June 30, 2009.
The Group's dividend income is analyzed as follows:
| GROUP | 2009 | 2008 | |||
|---|---|---|---|---|---|
| 2nd Quarter | 1st Half | 2nd Quarter Quarter | 1st Half | ||
| TELEKOM SRBIJA | 9.3 | 9.3 | 11.2 | 11.2 | |
| Other available for sale investments | 0.3 | 0.3 | 0.9 | 0.9 | |
| T O TAL TAL | 9.6 | 9.6 | 12.1 | 12.1 |
Other financial assets are analyzed as follows:
| 30/06/2009 30/06/2009 |
31/12/2008 | |||
|---|---|---|---|---|
| COMPANY COMPANY |
GROUP | COMPANY COMPANY |
GROUP | |
| Equity securities | 15.6 | 33.9 | 13.0 | 26.2 |
| Government bonds and Treasury Bills | 290.7 | 290.7 | 106.6 | 109.7 |
| T O TAL TAL | 306.3 | 324.6 | 119.6 | 135.9 |
Other financial assets include shares listed on the Athens Exchange and Greek, Dutch and German government bonds. The above financial assets are classified into one of the categories permitted by IAS 39.
OTE's share capital as at June 30, 2009 and December 31, 2008 amounted to Euro 1,171.5, divided into 490,150,389 registered shares, with a nominal value of Euro 2.39 (absolute amount) per share.
As described in Note 11 below, on March 4, 2009, 4% of OTE's share capital held by the Hellenic State was transferred to IKA-ETAM.
The following is an analysis of the ownership of OTE's shares as of June 30, 2009:
| Shareholder Shareholder |
Number of shares | Percentage % |
|---|---|---|
| Hellenic State | 87,878,811 | 17.93% |
| D.E.K.A. S.A. (indirect participation of the Hellenic State) | 15,052,773 | 3.07% |
| IKA–ETAM (See Note 11) | 19,606,015 | 4.00% |
| DEUTSCHE TELEKOM AG | 122,537,599 | 25.00% |
| Institutional Investors | 189,176,507 | 38.60% |
| Private Investors | 55,898,684 | 11.40% |
| T O TAL TAL | 490,150,389 | 100.00% |
Under Greek Corporate Law, each year companies are required to distribute to their owners dividends of at least 35% of profits which result from their accounting books and records (published financial statements), after allowing for the statutory reserve and income tax. However, companies can waive such dividend payment requirement with the unanimous consent of their owners.
On June 24, 2009, the General Assembly of OTE's Shareholders approved the distribution of a dividend from 2008 profits of a total amount of Euro 367.6 or Euro 0.75 (in absolute amount) per share. Pursuant to Law 3697/2008 (article 18, par. 7 – FEK A 194), dividends approved by General Meetings convened after January 1, 2009, will be subject to 10% withholding tax which will be borne by the beneficiary, however, the related law provides for certain exceptions. The amount of dividends payable as at June 30, 2009, amounted to Euro 334.4.
Long-term borrowings are analyzed as follows:
| C O M P A N Y C O Y |
30/6/2009 | 31/12/2008 |
|---|---|---|
| (a) Loan from European Investment Bank / Hellenic State |
18.9 | 18.9 |
| (b) Intercompany loans from ΟΤΕ PLC |
3,287.2 | 3,288.2 |
| Total long- long-term debt term debt | 3,306.1 | 3,307.1 |
| Short-term portion | (18.9) | (18.9) |
| Long-term portion term portion |
3,287.2 | 3,288.2 |
| G R O U P O P | ||
| (a) Loan from European Investment Bank / Hellenic State |
18.9 | 18.9 |
| (b) Syndicated loans |
500.0 | 500.0 |
| (c) Global Medium-Term Note Program |
5,442.8 | 5,464.5 |
| (d) Other bank loans |
49.2 | 59.2 |
| Total long- long-term debt term debt | 6,010.9 | 6,042.6 |
| Short-term portion | (601.2) | (633.0) |
| Long-term portion term portion |
5,409.7 5,409.7 | 5,409.6 |
During May 2009, OTE PLC repurchased in total a principal amount of Euro 28.1 under the Euro 600.0 Floating Rate Notes (FRN), issued on November 21, 2006 and maturing on November 21, 2009. The notes were cancelled and, therefore, the outstanding nominal balance of the aforementioned FRN is now Euro 571.9.
In accordance with the Greek tax regulations (Law 3296/2004), the income tax rate was 25% for 2007 and onwards. In accordance with article 19 of Law 3697/2008 the income tax rate will gradually reduce as follows: 24% for 2010, 23% for 2011, 22% for 2012, 21% for 2013 and 20% for 2014 and onwards.
