Annual Report of the Management Bord on the

Transcription

Annual Report of the Management Bord on the
Company Status
in 2013
Zagreb, April 2014
Organisation and
human
resources
Multimedia
services
Network services
Infrastructure
Television and
radio
programme
broadcasting
services
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www.oiv.hr
Godišnje izvješće Uprave o stanju Društva za 2013. godinu
CONTENTS
1.
INTRODUCTION ....................................................................................................................................................... 3
MANAGEMENT BOARD REPORT ................................................................................................................................................... 3
2.
COMPANY ACTIVITIES AND POSITION ..................................................................................................................... 5
INSTITUTIONAL FRAMEWORK ....................................................................................................................................................... 5
LEGAL FRAMEWORK................................................................................................................................................................... 5
ACTIVITIES ............................................................................................................................................................................... 5
MANAGEMENT, STRUCTURE, AND ORGANISATION ........................................................................................................................... 6
MANAGEMENT SYSTEM .............................................................................................................................................................. 7
3.
KEY FINANCIAL INDICATORS .................................................................................................................................... 9
4.
GENERAL OBJECTIVES ............................................................................................................................................ 10
5.
ACTIVITIES – CONDITION, 2013 OVERVIEW, AND 2014 OBJECTIVES ...................................................................... 11
TELEVISION AND RADIO SIGNAL BROADCASTING............................................................................................................................. 11
MULTIMEDIA ......................................................................................................................................................................... 16
FIBER OPTIC AND MICROWAVE LINKS ........................................................................................................................................... 18
SERVICES IN PROFESSIONAL MOBILE NETWORK (PMR) ................................................................................................................... 22
SUPPORT AND OTHER ACTIVITIES ............................................................................................................................................... 23
6.
BUSINESS ENVIRONMENT AND OPERATIONAL RISKS ............................................................................................ 25
OPERATIONAL RISKS ................................................................................................................................................................ 25
7.
HUMAN RESOURCES.............................................................................................................................................. 27
EMPLOYEE COSTS AND STRUCTURE............................................................................................................................................. 27
EDUCATION ........................................................................................................................................................................... 27
WORK ENVIRONMENT ............................................................................................................................................................. 28
RESPONSIBILITY TOWARDS EMPLOYEES........................................................................................................................................ 28
REMUNERATION AND SUPPORT ................................................................................................................................................. 28
OCCUPATIONAL SAFETY............................................................................................................................................................ 28
PROTECTION OF EMPLOYEES' DIGNITY......................................................................................................................................... 29
EMPLOYEES - MANAGEMENT BOARD RELATIONSHIP ...................................................................................................................... 29
8.
SOCIAL RESPONSIBILITY ......................................................................................................................................... 30
COMMUNITY ASSISTANCE ......................................................................................................................................................... 30
ETHICS IN BUSINESS................................................................................................................................................................. 30
CORPORATE MANAGEMENT CODE ............................................................................................................................................. 30
ANTI-CORRUPTION PROGRAMME ............................................................................................................................................... 30
9.
CONCLUSION ......................................................................................................................................................... 31
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1. Introduction
Management Board Report
Despite challenging business environment in 2013 company Odašiljači i veze d.o.o. realised good business
results, and positive financial results. In order to reduce further negative impacts of unfavourable economic
and financial circumstance and to maintain business stability, Company increased its efforts in search for new
markets, implemented business cost cutting measures, and systematically realised goals defined by strategic
documents aimed at increasing income from new sources.
Company's pre-tax profit was HRK 17.4 million, 12.1% over the 2013 plan and 0.2% less than in 2012. The
income tax was HRK 3.8 million, giving the after tax profit of HRK 13.5 million.
The operating income realised in 2013 was HRK 232.4 million, 2.7% less than the 2013 plan and 0.6% more
than in 2012.
In accordance with the defined mission and outlined strategic objectives, Odašiljači i veze d.o.o. was applying
an integrated management system compliant with the requirements of HRN ISO 9001:2008 Quality
Management Systems and ISO 14001:2004 Environmental Protection Management System. Given the
specificities of our services and their limited number of customers, particular attention was given to customer
relationships in order to realise mutual economic benefit and successful cooperation.
During 2013, OiV continued with regular broadcasting of the programmes of HRT, RTL Televizija and Nova TV
on multiplexes A and B, as well as regular broadcasting of all the national, regional, and local television
programmes on MUX D. In April 2013 transmission pricing on MUX A and B was adjusted, and in July 2013 also
on MUX D. Transmission pricing was adjusted due to lower fees for use of radio spectrum, and increased
prices of electric power and fuel compared to the same fees and prices in 2009 (MUX A, B), and 2010 (MUX D).
The adjusted prices were lower than the old prices. The lower prices decreased the income, but because of
simultaneous cost reduction, these changes had no impact on profit. HRT announced termination of
broadcasting on medium wave with the beginning of 2014, as well as closure of several correspondent offices
during 2014.
The Company Plan is to continue building OiV fibre optic network with the goal of linking the largest cities in
the Republic of Croatia and establishing links with the fibre optic networks of neighbouring countries.
There were significant activities realised within the Project of unification of fiber optic infrastructure since the
beginning of 2013.
At the session held on January 17th 2013 the Government of the Republic of Croatia adopted its Conclusion on
the Project of unification of fiber optic infrastructure in companies that are in majority ownership of the
Republic of Croatia, tasking CEI (Center for Monitoring Business Activities in the Energy Sector and
Investments) to create the analysis and the proposal of the contractor on the operative implementation of the
technical part of the project and of the management and maintenance of the implemented Project.
Based on the decision of the Government of the Republic of Croatia "Decision on selecting of and issuing
charges to the contractor on implementation of the Project of unification of fiber optic infrastructure in
companies that are in majority ownership of the Republic of Croatia" of April 11th 2013, Official Gazette
46/2013, OiV was appointed as the contractor on operative implementation of the "Project of unification of
fiber optic infrastructure in companies that are in majority ownership of the Republic of Croatia".
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By June OiV drafted the contract proposal for the companies, including the model for operation, maintenance
and future investment into enlargement and joint use of fiber optic infrastructure, as well as the framework
business plan, holding presentation of the plan and the contract to the ministries in July.
The decision of the Government of the Republic of Croatia, class: 022-03/13-04/512, reg. no.: 50301-05/25-133, of December 18th 2013 defined the operative implementation of the Project and posed requirement to the
companies that are in majority ownership of the Republic of Croatia and to the connected companies
managing the fiber optic infrastructure to sign the contract with Odašiljači i veze d.o.o. within 45 days of
coming into force of the decision, on business cooperation based on the income sharing model and for the
duration of 30 years by which Odašiljači i veze d.o.o. would be allowed, within 30 days from the day of the
signing, to place surplus of fiber optic infrastructure of the aforementioned companies on the electronic
communication market for the purpose of project implementation.
