Annual Report 2012
Annual Report 2012
Annual Report 2012
Welcome to ONO’s
Annual Report 2012.
Come and discover why fibre optic cable gives you so much more ...
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ONO’s Annual Report 2012
ONO, fibre optic cable gives you more
ONO, fibre optic cable gives you more:
More than 7 million
Homes released to marketing (HRTM)
More than 4.7 million
Services (1)
€1,573 million
Revenues
€752 million
EBITDA
Thanks to 2,778 people who work at the Company
(2)
(1) Including fixed and mobile services
(2) As of 31 December 2012
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ONO’s Annual Report 2012
North
South
Central
East
Data in thousands
Homes in Spain (1) 17,545
Homes in ONO franchises (1) 14,741
Coverage 84.0%
Homes released to marketing 7,063
Coverage 47.9%
Services
Fixed services 4,308
Residential (2) 4,102
SMEs (2) 206
Mobile services (3) 417
Total 4,725
(1) Source: INE Population and household census 2001
(2) Include fibre, ADSL y indirect access
(3) Include voice and mobile broadband (BAM) of Residential and SMEs
In addition, ONO provides a complementary ADSL service in some areas
• More than 7 million homes covered by a 45,000 km proprietary network
• Present in more than 300 municipalities, including the 9 largest cities in Spain
• Around five million service subscriptions
• Triple play leader in Spain
• Around 700,000 customers with high-speed services (≥30 Mb)
• Marketing TiVo®, ONO’s exclusive intelligent television service in Spain, with around 100,000 subscribers at year end
• Major growth in mobile, with more than 400,000 services
• 1,573 million euros in revenues
• 752 million euros in operating profit before depreciation and amortization (EBITDA)
• Net profit of 52 million euros
• Solid and stable capital structure
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ONO in 2012
With fibre, we can provide new services and also traditional services… in a totally new way.
100,000 homes now use TiVo,
ONO’s intelligent television service.
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ONO in 2012
Products and Services
ONO is the leading alternative provider of telecommunications services in Spain (Fixed Telephony, Broadband and
Pay Television) and is a major provider of mobile telecoms services.
It is the only fibre operator with nationwide coverage that provides services to both households and businesses.
Position in the market
Fixed Telephony
14%
55%
ONO
Movistar Spain
Others
31%
Internet
16% 14%
43%
ONO
Movistar Spain
Orange
Others
27%
Television
40%
21%
17%
19%
ONO
Movistar Spain
Sogecable
Others
Mobile
21%
8% 9%
36%
26%
MVNO
Movistar Spain
Vodafone
Orange
Yoigo
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ONO in 2012
Key figures
Operating
Homes released to marketing (‘000) (Fibre)
7,030 7,043 7,063
2010 2011 2012
Financial
Revenues (€m)
1,472 1,485 1,573
3 3
3
306 310 425
1,163 1,172 1,145
2010 2011 2012
Residential
Business
Others
Services (‘000)
4,464 4,623 4,725
121
140
192
179
417
206
4,203 4,252 4,102
2010 2011 2012
Fixed residential
Fixed SMEs
Mobile
EBITDA (€m) / EBITDA margin
49.2% 50.4% 47.8%
Residential Fixed Fibre
Customer split per bundle (%)
38.6% 39.9% 39.9%
44.3% 44.8% 45.7%
17.1% 15.3% 14.4%
2010 2011 2012
Single play
Double play
Triple play
Net profit (€m)
Residential Fixed Fibre ARPU breakdown (€)
51.5
52.4
52.4
3.1
4.6
3.4
4.0
5.5
3.1
43.7 45.0 43.8
2010 2011 2012
Monthly fee
Variable TLF+TV
Other value-added services
Fixed fibre ARPU
Operating free cash flow (€m)
725 748 752
2010 2011 2012
47 50 52
2010 2011 2012
480 456 453
2010 2011 2012
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ONO in 2012
Chairman’s statement
José María Castellano
President, ONO
‘We are committed to contributing better services to today’s digital society, which is continuously evolving and which demands high quality products that enable and enrich their everyday communications and leisure’
2012 was an intense year for ONO, full of major corporate and business milestones that have strengthened us a Company and as a significant player in the Spanish telecoms market. ONO has always been able to differentiate itself from its competitors because of its proprietary and independent fibre optic network, and in 2012 this alternative approach to telecoms in Spain became even more important.
The year was also characterized by the continued impact of the economic crisis on Spanish society, which has resulted in a lack of employment and a loss of household purchasing power. In addition to these difficult and painful conditions, there has been a general loss of confidence in the Spanish economy and in our brand as a country. All companies and institutions in the country need to focus their efforts on restoring this lost credibility.
A company such as ONO is immersed in this reality. We are committed to contributing better services to today’s digital society, which is continuously evolving and which demands high quality products that enable and enrich their everyday communications and leisure.
This is our focus: to satisfy that need and to transform it into technological and social wealth.
Today we cannot imagine what it is like not to be connected. For another year,
ONO has led the high-speed connectivity market in Spain. We also made intelligent television a reality, with TiVo®. We launched the new ONO Móvil calling plans, which have been a major success for us. Our professional success is based on our high quality services. At ONO, we have made it possible for thousands of
SMEs to connect to the best broadband service in Spain. We have also been pioneers in providing access to the very highest Internet browsing speeds, with real speeds of 200 Mb.
In the financial area, our business also made major progress in 2012. Following a series of successful bond issues that have made our debt more manageable, in June we completed the refinancing of the Company, significantly reducing the number of financial institutions involved and improving financial conditions, with no major maturities until 2017. This major achievement reflects the confidence of the markets and the solid operational and financial progress that we have made in recent years.
This progress depends on the work of each and every employee at ONO. We have again been able to show the market that we are a flexible company that can adapt to change, and that we are in the best position for offering society what it needs. This is only possible because we have a committed team which every day works hard to maintain ONO in its leading position in the telecommunications market.
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ONO in 2012
Chairman’s statement
In 2012, the Company remained committed to its main corporate social responsibility agreements. It renewed its adherence to the Spanish Network of the
Global Compact and its support for the ten principles of the Compact. For the third consecutive year, the Company’s annual report follows the standards of the GRI
(the Global Reporting Initiative). This has been essential to ONO as an agent and a contributor to social development and well-being.
In 2012, ONO also approved its Code of
Ethics, which represents a new phase for the culture of the Company. This important document provides guidance to ONO’s employees, managers and members of governing bodies in all of their actions.
Our commitment to improve and to outperform reflects our understanding of our market, our customers and our people. For 2013, we will remain focused on society, as we set the pace in innovation, help companies to improve their businesses, consolidate our cultural values as a company, lead the way towards technological change, and contribute to a more advanced and more competitive society. In 2012, we were able to point
ONO the right way. In the years to come, we will continue to progress in this direction.
‘Our commitment to improve and to outperform reflects our understanding of our market, our customers and our people’
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ONO in 2012
CEO’s statement
Rosalía Portela
CEO’s, ONO
‘At ONO we know that we are ready to satisfy all the demands of the market, thanks to our range of superior products and the high level of quality that we provide to our customers’
We have completed what has been a very significant year for ONO, a year in which we have consolidated our strategy and strengthened our operations and our finances, despite the continued challenges of a market where consumer demand is falling and where there is intense downside pressure on prices.
2012 was characterised by two clear dynamics in the market. Firstly, there was an increase in competition in the sector and, secondly, an acceleration in convergence. The increased level of price competition has forced the entire sector to rethink the design and marketing of its products and services. In this context, it is essential that we continue to improve our cost structure to remain competitive.
Convergence is a trend that has been developing for some time. We made our commitment to convergence at the start of the year, when we launched new rates for ONO Móvil and offered very attractive bundles for our customers, including
Broadband, Television, Fixed Telephony and
Mobile. This strategy enabled us to end the year as leaders in triple play and in bundled services. This was the key to increasing the loyalty of our clients and to maintaining our ARPU.
At ONO we know that we are ready to satisfy all the demands of the market, thanks to our range of superior products and the high level of quality that we provide to our customers. This is possible thanks above all to the capacity and the quality of our network: 45,000 kilometres of fibre optic cable, which differentiates us from the rest of the market. In 2012 we increased revenues by 5.9% to
1,573 million euros, while EBITDA rose by 0.5% to 752 million euros. At the same time, we increased the number of service subscriptions by 2.2%. We obtained 45 million euros of free cash flow after interest payments on debt and after expenses associated with the debt refinancing process that we completed in
June, thanks to which we now have a stable and mature capital structure.
For ONO, innovation and the identification of new business opportunities will always be a priority. We have been able to reinforce our growth drivers and we are certain that we have high potential and upside for the future. We continue to lead the ultra-fast broadband market, with almost 700,000 customers at the end of the year. ONO is the only telecoms operator that can market these products to seven million homes.
Our TiVo® product has positioned ONO as a pioneer in the Spanish television market.
Almost 100,000 customers, or 11% of our customer base, are now enjoying a unique television experience which includes real
HD and 3D content, the ability to record various channels at the same time and an intelligent content browser, just some of the characteristics that make TiVo® a unique product in the Spanish market.
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ONO in 2012
CEO’s statement
ONO Móvil has represented a revolution for the sector, leading net adds month after month, and for our clients, who enjoy very attractive convergent tariffs that meet all their requirements. We are certain that our mobile service will lead to major business opportunities for ONO, not only in terms of growing the business but also in increasing customer loyalty and satisfaction.
Finally, our services for SMEs are becoming an important growth lever that are consolidating ONO as a major player in the small and medium enterprise sector, thanks to our competitive and innovative offering, which includes unique and exclusive products. The SME and independent professional segment is performing very well, with revenue growth of 11.5% and
206,000 services sold in 2012. In the operator sector, we also made major progress in 2012, with an increase of
110%, consolidating the business as a new growth driver that will be continue to perform strongly in 2013.
All of these innovative services have helped sustain our growth and our success in a very negative economic environment. But they are not the only factors. At ONO, we believe that our people, technology and leadership are the main values that make it possible for us to retain our strong market position.
‘The quality of our organisation will continue to be a priority and a source of competitive advantage in the future’
To reflect this, in 2012 we also focused on improving the satisfaction of our employees. Their level of commitment to the company’s success is at record highs, as shown by the 2012 Working Climate
Survey. This demonstrates the efforts and dedication of each and every one of
ONO’s employees, who in a difficult year have again proved their professionalism and commitment to a company that is leading innovation in the Spanish telecoms market. The quality of our organisation will continue to be a priority and a source of competitive advantage in the future.
We are now embarking on a year full of new challenges and ambitious projects, a year which will again be difficult but which will also be full of opportunities for ONO to deliver our entertainment and communications solutions to new and existing customers, and to continue to contribute to a more global and better informed world.
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Who is ONO?
Fibre is always the fastest option, and our customers know this...
almost 700,000 people enjoy our high speed services.
700,000
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Who is ONO?
Corporate profile
ONO is the leading alternative provider of telecommunications services in Spain
(fixed telephony, broadband and paytelevision) and is a major provider of mobile telecoms services. ONO is the only fibre operator with nationwide coverage that provides services to both households and businesses.
As of 31 December 2012, ONO delivers more than 4.7 million fixed and mobile services to 1.8 million residential clients and 105 SMEs, using its own high capacity fibre optic digital networks, which provide direct access to more than seven million homes across most of Spain, including the nine largest cities.
In 2012, the Company generated revenues of 1,573 million euros, EBITDA of 752 million euros and net profit of 52 million euros.
North
South
Central
In addition, ONO provides a complementary ADSL services in some areas.
East
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Who is ONO?
Corporate profile
Mission, vision, objectives and corporate values of ONO
Mission
Provide society with the best telecommunications products and services available, based on the daily efforts of a group of professionals that are committed to innovation, to excellence and to guaranteeing continued improvements in customer satisfaction.
Vision
Become the best telecommunications company for households and companies, positioning itself as a leader in the development of the digital society. ONO’s aspiration is to be a company with a high level of satisfaction with all its stakeholders and to remain committed to competitiveness and sustainability as the foundations for continued strong growth into the future.
Strategic objectives
•
Pursuing leadership as the only cable company with nationwide coverage:
- Positioning ONO as a leader in the telecommunications sector.
- Investing selectively to provide a diversified, differentiated and high quality portfolio of products at competitive prices.
- Continuously improving the standards of quality, security and reliability of the services provided.
- Improving competitiveness, maximising value creation for clients and attracting talent into the organisation.
•
Optimising the return on resources:
- Increasing operating and financial efficiency.
- Applying rigorous criteria for investment that are appropriate for the growth and expansion strategy.
- Maintaining a solid financial structure.
•
Promoting sustainable growth:
- Respecting the social, environmental and economic context by following the recommendations of the major institutions that research this area.
- Improving the society in which it lives, guaranteeing the wellbeing of citizens.
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Who is ONO?
Corporate profile
All of this can be possible because of a defined corporate culture , determined by
a series of values that are present in all of
ONO’s actions and all its behaviour.
These values, which since 2010 have been the formal foundations for the Company’s culture, have reinforced the main competitive advantages of ONO , which are the main reasons for its growth.
At the end of 2012, the Board of Directors of ONO approved a
more than just another book of rules. The
Code represents a mutual agreement by all the Company to encourage positive values and behaviour that can add value to the business and guarantee the highest levels of integrity.
(For more information see
ONO’s Responsability_Corporate
Leadership
Efficiency
Innovation
Customer
Teamwork
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Who is ONO?
The history of ONO
• 480,000 residential fibre customers
• Milestone of 1million home passed
• Over 330,000 residential and 4,800 SMEs • ONO won 11 cable franchises areas around
Spain and starts construction of the network
• 168,000 residential fibre customers
• 1st Internet flat rate
• GOL TV added to TV offering
• ONO launched new TV packages: “Esencial”, ”Extra
“and “Total”
• Several iniciatives for reduce churn
• ONO offered 4Mb to all its customers
• 1.7m residential customers and 5.7m
HRTM
• Launch of Ojo
• ONO launched
50Mb in Madrid
50Mb
• Completed the deployment of
DOCSIS 3.0
• TiVo®: available for all of our customers
• Further advances in mobile
• New convergent offers
• Successful completion of the refinancing process
• ONO launched
50Mb in all
Spanish regions
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
• Launch of
ONO brand
• 1st full year of
• ONO’s granted the license to offer fibre services in
Castilla-La Mancha
• Over 780,000 residential fibre customers
• ONO started to offer free calls for life between its customers
• Purchased of Retecal extending its coverage to Castilla y León
• ONO acquired Auna widening its coverage to other Spanish’s regions
• Jose María Castellano appointed Chairman
• Transformation process to turnaround the Company: improve profitability and preserve liquidity
• Rosalía Portela oppointed CEO
• Net profit
100Mb
• ONO launched
100Mb
• ONO launched
TIVo
• 2.6Ghz mobile spectrum licence acquired for 9
Spanish regions including Madrid,
Valencia and
Cataluña
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Who is ONO?
The history of ONO
This new vision of communications began over twelve years ago, with the rollout into the first regions of a powerful, modern network that ONO has constructed kilometre by kilometre until it now covers
45,000 km across all the geography of
Spain.
In 1998, the Spanish telecommunications market was liberalised, and following the entry into force of the General Law on
Cable Telecommunications 42/95, ONO was able to compete in the tenders that were called. As a result, the Company obtained the licenses needed to roll out its network, and began to provide cable telecommunications services in Valencia,
Castellón, Alicante, Murcia, Cádiz, Huelva,
Cantabria, Mallorca and Albacete using its own network, becoming the main alternative to the dominant operator.
As the company deployed its state-of-theart network in its regions, consumers began to realise the advantages of the Triple Play services it provided.
At the end of 2002, ONO was already present in about one third of all homes that could receive its services. One year later,
ONO won the license to operate in Castilla
-La Mancha, and in 2004 it acquired the telecommunications operator Retecal in
Castilla y León.
In 2005, ONO made the definitive step that gave it the national scale that it currently enjoys, by buying Auna, the cable company with the largest proprietary network in the regions where ONO was not present. As a result of this acquisition, ONO merged its services with those of another leading company to create the business that is now
Grupo Corporativo ONO, which has high capacity for providing advanced telecoms services, benefiting its customers and responding to their needs with reliable and highly useful communications solutions.
In 2008, ONO launched high-speed
Internet in various regions and in 2010 became the only operator that was able to offer these speeds to millions of customers.
At the end of 2011, ONO launched in some regions in Spain its next generation television service TiVo®, which in 2012 consolidated its position as the most sophisticated service currently available in the pay-TV market in Spain, available for all
ONO’s customers.
In early 2012 , ONO completed the roll-out of DOCSIS 3.0
, one of the most modern and advanced technologies in the market, enabling it to offer ultra-fast Internet speeds over its fibre optic network. The implementation of this technology makes it possible to offer real browsing speeds of
50, 100 and 200 Mb. This major investment in infrastructure has allowed ONO to position itself as the only company in
Spain with its own fibre network covering practically the entire country.
In addition, 2012 saw the consolidation of the Company’s mobile telecoms service .
A leader in high-speed connections, ONO was able to adapt to the requirements of the market and upgrade its mobile offering, with very competitive plans that have been a major commercial success.
In the year, ONO also successfully completed its refinancing . In October
2010, ONO began this process, which ended in June 2012. Following a number of bond issues and the renegotiation of its bank debt, ONO was able to establish a solid and stable capital structure.
The financial transactions completed over the course of the last two years demonstrate the confidence of investors in the Company, in a challenging economic and competitive environment, and allow
ONO to embark on a new stage of flexibility and stability.
ONO continues to move forward under the vision of offering its customers innovative and high quality services.
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Who is ONO?
The shareholders
Shareholder data following the capital increase carried out in early 2013
Providence Equity Partners, Inc.
15.2%
Thomas H. Lee Partners, L.L.P.
15.0%
General Electric Structured Finance, Inc
9.0%
Quadrangle Capital Partners
9.0%
CCMP Capital Advisors, LLC
15.2%
Acciones propias y otros
1.6%
Bregal Co-Invest
1.4%
Nortwestern Insurance
Mutual Life Company
2.3%
Sodinteleco, S.L.
3.9%
Grupo Santander
4.4%
Caisse de Dépôt et
Placement du Québec
6.8%
Grupo Multitel, S.A.
6.1%
Val Telecomunicaciones, S.L.
5.4%
Ontario Teachers Pension Plan
4.8%
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Who is ONO?
The shareholders
The following is a brief description of each shareholder in Grupo Corporativo ONO
(“GCO):
CCMP Capital, LLC (“CCMP”) –15.2% of capital– is a private equity company created out of the JP Morgan Chase & Co. split. Since 1984, it has invested over 13 billion dollars in more than 380 companies across the world within the consumer, media, telecommunications, energy, industry, finance, health, hardware and software sectors.
Providence Equity Partners, Inc.
(“Providence”) –15.2% of capital– is a private equity company from the United States specialized in the telecommunications and media sector.
Providence currently manages investments of around 22 billion dollars. Since its establishment in 1989 it has invested in over 100 companies.
Thomas H. Lee Partners, L.P.
(“Thomas H. Lee”) –15.0% of capital– is one of the oldest private equity companies in the United States. Since its establishment in 1974, Thomas H. Lee has invested over 12 billion dollars in more than 100 operations across the world.
General Electric Structured Finance,
Inc. –9.0% of capital– is a division of GE
Commercial Finance, General Electric’s financial services company and holds an equity stake in ONO through Global
Telecom Investments, L.C.C.
, a major investor, in both debt and equity, and a supplier of structured finance, for companies in the telecommunications, energy, industry and transport sectors.
Quadrangle Capital Partners (“Quadrangle”)
–9.0% of capital– based in New York, is the private equity division of Quadrangle
Group and manages over 3 billion dollars in assets. The company, established in
2000, invests equity in companies from the telecommunications and media sectors.
Caisse de Dépôt et Placement du Québec
(“CDPQ”) –6.8% of capital– is one of the largest financial institutions in North
America and manages public and private pensions and insurance funds. Through its subsidiaries, CDPQ offers private mutual funds and real estate management services to institutional investors. CDPQ is the leading fund manager in Canada and invests in private equity, real estate and the stock market. CDPQ holds an equity stake in ONO via Participel International Limited
Partnership .
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Who is ONO?
The shareholders
Grupo Multitel –6.1% of capital– is a holding company founded by Eugenio Galdón to promote and manage telecommunications and media projects in Spain and holds equity stakes in ONO via Telco Investment
Europe S.á.r.l y Multitel Alfa, S.L.U
. In 1992,
Grupo Multitel was the first company to launch cable services in the liberalised telecommunications market in Spain.
VAL Telecomunicaciones, S.L
–5.4% of capital– is the holding company that groups most of the local shareholders of the companies acquired by Cableuropa.
OTPP Power Luxembourg, S.à.r.l.
–4.8% of capital– Ontario Teachers’ Pension Plan is the largest pension plan in Canada. An independent organisation, it invests the pension fund’s assets and administers the pensions of 284,000 active and retired teachers in Ontario.
Grupo Santander –4.4% of capital– is the largest Spanish bank and the biggest provider of financial services in Latin
America. Grupo Santander is one of the five largest financial institutions in the world in terms of market capitalisation. The Group’s main business areas include: Commercial
Banking, Global Wholesale Banking, and
Asset Management and Insurance. It has been an ONO shareholder since 1995 via
Capital Riesgo Global, SCR S.A.
Sodinteleco, S.L.
–3.9% of capital– is a holding company which groups Retecal’s former shareholders, including: Caja
España, Grupo Begar, Caja Segovia and
Caja Ávila. Sodinteleco became an ONO shareholder after Retecal’s acquisition in
2004.
Northwestern Insurance Mutual Life
Company –2.3% of capital– an insurance company founded in 1857, has lived through the Civil War, the Crash of 1929, the Great Depression, two world wars, and numerous recessions.
Bregal Co-Invests, S.à.r.l., –1.4% of capital– is an active co-investor in amounts of between 10 and 50 million euros, with a presence in various sectors, including education, information services, cable, and aviation.
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Who is ONO?
Organisational structure
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Who is ONO?
Management team
José María Castellano
Chairman
Rosalía Portela
Chief Executive Officer
Carlos Sagasta
Chief Financial Officer
Guillermo Mercader
General Director of
Residential Services
Víctor Guerrero
Director of Business
Rafael Brull
Director of the
On-line Channel
Pablo Freire
Director of Business
Development
Paul Kearney
Director of Network and Technology
Carlos Moreno
Director of Systems
Antonio de la Fuente
Director of People, Teams and Resources
Juan Luis Delgado
General Secretary and
Secretary of the Board
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Who is ONO?
Management team
José María Castellano
José María Castellano has been Chairman since November 2008 and an executive director of Banco Novacaixagalicia (NCG) since June 2011.
Mr. Castellano was a member of the Board of Directors of Inditex from 1985 to 2005, and was appointed Deputy Chairman and
Chief Executive Officer. Previously, he was
Director of Information Systems at Aegon
España, S.A. and General Manager and
Chief Financial Officer of Conagra España,
S.A. From 2002 to 2005 he was a member of the Board of Directors of Fadesa, S.A. and from 2005 to 2008 he served as a director at various companies, including
ONO, Tous and Rothschild. He is currently
Chairman of NCG Banco. He is currently
Chairman of NCG Banco.
Mr. Castellano is a Doctor of Economics and Business Studies and a Professor in
Financial Economy and Accounting at the University of La Coruña. He is also a member of the Academy of Economics and
Financial Studies.
Rosalía Portela
Rosalía Portela has been Chief Executive
Officer since May 2009 and a member of the Board of Directors of DIA Discounts S.A. since July 2011.
Ms. Portela has extensive experience in the telecommunications sector and was the Managing Director for the residential segment at Telefónica España for six years.
Previously, she worked for the American multinational Kimberly Clark, first as head of the retail market area for Spain and Portugal and later as European Vice-
President. Ms. Portela has also held senior positions in marketing in companies such as Repsol and Procter & Gamble, where she worked for over 14 years.
She holds a bachelor’s degree in Economics from the Universidad Complutense of
Madrid and a Master’s in Economics from the University of Memphis.
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Who is ONO?
Management team
Carlos Sagasta
Carlos Sagasta became Chief Financial
Officer of ONO in April 2010. Before joining the Company, he was Financial Director and
Controller of Abertis Telecom for five years.
In 2003, he assumed the role of Director of Planning and Control at Retevisión
Audiovisual, the main business unit of Abertis Telecom. Previously, Carlos worked for several years at Salomon Smith
Barney and Gramercy Communications
Partners in New York and then at E-laCaixa
(Barcelona), the on-line subsidiary of la
Caixa, the leading shareholder in Grupo
Abertis.
Carlos Sagasta has been a director of
Eutelsat Communications, Hispasat and chairman of the Board of Overon, representing Abertis.
He holds a degree in Business
Administration and Finances from the
University of Saint Louis (Missouri) and an
MBA in Finances and Strategy from The
Anderson School of UCLA (California).
Guillermo Mercader
Guillermo Mercader has been Director
General of Residential Services since
January 2010. Mr Mercader has extensive experience in companies in this sector.
He has been CEO of Ya.com, where he worked for seven years. Subsequently, he was Director General of Home for Orange, a company he joined when it acquired
Ya.com. He has also held management positions at companies such as Wella and
Coopers & Lybrand.
He holds a degree in Business and Law and a Master’s in Financial Markets from the
Universidad Autónoma of Madrid.
Víctor Guerrero
Víctor Guerrero is Director of the Business
Unit. From July 2006 to January 2009, he was ONO’s Regional Director for
Eastern Andalusia. Previously, he held senior positions at Telepizza, including
Director General of Portugal and the
United Kingdom, Chief Financial Officer and International Director General New
Business. He is a graduate in Business
Administration and Financing from ETEA
(Universidad de Córdoba), and holds an
MBA from the Instituto de Empresa and a
PDG from IESE.
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Who is ONO?
Management team
Rafael Brull
Rafael Brull es el Director de Unidad de
Rafael Brull has been the Director of the
On-line Business Unit since January 2010.
He has been in the on-line sector since
2001, when he was appointed content manager at Universia. In 2003 he joined
Ya.Com as manager of e-commerce and then director of content in 2004 and director of Internet in 2006, when he also joined the Management Committee of the company. From 2007 until 2010 (the year in which Orange bought Ya.com) he was the director of Portals, Services and
Operations of Orange in Spain.
His experience of on-line portals and e-commerce is complemented by his professional development at various
Internet companies and a Master’s in e-business, in addition to his degree in Philosophy from the Universidad
Complutense of Madrid.
Pablo Freire
Pablo Freire has been Business
Development Director since October
2012. Pablo has held various positions since joining ONO following the acquisition of Auna in 2005. He has been Director of the Shareholder’s Office, Director of
Strategic Planning and Control and of the
Business and Operator unit for the last three years, where was in charge of the
Company’s wholesale business as Director of Operators and Interconnection. Before joining ONO, Pablo worked in the Planning and Control area of AUNA and as an auditor and consultant in the Telecommunications,
Media and Technology division of Arthur
Andersen (now Deloitte).
He holds a degree in Business
Administration and a management development certificate from IESE.
Paul Kearney
Paul Kearney is Director of Networks and
Technology. Mr. Kearney joined ONO in
June 2007 from Netia (a fixed telephony operator in Poland), where he was Chief
Technology Officer. Previously, he had held various management positions in the telecommunications sector in the United
Kingdom and Spain.
He holds a degree in Engineering from the Dundalk Institute of Technology and a Master’s in Telecommunications from
University College London.
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Who is ONO?
Management team
Carlos Moreno
Carlos Moreno has been Director of
Systems since 2000. Before joining ONO he worked as Director within the IP consultancy area and as project advisor at
Thomson-CSF. Previously, he worked as a consultant in Spain and Portugal and as a project development engineer in Paris for
Marben (ATOS Group).
He is an industrial engineer from ICAI and holds a PDG from IESE and a Master’s of
Science in Communication systems (MSc.) from the University of Wales.
Antonio de la Fuente
Antonio de la Fuente is Director of People,
Teams and Resources. He joined ONO in 2004 as Director of Labour Relations and Risks Prevention. Previously, de la
Fuente worked in the Legal Department of
Vodafone Spain. He also worked as Labour
Advisor in the Law Firm DLF Consultants and at FEDETT.
He is a Law graduate from the Universidad
Complutense of Madrid, holds a diploma in Labour Law and Social Security Law, is a Higher Graduate in Prevention of Risks in the Workplace, and is a member of the
Royal Academy of Law and Legislation.
Juan Luis Delgado
Juan Luis Delgado is the General Secretary and Secretary of the Board of Directors of
ONO. He has spent most of his career at the
Company, with five years as deputy General
Secretary, prior to which he was Manager of Corporate Development of the General
Secretariat and of the Legal Department of the Company. Previously, he worked for a law firm in Madrid that specialises in company law.
He holds a law degree from the University of Salamanca and a Master’s in Legal
Advice from the I.E. Business School.
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What does ONO do?
Fibre is a great facilitator, but it hasn’t been easy to achieve all of this…
14 years of hard work and 8,000 million euros of investments.
8,000,000,000Û
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What does ONO do?
Products and services
| Services to the residential sector
ONO provides a wide range of telephony and personal communications services, and entertainment, data transmission and Internet access. These services have continued to develop, incorporating new technologies and increasing their functionalities, reflecting the Company’s permanent commitment to innovation
Experience has shown that the success of ONO’s services offering is based on the simple and straightforward bundling of products: the ONO bundles, which deliver various services in one single product, and provide a solution that meets the needs of each customer.
These bundles are available to both homes and businesses. ONO provides the most innovative solutions in the market, each adapted to the needs of every customer regardless of their size, from individuals to SMEs, large corporations and the Public
Administration.
Bundles
Over the course of 2012, ONO’s strategy for marketing its products to new residential clients continued to be focused on the sales of bundles of two or more services . The Internet service was the growth driver, as this is the fastest growing market and the sector where the Company has the greatest competitive advantage.
At the end of 2012, 86% of fixed fibre residential customers subscribed to a bundle of services. Of these, 46% subscribed to two services and 40% had a 3P bundle (Telephone, Internet and
Television). In addition, at the end of 2012, more than 11% of ONO’s customer base subscribed to a mobile telephony service.
Despite difficult economic conditions, this focus on sales has enabled ONO to consolidate the ratio of fixed fibre residential services subscribed to customers at a level of 2.25 per subscriber, or 2.47 if mobile services are included.
(For more information about ONO’s bundles, please see: http://www.ono.es/ productos/combinados/ )
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What does ONO do?
Products and services
| Services to the Residential sector
In October 2012, for the second consecutive year, ONO received the award for the fastest broadband operator in Spain.
Broadband
ONO is the leader of the high-speed broadband sector in Spain, thanks to its
DOCSIS 3.0 technology, which provides high Internet access speeds using the hybrid HFC network.
2012 was the year of the definitive consolidation of high-speeds . More than seven million homes can enjoy an unrivalled experience of browsing with ultra-fast connections of up to 100
Mbps , opening up the full power and opportunities of the Internet and enabling customers to connect from multiple devices simultaneously .
The customer base for high-speed services
(of more than 30 Mb) increased from 30% to 50%, or around 700,000 customers in
2012, reflecting the very positive reaction from the market to the Company’s highspeed offering.
ONO adapts to all the requirements of the market and knows that there is an increasingly large and varied range of devices that connect wirelessly to the
Internet in households. To respond to this,
ONO has begun to offer a new process for installing devices and providing advice to its 50 and 100 Mb clients, to provide them with the best wireless browsing experience possible.
In addition, ONO provides added value services such as Total Security Pack, PC
Help and the new Virtual Hard Drive , which was launched in 2012 as part of the added value package. These services are the perfect complement for the Internet access offering, as they enable customers to enjoy a complete security package, remote assistance for solving any problem or doubt that could arise about their PC or the Internet, as well as helping them store, manage, synchronise and share all their information over the Cloud and on multiple devices.
In October 2012, for the second consecutive year, ONO received the award for the fastest broadband operator in Spain .
(For more information please go to the
ONO’s website: http://www.ono.es/ productos/internet/ )
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What does ONO do?
Products and services
| Services to the Residential sector
Television
ONO provides its customers with a multichannel television service , with packages of thematic channels that range from basic to premium offers and including a pay per view service for new movie releases and live football.
Programming includes a wide selection of television series, films, sport, news, music, documentaries and children’s channels.
In November 2011, ONO launched Next
Generation Television, TiVo® intelligent television , and in 2012 it completed the roll-out of the service, making it accessible in almost all areas covered by the Company. This ONO service, which is exclusive in Spain and is breaking new ground in European pay television, is only possible because of the capabilities of the
Company’s fibre optic network.
Next Generation Television is a leap towards real high definition and 3D , both on ordinary channels and on the Videoclub service, as well as enabling the recording of several programmes at the same time. Customers can control live broadcasts, pausing and rewarding television programmes as they desire.
TiVo® is considered to be ‘intelligent television’ because customers are able to teach the service about their habits and tastes. Over time, the service recognises what content may interest customers and makes suggestions about what to watch.
One of the main competitive advantages is that it allows Internet connections from any television sets , with users able to enjoy video and audio downloads without affecting browsing speeds.
In 2012, ONO implemented new functionalities which have improved the
TiVo® service:
- the customer can now record three rather than two programmes at the same time, while viewing a fourth channel, and
- the high definition offering has been improved, with a total of 24 linear channels in HD.
At the end of 2012, ONO had around
100,000 TiVo® customers, representing
11% of its customer base for television, showing that this new form of viewing television is gradually being implemented across the Spanish market.
ONO remains committed to offering the best television service in Spain, and in the first quarter of 2013 it rolled out TiVo® in its analogue regions.
(For more information about TiVo, please go to ONO’s website: http://www.ono.es/ productos/television/tivo/ ).
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What does ONO do?
Products and services
| Services to the Residential sector
Fixed Telephony
ONO ofrece distintos tipos de servicios de tONO offers various types of telephony service that adapt to the needs of its customers. These include:
- A direct access “ All inclusive ” service, with a flat rate for national calls without restrictions, including line rental and maintenance, with various optional added value services such as voicemail, caller identification, speed dialling, call waiting, conference calling, withholding identification of calling number, restrictions on outgoing calls, and three call forwarding options.
- An “ Additional All inclusive ” service, with the same advantages as “All Inclusive” but with a lower monthly fee.
- Second home lines , with different monthly fees and calling plans, for second homes and elevators.
ONO also provides a wide range of calling plans :
- International calling plans for the countries most in demand with customers, enabling them to call certain countries at a competitive price, reducing their bills.
- A wide and updated offering of fixedmobile plans that adapt to the needs of customers.
In addition, the Company launched various promotions for both the individual telephony product and for bundles, and about 43% of customers now take advantage of a fixed to mobile plans, with the volume of these calls doubling since 2011.
ONO also has a directory enquiries number, 11828.
To complete the company’s offering, ONO also offers an extensive range of handsets
(desk phones or wireless) that customers can either buy or lease, depending on their needs and preferences.
In 2012, ONO completed the migration of its switching exchanges, evolving its network to a next generation network
(NGN) voice platform using technology from Huawei. This enables it to manage electricity more efficiently and gives it the possibility of developing advanced multimedia services over IP in the future.
By the end of 2012, nearly all ONO’s exchanges had completed the migration process.
(See section:
ONO’s network_Voice Switched Network )
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What does ONO do?
Products and services
| Services to the Residential sector
Mobile
2012 was the year of fixed-mobile convergence and the take-off of mobile telephony at ONO . Reflecting this,
ONO won the award for technological excellence as the best Mobile Virtual
Network Operator (MVNO) in October at the II edition of the ADSLzone awards. In
2012, ONO outperformed its competitors in terms of net adds, with very positive results: with around 417,000 mobile subscribers (voice and data), ONO is the fastest growing MVNO in Spain.
Much of this success is due to the launch of convergent tariffs and the “Todo en
ONO” rates, which are very competitive plans that include calls to any destination
24 hours a day and data for browsing the
Internet.
Over the course of 2012, ONO moved away from the handset subsidy model and towards a financing model which enables customers to combine the tariff plan and the handset that best meet their requirements. Furthermore, the introduction of the microSIM enabled an increase in the smartphone portfolio and a more efficient management of SIM cards for ONO Móvil, as the two formats (SIM and microSIM) can be integrated on the same device.
In addition, in 2012, ONO improved its
Mobile Broadband offering with data plans for USB modems and new tariffs for tablets and HSUPA speeds which meet the requirements of customers for the best mobile Internet experience, enabling customers enjoy multimedia, social networks, streaming music and video, online chat, email, etc.
Other Direct Access services (ADSL)
ONO also offers telephony and broadband services to those customers who do not have direct access to its fibre network.
The Company uses an infrastructure base that combines ADSL technology with the proprietary network of ONO.
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What does ONO do?
Products and services
| Services to the Business sector
Small and Medium Enterprise (SME)
In 2012, ONO continued to renew its value proposal for the SME and independent professional market in Spain, upgrading its commercial offering, increasing and extending its sales channels, and reinforcing the quality and dedication of its specialised Customer Care unit.
ONO’s offer is founded on the delivery of the complete communications solutions that an
SME or independent professional needs:
- Broadband Internet with the launch of a pioneering product in Spain: 200 Mb for businesses, which has strengthened marketing of 50 and 100 Mb.
- The launch of Nubo, the portal for cloudbased applications for SMEs, with a very extensive offering that enables users to save costs while facilitating everyday management.
- Advanced services which enhance
ONO’s value proposition, as part of the
Nubo Virtual Exchange platform, managing campaigns, creating websites, etc
- Flat rates for voice and additional telephony lines for larger SMEs.
- The launch of the “Symmetric Fibre
Internet product” for businesses with specific requirements, including 5Mb/5Mb or 10Mb/10Mb packages with 4 or 8 lines for calls.
- Mobile telephony with flat rate plans of up 1,000 minutes, various ranges of han dsets and tablets for professional use.
- Mobile broadband (BAM) .
- Additional services such as TiVo®, the television offering for Horeca, email accounts, domains, intelligent network services, handsets, etc. The combination of these services in integrated bundles and with mobile offers has helped win new customers.
- Personalised “multi-site” services for
SMEs which operate in various locations
To meet demand from this market,
ONO has used both exclusive telephony platforms and indirect external channels with a presence in all regions covered by the Company and including professional services sectors, software, hardware and services providers, and independent professionals .
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What does ONO do?
Products and services
| Services to the Business sector
In addition, during 2012, there was an increase in on-line sales and marketing and in the proportion of customers generated from this channel, using the exclusive on-line store for Businesses and other new ways of generating sales from on-line channels.
The progress made in bundling and new products, and the increase of marketing channels, were supported by:
- A Customer Care Service with a dedicated number, specialising in the professional segments and focused on customer satisfaction
- Use of the DOCSIS 3.0 network for both high-speed downloads and uploading content to the Internet.
- Efforts to segment customers and potential customers, and continuous monitoring of their levels of satisfaction.
- Actions to position the brand, including a major presence at specialist fairs and events dedicated to SMEs and independent professionals. ONO
• organised events (e.g. Meeting Point by ONO ) que contribuyen a que Pymes y autónomwhich helped SMEs and independent professionals to understand how technologies can help them be more efficient and productive;
• worked with the Association of
Young Businesspeople (AJE) in various initiatives: awards, education, commercial meetings, etc.; and
• participated in trade fairs: the
Entrepreneur Fair, National SME
Congress, OMEXPO, etc.; and
• sponsored forums : the Network
Congress, Web Congress, Supporting
SMEs, Cloud Computing Professional
Forum, Social Networking forums for professionals, etc.
- Negotiation of agreements and promotions with companies and associations of SMEs to share joint benefits for the business sector, including agreements with
ATA, the sponsorship of Fundetec, and others
- Specialised marketing, operations and
Customer Care functions , to respond to the sustained growth of the portfolio of customers.
Meeting Point by ONO event
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What does ONO do?
Products and services
| Services to the Business sector
Large Accounts and Corporations
The capacity to provide state-of-theart telecommunications services over a proprietary high-speed network has positioned ONO as the best alternative for numerous companies located in Spain.
Corporate customers demand sophisticated and specific services and ONO has responded to this by establishing a dedicated business unit for offering value added solutions f or the communications needs of companies and the public administration.
Excellence when supplying and delivering the service is a key factor, as communications are increasingly integrated in the business processes of all companies. ONO’s commitment is to offer customers efficient, reliable, and secure communications that represent a significant competitive advantage for their businesses
Complete voice solutions
ONO’s network allows it to offer customers the most advanced corporate voice solutions, configuring traditional or
IP telephony and providing Intelligent
Network (IN) solutions. .
- Traditional voice services.
Any infrastructure solution which includes analogue lines and digital lines, with a wide range of customer equipment and exchanges that are either sold or leased.
These services can be financed, facilitating the technological upgrade process for customers.
This solution is combined with competitive tariff plans and savings for all kinds of calls, designed on a bespoke basis for each customer, and includes the possibility of easy to bill services that enable companies to set aside fixed costs for the service.
- Advanced IN services. The IN Platform enables customers to establish a professional image and be accessible to customers by using 900, 901 and 902 commercial prefixes, providing intuitive access to the most innovative functionalities for managing and controlling services, including: call recording, IVR services, receiving faxes on email, virtual operator, virtual ACD, conference calling and intelligent routing, among others. All these functionalities can be managed over the Internet.
IP Telephony Solutions
ONO offers a wide range of data services
(MPLS and VPLS virtual private networks, guaranteed access to the Internet, pointto-point connections) and manages the data networks of some of the largest companies in Spain. ONO is leading the way in implementing unified corporate telephony and communication services using these data networks, with various solutions available:
- IP Extensions. This service proposes an evolution to IP telephony and enables companies to overcome the technological barriers inherent to IP solutions, while also using a cost model that does not require large initial spending.
The model is based on a completely personalised and managed unified suite of communications infrastructure, connected to the public network for call management and based in the ONO Data Centres. This means that ONO can provide corporate customers with the most powerful unified communications and collaborative tools in the market.
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What does ONO do?
Products and services
| Services to the Business sector
- ONO IP Trunking.
This service represents an evolution in the management of telephony traffic, using secure IP access from the customer exchange to the public network, with the highest quality of service and cost reductions thanks to the convergence of voice and data services.
Virtual private networks
ONO’s sophisticated network enables it to offer its clients advanced services such as private interconnection between corporate sites, using Ethernet technology.
Different metropolitan networks (MAN) can be interconnected with high capacity links with high Quality of Service, allowing multi-technology access solutions at the highest standards of quality and availability,
IP MPLS solutions and native Ethernet interconnections (VPLS).
- MPLS Virtual Private Networks. The
MPLS service provides IP connectivity between corporate sites. It also enables the integration of different access technologies, for both main access and for back-up access, providing an alternative back-up which guarantees availability at all times.
- ONO LAN VPLS.
This service offers high-speed interconnection between local corporate networks, at the metropolitan level and nationwide. It is an Ethernetbased network that enables transparent communications between the various LANs of the client.
It also enables the integration of different access technologies, for both main access and for back-up access, providing an alternative back-up which guarantees availability at all times.
Internet Access and connections between corporate sites
ONO’s Internet Access services for
Corporations enable customers to access all the information and services of the
Internet services using the ONO network, managed from end to end with a very high quality of service delivery. The
Corporations portfolio has two offerings that are adapted to the requirements of each company:
- Guaranteed Internet services for medium and large companies, and for suppliers of Internet content, is a symmetrical service which guarantees
100% of the flow of traffic and the highest level of reliability of service, allowing customers to define the service as suits their requirements. The service includes a wide range of possibilities in terms of agreed bandwidth, access technologies, customer equipment, IP addressing, backup, DNS service, domain management, etc.
- The Broadband Internet service for small and medium enterprises and offices of large companies offers a series of asymmetric and symmetric forms of
Internet connection using different access technologies. Depending on the location of the site, the customer can choose either fibre access or ADSL.
The Dedicated Line service provides customers with a point-to-point connection between corporate locations, so that they can transmit any kind of information on a dedicated and secure line.
The service is aimed for other operators without their own infrastructure and for companies who want to connect their main offices and their data centres. The service offers a wide range of transmission speeds and customer interfaces.
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What does ONO do?
Products and services
| Services to the Business sector
ONO Cloud Services
ONO Cloud Services are virtual infrastructure services that use the cloud: virtual servers (VPS), mass storage, on-line backup, etc. It enables the highest level of reliability and confidence for a company’s
Internet presence.
To offer this service, ONO has 25,000 m2 for locating client equipment, saving them costs and providing the best conditions of security and connectivity.
ONO Cloud Services also include email exchange, streaming video distribution, virtual PCs, remote office, etc. These enjoy the Company’s guarantee and the best suppliers, including Microsoft, HP, Dell,
Cisco, VMware and Hyper-V.
Actions and Sponsorship
The Large Accounts area has also paid special attention to positioning the brand by supporting events, trade fairs and conferences, with three main areas of action:
- Telecommunications, including various events such as Telecommunications
Evenings and Awards in various regions
(Aragón, Valencia, Castilla la Mancha,…),
ANDITEL events, the ACUTEL Fair, etc.
- The business world, via Andalucía
Management, Málaga Valley, Vertice
Business CUP, Contact Center Awards…
- Corporate Social Responsibility (CSR) in events such as Esesa, C2T, Ciudades
Abiertas (Smart cities), EDU+ITC, etc.
(For more information please see the website for ONO corporate customers and professionals: http://www.ono.es/empresas/ )
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What does ONO do?
Products and services
| Services to the Business sector
Large accounts and Corporation event
Wholesale
ONO also provides wholesale services to other telecoms carriers, leveraging the reach of its national access network, high capacity and long distance trunk services and its infrastructure and interconnection agreements.