The Company and its subsidiaries have not been audited by the tax authorities for the following years and, therefore, the tax liabilities for these open years have not been finalized:
| COMPANY COMPANY |
OPEN TAX YEARS OPEN TAX |
|---|---|
| Direct ownership Direct ownership |
|
| OTE | From 2006 |
| COSMOTE | From 2006 |
| OTE INTERNATIONAL INVESTMENTS LTD | From 2003 |
| HELLAS SAT | From 2008 |
| COSMO-ONE | From 2002 |
| VOICENET | From 2004 |
| HELLASCOM | From 2007 |
| OTE PLC | From 2005 |
| OTE SAT-MARITEL | From 2004 |
| OTE PLUS | From 2008 |
| ΟΤΕ ESTATE | From 2003 |
| OTE GLOBE | From 2007 |
| OTE INSURANCE | From 2007 |
| OTE ACADEMY | From 2007 |
| HATWAVE | From 1996 |
| Indirect ownership ownership |
|
| OTE INVESTMENTS SERVICES S.A. | From 2005 |
| ROMTELECOM | From 2006 |
| AMC | From 2006 |
| GLOBUL | From 2005 |
| COSMOTE ROMANIA | From 2007 |
| GERMANOS | From 2008 |
| E-VALUE S.A. | From 2003 |
| GERMANOS TELECOM ROMANIA S.A. | From 2003 |
| SUNLIGHT ROMANIA S.R.L. -FILIALA | From 2003 |
| GERMANOS TELECOM BULGARIA A.D. | From 2005 |
| MOBILBEEEP LTD | From 2005 |
| HELLAS SAT S.A. | From 2008 |
| CHA | From 2007 |
| COSMO-HOLDING CYPRUS | From 2006 |
| REAL ESTATE INVESTMENT COMPANY | From 2008 (incorporation) |
| OTE PLUS BULGARIA | Tax exempt |
Revenue is analyzed as follows:
| COMPANY COMPANY |
2009 | 2008 | ||
|---|---|---|---|---|
| 2nd Quarter Quarter | 1st Half | 2nd Quarter | 1st Half | |
| DOMESTIC TELEPHONY | ||||
| Monthly network service fees | 143.9 | 291.3 | 158.7 | 318.9 |
| Local and long-distance calls | ||||
| -Fixed to fixed | 103.4 | 206.6 | 109.3 | 223.2 |
| -Fixed to mobile | 44.7 | 87.1 | 58.8 | 116.0 |
| 148.1 | 293.7 | 168.1 | 339.2 | |
| Other | 16.5 | 33.0 | 17.8 | 35.6 |
| 308.5 | 618.0 | 344.6 | 693.7 | |
| INTERNATIONAL TELEPHONY | ||||
| International traffic | 13.6 | 27.3 | 15.7 | 31.6 |
| Dues from international operators | 15.7 | 30.3 | 20.5 | 46.3 |
| Dues from mobile operators | 12.7 | 24.1 | 14.3 | 25.5 |
| 42.0 | 81.7 | 50.5 | 103.4 | |
| OTHER REVENUE | ||||
| Prepaid cards | 7.6 | 15.9 | 11.6 | 21.3 |
| Leased lines and Data ATM communications | 45.4 | 94.2 | 55.1 | 106.9 |
| Integrated Services Digital Network | 32.2 | 65.2 | 34.2 | 68.7 |
| Sales of telecommunication equipment | 11.0 | 20.8 | 14.6 | 26.5 |
| Internet/ ADSL | 52.6 | 105.3 | 41.1 | 80.2 |
| Co-location / Local Loop | 23.5 | 56.0 | 18.7 | 32.9 |
| Metro Ethernet & IP CORE | 4.7 | 9.9 | 3.8 | 7.4 |
| Provision for services | 36.6 | 71.0 | 34.9 | 72.0 |
| Interconnection charges | 19.7 | 44.7 | 29.3 | 58.3 |
| Miscellaneous | 7.0 | 13.1 | 8.4 | 13.5 |
| 240.3 | 496.1 | 251.7 | 487.7 | |
| TOTAL REVENUE | 590.8 | 1,195.8 | 646.8 | 1,284.8 |
| GROUP | 2009 | 2008 | ||
|---|---|---|---|---|
| 2nd Quarter 2nd |
1st Half 1st Half | 2nd Quarter Quarter | 1st Half | |
| DOMESTIC TELEPHONY TELEPHONY |
||||
| Monthly network service fees | 216.3 | 433.1 | 232.5 | 465.5 |
| Local and long-distance calls | ||||
| -Fixed to fixed | 115.4 | 231.4 | 122.0 | 250.1 |
| -Fixed to mobile | 65.0 | 127.7 | 83.4 | 165.4 |
| 180.4 | 359.1 | 205.4 | 415.5 | |
| Other | 16.9 | 31.5 | 24.4 | 47.3 |
| 413.6 | 823.7 | 462.3 | 928.3 | |
| INTERNATIONAL TELEPHONY | ||||
| International traffic | 20.5 | 41.1 | 23.5 | 47.3 |
| Dues from international operators | 28.5 | 52.5 | 31.8 | 74.8 |
| Dues from mobile operators | 13.3 | 25.3 | 15.5 | 27.6 |
| 62.3 | 118.9 | 70.8 | 149.7 | |
| MOBILE TELEPHONY | 599.7 | 1,178.7 | 603.0 | 1,162.8 |
| OTHER REVENUE | ||||
| Prepaid cards | 8.7 | 18.0 | 13.3 | 25.0 |
| Leased lines and Data ATM communications | 82.2 | 164.4 | 87.0 | 163.4 |
| Integrated Services Digital Network | 35.7 | 72.1 | 37.3 | 74.7 |
| Sales of telecommunication equipment | 110.4 | 205.4 | 155.1 | 308.0 |
| Internet/ ADSL | 73.1 | 146.4 | 59.2 | 113.7 |
| Co-location / Local Loop | 24.9 | 58.7 | 19.9 | 35.5 |
| Metro Ethernet & IP CORE | 6.5 | 13.3 | 4.9 | 9.3 |
| Provision for services | 22.2 | 42.9 | 25.7 | 50.9 |
| Interconnection charges | 19.7 | 45.1 | 30.7 | 59.9 |
| Miscellaneous | 28.6 | 54.5 | 21.3 | 46.8 |
| 412.0 | 820.8 | 454.4 | 887.2 | |
| TOTAL REVENUE | 1,487.6 | 2,942.1 | 1,590.5 | 3,128.0 |
On January 28, 2009, the management of OTE and OME-OTE (the personnel union body) signed a Collective Labor Agreement according to which employees who will complete the number of years required for retirement by December 30, 2009, would be entitled to benefits in order to retire by this date at the latest. The deadline for the applications for participating in this early retirement program was due on February 16, 2009. Applications were irrevocable. The respective cost amounted to Euro 11.0 and is included in the line "Cost of early retirement program" in the income statement for the first half of 2009.
In addition, an amount of Euro 3.9 which is the cost of ROMTELECOM's early retirement program is included in the consolidated income statement for the first half of 2009.
On March 4, 2009, the Hellenic State and IKA-ETAM (general successor of TAP-OTE) signed a transfer agreement of 19,606,015 ordinary shares held by the Hellenic State to IKA-ETAM without cash consideration. These shares represent 4% of OTE's share capital, in accordance with articles 74 par. 4a of L.3371/2005 and articles 1 and 2 par. 4 and 5 of L3655/2008, in combination with the decision of May 10, 2007, of the European Community Committee (C 2/2206). The fair value of the transaction was set at Euro 10.30 (in absolute amount) (closing price of the OTE's share at Athens Exchange, the date the transfer was signed) per share. The total value of the transferred shares amounted to Euro 201.9 and reduces OTE's liability to IKA-ETAM by this amount and is included in the results of OTE for the first half of 2009, under the account "Cost of early retirement program".
The above transfer is subject to the following terms:
On March 26, 2009 an amendment was submitted to a draft law of the Ministry of Employment and Social Security, according to which:
On May 15, 2009 the aforementioned amendment was enacted by the L. 3762/ FEK A' 75/15.5.2009.