The negotiations with the companies continued until the end of 2013 regarding the business cooperation
agreements, the signing of which would be at the beginning of 2014.
On December 31st 2013, the number of Company employees was 289.
On October 1st 2013 OiV implemented Company reorganisation and restructuring, transforming the
organisation from the model that supported previous investment projects, particularly the project of
implementation of digital television and introduction of the first payTV service of digital terrestrial television
(evotv), into the model that would support current and future projects, with particular emphasis on the
project of unification of fiber optic infrastructure in companies that are in majority ownership of the Republic
of Croatia, on development of new services, and on strengthening relationships with customers.
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2. Company Activities and Position
Institutional Framework
Odašiljači i veze fall under the Ministry of Maritime Affairs, Transport and Infrastructure, and its activities are
under the Directorate for Air Traffic, Electronic Communications and Postal Services.
The following regulatory agency have authority over its activities:
Croatian Post and Electronic Communications Agency (from now on HAKOM)
Agency for Electronic Media (from now on AEM)
Legal Framework
Legal framework for the activities of Odašiljača i veza consists of the following acts:
Electronic Communications Act, NN 73/08, 90/11, 133/12, 80/13
Electronic Media Act, NN 153/09, 84/11, 94/13, 136/13
Law on the Croatian Radio-Television, NN 137/10, 76/12
regulations in the area of physical planning and construction
Security and Intelligence System Act, NN 79/06, 105/06
 Regulation on requirements in the area of national security of the Republic of Croatia placed on
natural and legal persons in telecommunications, NN 64/08
Activities
Based on the classification of the relevant regulatory agency HAKOM - Croatian Post and Electronic
Communications Agency, Odašiljači i veze is an operator registered for the following activities:
Providing access to and joint use of electronic communication infrastructure and related equipment
Leasing electronic communication networks and/or lines
Providing transmission of images, voice and sound using electronic communication networks (which
excludes broadcasting service)
Providing broadband Internet access (until December 31st 2013)
Managing multiplex in broadcasting
Conveying, transmitting and/or receiving images, voice, sound and other data for the purpose of direct
reception by public in terrestrial broadcasting
Providing satellite services
Providing services in the private mobile network (PMR) (from January 1st 2014)
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Management, Structure and Organisation
Odašiljači i veze d.o.o. is 100% owned by the Republic of Croatia.
Company Odašiljači i veze d.o.o. was founded by the Articles of Association that established an independent
limited liability company on April 16th 2002, and it was created by dismantling the public institution Hrvatska
radiotelevizija into two entities: Hrvatska radiotelevizija and Odašiljači i veze d.o.o.
In accordance with the Companies Act and Articles of
Association of Odašiljači i veze d.o.o., Company has an
MANAGEMENT BOARD
Assembly, a Supervisory Board and a Management Board. The
Assembly recalls and appoints the Supervisory Board.
DIVISION AND INDEPENDENT DEPARTMENT
DIRECTORS
Company's Supervisory Board has five members. Four
members of the Supervisory Board are elected by the
Picture 2-1 Management structure
Assembly, while one member is elected by Company
employees. The term of office of the Supervisory Board
members is four years. The fundamental authority of the Supervisory Board is to continuously supervise how
Company business operations are managed, and to appoint members of the Management Board. During 2012,
the Supervisory Board members were appointed as follows:
SUPERVISORY BOARD
Marijan Crnjak
Mislav Peričić
Lora Čurković
Damir Vuk
Saša Radulić
Chairman of the Supervisory Board
Vice Chairman of the Supervisory Board
Supervisory Board Member
Supervisory Board Member
Supervisory Board Member, employees' representative
The authorities, duties and responsibilities of the Management Board when conducting business and
representing Company are established by the Articles of Association of Odašiljači i veze d.o.o., that being the
constitutive document of the Company. The Members of the Management Board represent Company
independently and individually. The basic authority of the Management Board is to conduct the Company
business activities and to represent Company in front of the third parties. The Management Board is required
and authorised to, , among others, undertake all actions and render all decisions it deems necessary to
successfully manage the Company business operations, which includes, among others, making the decisions
for the purpose of implementing business strategy, and work and development plans and programmes. The
Management Board consists of:
Aleksandar Golub
Vlatka Dokoza
Board Chairman
Board Member
The basic work organisation of Odašiljači i veze are organisational units that are operational systems for
providing services in the area of telecommunications in fixed networks, as well as using radio spectrum, and
providing services of projecting and supervising construction and installation of telecommunication objects,
creating projects in the field of electric and electronics, as well as installation, maintenance, and directing of
telecommunication equipment, and performance of joint tasks for the requirements of Odašiljači i veze.
Organisational structure consists of:
Divisions and Independent Departments
Departments
Based on the decision of the Management Board of Odašiljači i veze, it is also possible to establish temporary
structural units on the company level for implementation of projects that are of significance for the overall
activity of Odašiljači i veze.
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The divisions are headed by division directors who answer to the Company Management Board. The
independent departments are headed by independent department directors who answer to the Company
Management Board. Departments are headed by the department managers who answer to the division
manager of the division that had established the department. A general act on job systematisation,
Management Board decision, or work contract can specify that certain managers also manage lower
organisational units.
MANAGEMENT
SALES AND MARKETING INDEPENDENT
DEPARTMENT
STRATEGY AND DEVELOPMENT
INDEPENDENT DEPARTMENT
MANAGEMENT OFFICE
HUMAN RESOURCES AND LEGAL
AFFAIRS INDEPENDENT DEPARTMENT
PLANNING, ACCOUNTING AND
FINANCES INDEPENDENT
DEPARTMENT
CONTROLLING INDEPENDENT
DEPARTMENT
MANAGING,
MONITORING AND
PROCESSING DIVISION
REGIONAL CENTRE
DIVISION
INSTALLATION,
BUILDING AND
MAINTENANCE
DIVISION
TELECOMMUNICATION
DIVISION
RADIO
COMMUNICATION
DIVISION
LOGISTICS DIVISION
Picture 2-2 Organisational structure
Management system
The OiV activity is based on economic and developmental sustainability.
Standards and certificates:
ISO 9001 – Quality Management System
ISO 14001 – Environmental Protection Management System
OHSAS 18001 – Occupational Health and Safety Management System
By doing business in compliance with the implemented international standards and specifications, that are
continually developed and maintained, Odašiljači i veze proves its eagerness to permanently improve quality
of business, to take care of the users of its services, to protect environment, and to not only accept legally
prescribed standards, but to set on its own higher standards and to continuously monitor the state of its
business activities.