- Infrastructure. ONO provides other telecoms carriers who operate in Spain with services to lease its network capacity, such as leased lines managed on its network, providing guaranteed broadband services for all capacities using different access technologies, including PDH, SDH,
Ethernet and Lambdas
- IP connectivity services (MPLS, VPLS).
These guarantee different levels of services, and enable operators to provide virtual private networks for voice over IP and the transmission of different types of data (from various protocols for IT applications to high definition video content).
- Traffic management services for fixed and mobile voice. These provide national and international transit services for termination and pick up of the traffic of other carriers, and also provide services to resell prepaid traffic, premium rate services and all types of intelligent network services.
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What does ONO do?
ONO’s network
ONO has its own nationwide next generation network. This network consists of access networks (mainly fibre optic cable, complemented by ADSL and radio access), voice and data switching networks, the transmission network, and mobile and the audiovisual and mobile services networks.
Architecture of the ONO network
The ONO network is composed of 45,000 km of fibre optic cable, of which about
19,000 km is in the regional and trunk transmission network. About 85% of the fibre optic network in this segment is leased from electricity, gas and railway companies, while in the metropolitan area most of the network is owned by ONO.
95% of the ONO network consists of fibre optic cable.
Fibra
Coaxial
Copper pairs
Fibre Network up to Final Node Coaxial Access Network
Headend TV
Internet
PSTN
Network
Backbone
DVB-C DVB-C &
DOCSIS
Final Node Amplifier
DOCSIS 1.1/3.0
CMTS
Primary Node
SDH
Telefonía
MUX
Base and telephony
Tap
Ovarlay Access Network (pairs)
Home Network
STB
Wi-fi
Cable
Módem
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What does ONO do?
ONO’s network
Access Networks
The access networks are characterised by their extensive coverage and high level of reach. The Hybrid Fibre-Cable FTTN (Fibre to the Node) access network covers all the main Spanish cities, a total of over
300 municipalities, with access to over 7 million homes.
The primary node is the main node from which the network is distributed over a specific urban area or region, covering between 10,000 and 60,000 homes.
This node houses the head end for the data services that establish bidirectional communication sessions with the cable modems of users, using the DOCSIS 1.1 or
3.0 protocols, and is where the aggregation is made of data services with audiovisual services (digital TV, PPV and VoD) over fibre. Telephony services can be delivered in the traditional manner, from a POTS and
ISDN services multiplexer using a copper pair network, or using IP over coaxial fibre, using the Packetcable protocol.
In the final node (FN) the optical signals are converted into electronic signals that are distributed along coaxial cable buses which connect various homes.
In the client’s home, Internet services, which terminate on the cable modem , are separated from TV and VoD services, which terminate on a set top box decoder . Voice services are obtained from the copper pair or from an MTA
(Multimedia Terminal Adapter) which serves as a converter for VoIP-traditional telephony.
The high capacity of the HFC access network, based on the roll-out of fibre optic cable to very close to the home, enables a wide range of digital communication and entertainment services, including both Triple Play services
(Voice, Television and high capacity Internet) to residential customers, and advanced ASP and end-to-end connectivity services for business customers and other operators.
ONO has successfully implemented the
DOCSIS 3.0 standard in all the head ends of its access network, completing the rollout to 100% of the network, including the
Canary Islands, in 2012. The technology is compatible with previous versions of
Fibre
ADSL the DOCSIS protocol and eliminates the traditional speed limits of capacity on just one carrier. This new standard has facilitated a new universe of services with speeds of 30, 50 and 100 Mbps, which has enabled a rise in the number of subscribers to these speeds to now represent 50% of
ONO’s total broadband customer base. It has also allowed ONO to launch a premium
200 Mb service for SMEs.
As a complement to the FTTN-HFC network, and in order to increase the reach of its access network, ONO has unbundled the local loop in 132 telephone exchanges to provide services based on xDSL technology.
Using this xDSL access network, ONO provides connectivity with the ONO network to 134,000 lines, mainly in Madrid and
Barcelona.
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What does ONO do?
ONO’s network
High capacity access networks
In addition, to provide high capacity connections to business customers, ONO has rolled out various technologies:
- Point to point radio access network
(around 3,400 radio links, of which around 300 are high capacity). In 2012, a major roll-out of equipment increased connectivity for operator clients.
- Roll-out of FTTB (Fibre to the building), mainly in Madrid, Barcelona,
Valencia and Seville
- ADSL equipment in various industrial parks.
Voice Switched Network
ONO has a Next Generation voice communications network which it uses for most of its analogue, ISDN and IP telephony services. This network is complemented by a series of platforms which enable value added services, such as voice mail, premium services, VPN and others.
MADRID
VALENCIA
IMS
Softswitch
Media Getaway
Toll 5ESS ALU (8) National transit
Internat. 5ESS ALU (2) International transit
Local S12 ALU (8)
CS2K Nortel (1)
ONO has also a network of TDM exchanges, which it is migrating to the NGN platform.
During 2012, ONO continued to migrate customers from the TDM voice platform to the NGN platform, enabling ONO to efficiently deliver new Voice/Data and
Fixed/Mobile convergent services using IP.
By December 2012, nearly all the exchanges had migrated to the new technology.
Also in 2012, ONO completed the replacement of its intelligent network platform with a new platform that will enable it to deliver the current portfolio of services (portability, 90X/80X numbers, virtual private networks, and indirect access) and to introduce new functionalities.
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What does ONO do?
ONO’s network
Mobile Network
In 2007, ONO began to operate as a
Mobile Virtual Network Operator , offering its subscribers an integrated telephony service. The ONO network since then has included mobile switching and mobile services nodes needed for this service.
ONO has continued to develop in its mobile network to allow it to offer mobile broadband services using 3.5G+ standards
(HSDPA, HSUPA and HSPA+) with access speeds of up to 16 Mb.
In 2012, the capacity of the platform for data services was increased, and the portfolio of mobile broadband services was extended with new flat rate plans. ONO also continued to commercialise a wide selection of handsets with its logistics partner.
At the end of July 2011, ONO was awarded LTE licenses in the 2.6 GHz band in Madrid, Cataluña, the Comunidad
Valenciana, Cantabria, Murcia and La Rioja, reflecting the company’s commitment to using new standards in its mobile network. In early 2012, a pilot test of this technology was carried out.
Internet
MMS
Interconnection
GGSN
IP
BACKBONE
BARCELONA
BCN-MSC Voice
TME-B MSC 2
TME-B MSC 1
BCN-CT
SS 7
TME-S TP 1
MMSC
TME-SG SN
SASN
WAP GW
SAPC
INS Prepaid
SMCS
HLR MAD
Charging
DB
INS IN
HLR BCN
Voice Mail
VLC-CT TME-S TP 2
Transit MMS s
MAD-MSC Voice
TME-M MSC 1
TME-M MSC 2
BBS
MAD-CT TME-STP 1
International
Roaming
Provisioning
Charging
VLC-CT TME-STP 2
MADRID
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What does ONO do?
ONO’s network
Transmission Network
The Transmission Network is responsible for connecting ONO’s multiple nodes and service centres across Spain. The network is composed of a very large amount of transmission equipment that is connected with each other by various technologies
(mainly fibre, complemented by radio).
The equipment of the Transmission
Network uses various standards (SDH,
WDM, Ethernet) which are designed to transmit large volumes of information for long distances (hundreds or thousands of
Km). The Transmission Network transports traffic of any kind – data, voice, or audiovisual services – in a transparent way to comply with the quality requirements for each kind of traffic (error rate, margins for round trip delay times and jitter, % of service availability, etc.). The architecture of the Transmission Network is generally adapted to the geography of the service nodes whose traffic it carries. The nodes tend to be organised into various basic sub-networks that use different forms
(ring, point to point, bus, point to multipoint, mesh). Ring or mesh networks are able to create redundancy using specific mechanisms, so that multiple paths are available to transport the traffic in the event of failures.
The Transmission Network is also segmented by geographic level. Depending on the location of the nodes and connections, the network is categorised into Backbone, Regional and Metropolitan.
- The Trunk Network is formed of high capacity long distance links that connect the main nodes, mainly located in large cities. These links connect the main nodes and aggregate traffic from their geographies to exchange this traffic with other regions and/or metropolitan areas, at transmissions rates of up to Tb/s. The
Backbone Network of ONO can provide connections of up to 10 Gbps and new capacities of 40 Gbps and 100 Gbps are planned for the coming years, as well as the possibility of restoration at the optical level from 2013.
The following is a map of the Trunk and
Regional connections of the Ono network across Spain
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What does ONO do?
ONO’s network
Data Network
ONO’s data network is based on a double backbone architecture.
ONO has an IP MPLS Backbone which it uses to deliver all its data services, for both businesses and residential customers, and to provide connectivity to other networks.
The ONO Data Network is an integral part of the global Internet and has various IP interconnection points for exchanging data nationally and internationally. Its architecture consists of multiple nodes and uses a functional hierarchical network design with different levels of aggregation and an extensive reach, enabling the pickup/distribution of residential services, fixed and mobile services for SMEs and large accounts, and metropolitan IP/Ethernet.
ONO also has an Independent IP Backbone dedicated entirely to transmitting the TV
Service. In 2012, this backbone network was extended to the area previously covered by AUNA and used for transmitting the advanced TiVo® service, with next generation equipment based on VPN
Multicast. In the coming years, this will be extended to the entire ONO network.
Finally, ONO retains an ATM Backbone with has been reduced in size but which is still used for a certain volume of business services that have not still migrated to
MPLS solutions.
Regional Architecture of the IP MPLS Backbone
Higher hierarchy element.
CORE
AG-N1
Tenerife Las Palmas
Lanzarote
Coruña
Vigo
Oviedo
Santander
Léon
Valladolid
Pamplona
Burgos
Logroño
Zaragoza
Lérida Gerona
Barna
Salamanca
Tarragona
Madrid
Espanix
Castellón
Valencia
Huelva
Albacete
Cordoba
Jaén
Murcia
Sevilla
Granada
Málaga
Almería
Cádiz
Alicante
Palma
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What does ONO do?
ONO’s network
Audiovisual Services Network
ONO’s Audiovisual Services Network is composed by a head end infrastructure which receives channels from various content suppliers, adapts them and distributes them to the network; a conditional access system that manages encryption and access rights to content; a signalling system that allows STBs to pick up the channels, access EPG information and update the STB software and a customer terminal (STB) which allows customers to access the content in accordance with their subscription as well as to access high value audiovisual services such as VoD, audiovisual services over IP, meta data, search, recommendations, etc.
ONO also uses a programming and playout system for promotional channels and in-house PPV.
Access to channels is controlled by the conditional access system that is responsible for encrypting channels and providing users with access rights in accordance with their service bundle. It is this system that ensures the security of the TV platform.
In addition, ONO has a video on demand service (VoD) , which is an on demand system for viewing high quality video and audio content, in which the user can browse through an extensive catalogue, select content, establish a connection between the VoD platform and the user terminal (STB), and then view the content selected, all while maintaining full control over the system by the use of special functionalities (pause, stop, fast forward, rewind, bookmarks, etc. ) that are similar to those on other household video devices.
TV SAT
DTT
OWN
CHANNELS
VoD
National headend
Encoding
Multiplexing
Encriptyon
NDS
NGTV Platform
TiVo
NAGRA
Storage
ARRIS
Regional headend
Regional DTT
TV Distribution
DVB-C
Fibre Optic
Transmision
Network
Local storage
Encriptyon
NAGRA
Interactive Apps
TiVo
VoD Distribution
DVB-C
FTTN
Access
Network
User Terminals
TiVo
STBs
NDS
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What does ONO do?
ONO’s network
All of this network infrastructure, combined with the software provided by the exclusive agreement with TiVo®, provides the most advanced pay-TV service in Spain, or Next Generation Television Services
(NGTV) .
NGTV is focused on providing customers with the best user experience available and is based on a combination of current high functionality TV (such as a PVR service that can record three channels at the same time, HD channels, VoD, search and recommendation services, a high quality HD graphical interface, remote programming, interactive services, audiovisual services over IP, a Zapper service that is adapted to the sale strategy, etc.) with the next generation of TV (3D, broadband connected TV, hybrid devices, access to on-line content, etc.). The
NGTV platform has required the complete overhaul of the architecture of ONO’s TV platform, with the incorporation of a new conditional access system, a new head end infrastructure and a new STB that is integrated with TiVo® services, while at the same time integrating these new platforms with the existing VoD platform and with
ONO’s business systems.
By implementing this new TV network, ONO is now able to provide its customers with advanced functionalities that no other competitor has in Spain , such as a search engine with personalised recommendations that reflect the habits of the user, multiscreen capability, remote recording, home media sharing, etc.
In 2012, ONO continued to roll out NGTV to nearly all its network and updated the service with new functionalities and improvements, and in early 2013 it completed its commercial offering in
Navarra and La Rioja.
Over the course of 2013, ONO’s NGTV platform will continue to evolve, in order to offer more functionalities with the PVR service, improving the user experience even more.
Operations Support System
All the technologies that form part of the
ONO network also have a management layer
(OSS, Operations Support System) which automates critical tasks in the network, such as service delivery and continuity, network monitoring and configuration and obtaining information about usage and performance.
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What does ONO do?
ONO’s network
ONO’s network evolution
ONO, as part of its process to continuously improve the customer experience, is analysing the evolution of different technologies for their possible introduction in the network.
The main technology pilot tests carried out in 2012 are listed below.
1. RFoG pilot
Thanks to RFoG (RF over Glass) technology, it is possible to roll out FTTH (Fibre to the
Home) access, delivering all the same services with the same network and customer equipment. The technology represents an evolution of the access network in which the head end equipment and the business and provisioning systems are 100% compatible with those used in
FTTN-HFC roll-outs. The basic difference with the current network is that the
Optical Terminal Node (ONU), in the residence of the customer, is only used in the upload direction when there is a signal to transmit, so that there are no collisions with signals from other customers. In the download direction the ONU is just the same as only other Conventional Optical
Node. As a result, the customer premises equipment (CM and STB) is the same, with the same services as in the FTTN-HFC network.
This roll-out technology leads to helpful simplifications of specific network roll-out and maintenance scenarios.
Diagram of RFoG Architecture
DIGITAL
TV
Optical transmitter
1550nm e o
Optical am plifier (EDFA)
CMTS e o
Ultra low noise optical return path receiver
1550nm
WDM
1610nm
1550nm
(DS)
+
1610nm
(US)
1:32
...
1:64
Optical splitter
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What does ONO do?
ONO’s network
2. Public WiFi network pilot
In 2012, ONO launched a pilot for public
WiFi services (in unlicensed frequencies) in the city of Alicante, in order to confirm the viability of the technology, identify impacts on the ONO network and integrate both networks, assess the possibility of using public WiFi for off-loading traffic from
ONO’s mobile network and to evaluate its acceptance by customers.
Once again, thanks to the flexibility and quality of its fibre network, ONO was able to quickly roll out a new public WiFi network with extensive coverage.
The pilot WiFi network consists of a dedicated core platform, connected to
ONO’s Data Network, with all the elements needed to control and ensure Internet access from different client devices (PCs, tablets, smartphones) and from different access points in the public WiFi network.
Three types of public WiFi Access points have been rolled out, in the free frequency bands of 2.4 Ghz and 5 GHz:
- External access points in areas with high density of customers (hotspots).
- Interior access points in shops and restaurants.
- A network of DOCSIS 3.0 cable modems of ONO clients in Alicante, providing a so-called Community WiFi network. Using these modems, a second
WiFi network, separate from the client’s private WiFi network, is established, with dedicated bandwidth for connecting to the ONO network. Because of this innovative design, the residential customer service is not compromised, in terms either of performance or security.
Architecture of the Pilot WiFi network
INTERNET
Backbone
Network
ISG
Thanks to these different types of Access
Points, a high level of coverage has been achieved in Alicante, especially in popular public areas (the beach, harbour, squares, shopping centres, bus station, etc.).
The WiFi network based on external and internal Access Points enables ONO clients to access the Internet, as well as non-ONO clients who want to make occasional use of the service. However, the Community WiFi network is restricted to ONO clients only.
Cable
Network Core
Subscriber &
Policy Manager
Antenna
Management
TPV - PAYPAL
€
Portal cautivo
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What does ONO do?
ONO’s network
| Management of the environmental footprint of the roll-out and maintenance of ONO’s network
Article 45 of the Spanish Constitution recognises the right of citizens to enjoy an adequate environment as an indispensable condition for personal development.
The environmental responsibility that guarantees this right falls both on individuals and companies.
At ONO, respecting the environment and contributing to sustainable development are key principles, with environmental responsibility taking the lead. In its programmes the Company includes strategies to minimize environmental impacts, for example by implementing technologies that when deployed to do not have secondary effects or negative impacts on the environmental balance.
ONO is also committed to the continuous improvement of its processes, at all times maintaining the satisfaction of its customers, the desired level of quality for its products and services, as well as to compliance with legal requirements and environmental regulations, and the application of a series of additional internal principles in the environmental protection area, which include:
- Continuous monitoring of the compliance of its facilities, activities, products and services with all legal requirements and regulations for the environment, especially for electric and electronic equipment.
- Identifying the aspects and e nvironmental impacts that are associated with its activities and processes, and applying the operational controls needed to minimize those deemed significant.
- Assuming the commitment to prevent and minimise contamination.
- Efficiently using resources in the roll-out, upgrading and maintenance of its communications network, offices and technical centres, as well as in service delivery.
- Training and raising the awareness of its employees about environmental issues, in order to ensure that their tasks are carried with the highest respect for this model.
- Controlling and reducing as much as possible the consumption of resources, in particular electricity, water and paper.
- Controlling the CO
2 emissions associated with its activities, measuring its carbon footprint to prioritize actions to minimize emissions.
- Optimizing the management of the waste , both hazardous and non-hazardous, that is generated in its centres and achieving the highest level of recycling possible.
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What does ONO do?
ONO’s network
| Management of the environmental footprint of the roll-out and maintenance of ONO’s network
- Establishing the communications channels needed for the model to be disclosed and understood by all levels of the organisation and to be available to suppliers.
- Ensure the best landscaping of its facilities , minimising their impact and contributing to preserve the flora and fauna of the neighbourhood.
- Integrating the environmental requirements of the purchasing processes , requiring a commitment from suppliers to respect the environment.
- Cooperating with the public administration and users , and with other stakeholders who help to maintain satisfactory relations.
- Raising the awareness of employees about the importance of complying with the Model , as they can exercise an important role in environmental preservation.
ONO understands that every decision has an ecological impact with either a negative or a positive result. In 2012, it continued to implement strategies and actions which contribute to reducing its environmental footprint . The main actions carried out during 2012 include:
1. Implementation of a Waste Management
Model
In recent decades, there has been increased concern about the environmental and health problems caused by waste. Experience has shown that to achieve the right control of waste, an appropriate waste management policy is essential.
The proper control of waste includes the correct management of processes of waste generation, handling, conditioning, storage, transport and final destination, all without causing negative impacts on the environment or on living beings, and if possible at a low cost.
As a result, ONO has developed and implemented a Waste Management Model which controls all environmental aspects derived from delivering its services, in particular waste management, in order to minimize its impact on the environment.
ONO understands that the prevention and reduction of the environmental impact of its activities and facilities is the responsibility of all its team . Consequently, the Company strives to provide them with the means, the training and the information that they need to act in accordance with this Model.
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What does ONO do?
ONO’s network
| Management of the environmental footprint of the roll-out and maintenance of ONO’s network
To support the Model, internal communications have been used to publish the documents that are included in the
Model:
- Guide of Good Environmental
Practices , which includes the good environmental intentions from the
Company at all levels, for their understanding and application.
- Manual for storing, labelling and packaging for suppliers to comply with legislation.
- Basic Environmental Principles to be followed by suppliers , which includes the principles that suppliers must comply with.
- Environmental Addenda to include in contracts with suppliers , including in the contracts the environmental requirements to be complied with.
- Guide for environmental assessment for suppliers , which helps to assess their suitability in terms of their environmental approach to the services requested by any area of the Company.
- Plan for Management of Waste at
Building Sites , which aims to contribute to reducing the number of tips and reducing soil contamination.
Compliance with the legal and regulatory framework applicable (international,
European, national, regional and local), and the willingness to adapt to any future norms and social requirements is a commitment and a responsibility for
ONO.
This model monitors and assesses its compliance and extends it to its suppliers.
The correct management of waste also involves those suppliers who carry out activities that can generate any type of waste.
Reflecting this, the Model includes a series of
E nvironmental Requirements for Suppliers who provide their services at ONO sites or who distribute their products to or for ONO.
All suppliers must be aware of and comply with the environmental principles of the
Company, which are included in their contracts. To ensure this point, a Plan for supplier awareness has been developed which covers 80 companies and which aims to inform, assess, and ensure the suitability of these companies under the
Waste Management Plan
Any deficiencies found in terms of compliance with these requirements by suppliers have been eliminated, ensuring compliance with all environmental laws that are in force at the time. The Model also includes certain rules and voluntary commitments that are not a legal requirement.
One of the environmental requirements is that suppliers can provide traceability of their waste management from its generation to the final destination. This record enables monitoring of waste generated by each centre, and allows the waste to be traced and any relevant certificates to be provided.
At the end of the fourth quarter of 2012,
ONO made available the on-line tool
JUNO , which enables and facilitates communication, monitoring and control over traceability, as well as supporting the other processes involved in the Waste
Management Model:
- Maintenance of data and associated documentation.
- Waste management , enabling the different phases of waste to be recorded, from generation to final treatment in the recycling plant, with the associated documentation.
- Assessment of suppliers . ONO users responsible for assessing suppliers can do so and can also record any incident detected in the process.
- Auditing of the documentation associated with waste . Any document associated with waste can be audited and any incident recorded.
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What does ONO do?
ONO’s network
| Management of the environmental footprint of the roll-out and maintenance of ONO’s network
At the end of 2012, the Health and Safety company that ONO employs to prevent risks in the workplace was given another activity: to monitor compliance with the requirements of suppliers that concern
Waste Management.
- On-site inspections . Checks are made of waste management during visits to coordinate and inspect suppliers, in order to ensure the correct and immediate disposal of the waste generated.
- Monthly meetings and reports where the person responsible for ONO will report to the designed health and safety person about the activities of suppliers who generate waste during the month, and confirm their activities in the month.
- Control of the traceability of waste , using ONO’s tools for this purpose (JUNO), with confirmation that the tool is being updated appropriately.
- Regular re-assessments to:
• verify the suitability of suppliers, in accordance with the environmental requirements of the Model,
• request and check the documentation needed, and
• carry out monitoring until it has been confirmed that information has been delivered/uploaded to the ONO mechanism.
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What does ONO do?
ONO’s network
| Management of the environmental footprint of the roll-out and maintenance of ONO’s network
ONO is committed to the environment by buying electricity with zero CO
2
impact.
2. Minimising the environmental impact
Communication technologies allow information to be exchanged without transport and they minimise the consumption of paper and office materials.
As a result, services are more efficiently delivered, optimizing routes and reducing the impact on the environment.
ONO is committed to minimising the environmental impact, and to this end it:
- Offers the possibility of working without needing to move location.
- Supports local development thanks to its broadband activity.
- Reduces the consumption of resources, especially paper, office materials and energy, by using e-billing.
- Supports e-learning, providing users with access to distance training without using transport.
- Organises Video Conferences, or meetings without the need for transport, reducing the consumption of resources and the impact on the environment.
2012, ONO assigned increasing importance to initiatives that contribute to reducing the environmental impact, in particular by optimizing electricity consumption of both equipment and offices. These include:
- Reduction of electricity consumption and emissions of CO
2
ONO is committed to the environment and in 2012 it carried out a series of actions known as “Green-line” which were designed to reduce electricity consumption and emissions of CO
2
.
Thanks to these actions, the Company was able to reduce its electricity consumption by 10.35 Gwh (3,73x1013 joules) in 2012, reducing the impact of its CO2 footprint by 6,340 tons.
Consumption evolution
Total consumption (Gwh)
Variation (Gwh)
(*) Until 2012, the electricity consumption data were approximate.
2010 2011 (*) 2012
248.35
(14.03)
228.44
(19.91)
218.09
(10.35)
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What does ONO do?
ONO’s network
| Management of the environmental footprint of the roll-out and maintenance of ONO’s network
“In the last 3 years, the savings of
ONO’s electricity consumption is equivalent to planting 115,580 trees”
The main initiatives that have contributed to this reduction include:
- VPE Project (Voice Platform
Evolution). Decommissioning switching centres and migrating to a new technology.
- Adjusting the reference temperature for offices and technical rooms according to the procedure established in the previous year which defines the process for reducing as much as possible the activation and deactivation of air conditioning equipment, without damaging telecoms equipment prematurely because of a high temperature.
- Good Practices . Minor improvements to optimise air conditioning (cabling, segregating unused spaces, re-ordering grilles, optimization of warm air corridors, forced ventilation projects in cabinets and exchanges, etc.
- Optimisation of network centres and equipment, leaving some sites, concentrating network equipment, decommissioning equipment without service, etc.
- Improvements following decommissioning of switching centres.
Improving sites to optimize the temperature following the disassembly of the exchanges.
- Freecooling . ONO has installed a system in 62 of its centres which uses outside air to cool technical rooms. The system is innovative and effective.
- R22 . Replacement of underperforming air conditioning equipment with R22 gas for efficient equipment.
- Turning off air conditioning in nodes of the access network where it is not necessary, and optimising AC equipment when there are several sets in one centre.
- Adjustments and controls that reduce reactive power consumption in 75 actions.
Aware of the environmental situation and of its important role in society, on March
5th 2013, World Energy Efficiency Day,
ONO launched a campaign to raise the awareness of everyone at the Company about the importance of only using the electricity they really need. The plan is based on two main elements: supporting efficient habits by using Intranet communications, and providing courses in good practices to the areas with the greatest consumption of electricity.
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What does ONO do?
ONO’s network
| Management of the environmental footprint of the roll-out and maintenance of ONO’s network
- Reduction of the Visual Impact
In 2012, ONO carried out and executed studies on how to optimize its equipment and reduce the visual impact of its network.
These actions included:
- Elimination of cabinets in public highways, and replacing unsightly cabinets.
- Migration of customers and dismantling of radio sites.
- Dismantling platforms and ONO telecom antennas thanks to the optimisation of equipment, in Valencia, the Canaries Islands, Andalusia and
Catalonia.
- Prevention and reduction of noise pollution
In 2012, ONO made improvements to its sites and to its equipment in order to reduce noise pollution, including:
- Improvements to soundproofing
- Insulation around equipment
- Installation of silent blocks to minimise vibrations
- Replacement of noisy air conditioning
- Measurements of noise to confirm compliance with regulations.
Examples of the installation of acoustic cabinets with sound-absorbing panels on the inside:
- Reduction of radio-electric emissions
ONO’s efforts to optimise its radio infrastructure have helped reduce its radioelectric emissions. The following actions have been carried out:
- Decommissioning of BTS sites
- Migration of 7 high capacity transmitters to fibre optic cable
- Implementation of new spectrum efficient technologies
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What does ONO do?
Investment
Since the start of its operations,
ONO has invested significantly in the telecommunications sector in Spain. These investments have been focused mainly on rolling out its fibre optic network, acquiring equipment, continuously improving services, installing products in customer premises as well as investing in systems and other smaller investments.
Until 2008, investments were focused mainly on rolling out the next generation fibre optic network. Thanks to this, ONO now has the largest next generation fibre optic network in Spain, reaching more than
7 million households in the main provinces, or about 48% of the total number of households in the country.
Now that ONO has achieved a high level of coverage with its network, the focus of its investments is on modernising systems and equipment to be able to offer the most advanced services in the Spanish market, such as ultra-fast Internet speeds, next generation television and voice over IP and mobile telephony services.
2012 was a year of significant investments by ONO in continued enhancement of the network, updating systems to offer the best products and services in the market to customers. Total investments in 2012 were
299 million euros.
Homes released to marketing (‘000) (Fibre) Capex (€m)
7,030 7,043 7,063
2010 2011 2012
244 292 299
2010 2011 2012
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What does ONO do?
Investment
In addition to the recurring investments that ONO makes to provide its customers with telecoms services, the main investment projects in 2012 included:
- Development and commercialisation of high speeds Internet in Spain
In 2012, ONO completed the roll-out of DOCSIS 3.0 technology in its entire network. This state-of-the-art technology enables ultra-fast Internet speeds of up to 200 Mb to the entire customer base, making ONO the only operator that can offer these speeds to millions of Spaniards.
At the end of 2012 around 700,000 customers (c. 50% of the customer base) already enjoyed 30, 50 and 100
Mb products, proving that there is real demand for these high-speeds in Spain and that ONO is in a privileged position for responding to this demand from the market.
High-speed Internet customers (‘000)
9.2%
29.7%
49.2%
698
424
127
2010 2011 2012
Customers ≥30Mb
Customers with high-speed Internet
(See sections: Products and Services _
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What does ONO do?
Investment
- Development of next generation television (TiVo®)
Another priority area for investment for the Company was the development of next generation television in partnership with
US company TiVo®.
This innovative product has functionalities never before seen in the Spanish market.
TiVo® is a decoder with a hard disk system that can record up to three channels at the same time while watching a fourth channel; it has an intelligent browser that memorises the tastes of users and offers viewing suggestions depending on their consumption habits; the quality of the product is optimal, as it incorporates HD and 3D channels, etc. In addition, TiVo® also enables other Internet functionalities such as search engines and social networks but in a ground-breaking and innovative way.
In October 2011, ONO launched the TiVo® services in the regions of Madrid and
Barcelona and in 2012 it extended the service nationwide
TiVo® customers (‘000)
11%
6%
4%
2%
1%
95
56
34
8
16
T4 11 T1 12 T2 12 T3 12 T4 12
TiVo® Customers
% of TV customer base
Although this innovative product was only launched one year ago, it has received an extremely positive response in the market, with around 100,000 customers (11% of television clients) now subscribing to TiVo®.
In addition, satisfaction surveys indicate an excellent level of satisfaction with this innovative service.
(See sections: Products and Services_
Television and ONO’s network_Audiovisual
- Upgrading the voice network (Huawei)
ONO also invested significantly in updating its voice network in partnership with
Huawei, which in 2012 completed the migration of all switching equipment, with no service disruption to customers.
This means that the Company can not only improve its voice services but also significantly reduce its operating expenses, in particular the costs of electricity, leases and maintenance
(See section: ONO’s network_ Voice
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What does ONO do?
Innovation
La innovación es uno de los principales
Innovation is one of the main drivers of
ONO’s progress and growth. It is one of the five Group values and is also a major source of competitive advantage. Innovation has helped the Company’s technological solutions lead it to a very competitive market position, making it the only fibre operator with nationwide coverage.
ONO aspires to offer continuous benefits to its customers and the sector, based on permanent technological innovation.
It encourages the creation of new ideas, products, services and practices that add value to the Company and to society. In
April 2012, ONO began to roll out a new innovation model, with two objectives
(See section: ONO’s network_ONO’s network evolution )
1º Developing the innovation culture at the Company
In general, both worldwide and in the market in which ONO operates, it is essential to offer customers the best know-how possible. As a result, innovation needs to permeate all levels of the organisation, helping it to offer customers the best service there is.
2º Steering innovation
Innovation does not end when the idea is born. It needs to be developed. The development process can guarantee that the idea is supported by financial, technological and market analysis, and by a proof of concept that helps understands its pros and cons.
It is the innovation area of ONO that is in charge of this model, supporting all the other departments who are involved.
The model is based on the participation of all employees and the definition of a life cycle for ideas. The following diagram illustrates all these phases:
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What does ONO do?
Innovation
Innovators
Committee
Existing projects
Crowdsourcing
Permanent
Innovation
Committee
IDEA
Technology monitoring/ Research
Permanent
Innovation
Committee
Analysis of decisions
Pilot PROJECT
The first filter is represented by the
Innovation Committee , which has a rotating membership that is made up of employees who join on a voluntary basis.
The Committee is responsible for the first filtering of ideas that arrive in the innovation mailbox. This results in ideas moving to the next filter.
The second filter is supported by the
Permanent Innovation Committee, which comprises of directors from the Residential,
Business, Technology, Finance, Systems and
On-line Channel areas. This Committee is responsible for prioritising the ideas and beginning the life cycle of the ideas, first by analysing them from the perspective of innovation, and if this result is favourable, then organising a pilot or proof of concept that will be assessed by the Committee.
If a pilot is successful, all the information is provided to the corresponding area, for the idea to be implemented as a project.
This model reflects ONO’s interest in ensuring that the talent of its employees can lead to innovation and to new possibilities for themselves, the Company and its customers.
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We were voted Best
Mobile Virtual Network
Operator in Spain at the
2012 ADSLzone Awards, because of our service, the competitiveness of our calling plans and the growth we recorded.
ONO’s Responsibility
Fibre is our growth driver, but our most recent source of satisfaction is our mobile telecoms service… more than 400,000 mobile subscriptions in 2012.
400,000
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ONO’s Responsibility
Corporate Responsibility Focus
Development of ONO’s Corporate Responsibility
• Cooperation with the Juan XXIII Foundation to create courses for the integration of the mentally handicapped in the workplace, using new technologies
• Support to the Adelias Foundation project in
Nador (Morocco)
• Cooperation with the Red Cross, Entreculturas
Foundation and Médicos del Mundo
2006 - 2009 2010
• Implementation of ONO’s corporate values
• Signing the UN Global Compact
• Creation of the Corporate Responsibility website
• New model for Purchasing becomes operational
• Cooperation with the Bip-Bip Foundation and Germán Sánchez
Ruipérez Foundation, with ONO becoming the technological partner for the Casa del Lector project in Madrid-Río…
• Signing of the II Cooperation agreement with the Public Entity Red.
es to participate in campaigns to encourage the use of electronic invoices and bills
• Sponsors of the Global Education Forum (GEF), the XVII
Telecommunications Sector and Information Society Meeting at IESE-
Madrid, of the Prizes for best Doctoral Theses and best End of Course
Projects at the Official College of Telecommunications Engineers
• Christmas Campaign: cooperation with UNICEF
• Preparation of the 1st Management
Plan for Corporate Responsibility
• Increased participation in CR events
2011 2012 2013
• Approval of the corporate values of ONO
• First Integrated Annual Report
• Implementation of G3 standard from the GRI
• Support for the Sponsor a Tree Foundation –
ONO Wood
• Christmas Campaign: collecting toys for the
YMCA Foundation and Adelias Foundation
• Preparation and approval of the Code of Ethics
• CR actions and sponsorship in the business community
• Working with special employment centres for the disabled
• Commitment to the ONO Wood
• Christmas Campaign: cooperation with Cáritas
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ONO’s Responsibility
Corporate Responsibility Focus
The starting point for rising to a challenge such as a commitment to sustainability has to be to understand one’s own opportunities, strengths, weaknesses and barriers to success. For this reason,
ONO has been implementing a Corporate
Responsibility (CR) project .
Over the course of recent years, ONO has established the foundations for this project, based on the three main elements of sustainability - economic, social and environmental – and establishing a series of values and Code of Ethics that are key mechanisms for guiding the Group’s employees, managers and the members of its governance bodies in all their actions.
In 2010, ONO developed and established five corporate values, which were implemented in 2011 based on an ambitious plan of internal communications: a newsletter, open sessions, e-learning
(ONO CAMPUS), etc.
The results of this effort were positive, as in 2012 these values were reflected in the day-to-day life of all employees.
In order to reinforce these values, at the end of 2012 the Board of Directors approved a Code of Ethics that is more than just another book of rules. The Code represents a mutual agreement by the entire Company that aims to support positive values and behaviour that can add value to the business and guarantee the highest levels of integrity in the actions of every employee.
The Code provides guidance about the behaviour that is expected by everyone at ONO, based on the assumption that everyone is responsible for acting as is expected and that under no circumstances should any employee put the Company in risk by acting unduly. It aims to be an instrument for support and guidance .
To ensure the proper use of the Code of Ethics, ONO has made available to all employees various channels for making and managing complaints (e.g. the whistleblowing channel on the portal www.enonono.com
, managed by Internal
Audit). This means that those people who believe it appropriate can disclose in good faith any irregular practices that may breach the Code.
In addition, an Ethics Committee has been established which, among other powers, can guide anyone at ONO about any uncertainties in the interpretation of the Code of Ethics, and where anyone can disclose possible breaches.
This Committee comprises of the Secretary to the Board of Directors, the Director of Human
Resources, the Internal Auditor, the Manager of Compliance and a member of senior management, who rotates every 12 months.
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Corporate Responsibility Focus
The purpose of the Ethics Committee is to:
- Support the distribution, awareness and compliance with the Code of Ethics in the organization.
- Interpret the Code of Ethics and provide guidance during uncertainties.
- Facilitate the resolution of any disputes concerning the application of the Code of
Ethics.
- Provide reports directly to the Board of
Directors or, if applicable to the Audit and
Compliance Committee.
- Report on its activity to the Chairman of the Board of Directors and the Chief
Executive Officer.
- Regularly report to the Organisation about those aspects of the Code which are most relevant to the different areas.
- Supervise the procedure that has been established for handling complaints and processing any information and queries received about the issues covered by the
Code, in general making sure that these are appropriately managed and resolved.
The Ethics Committee may act on its own initiative or on the instigation of any employee who makes a complaint in good faith using whatever channel is available.
The aim of creating a culture of corporate responsibility is a challenge that requires long term management , as it implies: reinforcing the values of the Company so that they are understood and assumed, creating an appropriate framework for actions, training employees and raising awareness, and establishing mechanisms that serve to establish, measure and manage progress.
In 2012, the Company remained committed to the main agreements about corporate social responsibility, including the Principles of the United Nations
Global Compact and the compliance of its
Annual Report with the standards of the
GRI (Global Reporting Initiative) .
As part of its global approach to corporate responsibility, ONO continues to focus on both social and environmental actions:
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Corporate Responsibility Focus
Social action:
ONO complies with the requirements of Spain’s legislation on integrating disabled people in the workplace, both by providing direct employment and also by using alternative measures such as using organisations which support the training and integration of disabled people. The
Company is aware of the importance of integrating disabled people into the workplace and in 2012 it hired various services from companies whose mission it is to provide disabled people with employment , replacing cleaning contracts by contracts with Special Employment
Centres.
The Company has also been involved in other corporate responsibility actions and sponsorship, in order to support local businesses with strategies and services that improve competitiveness and help restart commercial activity and, in consequence, the Spanish economy.
In 2012, the business area of the company organised various programmes aimed at reactivating economic growth and supporting entrepreneurs, especially women entrepreneurs. ONO worked jointly with various associations to achieve this.
The most significant events in 2012 were:
- Supporting SMEs , with the aim of supporting Spanish SMEs in events across the country and using an on-line platform that allows any company that registers to have free and easy access to the knowledge
(legal, technological, commercial, communications) it needs to grow.
- Meeting point by ONO , a programme of events and communications established by
ONO for SMEs to discuss new technologies.
- Cooperation with the AJE Association to support and promote companies and support the entrepreneurial spirit of its young members.
- Cooperation with Fundetec to support the use of Information and Communication
Technologies (ICT) to reduce the digital divide, focused in particular on efforts with groups at risk of digital exclusion and with
SMEs, micro-companies and independent professionals, with the aim of improving their productivity and competitiveness.
- Cooperation with Womenalia to support and promote the incorporation of women into the business world.
- Cooperation with ESESA “with eyes of women” , which aims to help bring together all participants, men and women, through a professional event discussing the experiences and main management tools used in companies managed by women.
ONO has assumed the commitment of promoting the benefits of ITC and is trying to bring them to children and young people. Today, new technologies are an essential tool for teachers and students.
Incorporating them in the classroom is not only a challenge but a reality. In
2012, ONO has rolled out a programme,
EDU+ITC , which consists of holding events at schools and colleges in which qualified experts in education and new technologies participate, many of whom have the advantage of being teachers with a vision of this issue that is based on daily experience. In addition, at these events the schools can share their experiences and practices.
In December 2012, in response to the financial situation of many Spanish families,
ONO decided to help the neediest by establishing an agreement with Cáritas .
The amount set aside for commemorating
Christmas was given to this Association and used to help mitigate the effects of the recessions. This initiative also gave employees the opportunity to participate as individuals by contributing on a personalized microsite.
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Corporate Responsibility Focus
Environmental action:
Respecting the environment and contributing to sustainable development are basic principles for ONO. As a result, the Company strives to be involved in activities and programmes that support the environment. In 2012, ONO:
- continued to work as a sponsor of the
Tree Foundation with the commitment to work to reforest the zone and create the ONO Forest.
- participated in the “Ciudades
Abiertas” (“Open Cities”) Event organized by the council of Rivas
Vaciamadrid, which is a leading national and international event for organisations, institutions and companies concerned with ways to improve efficiency, sustainability and the quality of life in cities.
- included within its programmes strategies to minimize its environmental impact and made a commitment to continuously improve its processes , maintaining customer satisfaction, the quality of its products and services, compliance with legal requirements and environmental regulations, while applying a series of additional internal principles in the area of environmental protection.
In recent decades, there has been increased concern about the environmental and health problems caused by waste. Experience has shown that to achieve the right control of waste, an appropriate waste management policy is essential. As a result, in 2011 and 2012
ONO developed and implemented a Waste
Management Model which controls all the environmental issues derived from delivering its services, in particular waste management, in order to minimize the impact on the environment.
In 2012, ONO published on its Intranet a series of documents about the new model, to raise the awareness of all employees, including: the Guide of
Good Environmental Practices, Manual for storing, labelling and packaging for suppliers to comply with legislation, basic
Environmental Principles to be followed by suppliers, Environmental Addenda, Guide for environmental assessment for suppliers,
Plan for Management of Waste at Building
Sites, etc.
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Corporate Responsibility Focus
2013 will be a year of consolidation for
Corporate Responsibility at ONO, with the roll-out of the first Management Plan for
Corporate Responsibility at the Group .
This plan, developed by the Corporate
Responsibility department, will have a long term focus and will aim to provide the management elements needed to guarantee its successful implementation in the Company.
The Management Plan will focus on:
- Reinforcing corporate values and complying with the Code of Ethics.
- Establishing an organisational model for Corporate Responsibility which can involve all departments of the company at all levels, and other stakeholders. The main aim will be to transmit to all levels of the organisation the importance of responsible management and a working philosophy that is committed to the environment.
- Training and awareness-raising for ONO employees.
- Making Company Governance more transparent.
- Broadening the commitment with society, including social and environmental criteria.
ONO aspires to reach a point at which corporate responsibility is fully integrated into its strategy and in its daily business, forming part of its culture as a business.
There is still much to be done. ONO faces many difficulties, but it is establishing the foundations for this and consolidating them within its corporate structure.
ONO continues to rely on the effort of each and every one of its departments and employees to rise to this significant challenge.
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Commitment to stakeholders
ONO recognises that all the stakeholders in its activity have a legitimate interest in the various aspects of the daily business of the company. The company is fully aware that it plays a major role in economic, social, and environmental development.
In 2010, ONO started on a new stage of direct relationships with its stakeholders and in recent years this has begun to yield results.
ONO’s commitment is to create value for shareholders and investors, for customers, employees, and suppliers, and for the media and society as a whole. To maintain this commitment, the Company is continuing to analyse how corporate responsibility issues impact its various stakeholders.
For ONO, corporate responsibility is a process of continuous improvement. It is highly focused on maintaining open and constructive relations with all stakeholders and it sees dialogue and participation as key elements for earning the trust of its stakeholders. ONO has a number of communication channels for channelling the expectations and opinions of its stakeholders and for providing responses that create value for the business and for stakeholders .
Media
Society
Suppliers
Shareholders and Investors
Customers
Employees
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Communication channels
Stakeholder
Shareholders and Investors
Customers
Employees
Suppliers
Media
Society
Communication channel
Company website: https://www.ono.es/sobreono/
Shareholders and Investors e-mail: investor.relations@ono.es
Company website: www.ono.es
Customer area:
- Residential: https://www.ono.es/clientes/registro/login/
Number for acquiring services: 1400
- Business: https://www.ono.es/empresas/
Number for acquiring services: 1403
Customer care line: 902 929 000
Directory enquiries: 11828
Corporate Intranet
Employee Portal
HR department
Purchasing area: consultacompras@ono.es
Communication area: comunicación.ono@ono.es
Company website: www.ono.es
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Commitment to stakeholders
| Shareholders and Investors
“The foundations of confidence that ONO aims for in its relations with the financial community are based on the continuous search for a transparent, fluid and close dialogue and on the application of the values of credibility, value and guidance to the market.”
1. Shareholders and Investors
To manage these relations, ONO has a
Shareholder Relations department, which is integrated into the Chairman’s office, and an Investor Relations department , integrated into the Financial Department.
The tasks of both departments include identifying and resolving any concerns and requests for information from shareholders, analysts, current and potential investors, bondholders, credit rating agencies and other players in the market, using a combination of different media and communication channels to facilitate these relationships.
The Shareholder Relations office responds to all requests with a personalised service and enables shareholders to participate in General Shareholder Meetings electronically.
(See sections: B.1.42 and E3 of Corporate
The Investor Relations department, as well as publishing financial information on the web site ( http://www.ono.es/sobreono/ inversores/key-stats/ ), regularly sends e-mails disclosing all relevant financial events to investors interested in improving their understanding of the company. The
IR department also talks by telephone to investors who want to deepen their knowledge or who have specific questions about the Company.
In order to achieve these goals and to improve transparency and relations, in 2012 the Investor Relations team carried out an intensive series of activities, including organizing road shows in Europe and the
US, attending many sector conferences and one-on-one meetings, and welcoming investors to the company to improve their understanding of the Company, its business model and its strategy.