The movement of the provision for the cost of the Voluntary Leave Scheme is as follows:
| Balance as of December 31, 2 2008 | 383.0 |
|---|---|
| Payments during period | (10.4) |
| Release of liability due to the transfer of 4% to IKA-ETAM | (201.9) |
| Early retirement program cost | 152.0 |
| Adjustment due to finance cost | 30.4 |
| Balance as of June June30, 2009 | 353.1 |
Based on the estimated period of payment, the total obligations of the voluntary leave scheme are classified as follows:
| 30/6/2009 | 31/12/2008 | |
|---|---|---|
| Short-term portion of the provision for Voluntary Leave Scheme | 184.9 | 275.8 |
| Long-term portion of the provision for Voluntary Leave Scheme | 168.2 | 107.2 |
| T O TAL T TAL | 353.1 | 383.0 |
Other operating expenses are analyzed as follows:
| C O M P A N Y C O Y |
2009 | 2008 | ||
|---|---|---|---|---|
| 2nd Quarter 2nd |
1st Half 1st Half | 2nd Quarter Quarter | 1st Half | |
| Third party fees | 32.6 | 58.2 | 28.0 | 51.1 |
| Cost of telecommunication materials, repairs and | ||||
| maintenance | 20.6 | 39.3 | 17.4 | 34.6 |
| Advertising and promotion costs | 11.5 | 22.2 | 13.8 | 26.2 |
| Utilities | 16.1 | 29.8 | 13.2 | 25.5 |
| Provision for doubtful accounts | 13.2 | 26.4 | 12.6 | 30.0 |
| Travel costs | 2.7 | 4.3 | 2.2 | 4.0 |
| Payments to Audiotex providers | 1.0 | 2.9 | 1.8 | 3.6 |
| Rents | 16.9 | 35.8 | 18.2 | 36.6 |
| Taxes, other than income tax | 2.9 | 6.2 | 4.1 | 6.8 |
| Transportation costs | 1.4 | 2.2 | 1.5 | 2.5 |
| Other | 1.5 | 7.5 | 4.0 | 7.7 |
| TOTAL EXPENSES EXPENSES EXPENSES |
120.4 | 234.8 | 116.8 | 228.6 |
| G R O U P O P | 2009 | 2008 | ||
|---|---|---|---|---|
| 2nd Quarter 2nd |
1st Half 1st Half | 2nd Quarter Quarter | 1st Half | |
| Third party fees | 63.2 | 108.4 | 46.1 | 90.8 |
| Cost of telecommunication materials, repairs and | ||||
| maintenance | 48.8 | 96.7 | 51.4 | 100.3 |
| Advertising and promotion costs | 53.6 | 104.6 | 55.0 | 98.2 |
| Utilities | 28.8 | 60.2 | 29.6 | 51.9 |
| Provision for doubtful accounts | 35.8 | 62.6 | 22.4 | 47.9 |
| Travel costs | 5.1 | 9.2 | 4.8 | 8.7 |
| Commissions to independent commercial distributors | 56.0 | 120.4 | 55.3 | 120.6 |
| Payments to Audiotex providers | 1.5 | 4.5 | 2.3 | 4.7 |
| Rents | 24.6 | 49.2 | 22.2 | 47.1 |
| Taxes, other than income tax | 15.0 | 27.7 | 19.7 | 31.1 |
| Transportation costs | 2.9 | 5.5 | 2.9 | 5.1 |
| Other | 12.1 | 27.7 | 15.2 | 24.9 |
| TOTAL EXPENSES EXPENSES EXPENSES |
347.4 | 676.7 | 326.9 | 631.3 |
The following information is provided for the reportable segments, which are separately disclosed in the financial statements and which is regularly reviewed by the Group's chief operating decision makers. Segments were determined based on the Group's legal structure, as the Group's chief operating decision makers review financial information separately reported by the parent company (OTE) and each of the Group's consolidated subsidiaries, or the sub groups included in the consolidation. Using the quantitative thresholds OTE, COSMOTE GROUP and ROMTELECOM have been determined as reportable segments. Information about operating segments that do not constitute reportable segments has been combined and disclosed in an "All Other" category.
Accounting policies of the operating segments are the same as those followed for the preparation of the financial statements. Management evaluates segment performance based on operating income before depreciation and amortization, operating income and profit for the period.
| Six month period ended June 30, June 30, 2009 |
OTE | COSMOTE COSMOTE |
ROMTELECOM ROMTELECOM |
OTHER | TOTAL | Eliminations | GROUP |
|---|---|---|---|---|---|---|---|
| Revenue from external | |||||||
| customers | 1,095.8 | 1,380.8 | 400.4 | 65.1 | 2,942.1 | - | 2,942.1 |
| Intersegment revenue | 100.0 | 89.6 | 8.3 | 133.1 | 331.0 | (331.0) | - |
| Total Revenue | 1,195.8 | 1,470.4 | 408.7 | 198.2 | 3,273.1 | (331.0) | 2,942.1 |
| Operating expenses | (1,022.3) | (1,179.5) | (376.9) | (169.8) | (2,748.5) | 328.7 | (2,419.8) |
| Operating income | 173.5 | 290.9 | 31.8 | 28.4 | 524.6 | (2.3) | 522.3 |
| Operating income | |||||||
| before depreciation and | |||||||
| amortization | 389.5 | 511.3 | 134.9 | 51.1 | 1,086.8 | (2.3) | 1,084.5 |
| Profit for the period | 315.4 | 215.8 | 21.9 | 24.0 | 577.1 | (298.7) | 278.4 |
| Six month period ended Six month period ended June 30, June 30, 2008 |
OTE | COSMOTE COSMOTE |
ROMTELECOM ROMTELECOM |
OTHER | TOTAL | Eliminations | GROUP |
|---|---|---|---|---|---|---|---|
| Revenue from external | |||||||
| customers | 1,178.3 | 1,448.0 | 433.1 | 68.6 | 3,128.0 | - | 3,128.0 |
| Intersegment revenue | 106.5 | 93.5 | 9.3 | 118.1 | 327.4 | (327.4) | - |
| Total Revenue | 1,284.8 | 1,541.5 | 442.4 | 186.7 | 3,455.4 | (327.4) | 3,128.0 |
| Operating expenses | (1,107.8) | (1,220.3) | (440.2) | (158.7) | (2,927.0) | 326.8 | (2,600.2) |
| Operating income | 177.0 | 321.2 | 2.2 | 28.0 | 528.4 | (0.6) | 527.8 |
| Operating income | |||||||
| before depreciation and | |||||||
| amortization | 416.3 | 523.2 | 124.4 | 50.0 | 1,113.9 | (1.3) | 1,112.6 |
| Profit for the period | 341.9 | 189.4 | (3.2) | 27.9 | 556.0 | (258.6) | 297.4 |
Earnings per share (after income taxes) are calculated by dividing the profit attributable to the owners of the Company by the weighted average number of shares outstanding during the period, excluding the average number of own shares that the Company possessed during the period and including (for the diluted earnings per share) the number of shares corresponding to the stock option rights granted.
