Sustainability Report

Transcription

1 2014 Sustainabiity Report

2 Tabe of Contents Report Profie Message from the Chairman and CEO ΟΤΕ Group ΟΤΕ and COSMOTE CR Strategy CR Governance and Structure Corporate Governance Risk and Compiance and Poicies Stakehoders Materiaity Anaysis Memberships, Ratings and Awards CR Performance and 2015 Goas Marketpace 3.1 Strategy for the Marketpace Responsibe Competition Expanding Broadband And Mobie Internet In Greece Internet Safety and Pubic Awareness Responsibe Products and Services Responsibe Marketing Customer Service and Satisfaction Data Security and Privacy Business Continuity Responsibe Procurement and Suppy Chain Empoyees 4.1 Human Resources Strategy Empoyment Heath and Safety Organization Transformation and Effectiveness Empoyee Deveopment Empoyee Benefits Interna Communications Empoyee Engagement and Satisfaction Strategy for Socia Products, Services and Offers Supporting Vunerabe Socia Groups and Chidren Supporting Education Contributing to Loca Communities We-being and Sustainabiity Strengthening of Entrepreneurship Promoting Cuture Promoting Sports Εmpoyee Vounteering a Strategy Teecommunications for the Greenhouse Gases and other Gas Emissions Improving Energy Efficiency and Emission Reduction Resource Use and Waste Eectromagnetic Fieds Other a Aspects a Awareness Initiatives ΟΤΕ Group 7.0 ΟΤΕ Group Romania Αbania Accountabiity Principes Standard AA1000 Index United Nations Goba Compact Communication On Progress (COP) Goba Reporting Initiative G3.1 Index Independent Assurance Report 212

3 Empoyees Marketpace 1.0 About this Report

4 1.1 Report Profie The 2014 Sustainabiity Report is the third common Corporate Responsibiity (CR) Report of OTE and COSMOTE, foowing the 2012 and 2013 common annua reports and the separate corporate annua CR Reports for the years 2005 to The Companies pubish a joint CR Report, foowing the transformation of the two companies to a joint organization. This year, the CR Report is presented for a second year entirey onine on a speciay formuated reporting patform for OTE and COSMOTE. Report Scope and Boundary The Sustainabiity Report covers the period 01 January December 2014 (uness otherwise indicated). The Report covers the operations and activity in Greece of OTE S.A. and COSMOTE S.A. The two Companies have their headquarters in Athens. Summary information on other companies is incuded in the section, so as to provide the reader with a compete picture of. Moreover, information on how the major teecommunications subsidiaries of the two Companies in Eastern Europe approach sustainabiity is presented in the OTE Group section. This approach represents a continuation and integration of the scope and boundary approach used in the CR reports of previous years by OTE and COSMOTE and at the same time the initiation of a process of providing graduay more information on the fu OTE Group approach to sustainabiity. Report Content Definition The content of the Report is defined according to the foowing principes, guideines and directives: The Goba Reporting Initiative s Sustainabiity Reporting Guideines(GRI G3.1). The AccountAbiity AA1000 Principes on Incusivity, Materiaity and Responsiveness. The United Nation s Goba Compact Principes. The index tabes for each of these standards are provided in the AccountAbiity Principes Standard AA1000 Index Tabe, the UN Goba Compact Communication on Progress (COP) and the Goba Reporting Initiative G3.1. Index. In addition the Companies took into account their Corporate Responsibiity vision and the Group strategic piars for Corporate Responsibiity as specified (presented in the CR Strategy section), the outcomes of the stakehoders engagement approach and sustainabiity issues materiaity anaysis presented in the Materiaity Anaysis section. The Companies have taken into account the statistica use data from the on-ine microsite of the 2013 Corporate Responsibiity Report of OTE and COSMOTE, and the resuts of surveys carried out to obtain the opinion of stakehoders on the presentation of the Corporate Responsibiity Report Marketpace Empoyees 3 Sustainabiity Report 2014

