The consolidated financial statements as of 31 December 2003, were compiled in compliance with IFRS. These statements are exempting consolidated financial statements under § 245a of the Austrian Commercial Code (HGB) and comply with the directives of the European Union regarding group accounting (Directive 83/349/EEC). The accounting, valuation and consolidation methods deviating from Austrian law are explained below.

MAIN DIFFERENCES BETWEEN AUSTRIAN FINANCIAL REPORTING AND INTERNATIONAL FINANCIAL REPORTING STANDARDS

Austrian financial reporting and International Financial Reporting Standards are based on fundamentally different principles. While the Austrian Commercial Code (HGB) focuses on the principle of prudence and the protection of creditors, IFRS standards primarily focus on supplying shareholders with relevant information. For this reason, the comparability of financial statements – both those from different years and different companies – is given greater priority under IFRS than under the Austrian Commercial Code (HGB).

Under IFRS, deferred tax assets and liabilities resulting from the temporary differences between tax bases and valuations in the IFRS balance sheet must be recognized at the prevailing tax rate. Deferred tax assets from tax loss carryforwards must be capitalized depending on their probability of being realized. Under Austrian reporting rules, there is an option to recognize deferred tax assets; the recognition of deferred tax assets from tax loss carryforwards is not regulated explicitly under the Austrian Commercial Code, but, according to prevailing opinion, this practice tends to be rejected.

Under IFRS, provisions must be created for obligations to third parties when it is likely (i.e., more likely than not) that the obligations will have to be settled and when the provision can be calculated reliably. By contrast, the creation of provisions under the Austrian Commercial Code is based on the principle of prudence, which will result in the creation of a provision even in the event of a lower probability.

Under IFRS, foreign-currency liabilities are valuated using the rate prevailing on the reporting date, excluding historical cost. As a result, unlike Austrian accounting rules, IFRS requires that both unrealized losses and unrealized profits be recognized.

The IFRS accounting rules used to distinguish between operating leasing (investment risk borne by the lessor) and financial leasing (investment risk borne by the lessee) are based, to a much greater extent, on economic facts (as compared to the Austrian Commercial Code), i.e. on the extent to which risks and rewards incident to ownership of a leased asset lie with the lessor or the lessee.

Upon recognition, liabilities are stated in the amount of the actual inflow under IFRS accounting rules. Premiums, discounts or other differences between the amount received and the repayment amount are stated directly under the liability and distributed across the financing term. Under HGB, in contrast, discounts can be carried as assets and premiums as liabilities and reversed in a pro-rated fashion over their terms to maturity.

Long-term securities are recognized at fair value under IFRS, and all changes in value are stated as income or expense. Under HGB, they are valuated at acquisition cost or at the lower appropriate value in case of a non-temporary decrease in value.

Under IFRS accounting rules, derivative financial instruments are stated at acquisition cost upon conclusion of the contract and stated at fair value in the following periods. Unrealized valuation gains or losses from derivative financial instruments that are concluded for hedging purposes are recognized, depending on the type of the underlying hedged transaction, either directly under shareholders' equity or as income or expense. Under IFRS, valuation differences from other derivative transactions are always recognized as immediately affecting the result. Under HGB, derivative financial instruments are stated at the hedging rate prevailing on the reporting date. Impending losses are recognized in the income statement without any exceptions. Unrealized profits are not recognized.

Vienna, January 26, 2004

The Managing Board