Annual Report 2009
TELEFÓNICA O2 CZECH REPUBLIC Corporate governance of the Telefónica O2 Czech Republic Group 61 Governing bodies of Telefónica O2 Czech Republic (as at 15 March 2010) 60 The organisation chart of Telefónica O2 59 subsidiary and associated companies (as at 15 March 2010) 58 58 63 Corporate Governance 55 Promoting activities for the benefjt of the community 54 Caring for the environment 51 Caring for employees and the workplace environment Board of Directors (as at 15 March 2010) Executive management (as at 15 March 2010) Market presence and customer relations Other information relating to persons with executive powers report compiled according to the requirement of section 118(8) of the CMUA the Capital Market Undertakings Act (CMUA), and information which is a part of a summary Information relating to matters according to section 118(5) of the Act No. 256/2004 Coll., 83 based on OECD Principles (2004) Telefónica O2’s Declaration of Compliance with the Code of Good Corporate Governance 81 76 66 Principles of remuneration of persons with executive powers in the issuer 75 Audit Committee (as at 15 March 2010) 69 supervisory Board 68 Report by the supervisory Board 48 47 ANNUAL REPORT 2009 7 Telefónica O2 Czech Republic Group 20 Board of Directors’ Report on Business Activity 13 About Telefónica Group 10 Calendar of key events in 2009 Letter from the Chairman of the Board of Directors The telecommunications market in the Czech Republic 6 Financial and operational highlights 4 Independent auditors’ report to the shareholders of Telefónica O2 Czech Republic, a.s. Table of contents TABLE OF CONTENTs 2 20 25 Business principles and compliance ICT services and business solutions for the central and local government 46 Corporate Social Responsibility (CSR) 41 Comments on the fjnancial results 40 National and international wholesale services 39 38 Networks and technologies Payment services 37 Convergent services 36 Internet, data and value added services 34 Voice services 32 93
TELEFÓNICA O2 CZECH REPUBLIC Based on our audit, the accounting information presented in the annual report is consistent, in all statements is consistent, in all material respects, with the fjnancial statements. We have checked that the accounting information presented in the annual report on pages 6–96 and 221–226 is consistent with that contained in the audited fjnancial statements as at 31 December 2009. Our work as auditors was confjned to checking the annual report with the aforementioned scope and did not include a review of any information other than that drawn from the audited accounting records of the Company. We believe that our audit provides a reasonable basis for our opinion. material respects, with the above-mentioned fjnancial statements. standards require that we plan and perform the audit to obtain reasonable assurance as to whether III. In addition, we have reviewed the accuracy of the information contained in the report on related parties of Telefónica O2 Czech Republic, a.s., for the year ended 31 December 2009, presented in the annual report of the Company on pages 227–236. The management of Telefónica O2 Czech Republic, a.s., is responsible for the preparation of the report on related parties. Our responsibility is to issue a report based on our review. Independent auditors’ report to the shareholders the information presented in the annual report that describes the facts refmected in the fjnancial implementation guidance issued by the Chamber of Auditors of the Czech Republic. Those ANNUAL REPORT 2009 also audited the separate fjnancial statements of the Company as at 31 December 2009, which 4 I. We have audited the consolidated fjnancial statements of Telefónica O2 Czech Republic, a.s. and its subsidiaries (“the Group”) as at 31 December 2009, presented in the annual report of Telefónica O2 Czech Republic, a.s. (“the Company”) on pages 98–159, on which we have issued an auditors’ report dated 19 February 2010, presented in the annual report on page 101. We have are presented in the annual report of the Company on pages 160–220 on which we have issued We conducted our audit in accordance with International standards on Auditing and the related an auditors’ report dated 19 February 2010, presented in the annual report of the Company on page 162 (both referred further as “fjnancial statements”). II. We have also audited the consistency of the annual report with the fjnancial statements described above. The management of Telefónica O2 Czech Republic, a.s., is responsible for the accuracy of the annual report. Our responsibility is to express, based on our audit, an opinion on the consistency of the annual report with the fjnancial statements. of Telefónica O2 Czech Republic, a.s.
TELEFÓNICA O2 CZECH REPUBLIC materially misstated. Licence No. 2042 Represented by Prague, Auditor, Partner Licence No. 401 31 March 2010 Radek Pav Brian Welsh Ernst & Young Audit, s.r.o. on related parties of Telefónica O2 Czech Republic, a.s., for the year ended 31 December 2009 is ANNUAL REPORT 2009 Based on our review, nothing has come to our attention that causes us to believe that the report express an audit opinion. less assurance than an audit. We have not performed an audit and, accordingly, we do not fjnancial data and to examining, on a test basis, the accuracy of information, and thus provides review is limited primarily to enquiries of company personnel, to analytical procedures applied to assurance as to whether the report on related parties is free from material misstatement. The Czech Republic. Those standards require that we plan and perform the review to obtain moderate Engagements and the related implementation guidance issued by the Chamber of Auditors of the We conducted our review in accordance with the applicable International standard on Review 5 Czech Republic
TELEFÓNICA O2 CZECH REPUBLIC 10.8 Macroeconomic indicators 2 4.1 4.2 Gross gearing (Financial debts/Total equity) 14.9 15.8 ROE (Net income/Equity) 11.2 12.6 ROA (Net income/Total assets) 12.5 Capital expenditure/Revenues 10.5 18.0 19.5 Net income/Revenues 43.8 45.2 OIBDA margin (OIBDA/Revenues) Ratios (in %) 9,096 8,687 Group headcount 325 553 Population (in millions) 10.4 2,283 19.3 3 At constant 1995 prices. 2 sources: Czech statistical Offjce, Czech National Bank, Ministry of Labour and social Affairs. CZK 855 million in 2008 compared to CZK 422 million in 2009. charge of CZK 86 million, compared to CZK 23 million in 2009; gain from sale of non-current assets reached 1 Including impairment charge and gain from sale of non-current assets. In 2008, the Group posted an impairment 26.9 26.5 CZK/EUR exchange rate – end of period 24.9 26.4 CZK/EUR exchange rate – average over the period 18.4 GDP growth (in %) 3 CZK/UsD exchange rate – end of period 17.0 19.1 CZK/UsD exchange rate – average over the period 6.0 9.2 Unemployment (end of period, in %) 6.3 1.0 Infmation (in %) 2.3 (4.1) Active mobile customers in slovakia (x 1,000) 2,130 ANNUAL REPORT 2009 27,076 Total assets 11,628 11,666 Net income 15,348 14,877 Income before taxes 15,380 15,075 Operating income 28,312 amortization 1 103,623 OIBDA – Operating income before fjnance costs, tax, depreciation and 64,709 59,889 Revenues Financials 2008 2009 All fjgures, unless otherwise stated, are in CZK millions as at 31 December of each year. with International Financial Reporting standards. Financial data are based on audited consolidated fjnancial statements prepared in accordance 6 92,768 Property, plant and equipment pre-paid 1,893 2,519 2,815 – of which contract 4,802 4,945 Mobile registered customers in Czech Republic (x 1,000) 115 138 Pay TV – O 2 TV (x 1,000) 631 725 ADsL connections (x 1,000) 1,771 57,545 Fixed telephony accesses (x 1,000) Operations (end of period) 8,088 6,489 Capital expenditure 3,196 3,131 Financial debts 78,168 73,879 Total equity 63,429 Financial and operational highlights
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