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

The following table sets forth our other operating expenses and the percentage change from period to period for each of
the periods indicated:
% change
Data in € million 2009 2010 2011 09/10 10/11
Leases and canons 54 51 49 (5.6%) (2.9%)
Repairs and maintenance 64 62 58 (3.1%) (6.2%)
Service of independent professionals 90 92 91 2.2% (0.8%)
Advertising 42 43 39 2.4% (9.8%)
Other services 40 36 34 (10.0%) (8.1%)
Taxes 19 32 36 68.4% 10.4%
Impairment of trade receivables 34 26 17 (23.5%) (31.8%)
Total other operating expenses 344 342 324 (0.6%) (5.3%)
In 2011, other operating expenses decreased by €18 million, or 5.3%, to €324 million from €342 million in 2010. The
stability in other operating expenses was mainly a result of the reduction in impairment of trade receivables of 31.8%, the
reduction in other services of 8.1%, the reduction in advertising of 9.8% and the reduction in leases and canons of 6.2% which
were offset by the increase in taxes of 10.4% that was primarily the result of the RTVE Financing Law, which resulted in
expenses of €13.4 million in 2011. In 2010, other operating expenses decreased by €2 million, or 0.6%, to €342 million from
€344 million in 2009. The stability in other operating expenses was mainly a result of the reduction in impairment of trade
receivables of 23.5%, the reduction in other services of 10.0% and the reduction in leases and canons of 5.6% which were offset
by the increase in taxes of 68.4% that was primarily the result of the RTVE Financing Law, which resulted in expenses of
€10.5 million in 2010.
Capitalized Costs: We capitalize direct labor costs associated with the development and construction of our network
and installations carried out at our customer premises. In 2011, capitalized costs decreased by €3 million, or 4.6%, to €62 million
from €65 million in 2010. In 2010, capitalized costs increased by €4 million, or 6.6%, to €65 million from €61 million in 2009.
This increase was primarily the result of increased installation activity related to upgrading equipment for existing customers.
Depreciation, Amortization & Impairment Charges: Depreciation and amortization expense is principally related to the
depreciation of our network, customer premise equipment and installation costs incurred in connection with the addition of new
subscribers, and to the amortization of intangible assets. In 2011, depreciation, amortization and impairment charges decreased by
€6 million, or 1.6%, to €379 million from €385 million in 2010. The decrease was mainly due to the cancellation of network
expansion activities since mid-2008 until 2009. In 2010, depreciation, amortization and impairment charges decreased by
€5 million, or 1.3%, to €385 million from €390 million in 2009. The decrease was mainly due to the cancellation of network
expansion activities since mid-2008 until 2009.
Reversal of Provision: In 2011, we reversed provisions in the amount of €9 million. In prior years we had recognized
certain provisions in connection with contributions to the National Universal Service Fund. In connection with a review of such
provisions following a CMT decision, we reversed a portion of the provisions.
Impairment and Gains or Losses on Disposal of Fixed Assets: In 2011, we increased the recognition of impairments to
€10 million from €2 million in 2010.
Operating Profit
We calculate operating profit as revenues minus operating expenses. Our operating profit increased by €31 million, or
9.2%, to €368 million in 2011 from €337 million in 2010 and by €7 million, or 2.1%, to €337 million in 2010 from €330 million
in 2009. Our operating profit margin was 21.8% in 2009, 22.9% in 2010 and 24.8% in 2011. The increases in our operating profit
and operating profit margin are the result of the factors discussed above.
66