Deutsche Telekom Ag · XETR:DTE

Deutsche Telekom — Investor Presentation (April 2005)

29 slides from Deutsche Telekom's investor presentation, April 2005

  1. Slide 1: IFRS and New Structure. April 2005

    Deutsche Telekom IFRS and New Structure. April 2005. Investor Relations

  2. Slide 2: Disclaimer 1

    Disclaimer 1. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “project” and “should ” and similar expressions are inten

  3. Slide 3: Disclaimer 2

    Disclaimer 2. The Committee of European Securities Regulators recommends that selected IFRS financial information be disclosed in the reporting on the 2004 financial year. In line with this recommendation, we are presenting here the preliminary consolidated balance sheets, consolidated income statem

  4. Slide 4: Background to the reporting changes

    IFRS and New Structure. Background to the reporting changes. „ DT is required to move to IFRS accounting from 2005 onwards. „ Change of group structure following strategic realignment towards three strategic business units rather than four divisions. „ Q1 2005 will be the first interim report under

  5. Slide 5: A different philosophy behind German GAAP and IFRS

    IFRS and New Structure. Adifferent philosophy behind German GAAP and IFRS. German GAAP IFRS Protection of debt holders Protection of equity holders Prudence principle Matching principle over prudence principle Historical Cost Accounting (Partial) Fair Value Accounting Investor Relations Preliminary

  6. Slide 6: Revenue recognition

    IFRS. Revenue recognition. „ Activation fees Revenue from activation fees is – different to German GAAP – spread over the average duration of customer relationship. „ Construction contracts (percentage-of-completion method) Under German GAAP revenue recognition is not allowed before completion of th

  7. Slide 7: Revenue recognition: impact

    IFRS. Revenue recognition. Impact on Equity 31.12.2004 31.12.2003 01.01.2003 € billion (IFRS) Revenue recognition -1.2 -1.1 -1.1 Impact of revenue recognition on P&L FY 2004 FY 2003 € billion (IFRS) On revenue -0.5 -0.3 On EBITDA -0.1 0.0 On net income -0.1 0.0 Investor Relations Preliminary and una

  8. Slide 8: Goodwill and mobile licenses (1)

    IFRS. Goodwill and mobile licenses (1). Goodwill: „ No amortization of goodwill under IFRS (similar to US GAAP) (impairment-only approach). „ Annual impairment test. „ In contrast to US GAAP one-step impairment test. „ Same approach to evaluate whether impairment is necessary, but different approach

  9. Slide 9: Goodwill and mobile licenses (2)

    IFRS. Goodwill and mobile licenses (2). UMTS Licenses: „ German GAAP: amortization starting at date of acquisition. „ IFRS (similar to US GAAP): amortization with start of network operation. „ Under IFRS no recognition of borrowing costs (similar to German GAAP, different to US GAAP). Impact UMTS Li

  10. Slide 10: Goodwill and mobile licenses (3)

    IFRS. Goodwill and mobile licenses (3). FCC Licenses (mobile licenses USA): „ German GAAP: amortization. „ IFRS (similar to US GAAP): “impairment-only approach” due to indefinite useful life. Impact FCC Licenses: „ Reversal of amortization and impairments charged under German GAAP. „ Impairment test

  11. Slide 11: Goodwill and mobile licenses (4)

    IFRS. Goodwill and mobile licenses (4). Impact on Equity 31.12.2004 31.12.2003 01.01.2003 € billion (IFRS) Goodwill -3.1 -3.5 -6.0 Mobile licenses +9.8 +13.1 +14.0 Impact on P&L FY 2004 FY 2003 € billion (IFRS) Goodwill amortization +0.1 +1.6 Mobile licenses amortization -3.1 +1.1 Investor Relations

  12. Slide 12: Provisions

    IFRS. Provisions. Pension provisions: „ No additional minimum liability under IFRS. „ Different treatment of actuarial gains and losses under IFRS: recognition in shareholders’ equity at the date of transition (IFRS 1). „ Interest costs presented in financial result, not in operating result. „ Reduc

  13. Slide 13: Provisions: impact

    IFRS. Provisions. Impact on Equity 31.12.2004 31.12.2003 01.01.2003 € billion (IFRS) Provisions +1.6 +1.5 +1.1 Impact of provisions on P&L FY 2004 FY 2003 € billion (IFRS) EBITDA (adj.) 0.0 +0.4 Net income (adj.) -0.4 +0.1 Net Income (unadj.) +0.1 +0.4 Investor Relations Preliminary and unaudited fi

  14. Slide 14: Internally generated software and borrowing costs

    IFRS. Internally generated software and borrowing costs. Software: „ Recognizing internally generated software, which is not permissible under German GAAP, increases shareholders’ equity under IFRS in all of the periods presented. In the periods following the recognition, net profit under IFRS remai

  15. Slide 15: Deferred Taxes

    IFRS. Deferred Taxes. „ Differences between IFRS and German GAAP relate in particular to Deutsche Telekom’s “contribution goodwill”, tax loss carryforwards and general recognition and measurement differences between IFRS and German GAAP: „ Deferred tax asset: “contribution goodwill” recognized in ta

  16. Slide 16: ABS

    IFRS. ABS. „ As part of asset-backed securities (ABS) transactions, mostly financial assets are sold to a special-purpose entity (SPE). The SPE refinances itself on the capital market. „ Under IFRS, SPEs must generally be consolidated by the economic beneficiary. In total, there are three SPEs arisi