In addition, in early 2013 the Corporate
Responsibility area joined the Investor
Relations department. The concepts of sustainability and corporate governance are increasingly important and there are an increasing number of investors who are looking not only at financial performance but also at other factors, including governance and social and environmental issues. In the long term these factors have a major influence on financial performance and contribute to value creation.
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Commitment to stakeholders
| Customers
“The satisfaction of customers is essential, both to maintain the current customer base and to ensure a long lasting relationship with clients. ONO believes that this satisfaction depends on the value and quality of the services that it provides to its customers.”
2. Customers
ONO is completely committed to improving the satisfaction of its customers. It has invested continually in improving customer service and in optimising all processes in this area. The Company has focused on identifying possible anomalies, needs and requirements so that it can contribute to improving the efficiency of processes and the quality of the services it delivers.
For some time, ONO has been using the
Net Promoter Score (NPS) , a synthetic indicator that represents the proportion of clients who are “promoters,” in other words those clients who are loyal to the brand and who are its best ambassadors.
The indicator also connects the loyalty of clients to the growth and profitability of the Company.
For yet another year, ONO rose to this challenge, reflecting its continued investment in its customers , which ONO believes is the only way of prospering in the market .
Installations and Provisioning
In 2012, ONO was focused on customer satisfaction and implemented an installation and provisioning process for new services, aiming to carry out these processes more efficiently.
The Company did not only improve its installation processes with technicians, but also launched a project for selfinstallation of high-speed Internet orders , leading to a rise in the proportion of new clients installing their own services.
These are some of the reasons why ONO’s installation service receives the best score from its clients. The average satisfaction of clients remained at a score of near to 9 in surveys carried out in the year. The average level of recommendation for this process, the so-called net promoter score, was higher than 73% in the year.
In 2012, it was especially important to support the campaigns launched by
ONO to retain clients and improve the penetration of new services: increasing speeds by 15Mb for Internet clients, installing TiVo® services, increasing the customer base for mobile services, the successful convergent plans, etc.
In addition, in accordance with European legislation, in June 2012 there was a significant change in regulation in Spain in the mobile number portability process , with the time for change of operator being cut from 4 days to 24 hours. In 2013 there will be the same change in the processes for fixed number portability, which will require ONO to implement the new process from July.
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Commitment to stakeholders
| Customers
Billing
One of the demands of customers is for bills to be transparent, accurate, and punctual . To meet this demand, ONO has installed a flexible and advanced corporate system for billing, Infinys Rating and Billing .
Operators on the customer care helpline use a system that provides them with online information, so that they can resolve in real time any doubts or complaints that a client may have about their bill.
In addition, ONO provides its customers with the possibility of receiving electronic bills , in accordance with current legislation.
Users that opt for this system have itemized bills available on the Internet, with a breakdown of the bill and itemised details of their consumption, and the possibility of consulting what has been consumed to date and is still pending billing.
The greater flexibility and optimisation of commercial processes is essential, and leveraging technology has helped to increase productivity and create value. In
December 2012, 79.1% of bills issued were electronic, up from 64.8% in December
2011, with the following positive consequences for ONO:
- Reduced cost of billing.
- Security and speed in the issue of bills.
- Simplified administrative procedures.
- Reduced paper use, contributing to the preservation of the environment
(See: Environmental Footprint section in the roll-out and maintenance of the ONO
- Improved customer service.
- Greater control over documents.
Management of service failures
The service failure management process is a key part of customer satisfaction.
In 2012, ONO continued to work in its
Operations, Networks and Technology areas to reduce the level of service incidents.
As a result, the number of faults fell, while diagnostics improved and the time taken for technicians to go to customer households was reduced.
Customer satisfaction with service failure management remained at very high levels, with a Net Promoter Score, or level of recommendation, of above 25% for customer care by telephone and of over 50% when for technician visits to a customer’s home.
ONO aims to act in advance of any problems that could affect customer satisfaction. In 2012 it launched a preventive programme under which it acts even before clients report deterioration in service. This plan, which is continuing in 2013, is designed to improve the image of ONO’s service and aims to act before clients have expressed their dissatisfaction with the service.
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| Customers
Customer care
The Customer Care Service continues to play an important part in maintaining
ONO’s reputation, not only because of the commercial activity it undertakes but also because of the understanding it generates about the customer and its contribution to customer satisfaction.
From its platforms in Spain, Colombia and Peru, ONO delivers a stable customer service, following the process of transformation undertaken two years ago.
Bogota 2
Manizales
Colombia
Lima 2 Peru
Spain
Barcelona
Valencia
In the second and third quarter of 2012,
ONO rolled out to all its Call Centres a new
Smart Client management system, which will provide its agents with:
- better access to client information during a call
- simplified execution of some actions, and
-higher call quality.
These improvements will help ONO continue to improve customer satisfaction and the to increase the efficiency of its customer attention services.
In 2012, the Company also implemented:
- a new recording system which enables the recording of all commercial transactions made, giving clients peace of mind, and
- a new complaints management process that aims to improve customer satisfaction with calls.
Thanks to these measures and the action taken with information from the system for automatic surveys, the satisfaction of customers after calling customer care improved by 4 points from 2011, while customer satisfaction after making a complaint improved by 7 points.
The maturity of the supplier relations model and the stability now achieved at the platforms meant that cross selling from the customer attention service became one of the main sources of maintaining and increasing the ARPU of ONO’s clients.
In particular, mention should be made of the results for TiVo®, with sales from the customer attention service up 66% in
2012, and for mobile phone services, with sales up by over 400%.
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| Customers
In addition, in 2012, reflecting the
Company’s continued commitment to customer satisfaction and to complying with all norms and regulations in this area, ONO renewed its ISO 9001:2008
Certification for the Quality Management
System of its Customer Attention
Services , following an audit by the
Asociación Española de Normalización y
Certificación (AENOR).
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| Customers
Customer loyalty
2012 was a key year for ONO in the implementation of its strategy for increasing customer loyalty, which is based on raising customer perceptions of the value of the service, using the Company’s strategic products and services.
The main achievements of ONO in the area of customer loyalty in 2012 include:
- Launch of the free service: +15Mb .
This has proved to be a proactive way of improving customer’s Internet speeds, increasing the speeds for more than
273,000 customers in the year.
- TiVo® . ONO has achieved high levels of satisfaction from this service.
- Mobile . ONO improved its mobile product, rewarding the loyalty of fixed and mobile customers with better prices for convergent packages. In 2012, ONO reported 417,000 active lines (voice and data), meaning that the Company is one of the main mobile virtual network operators
(MVNO) in the market.
- Segmented loyalty actions for the customer base .
Sales channels
In 2012, ONO continued to redesign the mix of its sales channels to optimize the process of winning clients.
Currently, ONO sells its products using the following channels:
- Telephone channel . Calls to 1400 from customers interested in subscribing to ONO services are managed from internal and external platforms.
In addition, to reinforce this area, ONO has about 400 sales people who carry out proactive calls to potential customers to offer them products and services.
- Physical channel . Composed of:
- Direct sales . In different parts of Spain, where they carry out sales visits and other local commercial actions.
- Own stores and franchises , representing the brand across Spain in strategic locations in main shopping areas, designed to be showcase the company’s brand and its offers.
- Indirect channels , in large stores such as El Corte Inglés and Mediamarkt, mobile telephone stores such as The
Phone House and other independent points of sale.
- On-line channel . This has become an essential channel for ONO to win customers, not only because of its importance in the acquisition process but also because of the low levels of churn that derive from this sort of connection with the client.
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Commitment to stakeholders
| Customers
Data protection and privacy
In the area of telecommunications, which are now extensively used across society, it is becoming increasingly essential to ensure the digital confidence of customers in areas such as network security, data protection, protection of minors, etc.
ONO is highly sensitive to these issues. It ensures its compliance with legislation on the personal data of its customers both internally, monitoring the correct use of data in all processes and ensuring that all security measures and procedures designed to protect the confidentiality of client information are implemented and up to date, and also externally, for example by complying with the rights of information and the need to obtain consent, as well as carefully managing all requests to exercise the rights of access, rectification, opposition, and cancellation of the data received from clients.
Among other actions, the Company regularly undertakes reviews of its current procedures to guarantee that these respect all corresponding legal obligations and it continuously analyses new topics that may affect data protection.
In this area, ONO’s data protection committee is playing a very effective role, making it easier to identify issues and to find solution. The committee has initiated projects that, for example, aim to review the quality of customer data on a regular basis or to update the document authorising the handling of personal data, which customers are provided in order to give their consent.
Safe and responsible use of telecommunication services
A key issue for ONO is promoting the safe and responsible use of telecommunications services, as this is an issue which is of concern to customers, the general public, and industry associations and the regulator.
Over the course of recent years, ONO has implemented a range of actions in the area of protecting minors, such as initiatives to raise awareness and provide education about this issue.
ONO has made available to its users tools for managing access to on-line content, as well as focusing on programming that is suitable for children and maintaining stringent rules about the classification and broadcasting of content and advertising at times when television can be seen by children, in accordance with Spanish legislation.
On the company’s Corporate Responsibility website there is a special section with advice and recommendations about making the most of ICT, avoiding risks and poor usage practices. More information can be found at: http://www.ono.es/sobreono/
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| Customers
ONO’s brand
In 2010, at the same time as the launch of real 50 Mb speeds, ONO began to make a major change to its brand. The Company was positioned as a leader in fibre optic cable and high-speeds , with the brand presenting an unprecedented product in the Spanish market and positioning the company as the most lucid and brilliant option .
For customers, the colour purple has gradually become synonymous with the identity of ONO. It is a colour that suggests technology and modernity, and when combined with light, it supports the image of a company in the vanguard of technology and innovation , and with a bright future ahead of it. Only ONO has next generation network that can offer millions of clients high real Internet speeds (30, 50, 100 and 200 Mb).
In 2012, work continued in the same line, but even more intensively. Today the customer can be told that fibre optic cable gives you more . Not only more and higher speeds, but also a new concept of television that is wildly popular in the US, and that is only possible with fibre optic cable: Tivo®, ONO’s intelligent TV service.
The Tivo® service has reinvented TV and represents a quantum leap in technology: ONO is light years ahead of the competition, not only for Internet but also in television . ONO is recognized as a pioneering operator that continues to be committed to innovation, an operator which is focused not only on the best service but also the best products.
With ONO, there is a before and an after.
ONO’s entrepreneurial, proactive and innovative spirit makes it move ahead of the market and deliver unique solutions and experiences. It continues to move forward, and continues to represent and provide next generation connections.
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| Employees
3. Employees
At the end of 2012, ONO had 2,778 employees who each day demonstrate their high commitment to doing a job well and to overcoming new social and economic challenges. They are one of the Company’s strategic assets . ONO pays great attention to their needs and is focused on creating a corporate culture that identifies it as a socially responsible company. Its efforts and actions in this area are aimed at the personal and professional development of everyone at the Company. ONO is very aware that it is people who represent the most influential mechanism for creating value.
Part of this work to support the growth of the Company’s employees is based on establishing a common identity and corporate values, and ONO is focused on ensuring that it is these values that identify the Company.
Since 2010, ONO has worked hard to embed these values, developing action plans with all areas and levels of the
Company so that these values can be shared, implemented and integrated into daily activity.
Leadership
We are leaders in fibre.
You can feel proud of this, but never arrogant.
Leadership implies
Responsibility.
Efficiency
Make the most of your time and the resources available. You will find that what is best for the
Company is also what is best for you.
Corporate
Values
Innovation
Look around you and observe. Think how to make things better. Apply this to your products and your way of working. Each day aspire to a proactive attitude and a creative approach.
Costumer
We are committed to improving their quality of life. Be an authentic, honest and open partner.
They are your best source of information.
Listen to them and learn what they need.
Team
Learn from your colleagues. Listen to them and support them.
But have self-confidence and independence. We believe in you.
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| Employees
In accordance with these values, at ONO the management of people is based on a socially responsible approach, applying management policies that guarantee the fair treatment of people and encourage their integration in the business and their professional development.
Employee management at ONO
The main asset of ONO is its people.
The Company depends on them for its performance. ONO considers it essential to invest in these people, to ensure that recruitment and training are objective and of high quality (prioritising internal promotions), and to provide the right training plans for every requirement.
ONO’s people are the best – they are people who are ethical, dynamic, flexible, eager to learn and to grow, able to work in a team, and constantly looking to overachieve. The Company is very focused on their development, so that it can make sure that the personal and professional capacities of its employees are in line with the duties they perform.
Selection
The incorporation of new professionals is the result of an exhaustive and rigorous selection process whose main aim is to attract talent, guaranteeing a transparent and objective process with equal opportunities to all.
ONO manages its selection processes to ensure the best level of objectivity and quality possible. It has created the “ Objective
Selection ” project, which defines the competencies required by each group of positions and collects the tests of the best candidates for each position, from interviews to critical incidents to technical tests.
The Company classifies selection into two parts:
1. External Selection
ONO believes in people and believes that the success of its activity depends on the people who carry it out. As a result, it is focused on creating objective and exhaustive selection processes that guarantee the best professionals join the
Company.
To achieve this, ONO uses different recruitment methods, from well-known employment websites to more innovative sources such as social networks.
The Company is not only interested in passive recruitment that reflects a selection need or process, but also in generating and maintaining its image as a good employer. ONO is carrying out two projects:
1. The development of an innovative selection strategy which is based around the construction of relations of interest on social networks , with two separate but related aspects:
- Employer Branding , which defines the actions that enables ONO to reach all potential candidates, to make the most talented of them feel an affinity with the
Company and be interested in working at
ONO.
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| Employees
- Recruitment 2.0
is mainly based on social networks such as:
• LinkedIn , where a Company profile has been created, on which information is published, comments made, articles of interest shared, and major events debated. The profile also includes job offers and gives access to the BBDD of
LinkedIn, using the professional tool
LinkedIn Recruiter. At the end of 2012, there were 2,345 contacts and 5,555 followers.
• Twitter , where an ONO Employment profile has been created and which will serve to broadcast shared content on
LinkedIn, but in a more flexible, dynamic and faster way.
2. The development of the Cantera ONO programme, which aims to develop and train Young Talents who aim to start their career at the Company and become future high value employees, born and bred at
ONO.
The main areas where the Company incorporates these Young Talents and encourages them to develop their professional abilities include IT and
Telecoms Engineering, Advertising and Public Relations, Audiovisual
Communications and Marketing.
The programme includes two types of profiles:
- Trainees , who have completed their university studies and who carry out at ONO various tasks, as part of an obligatory rotation at the departments where they are allocated, as well as being able to access a training programme at the Francisco de Vitoria
University.
- Interns , students who have not yet finished university and want practical experience in a private sector company, to complete their training and in the future form part of a major company such as ONO.
The duration of contracts for trainees is one year, while for interns the duration is that stipulated by the University.
In addition, the programme is completed by an internal training programme, not only for trainees and interns but also for the “ ONO young people collective ”, which comprises of employees who are under 30, have been at the Company for less than 2 years and have a profile that coincides with the corporate values.
Currently, ONO has a reliable source of people who not only have excellent academic training but also have received complementary training about values and the Company’s attitudes and culture, which means that they are of high value for the
Company. This sort of project has proven to be one of the best ways of joining the labour market.
2. Internal Selection
ONO is very concerned to support the development of its people. It considers internal promotion as the first option before starting an external selection process.
A selection process that is free and open to all employees and guarantees that everyone gets an opportunity. ONO has an internal tool that publishes vacancies and is available to all employees , helping its internal selection processes.
As well as publishing these offers, ONO also tries to be in the best position before publishing a vacancy, by analysing the competencies, experience, knowhow attitudes and expectations of its employees. This enables ONO to propose internal candidates for positions, which helps create closer relations with employees and ensures that in the organisation the right people are in the right positions.
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| Employees
Training and Development
The people in a company are its greatest asset, and for ONO training is an essential part of its strategy: a commitment to the professional development of employees is a commitment to the success of the
Company.
Despite difficult economic conditions in Spain, ONO has continued to invest in training, as a way of guaranteeing service excellence. In 2012, the Company provided
61,513 hours of training.
Training and education indicators
Number of employees trained
Employees in training (%)
Employee training hours
Employee on-line training hours
Hours per employee
Outside training (%)
Inside training (%)
Employees receiving performance review (%)
Investment in training (thousand of euros)
Investment per employee (euros)
Investment per employee in on-line training (euros)
2011
2,132
71
87,425
38,627
29
85
15
100
1,218
403
177
2012
2,147
75
61,513
21,962
21
79
21
100
989
346
123
Breakdown of training by categories (hours) Breakdown of training by categories (euros)
10%
17%
24%
14%
62%
73%
Manager
Coordinator
Technician
Note: Managers include Managers and Directors.
Manager
Coordinator
Technician
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| Employees
Given the characteristics of the Company, training and development plans which are designed to give added value to people and to our organisation are fundamental for ONO.
In the annual training plan for 2012, there was again a special place for training in general skills and in technical training, aimed at developing the capacities of employees and the maintenance and improvement of the fibre optic network.
With this balance in its training programmes, ONO is achieving two objectives: making the most of its staff, and obtaining outstanding performance from its employees.
Training at ONO is both internal and external, and is focused both on e-learning and on classroom courses.
The annual training plan in 2012 included major roles for the following programmes:
- Arquímedes 2012, the professional development programme for managers .
This programme began in 2009 and aims to support the professional development of the Company’s management, using differentiated training and development
(classroom courses, on-line training, outdoors, on-line training, business simulations, practical case studies, open sessions, etc.).
In 2012, the third edition of the programme was held, with the participation of 252 students, who were assigned different professional route maps according to their profiles and functions.
In March 2013, the fourth edition of the programme began in the ONO
Development School , including for the first time access by people of potential with different profiles who can begin their professional development cycle, as well as from managers continuing their training. This has doubled the number of participants in the programme.
- Impulso 2012 . This programme is aimed at developing the competencies, professional abilities and potential of 505 employees, and to develop the corporate values that are in line with the strategic plans for the professional future of the employees at ONO.
Impulso is composed of three different training paths that use blended methodology
(on-line and classroom training):
• Perfecciono which develops core competencies for managing and leading teams, resolving conflicts and making decisions.
• Gestiono which develops decisionmaking competencies, effective communications and planning.
• Evoluciono which develops core competencies for managing projects and communicating and working in teams.
In 2013, this Programme will form part of the Arquímedes Programme at the ONO
Development School and will include
Arquímedes Immersion.
- ONO Campus . This on-line training platform is managed and implemented internally. It forms a virtual environment which encourages learning and communication between participants, using communication 2.0 tools. The platform includes high quality content that is adapted to the requirements of the position in both an open format (for any Company employee) or in the format that involves a tutor (when the course is followed on an ad hoc basis). The ONO
Campus also serves as an information platform with the latest news about training inside and outside the Company.
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Category hours As a result, ONO is continuing to invest in mixed training and purely on-line training, leading to savings in transport and a better work/life balance. By minimising the need to attend a class in person, the company is also improving the flexibility and adaptability of its training, allowing bespoke training times to be established for each employee.
- Internal Training Faculty . In 2011,
ONO established this facility to support the Internal Training Programme and to improve the amount of training and the perception of its quality.
The faculty comprises of mainly technical employees of the Company who have both the knowledge and the communications skills to be teachers. A corporate course in training provides them with the use of didactic resources and media, and they are also given specific incentives to encourage them to share their knowledge with their colleagues.
At the end of 2012, ONO had trained 75 internal trainers, leading to more than
1,800 training hours.
52%
On-line
Blended
70%
48%
Category students
30%
On-line
Blended
Performance review
All ONO employees participate in a standardised and continuous process of reviewing performance, communication and personal development. The aim is to assess the level of achievement of the goals set for employees at the beginning of the year, ending with a personal interview with the employee’s manager, sharing the results of the assessment and proposing action plans for those competencies or behaviours where there is room for improvement.
In 2011, the second full year of performance reviews was completed for the whole company, and reviews for 2012 will be completed in the first quarter of 2013.
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Motivation
Remuneration
The remuneration model of ONO follows the criteria of internal equity, non-discrimination and transparency.
All employees of ONO receive a fair and equitable treatment, with fixed remuneration within wide salary ranges that recognise the value of the most outstanding performances. There are no major differences in the minimum salaries applied in the regions where the Company operates.
In 2010, ONO implemented a flexible remuneration system, ONO Flex , which consists in being able to exchange part of the salary (a maximum of 25%) and social benefits for goods or services included in the plan (computers, crèche, rent, etc.), goods or services which are tax deductible and which provide the employee with greater buying power without increasing personnel expenses, while adapting the benefits provided to the requirements of employees.
Development of ONO Flex (% Signed up)
2010 2011 2012
51% 78% 79%
This compensation system is personalised and flexible and enables each professional to decide, on a completely voluntary basis, how to receive part of their annual remuneration, adapting remuneration to their personal needs and the requirements of their family . In practical terms, the employee comes to an agreement with the company and decides how to receive the salary, receiving a flexible part of the salary in products and services .
Working culture survey
The working culture survey represents one of the most important channels for employee participation and for finding out the level of satisfaction and commitment of the Company’s personnel. ONO regularly carries out working culture surveys that aim to find out the level of satisfaction and engagement of its employees, as a result of which it can put in place action plans to strengthen the organisation and facilitate the professional and personal development of all employees, in a more constructive and productive environment.
In May 2012, ONO carried out its third working culture survey, following the first survey of 2009, and obtained positive results. Participation has increased year after year, from 58% in 2010 to 75% in 2012, which shows the high level of engagement from employees and enables the Company to demonstrate that its action plans are delivering results.
“7 out of 10 employees believe ONO is a good place to work”
(24 points higher than in 2010)
Average satisfaction of 63%
(14 points higher than in 2010)
A high number of answers to the open questions asked
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In 2012, ONO incorporated the Truthmark model, which obtains new and better indicators of employee opinion. One of these indicators is a Rating , which is similar to the Net Promoter Score for external clients, for every aspect of the working environment, analysing the number of positive and negative answers. This is different to other models, which tend to use only positive responses. As a result, the company is able to understand in more detail the progress and impact of the actions it has undertaken.
Following the 2012 survey, ONO has implemented a range of actions to improve the key performance indicators of its employees.
The work plan for 2013 includes improving results at all levels, holding focus groups to look into specific problems and design action plans, identify people in each area who can help to implement the plans, as well as reviewing and monitoring the action plans and the working climate. With all of these steps, ONO is assuming a new commitment to improve results in the next working culture survey.
Internal communication
Transparency, access to information, and constant dialogue, are the keys to effective internal communication at ONO. The selection of the right channel is essential.
ONO’s internal communications strategy is based mainly on ensuring that its employees are responsible for, and benefit from, the Company’s results, providing these employees with the recognition and visibility.
The web 2.0 internal communications portal called NOS , which the Company launched in 2009 continues to be used on a daily basis by Company employees.
It is a modular mechanism which is very easy to use and which enables employees to express their opinions and criticisms in an anonymous and participative way.
The introduction of NOS has represented a revolution in terms of its design and content. Its main modules include:
- Complaints , for employees to anonymously express their disagreements with the Company and propose a possible solution. Every complaint can be voted for or against, so that it is the employees themselves who establish how significant the complaint is for ONO. The performance of this module reflects improvements at the Group, as the number of complaints has fallen from an average of around 85 per month in the year of its launch to 26 in
2012 and 22 in 2013.
- Thanks . This module was introduces a year after the launch of NOS and has become a much appreciated way of recognising employees. Every note of gratitude is now also posted on the main
Intranet wall, which increases its visibility and means that anyone can participate by expressing their positive opinion of the people or person who is thanked.
- Incidents . This option on NOS allows anyone at ONO to respond to service incidents at customers who are family or friends. It is very simple. All they have to do is fill in a form, which is sent to a special team in the ONO Customer Care Service, which then manages the incident and informs the customer and the employee of all the steps they are taking.
In 2013, ONO aims to have the opportunity to increase the range of options on
NOS, with new modules including:
Opinion (about any issue at ONO),
Recommendations (products and services),
Questions (of any type) and Me gusta
(about things that people like at ONO).
2012 , following the same 2.0 line, ONO launched a new Intranet site , which integrates a social network that has totally changed the way in which the Company communicates internally.
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ONO’s new Intranet is a driver for cultural change , encouraging the maximum level of cooperation between teams and the sharing of knowledge and tools. It won a prestigious award from the Nielsen
Norman Group , world experts in usability, as one of the 10 best Intranets in the world in the year.
Teleworking
Having the right work/life balance is one of the main challenges for many employees in their lives. To get the right balance requires flexibility from the company and a new concept of work. ONO has developed and implemented measures that reflect its concern for the personal circumstances and needs of its employees.
The mission of teleworking is to respond to the needs of employees in their work and family lives with the needs of the company, and so increase the levels of efficiency in productive processes.
At the beginning of 2011, ONO launched its teleworking project and has since achieved very positive results.
In 2012, ONO continued to pursue these aims and to work on various fronts:
- Educate managers about the importance of a work/life balance in improving the productivity and satisfaction of teams and to support teleworking as an innovative way of improving the balance.
- Increase teleworking opportunities to more positions.
- Optimize space in work centres.
- Train both teleworkers and their managers.
- Improve communications with teleworkers.
At the end of 2012, many people were enjoying teleworking.
The objective for 2013 is to increase the number of teleworkers, and for teleworking to be seen as an attractive, innovative and flexible option.
For ONO, the keys to the success of teleworking are:
- The right analysis of job positions.
- The right selection of teleworkers.
- Making the most of the benefits of ITC.
- Establishing clear targets that can be measured.
- The right training for teleworkers.
- Design of a process for evaluation and monitoring.
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Attitude Awards
Three years ago, ONO implemented its
Attitude Awards, in which any employee can participate. The aim of the awards is to encourage good conduct, results and successes related to three core values: attention to the client, innovation, and results.
These awards recognize the achievements of a team in projects that benefit ONO, and recognise the dedication of each team member .
In March 2012, the awards ceremony for the second set of awards was held at ONO headquarters, with the presence of the winners from the first edition. Awards were given to workers from various areas:
- The Client Award went to the
Front Office team of Valencia, for their exceptional contribution to the satisfaction of external and internal clients;
- The Innovation Award went to the
Advertising, Media and Brand team in
Madrid, for proposals for alternatives that are viable in time and cost and aimed at creating or changing processes, procedures and actions that improve the Company’s performance; and
- The Results Award for the Companies and SME Team in Barcelona, for excellence in results in any area of activity of the
Company, administrative, operational or strategic.
New headquarters in Pozuelo
In mid-March 2013, ONO moved its headquarters from Aravaca in Madrid to
Pozuelo de Alarcón.
In 2011, the Company implemented a new Space Management Policy which aims to support a corporate culture that is based on team working, and also at a better distribution, modernization and optimization of ONO’s buildings. ONO decided to transfer headquarters as part of this, enabling the integration of its corporate areas in just one building.
The new building, which has been renovated and adapted significantly, has been designed in accordance with the new policy and it will help support and consolidate the
Company’s new corporate culture .
The building comprises of 14,000 square metres on four floors, and will house 600 people from different buildings that ONO had in Madrid. The Company’s real estate assets in Madrid will be reduced from five to three buildings at the end of 2013.
The new space management policy includes the following concepts:
- open and transparent spaces, to encourage the integration of different areas and teams.
- digital formats, reducing spaces for storage and printing.
- optimized meeting rooms, with a trend for informal meetings that encourage talent and teamwork.
- energy efficiency: natural light for all positions.
This is not just another building. It is the headquarters of ONO, uniting everyone who works in the Company’s corporate activities. The best symbol of the cultural change is the move to this site, which will encourage sharing in new spaces, with new services. It will be a much better representation of the Company whenever it welcomes customers, partners and suppliers.
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ONO, looking after its employees
Assistance to employees
Social benefits and benefits in kind
Restaurant vouchers
Support for crèche services
Special offer for employees. “You are ONO” Programme
Health insurance for employees and family members
Life and accident insurance
Insurance for accidents in the workplace
Pension Plan
Social fund (which applies the terms of the Collective Agreement for ONO)
Flexible working days, reduced in the summer and over Christmas
Advances of up to 75% of fixed remuneration
Presents for marriage, births…
Services
Company canteen
Bus for employees
Parking and car washing
Travel agency with special discounts
ONO Employee Club: agreements with exclusive offers, special discounts and promotions
Medical services and campaigns
Health and Medicine
Health and safety at work is a priority for the management of the Company.
ONO has made available to its employees private health insurance that covers the medical service desired. The Company pays for the full cost of the policy for its employees and 60% of the cost for family members.
Meanwhile, ONO carries out basic preventative initiatives aimed at preventing health issues and/or improving the health of its employees. It has:
- A medical assistance service in its offices, and physiotherapists who treat employees on special terms.
- Employee discounts for gyms, health and beauty, physiotherapy, etc.
- Rest spaces, with vending machines, water coolers, furniture, and open air balconies, etc.
Health and safety activities include regular voluntary medical check-ups for new and existing employees (1,028 in 2012 from 1,139 in 2011), and campaigns for giving blood .
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Labour relations
ONO has continued to demonstrate its responsible labour relations policy in the various collective agreements that govern its labour relations, with the basic aim of guaranteeing the best working conditions for its employees, based on the principle of social dialogue. In 2012, 92% of the workforce was covered by these agreements, with the 8% represented by directors and managers excluded because of their strategic status.
ONO continues to strive to improve the quality of life of its workforce. In April
2013 , it signed its Second Collective
Agreement with representatives from the UGT, CCOO and STC Trade Unions, which covers working conditions and labour relations for 90% of the workforce until 2015, and may be extended for two additional years.
The Company and the unions have exercised their responsibilities to achieve this agreement, which is an excellent achievement given today’s highly competitive scenario for the telecommunications market.
ONO has worked hard to retain the main social benefits it provides to employees and to preserve the work/life balance, and it has focused on being able to guarantee employment for its workforce.
ONO is aware of how important it is to integrate disabled people into the workplace, and runs initiatives to help them join the Company. It works with associations that support the disabled, and whenever it is possible it procures certain services from companies whose mission it is to provide employment to disabled people. In 2012, it completed the substitution of its cleaning contracts with cleaning contracts from Special
Employment Centres, a source of pride and civic responsibility for ONO.
In this way, ONO is making a positive contribution to society and is consolidating its position as a socially responsible company that integrates disabled people and carries out social actions.
You are ONO
ONO provides its employees with the possibility of acquiring Internet, television and telephony services in their homes with special terms.
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Risk prevention at work
The prevention of risks at work aims to guarantee well-being in the workplace and is fully integrated into the daily management of the Company, and everyone who works at ONO is both responsible for this and a beneficiary of this policy.
In 2012, 725 employees received health and safety training.
The main indicators in this area are:
Health and safety indicators
Accidents with sick leave
Accident frequency rate
Absenteeism rate
2010 2011 2012
48
4.9
1.8
32
6.1
3.1
22
4.2
2.6
ONO is committed to ensuring the health and safety of all its employees, by continually improving the conditions and the quality of working life at all its sites, and involving all levels of the Organisation.
To meet this basic objective and this commitment, the Company has a Plan for
Prevention of Risks in the Workplace which is integrated into the management system, with new instruments that affect and involve all levels.
The basic principles on which the
Prevention Policy was prepared are the following:
- Every person who works at ONO is a protagonist of the prevention policy, with
Management exercising leadership by example.
- The physical health and safety of every worker must be guaranteed when carrying out their work, as well as the continuous improvement of the quality of life at workplace.
- All accidents can and should be avoided, and risk assessment is an excellent instrument for achieving this.
- Training and information, and the consultation and participation of workers are also essential instruments for preventative action.
- It is essential to integrate prevention into all the activities of the Company.
- Any accident or incident that takes place must be investigated and analysed, serving as tool to learn a lesson, adopt preventive measures, and improve working procedures. Likewise, every unsafe action or practice has to be disclosed, recognised, analysed and corrected, followed by if appropriate, prosecution.
- At all times, workers, contracted staff and suppliers will all comply with the legislation that is in force. In addition to this, ONO will comply with the law in the acquisition, implementation and use of all goods and equipment that are acquired.
On the Intranet, all the necessary preventative tools are available to employees: information dossiers on risks, a prevention portal, a function for requesting a medical appointment, accreditation of contracts, etc.
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ONO’s workforce
Key employment indicators
Number of employees (total workforce)
Number of employees (average workforce)
% men/women
Average age (years)
Average time in ONO (years)
Turnover rate (%)
Employees with permanent contract (%)
Employees with temporary contract (%)
At ONO, it is the talent of employees and professionals that makes the Company different and helps it achieve its goals.
It is vital to invest in and support their professional development, facilitating their work/life balance, and motivating them to improve.
The people in the workforce are based in Spain, and are highly qualified, in accordance with the technical functions that they carry out.
2010
3,085
3,288
58 / 42
37
7
18.3%
97.2%
2.8%
Breakdown of workforce by professional group (%)
2011
2,952
3,020
58 / 42
38
8
11.3%
98.2%
1.8%
80.1% 79.7% 79.2%
11.7% 12.3% 12.5%
8.1% 7.9% 8.3%
2010 2011 2012
Manager
Coordinator
Technician
Note: Managers include Managers and Directors
2012
2,778
2,849
59 / 41
40
9
10.31%
98.9%
1.1%
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The distribution of the workforce by gender, age, and seniority reflects the recruitment policy of ONO, which is based on the principles of equal opportunities and non-discrimination. As a result in
2012 no incidents of discrimination were recorded.
In 2012, 40.6% of the workforce were women, and 25.5% of the management segment (directors and managers) were women.
The average age was 40 and the 35 to 39 year range was the most common (31.9% of the total).
Breakdown of workforce by sex (number)
1,782
1,303
1,717
1,235
1,651
1,127
2010 2011 2012
Men
Women
Breakdown of workforce by age groups and gender (number)
< 25 years
25 - 29 years
30 - 34 years
35 - 39 years
40 - 44 years
45 - 49 years
Total
2010 2011 2012
Men Women Total Men Women Total Men Women Total
11
132
21
137
32
269
11
91
13
85
24
176
2
49
5
41
7
90
413
578
389
172
346
434
229
74
759
1,012
618
246
346
555
422
199
310
426
252
86
656
981
674
285
248
503
478
253
220
383
294
117
468
886
772
370
87 62 149 93 63 156 118 67 185
1,782 1,303 3,085 1,717 1,235 2,952 1,651 1,127 2,778
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Breakdown of Executive Committee by age groups in 2012 (%)
22%
56%
22%
40 to 44 years
45 to 49 years
>50 years
ONO has a sustainable approach to its workforce. All of its employees hold stable positions, with 98.9% on an indefinite contract in 2012, which reflects the stability that comes from our employees’ commitment to the company (with an average seniority of 9 years).
In Madrid, Valencia and Barcelona, the cities where most of activity is concentrated, there is also more diversity of positions and contracts.
Breakdown of Executive Committee by sex in 2012 (%)
11%
89%
Men
Women
Breakdown of workforce by regional clusters in 2012 (%)
9%
6%
46%
39%
Center
East
South
North
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| Suppliers
2012 was a year of consolidation for the ONO purchasing department.
The implementation of the new operating model for Purchasing, based on the principles of competition and advance planning, reinforces operational aspects of the previous model and provides more traceability and transparency in awarding supplier contracts.
4. Suppliers
In 2012, the Company also continued to implement specific projects to simplify its operations and support its requirements more efficiently and economically. ONO carries out continuous research of the market, to try to make the most efficient use of the capacities and know-how of its suppliers, who are leaders in the technologies and services that ONO requires of them.
This task is carried out by the purchasing department, which is particularly sensitive when it comes to deciding which suppliers to work with and how. Aware of the importance of these suppliers for the company’s business, because of the products and services that they supply, it implements measures to soften the impact of the demands and commitments required from every supplier.
In this area, ONO has continued to look for the optimal relation between quality, service and cost , and has increased the level of free competition between suppliers , striving to maintain maximum objectivity and transparency in the award process. All of this follows the procedures and processes that have been established and approved by the Company, which are summarised below.
Norms of commercial conduct norms for purchasing at ONO
This document defines the principles for conduct and action of ONO employees in their commercial relationship with suppliers.
These basic principles include:
- The need for purchasing to supply the requirements of ONO with the budget available.
- Looking for the solutions available in the market and encouraging competition in selection processes.
- Maintaining confidentiality in negotiation processes
- Establishing a framework for a policy on gifts from suppliers.
- Impartiality and objectivity in awards, avoiding conflicts of interest.
Code of conduct for suppliers
Likewise ONO aims to ensure that on the other side of purchasing negotiations the organisation of suppliers follows ethical and responsible principles in the procurement process, and in the management of their employees and resources. For several years, a process has been operational in which
ONO requests from suppliers that they sign up to certain principles of action, signing a document that commits them to:
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Principles of action:
- Ensure their compliance with the laws and regulations applicable to the sector they operate in and their country of origin.
- Respect human rights, regardless of race, gender, age, nationality, sexual orientation or political or religious beliefs.
- To act in accordance with protection of the environment, minimizing the generation of pollutants, and applying policies for recycling and waste management.
- To monitor employment of labour, ensuring that minors are not hired, that work is not coercive, threatening, or abusive, and that policies for health and safety at the workplace and the prevention of risks are followed.
- Maintain a high level of business ethics, expressly forbidding any payment of commissions, bribes, ostentatious gifts, or any other element that could significantly influence decision making in the purchasing process.
Currently, more than 1,000 suppliers have signed this document, or 23% of the total supplier base, and a process has been established for any supplier who participates in a tender to understand and accept these basic principles. With this Code of Conduct,
ONO aims to guarantee that its main suppliers respect basic human rights principles.
Certification of suppliers
The process described above forms an additional element of the more wide reaching process of supplier certification.
ONO wants to know who its suppliers are, and what differentiates them from the others. To this end, five years ago, it started this process.
To implement this process, suppliers are requested to fill in a self-assessment form , providing information on their shareholders, finances, resources, processes, possible relationships with management personnel of ONO, certifications they may possess from organisations. etc., which will allow the purchasing department to weight the scoring of the adjudication processes and act as transparently and objectively as possible.
Thanks to the implementation of this process, over 800 suppliers have been assessed, using the process as a condition and as a filter for being able to participate in new negotiations and procurement processes.
In addition, in some important cases, systems to measure service delivery are put in jointly by purchasing and the user areas, to monitor the quality and level of service, provide an opportunity to correct problems or to support a change in suppliers.
Procurement desk
ONO’s business model for Purchasing, implemented in 2011, is based on a system of “desks” in which all the areas involved in a transaction work together to assess and decide on the best solution for a purchasing need at ONO. This model also integrates internal policies for monitoring and supervising these decisions, the main principles of which include:
- Guaranteeing that competition is used in all the cases where it is possible, or analysing the circumstances in which it is appropriate to renew existing suppliers.
- Ensuring the highest level of transparency with all internal participants, to guarantee equal opportunities for external participants (suppliers or potential suppliers).
- Looking for new alternatives to existing solutions and constantly analysing different alternatives and solutions that could help the Company meet its requirements more efficiently and economically.
- Monitoring the compliance with the
Company’s budgets, and the consolidation of savings achieved in negotiations for their possible reinvestment subsequently, or transfer to the P&L.
In January 2013, the Purchasing department partly modified the model to provide more flexibility and better meet its requirements.
The revised model clarifies the scope of its application.
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Purchasing portal
Some years ago, ONO decided to establish a common point of entry for commercial relations with its suppliers and created a Purchasing Portal with the aim of maintaining all these interactions on the portal, as well as direct relations with suppliers in the following areas:
- The certification and self-assessment process.
- Negotiation of offers.
- Access to orders that have been issued.
- Access to orders for products and services.
As a result, ONO has been able to achieve a high level of fluidity in the exchange of information, with the possibility of auditing the processes, providing suppliers with complete transparency in the purchasing process and simplifying the administrative process, which has led to an improvement in its payment commitments and convergence with new legislation on late payments.
Financial / statistical data
ONO works with over 4,200 suppliers and manages a volume of business of 1,122 million euros (in 2012, including VAT for
Spanish suppliers).
A major part of these suppliers comes from two sectors that are in permanent contact with customers:
- Companies which install equipment in the homes of clients and provide maintenance on the customer’s network.
- Companies which provide customer care services to clients, as well as sales platforms and remote resolution of any service failures.
These suppliers are of vital importance to
ONO, both because of their financial scale, and because they are in permanent contact with customers, and as such are the face and voice of the company with clients.
In addition, these companies are a significant source of job creation, both locally in the regions where ONO operates, and in developing countries.
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ONO strives to maintain a fluid and constant relationship with the media, based on transparency and accuracy when disclosing information. In 2012, the Company invited the media to participate in all the main business and corporate events that took place, and remained true to these guiding principles.
5. Media
ONO’s external communications policy is based on sharing information directly with the national and financial press, with radio and television stations and on-line media, either at events or in press releases.
In 2012, ONO had a high profile in the media, thanks to its press releases and the press conferences it organised. The
Company focused on the regional press, presenting new products in cities such as Barcelona, Valencia, Alicante, Cadiz,
Valladolid and Tenerife. Corporate affairs were also high on the agenda, especially information about the successful bond issue, financial results and the completion of the refinancing process.
A total of over 4,000 impacts in the press, magazines, on-line media and blogs reflected the news and products launches of a year which saw many corporate milestones, such as the extension of the
TiVo® service across all of ONO’s network, the launch of 200 Mb speeds for SMEs, the start of the first ONO WiFi pilot project in
Alicante and the arrival of high-speeds in the Canary Islands.
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ONO is aware of its role in Spanish society and of the general interest in its services. It is committed to continued relationships built on cooperation and trust with the media and with the journalists who follow the company on a regular or occasional basis, as well as maintaining its commitment to accuracy and transparency.
Financial releases
Operational releases
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TiVo®, ONO’s intelligent television service Information about the sector
ONO launchs Nubo, its new portal for cloud-based application
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Corporate website
ONO’s website ( www.ono.es
) aims to disclose and highlight the products and services that ONO offers to the Spanish market and to explain the main features of the Company’s activity .
Content available on the website includes information about the Company’s products for high-speed Internet, mobile telephony, fixed telephony, television and convergent offers. This range of services, accessible to individuals and businesses, enjoys differentiating advantages because they are provided over ONO’s own state of the art fibre optic network.
Ono.es
also includes a redesigned section with new functionalities that enables customers to manage their relationship with the company directly: the “ Client Area ”, which delivers specialist on-line assistance and numerous options for customers to manage their demands simply and directly without needing to make a telephone call.
Moreover, ono.es
includes detailed information on most of the Company’s activity, such as penetration data and figures for the Spanish market, for any customer or Internet user who wants to access main financial data in a transparent and direct manner.
In 2012, the website received 36,061,192 visits and recorded 16,711,389 unique users . The increase in the number of visits and operations carried out by customers confirms the growing importance of the ONO website, as a channel for communications, support and sales .
Major content and services in 2012 that contributed to this growth included:
- The growth of ONO on social networks , with an 85% increase in followers, with the goal of providing support, highlighting new technologies and helping customers get the most out of their
ONO services.
- The consolidation of on-line commercial actions , including TiVo®,
ONO’s intelligent TV service and the ONO
Móvil service.
- The growth of the “Client Area” . Every month, more than 40% of clients visit the website, due to the change of image and focus (according to results from surveys) and to the increase in its functionalities, including:
• On-line resolution of technical incidents for customers, by checking the network and accessing equipment.
• Remote recording of TiVo®, without needing to be in front of the decoder.
• Automated second copy of the bill, increasing this number of requests by
1,000%.
• Launch of virtual services managed online (Nubo).
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ONO’s Responsibility
Commitment to stakeholders
| Society
6. Society
In order to encourage a competitive and appropriate context for its activity, ONO aims to encourage and maintain a fluid dialogue with different players , both public and private, at the local, regional, national and European level.
ONO makes a special effort with public institutions. It works with different representatives according to their area of action: local, regional, national,
European and international. ONO talks mainly to telecoms regulators, as well as to representatives for R&D, innovation, consumption and institutions and bodies who support e-administration and the development of all aspects of the information society.
Because of the nature of the sector, relations with various regulators are essential, in light of the important role that they play in the telecoms ecosystem.
To maintain its relations with the various public institutions, the Company carries out various actions depending on each issue. Often, it is ONO that carries out the action directly, but when its demands and objectives are shared by the sector, the representation of these interests is carried out collectively, via the different sector associations in which ONO participates actively :
- AMETIC (the Spanish association of companies in the electronics, information technology, telecommunications and digital content sectors),
- Redtel (Association of telecoms operators with their own networks),
- ASTEL (Association of telecoms operators and services companies), and
- Cable Europe (for European affairs).
Key issues for ONO include those related with the development of the information society, the delivery of new digital services, the future of the telecoms sector, investment in new technologies and innovation and all public policies with a direct or indirect impact on the development and delivery of its services.
One of the main cornerstones of ONO’s strategy is to strengthen the development of digital technologies to benefit the citizens and companies of Spain. As part of this strategy, ONO has reached significant agreements with various institutions which are prestigious in their fields. These include:
- Instituto de Empresa
Since 2012, this renowned Business School has trusted in ONO for its most demanding service, WiFi connectivity for its students in its new intelligent headquarters in Madrid.
In addition, as part of this agreement,
ONO and the Instituto de Empresa have made a commitment to encourage entrepreneurship and innovation from a technological perspective and to support the development of new ITC services for the professional sector, with various initiatives aimed at entrepreneurs and independent professionals from all sectors, leveraging the innovative technologies provided by ONO.
- Casa del Lector
In 2012, ONO began to provide activities in the ONO centre of digital innovation in the Casa del Lector. This is a centre aimed at training, research and experimentation with all types of new digital contents and services that can help cultural, social and business development.
Casa del Lector is a major cultural centre, comprising 8,000 square metres in the
Matadero of Madrid which is focused on reading and readers. In this centre, ONO has the ideal location for researching all aspects of culture and in particular reading, exploring new formats and contents that use new technologies.