5 The report is addressed to the main group of stakehoders recognized by the Companies, which are: Customers and prospective customers. Business. Science, research and education. NGOs and interest groups. Media. State/Government entities. Empoyees, prospective empoyees and their representatives. Suppiers. Sharehoders, bondhoders, investors and anaysts. The issues that the stakehoders brought up and the Companies response are presented in the Stakehoders section. The Sustainabiity Report is subject to externa assurance, covering the AA1000 Principes Standard and specific performance indicators for OTE/COSMOTE. In addition the Report s GRI Appication Leve has been reviewed by GRI. Report Data Additiona data reated with the technica methods and the data computations are provided in the Sustainabiity Report where possibe. The data in the Report derives from the reporting systems of OTE and COSMOTE and comprise: aggregated financia and personne data, aggregated data on customer service, summary data on reguatory actions. They aso incude environmenta data that are cacuated according to internationay accepted methods on the basis of information provided by the Operationa Divisions of both Companies. In coecting and presenting data, OTE and COSMOTE have been guided by the definitions and parameters of the GRI Indicator Protocos. In certain sections, where the two Companies have not yet integrated their operations, poicies, initiatives and actions, the information is presented separatey for each company. On some issues, separate poicies are maintained and reported, due to the distinct nature of issues for fixed and mobie teephony. No major re-statement of information provided in earier reports has been incuded. GRI Appication Leve The GRI Appication Leve for the 2014 Sustainabiity Report of OTE and COSMOTE is indicated beow. GRI has confirmed that this report has been compied in accordance with the guideines of GRI G3.1 A+ appication eve. Report Appication Leve C C+ B B+ A A+ Marketpace Empoyees Standard Discosures Profie Discosures Discosures on Approach Performance Indicators & Sector Suppement Performance Indicators OUTPUT OUTPUT OUTPUT Report on: , , Not Required Report fuy on a minimum of any 10 Performance Indicators, incuding at east one from each of: socia, economic and environment.** Report on a criteria isted for Leve C pus: , Approach Discosures for each Indicator Category Report fuy on a minimum of any 20 Performance Indicators, at east one from each of: economic, environment, human rights, abour, society, product responsibiity*** * Sector suppement in fina version. ** Performance Indicators may be seected from any finaised Sector Suppement, but 7 of the 10 must be from the origina GRI Guideines. *** Performance Indicators may be seected from any finaised Sector Suppement, but 14 of the 20 must be from the origina GRI Guideines. Report Externay Assured Report Externay Assured Same as requirement for Leve B Approach Discosures for each Indicator Category Respond on each core and Sector Suppement* indicator with due regard to the materiaity Principe by either: a) reporting on the indicator or b) expaining the reason for its omission Report Externay Assured 3 Fu information on the fufiment of GRI G3.1 requirements is provided in the Goba Reporting Initiative G3.1 Index Report Feedback Readers opinions and comments regarding the CR Report are wecome. Pease send your feedback to the e-mai address: ote-cosmote.cr@ote.gr. 4 Sustainabiity Report 2014

6 1.2 Message from the Chairman and CEO Empoyees Marketpace 2014 was another opportunity for to prove its sustainabiity and dynamics. With our investments, we further contributed to Greece s technoogica growth, further improved peope s communication and quaity of ife. We remain by far the biggest investor in teecommunications in Greece. In 2014, was responsibe for more than 60% of the sector s domestic investments. Our 4G broadband network is currenty avaiabe to more than 70% of the Greek popuation, whie we were the first to carry out piot trias for 4G+. We further improved our customers experience in every point of contact, aiming to be their No1 choice for integrated teecommunication services. Our peope remain our most important asset and with our new Coective Labour Agreement, we secured empoyment for our personne. We recruited 700 new empoyees and aunched an innovative Graduate Trainee programme, aiming to deveop the eaders of tomorrow. This past year, we turned our attention towards society and young peope, more than ever before. Through our Corporate Responsibiity programme, we contributed more than 2.8 miion, for OTE and COSMOTE socia and environmenta initiatives. Our customers and their needs ie at the core of a our decisions, eading our strategy into the future. Our investment in society remains an integra part of our business. Our empoyees expertise and soid teamwork turn our strategy into action, socia responsibiity into an everyday habit and vountarism into a coective matter. We have created a human chain of socia contribution that grows stronger by the day. We embrace change and evove to become better. We treat each chaenge as an opportunity to change and improve. We come coser to our feow citizens, paying back their trust in OTE. Stronger and heathier than ever we join forces with society and enhance our country s prospects and potentia. Michae Tsamaz Chairman and CEO of 5 Sustainabiity Report 2014