  17. Slide 17: Leasing

    IFRS. Leasing. „ A considerably larger number of leases tends to be classified as finance leases under IFRS. While in an operating lease it is the lessor that recognizes the asset, it is the lessee that recognizes the asset in a finance lease. „ Deutsche Telekom has entered into sale and leaseback t

  18. Slide 18: Leasing: impact

    IFRS. Leasing. Impact on net debt 31.12.2004 31.12.2003 01.01.2003 € billion (IFRS) Leasing +2.5 +2.4 +1.8 Impact on P&L FY 2004 FY 2003 € billion (IFRS) Leasing (EBITDA-impact) +0.1 0.0 Leasing (net profit-impact) -0.1 -0.3 Investor Relations Preliminary and unaudited figures IFRS & New Structure A

  19. Slide 19: Measurement of investments not fully consolidated

    IFRS. Measurement of investments not fully consolidated and not accounted for in the consolidated financial statements under the equity method. „ Investments not fully consolidated and not accounted for in the consolidated financial statements under the equity method must be measured at fair value a

  20. Slide 20: In a nutshell

    IFRS. In a nutshell. € billion IFRS 2004 German GAAP IFRS 2003 German GAAP 2004 2003 Revenue 57.4 57.9 55.5 55.8 Adj. EBITDA 19.6 19.4 18.6 18.3 Adj. net income 3.7 2.2 2.3 0.2 Net income 1.6 4.6 1.9 1.3 Shareholders‘ Equity 45.9 37.9 43.8 33.8 Net debt 39.6 35.2 50.7 46.6 Free Cash Flow 10.3 10.2 8

  21. Slide 21: Impact on adj. EBITDA

    IFRS. Impact on adj. EBITDA. FY 2004 FY 2003 Excl. special Exc. Special € billion effects effects EBITDA (German GAAP) 19.4 18.3 Leasing (Regrouping in depreciation and net interest expense) 0.1 0.0 Interest pension provisions/PBeaKK (Regrouping into net interest expense) 0.2 0.3 Valuation pension p

  22. Slide 22: Net income reconciliation 2004 and 2003

    IFRS. Net income reconciliation 2004 and 2003. Full year 2004 Full year 2003 € billion Incl. SE Excl. SE Incl. SE Excl. SE Net income under German GAAP 4.6 2.2 1.3 0.2 Income applicable to minority shareholders 0.3 0.4 0.4 0.4 Income after taxes under German GAAP 4.9 2.6 1.6 0.6 Goodwill 0.1 2.6 1.6

  23. Slide 23: Reconciliation of Cash Flow

    IFRS. Reconciliation of Cash Flow. € million FY 2004 FY 2003 Net cash provided by operating activities (German GAAP) 16,307 14,316 Net cash provided by operating activities (IFRS) 16,721 15,053 Net cash used for investing activities (German GAAP) -4,318 -2,073 Net cash used for investing activities

  24. Slide 24: Reconciliation of equity

    IFRS. Reconciliation of equity. € billion 31.12.2004 31.12.2003 01.01.2003 Shareholders equity under German GAAP 37.9 33.8 35.4 Goodwill -3.1 -3.5 -6.0 Mobile licenses +9.8 +13.1 +14.0 Provisions +1.6 +1.5 +1.1 Revenue recognition -1.2 -1.1 -1.1 Deferred tax assets +6.4 +7.4 +9.1 Deferred tax liabil

  25. Slide 25: Net debt

    IFRS. Net debt. € billion 31.12.2004 31.12.2003 01.01.2003 Net debt under German GAAP 35.2 46.6 61.1 ABS +1.6 +1.2 +1.2 Leasing +2.5 +2.4 +1.8 Other +0.3 +0.5 +0.2 Net debt under IFRS 39.6 50.7 64.3 Investor Relations Preliminary and unaudited figures IFRS & New Structure April 2005, Page 25

  26. Slide 26: New structure. In a nutshell

    New structure. In a nutshell. Broadband Business Mobile Group HQ Fixed Customers Comms. and network Shared Services T-Com SMEs & NetPro CEE Mobile T-Mobile T-Systems GNF, ICSS and NWS T-Online Group HQ Billing S & C Investor Relations Preliminary and unaudited figures IFRS & New Structure April 2005

  27. Slide 27: Strategic Business Unit Broadband/Fixed network

    New Structure. The Strategic Business Unit Broadband/Fixed network . FY 2004 T-Com Changes Impact T-Com New T-Online Broadband/ [German IFRS and Changes IFRS IFRS Fixed GAAP Old] Mobile CEE SMEs, ICSS, Network NWS, GNF € million and consolid. Total Revenue 27,814 -1,561 -652 25,601 2,012 27,010 EBIT

  28. Slide 28: Strategic Business Unit Mobile

    New Structure. The Strategic Business Unit Mobile. FY 2004 Mobile Changes Changes Mobile [German Mobile CEE IFRS Commu- € million GAAP Old] nications Total Revenue 24,995 1,582 -50 26,527 EBITDA 10,596 676 -2,809 8,463 EBITDA-Margin 42.4% 42.7% 31.9% Adj. EBITDA 7,668 676 51 8,395 Adj. EBITDA-Margin

  29. Slide 29: Strategic Business Unit Business Customers

    New Structure. The Strategic Business Unit Business Customers. FY 2004 T-Systems Changes Impact Business [German IFRS Changes Customers GAAP Old] SMEs, NetPro, GNF, NWS, Billing S&C and € million consolid. Total Revenue 10,537 -168 2,588 12,957 EBITDA 1,357 -48 208 1,517 EBITDA-Margin 12.9% n.m. n.m

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