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ONO’s Responsibility
Commitment to stakeholders
| Society
- Fundetec
As part of its commitment to the development of the information society and its benefits for society, and to make a greater contribution to social and economic development, in 2012 ONO signed an agreement with FUNDETEC.
Fundetec is a public/private foundation that is focused on two clear targets: driving the adoption and general use of ITC by citizens, companies and institutions, and increasing Internet penetration in Spanish homes and small and medium enterprises.
This second objective aims at reducing the digital divide , both between Spain and more advanced countries in the European
Union and between different social groups and regions within Spain itself.
As part of the agreement, both institutions are committed to rolling out joint actions to meet their common goals.
- Mobile World Congress
As part of its support for mobile services, for another year ONO was one of the main sponsors of the Mobile World Congress.
This is the leading event in the industry, which takes place in the Mobile World
Capital of Barcelona. People from 205 countries attend the Mobile World
Congress, with more than 40 conferences with the very highest level of speakers, more than 1,500 stands of leading companies and over 12,000 application developers.
- Support and Sponsorship
To support the understanding and development of issues which concern the sector and to discuss different visions of these topics and encourage a constructive debate, over the course of 2012 ONO sponsored a number of events, including:
- The ITC, Tourism and Innovation
National Congress , organised by AMETIC and FECATIC, (The Canaries Federation for IT, Innovation and Communications
Businesses), in Las Palmas de Gran Canaria, with offered different outlooks on the latest trends and on the development of the market for new technologies and innovation in the tourism sector, in particular in promoting investments in the
Canary Islands.
- The IV Edition of the Summer Courses of AMETIC which in 2012 had the theme
“ ITC in the new social and economic environment: drivers of economic recovery and employment ” which invited the main players in the sector to debate the importance of ITC in the current context and discuss the major role that they can play in Spain’s economic recovery.
- Finally, in order to recognise the efforts being made by new generations,
ONO sponsored the Awards for the Best
Doctoral Theses and the Best End of
Degree Projects of the Official College of Telecommunications Engineers , in the categories “Innovation in Advanced
Services on Next Generation Networks” and
“Innovation in Networks and Services for
Delivery of Digital Television Services.”
(See section: ONO’s Responsability_
Corporate Responsibility Focus )
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Financial analysis
30, 50, 100 or 200 Mb.
Our ambition isn’t only to achieve the highest real
Internet speeds every year...
these are all just stages in a race we believe will never end.
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Financial analysis
Products and Services
ONO currently provides a wide range of fixed and mobile telephony, Internet and cable television services to residential customers and SMEs in the regions where the Company operates.
Services (‘000)
4,464 4,623 4,725
121
140
192
179
417
206
4,203 4,252 4,102
Customers (‘000) (1)
1,997
77
2,010
93
1,947
105
1,920 1,917 1,842
2010 2011 2012
Fixed Residential (1)
Fixed SME (1)
Mobile (2)
(1) Includes fibre, ADSL and Indirect Access
(2) Includes voice and data (BAM) of Residential and SME
ONO ended 2012 with a total of 4.7 million subscription services. The company provided 102,000 more services in the year, with mobile and SME services recording the highest level of demand, with increases of 15.2% and 117.3% respectively. This was achieved despite a very difficult economic environment, with low levels of demand and new tax rates, which rose from 8% to 21% for television and from 18% to 21% for other services.
These had the most significant impact on the residential fixed line business, where there was a 3.5% decline in the number of services.
2010 2011 2012
Residential
SME
(1) Includes fibre, ADSL and Indirect Access
Over the course of the year, the residential customer base decreased by 75,000 to 1.8 million clients as of 31 December 2012.
Despite the strong performance of high value clients (with bundles, high-speeds,
TiVo® and mobile services), the difficult economic conditions had a negative impact on more price sensitive clients.
In the SME segment, there was a very positive performance, as ONO increased its customer base by 12,000 to total
105,000 at the end of 2012.
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Financial analysis
Products and Services
| Fixed services
1. Fixed services
1.1 Residential services
Fibre services
At the end of 2012, there were 7.1 million homes released to marketing, an increase of 0.3% from the previous year.
Homes released to marketing (‘000) (Fibre)
The number of residential fibre services declined to 3.9 million services at the end of 2012, due to the difficult economic environment, low levels of demand, and new tax rates. Despite this, ONO was able to maintain its ratio of residential fibre services at 2.25 per client.
Residential Fixed Fibre Services (‘000)/
Services per customer
2.22x
2.25x
2.25x
At the end of 2012, 39.9% of new residential fibre customers subscribed to a triple play bundle, and 45.7% took out a double play bundle. As a result of the high rate of customer acquisition based on bundled offerings and continued marketing campaigns, ONO managed to increase the customer base for bundles to
85.6% in 2012.
This successful commercial strategy has enabled ONO to position itself as the leading supplier in Spain of bundled telecommunications services, and in particular of triple play services.
Residential Fixed Fibre Customer split per bundle (%)
4,030 7,043 7,063 4,019 4,060 3,941
2010 2011 2012 2010 2011 2012
38.6% 39.9% 39.9%
44.3% 44.8% 45.7%
17.1% 15.3% 14.4%
2010 2011 2012
Single play
Double play
Triple play
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Financial analysis
Products and Services
| Fixed services
Internet
Internet customers (‘000) /
% customers with Internet
76.2%
79.1% 81.0%
1.328
1.429
1.418
2010 2011 2012
ONO ended 2012 with 1.4 million Internet clients, a decrease of 11,000 clients in the year. The penetration of Internet services in ONO’s customer base continued to increase and reached 81% at the end of the year.
In 2012, ONO completed the roll-out of
DOCSIS 3.0 technology in its fibre network, enabling it to offer a higher quality Internet service, reflecting the company’s strong commitment to high connection speeds for more than 7 million Spanish homes.
This next generation technology has enabled ONO to make significant improvements to its commercial offering, with ‘real’ Internet speeds of 30, 50, 100 and 200 Mbps now available, positioning
ONO as the only operator that can offer speeds of 200 Mbps in the Spanish market.
There has been a very positive market reaction to these ultra-fast Internet speeds and at the end of 2012 around 700,000 clients enjoyed speeds of 30, 50 and 100
Mbps, or almost 50% of the customer base for Internet services. These excellent results make ONO the undisputed leader of ultra-fast Internet speeds in the
Spanish market.
High-speed Internet customers (‘000)
49.2%
29.7%
9.2%
698
424
127
2010 2011 2012
Customers ≥30Mbps
% customers with high-speed
Internet
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Financial analysis
Products and Services
| Fixed services
Television
At the end of 2012, ONO has 862,000 television clients, a decrease of 61,000.
The service has been significantly impacted by the difficult economic conditions and the increase in VAT from 8% to 21%, which led to the most price sensitive clients giving up the service to preserve their disposable income.
TV customers (‘000) /
% customers with TV
52.7% 51.1%
49.3%
To try to reverse this trend, in 2012 ONO stepped up the roll-out of TiVo® which is now available to practically all homes connected to the fibre network, and which is the best pay television offering in Spain, with a variety of content and functionalities not available elsewhere in the Spanish market, integrating Internet and fibre television.
TiVo®, ONO’s exclusive intelligent television offering in Spain, had around
100,000 clients at the end of 2012, or
11% of ONO’s customer base for television.
TiVo® users report very high levels of satisfaction to the Company, with the most popular characteristics including HD quality, 3D content, multimedia hard drive, the recording of various channels at the same time, and the possibility of watching
Internet content on the television set.
953 923 862
2010 2011 2012
TiVo® customers (‘000)
11%
6%
4%
2%
1%
95
56
34
8
16
Q4 11 Q1 12 Q2 12 Q3 12 Q4 12
TiVo® customers
% of TV customer base
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Financial analysis
Products and Services
| Fixed services
Fixed Telephony
At the end of 2012, ONO had 1.6 million fixed telephony clients, a decrease of
46,000 clients in the year. In 2012, this service continued to be the most requested from the Company, with around
95.0% of customers subscribing to a telephony product.
In 2012, ONO made major improvements to its telephony service by upgrading its voice network with Huawei, which not only led to improved quality but also to reduced operating expenses and consumption with a corresponding rise in profitability.
Average revenue per customer (ARPU)
In 2012, average revenue per residential fixed fibre clients was maintained at 52.4 euros per month.
The high quality of ONO’s customer base and its excellent offering (high Internet speeds, TiVo® and mobile services) are responsible for maintaining ARPU in a context in which there has been a negative trend for the consumption of products.
Acquisition and retention promotions are playing an important part in this.
Fixed Telephony customers (‘000) /
% customers with Telephony
93.1% 94.6% 95.0%
1,686 1,708 1,662
Residential Fixed Fibre ARPU breakdown (€)
51.5
3.1
4.6
52.4
52.4
3.4
4.0
5.5
3.1
43.7
45.0
43.8
2010 2011 2012 2010 2011 2012
Monthly Fee
Variable TLF+TV
Other value-added services
Fixed Fibre ARPU
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Financial analysis
Products and Services
| Mobile services
1.2 SME services
Revenues generated by SME customers include fees for voice and data services, offered individually or in bundles.
In 2012, ONO launched successful offers for SMEs and increased the number of services by 15.2% to 206,000 services at the end of the year. Likewise, the customer base performed very positively and increased by 12.7% to 105,000 SMEs at the end of 2012.
These extraordinary results are the consequence of a series of initiatives to strengthen the business unit, including:
(i) establishing a commercial offer that meets the requirements of this segment;
(ii) redefining prices at more competitive levels; (iii) designing new sales channels;
(iv) launching new speeds, such as 200 Mb for SMEs and a successful mobile service; and (v) value added services including registering domain names, hosting/housing services, cloud services and others.
2. Mobile services
2012 was the year of fixed-mobile convergence and the acceleration of mobile telephony at ONO. This success was due largely to the launch of convergent rates and the “Todo en ONO” plan , providing very competitive rates, including calls to any number 24 hours a day as well as data.
In 2012, ONO added 225,000 mobile lines, with a total of 417,000 lines at the end of the year. This enabled the Company to become one of the leading mobile virtual operators in Spain.
Fixed SME services (‘000) Mobile services (‘000)
140
179
206
2010 2011 2012
417
192
121
2010 2011 2012
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Financial analysis
Financial information
Revenues
ONO’s revenues are based on the provision of residential services (including revenues for individual and bundled services of telephony, Internet and television over fibre, and ADSL revenues), indirect access services, voice and data services for SMEs, services to companies (large accounts and public bodies), and services to other carriers. The following table provides information on ONO’s revenues:
2012 Revenue breakdown
7.7%
5.4%
0.2%
13.9%
72.8%
Residential
SME
Large Accounts and Corporations
Wholesale
Other
2011 2012
Data in € million
Residential
Fibre 1,125 1,103
ADSL, Indirect Access and Others
Total
47
1,172
42
1,145
Business
SME 77 86
Large Accounts and Corporations
Wholesale
Total
Other
Total revenues
129 121
104
310
218
425
3 3
1,485 1,573
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Financial analysis
Financial information
In 2012, ONO recorded revenue growth of 5.9% to 1,573 million euros, despite a very difficult economic environment and a high level of competition in the sector.
The Company was focused on fixed-mobile convergence and began to commercialize these services at the beginning of last year, services which have now become a trend in the market. In addition, the services that ONO delivers over its own fibre network lead the market in terms of quality and innovation, including the TiVo® intelligent television service, high-speed
Internet and value added services to SMEs and corporates.
The economic deterioration has mainly had an effect on household finances in
Spain, and residential revenues contracted slightly by 2.3% from 2011 levels, to
1,145 million euros. The increase in VAT in
September 2012 had a negative impact on this segment, especially on the Television service, where VAT rose from 8% to 21%.
However, on a quarter-on-quarter basis residential revenues moved higher at the end of the year, rising from 280 million euros in the third quarter to 287 million euros in the fourth quarter, a rise of 2.3%.
Despite the difficult environment, monthly
ARPU in the residential sector remained stable at 52.4 euros per client.
The Business area grew solidly over the course of the year, especially in the SME segment. Business revenues rose by
37.3% to 425 million euros at the end of the year. The SME segment was the best performing, with a very positive rise of 11.5% to 86 million euros. These results strengthen ONO’s position as a very attractive alternative for the rising demand from the professional sector, thanks to the Company’s high quality convergent services, specialist attention and competitive prices.
Direct cost and Gross margin
Direct costs include mainly the costs of the trunk network and interconnection costs for telephony services, connectivity costs for Internet, fibre and leased circuit costs, and programming costs for television services.
Interconnection costs for telephony services are generated by the calls made by customers that terminate outside the network. Connectivity costs are due mainly to bandwidth used for Internet transit outside of Spain. Television programming costs are generated by the broadcast of third party content and films and football on pay-per-view.
ONO’s direct costs increased by
110 million euros in the year to 427 million euros in 2012. Cost savings, which resulted from the continuous renegotiation of contracts, were offset by increased interconnection costs as a result of the successful mobile offering and strong results from the wholesale business.
Direct costs (€m) / % over revenues
78.9% 78.7%
72.9%
310 317
427
2010 2011 2012
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Financial information
Operating expenses (Opex)
Net operating expenses consist mainly of expenses related to salaries and wages, professional services, marketing and sales expenses, network operations and maintenance, information systems, and administrative and billing expenses.
In 2012, ONO cut operating expenses by
26 million euros to 395 million euros.
Strict cost controls and continued initiatives for optimization and transformation have enabled the Company to maintain its operating expenses at a steady level despite the pressure on prices from high inflation.
In 2012, ONO implemented a number of initiatives, including: (i) personnel savings by improving processes; (ii) increasing sales from more efficient sales channels, such as on-line; (iii) developing a new, more profitable business model for stores; and (iv) designing more efficient models for managing faults and for network maintenance.
Net operating expenses (€m) /
% over revenues
29.7% 28.3%
25.1%
EBITDA
EBITDA in 2012 rose to 752 million euros, thanks to the solid performance of revenues and improvements in efficiency as a result of the measures described in the operating expenses item.
EBITDA (€m) / EBITDA margin
49.2% 50.4% 47.8%
437 421 395
725 748 752
2010 2011 2012 2010 2011 2012
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Financial analysis
Financial information
Net profit
For the third consecutive year, ONO increased net profit, which rose by 3.9% to 52 million euros thanks to the success of its strategy for offering the market convergent, differentiated and high quality services.
Net profit (€m)
Operating free cash-flow
Operating free cash flow is EBITDA less capital expenditure. In 2012, operating free cash flow was 453 million euros, a reduction of 4 million euros from the previous year as a result of increased investments to enhance the serviced offering.
Operating free cash-flow (€m)
47 50 52
480 456 453
Free cash-flow after debt service
Free cash flow is operating cash flow less changes to working capital, other payments, and interest payments.
Cash generation is one of the main priorities for the shareholders and management team at ONO. For the fourth consecutive year, ONO ended the year with positive free cash flow, of 45 million euros.
Despite this good performance, expenses associated with the refinancing of the
Company in 2012 had a negative impact on free cash flow in the year.
Free cash-flow after debt service (€m)
2010 2011 2012 2010 2011 2012
164 179
45
2010 2011 2012
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Financial analysis
Financial information
Financial structure
One of the major achievements of 2012 was the completion of the refinancing of ONO, resulting in a more mature and stable capital structure. In October 2010,
ONO began the refinancing process, which ended in June 2012. By carrying out various bond issues, ONO has been able to reduce bank debt and extend maturities on its debt.
These transactions demonstrate the confidence that investors have in the
Company, thanks, among other factors, to the solid operating and financial results reported, the return to revenue growth and the solid cash generation profile.
This new capital structure means that
ONO is entering a new stage, with more flexibility and stability, completing the refinancing processes begun some two years ago.
Grupo Corportivo
ONO, S.A. (“GCO”)
100%
2018 Senior
Secured Notes
ONOMidco
100%
Nara Cable
Funding II Ltd
Nara Cable
Funding II Ltd SPV Tranches
Senior Bank
Facility
Cableuropa
(Operating Company)
Senior
Subordinated Notes due 2019
Notes Proceeds
Loans
ONO Finance Plc II
2020 Senior
Secured Notes
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Financial analysis
Financial information
In July 2012, ONO was recognised by The
Banker , a prestigious magazine that is part of the Financial Times group, with the award for the best bond issue in
Europe in 2012 , thanks to the success of its 2,200 million euros bond issue, which successfully refinanced the Company’s debt.
In February 2013 “Project Finance” magazine, part of the Euromoney group, presented ONO with the award for the best financial deal in 2012 in the
European telecoms sector.
The magazine described the refinancing process as “epic” and said the “extraordinary complexity and scale of the deal was successfully achieved in extremely difficult market conditions.”
In early February 2013 , ONO successfully completed a new bond issue of 260 million euros , once again tapping the capital markets to continue to improve the maturity profile of its debt, extending the amortization timetable until 2017 and strengthening its current capital structure.
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Financial analysis
Management and Control of risks
The incorporation of the risks model into ONO’s control system has enabled the understanding, management and identification of risks and the quantification of their financial impact, allowing the Company to define policies and actions to minimize and monitor these risks.
A simple methodology is applied:
1. Understand the risks. Identify and assess specific risks and have them present in management processes.
2. Define a policy to manage and control risks, adapted for each specific case.
Depending on the greater or lower risks and their impacts, appropriate measures are designed, which vary each financial year.
3. Monitor risks just as other variables affecting the business are monitored.
Risk management at ONO is based on the following principles:
• Identifying, assessing and controlling relevant risks that could affect ONO’s targets and activities.
• Establishing an integrated risk management system across all the organization.
• Identifying, measuring and monitoring the main operational, business, financial, credit and counterparty risks.
• Checking that all Company members understand and comply.
The main activity of the risk management area is to manage in an integrated and efficient way those risks that could prevent the Company from meeting its targets, and to implement the measures needed to respond to these risks.
The identification and assessment of risks uses a map that includes the main risks and which is regularly updated to include new events in accordance with the evolution of the business and its operating environment.
This process means that all people in the
Company can improve their understanding and management of risks, and enable informed, coherent and realistic decisionmaking.
The main target which ONO is working towards is the consolidation of a culture of controlling risks, which flows from
Management to the other levels of the organization.
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Financial analysis
Management and Control of risks
Operational
Risks
Business
Risks
Integrated Risk Model
Financial
Risks
Identification - Evaluation - Mitigation
Counterpart
Risks
The methodology used by ONO is based on COSO (Committee of Sponsoring
Organizations of the Treadway
Commission) as a framework used for
Enterprise Risk Management . It covers in particular the following elements:
- Operational Risks. At ONO these risks are defined as possible losses of value or earnings derived from events caused by inappropriate processes or faults in processes, human resources, equipment and information systems, or derived from external factors.
This definition includes compliance risk but excludes strategic and regulatory risks, which are covered by the Business
Risks category. Operational losses include financial impacts, and non-financial and reputational impacts.
The following aspects are included within this category:
- Infrastructure, equipment, networks and systems.
- Damage to the environment or third parties.
- Low quality of service or service interruption.
- Suppliers, counterparties, outsourcing and other agents.
- Execution of Processes and Operations
- Business Practices
- Employment practices and safety at work.
- Fraud and unauthorised activities.
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Financial analysis
Management and Control of risks
- Business Risks. These are risks of losses derived from external factors such as regulation, economic cycles, levels of competition, changes in demand, industry structure, etc., and also the risk of losses from incorrect decisions being made in relation to the Company’s business plans and future strategies.
There is special relevance in this risk category for regulatory risk , which is the risk associated with the regulatory framework in which business activities are carried out.
The business risks model includes the following risks:
- Market and competition
- Regulatory and legal
- Strategic
- Financial risks. Financial risks include events related to the uncertainty of earnings due to adverse movements in financial variables such as interest rates, exchange rates, liquidity and other market factors.
At ONO, financial risks include:
- Liquidity risks
- Interest rate risks
- Exchange rate risks
- Counterparty risks. These are defined at
ONO as the risk of economic losses derived from non-compliance with the contractual obligations of a counterparty, based on the following criteria: the existence of a right/commitment (either original or derived); non-compliance in time (not respecting the established deadlines); noncompliance in form (the form of payment/ delivery is not that that has been agreed), and the probability of losses (not certain, but a possibility that must be considered).
The following are included within the counterparty risks model:
- Financial positions
- Suppliers
- Clients
The risk management policy aims to try to reduce the probability of the defined risks occurring and to minimize the financial impact on results if they do materialize.
ONO is developing both policies in order to achieve a global policy for controlling and managing risk in accordance with its responsibility as a Company.
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Corporate
Governance Report
Fibre is an innovative product, but we also want to be… innovative in all the services that use fibre.
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Corporate Governance Report
Corporate Governance
Data as of 31 December 2012
A. OWNERSHIP STRUCTURE
A1. Share capital of the Company.
Date of latest modification
13/09/2012
Share capital
Number of shares
Number of voting rights
1,817,269,942 1,817,269,942 1,817,269,942
All shares are of the same class and series.
A2. Direct and indirect holders of significant ownership interests at year-end, excluding directors.
Name or company name of director
CCMP Capital Advisors, LLC (1)
Providence Equity Partners, Inc.
(2)
Thomas H. Lee Partners, L.L.P.
(3)
General Electric Structured Finance, Inc.
(4)
Quadrangle Capital Partners (5)
Caisse de Dépôt et Placement du Quebec (CDPQ) (6)
Grupo Multitel, S.A.
(7)
Val Telecomunicaciones S.L.
Number of direct voting rights
Number of indirect voting rights *
163,729,808
162,662,115
12,364,167 110,367,976
% of total voting rights *
277,002,125 15.243%
277,099,129 15.193%
273,132,152 15.030%
9.010%
8.951%
6.754%
29,732,775 80,381,196 6.059%
97,242,293 5.351%
(1) Via J.P. Morgan Partners (BCHA) Luxembourg, S.à.r.l., J.P. Morgan Partners (PTC) Luxembourg, S.à.r.l., J.P. Morgan Partners Global Investors Luxembourg, S.à.r.l., JPMP GCO Equity
Investments, S.à.r.l., J.P. Morgan Partners Global Investors (Paul) Luxembourg, S.à.r.l., J.P. Morgan Partners Global Investors (Selldown) Luxembourg, S.à.r.l., J.P. Morgan Partners
Global Investors (Cayman/Selldown) III Luxembourg, S.à.r.l., J.P. Morgan Partners Global Investors (Selldown) II Luxembourg, S.á.r.l. and Prospero Luxembourg Sàrl.
(2) Via PEP GCO S.á.r.l., PEP GCO Co-invest, S.á.r.l., PEP GCO HL Co-invest, S.á.r.l., PEP ESP S.à.r.l. and Prospero Luxembourg Sàrl..
(3) Via THL GCO Investments I, S.á.r.l., THL GCO Investments II, S.á.r.l., THL GCO Investments III, S.á.r.l., THL GCO Investments HL, S.á.r.l., THL GCO Investments IV, S.á.r.l., THL GCO
GmbH & Co KG. and Prospero Luxembourg Sàrl.
(4)
(5)
Via Global Telecom Investments, LLC, GE Capital Equity Holdings Inc, General Electric Pension Trust and Prospero Luxembourg, Sàrl
Via QCP GCO Investments S.á.r.l., QCP GCO Investments II S.á.r.l., QCP GCO Investments A S.á.r.l., QCP GCO Investments II-A S.á.r.l, Quadrangle Capital Partners LP, QCP GCO
*
Equity Investors, S.á.r.l. and Prospero Luxembourg Sàrl..
(6) Via Particitel International Limited Partnership.
(7) Via Telco Investment Europe, S.á.r.l. and Multitel Alfa, S.L.U.
Both the number of votes and the percentages are calculated according to the information available to the company. Amounts may vary slightly due to rounding.
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A3. Members of the Board of Directors who own voting rights in the company and details of these.
Name or company name of director
Particitel International Limited Partnership
Number of direct voting rights
110,367,976
Number of indirect voting rights
% of total voting rights
6.073%
In addition, Val Telecomunicaciones Cartera, S.L. is a company whose sole shareholder is Val Telecomunicaciones, S.L., which has a total of
97,242,293 shares with voting rights, representing 5.351% of total voting rights.
A4. Family, commercial, contractual or corporate relationships between owners of significant shareholdings, insofar as these are known by the company.
As established by the current Shareholder Contract, Val Telecomunicaciones, S.L., the Purchase Vehicles of Grupo Multitel (currently
Multitel Alfa, S.L.U.) and Telco Investment Europe, S.á.r.l are directly or indirectly controlled by Mr. Eugenio Galdón, the founder and former chairman of the Company (EG Shareholders).
Notwithstanding this, on 22 June 2009, Val Telecomunicaciones, S.L. informed the company that it was not an EG Shareholder as it was no longer controlled by Mr. Eugenio Galdón.
No information has been provided to the company about any changes concerning the other companies (Multitel Alfa, S.L.U and Telco
Investments Europe, S.á.r.l.)
A5. Any commercial, contractual or corporate relationships between owners of significant shareholdings, and the company and/or its group, unless they are insignificant or arise from ordinary trading activities.
There were no relations of any commercial, contractual or corporate relationships between owners of significant shareholdings, and the company that were significant or did not arise from ordinary trading, notwithstanding the information provided, for purposes of transparency, in section C on transactions with related parties.
A6. Shareholder Agreements involving the company in accordance with Article 112 of the Law on Securities Markets.
Any concerted action by shareholders, and possible amendments or breaches of these pacts, agreements, or concerted actions.
On 29 July 2005, a contract was signed between shareholders and the Company was notified of this contract. This contract was subsequently modified on 1 November 2005, 4 November 2005, and 7 March 2007. The Shareholder Contract covers various aspects of governance of the Company, including the system for electing directors, the chief executive officer and other senior management, high level corporate decisions, situations of a change in control, and voting rights. According to the terms of the pact, the voting rights of each shareholder and companies in their group are limited to one third of total voting rights.
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The Company is not aware of any concerted actions by its shareholders, which are not allowed under the Shareholder Contract, in 2012. No amendments or breaches of the Contract have occurred in the year.
A7. Individuals or legal entities that can exercise control over the company, in accordance with Article 4 of the Law on Securities Markets.
There are no individuals or legal entities that can exercise control over the company, in accordance with Article 4 of the Law on Securities
Markets.
Regarding the ban on the issue of votes, established in article 14 of the Company Bylaws, see section E2 of this report.
A8. Treasury Stock.
At the end of 2012:
Number of direct shares
18,110,206
No treasury shares were acquired in 2012.
Number of indirect shares % of share capital
0.997%
A9. Conditions and time period of the current mandate from the Shareholder Meeting to the Board of Directors to acquire or transfer treasury stock.
There is currently no authorisation to acquire treasury stock.
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A10. Any restrictions imposed by Law or the company’s bylaws on exercising voting rights, as well as any legal restrictions on the acquisition or transfer of ownership interests in the share capital.
Restrictions in the bylaws on the exercise of voting rights
The restrictions on attending the General Shareholder Meeting are described in section E9 of this report.
For the limitations on issuing voting rights, established in Article 14 of the Bylaws, see section E2 of this report.
Legal restriction on the acquisition or transfer of stakes in the share capital
In order to guarantee transparency, Article 6 of the Company Bylaws, covering the regime for transferring shares that is established in the
Shareholder Contract, is reproduced here:
“Article 6.- Rules governing the transfer of shares
6.1. Transfers for valuable consideration
If any shareholder (the Transferring Shareholder) receives an offer from a third party or from another shareholder to acquire all or part of the shares in the capital of the Company that they own (the Offer), and intends to accept the Offer and transfer all or part of the shares in the
Company for a valuable consideration (including but not limited to, a purchase, a non-cash transaction, exchange, execution of pledge, etc.), the shareholder will grant the Company and all other shareholders a preferential acquisition right to buy the shares being transferred, in the same terms and conditions as those of the Offer. The Transferring Shareholder will notify the Chairman of the Board of Directors of the Offer that has been received, in accordance with the terms of this article.
The notification of the Transferring Shareholder that wants to transfer all or part of their shares (the Notification) will clearly identify the
Transferred Shares and include full information about the price and all other terms and conditions in which the shareholder wants to sell the
Transferred Shares, including validity, expiry date, and sufficient information about the identity of the third party or shareholder that is making the Offer to the Transferring Shareholder.
The Transferring Shareholder will send the Notification of the Offer to the chairman of the Board of Directors at the registered headquarters of the Company. In a maximum period of five (5) calendar days from the receipt by the chairman of this Notification, he will send it to the other shareholders, who will then have a period of thirty (30) calendar days from the receipt of the Notification to inform the chairman of their desire to acquire all, and not less than all, the Transferred Shares in the terms of the Offer. Notwithstanding this, if the Transferred Shares represent five per cent (5%) or more of share capital, the period for the other shareholders to state their desire to acquire the Transferred Shares will be forty (40) calendar days from the receipt of the Notification. If no response is received in the applicable period, it will be understand that the exercise of the preferential acquisition rights has been waived.
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At the same time as sending the Notification to the other shareholders, the chairman of the Board of Directors will call a meeting of the board to be held within two (2) calendar days of the sending of the Notification, so that the Company can decide whether to exercise its preferential acquisition rights on the Transferred Shares. If the Board approves the acquisition of all or part of the Transferred Shares, on the same day as the meeting of the Board, the chairman will call a General Shareholder Meeting to be held in as little time as possible in compliance with the legal time periods. The order of the day of this Meeting must include the exercise of the preferential acquisition rights of the Company on the shares that are the object of the Offer, and hence the authorisation of the acquisition of treasury stock in the terms of the Offer.
The acquisition agreement by the Company for the shares that are the object of the Offer, which must fully comply with current legislation on the acquisition of treasury stock, will require the vote in favour of at least two thirds of share capital with voting rights. The chairman, or the person who carries out these duties at the General Shareholder Meeting in which it is decided whether the Company will exercise the preferential acquisition rights on the shares that are the object of the Offer, will expressly state at this Meeting that the Company will exercise this right.
In all events, the shareholder that made the offer will not be obliged to accept the acquisition by the Company and/or other shareholders of less than the full one hundred per cent (100%) of the Transferred Shares.
If the Company, at the Shareholder Meeting mentioned above, decides to acquire all the Transferred Shares, the formalisation of the relevant transfer documents will take place within thirty (30) calendar days of the date of the Shareholder Meeting.
Once the period referred to in the third paragraph of this section 6.1 has been completed, for the shareholders to state their desire to exercise their preferential acquisition rights, if one or more shareholders then want to acquire the Transferred Shares and the Company, at the Shareholder Meeting mentioned above, has decided to buy less than all the Transferred Shares, the chairman must state this to those shareholders who have stated their desire to acquire the Transferred Shares. In this case, the Transferred Shares that have not been requested by the Company will be distributed, pro rata for their stake in the capital of the Company, between the shareholders that have stated their desire to exercise their preferential acquisition rights. The formalisation of the transfer documents for these shareholders will take place within ten (10) calendar days from the date of expiry of the time granted them for notification of their desire to exercise their preferential acquisition rights.
If the Company and shareholders decide not to exercise their preferential rights to acquire the full total of the Transferred Shares, the chairman will notify the Transferring Shareholder within five (5) calendar days of the last day of the period granted to shareholders to notify their desire to exercise this right. The Transferring Shareholder will then have the right to transfer the Transferred Shares to the third party or to the shareholder that made the Offer in a maximum period of sixty (60) calendar days from the receipt of the notification of the chairman cited in this paragraph, as long as the transfer price is not less than and the terms are not more favourable than those contained in the Offer. Once this period has gone by, and no transfer has been made, the procedure will have to restart at the beginning for any future transfers.
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6.2. Annual offer to buy shares
Notwithstanding the terms of section 6.1, from 1 January 2006 any shareholder will have the right to sell shares that represent less than one and a half per cent (1.5%) of the total share capital of the Company, as long as the total number of shares sold by all the shareholders in the terms of this paragraph 6.2, within one calendar year, does not total more than five per cent (5%) of the share capital of the
Company, and these shares will not be subject to the preferential acquisition rights of the Company or other shareholders as covered by section 6.1, but rather by this current paragraph 6.2.
Each shareholder (the selling shareholder) that within one calendar year wants to make the sale referred to in the above paragraph of section 6.2 (the Annual Offer), must inform the chairman of the Board of Directors before 31 December of the year underway of the shares that they want to transfer (the offered shares) in the following calendar year.
The chairman, once he has received all the requests to make sales under the Annual Offer, will inform the selling shareholders is the total number of offered shares is above five per cent (5%) of the share capital of the Company. If the total number of offered shares is above five per cent (5%) than the chairman will inform the selling shareholders that the five per cent (5%) limit will be distributed pro rata for the number of shares offered by them. The chairman will inform the Company and non-selling shareholders of the total offered shares (within the limit of five per cent (5%)), and the identity of the selling shareholders, no later than 31 January each year. The Company will have the right to offer to buy from the selling shareholders all or part of the offered shares in terms specified by the Company, in accordance with the procedure described in paragraphs five and six of section 6.1 above, in terms of calling a meeting of the Board of Directors and a General Shareholder Meeting. If the Board of Directors approves the purchases of the offered shares, it will also determine the price at which the Company wants to acquire them, which the chairman will state to the selling shareholders.
The selling shareholders will have ten (10) calendar days from the receipt of the notification of the offer of the Company to accept or reject this. If the selling shareholders reject all or part of the offer of the Company, then the chairman will notify non-selling shareholders of the number of offered shares that will be at their disposal. The non-selling shareholders will then have ten (10) calendar days from the receipt of the notification of the chairman to state the terms in which they are disposed to acquire all the offered shares. No response in this period will be considered to be a waiver of the exercise of the right to acquire the Offered Shares that have been offered to them.
If more than one non-selling shareholder wants to acquire the offered shares, the chairman will notify the selling shareholders of the most favourable offer for the shares. The selling shareholders will have a period of ten (10) calendar days to notify the chairman if they accept or reject the offer.
If no non-selling shareholder wants to exercise their right to acquire the Shares offered in the annual offer, or if the selling shareholders reject the offer of the non-selling shareholders that has been notified by the chairman, the selling shareholders will have the right to sell the offered shares to a third party in a maximum period of sixty (60) calendar days from the receipt of the notification of the chairman referred to in this paragraph, as long as the sale price is not lower and the conditions not more favourable than those offered to the selling shareholders, if an offer has been made by the Company or the other shareholders. After this period, those shares that have not been transferred under this annual offer procedure cannot be transferred, and will be covered by the regime of this section 6.2, until the following calendar year.
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6.3. Common rules for 6.1 and 6.2
In the event that any transfer of shares referred to in this article is subject to administrative authorisation, the established periods will be extended as necessary.
The transfer regime covered by this article 6 will apply, mutatis mutandis, to the transfer of any rights to subscribe to or acquire shares.
6.4. Tag-along rights
6.4.1. If any shareholder, individually or in concert with other shareholders, has agreed to exercise their voting rights in the Company in a coordinated form (hereinafter, the “Majority Shareholder”), acquires shares directly or indirectly, or voting rights, or any similar right that enables the Majority Shareholder to exercise control of over one third of the shares of the Company (“Acquisition of Control”), this shareholder must make an offer (“Acquisition Offer”) to all the other shareholders (“Minority Shareholders”) to acquire all the shares of these Minority Shareholders at the greater of the following values:
(i) the fair market value determined by an investment bank established in Spain, of the following: Deutsche Bank, JPMorgan,
Lehman Brothers, Goldman Sachs, Morgan Stanley, UBS, Citigroup, or any entity that succeeds these
(ii) the highest value paid for any of the shares acquired by the Majority Shareholder in the Acquisition of Control.
6.4.2. The Majority Shareholder will make the Acquisition Offer in five (5) days following the date on which the reasonable market value has been determined in accordance with point 6.4.1 above. Each of the Minority Shareholders will have ten (10) days from the receipt of the notification of the Acquisition Offer to notify the Majority Shareholder of their intention to accept the Acquisition Offer.
6.4.3. At the time of the Acquisition of Control, Minority Shareholders will appoint an investment bank established in Spain, of the following: Deutsche Bank, JPMorgan, Lehman Brothers, Goldman Sachs, Morgan Stanley, UBS, Citigroup, or any successor, and the Majority
Shareholder will appoint another investment bank of those in this list to determine the fair market value of the shares of the Company. If there is a difference between the valuations of the shares of the Company made by the investment banks, than the fair market value of the shares of the Company will be understood to be the average value of the two valuations. If the difference between the two valuations is more than 10%, the two designated investment banks will appoint a third investment bank. For the purposes of this section, the investment banks will value the shares of the Company on the basis of an offer for one hundred per cent (100%) of the shares in the Company, with a control premium and no discount for liquidity or minorities. The fees and expenses of the investment banks will be paid by the Company.
6.4.4. The Majority Shareholder will acquire all the shares of the Company that are owned by the Minority Shareholders that accept the
Acquisition Offer, in accordance with the terms of section 6.2 above.
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6.4.5. In the event that a Majority Shareholder acquires control because a capital increase at the Company is not subscribed, this
Majority Shareholder will not be obliged to carry out the Acquisition Offer covered by this article.
6.4.6. If as a consequence of the procedure described in this article, the Majority Shareholder acquires more than two thirds (2/3) of the shares of the Company, the voting restrictions established in Article 14 will not apply.
”
A11. Existence of a resolution by the General Shareholder Meeting to take neutralisation measures to respond to a public takeover bid, as covered by Law 6/2007.
This section is not applicable, as the company is not listed.
B. COMPANY MANAGEMENT STRUCTURE
B1. Board of Directors.
B.1.1. Maximum and minimum number of directors included in the bylaws.
In accordance with the terms of the Shareholder Agreement of 29 July 2005, Article 16 of the Company Bylaws and Article 3 of the
Regulations for the Internal Functioning of the Board of Directors, this body is composed of 13 directors.
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B.1.2. Members of the Board.
At the end of the year:
Name or company name of director
José María Castellano Ríos
Representative
Position on board
Date of 1 st appointment
Chairman 25-05-2006
John Hahn
1 st Vice
Chairman 04-11-2005
Val Telecomunicaciones
Cartera, S.L.
Diego L. 2 nd Vice
Lozano Romeral Chairman 05-05-2009
Date of last appointment
20-06-2012
22-06-2011
20-06-2012
Election procedure
General Shareholder
Meeting
General Shareholder
Meeting
General Shareholder
Meeting
Rosalía Portela de Pablo
Alejandro Valencia
Soren Oberg
Thomas Walker
Peter Ezersky
Felipe Blanco
Eduardo Serra Rexach
Chief Executive
Officer
Director
Director
Director
Director
Director
Director
05-05-2009
05-05-2009
04-11-2005
04-11-2005
09-02-2012
22-06-2011
26-06-2009
General Shareholder
20-06-2012 Meeting
20-06-2012
General Shareholder
Meeting
General Shareholder
22-06-2011 Meeting
22-06-2011
General Shareholder
Meeting
General Shareholder
09-02-2012 Meeting
22-06-2011
General Shareholder
Meeting
General Shareholder
20-06-2012 Meeting
International
Limited Partnership Alain Michel Director 25-11-2009 26-04-2010 Meeting
Anthony Ball
José Luis Nueno Iniesta
Director
Director
29-06-2006
26-06-2009
General Shareholder
20-06-2012 Meeting
General Shareholder
20-06-2012 Meeting
Total number of directors 13
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B.1.3. Members of the board and their categories.
Executive directors
Name or company name of director
José María Castellano Ríos
Rosalía Portela de Pablo
Committee Position proposing appointment in company
-----
-----
Chairman
Chief executive officer
Total number of executive directors % of Board
2 15.38%
External proprietary directors
Committee
Name or company name of director proposing appointment
Name or company name significant shareholder represented or proposing appointment
John Hahn
Soren Oberg
-----
-----
Providence Equity Partners, Inc.
Thomas H. Lee Partners, L.L.P.
Thomas Walker
Peter Ezersky
Anthony Ball
Alejandro Valencia
Felipe Blanco
Particitel Internationel Limited Partnership
Val Telecomunicaciones Cartera, S.L.
-----
-----
-----
-----
-----
-----
CCMP Capital Advisors, L.L.C.
Quadrangle Capital Partners
Proposed by the 4 shareholders above
Multitel
General Electric
Structured Finance, Inc.
Caisse de Dépôt et
Placement du Quebec
Val Telecomunicaciones, S.L.
Total number of proprietary directors
9
% of Board
69.23%
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External independent directors
Name or company name of director
Jose Luis Nueno Iniesta
Eduardo Serra Rexach
Número total de consejeros dominicales
2
Committee proposing appointment Profile
-----
-----
See below
See below
% total del Consejo
15,38%
The profiles of the external independent directors are as follows:
José Luis Nueno Iniesta
José L. Nueno is Ordinary Professor of Business Management at IESE. He holds a Doctorate in Business Administration (Marketing) from
Harvard University, a Master’s in Business Administration from IESE, and a law degree from the University of Barcelona. His areas of interest are distribution channels and manufacturer/retailer relations. He has published articles on globalization, the marketing of consumer goods, luxury goods, and marketing. He has lectured at various business schools, including the Industrial Marketing course at INSEAD, France. He was guest professor at the University of Michigan and at the combined programmes of Michigan and IESE at Vevey in Switzerland and in
Shanghai. In 2003, he gave lectures at the Harvard Business School, for AMP Middle East and for the Strategic Program for Retail Managers.
He is a member of the Board of Directors of several international companies. He is also a corporate consultant (since 1986 he has carried out consulting activities for over 160 clients in more than 230 projects), and an adviser to national and multinational corporations in the areas of marketing and strategy.
Eduardo Serra Rexach
Mr. Serra studied law at the Universidad Complutense of Madrid and in 1974 joined the legal area of the public administration. He has devoted half of his career to the public sector, and is the only Spaniard to hold senior positions in the three governing parties since the restoration of democracy, notably as Minister of Defence from 1996 to 2000. In the private sector, he has held various roles; Chairman of
Telettra España, Vice Chairman and Chairman of Cubiertas MZOV, Chairman of Peugeot-Talbot España, Chairman of Airtel and Chairman of
UBS España. Eduardo Serra has dedicated part of his life to working for charitable organisations. He has been Vice Chairman and Chairman of INCIPE (1989-1996), Vice Chairman of the Foundation for Help against Drug Addiction (of which he was Managing Director and
Chairman from 1987-1996), Chairman of the Board of Trustees of the Prado Museum (2000-2004), and Founding Chairman of the Real
Instituto Elcano (2000-2004). He is currently Chairman of Eduardo Serra y Asociados Consulting, Chairman of the EVERIS Foundation, Vice
Chairman of Everis, and Director, Adviser and trustee of various national and international institutions.
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B.1.4. Appointment of proprietary director on proposal of shareholders with a stake of under 5% of capital.
The appointment system for directors is defined in the Shareholder Contract, in article 16 of the Company Bylaws, and in Article 3 of the
Regulations for the Internal Functioning of the Board of Directors. This system is described in item B.1.19 of this report.
No representative directors have been appointed on the proposal of shareholders with a stake of under 5% of capital.
No formal requests for presence on the Board have come from shareholders with a stake that is equal or greater than that of others at whose proposal representative directors have been appointed.
B.1.5. Resignation of directors before the end of their mandate, and explanation for this.
Don Joshua Steiner and the physical representative of Particitel International Limited Partnership, Robert Coallier, resigned as directors before the end of their mandates on the request of the shareholders they represented and who appointed them, due to their new responsibilities.
B.1.6. Powers delegated to the chief executive officer.
As established in Article 20 of the Company Bylaws, the chairman of the Board of Directors will be chosen with the vote in favour of the majority of the directors present at the meeting, and notwithstanding any other powers that may be delegated, this chairman will be delegated all the powers that can be delegated legally and statutorily in the terms determined by the Board of Directors, subject to the provisions of Article 141 of the Law on Corporations (currently Article 249 of the Spanish Companies Act).
In addition, Article 22 of the Bylaws states that the Board of Directors will appoint, on the proposal of the chairman, a chief executive officer to whom, without affecting the powers of attorney that may be conferred, will be delegated all the powers that can be delegated legally and statutorily in the terms determined by the Board of Directors, subject to the provisions of Article 141 of the Law on Corporations
(currently Article 249 of the Spanish Companies Act).
Item B.1.21 describes how these powers are exercised with third parties.
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B.1.7. Members of the Board who have positions as directors or management in other companies that form part of the listed Company.
Name or company name of director
José María Castellano Ríos
Rosalía Portela de Pablo
Company name of group entity
ONO Midco, S.A.U.
Cableuropa, S.A.U.
Tenaria, S.A.
Spanish Cable Holding, S.A.U.
ONO Midco, S.A.U.
Cableuropa, S.A.U.
Spanish Cable Holding, S.A.U.
Position
Chairman
Chairman
Chairman
Chairman
Chief Executive Officer
Chief Executive Officer
Chief Executive Officer
Physical representative of the
CEO of Cableuropa, S.A.U.
B.1.8. Directors that are members of the Board of Directors of other listed companies in securities markets in Spain and disclosed
to the company.
The company has received no notification about this.
B.1.9. Rules about the number of boards that directors may form part of.
There are no rules about the number of boards to which directors may belong.
B.1.10. In relation with Recommendation 8 of the Unified Code, indicate the company’s general policies and strategies that are
reserved for approval by the Board of Directors in plenary session.
The plenary meeting of the Board has reserved for it the approval of the following policies and strategies:
Yes
Investment and financing policy X
Design of the structure of the corporate group
Corporate governance policy
X
X
Corporate social responsibility policy
The strategic or business plans, management targets and annual budgets
Remuneration and evaluation of senior management
Policy for risk management and control, including regular monitoring of internal information and control systems
Dividends and treasury stock policy and limits
X
X
X
X
X
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B.1.11. Aggregate remuneration paid to directors during the year.
a) In the Company.