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Ethics and protection of Company reputation and assets are given particular attention in all business
segments.
In accordance with its business policy Odašiljači i veze manages quality of service, defines business processes,
defines roles and responsibilities in realisation of business goals, conducts supervision and reporting. The
management system is regularly updated and adjusted to the business strategy.
Quality management system is verified internally between one and three times per year (depending on the
area), and once a year with the assessment of an independent reviser, a certifying authority.
Business goals are defined by the business plan, and their realisation is followed monthly and quarterly, with
consequent reporting to the Management Board.
Environmental Protection
Odašiljači i veze puts great importance into environmental protection and continuously works on improving
environmental protection management system, wherever and whenever possible.
The environmental protection goals are ensured
by:
New
technologies
Education
and
improvement
Action in
case of
unforseen
events
Waste
management
Waste
reduction /
Reuse
Preventive
and active
maintenance
managing waste following economic and
environmental protection principles that include
taking care of the waste following the legally
defined procedures
avoiding creation of waste if possible and by
reusing it for some other purposes
preventive and active maintenance of
equipment and installations
constant education and improvement of
environmental protection management system
procedures
organised action in case of a sudden event in
accordance with the intervention plans
introduction of new technologies (reducing
power use, long-term reduction of various waste
loads...)
Picture 2-3 Realisation of environmental protection goals
OiV holds ISO 14001:2004 Environmental Protection Management System. By taking care of our environment,
we provide for needs and expectations of current and future generations.
Internal and external verification of the functioning of the Environmental Management System is conducted
systematically and regularly.
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3. Key Financial Indicators
Indicators
2012
2013
Comparison
Operating income
231,039,649
232,360,812
101.0
Total income (operating + financial)
236,985,219
235,310,357
99.3
Operating expenses
202,703,036
202,177,749
99.7
Material costs
68,398,565
61,091,591
89.3
Personnel costs
51,309,039
49,811,687
97.1
Depreciation
59,791,551
58,076,428
97.1
Intangible costs
23,203,881
33,198,043
143.1
219,583,328
217,949,120
99.3
EBIT
28,336,613
30,183,063
106.5
EBITDA
88,128,164
88,259,491
100.1
EBIT margin
0.12
0.13
105.9
EBITDA margin
0.38
0.38
99.6
Gross profit
17,401,891
17,361,237
99.8
Earnings after taxation
13,421,587
13,522,393
100.8
120,310,825
130,094,892
108.1
Stock
23,042,979
23,342,133
101.3
Receivables
88,042,555
38,288,717
43.5
3,504,213
5,829,214
166.3
Fixed assets
384,362,509
348,259,553
90.6
Total assets = Assets
511,389,074
484,543,298
94.8
Total capital
226,200,184
239,722,578
106.0
69,803,930
165,649,814
237.3
210,820,899
74,613,207
35.4
ROE
0.08
0.07
94.1
ROA
0.03
0.04
105.3
ROS
0.08
0.07
99.2
Financial stability ratio
0.88
1.11
126
Coverage level I
0.59
0.69
117
Coverage level II
1.14
0.90
79.4
Debt ratio
0.56
0.50
90.3
Total assets turnover ratio
0.46
0.49
104.8
Current assets turnover ratio
1.97
1.81
91.8
Total expenses (operating + financial)
Current assets
Cash
Current liabilities
Long-term liabilities
Slika 3-1 Key Financial Indicators
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4. General Objectives
OiV's general objectives are strengthening its market position by developing new services, and maintaining
and developing electronic communication infrastructure and related equipment.
Strengthening positions in core activities and developing new services






Strengthen its position of the market leading network operator in the Republic of Croatia in the sector
of terrestrial broadcasting,
Continue expanding telecommunication services, especially by expanding capacities in the fiber optic
network,
Continue expanding multimedia services,
Develop new services,
Monitor customers' requirements and wishes and promptly react accordingly in all areas, especially in
telecommunication services, digital television, and new multimedia services,
Work continuously on improving quality of all services.
Maintaining and developing electronic communication infrastructure and related equipment



Keep its position among the leading infrastructure operators in the Republic of Croatia,
Work continuously on maintaining and developing infrastructure, and on upgrading services,
Take continuous care in all the aspects of environmental protection.
Basic development guidelines are innovation and adaptation of business offering in accordance with
technological development, market demands and needs of customers, making OiV more recognisable as an
innovative network and service operator in the area of electronic communications. The emphasis is on
providing high quality services to maintain and further make OiV more recognisable as a reliable partner and
with customer satisfaction.
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5. Activities – Condition, 2013 Overview, and 2014 Objectives
Odašiljači i veze d.o.o. activities can be divided into:
Television and radio broadcasting
Multimedia
Fiber optic and microwave links
Professional mobile radio network (PMR) - beginning with 2014
Support and other activities
Operating results achieved in 2013 were according to the business plan. The operating income was HRK 232.3
million, which was 0.6% more than in 2012.
Item
2012
2013
Comparison
OPERATING INCOME
231,039,649
232,360,812
100.6
Television and radio broadcasting
Multimedia
Fiber optic and microwave links
Support and other activities
156,007,751
13,261,396
55,683,303
6,087,199
156,035,290
13,296,243
52,837,327
10,191,951
100.0
100.3
94.9
167.4
Picture 5-1 Income by activity
The main Company objectives in 2014 are:
income increase of 10% compared to 2013
network expansion and filling the remaining slots in the area of television and radio signal
broadcasting
project of unification of fiber optic infrastructure
acquisition of new, primarily foreign, users and new services in the area of multimedia
development of professional mobile radio network (PMR)
market presence on foreign markets and markets in neighbouring countries with consulting services
and services of projecting, installing and maintaining digital terrestrial television systems
Television and Radio Signal Broadcasting
Digital Terrestrial Television – Publicly Available Programmes – „free-to-air“
Over last ten years Odašiljači i veze has invested significant own assets in building digital terrestrial television
networks (DVB-T). Three digital terrestrial television networks (multiplexes - MUX) have been built for DVB-T
standard with MPEG-2 video content encoding system:
MUX A
 10-year licence – valid until 24. 4. 2019
 National coverage – more than 98% of the population
 The entire multiplex capacity is used, 4 national programmes are broadcast, two of which are
general HRT programmes according to the Law on the Croatian Radio-Television
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MUX B



MUX D




10-year licence – valid until 24. 4. 2019
National coverage – more than 96% of the population
Multiplex broadcasts 4 specialised programmes, and the fifth slot remains empty.