Earnings per share are analyzed as follows:
| GROUP | 2009 | 2008 | |||
|---|---|---|---|---|---|
| (Earning per share are in absolute amount) | 2nd Quarter Quarter | 1st Half | 2nd Quarter Quarter | 1st Half | |
| Profit attributable to owners of the parent | 4.7 | 271.4 | 159.3 | 300.4 | |
| Weighted average number of shares for basic | |||||
| earnings per share | 490,150,389 | 490,150,389 | 490,150,389 | 490,150,389 | |
| Share options outstanding | 9,100,080 | 9,100,080 | 3,141,620 | 3,141,620 | |
| Weighted average number of shares adjusted for | |||||
| the effect of dilutions | 499,250,469 | 499,250,469 | 493,292,009 | 493,292,009 | |
| Basic earnings per share | 0.0096 | 0.5537 | 0.3250 | 0.6129 | |
| Diluted earnings per share | 0.0094 | 0.5436 | 0.3229 | 0.6090 |
OTE's related parties have been identified based on the requirements of IAS 24 and comprise of its subsidiaries, its associates, the entity which controls OTE (together with its subsidiaries), the members of the Board of Directors and the key management personnel.
The Company purchases goods and services from these related parties, and provides services to them. Furthermore, OTE grants and receives loans to / from its subsidiaries and receives dividends.
OTE's purchases and sales with related parties are analyzed as follows:
| 1st Half 2009 | Half 2009 | 1st Half 2008 2008 | ||
|---|---|---|---|---|
| Sales ΟΤΕ | Purchases ΟΤΕ | Sales ΟΤΕ Sales ΟΤΕ |
Purchases ΟΤΕ Purchases |
|
| COSMOTE | 80.9 | 48.7 | 87.5 | 59.7 |
| OTE INTERNATIONAL INVESTMENTS LTD | 0.3 | 2.0 | 0.2 | 2.7 |
| HELLAS-SAT | 0.3 | 0.8 | 0.3 | 0.8 |
| COSMO-ONE | - | 0.4 | - | 0.4 |
| VOICENET | 2.7 | 2.1 | 2.6 | 0.8 |
| HELLASCOM | 0.1 | 4.3 | 0.1 | 3.9 |
| OTE SAT – MARITEL | 0.6 | 1.0 | 0.4 | 0.9 |
| ΟΤΕ PLUS | 0.2 | 17.1 | 0.2 | 18.6 |
| ΟΤΕ ESTATE | 0.3 | 30.2 | 1.4 | 30.9 |
| OTE-GLOBE | 14.6 | 38.6 | 13.7 | 33.0 |
| OTE ACADEMY | - | 2.9 | 0.1 | 2.2 |
| DEUTSCHE TELEKOM AG | 0.1 | 2.1 | - | - |
| MAKEDONSKI TELECOMMUNIKACII A. | 0.2 | 0.4 | - | - |
| HT HRVATSKE | - | 0.1 | - | - |
| TOTAL | 100.3 | 150.7 | 106.5 | 153.9 |
Purchases and sales of the Group with related parties which are not eliminated in the consolidation are analyzed as follows:
| 1st Half 2009 | ||||
|---|---|---|---|---|
| Group's Group'sSales | Group's Purchases Group's Purchases |
|||
| DEUTSCHE TELEKOM AG | 5.1 | 5.9 | ||
| MAKEDONSKI TELEKOMMUNIKACII A. | 0.2 | 0.5 | ||
| HT HRVATSKE | 0.1 | 0.1 | ||
| COMBRIDGE | 1.4 | - | ||
| DETEKON | - | 0.3 | ||
| T-SYSTEMS | 0.5 | 0.1 | ||
| T-Mobile Deutschland | 0.7 | 0.3 | ||
| T-Mobile Czech | 0.1 | - | ||
| T-Mobile UK | 0.2 | 0.2 | ||
| T-Mobile Austria | 0.1 | - | ||
| T-Mobile Netherlands | 0.1 | - | ||
| T-Mobile USA | 0.1 | 0.2 | ||
| PCT POLSKA TELEFONIA | 0.1 | - | ||
| TEL SIM GSM | - | 0.2 | ||
| TOTAL | 8.7 | 7.8 |
There were no transactions between the Group and related parties during the 1st half of 2008 which are not eliminated in the consolidation.
