Telefonica - Consolidated Financial Statements Telefonica 2014

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Telefonica - Consolidated Financial Statements Telefonica 2014

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<ul><li><p> AUDIT REPORT, CONSOLIDATED ANNUAL FINANCIAL </p><p>STATEMENTS, AND CONSOLIDATED MANAGEMENT REPORT ALL FOR THE YEAR ENDED DECEMBER 31, 2014 </p></li><li><p> 2014 Consolidated financial statements (Consolidated annual accounts) and Consolidated management report for 2014 </p><p>Telefnica, S.A. and subsidiaries composing the Telefnica Group </p></li><li><p>Index Consolidated statements of financial position at December 31 ............................................................ 4 </p><p>Consolidated income statements for the years ended December 31 .................................................. 5 </p><p>Consolidated statements of comprehensive income for the years ended December 31 ................ 6 </p><p>Consolidated statements of changes in equity for the years ended December 31 ........................... 7 </p><p>Consolidated statements of cash flows for the years ended December 31 ........................................ 8 </p><p>Note 1. Background and general information ............................................................................................ 9 </p><p>Note 2. Basis of presentation of the consolidated financial statements ............................................ 10 </p><p>Note 3. Accounting policies ........................................................................................................................... 16 </p><p>Note 4. Segment information ...................................................................................................................... 23 </p><p>Note 5. Business combinations and acquisitions of non-controlling interests ................................. 28 </p><p>Note 6. Intangible assets ............................................................................................................................... 31 </p><p>Note 7. Goodwill............................................................................................................................................... 33 </p><p>Note 8. Property, plant and equipment ..................................................................................................... 37 </p><p>Note 9. Associates and joint ventures ........................................................................................................ 39 </p><p>Note 10. Related parties ................................................................................................................................ 42 </p><p>Note 11. Trade and other receivables ......................................................................................................... 44 </p><p>Note 12. Equity ................................................................................................................................................ 45 </p><p>Note 13. Financial assets and liabilities ...................................................................................................... 53 </p><p>Note 14. Trade and other payables............................................................................................................. 61 </p><p>Note 15. Provisions ......................................................................................................................................... 63 </p><p>Note 16. Derivative financial instruments and risk management policies ......................................... 70 </p><p>Note 17. Income tax matters ........................................................................................................................ 82 </p><p>Note 18. Revenue and expenses ................................................................................................................. 89 </p><p>Note 19. Share-based payment plans ........................................................................................................ 93 </p><p>Note 20. Cash flow analysis .......................................................................................................................... 95 </p><p>Note 21. Other information .......................................................................................................................... 99 </p><p>Note 22. Finance leases ............................................................................................................................... 107 </p></li><li><p>Note 23. Events after the reporting period .............................................................................................. 109 </p><p>Note 24. Additional note for English translation .................................................................................... 109 </p><p>Appendix I: Changes in the consolidation scope..................................................................................... 110 </p><p>Appendix II: Board of Directors Compensation ...................................................................................... 113 </p><p>Appendix III: Debentures and bonds ......................................................................................................... 