7 1.3 is the eading teecommunications provider in Greece and one of the pre-eminent providers in South East Europe, offering its customers exceent quaity products and services. The organizationa structure of the Group is shown in the foowing diagram. Marketpace 2014 Organizationa Structure Fixed-Line Teephony Mobie Teephone Other Operations Empoyees OTE SA Greece 100% OTE GLOBE Greece AMC Abania 100% 99.97% COSMOTE Greece 54% Rom Teecom Romania 30% 100% 94% OTE Sat Marite Greece OTE Estate Greece Other Operations Greece 100% 70% Zapp Romania 100% Cosmote Romania Germanos S.E. Europe 6 Sustainabiity Report 2014

8 The organizationa structure of the Group is avaiabe on the website of OTE ( en/web/guest/consumer). More information on the structure of is avaiabe in the Annua Report 2014 of OTE. The Group consists of the parent company OTE SA and its subsidiaries, offering fixed teephony services (phone, data and eased ine), teevision and mobie teephony in Greece and Romania, as we as mobie services in Abania. The Group is aso engaged in providing additiona services such as property management and education. At present, the companies in which the participates empoy more than 22,100 workers. Group income for 2014 amounted to 3,918.4 mn, whie its market capitaization stood at 4.5 bn. During 2014 the Group s performance was stabe, mainy thanks to Greek fixed-ine business, where the fourth quarter of 2014 revenue recorded a sight increase compared to ast year, foowing 27 quarters of reduction. This achievement demonstrates the successfu turnaround of fixed teephony foowing the continuous efforts to improve customer experience, products and services. In Greece, revenues of COSMOTE, incoming from mobie teephony showed consistent trends of improvement in a quarters of the year. As a resut of the vountary retirement program in 2013, the staff cost decreased significanty at both Group and fixed teephony in Greece eves. With a more fexibe organization and robust financia structure, both the functiona and net profitabiity were significanty strengthened. The adjusted EBITDA margin of the Group improved, mainy due to the strong performance of fixed teephony in Greece and the ongoing cost containment efforts. The net profit of the Group increased by 30% in Despite significanty higher investments in the deveopment of technoogica infrastructure, mainy in Greece, the adjusted free cash fow for the year greaty exceeded the initia target of 500 mn. Having improved its performance in a areas, OTE wi distribute dividends for the first time in four years. Marketpace Empoyees Financia Performance (miion ) Tota Revenues 4, , ,918.4 Payro and empoyee benefits (914.5) (821.5) (697.1) Cost of eary retirement program (123.0) (272.4) (8.4) Interconnections and roaming costs (510.5) (468.2) (473.6) Depreciation, amortization and impairment (818.4) (842.5) (796.4) Merchandise costs (254.2) (276.4) (300.7) Other operating expenses (1,164.5) (1,080.0) (1,119.5) Tota Operating expenses (3,785.1) (3,761.0) (3,395.7) Operating Profits (EBIT) EBITDA 1, , ,385.5 as % of Revenues 32.2% 29.1% 35.4% Pro forma 2 EBITDA 1, , ,421.6 as % of Revenues 35.0% 35.9% 36.3% 1 Figures adjusted to refect ony continuing operations (Bugarian operations treated as discontinued operations) and accounting recassifications of revenues. 2 Excuding the impact of Vountary Retirement Programs and Restructuring Pans. 7 Sustainabiity Report 2014