10-year licence – valid until 21. 7. 2020
National coverage – more than 90% of the population. 2 programmes are broadcast on
national level (sptv, CMC), and an additional new programme starts with January 2014 – RTL
Kockica.
Regional coverage (D1-D9) – coverage depends on the region, but it is at least 70% of the
population. There are 16 programmes broadcast on regional level.
Local coverage (networks have been built for regions d71, d72 and unified region d44-d45d46). There are 4 programmes broadcast on local level. In each of the regions D2, D4, D6, D7
and D9, and d71 and d72 there is one free slot, and in the region d44-d45-d46 there are two
free programme slots.
The main problem are vacant slots in multiplexes B and D, and subsequent reduced income which has direct
impact on cost effectiveness of the digital broadcasting of a multiplex, since the permits have a set expiration
date. Apart from that, operational costs of networks are the same no matter how filled their slots are, all the
frequency fees are paid in full amount, equipment depreciation goes on, etc. Because of one vacant slot in the
B multiplex OiV is annually losing approximately HRK 7.4 million.
Global economic crises caused significant reduction in advertising, main income source of all the commercial
television networks, and this has also reflected on OiV since publishers, especially those on regional and local
levels, meet their obligations with increasing difficulty.
The continuation of this trend is to be expected in the next period, i.e. some publishers might stop their
operations, there might be bankruptcies, merging of publishers, etc., all of which can also have negative
impact on the occupation of multiplex slots, and thus loss of income.
Other problems are:
interference by Italian transmitters on the entire Adriatic coastal area. The interference by Italian
transmitters on the entire coastal area, from west shore of Istria to Prevlaka, is a particular problem
for all the digital terrestrial television networks, preventing good reception of all the Croatian
programmes. There has been no progress with resolving Italian interference. Due to Italian
interference, there has been a huge public pressure caused by justified complaints by viewers who are,
especially during summer months, prevented from following the programmes of national and local
broadcasters. There is a danger that part of the viewers will stop paying television licence fees, which
can indirectly also have effect on OiV. Apart from the viewers, publishers are also sustaining great
damages, and there is the danger that they will cancel transmission service or require fee reduction.
In December 2013 the Italian Government adopted a legislation that will require that by the end of
2014 all the frequencies where there is interference with reception of the domestic television
programmes in neighbouring countries are released. If the frequencies are not released, after that
deadline the Italian authorities will be able to undertake other enforcement measures in accordance
with the legislation.
In addition, there has been an announcement of a new competition for frequencies in Italy, which can
only additionally increase the interference problem.
potential interference from new LTE networks of mobile operators HT and VIPnet operating in
frequency area 791-862 MHz (so called 1st digital dividend, 800 MHz band). Resolving potential
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interference from LTE networks falls on mobile operators, and the procedure has been defined in
collaboration with HAKOM.
Business in 2013
In 2013 the realised income was HRK 90.2 million, HRK 2.8 million more than in 2012, despite the removal of
KAPITAL NETWORK on December 31st 2012 and of TV PLUS d.o.o. on June 21st 2013 from the digital
broadcasting system in MUX D, and despite price adjustments in MUX A and B in April 2013, and in MUX D in
July 2013. Transmission pricing was adjusted due to lower fees for use of radio spectrum, and increased prices
of electric power and fuel compared to the same fees and prices in 2009 (MUX A, B), and 2010 (MUX D). The
adjusted prices are lower than the old prices, which decreased income, but, at the same time, the costs are
lower, so the mentioned changes have no significant impact on profit. The transmission of new television
programmes HTV3 and HTV4 started at the beginning of 2013, which had influence on the income increase
compared to 2012.
Objectives in 2014
Find solution to filling remaining capacity of the multiplexes B and D.
The investments concern regular, planned investments into network optimization and equipment
replacement based on its end of life and on permit duration, which includes the equipment for signal
processing, conveyance, and transmission, and UHF antenna systems.
Digital Terrestrial Television – Programmes Protected by Conditional Access
System (CAS) – "Pay-TV"
On the grounds of a joint bid in the HAKOM's public tender procedure for managing MUX C and MUX E, OIV,
HPP, and HP were selected as the network operator. Both networks operate using DVB-T2 standard with
MPEG-4 encoding system and conditional access system (CAS) for the broadcast content, with the goal of
offering service of paid digital terrestrial television (PayTV) under the commercial name "evotv".
Pursuant to the issued Permit and mutual contractual obligations, OiV is under obligation to build and manage
MUX C and MUX E networks in two phases as defined by the Permit. There is a possibility of further expansion,
i.e. additional phases, depending on the project's successfulness. HPP is in charge of managing and
coordinating the entire project, while HP is in charge of procuring and buying content and copyright on
content to be transmitted, and sale of the service to end users.
Just like in the case of FTA (free-to-air) DVB-T networks, there is a problem of Italian interference in the
Adriatic coastal area that, together with the global economic crisis, has negative impact on service sales to end
users.
Business in 2013
In 2013 the realised income was HRK 17.9 million, HRK 12.1 million more than in 2012.
The first phase of the network building was finished on July 15th 2012 by starting operations at 12 transmitter
locations for both multiplexes, achieving coverage of more than 80% of the population of the Republic of
Croatia. The commercial operation started on September 15th 2012.
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On Mai 9th 2013 holders of the Permit for MUX C&E (HPP, OiV, HP) submitted request to HAKOM to change
the Permit RF-DTV-01/11 regarding dynamics of further network building.
Accordingly, during 2013 the realisation of the second phase of the network building started, and it was
concluded in December 2013 by starting operations at 5 additional transmitter locations, achieving coverage
of approximately 85% of the population of the Republic of Croatia for both multiplexes.
2014 Plan
Further expansion of MUX C and E should be planned together with "evotv" project partners.
Terrestrial Broadcasting of Radio Programmes
Odašiljači i veze built and managed the following VHF/FM radio networks with national concessions:
HRT HR1
HRT HR2
HRT HR3
HRT HR locally.
Since December 2012 there is a new contract between OiV and HRT on broadcasting service for HRT's radio
programmes, and the contract duration is until the end of 2016.
Apart from broadcasting of radio programmes, OiV, in its role of infrastructure operator, leases its electronic
communication infrastructure in the entire Republic of Croatia, where other holders of radio concessions on
national and/or regional level broadcast their programmes on their own transmitters using either their own
VHF antenna systems or leasing OiV's VHF transmitting antenna systems
Just like in the case of TV technology, the Italian VHF stations have been causing reception problems on the
Adriatic coast for many years. In collaboration with the relevant agency (HAKOM), OiV has been implementing
measures to reduce impacts of Italian interference (increasing VHF radio station power, changing parameters polarization, transmitter frequency, the way the modulating signal is introduced etc.).