Concept
Fixed remuneration
Variable remuneration
Per diems
Thousand euros
1,771
720
96
Stipulated remuneration
Share options and/or other financial instruments
Others 7
Total 2,594
Other benefits
Advances
Loans
Pension funds and plans: contributions
Pension funds and plans: obligations
Life insurance premiums
Guarantees issued by the company in favour of directors
Thousand euros
2 b) For company directors sitting on other governing bodies and/or holding senior management posts within group companies.
Concept
Fixed remuneration
Variable remuneration
Per diems
Stipulated remuneration
Share options and/or other financial instruments
Others
Total
Thousand euros
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Other benefits
Advances
Loans
Pension funds and plans: contributions
Pension funds and plans: obligations
Life insurance premiums
Guarantees issued by the company in favour of directors
Thousand euros
c) Total remuneration by type of director.
Type of director
External proprietary
By company By group
External independent
Other external
216
Total 2,596
d) Remuneration as percentage of profit attributable to the parent company.
Total remuneration for directors (thousand euros)
Total remuneration for directors/profit attributable to parent company (%)
B.1.12. Members of senior management who are not also executive directors and total remuneration paid to them.
Name or company name
Carlos Sagasta Reussi
Guillermo Mercader Herrero
Víctor Manuel Guerrero Ferrer
Rafael Brull Dans
John Paul Kearney
Carlos Porfirio Moreno Alonso
Antonio de la Fuente Fernández
Juan Luis Delgado Dominguez
Position
Chief Financial Officer
Director General of Residential Business
Director of Business Unit
Director of On-line Business Unit
Director of Networks and Technology
Director of Systems
Director of People, Teams and Resources
Secretary General and Secretary to the Board
2,596
4.91%
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Total remuneration to senior management (in thousand euros) 2,406
Corporate Governance Report
B.1.13. Clauses that guarantee or provide “golden parachutes” in the event of dismissal or changes in control, for senior management,
including executive directors, and whether these agreements must be reported to/approved by the administrative bodies of the company.
Number of beneficiaries 4
B.1.14. Processes for establishing the remuneration of the members of the Board of Directors and clauses of the bylaws concerning this.
Article 25 of the company Bylaws establishes that the position of director will be remunerated. The General Shareholder Meeting will establish, preferably in the annual Ordinary General Meeting, the global sum that all directors will receive in the year underway.
The Board of Directors will freely decide on the distribution of this amount, and can establish a sum, included in that set by the General
Shareholder Meeting as above, that each director can receive for attendance at the meetings of the Board of Directors and any Committees of the Board, without this sum necessarily having to be the same for each director.
In addition, the Board can, within this global sum that the General Shareholder Meeting establishes each year, remunerate certain directors for the responsibilities allocated to them or the functions they provide.
In addition, directors may be remunerated by providing them with shares in the capital of the Company, or options on these shares or options linked to the value of the shares of the Company. The use of these types of remuneration will require the prior agreement of the
General Shareholder Meeting. Any such resolution will include, as a minimum, the number of shares or options to be awarded to each director remunerated this way, which may differ, the strike price of the options, the value of the shares used as a benchmark, and the duration of this system of remuneration.
Similarly, article 17.1 c) of the Regulations for the Internal Functioning of the Board of Directors recognises the right of directors to receive attendance fees for their personal attendance at the meetings of the Board of Directors, and/or the remuneration established for their position or functions, in the terms established in the Bylaws. The remuneration of directors, for any concept, must follow the criteria and recommendations of the Appointments and Remuneration Committee, subject to the sovereignty of the General Shareholder Meeting in terms of this remuneration, as established in the Bylaws.
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B.1.15. Whether the Board of Directors approves a detailed remuneration policy and specify the points included.
The Board of Directors is informed by the Appointments and Remuneration Committee and approves, among others, the following aspects:
- The remuneration framework for the Chairman of the Board of Directors and the Chief Executive Officer of the Company, and the distribution of the remuneration set by the General Shareholder Meeting of the Company among the members of the Board of Directors.
- Proposes to the General Shareholder Meeting the total amount covering all concepts, of the remuneration to distribute among the directors in its ordinary annual meeting.
- Approves or reviews the master contracts for senior managers of the Company and other group companies.
- Maximum and minimum levels of gross annual compensation for the different segments of the group employees.
- The remuneration of the senior management that is hired, ensuring that these are within the maximum and minimum levels of the segment in which they are included.
- General group policy on variable remuneration for meeting targets, ensuring that there is an adequate proportion between fixed and variable remuneration.
- Salary reviews of senior group managers that represent an extraordinary increase in compensation because of exceptional reasons.
- Employee loyalty programmes.
B.1.16. Submission of a report by the Board of Directors on remuneration policy for directors to an advisory vote of the
General Shareholder Meeting, as a separate point of the order of the day.
A report by the Board of Directors on remuneration policy for directors is not submitted to an advisory vote of the General Shareholder
Meeting, as a separate point of the order of the day.
However, the General Shareholder Meeting establishes the total sum for directors to receive each year, as described in point B.1.14.
In addition, the General Shareholder Meeting is the body that decides on loyalty plans for the group employees.
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B.1.17. Members of the Board who are also members of the Board of Directors, management, or employees of companies that have
significant stakes in the company and/or group entities.
Name or company name of director
John Hahn
Peter Ezersky
Felipe Blanco
Thomas Walker
Soren Oberg
Alejandro Valencia
Company name of significant shareholder
Providence Equity Partners
Quadrangle Capital Partners
CCMP Capital Advisors, LLC
Thomas H. Lee Partners, L.L.P.
Multitel
Position
Director General
Co-Chairman and Director General
General Electric Structured Finance, Inc. Executive Director
Director General
Director General
Director General
B.1.18. Amendments to the Regulations for the Board in the year.
There were no amendments to the Regulations for the Internal Functioning of the Board of Directors in the year.
B.1.19. Procedures for appointing, re-electing, appraising and removing directors. Competent bodies and the processes and criteria
to be followed for each procedure.
The Shareholder Contract covers appointments to the Board of Directors and establishes that the Board of Directors will be composed of
13 directors, of which two will be executive, a Chairman and CEO, and another two will be independent directors. One of the independent shareholders will be proposed by shareholders before the date of the signing of the Shareholder Contract, and must be approved by the new shareholders. The second independent shareholder will be proposed by the new shareholders and must be approved by the former shareholders.
For other directors, each stake representing 11.11% of share capital will have the right to propose a director. If the total number of directors cannot be reached, shareholders with stakes of less than 11.11% will have the right to appoint a director, in descending order.
If the new shareholders hold together more than 50% of share capital, they will have the right to appoint 5 of the remaining 9 directors.
The Board of Directors will name two Vice Chairmen, one proposed by shareholders existing before the date of signing of the Shareholder
Contract, and another on the proposal of the new shareholders.
The appointment of the CEO, on the proposal of the Chairman, must be based on the advice of a human resources, management recruitment, or similar company of high reputation in the market, with the experience to find the candidate who best fits the profile of the
Company.
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Both the Bylaws and the Regulations for the Internal Functioning of the Board of Directors are reflected in the Shareholder Contract. The
Bylaws establish that directors cannot be shareholders and will exercise their role for three years, and can be re-elected one or more time for periods of the same duration.
In addition, the Board will elect a Secretary, and may elect one or several vice secretaries, who cannot be directors.
If there are vacancies on the Board of Directors, the Board can designate among the shareholders and co-opt the person to occupy this vacancy until the first General Shareholder Meeting.
In the selection of independent directors to be proposed to the General Shareholder Meeting for appointment, the candidates must, as well as being individuals of high professional reputation, also have, as much as possible, the following conditions of impartiality and objectivity: i) Not have, or have had in the twelve months prior to the appointment, a working, commercial or contractual relationship, directly or indirectly, and of a significant nature, with the Company or its subsidiaries, members of the Management Committee, executive directors, representative directors or group companies whose interests they represent, credit institutions with a major position in the financing of the company, or organisations that receive significant subsidies from the Company. ii) Not be a director of another company that has proposed the appointment of representative directors at the Company.
iii) Not to be related closely to any executive or representative director or members of the Management Committee of Grupo ONO.
In the event that a candidate, because he or she is especially well suited professionally, is proposed to be appointed as an independent director, and is affected by one of the relationships above, this must be stated to the General Shareholder Meeting at the same time as their candidacy, and if they are appointed a director, this will also be disclosed in the Annual Corporate Governance Report that must be produced in accordance with current legislation, if the Company lists on one or several securities markets.
B.1.20. The cases in which directors must resign.
Article 18 of the Regulations for the Internal Functioning of the Board of Directors, in sections 8, 9, 10 and 12, reproduced here, covers the circumstances under which Directors must resign:
“ 18.8.- The directors must inform the Board of Directors of any situation of direct or indirect conflict with the interest of the Company.
They must abstain from voting on any specific resolution in which there may be a conflict of interest, direct or indirect, between the director or a person linked to him, and the Company. In these cases, the director will not be included when counting majority votes. If the conflict of interest with the Company is permanent and not temporary, the director will be required to present his immediate resignation.
18.9.- The directors are obliged to disclose, when elected, any possible legal or statutory incompatibilities for the exercise of their position that they may incur. If the reason for this incompatibility is supervening, then they will be required to resign immediately.
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18.10.- Directors will be obliged to resign in the event that the functioning of the Board of Directors or the credit or reputation of the
Company suffers as a result of their remaining on the Board.
18.12.- Directors must disclose any stakes they may have in the capital of a company with the same, analogous or complementary activity as the corporate purpose of the company, and the positions or functions that they hold in it, and the carrying out individually or by a representative of the same, analogous or complementary activity as the corporate purpose of the company. This information must be provided to the Company when requested, to be included in the annual report. Directors from a competing company and people who in any way have interests that are opposed to those of the Company will resign their position at the request of any shareholder or director and with the resolution of the General Shareholder Meeting.”
B.1.21. . Functions of the chief executive officer that fall upon the Chairman of the Board, and measures taken to limit the risks
of accumulation of powers in a single person.
The division of powers between the Chairman of the Board and the Chief Executive Officer are clearly laid out in the Bylaws and the
Regulations for the Functioning of the Board.
The Board of Directors has delegated to both all the powers that can be legally and statutorily delegated, notwithstanding the delegation of other powers that the Board of Directors can make, or the provisions of Article 141 of the Law on Corporations (currently Article 249 of the
Spanish Companies Act).
With third parties, these faculties can be exercised individually by the Chairman or the CEO when the financial amount involved in the action is not more than five million euros. Above this limit, these faculties must be jointly exercised by the Chairman and CEO.
Notwithstanding this, internally:
(i) any decisions concerning operations included in the Annual Budget can be taken by the Chairman and/or CEO, in accordance with the framework noted above;
(ii) for decisions concerning operations not included in the Annual Budget, the agreement of the Board of Directors will be required, except for the following cases:
(a) Operations related to the ordinary course of business and not in excess of fifteen (15) million euros per year.
(b) Debt that is not more than fifteen (15) million euros in excess of the highest level established in the Annual Budget.
(c) Capital investments of no greater than thirty five (35) million euros per year.
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(d) Award of guarantees for no more than ten (10) million euros per year above the highest level established in the Annual Budget.
(e) Recognition or payment of compensation of not more than ten (10) million euros above the highest level of debt established in the
Annual Budget.
B.1.22. Requirement for qualified majorities, rather than legal majorities, for any type of decision. Adoption of resolutions by the
Board of Directors, minimum quorum for meetings, and type of majorities needed for resolutions.
As established by the Bylaws and the Regulations for the Internal Functioning of the Board, the Board is validly constituted when half plus one of its components are at the meeting or represented there, when the number of directors present is higher than the number of absentees, including, if applicable, any vacancies that may exist.
Nevertheless, a meeting of the Board of Directors will also be validly constituted, even without a prior call, when all the directors with a current position on the board are either present, represented, or using video calling, and unanimously accept that the Board of Directors is constituted and hold a meeting. In this case, if the Secretary or any Vice Secretaries are not present, the youngest director will carry out these functions.
Agreements will be adopted by the majority of directors present at the meeting, subject to those areas where the Bylaws, rule for functioning of the board, or the law, establish that a qualified majority is needed. In addition, this is all subject to following the previously established requirements of the shareholder contract that is force in the Company for the adoption of certain agreements.
As established by the current Shareholder Contract, for the business detailed below, the Chairman will present these issues to the vote of the Board of Directors only when instructions have been received that represent at least the simple majority of ordinary shares in the company (and for the matters in items (iii), (v) and (vi) at least 60%) confirming that they are in favour of adopting the resolutions submitted to a vote:
(i) approval or amendment of the annual budget or business plan;
(ii) remuneration of senior managers involved in the share loan scheme;
(iii) remuneration and incentives for the chairman and CEO;
(iv) authorisation of transactions with related parties that are not between group companies;
(v) dismissal of Chairman and appointment of a new Chairman;
(vi) dismissal of CEO and appointment of a new CEO
(vii) debt not included in the annual budget that is in excess of 100 million euros;
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(viii) execution of capital increases delegated by the General Shareholder Meeting;
(ix) strategic transactions such as acquisitions or joint ventures that are significant to the business, financial situation or operations of the Company;
(x) purchase of treasury stock in the circumstances described above in the framework of transferring shares for a consideration, and the annual share acquisition offer.
B.1.23. Specific requirements, different to those for directors, to be appointed as Chairman.
There are no specific requirements, different to those for directors, to be appointed as Chairman.
B.1.24. Casting vote of Chairman.
The Chairman currently has no casting vote.
B.1.25. Age limit for directors established by the Statutes or the Regulations for the Board.
There is no age limit for directors established by the Statutes or the Regulations for the Board.
B.1.26.Limit to the mandate of independent directors, established by the statutes or the Regulations for the Board.
There is no limit to the mandate of independent directors, established by the statutes or the Regulations for the Board.
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B.1.27. Initiatives taken to remedy the low number of female directors. Procedures established by the Appointments and Remuneration
Committee so that the selection processes are not implicitly biased against the selection of female directors.
The search for women who have the professional profile needed is a question of principle, and it is clear that the Company is committed to this principle. In accordance with this, it should be noted that on 5 May 2009, the General Shareholder Meeting appointed Ms. Rosalía Portela de
Pablo as director of the Company, and that she was subsequently appointed Chief Executive Officer by the Board of Directors.
In addition, the Regulations for the Internal Functioning of the Board of Directors establish that independent directors must have recognised reputation and experience, and that the selection process must consider whether the candidates, as much as possible, have certain conditions of impartiality and objectivity. The rules governing the functioning of the Company do not pose any obstacle to the selection of female directors.
Hence, the procedure for selecting female directors is based exclusively on the personal merits of the candidate.
B.1.28. Formal processes for granting proxies at the Board of Directors.
As established in Article 18 of the Bylaws, any director can delegate their representation to another member of the Board. The proxy will be conferred in a letter to the Chairman and will be specific for each meeting of the Board of Directors that is held.
This right to representation in the meetings of the Board of Directors by another director is included in the rights of directors, in Article 17 of the Regulations for Internal Functioning. Subject to this right of representation, Article 18 of the Regulations for Internal Functioning establishes the obligation of directors to personally attend all meetings of the Board, whether ordinary or extraordinary, and to diligently inform themselves about the development and business of the Company and the group.
Article 12 of the Regulations for the Internal Functioning of the Board also establishes the right for representation. It establishes that directors will be able to be represented in the meetings of the Board of Directors, exclusively by another director with a current position on the Board.
The proxy vote will be unique to each meeting and can be general and wide ranging, or it can be specific, with the direction of the vote indicated for each point on the order of the day. This proxy must be in writing, on paper with a written signature, or an email with an advanced electronic signature that complies with the requirements of the Spanish legislation applicable. Proxies can be sent by fax, notwithstanding that the original is sent immediately to the secretary of the Board of Directors for confirmation and storing.
When there are directors who are represented by others using a specific proxy vote with the vote that the proxy must make indicated for each point of the order of the day, and a new point is submitted to the Board of Directors for vote, and is not on the order of the day, it will be understood that the director who is represented is abstaining from voting on these points. However, if circumstances allow it, the proxy can try to obtain, by fax, or email with an advanced electronic signature that complies with the requirements of the Spanish legislation applicable, a special proxy with the direction of the vote for this point or points, from the director being represented. This proxy by fax or email must always be confirmed, by sending the original signed paper to the secretary of the Board of Directors five days after the meeting. If the original is not received in this period, it will be understood that the director abstained from voting on the new points.
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The personal attendance of the director who has organised a proxy for their vote with another director, will mean the automatic revocation of the proxy.
The directors who, when present in a meeting of the Board of Directors, have to leave the meeting before it ends, can delegate their vote to another director who is present, to represent them on the business to be discussed in the rest of the meeting. This proxy can be either in writing or oral. In both cases, the secretary of the Board will disclose this in the minutes.
B.1.29. Meetings of the Board of Directors in the year, and times that the Board has met without the Chairman.
Number of meetings of the Board
Number of meetings of the Board without the attendance of the Chairman
Meetings held in the year by the different committees of the Board.
9
1
Meetings of the Appointment and Remuneration Committee
Meetings of the Audit and Compliance Committee
2
3
B.1.30. Meetings held by the Board of Directors during the year without the attendance of all members. This calculation of non-attendance will include the proxies without specific instructions.
Number of non-attendances of directors in the year
% of non-attendances of the total votes cast in the year
22
19.30%
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B.1.31. Persons who have certified the individual and consolidated annual accounts of the Company, for their formulation by
the Board of Directors.
The individual and consolidated annual accounts of the Company are not certified for their formulation by the Board of Directors.
However, there is an exhaustive process of preparing the accounts, which are prepared by the Accounts department and then reviewed by the Chief Financial Officer, the secretary of the Board, and by the Chairman and Chief Executive Officer before being presented to the Audit and Compliance Committee.
The Audit and Compliance Committee reviews the annual accounts, with the attendance of the external auditor, and must inform the Board of Directors of any change in accounting standards and of the balance sheet and off balance sheets risks of this.
The Audit and Compliance Committee, if it thinks it appropriate, agrees to propose to the Board the formulation of the individual and consolidated accounts of the Company.
B.1.32. Mechanisms established by the Board of Directors to prevent the individual and consolidated financial statements it
prepares from being submitted to the General Shareholders’ Meeting with a qualified Audit Report.
It is the job of the Audit and Compliance Committee to inform the Annual Accounts, alert the Board of Directors to any change in accounting standard and the balance sheet and off balance sheet risks of these, as well as monitoring the implementation of the annual external audit and monitoring those critical areas that could affect the auditors’ report.
The external auditors inform the Audit Committee about the progress of their audit, and provide information to the meeting of the
Committee in March, when the individual and consolidated accounts of the Company and the Group are reviewed for them to be proposed to the Board for formulation. In addition, the external auditors review the quarterly results of the Company and the Group.
B.1.33. Whether the secretary of the Board is a director.
The secretary of the Board is not a director.
B.1.34. Procedures for appointment and removal of the Secretary
Article 23 of the Company Bylaws establishes that the Secretary of the Board of Directors, who cannot be a director, will be elected with the vote in favour of the majority of the directors present at the meeting. The position will be of indefinite duration, or can be for a certain number of years. To be elected Secretary of the Board of Directors, it is essential to be a lawyer and a practising member of the professional body of lawyers for at least ten years.
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The Regulations for the Internal Functioning of the Board govern the requirements for eligibility, powers, obligations, functions and other circumstances for the exercise of this position.
The Secretary of the Board is also especially responsible to ensure the practice of good governance recommendations.
B.1.35. Mechanisms established by the Company to preserve the independence of the auditor, financial analysts, investment banks,
and rating agencies.
In terms of the independence of the external auditor of the Company, both the Regulations for the Internal Functioning of the Board and the Audit and Compliance Committee establish that it corresponds to the Committee to propose to the Board of Directors the appointment or substitution of the external auditor, to be approved by the General Shareholder Meeting, and their fees, monitoring for any situation that could compromise their independence.
B.1.36. Changes to the external auditor of the Company in the year.
There were no changes to the external auditor of the Company in the year.
B.1.37. Whether the audit firm carries out other work, the amount of fees received for this work, and that work as a percentage
of the total fees invoiced to the Company.
The audit firm carries out other non-audit work for the company and the group, specifically:
Amount of other non-audit work (in thousand euros)
Amount of non-audit work / total amount invoiced by the audit firm (%)
217
39%
B.1.38. Existence of reservations or qualifications in the Audit Report.
There are no reservations or qualifications in the audit report for the annual accounts of the previous year.
B.1.39. Number of years in which the current audit firm has uninterruptedly carried out the audit of the accounts, and the percentage
this is of the number of years in which the accounts have been audited.
The audit firm has been carrying out the audit of the company and group accounts for 11 years uninterruptedly, which represents 92% of the number of years in which the accounts of the Company have been audited.
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B.1.40. Equity holdings of the members of the Board of Directors in other companies with the same, similar or complementary types
of activity to that which constitutes the corporate purpose of the company and/or its group, and which have been reported to the
company. The positions posts or duties they hold in these companies.
The holdings disclosed to the Company are listed below:
Name or company name of director
José María Castellano
Rosalía Portela
Soren Oberg
Anthony Ball
Eduardo Serra
John Hahn
Thomas H. Walker
Felipe Blanco
Peter Ezersky
Alejandro Valencia
José Luis Nueno Iniesta
---
---
---
---
---
---
---
---
---
Name of company
ONO Midco, S.A.U.
CABLEUROPA, S.A.U.
Spanish Cable Holding, S.A.U.
Tenaria, S.A.
ONO Midco, S.A.U.
Spanish Cable Holding, S.A.U.
CABLEUROPA, S.A.U.
Tenaria, S.A.
Comcast
Univisión
Kabel Deutschland
British Telecom
---
---
---
---
---
----
---
---
---
---
---
---
---
% stake
---
---
---
---
<0.1
2,049,451 shares (indirect)
31.452 shares (indirect)
16,157 shares
Position or functions
Chairman
Chairman
Chairman
Chairman
Related party
---
---
---
---
Chief Executive Officer ---
Chief Executive Officer
Chief Executive Officer
---
---
Physical representative of Chief
Executive Officer
---
---
---
Chairman of
Supervisory Board
Non-executive director
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
---
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In addition, the director Peter Ezersky has disclosed that he holds the position of non- executive director at various investment funds of the
Quadrangle group, which owns holdings in companies with a similar corporate purpose as the company
Name or company name of director
Peter Ezersky
Name of company
Gest AS
Hargray Holdings
Ntelos Holdings Corp
DAVE Wireless
Tower Vision Mauritius Ltd
% stake
---
---
---
---
---
Position or functions
---
---
---
---
---
Related party
QCP Funds
QCP Funds
QCP Funds
QCP Funds
QCP Funds
Likewise, the director Val Telecomunicaciones Cartera, S. L. has informed the company that Val Telecomunicaciones, S.L., a shareholder in
Grupo Corporativo ONO, owns 100% of its share capital, and is also its CEO. Val Telecomunicaciones, S.L. has stated that it does not have stakes in companies with the same, similar or complementary activity as the corporate purpose of the Company.
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The director Particitel International Limited Partnership has declared that Caisse de dépôt et placement du Québec, a shareholder in the
Company, has the following stakes:
Name or company name of director
Particitel International
Limited Partnership
Name of company
Quebecor Inc – Class B
Cogeco Càble Inc
Quebecor Inc – Class A
Cyfrowy Polsat SA
Sirius xm Radio Inc
SES Sa
DIRECTV
Time Warner Cable Inc
Comcast Corp – Special Class A
DISH Network Corp
Cablevision Systems-Ny Grp_A
Liberty Global Inc - A
% stake
5.30%
3.80%
1.59%
0.30%
0.02%
0.12%
British Sky Broadcasting Group PLC 0.09%
Kabel Deutchland Holding AG 0.13%
Eutelsat Communications 0.08%
Jupiter Telecommunications Co Ltd 0.04%
Virgin Media Inc
Comcast Corp –Class A
0.03%
0.14%
0.12%
0.12%
0.06%
0.04%
0.11%
0.03%
Liberty Global Inc – Series C 0.03%
CITIC Guoan Information Industry Co Ltd 0.01%
Quebecor Media Inc
Shaw Communications Inc-B
Ripley Cable Holdings I LP
Beijing Gehua CATV Network - A
24.64%
0.95%
2.76%
0.01%
Related party
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec
Finally, Diego L. Lozano and Alain Michel, as physical representatives of the directors Val Telecomunicaciones Cartera, S.L and Particitel
International Limited Partnership have declared that neither they nor persons related to them have any stake or position in companies of the same, similar or complementary corporate purpose.
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B.1.41. Procedures to provide directors with external advice.
As established in Article 18.7 of the Regulations for the Internal Functioning of the Board of Directors, the directors have the obligation to prepare for the meetings that are called, by reading and reviewing the information that is sent to them in advance, and requesting any additional information that they think is necessary for an adequate preparation of the meeting. If necessary, the directors can be advised by external experts. The cost of these experts will be incurred by the Company, when it is the Board of Directors that requests them. The cost of individual advice to a particular director will be borne by that director or the shareholder they represent, unless the board determines otherwise.
B.1.42. Procedures for the directors to have the necessary information for preparation of meetings of the governing bodies in
sufficient time in advance.
These procedures are established in Article 10 of the Regulations for the Internal Functioning of the Board of Directors.
Directors, notwithstanding their compliance with the obligations of the Regulations for the Internal Functioning of the Board of Directors, and the Ethical Code of Conduct, if it exists, and in particular their obligations of loyalty and confidentiality, have the right to access any type of information and documents concerning the Company, the Group and its activities, in complying with the director’s role that has been granted to them.
Likewise, directors have free access to the offices and facilities of the Company and the Group, subject to being accompanied by technical or qualified staff in their visits to the facilities or telecommunications networks on which the Company’s or Group’s activity depends.
Each of the points on the order of the day of a meeting of the Board of Directors or any other governing body of the Company, notwithstanding the information and debate that these points could generate in the meeting itself, can be accompanied, in the opinion of the Secretary of the Board of Directors or, if applicable, the Chairman, by an informative appendix that contains at least a succinct explanation of the business to be discussed, the aim of the point (information, debate and/or decision), and if applicable a proposal for the resolution to be adopted by the body. This can also consist of documents that must be approved or examined by the competent body.
To prepare these appendices, the responsibility falls on the Secretary of the Board of Directors, who may be helped by employees of the
Company or Group as he thinks appropriate.
These informative dossiers for the order of the day must be sent, if possible, with the order and the calling of the meeting, and in any event, at least two working days before the day set for the meeting, if possible. These appendices are sent to directors by fax, email, messenger or any other way that the Secretary of the Board of Directors thinks appropriate.
In addition, in compliance with the possibility established in the Regulations for the Internal Functioning of the Board of Directors, the
Shareholder’s Office has been established, whose main mission is relations between shareholders and with the Company, and the relations of the directors between themselves, with the Company, and between directors and shareholders.
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The Shareholder’s Office manages the “Virtual Board Room”, with access limited to directors and shareholders, that, among others, includes significant information about the company, its activity, composition, functioning of the Board of Directors, and documentation of the meetings that have been held.
B.1.43. Rules obliging directors to inform the board of any circumstances that might harm the company’s name or reputation,
tendering their resignation as the case may be.
In accordance with Article 18.10 of the Regulations for the Internal Functioning of the Board of Directors, directors will be obliged to present their resignation in those cases when the functioning of the Board could be negatively impacted, or the credit or reputation of the
Company hurt, as a result of their remaining on the board.
B.1.44. Members of the Board who have notified the company that he/she has been indicted or tried for any of the offences stated
in article 213 of the Spanish Companies Act (former Article 124 of the Law on Corporations).
No member of the Board of Directors has informed the Company of this.
B2. Committees of the Board of Directors
B.2.1. Committees of the Board and their members.
Remuneration and Appointments Committee
The Remuneration and Appointments Committee is formed by five members of the Board of Directors and is governed by the Norms of the
Committee approved in December 2005. Its purpose is to supervise the remuneration, selection and human resources policies of Grupo
ONO. The decisions taken by this Committee are then analysed by the Board of Directors for approval or amendments.
Composition of the Remuneration and Appointments Committee as of 31 December 2012:
Name Position
John Hahn Chairman
Peter Ezersky
Eduardo Serra
Member
Member
Anthony Ball
Particitel International Limited Partnership.
Member
Member
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Audit and Compliance Committee
The Audit and Compliance Committee is formed by five members of the Board of Directors and is governed by the Norms of the Committee approved in December 2005. It meets regularly with the purpose of supervising the audit and internal control policies of Grupo ONO, among others. The decisions taken by this Committee are then analysed by the Board of Directors for approval or amendments.
Composition of the Audit and Compliance Committee as of 31 December 2012:
Name Position
Val Telecomunicaciones Cartera, S.L. Chairman
Tom Walker
Felipe Blanco
Member
Member
José Luis Nueno
Soren Oberg
Member
Member
B.2.2. Functions of the Audit and Compliance Committee.
Yes
To supervise the preparation process and monitor the integrity of financial information on the company and, if applicable, the group, reviewing compliance with regulatory requirements, the adequate boundaries of the scope of consolidation and correct application of accounting principles.
To regularly review internal control and risk management systems, so main risks are correctly identified, managed and notified.
X
X
To safeguard the independence and efficacy of the internal audit function; propose the selection, appointment, reappointment and removal of the head of internal audit; propose the department’s budget; receive regular report-backs on its activities; and verify that senior management are acting on the findings and recommendations of its reports.
To establish and supervise a mechanism whereby staff can report, confidentially and, if necessary, anonymously, any irregularities they detect in the course of their duties, in particular financial or accounting irregularities, with potentially serious implications for the firm.
X
X
To submit to the board proposals for the selection, appointment, reappointment and removal of the external auditor, and the hiring conditions.
To receive regular information from the external auditor on the progress and findings of the audit programme and check that senior management are acting on its recommendations.
To ensure the independence of the external auditor.
For groups, to encourage the group auditor to assume the responsibility of auditing the companies in the group.
X
X
X
X
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B.2.3. Description of the rules of organisation, functioning, and responsibilities allocated to each of the Committees.
Remuneration and Appointments Committee
In accordance with the terms of the Company Statutes, the Regulations for the Internal Functioning of the Board of Directors and the
Regulations for the Internal Functioning of the Remuneration and Appointments Committee, this committee is composed of five nonexecutive members of the Board of Directors, of which at least one will be an independent director. Another member will be one of the vice chairmen of the Board of Directors, if this position exists. It corresponds to the Board of Directors to appoint the other directors that must form part of the Committee.
The Remuneration and Appointments Committee does not have any executive capacity except when the Board of Directors expressly delegates a power to it. Except for this, its functions are internal control, and are informative and aimed at discussion.
The functions that correspond to the Remuneration and Appointments Committee include: a) Proposing to the Board of Directors the framework for compensation for the Chairman of the Board of Directors and the CEO of the Company and of any other Group companies, if applicable, and the distribution of the remuneration established by the General
Shareholder Meeting of the Company among members of the Board, in accordance with the situation of the sector and their dedication and responsibilities, and subject to the requirements established in the shareholder contract in force at any time for the adoption of these agreements by the Board of Directors. Proposing to the Board of Directors for the Board to propose to the Shareholder Meeting the total sum that, for all concepts, should be established as remuneration to be distributed among the directors, in its annual general meeting. b) Approving or reviewing the master contracts for the main managers of the Company and other Group companies. c) On the requirement of the Chairman of the Board of Directors, establish a succession plan for the CEO, and if necessary coordinate the search for a replacement, assessing and proposing to the Chairman the right candidates. d) Approving the maximum and minimum levels of gross annual compensation for the various bands in which the Group employees are included. Approving the remuneration of the senior managers who are hired. e) Approving the general policy of the Group on the variable remuneration awarded for meeting targets, ensuring that there is an appropriate relation between fixed and variable remuneration. f) Approving the salary reviews of senior management of the Group that include an extraordinary increase in their remuneration due to exceptional reasons.
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Corporate Governance Report g) Proposing to the Board of Directors the appointment of external advisers for this body, when they are considered necessary for adequate advice in matters of special importance. h) Reviewing, and if applicable proposing to the Board of Directors, the approval of loyalty plans for employees. i) Any other power delegated to the Remunerations and Appointments Committee by the Board, in the area of remuneration, appointment and human resources. j) Carrying out the functions of the Remunerations and Appointments Committee for any other company in Grupo ONO for which it is appropriate or necessary.
Audit and Compliance Committee
As established in the Company Bylaws, the Regulations for the Internal Functioning of the Board of Directors and the Regulations for the
Internal Functioning of the Committee, the Audit and Compliance Committee has no executive capacity except for those powers expressly delegated to it by the Board. Except for this, its functions and faculties are only of internal control, and are informative and aimed at discussion, with the purpose of proposing to the Board the adoption of any company agreements necessary.
The functions that correspond to the Audit and Compliance Committee include: a) Providing the Annual Accounts, and if applicable the bi-yearly or quarterly financial statements, that must be sent to regulators or supervisory authorities for the markets, informing the Board of Directors of any change in accounting standards and the balance sheet and off balance sheet risks of these. b) Proposing to the Board of Directors the appointment or substitution of the external auditor for approval by the General Shareholder
Meeting, and the fees for them, monitoring any situations that threaten their independence. c) Monitoring the development of the external audit.
d) Investigating, with the widest powers, any aspect of the financial, accounting, and risk control system of the Company or the Group. e) Propose to the Board the approval of the annual internal audit plan and monitor this. f) Informing the Board and formulating proposals for the Board about measures that it considers appropriate and in the area of audit, internal control system, and compliance with the legal norms for providing markets with transparent and accurate information.
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Corporate Governance Report g) Informing the Board of Directors in the process of selecting, appointing, renewing and removing the Internal Auditor, and in setting their compensation.
h) Carrying out the functions of Audit and Compliance Committee for any other company in Grupo ONO for which it is appropriate or necessary.
B.2.4. Advisory or consulting powers and, where applicable, the powers delegated to each of the committees.
Neither the Appointments and Remuneration Committee nor the Audit and Compliance Committee have executive capacity, unless the
Board of Directors expressly delegates a power to them. Except for this case, their functions are of internal control, to inform, and to discuss.
B.2.5. Existence of regulations governing the board committees, the place where they can be consulted, and any amendments
made during the year. Voluntary preparation of an annual report on the activities of each committee.
Both the Shareholder Agreement of 29 July 2005 and the Bylaws of the Company establish that the Board of Directors will create an Audit and Compliance Committee and a Remuneration and Appointment Committee.
Both Committees are governed by their respective Rules for Internal Functioning, approved by the Board on the proposal of the Committees themselves.
In both cases, the Rules for the Internal Functioning of the Board of Directors are applicable to the two Committees, “mutatis mutandis,” in all areas covered by these Rules that can be applicable to the Committees.
The full text of these documents is available for consultation in the “Virtual Board Room”.
No amendments have been made to the regulation of the Committees during the year.
B.2.6. . Composition of the Executive Committee in relation to composition of the Board.
Article 4.1 of the Shareholder Agreement of 29 July 2005 establishes that the Board of Directors will not appoint an Executive Committee.
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C. RELATED PARTY TRANSACTIONS
C1. Transactions of the company with its directors, significant shareholders or representatives on the Board, or with people related to these.
C2. Relevant transactions entailing a transfer of assets or liabilities between the company or its group companies and the significant shareholders in the company.
C3. Relevant transactions entailing a transfer of resources or liabilities between the Company or its group companies, and the company’s managers or directors.
C4. Any relevant transactions undertaken with other companies in its group that are not eliminated in the process of drawing up the consolidated financial statements and do not form part of the company’s ordinary business.
C1 to C4: See section: The Figures
C5. Members of the Board of Directors who have in the course of the year been in some situation of conflict of interest, in the terms of articles 227, 228, 229.1, 229.2, 229.3, 230.1 and 230.2 of the Law of Capital Companies (Article 127 of the Law on Corporations).
The director Val Telecomunicaciones Cartera, S.L is a company whose only shareholder is Val Telecomunicaciones, S.L., a minority shareholder in Grupo Corporativo ONO, S.A. This shareholder has presented a legal challenge against the resolution of the Board of
Directors which authorised the Company to subscribe a shareholder loan for a maximum of two hundred million euros (200,000,000 euros), regardless of which this loan has been subscribed, to a substantial degree, by this shareholder. Following the agreement reached between the company and the shareholder, the principal and part of the interest was capitalized in 2012, following which the shareholder abandoned the legal challenge.
C6. Mechanisms established to detect, determine and resolve the possible conflicts of interests between the Company and its directors, managers or significant shareholders.
Article 18 of the Regulations for the Internal Functioning of the Board of Directors establishes the following obligations for directors:
“ 18.1.- The directors will carry out their role with the diligence of a reasonable businessperson and a loyal representative, prioritising corporate interest ahead of their own interests, the interest of their companies, or of any third party. The actions of the directors must be aimed to achieve the profits of the Company by developing its activity and exploring new business opportunities that arise, subject to the voting majorities established in the Bylaws and in the current Rules, and the creation of value for the Company and its shareholders.
…
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18.3.- Subject to the terms of the Ethical Code or the Rules of Conduct, in no case can the directors use any form of information to which their position gives them access for their own benefit or that of a third party.
18.4.- Directors will not be able to use the name of the Company or any of the companies of Grupo ONO, or use their status as directors of the Company, to carry out transactions for themselves or for third parties, or to obtain a financial advantage for them or any related person. For the purposes of this article, related persons will be those included in item 5 of article 127 of the Law on Corporations or any norm that substitutes this law.
18.5.- No director can carry out, to their own benefit or that of a third party, investments or any transactions linked to the goods of the Company or any of the companies of Grupo ONO, of which they have become aware of due to their position, when the investment or the transaction has been offered to one or various of these companies or they are interested in it, unless the Company has decided against this investment or transaction without the influence of the director.
…
18.8.- The directors must inform the Board of Directors of any situation of direct or indirect conflict of interest that they could have with the Company. In all events, they must abstain from voting on specific resolutions in which there is a conflict of interest, direct or indirectly, between the director or a related person and the Company. In these cases, the director in question will not be considered when counting voting majorities. When the conflict of interest with the Company is permanent and not temporary, the director will be obliged to present their immediate resignation.
18.9.- The directors are required to state, at the time of their election, any possible legal or statutory incompatibilities for the exercise of their role in which they may be involved. When the cause of this incompatibility is supervening, they will be obliged to inform the Company immediately and present their resignation.
…
18.12.- The directors must disclose any stakes they have in the capital of a company with the same, similar or complementary activities as that of the corporate purpose of the company, and the positions they hold or their functions in the company, as well as the carrying out, individually or via a representative, of the same, similar or complementary type of activity as that of the corporate purpose. This information must be provided when requested by the Company, to be included in the annual report. Directors who are directors at a competing company and people who have any form of interests opposed to the interests of the Company will leave their position when requested to by any shareholder or director, with the agreement of the Shareholder Meeting.
18.13.- Directors must inform the Secretary of the Board of Directors if they or their spouses are involved in any of the incompatibilities established in community, national or regional legislation for employment with public administrations or incompatibilities for high office, with it being assumed that if no such disclosure is made, they are not incompatible.
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18.14.- The directors will not be able to make use of the assets of the Company or group companies for their own benefit or that of a third party.
”
Currently, a binding Code of Ethics is being prepared for employees of the Company and Group.
C7. Listing of more than one Group company in Spain.
Neither the Company or any Group company are listed.
D. RISK CONTROL SYSTEMS
D1. General description of risk policy in the company and/or its group, detailing and evaluating the risks covered by the system, together with evidence that the system is appropriate for the profile of each type of risk.
D2. Indicate if any of the different types of risk that affect the company have materialised in the year.
D1-D2: See: Management and Control of risks section
D3. Committee or other governing body in charge of establishing and supervising these control systems.
The risk management process involves, in different cases, the Board of Directors, the Audit and Compliance Committee, the Executive
Committee, the Risk Committee, the Personal Data Protection Committee and the Management of each area, responsible for identifying, monitoring and mitigating risks.
Board of Directors
The body with the highest responsibility for the identification of the main risks of the group.
Audit and Compliance Committee
The Audit and Compliance Committee assists the Board of Directors in its functions of monitoring the group, reviewing the internal control systems. The competences of this Committee are established in the Regulations for the Internal Functioning of the Board of Directors and in the Regulations for the Internal Functioning of the Committee itself.
The Internal Auditor in the current organisational structure is directly linked to the Board of Directors, on which it depends functionally and which it reports to, and it must inform and advise the Audit and Compliance Committee. The Internal Auditor of the Company has the responsibility of advising all levels of management, the Audit and Compliance Committee and, when so required, the Board of Directors, about the quality of the operations of the group, and mainly its control systems.
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Executive Committee
This Committee participates actively in the identification, assessment, definition, and execution of risk management policies, establishing specific measures to mitigate their impact on the achievement of the group’s goals.
Risk Committee
A functional Committee that is responsible for identifying, analysing, advising, and proposing to the Executive Committee and the Audit and
Compliance Committee mitigation measures for the risks identified.
Personal Data Protection Committee
This Committee is responsible for identifying, analysing, advising and proposing appropriate measures for the protection of personal data at
ONO and compliance with the Law on Data Protection (LOPD, in Spanish).
Business and Support Areas
Responsible for identifying, reporting and assessing risks related to their business and support processes. In addition, they manage risks in accordance with the criteria approved by the Executive Committee on the proposal of the Risks Committee.
D4. Processes for compliance with the regulations applicable to the company.
ONO operates in the telecommunication sector, which is subject to regulation. The specific controls on this sort of question are led by the
Regulation and Competition team of the General Secretariat.
In 2011, a Legal Compliance Manager was appointed to ensure compliance with legislation in other areas of the law.
In 2012, the company also approved a Code of Ethics applicable to the directors, managers and employees, and established an Ethics
Committee to manage all aspects concerning its implementation and compliance with the Code.
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E. GENERAL SHAREHOLDER MEETING
The General Shareholder Meeting is the sovereign body of the Company, with the power to decide over all the questions that fall within its competence, without any limits other than those due to the individual rights of shareholders and the agreements adopted by the directors in the exercise of their respective competences.
It corresponds to the Shareholder Meeting, in accordance with the law, to decide about increasing and reducing share capital, issuing bonds, transforming, merging or winding up the Company, amending the statutes, censuring the management, approval of the annual accounts and management report, the distribution of results, appointment and dismissal of members of the Board of Directors, and the appointment of the Company’s auditors, if obliged to in accordance with the Law.
E1. Indicate the quorum required for constitution of the General Shareholders’ Meeting established in the company’s bylaws.
Describe how it differs from the system of minimum quorums established in the law on corporations.
There are no differences between the minimum established in the Law and the quorum required for the Shareholder Meeting.
E2. Describe any differences between the company’s system of adopting corporate resolutions and the framework set forth in the law.
Article 14 of the Company Bylaws, concerning debates at the Shareholder Meeting and voting, establishes that, among others, the debates at the Meeting will be directed by their Chairman, and agreements will be made using a majority of votes, with each share having one vote, subject to those questions for which the statutes or the law establishes that a qualified majority is needed for a valid resolution. However, for the ordinary or extraordinary Shareholder Meeting to be able to agree validly the issue of securities, obligations that are convertible or not, bonds, or any class of financial instrument that is convertible or exchangeable into shares of the Company, or that give their holders a preferential right to these shares; increase or reduction in share capital; transformation, merger, spin off, winding up or liquidation
(except, for the last two, when these are legally enforced); transfer of registered headquarters to another municipality; amendment of the corporate purpose and, in general, any amendment to the Company Statutes; approval of dividend policy and the distribution of these; and authorisation to acquire treasury stock, the favourable vote of at least two thirds (2/3) of the total share capital with voting rights will be required.
Subject to the provisions of the previous paragraph, and in accordance with Article 105.2 of the Law on Corporations (currently Article
188 of the Spanish Companies Act),, no shareholder or group of shareholder companies that belong to the same business group as defined by Article 4 of the Law on Securities Markets, regardless of the percentage of capital with voting rights that they own, and that has been delegated to them, can issue a number of votes higher than the level that would correspond to one third (1/3) of the ordinary shares of the
Company. For this purpose, a group of companies will refer to that established in Article 4 of the Law on Securities Markets of 28 July 1988, and a person will be understood to control one or various entities when that person and the corresponding entity or entities comply with any of the conditions established in this Article 4.
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In the days prior to a General Shareholder Meeting, the Chairman can require written disclosure, within 48 hours of the receipt of this requirement by the shareholders, of the shares that are held directly and shares that are held by individuals or legal bodies that are directly or indirectly controlled by shareholders, as well as proxies, agreements on vote syndication, or any other agreement to vote jointly that is obligatory for the shareholders. The written response, which must be certified, must be accurate and refer both to the date of the certification and the date of the General Shareholder Meeting in question.
E3. List all shareholders’ rights regarding the General Shareholders’ Meetings other than those established under the
Spanish Companies Act.
Among the rights established for shareholders in Article 93 of the Spanish Companies Act those relating to General Shareholder Meetings include: attending and voting in shareholder meetings, contesting any resolutions made, and information.
The rights of shareholders in the Company in relation to General Shareholder Meetings are fully respected by the Company, in the terms established, in current legislation and in the Company Bylaws.
Shareholders’ rights to information.
The Department for Investor and Shareholder Relations is available to shareholders to facilitate all the information on the General
Shareholder Meeting that they may require. Prior to the General Shareholder Meeting, it sends to the shareholders who have requested it a copy of the annual accounts and relevant documentation for the order of the day.
