Report on ONO Midco, SAU and its subsidiaries as of December 31 ...

In this <strong>Report</strong>, references to the "ONO Group", "ONO", "we", "us", “our” and "ours" are, as the context requires, to ONO
Midco, S.A.U. and its subsidiaries as of and for the years ended December 31, 2009, 2010 and 2011.
References to “GCO” are to Grupo Corporativo ONO, S.A., the sole shareholder of ONO Midco, S.A.U. References to
"ONO" refer to the ONO Group following the acquisition of Auna (the “Auna Acquisition”). References to "Auna" and the "Auna
Group" are to Auna Telecomunicaciones, S.A.U. and its subsidiaries.
References to the “Notes” are to the $1,000,000,000 8.875% Senior Secured Notes Due 2018 (issued by Nara Cable
Funding Limited), the €300,000,000 8.875% Senior Secured Notes Due 2018 (issued by Nara Cable Funding Limited), the
€700,000,000 8.875% Senior Secured Notes Due 2018 (issued by Nara Cable Funding Limited), the €295,000,000 11.125% Senior
Notes Due 2019 (issued by ONO Finance II plc) and the $225,000,000 10.875% Senior Notes Due 2019 (issued by ONO Finance II
plc).
Financial Information
On November 22, 2011 the Board of Directors of GCO approved a resolution by which the consolidated financial
statements of the Group were prepared in accordance with International Financial <strong>Report</strong>ing Standards as adopted by the European
Union (IFRS-UE, thereafter “IFRS”) and IFRIC interpretations, for the years ended December 31, 2011 and 2010 in accordance with
current mercantile legislation applicable to those entities presenting financial information under IFRS, being these the Group’s first
consolidated financial statements published in accordance with these standards.
We maintain our accounting records and prepare our statutory accounts in accordance with International Financial <strong>Report</strong>ing
Standards ("IFRS"). Our unaudited consolidated financial statements as of and for the year ended December 31, 2009, the audited
consolidated financial statements as of and for the year ended December 31, 2010, and the audited consolidated annual accounts for
the year ended December 31, 2011 and unless otherwise indicated, other financial information relating to the ONO Group in this
<strong>Report</strong> have been prepared in accordance with IFRS, which differs in certain significant respects from U.S. Generally Accepted
Accounting Principles ("U.S. GAAP").
Unless otherwise indicated or otherwise required by the context, all references in this <strong>Report</strong> to "euro", "€" or "EUR" are to
the lawful currency of the participating member states, including Spain, in the third stage of European economic and monetary Union
of the Treaty establishing the European Community, as amended from time to time. References to "U.S. dollars", "USD", "dollars",
"U.S.$" or "$" are to United States dollars, the lawful currency of the United States of America.
Non-GAAP Financial Measures
Operating free cash flow and free cash flow as well as other data and certain ratios presented in this <strong>Report</strong> are
supplemental measures of our performance and liquidity that are not required by, or presented in accordance with IFRS. Operating
free cash flow and free cash flow are not measures of our financial performance or liquidity under IFRS and should not be
considered as an alternative to net income, operating profit or any other performance measures derived in accordance with IFRS
or as an alternative to cash flow from operating, investing and financing activities as a measure of our liquidity.
We believe that operating free cash flow and free cash flow facilitate comparisons of operating performance from
period to period and company to company by eliminating potential differences caused by variations in capital structures (affecting
interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating
losses), the age and booked depreciation and amortization of assets (affecting relative depreciation and amortization of expense),
non-recurring items and minority interests. We also present operating free cash flow and free cash flow because we believe that
they are frequently used by securities analysts, investors and other interested parties in evaluating similar companies in our
industry, many of whom present such non-GAAP financial measures when reporting their results. Finally, we present operating
free cash flow and free cash flow as a supplemental measure of our ability to service our debt.
Nevertheless, operating free cash flow and free cash flow have limitations as analytical tools, and you should not
consider them in isolation from, or as a substitute for analysis of, our financial condition or results of operations, as reported under
IFRS. Some of these limitations are:
• Operating free cash flow and free cash flow do not reflect our future requirements for capital expenditures or
contractual commitments;
• Operating free cash flow do not reflect changes in, or cash requirements for, our working capital needs;
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