ΟΤΕ's financial activities with its related parties comprise interest on loans granted and received and are analyzed as follows:
| Half | 1st Half 2009 | 1st Half 2008 | ||||
|---|---|---|---|---|---|---|
| Finance income ΟΤΕ | Finance expense ΟΤΕ expense |
Finance income ΟΤΕ income ΟΤΕ |
Finance expense ΟΤΕ expense |
|||
| COSMOFOΝ | 1.1 | - | 1.7 | - | ||
| OTE PLC | - | 89.6 | 0.9 | 98.0 | ||
| TOTAL | 1.1 | 89.6 | 2.6 | 98.0 |
OTE's dividend income from its related parties, are analyzed as follows:
| 1st Half 2009 | 1st Half 2008 Half 2008 |
|
|---|---|---|
| COSMOTE | 282.2 | 245.2 |
| ΟΤΕ ESTATE | 18.9 | 30.3 |
| OTE SAT – MARITEL | 1.0 | 0.5 |
| OTE PLUS | 0.4 | - |
| TOTAL | 302.5 | 276.0 |
Amounts owed to and by the related parties as a result of OTE's transactions with them are analyzed as follows:
| 30/6/2009 30/6/2009 |
31/12/2008 | |||
|---|---|---|---|---|
| Amounts owed to ΟΤΕ |
Amounts owed by ΟΤΕ |
Amounts owed to ΟΤΕ |
Amounts owed by ΟΤΕ |
|
| COSMOTE | 53.4 | 40.6 | 37.9 | 50.4 |
| OTE INTERNATIONAL INVESTMENTS LTD | 0.1 | 0.8 | 0.3 | 1.0 |
| HELLAS-SAT | 0.3 | 0.3 | 0.5 | 0.3 |
| COSMO-ONE | - | 0.4 | - | 0.7 |
| VOICENET | 1.4 | 0.9 | 1.7 | 0.9 |
| HELLASCOM | - | 2.6 | - | 2.9 |
| OTE SAT – MARITEL | 0.7 | 0.8 | 0.3 | 0.6 |
| ΟΤΕ PLUS | 0.1 | 17.2 | 0.2 | 15.9 |
| ΟΤΕ ESTATE | 1.2 | 14.3 | 0.7 | 0.4 |
| OTE-GLOBE | 17.9 | 52.1 | 68.0 | 91.8 |
| OTE ACADEMY | 0.4 | 1.2 | - | 0.1 |
| DEUTSCHE TELEKOM AG | 5.3 | - | 6.3 | 7.2 |
| MAKEDONSKI TELECOMMUNIKACII A. | - | 2.6 | - | - |
| TOTAL | 80.8 | 133.8 | 115.9 | 172.2 |
Amounts owed to and by the related parties as a result of the Group's transactions with them, which are not eliminated in the consolidation, are analyzed as follows:
| 30/6/2009 30/6/2009 |
31/12/2008 | ||||
|---|---|---|---|---|---|
| Amounts owed to Group to Group |
Amounts owed by Group by Group |
Amounts owed to Group to Group |
Amounts owed by Group by Group |
||
| DEUTSCHE TELEKOM AG | 9.4 | 3.2 | 6.5 | 7.5 | |
| MAKEDONSKI TELEKOMMUNIKACII A. | - | 2.6 | - | - | |
| MAGYAR TELECOM TELECOMMUNICATI | - | - | - | - | |
| DETEKON | - | 0.4 | - | - | |
| HT HRVATSKE | 0.1 | - | - | - | |
| COMBRIDGE | 1.1 | 0.2 | - | - | |
| T-SYSTEMS | 0.3 | 0.1 | - | - | |
| T-Mobile Deutschland | 0.6 | 0.8 | - | - | |
| T-Mobile Hungary | - | 0.1 | - | - | |
| T-Mobile Czech | 0.1 | 0.1 | - | - | |
| T-Mobile UK | 0.3 | 0.3 | - | - | |
| T-Mobile Austria | - | 0.1 | - | - | |
| T-Mobile Netherlands | 0.1 | 0.1 | - | - | |
| T-Mobile International AG | 0.7 | 4.4 | - | - | |
| T-Mobile USA | 2.4 | 2.8 | - | - | |
| TOTAL | 15.1 | 15.2 | 6.5 | 7.5 |
Of the entities included in the above table, as of December 31, 2008 only DEUTSCHE TELEKOM AG was a related party to OTE.
Amounts due to related parties as a result of OTE's dividend distribution are analyzed as follows:
| 30/6/2009 | 31/12/2008 31/12/2008 |
|
|---|---|---|
| DEUTSCHE TELEKOM AG | 82.7 | - |
Amounts owed by and to OTE relating to loans advanced, are analyzed as follows:
| 30/6/2009 30/6/2009 |
31/12/2008 31/12/2008 |
|||||
|---|---|---|---|---|---|---|
| Receivable ΟΤΕ Receivable ΟΤΕ |
Payable by ΟΤΕ Payable by |
Receivable ΟΤΕ Receivable ΟΤΕ |
Payable by ΟΤΕ Payable by |
|||
| COSMOFOΝ | - | - | 46.8 | - | ||
| OTE PLC | - | 3,387.4 | - | 3,423.1 | ||
| TOTAL | - | 3,387.4 | 46.8 | 3,423.1 |
Key Management Personnel and those closely related to them are defined in accordance with IAS 24 "Related Party Disclosures". Compensation includes all employee benefits (as defined in IAS 19 "Employee Benefits") including employee benefits to which IFRS 2 "Share-based Payment" applies.
Fees to the members of the Board of Directors and OTE's key management personnel amounted to Euro 1.7 million and Euro 2.7 million for the 1st half of 2009 and 2008, respectively.
999,230 options under OTE's share based payment plan have been granted to the Company's key management personnel.
On February 20, 2009, OTE's Board of Directors decided on and approved the introduction of new beneficiaries to the existing Share Option Plan, with the simultaneous granting of 1,107,780 Basic Options to them, of which 590,000 are to be granted to executives of OTE and 517,780 to executives of OTE's subsidiaries. Furthermore, the Board of Directors, decided on and approved the granting of 2,117,890 Additional Options to existing beneficiaries, of which 927,110 are to be granted to executives of OTE and 1,190,780 to executives of OTE' s subsidiaries.
On December 31, 2008 the total number of share options outstanding was 6,008,060, while on June 30, 2009 after the additional grant the total number of share options outstanding was 9,100,080.
The fair value is reflected in the income statement during the vesting period. An amount of Euro 1.7 and Euro 4.0 was charged to the separate and consolidated income statements respectively in the first half of 2009. The amounts are recorded in the line "Payroll and employee benefits" with a corresponding entry in the Share Premium.
In addition to litigations and claims referred to the financial statements as of December 31, 2008 the below are presented:
In May 2009, Lannet filed a claim against OTE before the Court of First Instance for an aggregate amount of Euro 175.6, claiming restitution for our alleged illegal termination of services. The hearing of this case is scheduled for February 17, 2011.
Timeapply Ltd, has filed a claim against OTE in the Court of First Instance for Euro 17.3 for restitution due to damage caused by alleged patent infringement, as a result of our sale and advertisement of a prepaid telephone card called "Promocard". The case was heard on January 22, 2009 and a decision is pending. In addition, Timeapply filed a claim against OTE in the Court of First Instance for Euro 68.4 for alleged breach of a decision of the Court of First Instance granting an injunction prohibiting distribution of "Promocard". The Court of First Instance rejected the claim and Timeapply filed an appeal, which was heard on May 12, 2009; a decision has not yet been issued.
On February 3, 2009, the Hellenic Telecommunications and Post Commission ("HTPC") imposed a fine of Euro 2.0 to OTE, for the alleged refusal to provide the information requested for the purpose of price squeezing control over the price margins for voice telephony. OTE has appealed against this decision, before the Athens Administrative Court of Appeals and also intends to seek the suspension of this decision.
On March 17, 2009, HTPC imposed a fine of Euro 7.0 to OTE for allegedly delayed delivery of lease lines to Hellas On Line S.A. OTE has appealed against this decision, before the Athens Administrative Court of Appeals and also intends to seek the suspension of this decision.