9 Economic Contribution (miion ) Saaries and benefits (914.5) (821.5) (697.1) Income taxes paid (108.0) (121.3) (137.3) Interconnections and roaming cost (510.5) (468.2) (473.6) Merchandise costs (254.2) (276.4) (300.7) Other operating expenses (Inc. renta, third party fees, non-income taxes and reguatory charges and other) (651.1) (622.4) (660.1) Profit attributabe to owners of the parent Sponsorships, donations and fund-raising directed to community causes Figures adjusted to refect ony continuing operations (Bugarian operations treated as discontinued operations) and accounting recassifications of revenues. 2 Data do not incude Teekom Romania Communications. (miion ) Breakdown of Revenues 2012 * Change Fixed Line Operations, Greece 1, , , % Fixed Line Operations, Romania % Mobie Operations, Greece 1, , , % Mobie Operations, Internationa % Others % Intragroup Eiminations (531.5) (441.8) (430.9) 2.5% TOTAL 4, , , % Other income/(expense), net % Marketpace Empoyees * Figures adjusted to refect ony continuing operations (Bugarian operations treated as discontinued operations) and accounting recassifications of revenues. Significant Changes/Events in 2014 The first quarter of 2014, OTE acquired 4,526,651 own shares at an average price of per share ony in the context of the existing program of providing stock options to executives. As a resut, on March 31, 2014, OTE hed 5,724,610 shares, representing 1.17% of its capitaization. On 6 February 2014, OTE announced its participation, through its subsidiary OTEGLOBE, in the construction of the new internationa utrahigh-speed submarine cabe Asia Africa Europe 1 (AAE-1). The AAE-1 submarine cabe with a ength of approximatey 25,000 km, is expected to be operationa in 2016 and wi connect Hong Kong and Singapore with the Midde East, Africa and Europe, making Greece one of the three, aong with Itay and France, main gateways in Europe. On 8 Apri 2014, OTE PLC proceeded with the fu repayment of the remaining baance of mn debenture, which was expiring on the same date with the accrued interest. On 10 Juy 2014, OTE PLC issued a fixed rate debenture amounting to 700 mn, under the Goba Medium-Term Note Programme, ending on Juy , with an annua coupon of 3.5%. The debentures are guaranteed by OTE. On October , COSMOTE received rights for the use of the radio frequency in the spectra regions of 800MHz and 2.6GHz in Greece for the period from 1 November 2014 to 28 February Through this investment, COSMOTE wi further enhance the speed and extensive coverage of its 4G network in both urban and rura areas. The tota amount the company invested amounted to mn. 8 Sustainabiity Report 2014

10 On October 14, 2014, OTE secured the broadcasting rights for a the matches of the European footba, incuding UEFA Champions League and UEFA Europa League from Juy 2015 to On December 24, 2014, the of OTE and the OTE Workers Federation (OME-OTE) signed a new Coective Bargaining Agreement. The contract estabished a new wage scae for new recruits with an initia saary of 755 per month, consideraby higher than that of the genera empoyment market. With regard to current OTE empoyees and for the next three years, the agreement guarantees jobs, as the company wi not proceed with dismissas for financia or operationa reasons, and maintains the average reduction of 11% in the wage scae, with respect to that of 2011 as agreed under the previous agreement, and the reduced working hours of 35 per week. More information about important events can be found in the Annua Report 2014 OTE pubications/annua-reports. Main Products and Services provides integrated products and services, covering the demanding communications needs of both businesses and individuas, namey: Fixed teephony and broadband services, with high VDSL speeds of up to 50 Mbps (OTE and Teekom Romania Communications). Mobie teephony through COSMOTE in Greece, Teekom Romania Mobie Communications in Romania and AMC in Abania. Products and services offered incude post and pre-paid services, mobie broadband (with COSMOTE being the first company in Greece which offered 4G services), vaue added and roaming services, as we as a wide range of mobie devices (smartphones, tabets) and accessories. Teevision services, via sateite or broadband, offering a wide range of channes and content, at the most competitive prices (OTE and Teekom Romania). Advanced and speciaized soutions and services in fixed and mobie teephony, contributing significanty to the increase of business efficiency. B2B Eectronic transactions (CosmoOne). Whoesae Internationa teecommunications services to high-capacity carriers and mutisite organizations in the broader South East European region (OTEGobe). Wireess and sateite communications, incuding maritime services (OTESAT-MARITEL). Rea estate assets management and deveopment (OTE Estate). Professiona training services that cover the training needs of empoyees, as we as those of the wider pubic and private sector (OTE Academy). Marketpace Empoyees 9 Sustainabiity Report 2014

11 1.4 OTE and COSMOTE OTE S.A. is the parent company of and the main fixed ine operator in Greece, offering broadband, fixed-ine teephony, TV, data and eased ine services. In 2014, the company recorded revenues of EUR 1,511.7 biion and on the 31 December 2014, it empoyed 6,924 empoyees on permanent contracts. Marketpace Institutiona Investors 42.8% Empoyees Private Investors 7.0% Ownership Own Shares 0.3% Structure (31/12/2014) Heenic State* 10.0% Deutsche Teekom 40.0% * Incuding voting rights attached to the 4% of the share capita has been transferred to the pension fund. COSMOTE S.A., OTE s fuy-owned subsidiary, is the eading provider of mobie teephony services in Greece, focusing on innovation, quaity and customer care. In 2014, COSMOTE had revenues of 1,202.2 miion and on 31 December 2014, empoyed 2,050 empoyees. OTE, COSMOTE and their subsidiary companies do not receive any government financia subsidies, state aid, specia tax reief or other government financia support. 10 Sustainabiity Report 2014