In addition, the Company responds to requests for information that shareholders make concerning business included in the order of the day of the General Shareholder Meeting, both before the meeting and by speaking in the meeting itself, which is open to all shareholders at the
Meeting who wish to speak, and who are always responded to in the periods established in Article 197 of the Spanish Companies Act.
Attendance at General Shareholder Meetings. Voting rights.
Attendance rights are discussed in section E9.
Each share has a voting right.
Proxy voting at the General Shareholder Meeting.
Proxy voting is discusses in section E10.
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E4. Measures taken to encourage shareholder participation in General Shareholder Meetings.
The Company Bylaws allow the issue of votes by post, electronically, or any other form of remote communication, as long as (i) the identity of the subject exercising their voting right is duly guaranteed, and (ii) the Company is aware of this at least one hour before the start of the meeting, as detailed in section E10.
E5. Indicate whether the General Shareholder Meetings is presided by the Chairman of the Board of Directors. List measures, if any, adopted to guarantee the independence and correct operation of the General Shareholders’ Meeting.
Article 9 of the Company Bylaws establishes that the Chairman and Secretary of the General Shareholder Meetings will be those of the
Board of Directors. In their absence, the Vice Chairmen or Vice Secretaries, respectively, starting with the first Vice Chairman and the first
Vice Secretary, and, if these positions do not exist, the oldest and/or the youngest director at the Meeting will respectively act as Chairman and Secretary.
Once the Meeting has formulated a list of attendees, the Chairman will declare the Meeting valid and constituted. The Bylaws establish that the Chairman will direct the meeting, with debates held following the order of the day; he will provide the floor to the shareholders who request it at the appropriate time, and can withdraw this when he believes that a point has been sufficiently discussed, and will indicate when the resolutions must be voted on and announce the results of the votes.
In addition, to guarantee the independence and correct operation of the General Shareholder Meeting, it should be noted that the
Chairman of the Board of Directors generally requires the presence of a Notary to prepare the minutes of the General Shareholder Meeting.
E6. Amendments made in the year to the Regulations for the General Shareholder Meeting.
As the company is not listed, it is not required to have Regulations for the General Shareholder Meeting.
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E7. Attendance at General Shareholder Meetings in the year.
Date of General Shareholder Meeting
% attending in person
09-02-2012
0.00
% proxy 78.88%*
% remote voting
Electronic votes
Others
0.00
Total 78.88%
Date of General Shareholder Meeting
% attending in person
20-06-2012
0.00
% proxy 91.67%*
% remote voting
Electronic votes
Others
0.00
Total 91.67%
*Excluding treasury stock.
E8. Resolutions adopted at the General Shareholders’ Meetings held during the year and the percentage of votes with which each resolution was adopted.
General Shareholder Meeting – 9 February 2012
Points of Order of the Day Summary of proposal
Cese y, en su caso, nombramiento de
I administradores
Result
Votes in favour Votes against Abstentions of vote
78,88% 0 0 Aprobado
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Junta General de Accionistas – 20 de junio de 2012
V
VII
VII
VIII
IX
X
III
IV
Points of Order of the Day Summary of proposal
I
II
Approval of annual individual accounts for 2011
Approval of company management in 2011
Distribution of result in 2011
Approval of annual consolidated accounts of the Company and subsidiaries in 2011 and distribution of the consolidated result
Result
Votes in favour
91.67%
91.67%
91.67%
Approval of consolidated management in 2011
Capital increase by €168,745,518
91.67%
91.67%
Delegation of powers for previous item 91.67%
Re-appointment of external auditors for verification of annual accounts for 2012. 79.93%
Dismissal, renewal and/or appointment of directors
Approval of the maximum total annual remuneration, for all concepts, to be received by directors
91.67%
91.67%
91.67%
Votes against
0
0
0
0
0
0
0
8.56%
0
0
Abstentions
0
0
0
0
0
0
0
3.17%
0
0 of vote
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
E9. Restrictions in the bylaws on the minimum number of shares needed to attend the General Shareholder Meeting.
Shareholders who have the right to attend the meeting can organise proxy voting with another person, who may or may not be a shareholder of the Company. Likewise, it will be permitted to aggregate shares in order to have the right of attendance. Proxy votes must always be awarded in writing or by remote communication, with the same rules as for issuing votes, and must be unique to each shareholder meeting.
This requirement is in accordance with the terms of Article 179.2 of the Spanish Companies Act.
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E10. Policies followed by the Company in regards to proxy votes at the General Shareholder Meeting.
Shareholders who have the right to attend the meeting can organise proxy voting with another person, who may or may not be a shareholder of the Company. Likewise, it will be permitted to aggregate shares in order to have the right of attendance. Proxy votes must always be awarded in writing or by remote communication, with the same rules as for issuing votes, and must be unique to each shareholder meeting.
With the same requirements for share ownership as those referred to in section E9, shareholders will be able to cast a valid vote on the proposals included in the points of the order of the day of any class of Shareholder Meeting, by postal, electronic or other remote voting, as long as (i) the identity of the subject exercising their right to vote is duly guaranteed, and (ii) the Company is aware of this at least one hour before the start of the meeting.
In order to duly guarantee the identity of the subject who will exercise their right to vote:
Individual shareholders:
- If a postal vote is cast, this must be in writing, clear, and with the signature of the shareholder certified by a notary. This can also be done using a notarial certificate or a public deed.
- If the vote is cast using e-mail, this vote must be accompanied by an advanced electronic signature based on a recognised certificate that complies with the requirements of the Spanish legislation that is applicable.
- If the vote is cast by any other form of remote communication, it must comply with the requirements established by the Board of
Directors for this form of communication.
Shareholders who are legal entities:
- If a postal vote is cast, this must be in writing, clear, and with the signature of the representative casting the vote certified by a notary.
This vote must be accompanied by the certification of a notary of the delegation to the representative of the shareholder to cast the vote, in accordance with legislation. If the vote is to be cast by the governing body of the legal entity, a certification of the agreement on the vote will suffice, issued by a person with authority to certify this, and signatures certified by a notary. This can also be done using a notarial certificate or a public deed.
- If the vote is cast by email, then it must be accompanied by an advanced electronic signature based on a recognised certificate that complies with the requirements of the Spanish legislation that is applicable, corresponding to the person who, by any medium and prior to the General Shareholder Meeting, provides a verifiable accreditation of the proxy for this vote, in accordance with the legislation in force, or, if cast directly by the governing body, corresponding to the person who has the authority to certify at the legal entity, in accordance with the applicable legislation.
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- If the vote is cast by any other form of remote communication, it must comply with the requirements established by the Board of
Directors for this form of communication.
Shareholders who cast their votes remotely must be included as present when calculating the valid constitution of the General Shareholder
Meeting.
E11. Policy of institutional investors to participate in the decision-making process of the Company.
This item is not applicable.
E12. Address and access to corporate governance content on the company website.
As the company is not listed, the legislation on these instruments of information is not applicable. As the shareholders of the Company are identified and have access to the Chairman, the secretary of the Board of Directors, and the Department of Investor and Shareholder
Relations, the Company has not considered it necessary so far to include corporate governance information on its website.
However, there is a dedicated section on our website that contains information of interest to shareholders and investors
( http://www.ono.es/sobreono/ ).
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The Figures
Fibre isn’t just a good idea... it’s also proved to be an excellent business.
1,573 million euros in revenues in 2012.
1,573,000,000
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The Figures
GRUPO CORPORATIVO ONO, S.A.
AND SUBSIDIARIES
(ONO GROUP)
Consolidated Annual Accounts and Consolidated Management Report for the year 2012
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The Figures
Audit report
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A free translation of the 2012 consolidated annual accounts originally issued in Spanish and prepared in accordance with International Financial Reporting Standards.
In the event of a discrepancy, the Spanish language version prevails.
The Figures
Contents
Consolidated balance sheet
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated annual accounts:
1. General information
2. Summary of significant accounting policies
2.1. Basis of presentation
2.2. Going Concern
2.3. New standards, amendments and interpretations issued
2.4. Consolidation
2.5. Segment reporting
2.6. Foreign currency translation
2.7. Property, plant and equipment
2.8. Intangible assets
2.9. Interest costs
2.10. Impairment losses on non-financial assets
2.11. Financial assets
2.12. Offsetting financial instruments
2.13. Impairment of financial assets
2.14. Derivative financial instruments and hedging activities
2.15. Inventories
2.16. Trade receivables 192
2.17. Cash and cash equivalents 192
2.18. Share Capital
2.19. Trade payables
193
193
2.20. Borrowings
2.21. Financial liabilities at fair value through profit and loss
2.22. Received Grants
2.23. Current and deferred income tax
193
194
195
195
186
187
187
188
190
190
191
192
180
180
180
181
183
184
185
185
Page
172
174
175
176
177
179
179
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The Figures
Contents
2.24. Employee benefits
2.25. Provisions
2.26. Revenue recognition
2.27. Leases
2.28. Exceptional items
3. Financial risk management
3.1. Financial risk factors
3.2. Capital management
3.3. Fair value estimation
4.
5.
Critical accounting estimates and judgements
Segment information
6.
7.
8.
9.
Property, plant and equipment
Intangible assets
Financial instruments by category
Other financial assets
10. Inventories
11. Trade and other receivables
12. Cash and cash equivalents
13. Equity
14. Trade and other payables
15. Borrowings
16. Derivative financial instruments
17. Long term incentive plan
18. Deferred income tax
19. Provisions for other liabilities and charges
20. Deferred income
21. Income and expenses
22. Finance result
23. Income tax and tax situation
24. Contingencies
25. Commitments
236
238
239
240
243
244
215
215
216
217
220
222
233
234
203
205
206
208
209
211
212
214
Page
196
196
197
198
198
199
199
248
248
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The Figures
Contents
26. Related parties
27. Board of Directors and Senior Management
28. Environmental information
29. Auditors fees
30. Subsequent events
Page
249
251
255
256
256
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012 AND 31 DECEMBER 2011 (Thousands of Euros)
ASSETS
NON - CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred income tax assets
Available-for-sale financial assets
Derivative financial instruments
Other financial assets
CURRENT ASSETS
Inventories
Trade and other receivables
Other financial assets
Derivative financial instruments
Prepayments and accrued income
Cash and cash equivalents
TOTAL ASSETS
Notes 1 to 30 are an integral part of these consolidated annual accounts
Note 31.12.2012 31.12.2011
6
7
18
8
3,976,448
110,215
1,075,701
544
4,113,290
95,763
1,084,913
557
16 8,403 11,321
9 13,083 9,604
5,184,393 5,315,448
10 1,366 1,353
11
9
16
151,955
11,793
1,249
1,876
145,662
10,274
-
1.937
12 96,625 184,901
264,864 344,127
5,449,257 5,659,575
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012 AND 31 DECEMBER 2011 (Thousands of Euros)
EQUITY AND LIABILITIES
EQUITY
Equity attributable to owners of the parent
Share Capital
Share premium
Own shares
Other reserves
Retained earnings
Non-controlling interests
TOTAL EQUITY
NON-CURRENT LIABILITIES
Borrowings
Other non-current liabilities
Deferred income tax liabilities
Derivative financial instruments
Deferred income
Provisions for other liabilities and charges
Government deferred grants
CURRENT LIABILITIES
Trade and other payables
Borrowings
Derivative financial instruments
Other current liabilities
Deferred income
Provisions for other liabilities and charges
TOTAL EQUITY AND LIABILITIES
Notes 1 to 30 are an integral part of these consolidated annual accounts
Note
13.a
13.a
13.b
13.e
31.12.2012
1,817,270
362,776
(27,861)
(3,316)
31.12.2011
1,648,525
362,776
(27,861)
(775)
13.f (662,466) (714,777)
13.g
1,486,403 1,267,888
5,168 4,573
1,491,571 1,272,461
15
18
16
19
14
15
16
20
3,378,750
954
38,004
15,849
278
48,653
178
3,482,666 3,677,669
337,275
82,040
2,153
2,521
45,903
3,583,524
1,286
37,244
-
281
54,817
517
318,181
208,075
-
2,365
155,662
19 5,128 25,162
475,020 709,445
5,449,257 5,659,575
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012 AND 2011 (Thousands of Euros)
Net revenue
Work carried out by the Company for its assets
Other revenue
Cost of sales
Staff costs
Other operating expenses
Depreciation and amortization
Overprovisions
Impairment and gains or losses on disposal of fixed assets
Other results
OPERATING RESULT
Finance income
Finance expenses
Fair value losses on financial instruments
Impairment and results from financial instruments disposals
Exchange differences
NET FINANCIAL RESULT
CONSOLIDATED RESULT BEFORE INCOME TAX
Income tax
RESULT FOR THE YEAR
Attributable to:
Owners of the parent
Non-controlling interest
Notes 1 to 30 are an integral part of these consolidated annual accounts
22
23
Year ended 31 December
Note 2012 2011
5
21.b
1,573,251
59,991
1,485,419
62,377
21.c
21.d
21.e
21.f
339
(426,657)
(156,079)
(298,587)
446
(316,816)
(160,958)
(321,931)
6,7
19
6,7
21.g
(389,869)
-
(30,638)
53,936
385,687
(379,429)
9,015
(9,638)
(1,059)
367,426
8,763
(323,948)
(3,751)
(652)
5,856
(313,732)
71,955
(19,049)
52,906
1,898
(285,553
-
215
3,178
(280,262)
87,164
(36,191)
50,973
52,311
595
50,359
614
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2012 AND 2011 (Thousands of Euros)
Result for the year
Other comprehensive income
Cash flow hedges
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Owners of the parent
Non-controlling interest
Notes 1 to 30 are an integral part of these consolidated annual accounts
Year ended 31 December
2012 2011
52,906 5,973
(2,541)
(2,541)
50,365
49,770
595
276
276
51,249
50,635
614
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2012 AND 2011 (Thousands of Euros)
Attributable to owners of the parent
Declared Share Own Other Retained
Share Capital Premium Shares Reserves earnings
(Nota 13.a) (Nota 13.a) (Nota 13.b) (Nota 13.e) (Nota 13.f) Total
Non-controlling
interest
(Nota 13.g)
Total
Equity
Balance at
31 December 2010
Comprehensive income
Profit or (loss)
Other comprehensive income
Cash flow hedges
1,648,525 362,776 (27,861)
- - -
(1,051) (765,136) 1,217,253
- 50,359 50,359
3,959 1,221,212
614 50,973
- - - 276 - 276 - 276
Total other comprehensive - - -
Total comprehensive income
Balance at
- - - 276 50,359 50,635 614 51,249
31 December 2011
Comprehensive income
Profit or (loss)
1,648,525 362,776 (27,861)
- - -
(775) (714,777) 1,267,888
- 52,311 52,311
4,573 1,272,461
595 52,906
Other comprehensive income
Cash flow hedges - - - (2,541)
Total other comprehensive - - -
- (2,541) - (2,541)
Transactions with owners of the parent
Capital increases /
(decreases) (note 13.c)
Total transactions with owners of the parent
Balance at
31 December 2012
168,745
168,745
-
-
-
-
-
-
-
-
168,745
168,745
-
-
168,745
168,745
1,817,270 362,776 (27,861) (3,316) (662,466) 1,486,403 5,168 1,491,571
Notes 1 to 30 are an integral part of these consolidated annual accounts
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The Figures
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177
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011 (Thousands of Euros)
Year ended 31 December
Note 2012 2011
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment
Acquisition of intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from assets classified as held for sale
Payments for other financial assets
Proceeds from other financial assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from New Senior Bank Facility
Reimbursement of 2005 Senior Bank Facility
Proceeds from Senior Secured Notes
Proceeds from Senior Subordinated Notes
Reimbursement of Senior Subordinated Notes
Reimbursement of ICO participative loan
Reimbursement of other credit lines
Reimbursement of subsidised loans
Reimbursement of other debts
Net cash used in financing activities
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes 1 to 30 are an integral part of these consolidated annual accounts
6
7
15.c
15.c
15.d
15.e
15.e
15.a
(255,417)
(43,989)
1,289
-
(16,038)
3,319
(310,836)
1,075,700
(2,136,236)
950,597
-
-
-
(971)
(7,569)
(1,610)
(120,089)
(88,276)
184,901
96,625
(235,817)
(55,910)
21
15,652
(11,817)
343
(287,528)
-
(330,000)
300,000
460,575
(450,000)
(10,000)
148
(9,955)
(2,872)
(42,104)
125,561
59,340
184,901
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
1. General information
The main activity of Grupo Corporativo ONO, S.A. and its subsidiaries (hereinafter, “the Group”) is constructing and operating fibre networks in order to provide integrated television and telecommunications services in Spain by means of the transmission of images, voice and data.
The Group, which operates in the market under the trade mark ONO, mainly comprises operating companies that are legally authorised to provide telecommunications and audiovisual services.
Grupo Corporativo ONO, S.A. (hereinafter, “the Parent Company”) was incorporated on 31 May, 2000 for an indefinite term. The Parent
Company has its registered offices and tax address at Edificio Belagua, calle Basauri, 7-9, urbanización La Florida, Aravaca, Madrid.
The list of the companies that form the Group and the relevant information thereon is as follows:
Subsidiaries
Company
ONO Midco, S.A.U.
Cableuropa, S.A.U.
Tenaria, S.A.
Spanish Cable Holding, S.A.U.
Other companies
Company
Madrid Sistemas de Cable, S.A.
(1)
(1) Inactive company.
Activity
Telecommunications
Telecommunications
Telecommunications
Telecommunications
Activity
Registered office
Madrid
Madrid
Pamplona
Madrid
Registered office
Telecommunications Madrid
All subsidiaries close the financial year at 31 December.
The company Madrid Sistemas de Cable, S.A is registered at acquisition cost.
% direct or indirect stake at 31.12.2012
100.00
100.00
92.81
100.00
% direct or indirect stake at 31.12.2012
%
% direct or indirect stake at 31.12.2011
100.00
100.00
92.81
100.00
direct or indirect stake at 31.12.2011
100.00 100.00
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated annual accounts are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1. Basis of presentation
The figures shown in the document, that comprise these consolidated annual accounts are the consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flow and notes, are expressed in thousands of Euros, unless otherwise stated.
The consolidated annual accounts of the Group have been prepared in accordance with International Financial Reporting Standards adopted by the European Union (IFRS-UE, hereinafter “IFRS”) and IFRIC interpretations. The consolidated annual accounts have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value.
The preparation of the annual accounts under IFRS requires the Group to use certain accounting critical estimates. It also requires to the Management to exercise his judgment when applying Group’s accounting policies. In Note 4 are outlined those areas involving a higher degree of judgment or complexity, or those in which the assumptions and estimates are significant to the consolidated financial statements.
These consolidated annual accounts have been prepared by the Board of Directors on 28 February 2013. These consolidated annual accounts for the year 2012 have not been yet approved by the General Shareholders Meeting of the Parent Company. However, the Board of Directors expects them to be approved without amendments.
2.2. Going Concern
At 31 December 2012, the Group has €210 million of negative working capital (365 million at 31 December 2011), which is a regular circumstance of the Group´s business and financial structure, and does not offer any impediment for the business from being carried out normally.
At 31 December 2012 and 31 December 2011 all short term commitments had been settled within their periods, and it is expected that all debt maturities within the next twelve months will be settled in the required periods.
The Directors consider that the following factors reasonably mitigate any uncertainty on the capacity of the Group to generate enough resources in order to operate under a going concern basis:
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
- The telecommunications sector has a short average collection period (less than 30 days) when average payment period is longer, which enables to generate operating cash to settle current payments.
- The Group is generating positive operating cash flow
- From 2009 to 2012 the Group has carried out a refinancing process, that ended in 2012 with the signing of a new Credit
Agreement(hereinafter ‘New Senior Bank Facility’) as described in note 15.
- The Group has the shareholders financial support. On 20 June 2012, according to the proposal of Board of Director’s, the General
Shareholders Meeting of Grupo Corporativo ONO S.A. approved a share capital increase by offsetting the €125 million corresponding to the principal of the participative loan received from its shareholders, plus accrued interest until 30 June 2011, which amounted to
€43,745 thousand (notes 13 and 15).
- The Group has cash and financing facilities available to cover any payments arising in the normal course of its business.
Accordingly, the Directors have prepared these consolidated annual accounts based on the principle of going concern.
2.3. New standards, amendments and interpretations issued
As of today, the EU has adopted existing new standards, amendments and interpretations applicable to the Group, mandatory from all financial years starting on 1 January 2012.
Amendments
IFRS 7
Description
Financial instruments; Disclosures on derecognition
Effective for annual periods beginning on or after
1 July 2011
The adoption of the standards listed above has not resulted on a significant impact in the consolidated annual accounts of the Group.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
At the date of issuance of these consolidated annual accounts new and revised standards, amendments and interpretations that have been issued by the IASB and the IFRS Interpretations Committee, although the Group has not yet adopted them:
Amendments
IFRS 7
IFRS 7 (*)
IFRS 9 (*)
IFRS 9 (*)
IFRS 10
IFRS 11
IFRS 12
IFRS 13
IAS 1
IAS 12
IAS 27
IAS 28 (*)
IAS 19
IAS 32
Description
Financial instruments; Disclosures on asset and liability offsetting
Financial instruments; Effective date and transition disclosures
Financial instruments; Classification and measurement
Financial instruments; Effective date and transition disclosures
Consolidated financial statements
Joint arrangements
Disclosures of interests in other entities
Fair value measurement
Financial statement presentation; regarding ‘other comprehensive income’
Deferred tax: Recovery of Underlying Assets
Separate financial statements
Associates and joint ventures
Employee benefits
Financial instruments: Presentation on asset and liability offsetting
Effective for annual periods beginning on or after
1 January 2013
-
1 January 2013
-
1 January 2014
1 January 2014
1 January 2014
1 January 2013
1 July 2012
1 January 2013
1 January 2014
1 January 2014
1 January 2013
1 January 2014
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2012 improvement projects, includes explanations on the following standards:
IFRS 1 (*) First time adoption of International Financial Reporting Standards
IAS 1 (*)
IAS 16 (*)
Financial statement presentation
Property plant and equipment
IAS 32 (*)
IAS 34 (*)
Financial instrument; Presentation
Interim financial reporting
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
New standards and amendments
IFRS 1 (*) Accounting for government grants and disclosure of government assistance
IFRS 10 (*)
IFRS 10 (*)
Consolidated financial statements – transitional provision
Consolidated financial statements – investment companies
IFRS 11 (*)
IFRS 12 (*)
IFRS 12 (*)
Joint arrangements – transitional provision
Disclosures of interests in other entities – transitional provision
Disclosures of interests in other entities statements – investment companies
(*) Not yet adopted by the European Union.
1 January 2013
1 January 2013
1 January 2014
1 January 2013
1 January 2013
1 January 2014
The Group is analysing the possible impact that the application of the standards described above will have on the consolidated annual accounts and is not likely to be significant.
2.4. Consolidation
a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The Group uses the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
b) Transactions and non-controlling interests
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from noncontrolling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit and loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in other comprehensive income are reclassified to profit and loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit and loss where appropriate.
2.5. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2.6. Foreign currency translation
a) Functional and presentation currency
The euro is the functional and presentation currency of the Parent Company. The consolidated annual accounts are presented in thousands of Euros, unless otherwise stated.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges. Foreign exchange gains and losses are presented in the income statement under the caption ‘Net financial result’.
2.7. Property, plant and equipment
The items of property, plant and equipment are recognised at their acquisition price or production cost, less accumulated depreciation and the cumulative amount of the recognised losses.
The amount of work carried out by the Group for its own property, plant and equipment is calculated by adding the direct or indirect costs attributable to the assets to the acquisition price of the consumables.
If applicable, the acquisition price includes the initial estimate of the costs associated to dismantling or removing the asset and the restoral of its location when, as a result of use of the asset, the Group is obliged to take said actions.
The costs of expansion, modernisation or improvement of property, plant and equipment are included in the asset as an increase in its value only when they represent an increase in its capacity or productivity or a lengthening of its useful life, provided that it is possible to estimate the carrying amounts of the assets that are removed from the inventory because they have been replaced.
Recurring repair and maintenance expenses are charged to the income statement in the year in which they are incurred.
Depreciation of property, plant and equipment, except for land, which is not depreciated, is calculated systematically using the straight-line method over its estimated useful life, taking the impairment actually suffered due to operation, use and enjoyment into account.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The estimated useful lives are:
Technical facilities
Indefeasible right of use and infrastructure leases
Equipment at the client’s facilities
Data-processing equipment
Other property, plant and equipment
Estimated years of useful life
10-35
15-30
5.5
4-5
6-10
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Indefeasible right of use and infrastructure leases mainly relates to the amounts under contracts for the use of fibre optic and telecommunications infrastructure, less the accumulated amortization and the cumulative amount of the impairment adjustments recognised.
Costs incurred under the contracts assigning the use of fibre optic and infrastructure are amortised on a straight-line basis in accordance with the terms of the respective contracts, which are between 15 and 25 years, except for contracts signed with electricity companies assigning the use and excess capacity rights of fibre optic networks, which are amortised over a maximum period of 30 years.
Gains and losses on the disposal of property, plant and equipment are calculated by comparing the income obtained from the sale with the carrying amount and are recorded in the income statement, under the caption ‘Impairment and gain or losses on disposal of fixed assets’.
2.8. Intangible assets
Intangible assets are initially recognised at their acquisition or production cost when they are internally developed, and are subsequently shown at cost less their accumulated amortization and any impairment losses they may have suffered.
The main items included under this caption are the following:
a) Administrative concessions
This mainly includes the expenses incurred in preparing the bids that are submitted in tenders to obtain authorisation as a cable telecommunications operator and mobile spectrum licences in the different areas.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Administrative concessions are shown in the assets at cost less accumulated amortization and the accumulated amount of the impairment adjustments recognised.
Administrative concessions are amortized on a straight-line basis over 20-25 years.
b) Computer software
Computer software licences acquired from third parties are capitalised on the basis of the costs incurred in acquiring them and preparing them to use the specific programme. These costs are amortized over their estimated useful lives (which do not exceed 4 years).
Expenses related to computer software maintenance are recognised as an expense when incurred.
c) Subscriber acquisition costs
It mainly relates to the payment of commissions incurred in obtaining new subscribers. These costs are amortized on a straight-line basis in accordance with the average useful life of the client, estimated at 5.5 years.
2.9. Interest costs
Finance costs directly attributable to the acquisition or construction of fixed assets that require a period of longer than one year to come into use is included in their cost until they become operative.
2.10. Impairment losses on non-financial assets
Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Non-financial assets other than goodwill that had suffered an impairment are reviewed for possible reversal of the impairment at each balance sheet date.
Contact
Information
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2.11. Financial assets
The Group classifies its financial assets in the following categories: at fair value through profit and loss, loans and receivables, financial assets held for sale and hedging derivatives. The classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
a) Financial assets at fair value through profit and loss
Financial assets at fair value through profit and loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.
Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit and loss’ category are presented in the income statement within ‘Fair value losses on financial instruments’ in the period in which they arise.
b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable reimbursements that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. The loans and receivables are included in ‘Trade and other receivables’, ‘Other financial assets’ and ‘Cash and cash equivalents’ in the balance sheet (notes 2.16 and 2.17).
These financial assets are recognised initially at fair value, including any transaction costs directly attributable to them, and subsequently measured at amortized cost, recognising the interest accrued in accordance with the effective interest rate.
Deposits given included under ‘Other financial assets’ are amounts paid under operating leases. The difference between their fair value and the amount paid is considered an advance lease payment that will be taken to the income statement during the lease term. When estimating the fair value of deposits given, the remaining period will be the minimum contractual term committed during which the amount cannot be refunded.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. Financial assets which the Company intends to hold for an unspecified period of time and could be sold at any time are classified as available-for-sale. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.
Regular purchases and sales of financial assets are recognised on the trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets carried at fair value through profit and loss are initially recognised at fair value in equity. When fair value cannot be determined, they will be recognised at transaction cost.
At 31 December 2012 the Group has registered available-for-sale financial assets for an amount of €544 thousand (€557 thousand at 31
December 2011). These assets correspond to unlisted securities in an active market, with a fair value that cannot be determined, and which is recognised at cost.
Dividend income from financial assets at fair value through profit and loss is recognised in the income statement as part of ‘Other income’ when the Group’s right to receive payments is established.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
d) Audiovisual productions
Mainly relates to the investment made by the Group in film productions investments, registered under the caption ‘Other financial assets’.
Investments in audiovisual production are carried at nominal value, both initially and in subsequent periods, as long as the difference with its fair value is not significant.
At the year end, at least, the necessary value adjustments are made to account for impairment when there is objective evidence that all receivables will not be collected.
The amount of the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate prevailing at the date of initial recognition. Value adjustments, and reversals, where applicable, are recognised in the income statement.
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189
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2.12. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention of the Group, to settle on a net basis or realise the asset and settle the liability simultaneously.
2.13. Impairment of financial assets
a) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
- Significant financial difficulty of the debtor;
- A breach of contract, such as a default or delinquency in interest or principal payments;
- The Group, for economic or legal reasons relating to the debtor’s financial difficulty, granting him a concession that the lender would not otherwise consider;
- It becomes probable that the debtor will enter bankruptcy or other financial reorganisation;
- The disappearance of an active market for that financial asset because of financial difficulties; or
- Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including adverse changes in the payment status of debtors in the portfolio; and national or local economic conditions that correlate with defaults on the assets in the portfolio.
The Group first assesses whether objective evidence of impairment exists.
For receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.
Report
The Figures
190
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
b) Assets classified as available for sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss – is removed from equity and recognised in the consolidated income statement.
Impairment losses recognised in the consolidated income statement on equity instruments are not reversed through the consolidated income statement.
2.14. Derivative financial instruments and hedging activities
Derivatives are recognised at fair value both initially and when subsequently re-measured, being shown as financial assets or financial liabilities depending on whether the fair value is positive or negative, respectively. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of derivative instruments used for hedging purposes and trading derivatives are disclosed in note 16. Movements on the hedging reserve in other comprehensive income are shown in note 13. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement under the caption ‘Net financial result’.
Amounts accumulated in equity are reclassified to profit and loss in the periods when the hedged item affects profit and loss.
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The Figures
191
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
2.15. Inventories
Inventories are stated at the lower of cost and net realisable value. When the net realisable value of inventories is below cost, the necessary value adjustments are made and an expense is recorded in the income statement. If the circumstances that caused the value adjustment cease to exist, the adjustment is reversed and recognised as income in the income statement.
Audiovisual productions which production costs are known and are ready for immediate commercialization in the following twelve months are registered under ‘Inventories’ caption as audiovisual rights. Those amounts are transferred to the income statement in the moment that the Group delivers the episodes.
2.16.Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Notwithstanding the foregoing, trade receivables maturing at not more than one year without a contractual interest rate are stated, both initially and subsequently, at their face value when the effect of not discounting the cash flows is not significant.
2.17. Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other shortterm highly liquid investments with original maturities of three months or less.
Report
The Figures
192
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2.18. Share Capital
The share Capital is represented by ordinary shares.
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
When any group company purchases the company’s equity share capital (own shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders.
2.19. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Notwithstanding the foregoing, trade payables maturing at not more than one year without a contractual interest rate are stated, both initially and subsequently, at their face value when the effect of not discounting the cash flows is not significant.
2.20. Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months as from the balance sheet date.
The company shall remove a financial liability from its statement of financial position when the obligation specified in the contract is discharged, or cancelled or expires.
Report
The Figures
193
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
An exchange between an existing borrower and lender of debt instruments with substantially different terms shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability or a part of it (whether or not attributable to the financial difficulty of the debtor) shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
For the purpose of the previous paragraph, the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
2.21. Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss are financial liabilities held for trading. A financial liability is classified in this category if acquired principally for the purpose of selling in the short term or are part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking, as at fair value through profit and loss provided that doing so results in more relevant information.
Liabilities in this category are classified as current liabilities if expected to be settled within 12 months; otherwise, they are classified as non-current.
Financial liabilities carried at fair value through profits or losses are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial liabilities at fair value through profit and loss are subsequently carried at fair value.
Gains or losses arising from changes in the fair value of the ‘financial liabilities at fair value through profit and loss’ category are presented in the consolidated income statement in the period in which they arise.
Report
The Figures
194
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2.22. Received Grants
Grants from the government are recognised at their fair value when there is a reasonable assurance that the grant will be received and the
Group will comply with all attached conditions.
Subsidised loans without interest are initially classified as liability at their fair value. The difference between the fair value and the carrying value is recognised as a grant, under the caption ‘Government deferred grants’, charged to profit and loss, with the depreciation of assets related to those projects.
2.23.Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated annual accounts. However, deferred tax liabilities are not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit and loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences and tax credits can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Report
The Figures
195
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
2.24.Employee benefits
a) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.
b) Bonus
Group companies recognise a provision when are contractually obliged or when there is a past practice that has created a constructive obligation.
c) Long term incentive plan
For cash-settled share-based payment transactions, the Group shall measure the liability incurred at the fair value, referred to the date when the requirements for recognition are met. Subsequently and until the liability is settled, the Group shall remeasure at the year-end the final value of each of the theoretical shares to be taken for the calculation of the incentive, with any changes in fair value recognised in profit and loss account for each period.
2.25. Provisions
Provisions for restructuring costs, legal claims and other risks are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Report
The Figures
196
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Provisions maturing at one year or less with non material financial effect are not discounted.
Contingent liabilities are considered as a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. These contingent liabilities are not recognised but details are set forth in the notes to the consolidated annual accounts.
2.26. Revenue recognition
Ordinary revenues comprise the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of Value-Added Tax, returns, rebates and discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
The Group’s revenue comes from the individual or combined provision of telephone, television and broad-band internet services to residential direct-access customers, indirect-access customers and companies, together with the provision of services of interconnection with other operators.
Commercial packages that combine different elements are analysed to determine whether it is necessary to separate the different elements identified, applying the appropriate revenue recognition policy in each specific case. Total revenue from the package is distributed among its identified elements in accordance with their respective fair values (i.e. the fair value of each individual component in relation to the total fair value of the package).
Traffic is recognised as revenue as consumed.
If traffic or other services are sold at a fixed rate for a determined time period (flat rate), revenue is recognised on a straight-line basis over the time period covered by the rate paid by the customer.
The periodic charges for use of the network (Telephony, Internet and Television) are credited to the income statement on a straight-line basis over the period to which they relate. Rentals and other services are credited to the income statement as the service is provided.
Revenue from interconnection and other services used by customers is recognised in the period in which the customers generate the traffic.
Revenue from the sale of terminals and equipment is recognised when, in addition to the aforegoing, the sale is deemed to be completed, i.e. when the significant risks and rewards have been transferred and neither the management nor effective control of the items is held.
This moment usually coincides with the time of delivery to the final customer.
Report
The Figures
197
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Likewise, the Group carries out commercial promotions based on the subscriber obtaining points in accordance with his consumption.
The amount assigned to the points given is recorded as a decrease in revenue until the time that the points are exchanged, when they are recognised as revenue from sales or services, depending on the product or service chosen by the customer. In the event that the points are not used, they are recognised as income when they expire. The exchange may be for traffic or another type of service, depending on the amount of points obtained and the type of contract held.
2.27. Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straightline basis over the period of the lease.
The Group leases certain property, plant and equipment.Leases of property, plant and equipment, for which the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.
2.28. Exceptional items
Items that are material either because of their size or their nature, or that are non-recurring are considered as exceptional items and are presented within the line items to which they best relate. During 2012, the exceptional items have been included in the caption ‘Other results’ of the income statement (note 21.g).
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The Figures
198
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
3. Financial risk management
3.1. Financial risk factors
The Group’s activities are exposed to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by the finance planning and corporate finance departments under policies approved by the Board of Directors.
A valuation of the main financial risks affecting the Group is as follows:
a) Market risk
(i) Foreign exchange risk
Foreign Exchange risk arises from the monetary nature of financial assets or liabilities which are designated against their functional currency.
It is the Group’s policy to control the exposure to foreign exchange risk controlling the borrowings denominated in foreign currency, for which the Group may engage derivative financial instruments.
In January 2011, an issuance of $225 million Senior Subordinated Notes due 2019 was completed, proceeds of which were on-lent to
Cableuropa, S.A.U. In order to reduce the uncertainty of exchange rate fluctuations, the Group engaged the hedging of coupon payments and the 100% of the principal until January 2014, being fully covered from exchange rate fluctuations within this period.
In February 2012, an issuance of $1,000 million Senior Secured Notes due 2018 has been completed, proceeds of which were on-lent to
Cableuropa, S.A.U. In order to reduce the uncertainty of exchange rate fluctuations, the Group engaged the hedging of coupon payments until December 2013, being fully covered from exchange rate fluctuations within this period.
The Group holds with several financial institutions option contracts with respect to the 50% of the principal of the $1,000 million Senior
Secured Notes issuance until December 2013, which has an associated net premium amounting €5 million, paid in the engagement date.
The option contracts have been classified as held for trading as do not meet the criteria to be accounted for as a hedging instrument.
Additionally, in June 2012, an issuance of $310 million Senior Secured Notes due 2018 has been completed, proceeds of which were onlent to Cableuropa, S.A.U. In order to reduce the uncertainty to exchange rate fluctuations, the Group engaged the hedging of coupon payments until December 2013, for 77% of the principal until December 2014 and the 23% of the principal until December 2015, being fully covered from exchange rate fluctuations within this period.
Report
The Figures
199
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
At 31 December 2012, the sensitivity in the result of a variation in the foreign exchange rates of those financial liabilities held with financial institutions, after giving effect to the hedging instruments engaged by the Group, is as follows:
Currency Exchange rate 31.12.2012
EUR/USD 1.319
10% Euro devaluation
(65,923)
Thousands of euros
Impact on results
10% Euro appreciation
78,774
At 31 December 2011, the sensitivity at year end in the result of a variation in the foreign exchange rates of those financial liabilities does not represent a significant effect due to the effectively of the forward foreign exchange contracts engaged by the Group.
(ii) Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. It is the Group’s policy to control the exposure to variable interest rate risk, by ensuring any outstanding amounts of variable rate debt, at which this occur can vary Group positions in interest rate hedging transactions, and perform operations in the bonds market.
The Group exposure to changes in the interest rate is mainly due to the New Senior Bank Facility. Debt related to the issuance of Senior
Secured and Subordinated Notes accrue fixed rates and subsided loans accrue zero interest.
As of 31 December 2012, borrowings under the New Senior Bank Facility (note 15) amounting to €1,076 million (€2,136 million at 31
December 2011 of 2005 Senior Bank Facility) bore interest at a floating rate determined by reference to Euribor plus a margin, which ranged from 4.50% to 5.25% depending on the tranche (Euribor plus a margin from 1.60% to 2.95% in 2011 of 2005 Senior Bank Facility).
In addition, other outstanding debt with credit entities usually bore interest at Euribor plus a margin.
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The Figures
200
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Variable rate debt (*)
Fixed rate and zero interest rate debt (*)
Total debt (*)
(*) Amounts shown at redemption value (note 15).
Thousands of Euros
31.12.2012 31.12.2011
1,076,288 2,139,407
2,462,369 1,480,423
3,538,657 3,619,830
The sensitivity in the result, of interest rate variations on those liabilities with credit entities, is as follows:
Increase/decrease of interest rates (linked to Euribor) +/- 1%
Impact in Result before income tax
b) Credit Risk
Millions of Euros
2012 2011
14.5 22.8
14.5 22.8
Financial assets mainly include cash and cash equivalents, trade and other receivables, which represent the maximum credit risk exposure of the Group relating to financial assets.
Group credit risk is mainly related to accounts receivable balances. It is the Group policy to perform a periodical and systematic evaluation of credit risk to record provisions on the income statement accordingly and to evaluate the potential need to reduce customer’s credit level allowed (in this sense, the Group has restrictive credit scoring procedures prior to the acceptance of new residential customers). See also policy of impairment in note 11.
For banks and financial institutions, the Group only accepts independent rated parties with a minimum quality.
c) Liquidity risk
It is the Group policy to match the schedule for its debt maturity payments to its capacity to generate cash flows to meet these maturities.
In particular, the Group’s management attempts to ensure that the operations over the next twelve months are always fully financed without the need to substantially modify the conditions and structure of the Group’s debt.
The following table contains a breakdown of the Group’s non-derivative financial liabilities and derivative financial liabilities, grouped together by maturity date based on the period from the balance sheet date to the maturity date stipulated in each contract. The amounts shown in the table relate to undiscounted cash flows.
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The Figures
201
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Borrowings
Debt related to the issuance of Notes
Shareholders’ Loan
Thousands of Euros
Maturities
Subsequent
2013 2014 2015 2016 2017 years
89,580 125,568 171,887 283,254 429,194 187,484
227,461 227,604 227,604 227,604 227,604 2,705,797
- - 35,676 - - -
2,153
323,001
11,229
-
4,620
-
-
-
-
-
-
954
Derivative financial instruments (*)
Other payables
(*) Included at their fair value.
Borrowings
Debt related to the issuance of Notes
Shareholders’ Loan
Other payables
Thousands of Euros
Maturities
Subsequent
2012 2013 2014 2015 2016 years
235,418 2,012,448 167 20 - -
139,697 139,827 140,174 140,482 140,482 1,789,539
- - 348,622 - - -
307,117 - - - - 1,286
Management considers the Group has cash reserves and cash generation on hand to address its immediate needs for twelve months rolling forward.
At 31 December 2012, the Group has liquidity of €199 million (€556 million at 31 December 2011) based on €102 million of undrawn debt (€371 million at 31 December 2011) and cash reserves of €97 million (€185 million at 31 December 2011).
In order to mitigate the liquidity risk, during 2009 the Group started a process of refinancing debt and a contribution of new monies from shareholders. The refinancing process started in 2010, continued in 2011 and has been successfully completed in 2012 as described in the note 2.2 and note 15.
Report
The Figures
202
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
3.2. Capital management
The objective of the Group in the management of the capital is to safeguard the capacity to continue to manage the recurrent activities as well as the capacity to continue growing in new projects, maintaining an optimum relationship between the capital and the debt.
The optimum level of indebtedness of the Group is not fixed on the basis of a global ratio of debt over internal resources but with the objective of maintaining a level of indebtedness, that has the capacity for growth in the recurrent activities of the Group and confront growth opportunities, maintaining a moderate level of indebtedness, in accordance with future cash flows and delivering quantitative restrictions provided in their financial contracts.
None of the main financial agreements concluded by the Group, establishes specific restrictions as concerns the debt to equity ratio.
In accordance with note 15, within the main quantitative restrictions established by the New Senior Bank Facility is that of maintaining compliance with covenants over periods of twelve months ended at the end of each quarter, related to swaps, maximum debt level and debt service level. Therefore, the Group is monitoring the percentages regarding financial net debt at redemption value and EBITDA. In addition the New Senior Bank Facility also establishes an annual quantity limitation on the maximum fixed assets investment.
The Group defines EBITDA as consolidated net income, excluding gains or losses on the disposal or revaluation of assets other than in the ordinary course of business, and excluding net income of any company disposed of during the period, and calculated before any amount charged to the provision for corporate income tax, financial interest expenses, amounts collected or paid as a consequence of a position related to the hedging financial instruments permitted under the New Senior Bank Facility, other extraordinary or exceptional items or any other non-cash item, amortisation of goodwill, realised and unrealised exchange gains and losses, any amounts for the amortisation or depreciation of intangible and tangible assets, profits or losses attributable to minority interests, any share of the profit of associated companies or investments, according to the definitions of the New Senior Bank Facility, except for dividends received in cash by a member of the Group, and any profits attributable to a debt purchase transactions according to the definitions of the New Senior Bank Facility.
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The Figures
203
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The reconciliation of EBITDA to consolidated income statements is as follows:
Net profit /(loss)
Income Tax
Net financial result
Impairment and gains or losses on disposal of fixed assets
Depreciation and amortization
Overprovisions
Other results
Other revenue
EBITDA
Thousands of Euros
2012 2011
52,906
19,049
50,973
36,191
313,732
30,638
389,869
-
280,262
9,638
379,429
(9,015)
(53,936) 1,059
(339) (446)
751,919 748,091
The net financial debt shown at redemption value was €3,442 million at 31 December 2012 (€3,434 million at 31 December 2011):
Current Debts
Non-current debts
Senior Bank Facility
Debt related to the issuance of Senior Secured Notes
Debt related to the issuance of Subordinated Notes
Other loans
Cash and cash equivalents
Total net debt (*)
EBITDA
Net debt/EBITDA
Thousands of Euros
31.12.2012 31.12.2011
40,497 176,437
40,497 176,437
1,037,044
1,992,875
1,969,404
1,000,000
465,532 468,893
2,708 5,096
3,498,159 3,443,393
96,625 184,901
3,442,031 3,434,929
751,919 748,091
4,58X 4,59X
(*) Excluded the Shareholder’s Loan described in note 15, it does not compute in covenants ratios due to it is debt subjected to subordinated commitments.
Debts are shown without considering the discount effect and they do not include earned interest payables as at 31 December.
Up to now, the Group complies with all the restrictions imposed under its borrowing agreements and no default events are expected to occur in the future.
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
3.3. Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2).
- Inputs for the asset or liability that are not based on observable market data (level 3).
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2012 and 31 December 2011:
Level 1 Level 2 Level 3
Thousands of Euros
Total
At 31 December 2012
Assets
Financial assets at fair value through profit and loss:
Derivatives used for hedging
Derivatives held for trading
Liabilities
Financial liabilities at fair value through profit and loss:
Derivatives used for hedging
At 31 December 2011
Assets
Financial assets at fair value through profit and loss:
Derivatives used for hedging
-
-
-
-
8,403
1,249
- 9,652
18,002
- 18,002
11,321
- 11,321
-
-
8,403
1,249
- 9,652
-
- 18,002
-
18,002
11,321
- 11,321
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
- The fair value of forward foreign exchange contracts and foreign exchange option contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value.
- Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
4. Critical accounting estimates and judgements
The preparation of the annual accounts requires the Group to use certain estimates and judgements in relation to the future that are continuously assessed and are based on historical experience and other factors, including expectations of future events deemed reasonable under the current circumstances. Actual results could differ from estimated ones.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:
Fixed assets
The accounting treatment of investment in property, plant and equipment and intangible assets means that estimates must be made to determine their useful lives for the purposes of depreciation or amortization.
The determination of useful lives requires estimates regarding expected technological evolution and alternative uses of the assets.
Assumptions regarding the technological environment and its future development imply a significant degree of judgement, inasmuch as the time and the nature of future technological changes are difficult to predict. The Group periodically reviews the suitability of the assumptions used in the determination of the fixed assets useful lives.
When impairment of fixed assets is identified, a value adjustment is recognised and charged to the income statement for the period. The determination of the need to recognise an impairment loss implies making estimates that include, among others, an analysis of the causes of the possible impairment and the time and the expected amount thereof. Likewise, factors such as technological obsolescence, the suspension of certain services and other changes in circumstances that create the need to assess possible impairment are taken into account.
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Fair value of derivatives and other financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group selects a variety of methods and makes assumptions that are mainly based on market conditions existing at each balance sheet date. The
Group has used discounted cash flow analysis as well as third party valuations to determine the fair value of the derivatives and other financial assets and liabilities.
Deferred income tax and tax credits
The Group assesses the recoverability of deferred income tax assets and tax credits on the basis of estimates of future results. The recoverability, in the final analysis, depends on the Group’s ability to generate taxable profits during the period in which the deferred income tax assets may be deducted. The analysis takes into account the taxable profits estimated on the basis of internal projections that are updated to reflect the most recent trends, assumptions and information. Actual flows of amounts received and paid for income tax may differ from the estimates made by the Group as a result of changes in tax legislation or unforeseen future transactions that might affect the tax balances. The Group updates annually the evaluation of the recoverability of the deferred income tax assets and the tax credits, and when there are changes in fiscal legislation.
Provisions
Provisions are recognised when the Group has a present obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. The obligation may be legal or constructive, derived from, among other factors, regulations, contracts, normal practices or public commitments that create a valid expectation for third parties that the Group will accept certain liabilities. The provision is measured by the best estimate of the payment that will be necessary to settle the relevant obligation, taking into consideration all the information available on the closing date, including the opinions of independent experts, such as legal advisors or consultants. Due to the unpredictability inherent to the estimates required to determine the amount of the provisions, the actual payments may differ from the amounts initially recognised on the basis of the estimates made.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
5. Segment information
Management has defined the operative segments based on reports previously reviewed by the Board of Directors and they are used for taking strategic decisions, monitoring of changes in results and resources assignment. The Board of Directors monitors the business in an operating income basis distinguishing by client typology. Given the nature of the services rendered by the Group, consisting of rendering telecommunication services through own and other’s network, it is not possible neither separate assets and liabilities by client nor allocate operating or financial results and taxes, following this criteria.
The Group only provides services to the Spanish market, and therefore there is only one geographical segment.
The information provided by the Group for 2012 and 2011 is as follows:
Net Revenue
Services to the residential market
Residential fibre
Residential ADSL and indirect access (*)
Other
Business and operators
SME´s
Businesses
Wholesale
Other
Net Revenue
(*)These subsegments were presented separately in 2011.
Thousands of Euros
2012 2011
1,145,150
1,103,116
1,172,353
1,125,056
41,184 44,947
850 2,350
425,100 309,635
85,741 76,930
121,070 128,563
218,289 104,142
3,001 3,431
1,573,251 1,485,419
In 2012 and 2011, the amount invoiced to a sole client did not exceed 10% of the net revenue.
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
6. Property, plant and equipment
Details of and movement on the items included in ‘Property, plant and equipment’ are as follows:
Net book value at 31 December 2010
Cost
Accumulated depreciation
Impairment losses
Net book value
Additions
Disposals
Transfers
Depreciation disposals
Impairment losses applied/ (recognised) in the year
Depreciation charge
Net book value at 31 December 2011
Cost
Accumulated depreciation
Impairment losses
Net book value
Thousands of Euros
Land
Technical facilities Advances and fixed and other property, plant & equipment assets under construction
14,803 4,149,984 77,817
Total
4,242,604
14,803 7,183,392 77,817 7,276,012
-
-
14,803
(2,973,248)
(60,160)
4,149,984
-
-
77,817
(2,973,248)
(60,160)
4,242,604
-
(21)
-
-
-
-
14,782
120,497
(10,457)
109,036
8,947
(203)
(354,726)
4,023,078
115,320
(8,671)
(109,036)
-
-
-
75,430
235,817
(19,149)
-
8,947
(203)
(354,726)
4,113,290
14,782 7,402,468 75,430 7,492,680
- (3,319,027) - (3,319,027)
-
14,782
(60,363)
4,023,078
-
75,430
(60,363)
4,113,290
Additions
Disposals
Transfers
Depreciation disposals
Impairment losses applied in the year
Depreciation charge
Net book value at 31 December 2012
Cost
Accumulated depreciation
Impairment losses
Net book value
-
(769)
-
-
-
-
14,013
126,894
(411,419)
110,260
357,967
28,384
(360,754)
3,874,410
128,523
(5,668)
(110,260)
-
-
-
88,025
255,417
(417,856)
-
357,967
28,384
(360,754)
3,976,448
14,013 7,228,203 88,025 7,330,241
- (3,321,814) - (3,321,814)
-
14,013
(31,979)
3,874,410
-
88,025
(31,979)
3,976,,448
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Additions under ‘Property, plant and equipment’ for 2012 and 2011 mainly correspond to customer installations.
During 2012, assets amounting €263,455 thousand were written off, those assets were fully depreciated. Additionally, assets amounting
€59,889 thousand of book value were retired, of which €28,384 thousand were fully provisioned. The Group has recognised a loss due to retired assets amounting to €30,217 thousand (€8,495 thousand at 31 December 2011).
Disposals were mainly in relation with radio and voice networks.
During 2011 no impairment adjustments were recognised for property, plant and equipment.
During 2012 and 2011, no interests or financial burdens have been capitalized in the property, plant and equipment construction period.
As of 31 December 2012 and 31 December 2011 there is no significant property, plant and equipment subject to ownership restrictions or pledged to secure liabilities.
The Group has several insurance policies to cover the risks the property, plant and equipment is exposed to. The insurance cover is considered sufficient.
Property, plant and equipment contains the following amounts where the Group is the lessee under a finance lease, including the improvement made in these assets (note 15.g):
Cost – capitalised finance leases
Acumulated depreciation
Net book value
Total
Technical facilities
Other
Technical facilities
Other
Technical facilities
Other
Thousand of Euros
31.12.2012 31.12.2011
10,893
(5,179)
-
18,738
1,967 3,282
(8,097)
-
5,714 10,641
1,967 3,282
7,681 13,923
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
7. Intangible assets
Details of and movement on the items included in ‘Intangible assets’ are as follows:
Net book value at 31 December 2010
Cost
Accumulated depreciation
Net book value
Additions
Amortization charge
Net book value at 31 December 2011
Cost
Accumulated depreciation
Net book value
Licenses software assets
Thousands of Euros
Total
3,774 26,268 34,514 64,556
12,651 158,090 53,236 223,977
(8,877) (131,822) (18,722) (159,421)
3,774 26,268 34,514 64,556
14,045 10,293 31,572 55,910
(522)
17,297
(14,307)
22,254
(9,874)
56,212
(24,703)
95,763
26,696 168,383 84,808 279,887
(9,399)
17.297
(146,129)
22,254
(28,596)
56,212
(184,124)
95,763
Additions
Charge
BAmortization charge
Provision for amortization
Net book value at 31 December 2012
Cost
Accumulated depreciation
Net book value
-
-
10,696
(1,350)
33,293
(3,340)
43,989
(4,690)
-
(1,009)
16,288
928
(10,300)
22,228
3,340
(17,806)
71,699
4,268
(29,115)
110,215
26,696 177,729 114,761 319,186
(10,408)
16,288
(155,501)
22,228
(43,062)
71,699
(208,971)
110,215
On 15 September 2011, the Group acquired 2.6GHz mobile spectrum licenses in 9 Spanish regions, including Madrid, Catalonia, C.
Valenciana, Murcia, Navarra, La Rioja, Cantabria, Ceuta and Melilla, for a total consideration of €14 million, including taxes.
The caption ‘Other intangible assets’ includes certain subscribers’ acquisition costs which meet the definition of intangible assets. As of 31
December 2012, the net book value of these costs amount €62,350 thousand (€45,922 thousand at 31 December 2011).
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
During the years 2012 and 2011, no impairment losses have been recognized regarding intangible assets.
As of 31 December 2012 and 2011, there are no intangible assets subject to ownership restrictions or pledged to secure liabilities.
8. Financial instruments by category
Details of ‘Financial instruments by category’ are as follows:
31 December 2012
Assets as per balance sheet
Available-for-sale financial assets
Derivative financial instruments (note 16)
Trade and other receivables (*) (note 11)
Other financial assets (note 9)
Cash and cash equivalents (note 12)
Loans and
151,352
24,876
-
-
Assets at fair value through
-
1,249
-
-
Derivatives used for hedging
-
8,403
-
-
96,625 - -
272,853 1,249 8,403
Available for sale
Thousands of Euros
Total
544
-
-
-
544
9,652
151,352
24,876
- 96,625
544 283,049
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
31 December 2011
Assets as per balance sheet
Available-for-sale financial assets
Derivative financial instruments (note 16)
Trade and other receivables (*) (note 11)
Other financial assets (note 9)
Cash and cash equivalents (note 12)
145,359
19,878
-
-
-
11,321
-
-
184,901 -
350,138 11,321
557
-
-
-
Thousands of Euros
Loans and Derivatives used Available receivables for hedging for sale Total
557
11,321
145,359
19,878
- 184,901
557 362,016
(*) Assets from legal requirements with Public Administration are excluded from the trade and other receivables balance, as this analysis is required only for financial instruments.
31 December 2012
Liabilities as per balance sheet
Borrowings (note 15)
Derivative financial instruments (note 16)
Trade and other payables (**) (note 14)
Other financial liabilities
Thousands of Euros
Derivatives used for hedging
Other financial liabilities at amortised cost Total
-
18,002
-
-
3,460,790
-
320,480
3,475
3,460,790
18,002
320,480
3,475
18,002 3,784,745 3,802,747
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Balance at 31 December 2011
Liabilities as per balance sheet
Borrowings (note 15)
Trade and other payables
Other financial liabilities
(**) (note 14)
Derivatives used for hedging
Other financial liabilities at
Thousands of euros amortised cost Total
-
-
3,791,599
304,752
3,791,599
304,752
- 3,651 3,651
- 4,100,002 4,100,002
(**) Liabilities from legal requirements with Public Administration are excluded from the trade payables balance, as this analysis is required only for financial instruments.
9. Other financial assets
Details of ‘Other financial assets’ are as follows:
Non current:
Investments in audiovisual productions
Deposits and other
Current:
Deposits and other
Total Other financial assets
31.12.2012 31.12.2011
9,369
3,714
Thousands of Euros
5,509
4,095
13,083 9,604
11,793 10,274
11,793 10,274
24,876 19,878
The carrying value of the trade and other receivables accounts is in line with its fair value and referred in Euros.
The maximum credit risk exposure at the reporting date is the carrying value of the held-to-maturity financial assets.
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
10. Inventories
Rights
Network materials
Other materials
Thousands of Euros
31.12.2012 31.12.2011
1,196 886
169 466
1 1
1,366 1,353
Under the caption ‘Rights’ there are audiovisual property rights and they are registered as consumption during the duration of the acquired rights in the income statement.
11. Trade and other receivables
Details of ‘Trade and other receivables’ are as follows:
Trade and other receivables:
Trade receivables and sundry debtors
Provision for impairment of trade receivables
Public Administration
Advances to suppliers and commercial creditors
31.12.2012 31.12.2011
294,798
(167,326)
603
23,880
Thousands of Euros
295,575
(171,201)
303
20,985
151,955 145,662
The caption ‘Trade receivables and sundry debtors’ relates mainly to receivables arising from the provision of telephone, television and broad-band internet services to direct-access residential customers, indirect-access customers and companies and the provision of interconnection services to other operators.
The credit risk is caused by the possibility of the Group not recovering the financial assets for its registered value or at is expected maturity date. The Directors of the Group consider that the net carrying value of the trade and other receivables accounts is in line with its fair value.
At 2012 and 2011, all the residential and SMEs trade receivables over one year are fully provided for. For trade receivables due below one year, there are partial accruals according to the age of the trade receivables. Regarding the rest of trade receivables (large companies,
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros) operators and other sundry debtors) the Group has the policy of registering specific trade receivables provision based on the business segment, client characteristics and age of the receivables.
Movement on the impairment provision for trade receivables is as follows:
Beginning of year
Impairment provision for trade receivables (note 21.f)
Receivables written-off
End of year
Thousands of Euros
2012 2011
171,201
14,071
(17,946)
167,326
172,220
17,442
(18,461)
171,201
The charge of provision for impaired receivables has been included in ‘other expenses’ in the income statement. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.
The receivables written-off correspond to balances that were fully accrued.
The carrying values of loans and receivables are denominated in Euros.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group holds a trade credit insurance policy which covers risks from the fully or partial default in payment of credits superior to €50 thousand with a maximum of €3 million.
12. Cash and cash equivalents
Cash in hand and at bank
Cash equivalents
Thousands of Euros
31.12.2012 31.12.2011
96,603 129,879
22 55,022
96,625 184,901
As of 31 December 2011, ‘Cash equivalents’ caption relates to short-term fixed-income securities for placing punctual cash exceedings with a less than three months maturity and a fixed remuneration between 1.6% and 2%.
At 31 December 2012 and 31 December 2011 there are no restricted cash amounts.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
13. Equity
a) Share capital and premium
Declared capital
Thousands of Euros
31.12.2012 31.12.2011
1,817,270 1,648,525
1,817,270 1,648,525
As of 31 December 2012, the share capital comprises 1,817,269,942 ordinary shares (1,648,524,524 ordinary shares in 2011) with a face value of 1 Euro each and a share premium of €363 million. Both share capital and share premium are fully disbursed.
The share premium has no restrictions to be distributed.
b) Own shares
As of 31 December 2012 and 31 December 2011, the number of own shares amounts to 18,110,206 shares.
In 2012 and 2011 there were no operations with own shares.
c) Capital increases
In May 2010, Grupo Corporativo ONO, S.A. signed a participative loan with shareholders by which €125 million were immediately drawn and subsequently loaned to Cableuropa, S.A.U. in the form of participating loan.
On 20 June 2012, according to the proposal of Board of Director’s, the General Shareholders Meeting of Grupo Corporativo ONO, S.A. approved a share capital increase of the Parent Company by offsetting the €125 million corresponding to the principal of the fully paid out participative loan, plus accrued interest until 30 June 2011, which amounted to €43,745 thousand. As a result, it is approved a capital increase of €168,745 thousand through the issue of 168,745,418 shares with a face value of €1, without share premium.
The capital increase has been entered in the Mercantile Register Office (“Registro Mercantil”) on 26 September 2012.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
d) Shareholders
The shareholders of Grupo Corporativo ONO, S.A. as of 31 December 2012 and 31 December 2011 are the following:
CCMP Capital Advisors, LLC
Providence Equity Partners
Thomas H. Lee Partners
Grupo Multitel, S.A.
Sodinteleco, S.L.
Bregal Co-Invest
(7)
(5)
Own shares and other
(2)
Quadrangle Capital Partners
Val Telecomunicaciones
(1)
(2)
(2)
Global Telecom Investments, LLC
Ontario Teachers Pension Plan
Capital Riesgo Global, SRC S.A.
(6)
(3)
Caisse de Dépôt et Placement du Québec (CDPQ)
Northwestern Mutual Life Insurance Company
(4)
(1) Formerly JP Morgan Partners. These interests are held through several other companies in which stakes are held.
(2) The shareholders mentioned hold these interests through several other companies in which they hold stakes.
(3) Company in which General Electric holds an interest.
(4) CDPQ’s interest is held by said company itself and another company belonging to its group.
(5) The interests of Grupo Multitel, S.A. are held by said company and several controlled companies.
(6) Company fully-held by Banco Santander, S.A.
(7) Company into which most of the former shareholders of Retecal were integrated.
Total percentage of interest
31.12.2012 31.12.2011
15.2% 15.0%
15.2% 15.0%
15.0% 15.0%
9.0% 9.0%
9.0% 8.8%
6.8% 6.6%
6.1% 6.3%
5.4% 5.4%
4.8% 4.7%
4.4% 4.4%
3.9% 4.2%
2.3% 2.2%
1.4%
1.5%
1.4%
2.0%
100% 100%
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
e) Other reserves - Hedge reserve
At 1 January 2011
Cash flow hedges:
Gains/Losses at fair value
Income tax expense at fair value
Transfers to comprehensive income
Income tax expense transferred to comprehensive income
At 31 December 2011
At 1 January 2012
Cash flow hedges:
Gains/Losses at fair value
Income tax expense at fair value
Transfers to comprehensive income
Income tax expense transferred to comprehensive income
At 31 December 2012
f) Retained earnings
At 1 January 2011
Result of the year
At 31 December 2011
At 1 January 2012
Result of the year
At 31 December 2012
Thousands of Euros
(1,051)
11,321
(3,396)
(10,926)
3,277
(775)
(775)
(9,599)
2,880
5,969
(1,791)
(3,316)
Thousands of Euros
(765,136)
50,359
(714,777)
(714,777)
52,311
(662,466)
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
g) Non-controlling interest
At 1 January 2011
Result of the year 2011
14. Trade and other payables
Details of ‘Trade and other payables’ are as follows:
At 31 December 2011
At 1 January 2012
Result of the year 2012
At 31 December 2012
Trade payables
Property, plant and equipment suppliers
Short-term public authorities
Outstanding employee remunerations
Thousands of Euros
3,959
614
4,573
4,573
595
5,168
Thousands of Euros
31.12.2012 31.12.2011
214,672
86,425
208,424
78,870
16,795 13,429
19,383 17,458
337,275 318,181
The carrying value of the trade and other payables accounts is in line with its fair value and referred in Euros.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Information regarding delays on payments to commercial suppliers 3rd A.D. ‘Information obligation’ in Law 15/2010, of 5 July.
According to Law 15/2010 of 5 July, a maximum delay of 60 days on payments to suppliers in commercial transactions is established. For this purpose, a transitional payment calendar is established that has ended on 1 January 2013. According to the Second Transitory Provision of the aforementioned Law, from 1 January 2012 to 31 December 2012 the maximum delay period is 75 days (85 days since the entry into force until 31 December 2011).
According to Law 15/2010 of 5 July, the following information is disclosed:
Payments for the financial year under the maximum legal deadline
Remaining
Total payments for the financial year
Average exceded payment (Days)
Remaining payment amounts at the year end exceeding the maximum legal deadline
2012
Thousands of Euros %
959,607 79%
255,085 21%
1,214,692 100%
39
8,350
Payments for the financial year under the maximum legal deadline
Remaining
Total payments for the financial year
Average exceded payment (Days)
Remaining payment amounts at the year end exceeding the maximum legal deadline
2011
Thousands of Euros %
753,700 66%
393,636 34%
1,147,336 100%
43
22,633
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
15. Borrowings
Details of ‘Borrowings’ are as follows:
Thousands of Euros
Long-term debts and other non-current debt:
31.12.2012 31.12.2011
Senior Bank Facility 987,059 1,959,486
Debt related to the issuance of Senior Secured Notes
Debt related to the issuance of Subordinated Notes
1,904,822
454,587
975,180
456,264
Mortgage loans
Finance lease liabilities
Subsidised loans (PROFIT)
Shareholders’ Loan
Total non-current
Short-term debts and other current debt:
Senior Bank Facility
Borrowings with other entities
Finance lease liabilities
Interest payable
Total current
Total
-
171
2,360
3,348,999 3,395,509
29,751
3,378,750
38,656
1,560
281
41,543
82,040
15
1,120
3,444
188,015
3,583,524
166,832
8,697
908
31,638
208,075
3,460,790 3,791,599
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The payment calendar at redemption value as of 31 December 2012 and 31 December 2011 of the long and short-term debt with credit institutions and other debts is as follows:
At 31 December 2012:
Maturities
Type of debt
Thousands of Euros
Average Maximum
Subsequent Total Interest rate 2012 at 31.12.12 2013 2014 2015 2016 2017 years debt
Debt with credit institutions
Senior Bank Facility (1) 4.99%
Mortgage loan
Leasing
Other credit lines
Total debt with credit institutions
4.12%
2.27%
15
452
3.60% 2,000
15
281
121
-
152
-
-
19
-
-
-
-
-
-
-
-
-
-
15
452
121
1,178,167 39,073 77,287 127,745 246,368 400,815 185,000 1,076,288 3,119
Other debt
Debt related to the issuance of
Senior Secured Notess (1) 8.88% 1,992,876 - - - - - 1,992,876 1,992,876 14,739
-
-
2
Debt related to the issuance of
Senior Secured Notes (1)
Subsidised loans (2)
Total other debt
Total long- and short-term debt
11.03%
-
465,532
3,962
-
1,424
-
397
-
357
-
268
-
268
465,532 465,532 23,685
1,248 3,962
3,640,537 40,497 77,684 128,102 246,636 401,083 2,644,656 3,538,658
-
41,543
(1) The payment calendar does not include the discount effect amounting €49,985 thousand, €88,054 thousand and €10,945 thousand, respectively.
(2) The subsidised loans as shown in the balance sheet include the subsidy recognised for an amount of €177 thousand.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
At 31 December 2011:
Maturities
Type of debt
Subsequent
Thousands of Euros
Total Interest rate 2011 at 31.12.11 2012 2013 2014 2015 2016 years debt
Debt with credit institutions
Senior Bank Facility (1) 3.13%
Mortgage loan
Leasing
Other credit lines
Total debt with credit institutions
Other debt
3.14% 51
2.19% 2,028
36
908
4.91% 8,300 1,092
15
935
-
165
-
-
-
20
-
-
-
-
-
-
-
- 2,136,236 381
- 51 -
- 2,028
- 1,092
-
7
Debt related to the issuance of
Subordinated Notes (1) 8.82%
Debt related to the issuance of
Subordinated Notes (1)
Subsidised loans (2)
Total other debt
Total long- and short-term debt
11.11% 468,893
-
-
-
-
- 11,530 7,569 1,424
-
-
397
-
-
357
-
-
268
1,000,000 1,000,000 7,396
468,893 468,893 23,854
1,515 11,530 -
(1) The payment calendar does not include the discount effect amounting €9,918 thousand, €24,820 thousand and €12,629 thousand, respectively.
(2) The subsidised loans as shown in the balance sheet include the subsidy recognised for an amount of €517 thousand.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
a) Refinancing process
In 2009 the Group started a refinancing process with the lenders of the Senior Bank Facility originally issued in 2005 (hereinafter, ‘2005
Senior Bank Facility’) in order to align the debt maturities to the new macroeconomic environment and business developments. In June
2012, the Group completed the final stage of this refinancing process which substantially extended the maturities of the financial indebtedness until 2018.
In May 2010, the Group completed the first step of the refinancing process, which consisted in the renegotiation of the 2005 Senior
Facility with the aim of: (i) extend most of the maturities of existing financing tranches until 2013 and (ii) allow for additional financing tranches to facilitate future refinancings. As part of this first step, the Group received an additional support from its shareholders in the form of a deeply-subordinated participative loan, which amounted to €125 million; this loan has been capitalized in 2012 (note 13).
In October 2010, the Group completed the second step of the refinancing process, which consisted of (i) the issuance of €700 million of
Senior Secured Notes (maintaining the considerations of the New Senior Bank Facility tranches in terms of debt order of priority) by Nara
Cable Funding Limited, the gross proceeds of which were on-lent to Cableuropa, S.A.U., (ii) the repayment of €700 million of existing bank tranches under the 2005 Senior Facility from the gross proceeds obtained from Nara Cable Funding Limited and (iii) the use of available cash to pay expenses related to the transaction.
The subsequent steps of the refinancing process taken in 2011 and 2012 are as follows:
In January 2011, it was completed the third step of our refinancing process, which consisted of: (i) the issuance of €461 million (equivalent)
Senior Subordinated Notes by ONO Finance II PLC, the proceeds of which were on-lent to Cableuropa, S.A.U., (ii) the prepayment of existing
€450 million subordinated notes issued by ONO Finance PLC and ONO Finance II PLC in full, in 2004 and 2006 respectively, and (iii) the prepayment of €10 million fond ICO Participative Loan (completely repaid in January 2011).
In July 2011, it was completed the fourth step of our refinancing process, which consisted of: (i) the issuance of €300 million Senior
Secured Notes (maintaining the considerations of the New Senior Bank Facility tranches in terms of debt order of priority) by Nara Cable
Funding Limited, the proceeds of which were on-lent to Cableuropa, S.A.U., (ii) the repayment of €300 million of existing bank tranches under the 2005 Senior Facility issued by Nara Cable Funding Limited and (iii) the use of available cash to pay expenses related to the transaction.
In February 2012, it was completed the fifth step of our refinancing process, which consisted of: (i) the issuance of $1,000 million Senior
Secured Notes (maintaining the considerations of the New Senior Bank Facility tranches in terms of debt order of priority) by Nara Cable
Funding Limited, the gross proceeds of which were on-lent to Cableuropa, S.A.U. (€738 million equivalent), (ii) the prepayment of €738 million of existing bank tranches under the 2005 Senior Facility issued by Nara Cable Funding Limited and (iii) the use of available cash to pay expenses related to the transaction.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
In May 2012, Cableuropa, S.A.U. signed the New Senior Bank Facility achieving a mature and stable capital structure with a well balanced debt maturity profile during the following years and until 2018, ensuring adequate liquidity and adjusting Group’s financing structure to reflect operational and strategic requirements. At the date of the agreement, borrowings under the different tranches amounted €1,076 million and the proceeds obtained were used for the repayment of the 2005 Senior Bank Facility.
In June 2012, it was completed the last step of the refinancing process which consisted of: (i) the issuance of $310 million Senior Secured
Notes (maintaining the considerations of the New Senior Bank Facility tranches in terms of debt order of priority) by Nara Cable Funding
Limited, the proceeds of which were on-lent to Cableuropa, S.A.U. (€212 million equivalent), (ii) the prepayment of €212 million of existing bank tranches under the 2005 Senior Facility issued by Nara Cable Funding Limited and (iii) the use of available cash to pay expenses related to the transaction.
The last two stages of the process, together with €110 million of available cash, had been used to fully prepay the 2005 Senior Bank
Facility in 2012. The features of the New Senior Bank Facility are detailed in note 15.c.
b) Shareholders’ Loan
In May 2010, Grupo Corporativo ONO, S.A. signed a PIK participative loan agreement with shareholders by which €125 million were immediately drawn and subsequently loaned to Cableuropa, S.A.U. in the form of participating loan.
On 20 June 2012, according to the Board of Director’s proposal, the General Shareholders Meeting of Grupo Corporativo ONO, S.A approved a share capital increase of the Parent Company by offsetting the €125 million debt corresponding to the principal of the participative loan, plus accrued interest until 30 June 2011, which amounted to €44 million (note 13.c). From this moment on, according to the agreement adopted by the shareholders, this participative loan is considered expired.
The accrued interest from 1 July 2011 to 14 May 2012, date of notice of the General Shareholders Meeting for the approval of the capital increase by the offsetting of the participative loan, not included in the capital increase described above and amounting to €35,676 thousand, has been registered on 20 June 2012 as a new financial liability, different to the previous one, which is considered expired and ended according to the agreement adopted. The new financial liability has been recognized initially at its fair value, amounting to €28,351 thousand, on the basis of the Parent’s Company Management best estimation, therefore, the Group has recognised an income of €7,325 thousand in 2012, registered under the caption ‘Finance income’. This financial liability shall not bear interest and will be paid in cash, according to the Shareholder’s Agreement, when the leverage ratio of Cableuropa Group on a consolidated basis is equal to or lower than
3.5x, or at the date on which the borrower or its subsidiaries has obtained financing for that purpose in the capital and/or financial markets, or in any other manner, taking into account the limitations of the financial agreements. As of 31 December 2012, it has been registered at amortized cost and amounts to €29,751 thousand.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Val Telecomunicaciones lawsuit
Val Telecomunicaciones (shareholder of Grupo Corporativo ONO, S.A.) challenged in court the Board of Directors Resolution of May 2010 which authorized the granting of the above referred Participative Loan despite the fact that it has subscribed for a substantial portion of it. The lawsuit sought to invalidate the Resolution on the basis that the Loan should have been authorized by a Shareholders’ Meeting of
Grupo Corporativo ONO, S.A. and that various Board members of Grupo Corporativo ONO, S.A. had a conflict of interest in adopting the
Resolution. Furthermore, this shareholder claimed that the interest rate agreed in the Loan, in addition to other ancillary terms, is unlawful, contrary to the by-laws of Grupo Corporativo ONO, S.A. and detrimental to the interests of Grupo Corporativo ONO, S.A. In its lawsuit the shareholder was not making any claims in relation to the participative loan granted to Cableuropa, S.A.U. nor it was making any claims against Cableuropa, S.A.U.
The lawsuit was contested by Grupo Corporativo ONO, S.A. which believed the lawsuit to be without merit.
On 11 May 2012, Grupo Corporativo ONO, S.A. and the shareholder Val Telecomunicaciones reached a agreement by which, after the public deed of the capital increase by offsetting the participative loan (note 13.c), which occurred on 26 September 2012, Val
Telecomunicaciones had settle the matters in dispute in the lawsuit. On 30 October 2012, the court has dictated a decision by which the lawsuit is filed.
c) New Senior Bank Facility
Background
The Senior Bank Facility was originally signed on 27 October 2005 in the amount of €3,100 million (2005 Senior Bank Facility) and amended and restated on 20 June 2007, 31 July 2008, 13 May 2010, 22 October 2010,14 July 2011 and 20 January 2012.
In May 2012, Cableuropa, S.A.U. signed the new Credit Agreement (New Senior Bank Facility), considering ended the 2005 Senior Bank
Facility, with a substantial change of the agreed conditions with respect to the previous one, among other, related to the amount, financial entities involved, structure of the different tranches and performance ratios (financial covenants). The availability of the funds is structured in different trances up to €2,400 million and $1,000 million. This agreement has been amended and restated in 7 June 2012, to include a
Senior Secured Notes tranche the debt related to the issuance on that date amounting to $310 million.
The Senior Secured Notes issued by Nara Cable Funding Limited maturing in 2018, which include €700 million Senior Secured Notes issued in
October 2010, the €300 million Senior Secured Notes issued in July 2011, the $1,000 million Senior Secured Notes issued in February 2012 and the $310 million Senior Secured Notes issued in May 2012 are included as additional tranches to the New Senior Bank Facility.
As of 31 December 2012, the amount drawn with credit entities is €1,076 million (€2,136 million at 31 December 2011) of which €1,037 million are classified as long term debt (€1,969 million at 31 December 2011) and €39 million as short term (€167 million at 31 December
2011), depending on its maturity. As of 31 December 2012, the undrawn tranches amounts €102 million (€364 million at 31 December 2011).
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Interest and expense
The Senior Bank Facility involves certain interests, expenses and commissions, including, among others:
- Interest on amounts drawn linked to Euribor plus a spread, that ranges between 4.50% and 5.25% depending on the drawn tranches.
- Availability commissions on the amounts granted but not drawn.
- Agency commissions.
Guarantees and conditions
The following assets have been pledged by the Group to guarantee its Senior Bank Facility:
- The shares in Cableuropa, S.A.U. belonging to ONO Midco, S.A.U.
- ONO Finance II plc credit rights over the funds obtained in relation to the Senior Subortinated notes issued on January 2011.
- Participative loans between Grupo Corporativo ONO, S.A. and Cableuropa, S.A.U. and credit rights under the agreement dated February 2011.
- Credit rights from certain Cableuropa, S.A.U. bank accounts.
- Credit rights arising from certain insurance policies.
The borrower of the Senior Bank Facility (Cableuropa, S.A.U.) has jointly and severally guaranteed all the amounts of the credit as senior debt.
The Senior Bank Facility also contains financial and non-financial conditions, including voluntary early repayment and, under some circumstances, obligatory repayment, the establishment of mandatory conditions concerning the possibility of new borrowings, the sale of assets, sale and lease-back agreements, acquisitions, the possibility of granting loans and guarantees, early repayment of other borrowings, investments, dividends and the negotiation of significant contracts.
The carrying value of the New Senior Bank Facility is in line with its fair value.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
d) Debt related to the issuance of Senior Secured Notes
As described in section a), in 2010, 2011 and 2012 several issuances of Senior Secured Notes had been completed by Nara Cable Funding, the proceeds of which were on-lent to Cableuropa, S.A.U.
Nara Cable Funding Limited is an independent company established in Ireland with the corporate purpose of issuing notes and the subsequent financing of the ONO Group with the funds obtained from the issues.
Details of the Senior Secured Notes are as follows:
At 31 December 2012:
Issuer
Issue date
Nara Cable Funding Limited 22 October 2010
Nara Cable Funding Limited 14 July 2011
Nara Cable Funding Limited 2 February 2012
Nara Cable Funding Limited 7 June 2012
Number of notes
700,000
300,000
Unit face value
1,000 Euros
1,000 Euros
Nominal interest rate
8.875%
8.875%
1,000,000 1,000 Dollars 8.875%
310,000 1,000 Dollars 8.875%
Maturity
1 December 2018
1 December 2018
1 December 2018
1 December 2018
At 31 December 2011:
Issuer
Issue date
Nara Cable Funding Limited 22 October 2010
Nara Cable Funding Limited 14 July 2011
Number of notes
700,000
300,000
Unit face value
1,000 Euros
1,000 Euros
Nominal interest rate
8.875%
8.875%
Maturity
1 December 2018
1 December 2018
On 2 February 2012, the issuance of $1,000 million Senior Secured Notes was completed by Nara Cable Funding Limited at a discount price of 96.934% of their principal amount, the proceeds of which were on-lent to Cableuropa, S.A.U. (€738 million equivalent).
On 7 June 2012, the issuance of $310 million Senior Secured Notes was completed by Nara Cable Funding Limited at a discount price of
85% of their principal amount, the proceeds of which were on-lent to Cableuropa, S.A.U. (€212 million equivalent).
These notes mature on 1 December 2018, but the issuer reserves the right to call the debt in advance, subject to certain conditions, after 1
December 2013.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
These issuances have the same guarantees that the New Senior Bank Facility. ONO Midco, S.A.U. and Cableuropa, S.A.U. are guarantors under the contracts that regulate the notes issue with similar terms to the existing New Senior Bank Faclility borrowers.
All interest payments are paid semi-annually.
The proceeds obtained by the Issuer were on-lent to Cableuropa, S.A.U. through a new tranche which was incorporated into the New Senior
Bank Facility under the same conditions. This new tranche accrues interest at an annual rate of 8.875% plus a margin. Interests are paid semi-annually.
The fair value of the debt related to the issuance of Senior Secured Notes, calculated on the quoted price basis as at 31 December 2012 is
€2,022,032 thousand (€880,000 thousand at 31 December 2011).
Nara Cable Funding Limited is not included under the Group’s consolidated annual accounts. According to the signed loan agreement between Cableuropa, S.A.U. and Nara Cable Funding, this incorporation does not represent significant effects for the Group’s consolidated annual accounts.
e) Debt related to the issuance of Senior Subordinated Notes
On 28 January 2011, ONO Finance II PLC issued €461 million (equivalent) Senior Subordinated Notes due 2019 (comprising €295 million aggregate principal amount of 11.125% and €225 million aggregate principal amount of 10.875%). The issuer reserves the right to call the debt in advance, subject to certain conditions.
The Notes are guaranteed on a senior basis by ONO Midco, S.A.U., and on a senior subordinated basis by Cableuropa, S.A.U., both members of the ONO Group.
The gross proceeds of the January 2011 issuance were used to prepay in full the debt related to the previous notes issued with maturity in
2014 and the Fond ICO Participative Loan. Therefore, this issuance, did not resulted in an increase of the Group’s leverage, but an extension of maturity of debt.
ONO Finance II PLC is an independent company established in Ireland with the corporate purpose of issuing notes and the subsequent financing of the Cableuropa Group with the funds obtained from the issues.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Details of the Senior Subordinated Notes issuances at 31 December 2012 and 2011, is as follows:
Issuer
ONO Finance II PLC
ONO Finance II PLC
Issuer date
28 January 2011
28 January 2011
Number of notes
225,000
295,000
Unit face value
Nominal interest rate Maturity
1,000 Dollars 10.875 %
1,000 Euros 11.125 %
15 July 2019
15 July 2019
All interest payments are paid semi-annually.
ONO Midco, S.A.U. and Cableuropa, S.A.U. are guarantors under the contracts that regulate the notes issues. In relation to notes issuance, the Cableuropa Group, as the borrower and guarantor, and the issuers, as the lenders, signed a number of subordinated financing agreements to transfer the effective amount obtained from the notes issues to the guarantors and, in return, the borrower undertook the obligation to repay the issuers:
- the face value of the debt from the notes issues upon maturity, equivalent to the issue value plus opening, maintenance and underwriting commissions; and
- sufficient interests to cover the interests’ payments associated to the notes, plus a margin.
The fair value of the debt related to notes issuance, calculated on the quoted price basis is as follows:
- Notes issuance from ONO Finance II PLC
Thousands of Euros
31.12.2012 31.12.2011
447,583 381,915
447,583 381,915
ONO Finance II PLC is not included under the Group’s annual accounts. According to the signed loan agreement between Cableuropa, S.A.U. and this entity, this incorporation does not represent significant effects for the Group’s consolidated annual accounts.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
f) Credit Lines
The Group has the following undrawn credit lines:
Variable rate:
- maturing at less than one year
Thousands of Euros
31.12.2012 31.12.2011
1,879 7,208
1,879 7,208
The credit lines maturing at less than one year are subject to revision in 2013.
The carrying value of the credit lines is in line with its fair value.
g) Finance lease liabilities
Finance lease liabilities are effectively guaranteed if the rights over the leased asset revert to the lessor in the event of default.
Gross finance lease liabilities – minimum payment under finance leases, are as follows:
Up to 1 year
Between 1 and 5 years
Future finance charges on finance leases
Present value of finance lease liabilities
Thousands of Euros
31.12.2012 31.12.2011
284
173
(5)
452
948
1,140
(60)
2,028
The present value of finance lease liabilities is as follows:
Up to 1 year
Between 1 and 5 years
Present Value
281
171
452
Thousands of Euros
31.12.2012 31.12.2011
908
1,120
2,028
The carrying value of finance lease liabilities is in line with its fair value.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
h) Subsidised loanss
Since 2001, within the framework of the ‘Programa para el Fomento de la Innovación Tecnológica’ (PROFIT) (Technological Innovation
Promotion Programme), the Group has obtained a number of subsidised loans from the Ministry of Science and Technology to finance certain technological innovation projects. This subsidised funding is recorded as long-term borrowings and is received in the form of reimbursable advances in annual payments of the same amount, and from the third anniversary of its granting, the loan does not accrue interest and it is secured by bank guarantees. These subsidised loans mature between 2013 and 2024.
The Group considers that it meets all the general and specific conditions fixed in the relevant individual decisions to grant all the subsidised loans.
The fair value of subsidised loans amounts €3,748 thousand at 31 December 2012 (€11,080 thousand at 31 December 2011).
16. Derivative financial instruments
Forward foreign exchange contracts – cash flow hedges
Foreign exchange option contracts – trading derivatives
Total
Non-current portion
Current portion
31.12.2012
Thousands of Euros
31.12.2011
Assets Liabilities Assets Liabilities
8,403 18,002 11,321
1,249 - -
9,652 18,002 11,321
8,403
1,249
15,849
2,153
11,321
-
-
-
-
-
-
a) Forward foreign exchange contracts
To reduce the exposure to exchange rate fluctuations affecting cash flows from future coupon and principal payments in USD, the Group engaged with several financial institutions the hedging of coupon payment related to Senior Secured Notes issuances in dollars and 100% of the principal of the issuance in June 2012.
Additionally, with the same purpose, the Group engaged with several financial institutions the hedging of coupon payments and 100% of the principal related to Subordinated Notes.
Forward foreign exchange contracts have been classified as hedging derivatives as it fulfills the criteria for the designation.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
As of 31 December 2012, hedging financial contracts amount to $466 million related to:
- $81 million corresponding to coupon payments until December 2013 of February 2012 issuance.
- $239 million corresponding to 77% of the principal issued in June 2012 until December 2014, $71 million corresponding to 23% of the principal issued in June 2012 until December 2015 for coupon and $25 million corresponding to coupon payments until
December 2013.
- $225 million corresponding to 100% of the principal issued in January 2011 and $50 million for coupon payments until January 2014.
As of 31 December 2011, hedging financial contracts amounted to $286 million ($225 million related to the 100% of the principal of the issuance on 28 January 2012 and $61 million of the coupon payment until January 2014).
As of 31 December 2012, the year end exchange rate was 1.3194 (1.2939 at 31 December 2011).
Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts will be continuously released to the income statement within finance cost until the maturity of the contracts.
b) Foreign exchange option contracts
The Group holds with several financial institutions option contracts with regard to the 50% of the principal of the $1,000 million Senior
Secured Notes issuance until December 2013.
The net premium paid amounted to €5 million. The option contracts have been classified in current assets as a financial asset held for trading, being as it does not meet the criteria to be accounted for as an effective hedging instrument.
17. Long term incentive plan
On 25 May 2011, the Group’s Board of Directors approved a cash–settled share–based payment variable remuneration plan (the Long
Term Incentive Plan), based on the evolution of the Parent Company’s share value. This plan was approved in 22 June 2011 by the General
Meeting of Shareholders of Grupo Corporativo ONO, S.A. The incentive amount is determined by multiplying the theoretical number of shares granted to each participant by the difference between the final and initial reference value as defined in the plan.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The plan envisages two accrual potential outcomes:
a) A Liquidity Event (IPO or change of control) happens during the life of the plan (up to 31 December 2017).
b) If before 31 December 2017 the Liquidity Event has not occurred, both parts, the Company and participants, will agree a settlement in good faith.
On July 2011 the Board of Directors communicated the theoretical shares for each participant on the basis of the following tranches:
Tranche
A
B
C
Initial reference Value Number of shares
0.00 13,517,902
0.90 22,419,934
1.20 13,517,900
49,455,736
The incentive is accrued according to the service period of each participant as follows:
- 40 % as of 31 of December of the third year since the reference date fixed by the Board of Director for every participant.
-40 % as of 31 of December of the fourth year since the reference date fixed by the Board of Director for every participant.
-20 % as of 31 December 2017 or the Liquidity Event date, if earlier.
As of 31 December 2012 the Group’s Management has made a reasonable estimation on the basis that the probability of occurrence of the
Liquidity Event is considered as uncertain, and therefore the Long Term Incentive Plan will be settled in 2017 based on good faith between both parts. The amount registered in the income statement for 2012 is €0.7 million (€0.9 million at 31 December 2011).
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
18. Deferred income tax
Details of deferred income tax are as follows:
Deferred income tax assets:
Assets arising from tax loss carry-forwards and deductions
Financial expenses to deduct in subsequent years
Temporary differences
Deferred income tax liabilities:
Temporary differences
Deferred income tax
31.12.2012 31.12.2011
985,195
20,740
69,766
Thousands of Euros
988,883
-
96,030
1,075,701 1,084,913
(38,004) (37,244)
(38,004) (37,244)
1,037,697 1,047,669
Movement on deferred income taxes in the year is as follows:
a) Deferred income tax assets
Tax credits and deductions
Temporary differences
Total deferred income tax assets
Thousands of Euros
Balance at Balance at
31.12.2010 Additions Disposals 31.12.2011
999,090
108,066
1,107,156
540
1,400
1,940
(10,747)
(13,436)
(24,183)
988,883
96,030
1,084,913
Tax credits and deductions
Financial expenses to deduct in subsequent years
Temporary differences
Total deferred income tax assets
Thousands of Euros
Balance at Balance at
31.12.2010 Additions Disposals 31.12.2012
988,883
-
96,030
1,084,913
2,663
20,740
2,699
26,102
(6,351)
-
(28,963)
(35,314)
985,195
20,740
69,766
1,075,701
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
b) Deferred income tax liabilities
Temporary differences
Total deferred income tax liabilities
Temporary differences
Total deferred income tax liabilities
Balance at Balance at
31.12.2010 Additions Disposals 31.12.2011
(23,178)
(23,178)
Balance at
(14,066)
(14,066)
-
-
Thousands of euros
(37,244)
(37,244)
Thousands of euros
Balance at
31.12.2011 Additions Disposals 31.12.2012
(37,244)
(37,244)
(3,463)
(3,463)
2,703
2,703
(38,004)
(38,004)
The sources of deferred income tax assets and liabilities at 31 December 2012 and 31 December 2011 are as follows:
Property, plant and equipment
Provisions
Derivatives
Investments in Group and associated companies
Total
31.12.2012
Deferred income tax
Thousands of euros
31.12.2011
Deferred income tax
Assets Liabilities Assets Liabilities
46,927 (14,826) 64,500 (14,066)
21,418
1,421
-
-
31,198
332
-
-
- (23,178) - (23,178)
69,766 (38,004) 96,030 (37,244)
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The deferred income tax balance charged to equity is as follows:
Cash flow hedge
Thousands of Euros
31.12.2012 31.12.2011
1,421 332
1,421 332
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that it is probable that the Company will obtain future tax profits that allow them to be applied (note 23.c).