In addition, on March 17, 2009, HTPC imposed a fine of Euro 0.5 to OTE for non-compliance with its decision of provisional measures, regarding the delivery of leased circuits to Hellas On Line S.A. OTE has appealed against this decision, before the Athens Administrative Court of Appeals and also intends to seek the suspension of this decision.
On April 8, 2009, HTPC imposed a fine of Euro 1.5 to OTE for allegedly delaying the provision of information requested from OTE for the purpose of the cost audit. OTE has appealed against this decision, before the Athens Administrative Court of Appeals and also intends to seek the suspension of this decision.
In May 6, 2009, HTPC imposed a fine of Euro 2.0 to OTE for violation of telecommunications law and specifically on the Company's obligation, as a company with significant market power (SMP) in the relevant market, to maintain maximum price level at the retention fee for calls from subscribers of its network to subscribers of mobile network providers. OTE has appealed against this decision, before the Athens Administrative Court of Appeals and also intends to seek the suspension of this decision.
Germanos acquisition case. In 2007, the District Attorney of Athens commenced a preliminary investigation with respect to the propriety of the acquisition of Germanos by COSMOTE following the submission of a report by a number of members of the opposition party of the Greek Parliament, which claimed among other things that the acquisition was not in the business interest of COSMOTE. During the course of the preliminary investigation, members of the board of directors of COSMOTE at the time of the acquisition of Germanos were called and requested to submit explanations in connection with this case. Following the completion of the preliminary investigation, an investigating judge (the 20th Investigating Judge of Athens) was appointed to lead a formal criminal investigation in connection with the potential perpetration of offences. The investigating judge initiated criminal proceedings against the members of the board of directors of COSMOTE at the time of the acquisition of Germanos, investigating alleged abuse of trust ("Apistia"). Upon conclusion of the criminal investigation, a decision will be made on whether an indictment is warranted. Four of the then members of the board of directors of COSMOTE, are still members of the current board of COSMOTE and senior executives of the Group. In addition, the investigating judge ordered the appointment of two independent accounting firms to conduct an expert investigation in order to assess whether the consideration for the acquisition of Germanos (of approximately Euro 1.5 billion for 99.03% of the share capital of Germanos) was reasonable in view of business judgment and internationally accepted and customary financial and contractual practices, and whether the acquisition resulted in financial detriment to COSMOTE, and, in that event, to assess the amount of such detriment. To the extent so be requested, the Group intends to cooperate in relation to this investigation.
Siemens AG case. The District Attorney of Athens has conducted a preliminary investigation in connection with allegations of bribery, money laundering and other criminal offences committed in Germany and Greece by employees of Siemens AG and a number of Greek government officials and other individuals, relating to the award of supply contracts to Siemens AG. In connection with the investigation, the District Attorney has investigated, among other matters, the propriety of, and allegations of criminal conduct in connection with, a framework contract 8002/1997 with Siemens AG, and various equipment orders pursuant to that framework contract in the period following its signing and up to 2004. Framework contract 8002/1997 was signed on December 12, 1997 and related to the supply to OTE by Siemens AG of equipment for the digitalization of the network. In connection with this preliminary investigation, the Company has provided to the investigating authorities certain documents requested. Following the conclusion of the preliminary investigation, criminal charges were filed and an investigating judge (the 4th Special Investigating Judge of Athens) was appointed to lead a formal criminal investigation. To the extent so requested, the Group has cooperated and intends to continue to cooperate with the competent authorities in relation to this investigation. It is understood that, as part of the same investigation, a former senior executive of the Group, was charged for certain criminal offences, including receipt of bribes, and that in May 2009, was remanded in custody pending his trial for the same charges.
Maintenance contracts case. Following the conclusion of a preliminary investigation on the matter, an investigating judge (the 2nd Investigating Judge of Athens) was appointed to lead a formal criminal investigation into the potential perpetration of offences in connection with the propriety of a technical maintenance contract with three of OTE's suppliers. In June 2009, the investigating judge initiated criminal proceedings against members of OTE's Board of Directors and a member of OTE's senior management serving at the time of signing of the relevant contract, in 2004 and 2005, investigating alleged abuse of trust ("Apistia"). Three of these members, are still members of the current Board, whereas the member of OTE's senior management is currently the C.E.O. of ROMTELECOM. The investigation is expected to continue with the above individuals testifying in connection with the case. The above individuals have by this time testified in connection with the case by filing defense briefs. Upon conclusion of the criminal investigation, a decision will be made on whether an indictment is warranted.
The most significant events after the financial position date are as follows:
On July 10, 2009, the Hellenic State notified DEUTSCHE TELEKOM AG of its intent to exercise the first of two put options provided by the share purchase agreement, referring to the acquisition by DEUTSCHE TELEKOM AG of an additional 5% interest in OTE's share capital in a defined price per share. On July 31, 2009, as a result of the exercise of the above put option, the Hellenic State sold to DEUTSCHE TELEKOM AG 24,507,519 shares of OTE representing 5% of its share capital. Following the above mentioned transaction, the Hellenic State's participation in OTE's share capital (direct and indirect) is 20.0% plus one share, while DEUTSCHE TELEKOM AG's participation in OTE's share capital is 30.0% plus one share.