Business in 2013
In 2013 there was an alignment of service income representation in accordance with the stipulations of the
Electronic Communications Act and Croatian Post and Electronic Communications Agency.
The income from technical services provided to holders of radio and TV concessions has been divided into
three items:
- income from providing radio distribution and transmission services in analogue terrestrial
broadcasting.
- income from providing conveyance of images, voice and sound,
- income from providing projecting, installation, measuring and maintenance services.
Cancelling of the broadcasting service for the programme Glas Hrvatske on VHF at the beginning of 2013 and
establishing a new conveyance system using new encoding system (Eapt-X) with July 2013 caused income
decrease in 2013.
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2014 Plan
Increase quality and coverage of the population and of the territory of the Republic of Croatia of the signal of
the third programme of Hrvatski radio (HRT HR3). To do that, there are plans to increase transmitting power at
some of the existing locations (e.g. Tusti vrh, Uljenje), as well as to build a dozen new locations that would
cover areas with currently insufficient coverage (e.g. Sinj, Knin, Imotski, Metković, Krapina, road route ZG-RI).
In addition, there are plans to build additional locations in HR2 network to extend coverage of the coastal area
(Omiš and the area between Makarska and Zaostrog).
Following the HRT decision, broadcasting of Glas Hrvatske programme on medium wave stopped at the
beginning of 2014.
In order to keep the service quality dependant on the age of the existing VHF radio equipment on individual
transmitter locations, OiV will invest assets into renovation of VHF/GM transmitters and VHF antenna systems.
Satellite Transmission
Odašiljači i veze provide satellite transmission service on satellite Eutelsat E16A on orbital location 16°E and on
satellite Spacecom AMOS3 on position 5°W for the users:
EutelsatE16A
o HRT (4 TV and 5 radio programmes)
o RTVSLO (4 TV and 5 radio programmes)
o HKR (radio programme)
AMOS 3
o
o
o
MTV Adria (2 TV programmes)
NTH (TV programme)
KlasikTV (TV programme)
For the programmes of HRT, MTV, and KlasikTV there is also an option of Viaccess conditional access system
that limits reception of the said programmes to the users who possess an authorised decoder card. OiV
provides services of authorisation and deactivation of decoder cards upon user demand.
Business in 2013
The income realised in 2013 was HRK 5.5 million, 22% lower than in 2012. The income decrease is mostly
attributed to expiration of contracts with customers who had no further interest in continuing cooperation.
2014 Plan
The plan is to fill the remaining available capacity on the existing satellites on which we are currently
transmitting, and to use other free satellite transmission stations to provide services to new customers.
In addition, there is a plan to upgrade the existing Viaccess system to the latest software version to provide
the highest possible copyright protection from unauthorised watching of the programmes.
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Multimedia
IPTV
OiV has an IPTV platform for providing interactive television wholesale service. The users of the service are
cable and telecom operators who provide their end users with payTV service without investing into their own
service infrastructure. IPTV service is divided into two groups:
IPTV HeadEnd
IPTV turn-key
IPTV HeadEnd service consists of receiving, processing and delivering TV and radio programmes using IP
technologies, while IPTV turn-key includes, in addition to IPTV HeadEnd, service interactive platform like
Middleware, Conditional Access, Video-on-Demand, nPVR, etc.
Business in 2013
The income realised in 2013 was HRK 8.7 million, on the same level as in 2012.
2014 Plan
By expanding intercity and international network, OiV can offer its wholesale IPTV services to smaller cable
and telecom operators outside of Zagreb and Croatia. During 2014 OiV will focus on keeping its existing users
in the Republic of Croatia, and at the same time it will try to attract new regional users of wholesale IPTV
services by implementing fiber optic links at border crossings.
The income from multimedia is expected to decrease because of unfavourable trends in the environment.
Playout
Playout service represents automatic transmission of TV programmes that allows content owners or copyright
holders to start new TV programmes in a timely and cost effective way. The OiV Playout platform is located in
satellite and multimedia centre Deanovec. The advantages of the OiV Playout service to the users are:
Minimal initial investment in technical infrastructure;
Exceptionally short time required to start new TV programmes;
Focus on programming content (OiV worries about technical infrastructure);
Capacity of signal distribution over multiple channels (terrestrial transmission, satellite transmission,
IPTV).
OiV's Playout services are used by the holders of content rights to produce and distribute TV channel signal for
Croatian and regional market.
Business in 2013
The income realised in 2013 was HRK 4.5 million, on the same level as in 2012.
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2014 Plan
During the next period OiV will focus on keeping its existing users and on acquiring new ones, primarily foreign
media houses that want to regionalise existing TV channels for pay TV platforms in Croatia and the region.
The main risk is represented by foreign competitors offering services similar to Playout, and telecom operators
offering regionalisation of the existing TV programmes.
New Multimedia Services (OTT and HbbTV)
During the next period OiV will focus on development of new services that will provide new income in the
future and it will widen the focus of new multimedia services from telecom operators to media houses and
other entities. Following market trends, user inquiries and sale opportunities, new alternative ways to convey
TV signal are:
Over-The-Top (OTT) distribution of audio-visual contents;
Interactive television based on Hybrid Broadcast Broadband TV (HbbTV) standard.
The term OTT means delivery of audio-visual contents to end users over Internet without direct involvement
of Internet service providers in the process of content distribution. An Internet service provider can be aware
of the traffic transporting audio-visual content, but it is in no way responsible for it, nor can it control access to
it. To access and reproduce OTT content the end user can use computer, video game console, "smart" phone,
"smart" TV set, or any other device that can access Internet and reproduce audio-visual content.
During the last period, OiV identified several marketing opportunities with the existing users and evaluated
several potential OTT technical solutions. During the following period, OiV will put more effort into
identification and processing of OTT sale opportunities. During 2014, OiV will enable OTT pilot platform for
demonstrating OTT services to potential users.
The HbbTV term refers to an industry standard and promotional initiative for harmonisation of different
(broadcast, broadband) end user delivery methods. Members of HbbTV consortium (that defines and
promotes HbbTV standard) are leading manufacturers of consumer electronics and software, but also TV
publishers. Leading European TV publishers have until now mostly already started end user services based on
HbbTV (as pilot projects or commercial services).