12 Financia Performance OTE-COSMOTE Financia Performance (miion ) OTE A.E. COSMOTE A.E Tota Revenues 1, , , ,202.2 Payro and empoyee benefits (44.5) (315.1) (98.1) (89.8) Cost of eary retirement program (250.9) 0.0 (4.2) (0.9) Interconnection and roaming cost (140.2) (119.8) (69.0) (64.8) Depreciation, amortization and impairment (322.5) (279.4) (212.8) (200.4) Merchandise costs (30.0) (50.3) (155.0) (144.8) Other operating expenses (384.8) (444.2) (474.0) (473.2) Economic Contribution OTE and COSMOTE Economic Contribution (miion ) OTE A.E. COSMOTE A.E Revenues 1, , , ,202.2 Operating costs (ex. depreciation and VES) (999.5) (916.6) (796.0) (772.6) Empoyee wages and benefits (444.5) (315.1) (98.1) (89.8) Payments to providers of capita (161.5) (168.0) (143.3) (143.3) Payments to the Greek government (9.7) (58.2) (88.9) (19.5) Investments for the Community (1.1) (1.3) (1.6) (1.6) Economic vaue retained (58.8) Marketpace Empoyees Products and Services OTE offers fixed teephony and broadband services, with high VDSL speeds up to 50 Mbps, and teevision services, via sateite or broadband. Fu detais of a OTE products and services are avaiabe on the OTE website. In 2014, OTE expanded its VDSL network to additiona areas throughout Greece. A tota of 367 oca exchanges in urban areas and 2,732 outdoor cabinets in areas such as Attica, Thessaoniki, Aexandroupois, Komotini, Xanthi, Serres, Crete, Rhodes, Santorini, Samos, Nafpio, Tripoi, Sparta, Patras, Agrinio, Corfu, Argostoi, Ioannina, Preveza, Kastoria, Grevena, Karditsa, Trikaa, Gaaxidi, Lamia and others, host the OTE VDSL service offering speeds up to 50 Mbps. More than 1.3 miion househods and businesses throughout Greece have access to these new utra high speeds. OTE, first in Greece in coaboration with Fon, offered in 2014 the OTE My WiFi, service which aows OTE Doube Pay customers excusivey to connect to the Internet via WiFi free of charge, even outside their home. This new service has come to change customers everyday ives, ensuring extensive WiFi coverage (the community of users of OTE My WiFi incudes more than 200,000 hotspots in Greece and more than 14 miion points wordwide), security and quaity connection. In the fied of pay-tv, OTE TV in 2014 continued its market advance by adding 100,000 new subscribers thus exceeding 353,000 subscribers at the end of the year, whie continuing its program and services enrichment. The acquisition of TV rights for the top European Footba competitions, UEFA Champions League and UEFA Europa League, for the period, and the agreements 11 Sustainabiity Report 2014

13 with major Hoywood studios such as MGM and NBC-Universa for excusive firsts are noteworthy. With more than 80 digita channes OTE TV, of which 26 with high definition, at their disposa, the OTE TV subscribers enjoy over 50 ive sports broadcasts a week, more than 500 premieres and 2,000 movies in tota per year, quaity documentaries, chidren programs and content for the whoe famiy, at the most competitive prices. COSMOTE offers pre and post-paid biing services, mobie Internet services (COSMOTE is the first company in Greece which offered 4G services), vaue added services, roaming services, as we as mobie devices (smartphones, tabets) and accessories. Fu detais of a COSMOTE products and services are avaiabe on the COSMOTE website. To meet its customers needs, COSMOTE, further expanded its 4G network to cover 70% of the popuation, thus making it the 4G network with the widest coverage in Greece in COSMOTE s 4G network covers a urban areas with more than 50,000 inhabitants, many smaer towns across the country, and a popuar tourist destinations. A pioneer yet again, COSMOTE initiated in 2014 piot testing for the upgrade of its 4G network to 4G+, in order to offer speeds of up to 300Mbps. To this end, the company fuy utiized the enhanced capabiities of its network after the acquisition of the new spectrum at 800MHz and 2.6GHz. COSMOTE commerciay aunched its 4G+ network at eary CosmoteBooks is another COSMOTE service. It s the argest onine bookstore in Greece, with more than 2,000,000 books in print and digita form as we as toys, stationery and chidren s movies, avaiabe with just one cick at specia prices. CosmoteBooks is avaiabe onine and via specia appications for smartphones and tabets. OTE is the Greek Universa Service Provider The Universa Service in the Eectronic Communications Sector, is the provision of a fixed set of basic Eectronic Communications services to a citizens of Greece, regardess of their geographic ocation and at affordabe prices. OTE is the designated Universa Service Provider for Greece, undertaking a notabe task in chaenging times for Greece. Marketpace Empoyees 12 Sustainabiity Report 2014