19. Provisions for other liabilities and charges
Movements on the provisions recognised in the balance sheet are as follows:
Balance at 31 December 2010
Increase (decrease) due to effect of discount
(Reversal)
Applications
Balance at 31 December 2011
Increase (decrease) due to effect of discount
Provisions
Applications
Balance at 31 December 2012
Onerous Litigations contracts and other
57,870 60,530
2,955
-
(30,534) (1,980) (32,514)
30,291 49,688 79,979
2,118
-
(130)
(8,732)
-
3,928
Thousands of Euros
Total
118,400
2,825
(8,732)
2,118
3,928
(27,281) (4,963) (32,244)
5,128 48,653 53,781
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The analysis of the total of these provisions is as follows:
Non-current
Current
Thousands of Euros
31.12.2012 31.12.2011
48,653 54,817
5,128 25,162
53,781 79,979
a) Onerous contracts
Several contracts mainly corresponding to network maintenance and rental contracts, acquired as part of the Auna Telecomunicaciones
Group purchase process with costs higher than market standards, were considered on the acquisition date onerous contracts.
During 2013 the provision to be applied is expected to be approximately €5 million annually, after considering the future costs.
b) Litigations and other liabilities
The amount represents a provision for certain complaints filed against the Group companies and other risks and liabilities. The amounts have been estimated in accordance with the sums claimed or the risk estimated by the Group.
According to Directors’ opinion after receiving the relevant legal advice, the result of these litigations is not expected to represent significant losses higher than the amounts provided at 31 December 2012.
As a result of the resolutions of the Telecommunications Market Commission in relation with the cost and contribution to the Universal
Service Fun in June and December of 2011, the Group updated its best estimation for this item. As a consequence, during 2011 a €9 million provision was reversed.
20. Deferred income
On 1 December 2009, a sentence was passed against Prisa Televisión (current name of Sogecable, hereinafter ‘Prisa TV’), and on 3 March
2010 against Prisa TV and Audiovisual Sport (hereinafter, ‘AVS’). In these sentences Prisa TV and AVS were condemned to pay a claim to
Cableuropa, S.A.U. for damages caused. All the parties agreed a payment calendar by which Prisa TV advanced in cash to Cableuropa, S.A.U.
€20 million in 2009, €38 in 2010 and €51 in 2011, totally amounting to €109 million.
On 18 May 2012, Cableuropa, S.A.U and Prisa TV, reached two agreements pursuant to which Cableuropa, S.A.U. repaid Prisa TV €54.4 million, accounting for half of the amounts already paid to the Group by Prisa TV, and pursuant to which Prisa TV ended the appeal process. According to these agreements, all the credits that gave rise to the proceeding and the resulting sentence are considered fully settled by the parties.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
As a consequence of both agreements reached on 18 May 2012, the Group has recognized an extraordinary income in 2012 of €54.4 million under the caption ‘Other results’ (note 21.g), withdrawing the amounts collected in previous years registered under the caption
“Deferred income” amounting to €109 million.
As of 31 December 2012, the caption ‘Deferred income’ only registers customer advanced billing for invoiced services not yet accrued.
21. Income
a) Net revenue
Net revenue by service line is analyzed in note 5 ‘Segment Information’.
b) Work carried out by the company for its assets
The expenses associated to the development and construction of the Group’s network, and several installation costs, are capitalised as a higher cost of the network. All these capitalised expenses are recognised as operating income under the caption ‘Work carried out by the company for its assets’ in the income statement.
c) Other revenues
Since 2001, within the framework of the ‘Programa para el Fomento de la Innovación Tecnológica’ (PROFIT) (Technological Innovation
Promotion Programme), the Group has obtained a number of subsidised loans to finance certain technological innovation projects. During the year, the Group has recognised as a revenue the amount of €339 thousand (€446 thousand in 2011).
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
d) Cost of sales
Operating consumption is the Group’s direct sales cost and includes programming expenses, internet connectivity and the rental of fibre, circuits and channelling.
Interconnection
Content
Intelligent network
Trunk network
Loop costs
Circuit costs
Others
2012 2011
203,145 91,955
76,759 84,315
48,816
38,878
13,194
9,214
Thousands of Euros
50,387
37,310
14,353
9,142
36,651 29,354
426,657 316,816
e) Staff costs
Wages, salaries and similar
Employer’s social security contributions
Other employee expenses
Severance payments
2012 2011
114,509
28,868
7,706
4,996
Thousands of Euros
118,663
30,299
8,012
3,984
156,079 160,958
The average number of employees in the year, by category, is as follows:
Directors
Qualified, technical
Administration
2012 2011
74 83
2,088 1,959
702 985
2,864 3,027
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Likewise, the distribution of the Group’s employees by sex and categories at the year end 31 December 2012 and 31 December 2011 is as follows:
Directors
Men Women Total Men Women Total
64 9 73 72 9 81
f) Other operating expenses
Administration
Leases and canons
Repairs and maintenance
Service of independent professionals
Advertising
Other services
Taxes
Impairment of trade receivables (note 11)
Total other operating expenses
217 455 672 287 669 956
1,651 1,127 2,778 1,716 1,235 2,951
Thousands of Euros
2012 2011
45,714
43,365
49,374
58,019
97,662 88,541
29,676 38,733
33,353 34,167
34,746 35,655
14,071
298,587
17,442
321,931
The caption ‘Taxes’ includes €12,959 thousand regarding the RTVE financing tax (€13,430 thousand in 2011).
g) Other results
According to the agreements reached with Prisa TV and AVS on 18 May 2012 (note 20) the Group has registered in 2012 an extraordinary income amounting to €54.4 million under the caption ‘Other results’.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
22. Finance result
The breakdown of finance cost and income is as follows:
Finance income:
Other finance income
Unwinding of discount
Interest expense:
Guarantee costs
Availability commissions
Interest on debt related to the issuance of notes (note 15.d and 15.e)
Interest on Senior Bank Facility (note 15.c)
Interest on Shareholders’ loan (note 15.b)
Other finance costs
Other financial charges:
Provisions: unwinding of discount (note 19)
Financial instruments: unwinding of discount related to the prepayment of the 2005 Senior Bank Facility
Financial instruments: unwinding of discount
Fair value losses on financial instruments:
Losses on financial assets held for trading
Impairment and results from financial instruments disposals:
Exchange differences
Total net financial negative result
Thousands of Euros
2012 2011
8,573 1,578
190 320
8,763 1,898
(516)
(3,949)
(215,592)
(48,792)
(832)
(14,177)
(137,362)
(73,887)
(15,600) (39,200)
(70) (2,417)
(284,519) (267,875)
(2,118)
(12,630) -
(24,681) (14,723)
(39,429) (17,678)
(3,751)
(652)
5,856
(313,732)
(2,955)
-
(3,751) -
215
3,178
(280,262)
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
23. Income tax and tax situation
a) Consolidated tax regime
In 2002, Grupo Corporativo ONO, S.A. notified its election to apply the consolidated tax regime. The Group has consolidated for tax purposes since 1 January 2003.
b) Income tax
The analysis of income tax is as follows:
Current tax
Deferred tax
Reversal deductions/additions
Other
Total Income tax expense
2012 2011
14,200
7,837
(2,663)
Thousands of Euros
(540)
27,383
9,178
(325) 170
19,049 36,191
The conciliation between the Spanish rate applicable (30%) and the consolidated result before income tax and the income tax expense registered in 2012 and 2011, is as follows:
Profit before income tax
Spanish tax rate 30%
Effect of tax rate:
Non-deductible expenses
Income tax expense
Reversal deductions/additions
Other
Total Income tax expense
Thousands of Euros
2012 2011
71,955
21,587
450
22,037
(2,663)
(325)
19,049
87,164
26,149
694
26,843
9,178
170
36,191
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The tax credit/(debit) related to other comprehensive income is as follows:
At 31 December 2011
Cash flow hedge
Other comprehensive income
Current tax
Deferred tax
At 31 December 2012
Cash flow hedge
Other comprehensive income
Current tax
Deferred tax
Before tax
395
395
Before tax
(3,630)
(3,630)
Tax credit/
(debit)
Thousands of Euros
Net of tax
(119)
(119)
-
(119)
276
276
Tax credit/
(debit)
Thousands of Euros
Net of tax
1,089
1,089
-
1,089
(2,541)
(2,541)
The Group has made advanced income tax payments of the income tax for 2012 amounting to €8,767 thousand (no advanced payments in 2011).
c) Tax Loses:
The Group has recognised tax credits, generated by the incurred losses, during the initial and penetrating stage. Their recoverability is reasonably likely, given recent developments in the business, that has recorded gains since 2009 and the forecast reflected in the business plan.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
As of 31 December 2012 and 2011 the Group has the following tax loss carry-forwards that may be offset against tax profits generated from 2013 onwards:
Year
Thousands of Euros
31.12.2012 31.12.2011
2000
2001
2002
239,870 239,870
330,110 330,110
679,447 679,447
2003
2004
2005
2006
2007
2008
2009
2010
2011
344,537 344,537
66,686 66,686
1,330,071 1,330,071
- -
189,551 189,551
60,227 60,227
38,558 38,558
4,887 4,887
1,337 -
3,285,281 3,283,944
The previous detail does not include the tax loss carry-forwards to be offset according to the tax income provision of 2012.
On 31 March 2012 Royal Decree-Law 12/2012 entered into force. This RDL has introduced several amendments regarding Spanish
Corporate Income Tax that have impacted the Group. Additionally, on 15 July 2012, RDL 20/2012 came into effect introducing important restrictions on the offsetting of tax losses. The Group does not expect impacts on the tax credit recovery concerning those measures.
According to current legislation, the maximum allowed period for offsetting negative losses carry forwards is 18 years.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
As of 31 December 2012, the Group maintains financial expenses to deduct in subsequent years generated by the general restriction in the deductibility of financial expenses approved by the Royal Decree-Law 12/2012.
Year
2012
Thousands of Euros
31.12.2012
69,134
69,134
According to current legislation, the maximum allowed period for financial expenses to deduct in subsequent years offsetting is 18 years.
d) Years open to inspection
According to current legislation, taxes may not be deemed to have been definitively settled until the returns filed have been inspected by the tax authorities or the 4-year years from the last day of the voluntary period for filing statute of limitations has expired.
The tax years open to tax audit are shown in the chart below:
Company
Grupo Corporativo ONO, S.A.
Cableuropa, S.A.U.
ONO Midco, S.A.U.
Spanish Cable Holding, S.A.U.
Tenaria, S.A.
Corporate
Income Tax
2006 and 2008-2011
2006 and 2008-2011
2006 and 2008-2011
2006 and 2008-2011
2006 and 2008-2011
Other taxes
2009-2012
2009-2012
2009-2012
2009-2012
2009-2012
The Directors do not expect any significant additional liabilities to arise in the years open to inspection.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
24. Contingencies
a) Contingent liabilities
The Group has contingent liabilities for litigations arising in the normal course of business. No significant liabilities other than those already provided for are expected to arise from these litigations (note 19).
The Group holds guarantees with several Spanish credit institutions to secure compliance with certain financial, operating and technical commitments held with the Ministry of Industry, Tourism and Trade, City Councils and other organizations and entities.
Details of commitments assumed as of 31 December 2012 and 2011 are as follows:
Ministry of Industry, Tourism and Trade
City Councils and other entities
Thousands of Euros
31.12.2012 31.12.2011
4,732
30,567
13,661
37,716
35,299 51,377
25. Commitments
a) Purchase and sale commitments
As of 31 December 2012, the Group has fixed assets purchase commitments amounting to €83 million (€91 million at 31 December 2011).
b) Operating lease commitments
The Group leases fibre optic, circuits and channelling under operating lease agreements. These contracts have terms of between five and thirty years.
The Group leases office and technical buildings under non-cancellable operating lease agreements. These contracts have terms of between five and ten years and most of them are renewable upon expiry under market conditions.
The Group also leases infrastructure, installations and machinery under cancellable operating lease agreements. The Group is obliged to give six months’ advance notice of the termination of these agreements.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Total minimum future payments for non-cancellable operating leases are as follows:
Less than one year
Between 1 and 5 years
Over 5 years
Thousands of Euros
2012 2011
34,859
168,271
205,414
24,989
83,009
142,734
408,544 250,732
The expense recognized in the income statement in the year 2012 for operating leases is €61 million (€61 million in 2011).
c) Other commitments: invest in audiovisual contents.
On 1 April 2010, the new Audiovisual Communication Law was approved. As a consequence, the Group has become legally required to invest 5% of the revenues from television and audiovisual services into the production of new Spanish and European television and other audiovisual content.
The financing of the audiovisual contents mentioned above may be done through direct production or through rights acquisitions.
26. Related parties
The nature of Related-party transactions is the same as ordinary market transactions.
Transactions completed are presented below:
a) Shareholders’ Transactions
Shareholders of the Parent Company are described in note 13.d.
As of 31 December 2012, Grupo Corporativo ONO, S.A. has financial liability held with shareholder amounting €29,751 thousand (note
15.b). Such borrowing does not accrue any interests.
As of 31 December 2011, Grupo Corporativo ONO, S.A. had a non-current liability amounting €188,015 thousand due to the Shareholders’
Participative Loan described in the note 15.b. Interest expenses for the year 2011 amounted to €39,200 thousand.
At 31 December 2012, the Group have financing transactions signed under fair market value with Banco Santander amounting €92 million and JP Morgan amounting €59 million already included under the caption of Borrowings in note 15.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
At 31 December 2011, the Group had financing transactions signed under fair market value with Banco Santander amounting €43 million, with General Electric amounting €74 million and JP Morgan amounting €30 million already included under the caption of Borrowings in note 15.
At 31 December 2012 there are bank guarantees granted from Banco Santander to the Group, at fair market value, amounting to €5 million (13 million at 31 December 2011).
b) Transactions with other Group companies
During 2012 and 2011 no transactions were carried out with Group companies excluded from the consolidation perimeter.
As of 31 December 2012 and 2011, there are no balances with Group companies.
c) Transactions
The Management Committee and Board of Directors which report directly to the Chief Executive Officer are considered as Senior
Managements by the Group.
Company’s Board of Directors and Management have nothing to report pursuant to direct or indirect interest they and their related parties may hold in the capital of another company with the same, analogous or complementary type of activity to the Company’s corporate purpose.
As to the obligation to notify the Board of Directors, or, in case of Sole Administrator, the General Meeting of Shareholders, of any direct or indirect conflict of interest with the Company, has been disaggregated in note 27.
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
27. Board of Directors and Senior Management
a) Compensation of the members of the Board of Directors
In the year 2012 and 2011, the amount accrued by the members of the Board of Directors was €3 million and €2 million respectively, comprising the following items and amounts:
Salaries
Per diem allowances
Other compensation
2012 2011
1,160 1,168
96
1,340
Thousands of Euros
122
1,044
2,596 2,334
b) Remuneration paid to Management
The total compensation accrued in 2012 and 2011 by Senior Management both past and present amounts are as follows:
Salaries
Other salaries
Severance payments
2012 2011
2,260 2,222
146
-
Thousands of Euros
47
100
2,406 2,369
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
c) Advances and credits
During 2012 and 2011 no loans were granted to the members of the Board of Directors and Senior Management.
d) Interests and positions held by members of the Board of Directors in other analogous companies.
Art. 229 of the Spanish Companies Act, in the wording of Law 1/2010 of 2 July, impose on the Directors the obligation to notify the Board of Directors, or, in case of Sole Administrator, the General Meeting of Shareholders, of any direct or indirect conflict of interest with the
Company. The involved Director shall be abstained from participating on the decisions or agreements in relation to any operations referring to such conflict.
Likewise, the Directors may notify the direct or indirect interest they and their related parties may hold in the capital of another company with the same, analogous or complementary type of activity to the Company’s corporate purpose, together with any positions they may hold or functions they may perform therein.
In this respect, the following information was provided to the Company by the Directors who held office on the Parent Company’s Board of
Directors:
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
Director
Companies with an analogous or complementary corporate purpose Activity
José María Castellano ONO MIDCO, S.A.U.
Cableuropa, S.A.U.
Tenaria S.A.
Telecommunications
Telecommunications
Spanish Cable Holding, S.A.U Telecommunications
Telecommunications
-
-
-
-
Rosalía Portela ONO MIDCO S.A.U.
Cableuropa S.A.U.
Telecommunications -
Spanish Cable Holding S.A.U. Telecommunications -
Telecommunications -
Soren Oberg
Tenaria S.A.
Comcast
Telecommunications -
Telecommunications < 0.1
Univision
Anthony Ball
Kabel Deutschland
Eduardo Serra Rexach
John Hahn
Thomas Walker
Peter Ezersky (1)
BT Group
-
2,049,451
Telecommunications
Cable
-
-
Get As
Hargray Holdings -
Ntelos Holdings Corporation -
-
-
-
- shares
31,452 shares
16,157
Telecommunications shares
-
-
-
-
-
-
Alejandro Valencia -
José Luis Nueno Iniesta -
Dave Wireless -
Tower Vision Mauritius LTD -
-
-
-
-
-
-
Felipe Blanco López
Alain Michel (2)
Diego Lozano Romeral (3) -
-
-
-
-
-
-
-
-
% Position
President
President
President
President
C.E.O
C.E.O
C.E.O
Individual representing the C.E.O.
-
-
Chairman Supervisory
Board
Non executive Director
-
-
-
Director
Director
Director
Director
Director
-
-
-
-
-
(1) Position held since 9 February 2012.
(2) Individual representing Particitel International Ltd Partnership. Position held since 29 November 2012, replacing Robert Coallier.
(3) Individual representing Val Telecomunicaciones Cartera, S.L. Position held since 24 February 2010.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Related party
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GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
The Director Val Telecomunicaciones Cartera, S.L. has notified the Company that Val Telecomunicaciones, S.L., shareholder of Grupo
Corporativo ONO, holds 100% of its share capital, being at the same time its CEO Val Telecomunicaciones, S.L. has notified that holds no capital in other companies with the same, analogous or complementary type of activity to the Company’s corporate purpose.
Director Particitel International Limited Partnership has notified that Caise de Dépôt et Placement du Québec, shareholder of the Company, holds the following capital investments:
Director
Particitel
International
Limited
Partnership
Companies with an analogous or complementary corporate purpose
Cogeco Cable Inc
Naspers Ltd
SES SA
British Sky Broadcasting Group Plc
Kabel Deutschland Holding AG
Eutelsat Communications
Jupiter Telecommunications Co Ltd
Virgin Media Inc
Time Warner Cable Inc
Cablevision Systems Corp
Quebecor Media
Ripley Cable Holdings I LP
Beijing Gehua CATV Nework
Citic Guoan Information
Comcast Corp
Comcast Corp
Cyfrowy Polsat S.A.
Directv
Dish Network Corp
Liberty Global Inc.
Liberty Global Inc.
Quebecor Inc.
Quebecor Inc.
Shaw Communication Inc.
Sirius XM Radio Inc.
Activity %
Cable and Satellite 3,80
Cable and Satellite 0,00
Cable and Satellite 0,12
Cable and Satellite 0,09
Cable and Satellite 0,13
Cable and Satellite 0,08
Cable and Satellite 0,04
Cable and Satellite 0,03
Cable and Satellite 0,12
Cable and Satellite 0,11
Cable and Satellite 24,64
Cable and Satellite 2,76
Cable and Satellite 0,01
Cable and Satellite 0,01
Cable and Satellite 0,14
Cable and Satellite 0,06
Cable and Satellite 0,30
Cable and Satellite 0,12
Cable and Satellite 0,04
Cable and Satellite 0,03
Cable and Satellite 0,03
Cable and Satellite 1,59
Cable and Satellite 5,30
Cable and Satellite 0,95
Cable and Satellite 0,02
Position
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Related party
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
CDPQ
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The Figures
254
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
During the year 2012, Mr. Joshua L. Steiner was replaced as Director. The information available by the Group regarding their interests and positions in companies with the same, analogous or complementary corporate purpose was revealed in the 2011 annual accounts.
During 2012, none of the Directors have been involved in any direct or indirect conflict of interest with Grupo Corporativo ONO, S.A and subsidiaries.
During 2011, none of the Directors was involved in any direct or indirect conflict of interest with Grupo Corporativo ONO, S.A. and subsidiaries, except for Val Telecomunicaciones Cartera S.L. (represented by Diego L. Lozano Romeral), due to its Sole Administrator,
Val Telecomunicaciones, S.L., shareholder of Grupo Corporativo ONO, S.A. challenged in court the Board of Directors’ resolution which authorized the granting of a participative loan with the shareholders (note 15.b). On 11 May 2012, Grupo Corporativo ONO, S.A. and
Val Telecomunicaciones reached a agreement by which, after the execution in a public deed of the capital increase by offsetting the participative loan (note 13.c), which occurred on 26 September 2012, Val Telecomunicaciones will inform the local court the lawsuit withdraw. On 30 October 2012, the court has dictated a decision by which the lawsuit is filed.
e) Long term incentive plan
On 25 May 2011, the Group’s Board of Directors approved a cash–settled share–based payment variable remuneration plan (the Long Term
Incentive Plan, note 17).
28. Environmental information
In its global operations, the Group takes the laws on environmental protection into account and considers that it substantially complies with these laws and has procedures designed to promote and guarantee such compliance.
Any operation the main purpose of which is to minimize the environmental impact and protect and improve the environment is considered an environmental activity. In December 2010, ONO became a sponsor of the ‘Sponsor a Tree Foundation’. Likewise it has not been considered necessary to record any provision for liabilities and charges in relation to environmental issues, since there are no contingencies or liability in this area.
Report
The Figures
255
The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR 2012 (Thousands of Euros)
29. Auditors fees
The fees accrued in the year by PricewaterhouseCoopers Auditores, S.L. for audit services and other review services amount €233 thousand
(€259 thousand in 2011) and €107 thousand (€179 thousand in 2011), respectively.
Likewise, fees accrued in the year by other entities of the PwC net for other services amount €217 thousand (€301 thousand in 2011).
The fees accrued to other auditors for audit services rendered during 2012 total €11 thousand (€11 thousand in 2011). Equally, the fees accrued for consulting services rendered during 2012 total €198 thousand (€385 thousand in 2011).
30. Subsequent events
Notes issuances 7 February 2013
On 7 February 2013 the Group completed the issuance of €260 million Senior Secured Notes at a discount price of 98.69% which accrues interest at an annual rate of 8.50%. These notes mature on 1 March 2020, but the issuer reserves the right to call the debt in advance, subject to certain conditions, after 1 March 2016.
The notes have been issued by Nara Cable Funding II Limited and have the same guarantees as the Senior Bank Facility.
Nara Cable Funding II Limited is an independent company established in Ireland with the corporate purpose of issuing notes and the subsequent financing of the ONO Group with the funds obtained from the issues.
The gross proceeds of the offering to Cableuropa, S.A.U., were used to prepay €252 million of existing bank tranches under the New Senior
Bank Facility and the commissions related to the issuance of bonds. As a consequence of this voluntary prepayment, the Group has no debt maturities until June 2016.
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The Figures
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
DIRECTOR’S REPORT FOR 2012
1. Business performance
Grupo Corporativo ONO, S.A. is the single shareholder of ONO Midco, S.A.U., which is the parent company of the Cableuropa Group which does business under the ONO brand.
ONO is the leading broadband communication and entertainment provider in Spain. It offers value-added telecommunications services to
SMEs, large companies and institutions. ONO also offers integrated telephone, television and Internet services to its residential customers and professionals. ONO has the largest next generation fibre optic network available in Spain available for over 7 million users. ONO closed the year 2012 with total earnings of €1,573 million and operating profits (EBITDA) of €752 million.
2. Analysis of results
The Group’s turnover was €1,573 million in 2012. By business segments, income breaks down as follows:
Net Revenue
Services to the residential market
Residential fibre
Residential ADSL and indirect access (*)
Other
Business and operators
SME´s
Businesses
Wholesale
Other
Net Revenue
(*) These subsegments were presented separately in 2011.
Thousands of Euros
2012 2011
1,145,150
1,103,116
425,100
1,573,251
1,172,353
1,125,056
41,184 44,947
850 2,350
309,635
85,741 76,930
121,070 128,563
218,289 104,142
3,001 3,431
1,485,419
Gross margin for 2012 stood at €1,207 million, 1.9% below previous year.
Operating profits have reached €386 million, 5.2% above the €367 million achieved for 2011.
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
DIRECTOR’S REPORT FOR 2012
3. Own shares
No operations have been carried out in 2012 with own shares.
4. Research and development
During 2012 there has been various research and development projects aimed at improving the quality of the services rendered to our customers.
5. Financial risk management - Use of financial instruments
The Group’s activities are exposed to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by finance planning and corporate finance departments under policies approved by the Board of Directors.
6. Personnel
The average number of employees in the year, by category, is as follows:
Directors
Qualified, technical
Administration
2012 2011
74 83
2,088 1,959
702 985
2,864 3,027
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The Figures
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The Figures
GRUPO CORPORATIVO ONO, S.A. AND SUBSIDIARIES (ONO GROUP)
DIRECTOR’S REPORT FOR 2012
7. Environment
In its global operations, the Group takes the laws on environmental protection into account and considers that it substantially complies with these laws and has procedures designed to promote and guarantee such compliance.
Any operation the main purpose of which is to minimize the environmental impact and protect and improve the environment is considered an environmental activity. In December 2010, ONO became a Sponsor of the “Sponsor a Tree Foundation”. Likewise it has not been considered necessary to record any provision for liabilities and charges in relation to environmental issues, since there are no contingencies or liability in this area.
8. Post balance sheet events
Notes issuances 7 February 2013
On 7 February 2013 the Group completed the issuance of €260 million Senior Secured Notes at a discount price of 98.69% which accrues interest at an annual rate of 8.50%. These notes mature on 1 March 2020, but the issuer reserves the right to call the debt in advance, subject to certain conditions, after 1 March 2016.
The notes have been issued by Nara Cable Funding II Limited and have the same guarantees as the Senior Bank Facility.
Nara Cable Funding II Limited is an independent company established in Ireland with the corporate purpose of issuing notes and the subsequent financing of the ONO Group with the funds obtained from the issues.
The gross proceeds of the offering to Cableuropa, S.A.U., were used to prepay €252 million of existing bank tranches under the New Senior
Bank Facility and the commissions related to the issuance of bonds. As a consequence of this voluntary prepayment, the Group has no debt maturities until June 2016.
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The Figures
259
Annexes
Fibre gives you more... and it’s us who gives you the most fibre.
45,000 km all over
Spain.
45,000
Report
The Figures
260
Annexes
Report scope
Company :
Grupo Corporativo ONO, S.A.
Location :
Spain
Timeline :
2011-2012
Activities :
Fixed and Mobile Telephony, Internet and Television
Frequency of publication of the report:
Annual
Date of the most recent full report:
2011
With transparency as the main principle for our relations with society, this Report provides a fair view of the company’s performance in the area of sustainability, and a balanced financial, environmental and social overview. Various areas of the
Company participated in the preparation of the Report, applying principles that guarantee a transparent, fair and balanced presentation.
For the third consecutive year, the contents of the Report follow the international standards of the Sustainability Reporting
Guidelines published by the Global
Reporting Inititiative: GRI-G3 , reaching application level A . ONO has applied the principles required by the GRI in terms of the quality of information.
The GRI-G3 indicators are classified into core and additional. Core indicators are those which are important for ONO and most of its stakeholders. The additional indicators are those that represent a particular practice that is not currently widespread but which may in the future be a core indicator.
This report is structured according to the guidance of the GRI into two main blocks of principles, around which the information about sustainability at the Company is presented.
Principles for the preparation of this
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The Figures
261
Annexes
Principles for the preparation of this Report
“Principles for determining the topics and Indicators on which the organization should report”
(For defining the content)
Materiality . To define the most relevant topics and indicators for this Report, ONO has undertaken a process of internal reflection based on the results obtained from its direct dialogue with stakeholders, taking account of both internal and external factors.
Stakeholder inclusiveness.
ONO has identified relevant stakeholders
(shareholders and investors, clients, employees, suppliers, media and society) and has held constant dialogue with them to meet their expectations and interests.
Sustainability context. ONO analyses its performance in light of the limits to environmental or social resources in a sector, local, regional or global context.
Over the course of 2011, the Company focused on a Corporate Responsibility Plan that has begun to deliver results.
Completeness. The contents of the
Report reflect the social, economic and environmental impacts, so that stakeholders can assess the performance of ONO during the period based on the information supplied.
“Principles for ensuring the quality and appropriate presentation of reported information”
(For defining the quality of the Report)
Balance . The Report reflects both the positive and negative aspects of the performance of the organisation, to enable a reasoned assessment of overall performance.
Comparability . Reported information is presented in charts and tables that enable stakeholders to analyse changes in the organization’s performance over time, and could support analysis relative to other organizations.
Accuracy . The reported information is sufficiently accurate and detailed for stakeholders to assess the reporting organization’s performance.
Timelines . ONO publishes this Report on a regular schedule and information is available in time for stakeholders to make informed decisions.
Clarity . Information in this Report is made available in a manner that is understandable and accessible to stakeholders.
Reliability . The information and processes used in the preparation of this Report are gathered, recorded, compiled, analysed, and disclosed in a way that can be subject to examination and that establishes the quality and materiality of the information.
Principles for the preparation of this
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The Figures
262
Annexes
Principles for the preparation of this Report
In addition, since 2011 ONO has been a signatory of the United Nations Global
Compact , committing the company to support in its activities the consolidation of this international project, which it believes to be of great value to the defence of human rights, the protection of the environment, the support for social development, respect for rights of workers and the fight against corruption.
As a consequence of this, in the GRI table of this Report, which is also a Progress
Report, an additional column has been included which connects the different parts of this document to the Principles of the Global Compact. There are ten principles in the Global Compact, in four blocks:
Human rights
•
Principle 1.
Businesses should support and respect the protection of internationally proclaimed human rights.
•
Principle 2.
Businesses should make sure that they are not complicit in human rights abuses.
Environment
•
Principle 7.
Businesses should support a precautionary approach to environmental challenges.
•
Principle 8. Businesses should undertake initiatives to promote greater environmental responsibility.
•
Principle 9.
Businesses should encourage the development and diffusion of environmentally friendly technologies.
Labour
•
Principle 3.
Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
•
Principle 4.
Businesses should uphold the elimination of all forms of forced and compulsory labour.
•
Principle 5.
Businesses should uphold the effective abolition of child labour.
•
Principle 6.
Businesses should uphold the elimination of discrimination in respect of employment and occupation.
Anti-Corruption
•
Principle 10.
Businesses should work against corruption in all its forms, including extortion and bribery.
Principles for the preparation of this
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The Figures
263
Annexes
Index of GRI indicators
GRI G3 INDEX
GRI
SECTION I: Profile indicators
1. 1. STRATEGY AND ANALYSIS
1.1
Statement from the most senior decision-maker of the organization.
1.2
Description of key impacts, risks, and opportunities.
2. ORGANIZATIONAL PROFILE
Description
2.1
Name of the organization.
2.2
Primary brands, products, and/or services.
2.3
Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.
2.4
Location of organization's headquarters.
2.5
Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.
2.6
Nature of ownership and legal form.
2.7
Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).
2.8
Scale of the reporting organization.
2.9
Significant changes during the reporting period regarding size, structure, or ownership.
2.10
Awards received in the reporting period.
Pages
Principles of
Global Compact
8-11
116-118; 199-202
180; 261
6; 28
21; 26
180; 282
4; 13
180; 217-218
4; 13
3; 6-7; 81; 104
16; 120-121; 180; 217-218
29; 32; 86; 115
Principles for the preparation of this
Report
The Figures
264
Annexes
Index of GRI indicators
3. REPORT PARAMETERS
Report Profile
3.1
Reporting period (e.g., fiscal/calendar year) for information provi ded.
3.2
Date of most recent previous report (if any).
3.3
3.4
Reporting cycle (annual, biennial, etc.)
Contact point for questions regarding the report or its contents.
168; 261
Cover on ONO’s website: http://www.ono.es/sobreono/inversores/ anual-report/
261
282
Report Scope and Boundary
3.5
Process for defining report content.
5; 68; 261-263
3.6
Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.
3.7
State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope).
3.8
Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.
3.9
Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other informa tion in the report. Explain any decisions not to apply, or to subs tantially diverge from, the GRI Indicator Protocols.
3.10
Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement
(e.g.,mergers/acquisitions, change of base years/periods, nature of business, measurement methods).
3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.
261
261
183-187
180-206
ONO has not been involved in any restatements of information provided in earlier reports
180-198
Principles for the preparation of this
Report
The Figures
265
Annexes
Index of GRI indicators
GRI Content Index
3.12 Table identifying the location of the Standard Disclosures in the report.
Assurance
3.13
Policy and current practice with regard to seeking external assurance for the report.
4. GOVERNANCE, COMMITMENTS AND ENGAGEMENT
Governance
4.1
Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight.
4.2
Indicate whether the Chair of the highest governance body is also an executive officer.
4.3
For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.
4.4
Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.
4.5
Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization's performance
(including social and environmental performance).
4.6
Processes in place for the highest governance body to ensure conflicts of interest are avoided.
4.7
Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization's strategy on economic, environmental, and social topics.
4.8
Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.
2; 264
168
120; 128-130; 218
8; 23; 128-129; 132
128-130
63; 69; 85-86; 160-161
133-134; 241-242; 251
157-159
121-124
14-15; 63-64; 78; 261-263
Principles for the preparation of this
Report
The Figures
266
Annexes
Index of GRI indicators
4.9
Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.
4.10
Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance.
63-64; 137-138
139-141
Commitments to External Initiatives
4.11
Explanation of whether and how the precautionary approach or principle is addressed by the organization.
4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.
4.13 Memberships in associations (such as industry associations) and/ or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic.
116-118; 145
65-66
65-66; 101-102
Stakeholder Engagement
4.14
List of stakeholder groups engaged by the organization.
4.15
Basis for identification and selection of stakeholders with whom to engage.
4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.
68-69
68-69; 262
ONO carries out a detailed analysis of its stakeholders in order to identify the impact of its activities on them and to develop a strategy to achieve the sustainability of its processes.
ONO toma como base el principio de
ONO uses the materiality principle as a foundation both the development of its sustainability strategy and for the prepa ration of the Annual Report.
P7
P7
Principles for the preparation of this
Report
The Figures
267
Annexes
Index of GRI indicators
4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.
68-69
ONO is implementing a process to analyse its stakeholders for the next years.
SECTION II: Management approach and performance indicators
ECONOMIC
Disclosure on Management Approach EC 3-4; 6-7; 69-70; 172-178; 255; 257
Econmic Performance
CORE EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.
65-66; 110-113; 241-242
Donations and other community investments, retained earnings, and payments to capital providers and governments are not found available the date of the closing of this report.
CORE EC2 Financial implications and other risks and opportunities for the organization's activities due to climate change.
CORE EC3 Coverage of the organization's defined benefit plan obligations.
49-55; 117-118; 255
65-66; 88; 101-102
CORE EC4 Significant financial assistance received from government. During 2012, ONO has not received from government significant financial assistance.
Market Presence
ADD EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.
CORE EC6 Policy, practices, and proportion of spending on locallybased suppliers at significant locations of operation.
The Group only has employees in
Spanish territory and its salaries are compliant with employment law.
94-96
P7; P8
P1; P4
Principles for the preparation of this
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The Figures
268
Annexes
Index of GRI indicators
CORE EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.
79-80
All of our employees proceed from the local community at significant locations of operation.
Indirect Economic Impacts
CORE EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.
ADD EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts.
ENVIRONMENTAL
Disclosure on Management Approach EN
Materials
CORE EN1 Materials used by weight or volume.
CORE EN2 Percentage of materials used that are recycled input materials.
Energy
CORE EN3 Direct energy consumption by primary energy source. This information is unavailable as there is no formal procedure for collecting the information.
39; 56-58
56-58
49-55; 66; 259
At the end of the fourth quarter of
50-52
2012, the Group deployed an online mechanism, JUNO, to facilitate communication, monitoring and control of traceability and to support other processes in the New Waste
Management Model
50-52
P6
P7
P8
P8; P9
P8
Principles for the preparation of this
Report
The Figures
269
Annexes
Index of GRI indicators
CORE EN4 Indirect energy consumption by primary source.
ADD EN5 Energy saved due to conservation and efficiency improvements.
ADD EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.
ADD EN7 Initiatives to reduce indirect energy consumption and reductions achieved.
Total energy consumption is based on
53 the use of electricity from the grid in the headquarters, in all other company locations and in the stores.
Indirect energy consumption by primary source is unavailable as there is no formal procedure for collecting this information.
53-55
53-55
53-55
Water
CORE EN8 Total water withdrawal by source. The supply of water in all locations comes from public, licensed networks, so ONO has no impact on protected habitats. The greatest consumption is for domestic uses (mainly cleaning and consumption) in the company headquarters.
ADD EN9 Water sources significantly affected by withdrawal of water. There is no direct withdrawal of water.
ADD EN10 Percentage and total volume of water recycled and reused. ONO has not used recycled and reused water.
P8
P9
P9
P9
Principles for the preparation of this
P7
Report
The Figures
270
Annexes
Index of GRI indicators
Biodiversity
CORE EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.
CORE EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.
ADD EN13 Habitats protected or restored.
There are not installations and activities in protected areas.
There are not installations and activities in protected areas.
There are not installations and activities in protected areas.
ADD EN14 Strategies, current actions, and future plans for managing impacts on biodiversity.
ADD EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.
50-55
There are not installations and activities in protected areas.
Emissions, Effluents and Waste
CORE EN16 Total direct and indirect greenhouse gas emissions by weight.
CORE EN17 Other relevant indirect greenhouse gas emissions by weight.
ADD EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved.
CORE EN19 Emissions of ozone-depleting substances by weight.
CORE EN20 NOx, SOx, and other significant air emissions by type and weight.
CORE EN21 Total water discharge by quality and destination.
As the company’s activity is telecommunications, total direct and indirect greenhouse gas emissions by weight were not available.
As the company’s activity is telecommunications, this indicator was not considered material for its activity.
53-55
53-55
As the company’s activity is telecommunications, this indicator was not considered material for its activity.
As the company’s activity is telecommunications, this indicator was not considered material for its activity.
P8
P8
P8
P7; P8; P9
P8
P8
P8
P8
P8
Principles for the preparation of this
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The Figures
271
Annexes
Index of GRI indicators
CORE EN22 Total weight of waste by type and disposal method. At the end of the fourth quarter of
2012, the Group deployed an online mechanism, JUNO, to facilitate communication, monitoring and control of traceability and to support other processes in the New Waste
Management Model. This calculation is not found available the date of the closing of this report.
During 2011, ONO has not registered significant spills.
CORE EN23 Total number and volume of significant spills.
ADD EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel
Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.
ADD EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff.
ONO has not transported waste deemed hazardous.
Compliance
CORE EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.
ONO’s activity does not affect to water bodies and related habitats.
Products and Services
CORE EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.
CORE EN27 Percentage of products sold and their packaging materials that are reclaimed by category.
49-50
50-52
Packages used in the market are recycled at the end of their useful life by authorised providers.
ONO has not registered monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations.
P8
P7; P8; P9
P8; P9
P8
Principles for the preparation of this
Report
The Figures
272
Annexes
Index of GRI indicators
Transport
ADD
EN29
Significant environmental impacts of transporting products and other goods and materials used for the organization's operations, and transporting members of the workforce.
50-52
The main impact of carriage of goods for the company is the energy consumption and the emissions stemming thereof
Overall
ADD
EN30
Total environmental protection expenditures and investments by type
There is no quantitative information available about these, which are considered as operating expenses
LABOR PRACTICES AND DECENT WORK
Disclosure on Management Approach LA
Labour/Management Relations
CORE LA4 Percentage of employees covered by collective bargaining agreements.
78-93; 241-242
Employment
CORE LA1 Total workforce by employment type, employment contract, and region.
CORE LA2 Total number and rate of employee turnover by age group, gender, and region.
ADD LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.
91-93
This calculation is not found available the date of the closing of this report.
88
89
P8
P6
P6
P1; P3
Principles for the preparation of this
Report
The Figures
273
Annexes
Index of GRI indicators
CORE LA5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.
The collective agreements that are in force do not include minimum notice periods for formal communications of organisational changes at the Group.
However, when a relevant event occurs, due notification is made in advance, in accordance with the Statute for workers.
Occupational Health and Safety
ADD LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.
100% of workers are represented on five formal committees: a National
Health and Safety Committee an four
Health and Safety Committees (East/
Centre/South/North). In addition, these committees hold extraordinary quarterly meetings whenever any party proposes this.
CORE LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region.
CORE LA8 Education, training, counselling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.
ADD LA9 Health and safety topics covered in formal agreements with trade unions.
90
In general terms, no workers have been identified who are involved in activities with high risk of accidents or specific illnesses.
All health and safety issues are covered by formal agreements with trade unions, plus specific issues that the Legal
Representative of Workers may want covered.
Training and Education
CORE LA10 Average hours of training per year per employee by employee category. 81
P1
P1
P1
P1
P1
P3
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ADD LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.
ADD LA12 Percentage of employees receiving regular performance and career development reviews.
Diversity and Equal Opportunity
CORE LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.
CORE LA14 Ratio of basic salary of men to women by employee category.
82-83
83
ONO has not had minority group’s membership.
This information is confidential, refers to key aspects of the business and ONO does not plan to disclose it in the future.
P1; P6
P1
P1; P6
P1; P6
HUMAN RIGHTS
Disclosure on Management Approach HR
Investment and Procurement Practices
CORE HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening.
CORE HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken.
ADD HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.
Non-discrimination
CORE HR4 Total number of incidents of discrimination and actions taken.
8-9; 84-96; 261-263
8-9; 94-96; 261-263
49-50; 94-97
66; 81
ONO has not registered incidents of discrimination.
P1; P2; P3;
P4; P5; P6
P1; P2; P3;
P4; P5; P6
P1; P2; P3;
P5; P6
P1; P2; P6
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Freedom of Association and Collective Bargaining Core
CORE HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.
ONO has not identified activities that has been affected the right to exercise freedom of association.
P1; P2; P3
Child Labour
CORE HR6 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour.
ONO does not have operations identified as having significant risk for incidents of child labour.
Forced and Compulsory Labour
CORE HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labour.
ONO does not have operations identified as having significant risk for incidents of forced or compulsory labour.
Security Practices
ADD HR8 Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations.
ONO subcontracts these services to independent companies who are required to comply with its Code of
Conduct for suppliers.
Indigenous Rights
ADD HR9 Total number of incidents of violations involving rights of indigenous people and actions taken.
ONO operates in Spain, so no incidents have been identified of violations of the rights of indigenous peoples.
P1; P2;P4;
P5
P1; P2; P4;
P6
P1
P1
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SOCIETY
Disclosure on Management Approach SO 39; 49-50; 65-66; 77-78; 88-90; 94-96
Community
CORE SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.
40-50; 65-66
Corruption
CORE SO2 Percentage and total number of business units analysed for risks related to corruption.
CORE SO3 Percentage of employees trained in organization's anticorruption policies and procedures.
CORE SO4 Actions taken in response to incidents of corruption.
ONO has not been involved in any risks related to corruption.
ONO has not been involved in any anticorruption policies and procedures.
ONO has not been involved in any actions related to incidents of corruptions.
P10
P10
P10
Public policy
CORE SO5 Public policy positions and participation in public policy development and lobbying.
ADD SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.
88-90; 94-96
The management of the Company is based on the principle of political neutrality. Consequently, ONO does not make any donations in money or in kind to political parties or related institutions.
Anti-Competitive Behaviour
ADD SO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes.
Every action undertaken by the Group fully complies with the legislation that is applicable. In 2011, ONO registered no legal actions for unfair competition, antitrust, or monopoly practices.
P1; P2; P3;
P4; P4; P5;
P6; P7; P8;
P9; P10
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Compliance
CORE SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.
After taking the corresponding legal advice, ONO does not expect that the result of these lawsuits will represent significant amounts that are in excess of the provisions made as of 31 December
2012.
PRODUCT RESPOSABILITY
Disclosure on Management Approach PR
Product and Service Labelling
CORE PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.
ADD PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes.
28-38; 71-77; 116-118
Customer Health and Safety
CORE PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.
ADD PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.
71-77; 116-118
The heatlh and safety standards for products and services are of general application and are obligatory for all of
ONO's value chain. The methodology used covers all stages of the life cycle of the service delivered.
ONO has not registered incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services.
Cover on ONO's website: http://www.ono.es/productos/
ONO has not registered incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling.
P1
P1
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P8
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ADD PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. 71; 73-74
Marketing Communications
CORE PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.
ADD PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.
ONO believes that there is a material risk that its products and services are the subject of public debate or are even banned in certain markets.
72-75
Customer Privacy
ADD PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.
72
Compliance
CORE PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.
ONO has not registered significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.
Note: we do not report against the indicator as our materiality process has determined that it is not relevant or significant for our business .
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| Statement GRI application level check
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Contact
Information
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Contact Information
Contact Information
Headquarters
Since 19 March 2013:
C/Emisora, 20
Pozuelo de Alarcón | 28224 | Madrid ..................................................................
91 202 71 02
Spain
Contact telephone numbers
Customer service ......................................................................................................
902 929 000
Information ..............................................................................................................................
11828
Number for residential service acquisition .........................................................................
1400
Number for business service acquisition .............................................................................
1403
Contact websites
Corporate website ........................................................................................................
www.ono.es
Investor Relations ................................................................................ investor.relations@ono.es
Communications ................................................................................
comunicacion.ono@ono.es
ONO’s social networks
............................................................................... http://www.linkedin.com/company/ono
............................................................................................ https://es-es.facebook.com/ono
................................................................................................... https://twitter.com/ono_ono
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