120 </p><p>Appendix IV: Financial instruments ........................................................................................................... 124 </p><p>Appendix V: Interest-bearing debt ............................................................................................................. 134 </p><p>Appendix VI: Main companies comprising the Telefnica Group ....................................................... 135 </p><p>Appendix VII: Key regulatory issues and concessions and licenses held by the Telefnica Group ........................................................................................................................................................................... 143 </p><p>2014 Consolidated Management Report ................................................................................................ 174 </p><p>Business model .............................................................................................................................................. 174 </p><p>Financial Results ............................................................................................................................................ 176 </p><p>2014 Consolidated results ........................................................................................................................... 180 </p><p>Segments Discussion ................................................................................................................................... 192 </p><p>Definitions ....................................................................................................................................................... 215 </p><p>Services and products .................................................................................................................................. 218 </p><p>Share price performance ............................................................................................................................. 220 </p><p>Research, Development and Innovation .................................................................................................. 221 </p><p>Human Resources ......................................................................................................................................... 223 </p><p>Environment ................................................................................................................................................... 225 </p><p>Liquidity and Capital Resources ................................................................................................................. 226 </p><p>Treasury shares ............................................................................................................................................. 229 </p><p>Risks and uncertainties facing the company .......................................................................................... 232 </p><p> Trend evolution ............................................................................................................................................. 245 </p><p>Events after the reporting period ............................................................................................................... 247 </p><p>Annual Corporate Governance Report for Listed Companies .............................................................. 248 </p></li><li><p>2014 Consolidated Financial Statements </p><p>Telefnica, S.A. 4 </p><p>Telefnica Group </p><p>Consolidated statements of financial position at December 31 </p><p>Millions of euros NOTES 2014 2013 ASSETS A) NON-CURRENT ASSETS 99,435 89,597 Intangible assets (Note 6) 22,353 18,548 Goodwill (Note 7) 25,111 23,434 Property, plant and equipment (Note 8) 33,343 31,040 Investments accounted for by the equity method (Note 9) 788 2,424 Non-current financial assets (Note 13) 10,973 7,775 Deferred tax assets (Note 17) 6,867 6,376 B) CURRENT ASSETS 22,864 29,265 Inventories 934 985 Trade and other receivables (Note 11) 10,606 9,640 Tax receivables (Note 17) 1,749 1,664 Current financial assets (Note 13) 2,932 2,117 Cash and cash equivalents (Note 13) 6,529 9,977 Non-current assets held for sale (Note 2) 114 4,882 TOTAL ASSETS (A+B) 122,299 118,862 </p><p> NOTE 2014 2013 EQUITY AND LIABILITIES A) EQUITY 30,289 27,482 Equity attributable to equity holders of the parent and other holders of equity instruments (Note 12) 21,115 21,185 Equity attributable to non-controlling interests (Note 12) 9,174 6,297 B) NON-CURRENT LIABILITIES 62,311 62,236 Non-current interest-bearing debt (Note 13) 50,688 51,172 Non-current trade and other payables (Note 14) 2,377 1,701 Deferred tax liabilities (Note 17) 2,566 3,063 Non-current provisions (Note 15) 6,680 6,300 C) CURRENT LIABILITIES 29,699 29,144 Current interest-bearing debt (Note 13) 9,094 9,527 Current trade and other payables (Note 14) 16,943 15,221 Current tax payables (Note 17) 2,026 2,203 Current provisions (Note 15) 1,595 1,271 Liabilities associated with non-current assets held for sale (Note 2) 41 922 TOTAL EQUITY AND LIABILITIES (A+B+C) 122,299 118,862 The accompanying Notes 