V. FINANCIAL DATA AND INFORMATION
| GROUP | COMPANY | GROUP | COMPANY | ||||||
|---|---|---|---|---|---|---|---|---|---|
| ASSETS | 30.06.2009 | 31.12.2008 | 30.06.2009 31.12.2008 | $01.01 -$ | $01.01 -$ | $01.01 -$ | $01.01 -$ | ||
| Property, plant and equipment | 5.594.3 | 5.872.8 | 2.084.0 | 2,191.5 | 30.06.2009 | 30.06.2008 | 30.06.2009 30.06.2008 | ||
| Intangible assets | 1.374.9 | 1.416.4 | 2.7 | 3.0 Cash flows from operating activities | |||||
| Other non current assets | 745.1 | 758.6 | 5,229.6 | 5.384.9 Profit before tax | 421.9 | 438.0 | 378.4 | 380.7 | |
| Inventories | 232.3 | 201.3 | 35.7 | 32.2 Adjustments for: | |||||
| Trade receivables | 1.149.3 | 1.194.2 | 605.5 | 697.5 Depreciation and amortization | 562.2 | 584.8 | 216.0 | 239.2 | |
| Other current assets | 633.8 | 397.5 | 707.7 | 219.4 Share-based payment | 4.0 | 3.0 | 1.7 | 3.0 | |
| Assets classified as held for sale | 156.6 | Cost of early retirement program | (35.0) | 44.8 | (38.9) | 12.2 | |||
| Cash and eash equivalents | 1.624.2 | 1.427.8 | 421.6 | 344.5 Provisions for staff retirement indemnities and youth account | 43.0 | 41.9 | 42.3 | 40.8 | |
| TOTAL ASSETS | 11,353.9 | 11,425.2 | 9,086.8 | 8,873.0 Other provisions | 62.6 | 47.6 | 26.4 | 30.1 | |
| Foreign exchange differences, net | (3.7) | (7.1) | (1.2) | 0.7 | |||||
| EQUITY AND LIABILITIES | Interest income | (39.6) | (40.0) | (10.8) | (18.3) | ||||
| Share capital | 1,171.5 | 1.171.5 | 1.171.5 | 1.171.5 Dividend income, (sains) / losses and impairment of investments | (34.0) | (29.3) | (312.1) | (287.1) | |
| Other equity items | (62.0) | 140.4 | 2,306.5 | 2.352.5 Release of EDEKT fund prepayment | 17.6 | 17.6 | 17.6 | 17.6 | |
| Equity attributable to shareholders of the parent (a) | 1,109.5 | 1.311.9 | 3.478.0 | 3.524.0 Interest expense | 177.7 | 166.2 | 119.2 | 101.0 | |
| Non-controlling interests (b) | 768.6 | 861.3 | Working capital adjustments: | ||||||
| Total equity $(e) = (a) + (b)$ | 1,878.1 | 2,173.2 | 3,478.0 | 3.524.0 Decrease / (increase) in inventories | (36.4) | 9.7 | (3.5) | 13.9 | |
| Long-term borrowings | 5.409.7 | 5.409.6 | 3.287.2 | 3,288.2 Decrease / (increase) in accounts receivables | (58.4) | (169.6) | 31.8 | (30.7) | |
| Provisions / Other non current liabilities | 908.6 | 839.7 | 744.4 | 668.7 (Decrease) in liabilities (except bank liabilities) | (123.6) | (169.1) | (129.3) | (116.0) | |
| Short-term borrowings | 605.6 | 638.1 | 18.9 | 18.9 Plus/ (Minus): | |||||
| Other current liabilities | 2.551.9 | 2.348.1 | 1.558.3 | 1.373.2 Interest and related expenses paid | (179.1) | (91.3) | (113.1) | (30.1) | |
| Liabilities directly assossiated with the assets classified as held for sale | 16.5 | Income taxes paid | (78.5) | (81.3) | (13.4) | (21.3) | |||
| Total liabilities (d) | 9,475.8 | 9,252.0 | 5,608.8 | 5.349.0 Settlement of receivables due from disposed subsidiaries | 16.6 | ||||
| TOTAL EQUITY AND LIABILITIES (c) + (d) | 11,353.9 | 11,425.2 | 9,086.8 | 8,873.0 Total cash flows from operating activities (a) | 717.3 | 765.9 | 211.1 | 335.7 |
| share capital increase | (48.4) | (848.9) | ٠ | (848.9) | |||||
|---|---|---|---|---|---|---|---|---|---|
| GROUP | $01.01 -$ | $01.01 -$ | $01.04 -$ | $01.04 -$ | Purchase of financial assets | (298.2) | (290.4) | ||
| 30.06.2009 | 30.06.2008 | 30.06.2009 | 30.06.2008 Sale or maturity of financial assets | 115.0 | 5.1 | 108.2 | |||
| nans granted | (0.3) | (0.3) | |||||||
| Total revenue | 2.942.1 | 3.128.0 | 1.487.6 | 1.590.5 Loans proceeds | 4.8 | 51.1 | |||
| Profit before taxes, investment and financial activities | 522.3 | 527.8 | 79.5 | 288.3 Loans proceeds in conjunction with disposal of subsidiaries | 78.5 | ||||
| Profit before tax | 421.9 | 438.0 | 52.8 | 247.5 Purchase of property, plant and equipment and intangible assets | (441.5) | (375.0) | (114.1) | (116.0) | |
| Profit after tax (A) | 278.4 | 297.4 | 7.8 | 160.5 Proceeds from disposal of subsidiaries | 84.8 | 2.5 | |||
| Attributable to: | Interest received | 31.5 | 26.4 | 9.0 | 13.7 | ||||
| Owners of the parent | 271.4 | 300.4 | 4.7 | 159.3 Dividends received | 0.3 | 4.9 | 0.3 | 4.9 | |
| - Non controlling interests | 7.0 | (3.0) | 3.1 | 1.2 Return of capital invested in subsidiary | 102.2 | ||||
| Total cash flows used in investing activities (b) | (473.2) | (1, 187.8) | (133.7) | (944.1) | |||||
| Other comprehensive income after tax (B) | (151.5) | (64.6) | 10.1 | 28.9 | |||||
| Total comprehensive income after tax (A)+(B) | 126.9 | 232.8 | 17.9 | 189.4 Cash flows from financing activities | |||||
| Attributable to: | Proceeds from non-controlling interests for their participation | ||||||||
| - Owners of the parent | 165.9 | 249.8 | 11.0 | 178.5 in subsidiary's share capital increase | 16.9 | $\sim$ | |||
| - Non controlling interests | (39.0) | (17.0) | 6.9 | 10.9 Proceeds of loans granted and issued | 15.2 | 2,701.3 | $\sim$ | 2,700.0 | |
| Repayment of loans | (50.9) | (2, 155.4) | (2, 100.0) | ||||||
| Basic earnings per share (in E) | 0.5537 | 0.6129 | 0.0096 | 0.3250 Dividends paid to Company's owners | (0.3) | (0.8) | (0.3) | (0.6) | |
| Profit before taxes, investment, financial activities and | Dividends paid to non-controlling interests | (1.2) | |||||||
| depreciation and amortization | 1,084.5 | 1,112.6 | 363.9 | 578.8 Total cash flows from / (used in) financing activities (c) | (37.2) | 562.0 | (0.3) | 599.4 | |
| COMPANY | $01.01 -$ | $01.01 -$ | $01.04 -$ | $01.04 -$ | Net increase / (decrease) in cash and cash equivalents (a) + (b) + (i) | 206.9 | 140.1 | 77.1 | (9.0) |
| 30.06.2009 | 30.06.2008 | 30.06.2009 | 30.06.2008 Cash and eash equivalents at the beginning of the period | 1.429.7 | 1.316.3 | 344.5 | 459.2 | ||
| the formation and the same of the company | 14.05.41 |
| Total revenue | 1,195.8 | 1,284.8 | 590.8 | 646.8 Cas | |
|---|---|---|---|---|---|
| Profit / (Loss) before taxes, investment and financial activities | 173.5 | 177.0 | (97.9) | 87.5 | |
| Profit before tax | 378.4 | 380.7 | 170.9 | 336.1 ADI | |
| Profit after tax (A) | 315.4 | 341.9 | 162.8 | 313.2111 | |
| in | |||||
