Deutsche Telekom AG - The 2009 financial year

Consolidated income statement and effects of special factors.a millions of € 2009 Special factors 2009 excluding special factors 2008 Special factors 2008 excluding special factors Net revenue 64,602 (37)b 64,639 61,666 61,666 Cost of sales (36,259) (436)c (35,823) (34,592) (937)k (33,655) Gross profit (loss) 28,343 (473) 28,816 27,074 (937) 28,011 Selling expenses (15,863) (83)d (15,780) (15,952) (485)l (15,467) General and administrative expenses (4,653) (206)e (4,447) (4,821) (224)m (4,597) Other operating income 1,504 86f 1,418 1,971 510n 1,461 Other operating expenses (3,319) (2,470)g (849) (1,232) (644)o (588) Profit (loss) from operations (EBIT) 6,012 (3,146) 9,158 7,040 (1,780) 8,820 Profit (loss) from financial activities (3,357) (232)h (3,125) (3,588) (652)p (2,936) Profit (loss) before income taxes 2,655 (3,378) 6,033 3,452 (2,432) 5,884 Income taxes (1,782) 320i (2,102) (1,428) 461q (1,889) Profit after income taxes 873 (3,058) 3,931 2,024 (1,971) 3,995 Profit (loss) attributable to non-controlling interests 520 (21) 541 541 (28) 569 Net profit (loss) 353 (3,037) 3,390 1,483 (1,943) 3,426 Profit (loss) from operations (EBIT) 6,012 (3,146) 9,158 7,040 (1,780) 8,820 Depreciation, amortization and impairment losses (13,894) (2,384)j (11,510) (10,975) (336)r (10,639) EBITDA 19,906 (762) 20,668 18,015 (1,444) 19,459 EBITDA margin (%) 30.8 32.0 29.2 31.6 a EBITDA for the operating segments and the Group as a whole is derived from profit/loss from operations (EBIT). This measure of earnings before profit/loss attributable to non-controlling interests, income taxes and profit/loss from financial activities is additionally adjusted for depreciation, amortization and impair- ment losses to calculate EBITDA. It should be noted that Deutsche Telekom’s definition of EBITDA may differ from that used by other companies. In this definition, profit/loss from financial activities includes finance costs, the share of profit/ loss of associates and joint ventures accounted for using the equity method, and other financial income/expense. As it is based on profit/loss from operations, this method of computa- tion allows EBITDA to be derived in a uniform manner on the basis of a measure of earnings in accordance with IFRS published for the operating segments and the Group as a whole. In the reporting period as well as the comparable prior- year period, Deutsche Telekom’s net profit/loss as well as the EBITDA of the Group and of the operating segments were affected by a number of special factors. Deutsche Telekom defines EBITDA adjusted for special factors as profit/loss from operations (EBIT) before depreciation, amortization and impair- ment losses and before the effects of any special factors. The underlying concept involves the elimination of special factors that affect operational business activities and thus impair the comparability of EBITDA and net profit/loss with the correspond- ing figures for prior periods. In addition, statements about the future development of EBITDA and net profit are only possible to a limited extent due to such special factors. Adjustments are made irrespective of whether the relevant income and expenses are reported in profit/loss from operations, profit/loss from finan- cial activities, or in tax expense. Income and expenses directly relating to the adjusted items are adjusted. To compare the earnings performance of profit-oriented units of different sizes, EBITDA margin and the adjusted EBITDA margin are presented in addition to EBITDA and adjusted EBITDA. The EBITDA margin is calculated as the ratio of EBITDA to net revenue (EBITDA divided by net revenue). Special factors in 2009: b Revenue credit in the fourth quarter of 2009 for fixed-network support services performed in previous years in the Germany operating segment. c Mainly expenses for staff-related measures in the Germany operating segment (EUR – 0.2 billion) and non-staff-related restructuring in the Systems Solutions operating segment (EUR – 0.1 billion). The Southern and Eastern Europe operating segment includes expenses for staff-related measures at Hellenic Telecommunications Organization S.A. (OTE), which are offset by proceeds from the involvement of the Hellenic Republic in a staff-related program at OTE. d Mainly expenses for staff-related measures in the Germany operating segment (EUR –0.1 billion). The Southern and Eastern Europe operating segment includes expenses for staff-related measures at OTE, which are offset by proceeds from the involve- ment of the Hellenic Republic in a staff-related program at OTE. e Expenses for staff-related measures (EUR – 0.1 billion) and non-staff-related restructuring (EUR – 0.1 billion). f Mainly gains on the disposal of Vivento Technical Services at Group Headquarters & Shared Services. Furthermore, income from the reversal of a provision resulting from the completion of the staff restructuring program and gain on the disposal of CAP Customer Advantage Program GmbH in the Germany operating segment. g Mainly impairment losses recognized on the goodwill of the cash-generating unit T-Mobile UK in the Europe operating seg- ment in the first quarter of 2009 (EUR –1.8 billion) and on the goodwill of cash-generating units in the Southern and Eastern Europe operating segment (EUR –0.5 billion). h Mainly expenses for interest added back to provisions for staff-related measures (EUR – 0.2 billion). i Mainly tax benefits from expenses for staff-related measures (EUR 0.2 billion) and non-staff-related restructuring (EUR 0.1 billion). j Mainly impairment losses recognized on the goodwill of the cash-generating unit T-Mobile UK in the first quarter of 2009 and on the goodwill of cash-generating units in the Southern and Eastern Europe operating segment. Special factors in 2008: k Mainly expenses for staff-related measures in the Germany (EUR –0.5 billion) and Systems Solutions (EUR –0.2 billion) operating segments as well as non-staff-related restructuring in the Systems Solutions operating segment (EUR –0.2 billion). l Mainly expenses for staff-related measures in the Germany (EUR –0.2 billion) and Systems Solutions (EUR –0.1 billion) operating segments. m Mainly expenses for staff-related measures in the Germany (EUR – 0.1 billion) and Systems Solutions (EUR –0.1 billion) operating segments as well as at Group Headquarters & Shared Services (EUR 0.1 billion). n Income from the disposal of Media&Broadcast in the Systems Solutions operating segment (EUR 0.5 billion). o Mainly expenses related to the disposal of DeTe Immobilien (EUR –0.3 billion) at Group Headquarters & Shared Services and impairment losses on goodwill in the Europe (EUR –0.1 billion) and Southern and Eastern Europe (EUR – 0.2 billion) operating segments. p Primarily impairment loss on the carrying amount of OTE under share of profit/loss of associates and joint ventures accounted for using the equity method (EUR – 0.5 billion), and expenses for interest added back to provisions for staff-related measures. (EUR –0.1 billion). q Mainly tax benefits from expenses for staff-related measures (EUR 0.2 billion) and non-staff-related restructuring (EUR 0.2 billion). r Mainly impairment losses on goodwill in the Southern and Eastern Europe (EUR –0.2 billion) and Europe (EUR –0.1 billion) operating segments. 72