1 to 24 and Appendices I to VII are an integral part of these consolidated statements of financial position. </p></li><li><p>2014 Consolidated Financial Statements </p><p>Telefnica, S.A. 5 </p><p>Telefnica Group </p><p>Consolidated income statements for the years ended December 31 </p><p>Millions of euros NOTES 2014 2013 2012 INCOME STATEMENTS Revenues (Note 18) 50,377 57,061 62,356 Other income (Note 18) 1,707 1,693 2,323 Supplies (15,182) (17,041) (18,074) Personnel expenses (7,098) (7,208) (8,569) Other expenses (Note 18) (14,289) (15,428) (16,805) OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (OIBDA) 15,515 19,077 21,231 Depreciation and amortization (Note 18) (8,548) (9,627) (10,433) OPERATING INCOME 6,967 9,450 10,798 Share of loss of investments accounted for by the equity method (Note 9) (510) (304) (1,275) Finance income 992 933 963 Exchange gains 4,110 3,323 2,382 Finance costs (3,511) (3,629) (4,025) Exchange losses (4,413) (3,493) (2,979) Net financial expense (Note 16) (2,822) (2,866) (3,659) PROFIT BEFORE TAX 3,635 6,280 5,864 Corporate income tax (Note 17) (383) (1,311) (1,461) PROFIT FOR THE YEAR 3,252 4,969 4,403 Non-controlling interests (Note 12) (251) (376) (475) PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 3,001 4,593 3,928 Basic and diluted earnings per share attributable to equity holders of the parent (euros) (Note 18) 0.61 0.99 0.85 The accompanying Notes 1 to 24 and Appendices I to VII are an integral part of these consolidated income statements. </p></li><li><p>2014 Consolidated Financial Statements </p><p>Telefnica, S.A. 6 </p><p>Telefnica Group </p><p>Consolidated statements of comprehensive income for the years ended December 31 </p><p>Millions of euros 2014 2013 2012 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Profit for the year 3,252 4,969 4,403 Other comprehensive income (loss) (Losses) gains on measurement of available-for-sale investments (45) 32 (49) Income tax impact 7 (10) 4 Reclassification of losses included in the income statement 51 46 Income tax impact (15) (3) (38) 58 (2) </p><p>(Losses) gains on hedges (507) 831 (1,414) Income tax impact 127 (247) 376 Reclassification of losses included in the income statement (Note 16) 163 121 173 Income tax impact (49) (36) (5) (266) 669 (870) </p><p>Share of losses recognized directly in equity of associates and others (27) (29) (27) Income tax impact 3 4 9 Reclassification of losses included in the income statement 103 1 4 Income tax impact (24) 55 (24) (14) </p><p>Translation differences (2,810) (6,454) (1,862) </p><p>Total other comprehensive loss recognized in the period (Items that may be reclassified subsequently to profit or loss) (3,059) (5,751) (2,748) </p><p>Actuarial losses and impact of limit on assets for defined benefit pension plans (173) (49) (154) Income tax impact 38 1 39 (135) (48) (115) </p><p>Total other comprehensive loss recognized in the period (Items that will not be reclassified subsequently to profit or loss) (135) (48) (115) </p><p>Total comprehensive income (loss) recognized in the year 58 (830) 1,540 Attributable to: Equity holders of the parent and other holders of equity instruments (258) (434) 1,652 Non-controlling interests 316 (396) (112) 58 (830) 1,540 The accompanying Notes 1 to 24 and Appendices I to VII are an integral part of these consolidated statements of comprehensive income. </p></li><li><p>2014 Consolidated Financial Statements </p><p>Telefnica, S.A. 7 </p><p>Consolidated statements of changes in equity for the years ended December 31 </p><p>Attributable to equity holders of the parent and other holders of equity instruments Non-controlling </p><p>interests (Note 12) </p><p>Total equity </p><p>Millions of euros </p><p>Share capital </p><p>Share premium </p><p>Treasury Shares </p><p>Other equity instruments </p><p>Legal reserve Retained earnings </p><p>Available-for-sale </p><p>investments </p><p>Hedges Equity of associates and others </p><p>Translation differences </p><p>Total </p><p> Financial position at December 31, 2013 4,551 460 (544) 2,466 984 22,517 94 (37) (31) (9,275) 21,185 6,297 27,482 Profit for the year 3,001 3,001 251 3,252 Other comprehensive loss (121) (39) (297) 55 (2,857) (3,259) 65 (3,194) Total comprehensive income 2,880 (39) (297) 55 (2,857) (258) 316 58 Dividends distribution (Note 12) 106 (2,138) (2,032) (406) (2,438) Net movement in treasury shares (1,042) (113) (1,155) (1,155) Acquisitions and disposals of non-controlling interests and business combinations (Note 5) (307) (307) 2,965 2,658 Undated Deeply Subordinated Securities and notes mandatorily convertible (Note 12) 3,885 (129) 3,756 3,756 Other movements (74) (74) 2 (72) Financial position at December 31, 2014 4,657 460 (1,586) 6,351 984 22,636 55 (334) 24 (12,132) 21,115 9,174 30,289 Financial position at December 31, 2012 4,551 460 (788) 984 19,569 36 (715) (7) (3,629) 20,461 7,200 27,661 Profit for the year 4,593 4,593 376 4,969 Other comprehensive loss (48) 58 678 (24) (5,691) (5,027) (772) (5,799) Total comprehensive loss 4,545 58 678 (24) (5,691) (434) (396) (830) Dividends distribution (Note 12) (1,588) (1,588) (739) (2,327) Net movement...</p></li></ul>

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