| Other comprehensive income after tax (B) | 2.2 | (20.6) | 4.1 | $(6.8)$ 21 Th | |
| Total comprehensive income after tax (A)+(B) | 317.6 | 321.3 | 166.9 | 306.4 31Th | |
| Δ. | |||||
| Profit before taxes, investment, financial activities and | |||||
| depreciation and amortization | 389.5 | 416.2 | 8.5 | 205.2 | Ъ. |
| c. On March 26, 2009, an amendment was submitted to a draft law of the Ministry of Employment and Social Security, according to which: OTE's en | ||||||
|---|---|---|---|---|---|---|
| GROUP | COMPANY | who i) have submitted a written application for participating in the Voluntary Leave Scheme, within the deadlines defined in par.2, article 74 of | ||||
| 30.06.2009 30.06.2008 30.06.2009 30.06.2008 | L.3371/2005 and ii) will not submit an irrevocable application that would recall the initial submitted application within one (1) month from the law | |||||
| enactment, are retired based on the article 74 of L 3371/2005 within three (3) months from the exairation of the deadline, On May 15, 2009 the | ||||||
| [otal equity at the beginning of the period (01.01.2009 and 01.01.2008 | 2.173.2 | 3.054.6 | 3.524.0 | 3.549.0 | aforementioned amendment was enacted by the L. 3762/FEK A 75/15.5.2009. This event is presented in Note 11 of the financial statements. | |
| 'otal comprehensive income after tax | 126.9 | 232.8 | 317.6 | 321.3 | d. On May 12, 2009, the transfer of 100% of COSMOFON through the sale of COSMOTE's wholly owned subsidiary. OTE MTS HOLDING B.V., as well a | |
| hare-based payments | 4.0 | 3.0 | 4.0 | 3.0 | GERMANOS TELECOM AD SKOPJE (GTS) to Telekom Slovinije was completed. COSMOFON and GERMANOS TELECOM SKOPJIE are included in the | |
| Widends | (367.6) | (367.6) | (367.6) | (367.6) | consolidated financial statements until the date the Group ceased to control those companies (May 12, 2009). The effect on the consolidated fina | |
| let change of participation in subsidiaries | (48.4) | (843.2) | statements is presented in Note 4. | |||
| Obligation to acquire non-controlling interests | (10.0) | e.On July 1, 2009 OTE announced that its subsidiary COSMOTE signed on June 30, 2009 a share purchase agreement for the acquisition of Telemol | ||||
| Total equity at the end of the period (30.06.2009 and 30.06.2008) | 1.878.1 | 2.079.6 | 3.478.0 | 3.505.7 | (ZAPP) in Romania. The consideration for the shares of ZAPP is estimated at approximately 6 61 million (equity value), while COSMOTE will also ass | |
| the debt and other liabilities of ZAPP, estimated at approximately € 146 million. The acquisition is subject to the approval of relevant Romanian auth | ||||||
| This event is presented in Note 4 of the financial statements. | ||||||
| 4) The outcome of pending litigation and claims is not expected to have a material impact on the financial statements. The amount of provisions that i | ||||||
| been established as of June 30, 2009 for litigations and other risks, as well as for unaudited tax wars are as follows; a) for the Company € 109.1 mi | ||||||
| and € 8.3 million respectively and b) for the Group € 110.5 million and € 19.4 million respectively | ||||||
| 5) Number of employees at the end of the period : Group 33.160 (30.06.2008: 33.062), Company 11.941 (30.06.2008: 12.123) | ||||||
| 6) Other comprehensive income (after tax) which was recognized directly in equity for the Group, relates to foreign currency translation and fair value | ||||||
| difference from the valuation of available for sale marketable securities (listed on the Athens Exchange) and the impact of cash flow hedge. As for th | ||||||
| Company relates to the fair value difference of available for sale securities. | ||||||
| 7) Effective February 1, 2009, the financial statements are included in the consolidated financial statements of DEUTSCHE TELEKOM AG (full consol | ||||||
| method), which has its registered office in Germany and holds a 25,00% interest in OTE plus one share. | ||||||
| 8) The Company's transactions with its related parties as defined in IAS 24, are analyzed as follows: Sales and purchases of goods and services for the | ||||||
| six months of 2009, amounted to € 100.3 million and € 150.7 million, respectively. Interest income and expense for the first six months of 2009 and | ||||||
| to € 1.1 million and € 89.6 million respectively. The outstanding balance of receivables and payables from/to related parties as of June 30, 2009 de | ||||||
| from current transactions amounted to € 80.8 million and € 133.8 million, respectively. The outstanding balance of payables to related parties from | ||||||
| loans granted amounted to € 3,387.4 million. Fees paid to the members of the Board of Directors of the Company and the Company's key manageme | ||||||
| personnel compensation charged to the Income Statement for the first six months of 2009, amount to € 1.7 million. Based on OTE's share option pl | ||||||
| 999.230 stock options have been granted to key management personnel. At Group level sales and purchases of goods and services, between relater | ||||||
| parties which are not eliminated. for the first six months of 2009 amounted to € 8.7 million and € 7.8 million, respectively. The outstanding balance | ||||||
| receivables and pavables, between related parties which are not eliminated, as of June 30, 2009 derived from operating transactions amounted to € | ||||||
| million and € 15.2 million, respectively. Amount due to related parties as a result of OTE's dividend distribution as of June 30, 2009 equals € 82.7 r | ||||||
| 9) Basic earnings per share were calculated based on the weighted average number of shares outstanding. | ||||||
| 10)The most signicant events that have occurred after June 30, 2009 are presented in the Note 18 of the financial statements | ||||||
| Athens, August 5, 2009 | ||||||
| CHAIRMAN AND MANAGING DIRECTOR | VICE CHAIRMAN | CHIEF FINANCIAL OFFICER | CHIEF ACCOUNTING OFFICER | |||
| PANAGIS VOURLOUMIS LD. Number N.00000 |
CHARALAMBOS DIMITRIOU D. Number 14 0000E0 |
CHRISTINI SPANOUDAKI IB Number LOCCZCO |
KONSTANTINOS VASILOPOULOS LD Number 0 E00300 |
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