2014 Plan
During 2014 OiV will work on promoting HbbTV standard at national TV publishers and it will continuously
follow development of HbbTV services in Europe. The plan is to produce a demonstration of a solution,
effectively a pilot project for national TV publishers. The risk is unregulated market of digital user receivers
that form the basis for providing an HbbTV service.
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Fiber Optic and Microwave Links
Odašiljači i veze d.o.o. is one of the largest providers of transmission services in the Republic of Croatia.
Service of conveying telecommunication capacities supports the most varied technological platforms
(PDH/SDH, Ethernet/GbEthernet, IP/MPLS), as well as high speed data transfer. Spread of potential
capacities/transfer speeds range from 2Mbit/s to 10Gbit/s and more.
Leasing links can be provided with different high reliability transport systems with high degree of redundancy:
 digital microwave link systems mean a high capacity network based on SDH technology with access
links in towns,
 fiber optic link systems based on DWDM and CWDM technology.
Fiber Optic Link System
During last five years Odašiljači i veze have, for the purpose of providing electronic communication services,
started construction of a modern fiber optic network based on DWDM technology. The network has been built
using the fiber optic infrastructure of the companies that are in majority ownership of the Republic of Croatia
(ARZ, HAC, Plinacro). The network allows for providing a wide range of services of conveying high speed
telecommunication capacities (from 2Mbit/s to 10Gbit/s and more) between cities Zagreb, Rijeka, and Split,
and it is also used to provide services of OiV's core business (distribution of radio and TV programming, and
multimedia services).
Overview of 2013
The income realised in 2013 was HRK 18.8 million, and it was on the same level as in 2012. During 2013 OiV
provided electronic communications services of conveying high speed telecommunication capacities through
built fiber optic network based on DWDM technology.
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Picture 5-2 DWDM network – current situation
Further Development of the Optical Network – 2014
Further development of the optical network in 2014 will be based on the following indicators:
-
needs of telecommunication operators in the Republic of Croatia
needs of telecommunication operators outside the Republic of Croatia with the purpose of
establishing new transit routes through Croatia
needs of business users (economic zones and data centres)
needs of building a core network in order to implement the Project of unification
needs of services of OiV's core business (distribution of radio and TV programmes, and multimedia
services)
Digital Agenda for Europe 2020
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Picture 5-3 DWDM network – current state and planned expansion
In addition, apart from providing services of conveying high speed telecommunication capacities, OiV partially
focused on leasing fiber optic links of the mentioned companies, which should bring a significant income
increase.
Project of unification of fiber optic infrastructure
The Project of unification of fiber optic infrastructure in companies that are in majority ownership of the
Republic of Croatia was initiated at beginning of 2013. The Project objective is to unify and standardise offer
on the electronic communication market, and of enabling faster and better development of the wholesale
market, thus also enabling the outlined development goals of broadband access for citizens and economic
subjects, in accordance with the "Strategy for the development of broadband access in Croatia".
In its session of January 17th 2013, the Government of the Republic of Croatia adopted its Conclusion on the
Project of unification of fiber optic infrastructure in companies that are in majority ownership of the Republic of
Croatia by which it gives responsibility to CEI (Center for Monitoring Business Activities in the Energy Sector
and Investments) to create the analysis and the proposal of the contractor on the operative implementation of
the technical part of the project and of the management and maintenance of the implemented Project.
Based on the decision of the Government of the Republic of Croatia "Decision on selecting of and issuing
charges to the contractor on implementation of the Project of unification of fiber optic infrastructure in
companies that are in majority ownership of the Republic of Croatia" of April 11th 2013, Official Gazette
46/2013, OiV was appointed as the contractor on operative implementation of the "Project of unification of
fiber optic infrastructure in companies that are in majority ownership of the Republic of Croatia".
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On the session held on December 12th 2013 the Government adopted the Decision on the operative
implementation method of the Project of unification of fiber optic infrastructure in companies that are in
majority ownership of the Republic of Croatia that defines that OiV and companies ARZ, HEP, HAC, HC, HŽ
Infrastruktura, Janaf and Plinarcro are to sign the contract on business cooperation based on the income
sharing model and for the duration of 30 years by which OiV would be allowed to place surplus of fiber optic
infrastructure of the aforementioned companies on the electronic communication market for the purpose of
Project implementation.
There are ongoing negotiations with the companies regarding the terms of the contract on business
cooperation and on the ways to implement the Project, and the operative beginning of the Project is planned
for the beginning of 2014.
Microwave Link System
OiV has a large system of microwave links with more than 200 individual systems of different capacities, two of
which are two national microwave backbone networks (on 4 and 8 GHz)
The system is constantly expanded to new microwave links, depending on the market demands, but in recent
years there has been reduced investment into expansion, with the exception of the expansion for the needs of
MUX C and MUX E project, mostly because microwave links do not meet needs of high capacities (above
approximately 200 Mbit/S on interregional links) since their permits are expensive and thus they are not
competitive with optical links for larger capacities based on the cost. Therefore, in the following period, with
the exception of distribution of DVB-T, DVB-T2 signals, and conveying radio and TV programmes
(contribution), the microwave links will be used for smaller capacities and for regional links (e.g. Požega-Osijek,
Pula-Rijeka or Dubrovnik-Split).
Business in 2013
The income realised in 2013 was HRK 34.1 million, and it was 5.6% lower than in 2012. Because of the
migration to optical transport networks between Zagreb and Split and Zagreb and Rijeka, part of the existing
microwave links is currently not used (approximately 25%).
2014 Plan
In order to optimise costs, it will be necessary to replace existing digital microwave equipment on certain
routes with the equipment operating in higher frequency ranges. This would gain significant savings in costs
for RF usage permits, and keep the existing technical specifications.
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Picture 5-4 OiV microwave network
Services in Professional Mobile Network (PMR)
Odašiljači i veze plans to expand its offer of mobile and fixed services based on digital professional radio
systems (from now on, "PMR services") in UHF and VHF ranges. OiV's PMR service will provide a high quality,
reliable and safe voice and data fixed and mobile communication that will be always available, independent of
the state of the public communication services.
Planned PMR services include providing:
voice and data services on own professional radio communication network
maintenance and managing service for the existing radio communication systems of others
planning, projecting, and building professional radio communication systems for others' needs
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Support and Other Activities
Colocation – leasing electronic communications infrastructure
There is various radio and telecommunication equipment installed on the existing OIV locations, such as radio
transmitting equipment, GSM/UMTS/LTE equipment, microwave link devices, wireless equipment, equipment
for satellite reception and transmission, etc.
We offer services of project preparation, installation, maintenance, and remote monitoring for all the
equipment that the user might need to install on OIV locations.
Project Design, Installation, Maintenance
Project Design
An experienced, expert team of certified engineers can offer planning and projecting of radio communication
and telecommunication networks and objects, compiling project documentation in the field of electronic
communication necessary for operating permits, designing projects of electric installations and grounding for
objects, projecting metal constructions and mounts for different types of antennas and antenna systems,
making projects for installation of electronic communication equipment, supervising object building and
installing of electronic communication equipment.
We have licenced software packages for projecting antenna systems for transmission of radio and television
programmes, making radiation graphs, making coverage maps with digital terrain model and GIS data
(population, traffic infrastructure, settlements, waterways, etc.), projecting microwave and fiber optic
systems.
Installation
OiV has expertly qualified employees for installation of different types of electronic communication devices
and equipment (radio and television transmission equipment, microwave link equipment, signal processing
equipment, satellite equipment, etc.) and of electric power equipment (plant switchboards, electric
installations, object grounding, AC and DC UPS, generators). Most of Company's own equipment in OiV's
objects, as well as the other users' equipment, was installed by OiV's employees.
Engineers and technicians are constantly educated on courses and seminars, and in production plants of
equipment manufacturers.
Experienced and trained mechanics-installation experts are qualified to install antennas on all kinds of masts,
and we make all kinds of bearing structures and constructions for antennas and antenna systems in our own
mechanic shop.
Maintenance
OiV employees independently maintain devices and equipment used for providing services, as well as the
associated electric power equipment. We have measuring instruments for all kinds of measurements on radio
and telecommunication equipment, as well as the mobile monitoring vehicle for radio measuring in electronic
communication network, as well as measuring, testing and determining interference in radio spectrum.
Our own Surveillance and Management Centre (NOC), located in Zagreb, performs supervision of radio and TV
transmission, telecommunication capacities, multimedia contents, and processing and transmitting devices
and equipment, and it also supervises the infrastructure (electric energy equipment, plant premises) at all the
more important objects.
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2013 Overview
In 2013 the listed services brought income of HRK 0.5 million.
Contact centre
After the call centre of the HR Government for assistance in move to digital television ended its operations (call
centre 0800 1-1-2011 ended operations on November 30th 2011), OiV's contact centre took over more
intensive communication with viewers with the goal of providing citizens with all the information on
conditions and possibilities of reception of digital television and radio transmitted by terrestrial transmitters
and by satellite. Unfortunately, most of the viewers' calls came because of the interference caused by illegal
Italian transmitters all over Adriatic, from western coast of Istria to the far south in Dubrovnik region,
especially during the summer when interference is the most prominent.
OiV's contact centre continues regular operations within the existing tasks.
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6. Business Environment and Operational Risks
Operational Risks
Operational risks are impossible to avoid, since there is no entrepreneurship without risk. Company Odašiljači i
veze is exposed to different financial risks related to price, interest rate, credit, and liquidity risk, as well as to
market risk, albeit at lower level. Company monitors mentioned risks related to its business operations and
manages them using internal risk reports that report risk exposures analysed in terms of their degree and size,
thus trying to reduce their impact. In order to as much as possible reduce Company exposure to various risks,
Company collects solvency and credit worthiness information on buyers, stipulates advance payments, collects
bank guarantees, stipulates precisely type, quality and quantity of goods and services, as well as delivery
deadlines and take-over procedures, defining suitable transport and storage, contracting strong and stable
payment currencies, etc.
Capital Risk
Company manages its capital in order to ensure unlimited continuation of business operations, while
simultaneously generating the greatest return to interested parties through optimizing the balance between
debt and equity capital. The structure of Company's capital consists of the capital that comprises subscribed
capital, reserves and kept profit.
Price Risk
OIV operates mainly on the domestic market, so the Company's Management Board sets prices of its services
based on the real market prices. This type of risk is more and more prominent in consequence of the global
crisis.
Interest Rate Risk
The interest rate risk is the risk that the value of financial instruments will change due to changes to the
market interest rates compared to the interest rates applicable to the financial instruments. Company is
exposed to the interest rate risk because of the received loans that are linked to EURIBOR trends on the
international market, as well as to TBMF trends of on the domestic market, and most of them have been
contracted with the variable interest rate.
Credit Risk
The credit risk refers to the risk of default of the contractual obligations by the other party to the contract,
whereby Company would suffer financial losses. Company follows procedures that ensures sales to the
customers who have a good credit score and who do not exceed the acceptable limit of credit exposure.
Company exposure and its business partners' credit scores are constantly monitored. In spite of the above, the
global economic crises brought significant fall of advertising, which is the main income source of all the
commercial televisions, that also reflects on Company since the publishers, especially those on regional and
local levels, are harder and harder put to meet their obligations. It is expected that the trend will continue over
the next period, that is, that certain publishers will stop operating or end in bankruptcy, that there be mergers
of publishers, and similar.
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Liquidity Risk
The liquidity risk management means maintaining adequate amount of money by maintaining adequate
reserves, and by using suitable bank credit products and loans from central reserves through continuous
monitoring of the estimated and actual cash flows, and by adjusting the maturity of financial assets and
financial liabilities.
The ultimate responsibility for the liquidity risk management is borne by the Management Board, which has
set a sound framework for the liquidity risk management, and identified requirements concerning liquidity
management.
In order to efficiently manage the liquidity risk, OiV follows the liquidity management policy that comprises
planning of expected known and potential outbound cash flows, and of sufficient inbound cash flows to cover
the former. In that sense, OIV continuously monitors liquidity and takes adequate measures to remove or
prevent anything that might cause lack of liquidity.
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7. Human Resources
Employee Costs and Structure
The greatest value of Company rests with its employees whose educational structure indicates that they are
overall highly educated human resources, and who, through their engagement, experience and knowledge,
form the main prerequisite to maintain competitive advantage of Company.
One of the basic business objectives of Company is to attract and to retain highly educated, high-quality
personnel, applying efficient models of motivation and of encouragement of personal ambitions of each
individual employee.
Basic principles:
 equal opportunities and working conditions for all employees,
 equality and protection of human rights,
 ethics in business operations,
 fairness as a general moral principle,
 achieving the greatest good for the greatest number of people.
On October 1st 2013 OiV implemented reorganisation and restructuring of Company, transforming the
organisation from the model that supported previous investment projects into the model that would optimally
support current and future projects. During 2014 the adjustment of qualification and age structure, as well as
of the number of employees, will continue following the strategic objectives and business projections of
Odašiljača i veza d.o.o.
On December 12th 2013 Company had 289 employees, 40 women. The average seniority was 19 years, and
average age 43. 46% of the employees were highly educated (graduate or higher), 9% had college education,
and the remaining 45% high school or lower. Considering gender, seniority and education structure, there
were no significant changes compared to 2012. The total number of employees fell by 0.7%.
The total costs of employees in 2013 were HRK 49.8 million Kuna, a slight decrease of 2.97% compared to the
same period of the year before, when they were HRK 51.3 million. The costs of employee in the operating
income of 2013 has slightly increased, and in average it is 21%.
The productivity indicator in 2013 was 1.3% higher than in 2012, and income per employee was HRK 804,017.
Education
Since lifelong learning is one of the key prerequisites for the continued development of Company and its
survival on the demanding technological market, continuous investment into knowledge of employees is OiV's
priority. Sophisticated technology requires continuous investment in knowledge and competencies of
employees, and training and education both in the Republic of Croatia and abroad. Employees acquire
specialised and general knowledge within Company. Specialised knowledge is often acquired through training
and education provided by the provider of the equipment used by Company for its core activity, at
conferences and seminars in Croatia and abroad, as well as on in-house seminars. Therefore, there is a marked
growth of the number of employees who participate in various forms of education, and, in parallel, there is
growth of the total average investment into education.
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Work Environment
There is a continuous effort to improve the work environment in order to increase employee satisfaction and
motivation through:
 possibility of a continuous process of learning and training
 elaborated incentive system based on performance results
 stimulating working environment, work place with modern equipment
 care for the employees' health through regular annual medical examinations
A management system governing employee and manager efficiency is currently under development, and new
communication tools are being implemented, both of which will contribute to strengthening of motivation and
achievement on all levels, and by well-defined evaluation criteria contribute to work transparency and socially
responsible business.
Implementing employee efficiency management system involves:
Evaluation of work effectiveness model and defining goals in the entire organisation,
Employee reviews, periodically and every six months,
Adjustment of the reward system based on results and work efficiency evaluations,
Education of directors and managers to use efficiency management system,
Informing workforce on process details.
Responsibility towards Employees
In general, Company employees are employed without time limitation. Temporary employment is used only as
a solution to temporary replacements, and their share is minimal.
Employees have the opportunity to continuously learn and train. There is an elaborated system of incentives
based on work performance. Employees work in a stimulating working environment in work places with
modern equipment. Care for the employees' health is reflected in the regular annual medical examinations.
Remuneration and Support
In addition to their regular income, Company provides its employees with various benefits. They are shown
through work place accident insurance, meal allowance, jubilee awards for loyalty to Company, holiday
bonuses, special Christmas gift for all the employees' children under 15, reimbursement of travel costs to
work, severance pay when retiring, support in the event of the death of a close family member, and assistance
in children's education for the OiV employees who are single parents.
Occupational Safety
OIV holds certificate for specification OHSAS 18001 - occupational health and safety management system. The
specification was introduced for the purpose of more efficient risk management for health, work safety, and
minimising work related injuries and occupational diseases. There is a systematic monitoring of legal and other
regulations, and adaptation of measures and activities in their implementation, education and training in
occupational safety, examination of work tools that are extra dangerous, periodic medical examinations of
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workers on positions that have special working conditions, periodic examination of personal protective
equipment and work equipment, as well as a series of other measures.
OHSAS 18001 specification in OIV has been integrated with ISO 9001 and ISO 14001 standards.
Protection of Employees' Dignity
For the purpose of protecting the employees' dignity, Company has appointed an employee who, in addition
to the Management Board, is authorised to receive and resolve complaints regarding the protection of
employees' dignity. In order to provide a working environment that is free of any form of behaviour that could
endanger the dignity of employees, the rules have been set defining the procedure to be followed if any form
of harassment or inappropriate behaviour occurs. The actual procedures, as well as any details regarding the
procedures, are inviolable and confidential, while the initiation of the procedure is defined by internal rules.
Employees - Management Board Relationship
There is a Workers' Council in Company, established in 2005, comprised of 5 members. Through the Workers'
Council, in the manner and according to the terms and conditions stipulated in the Labour Act, the employees
participate in the decision-making process in matters related to their economic and social rights and interests.
In Company, there is also a trade union that acts for the welfare of the employees.
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8. Social Responsibility
Socially responsible business is adoption of good business practice and its application in management and
making business decisions. The key areas of activity within the context of socially responsible business are
market behaviour, attitude towards employees, attitude towards environment, and attitude towards local
community. Company received Indeks DOP - DOP's award for socially responsible business - in 2011 and 2012.
Community Assistance
Whenever possible, Odašiljači i veze d.o.o. (OIV) tends to offer humanitarian assistance to children or people
in need, to support the gifted students, to give donations to pre-school and school institutions and to donate
to scientific and professional conferences.
Ethics in Business
In 2010 the Code of Ethics and Business Conduct was adopted and published on the Company intranet. The
purpose of the Code is to promote ethical values in business conduct, in daily work and in interpersonal
relations. The Code provides for the appointment of a commissioner in charge of receiving reports about nonabidance or breaches of adopted ethical principles. It is also the duty of the commissioner to advance ethical
conduct and activities in Company, and to promote changes and improvements by promoting ethical values in
business operations. Furthermore, internal regulations determining the procedure in the event of a breach of
the ethical rules of conduct are accessible to all the employees, and they have been published on the Company
website. The ethics commissioner is elected among the Company employees.
Corporate Management Code
The basis for the proper orientation and management of Company, taking into account risks and respecting
legislation and rules, may be integrated as "Corporate management, risks and conformity". By adopting the
Code, Company has continued with best practices for corporate management, and through its business
strategy, business policy and key internal documents, contributes to transparent and efficient business
operations and quality connections with the business environment in which it operates.
Pursuant to the above mentioned and with the goal of management support, OiV contracted company "Krakorevizija d.o.o", relying on its objective and advisory function in the capacity of internal revision, to establish
even higher standards of the corporate management.
Anti-corruption Programme
In the wider sense of the socially responsible business, great importance is given to the execution of the Anticorruption Programme. The programme execution is based on strengthening of the legal framework, of all the
forms of Anti-corruption prevention measures, including removal of all shortcomings that may benefit
corruption.
The goals of the Anti-corruption Programme are strengthening of integrity, responsibility, and transparency in
work, creating prerequisites to prevent corruption on all the levels, affirming "zero tolerance" approach to
corruption.
In the upcoming period, OIV will continue to dedicate particular attention to enforcing anti-corruption
measures with the goal of preventing and reducing potential corruptive behaviour of employees, both through
education and through a system of controls.
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Annual Report of the Management Bord on the

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