14 Empoyees Marketpace 2.0 CR Strategy and

15 CORPORATE RESPONSIBILITY STRATEGY AND MANAGEMENT Corporate Responsibiity Strategy We improve our performance in 4 strategic piars: MORE INFO Corporate Responsibiity is embedded in our core business strategy, with our CR initiatives fuy in ine with our business objectives. Marketpace Empoyees CR We participate in internationa CR indexes MORE INFO Since 2008 Since 2010 Since 2013 CR Our management is strongy committed to Corporate Responsibiity OTE GROUP CHAIRMAN OVERSEES CR STRATEGY AND PERFORMANCE WE STRIVE TO IMPROVE OUR CR MANAGEMENT PROCESS MORE INFO We practice sustainabe deveopment. Two new CR poicies: ΟΤΕ Group Socia Charter ΟΤΕ Group CR Poicy Marketpace Empoyees Stakehoders / Our stakehoders diaogue is the basis for sustainabe deveopment MORE INFO Business Science, research and education State / Government entities Customers, prospective customers Media NGO s and interest groups Stakehoder mapping review & updating with the participation of the Top MORE INFO Sharehoders, bondhoders, investorsand their representives Suppiers Empoyees, prospective empoyees and their representives 14 Sustainabiity Report 2014

16 2.1 CR Strategy The strategic objective of OTE and COSMOTE is to be modern, dynamic, customer-oriented, high performance companies that provide the best quaity service, the best network and the best working environment and hod a eading position in the markets they operate. In order to achieve this goa the companies are based on a transformation programme, having as it s main piars: technoogy eadership, best customer experience, revenue transformation, ead in core business, operationa and cost optimization, as we as peope strategy. The two Companies seek with each action to reinforce their sustainabe entrepreneurship, cutivating simutaneousy continuing diaogue with their interested parties. Marketpace Empoyees 15 Sustainabiity Report 2014

17 s vision on Corporate Responsibiity, one of the eading teecommunications enterprises in Europe, having incorporated the principes of corporate responsibiity in its operation and activities pursues its economic deveopment, simutaneousy contributing to environmenta protection and the support of society. OTE and COSMOTE, define their priorities on Corporate Responsibiity in the foowing four strategic piars that encompass the most important issues for the operation and their stakehoders: Marketpace They invest in the continuous improvement of oca teecommunications infrastructure and expansion of services and products, using the best avaiabe technoogy soutions. They work with customer-oriented phiosophy, to maximize customer satisfaction, but aso in a responsibe manner, aunchimg innovative and sustainabe products and services and asking their suppiers to operate under the same principes. Empoyees They provide a sustainabe work environment for their empoyees, having their vaues as a driver, as expressed in the Corporate Conduct Principes. They encourage the deveopment of their empoyees, recognize good performance, ensure equaity in providing opportunities and promote cooperation. In a difficut time for the Greek economy and society, they support vunerabe socia groups and communities, with a view to covering directy important needs. They invite empoyees to participate, promoting vountary action. They aim at reducing the environmenta impact of their activities, providing products and services that contribute to environmenta protection aso in other sectors of the economy, and at raising pubic awareness to adopt a more responsibe attitude to environmenta protection. In 2014, a year of continuing economic pressures and difficuties in Greece, both companies focused on safeguarding their operationa transformation and optimization,of their position and on creating the base for further growth. OTE and COSMOTE maintained their objective of improving their performance in Corporate Responsibiity, by strengthening their approach to managing corporate risks and business continuity, by investing in deveoping responsibe products and services, by continuing the restructuring of the Companies with the aid of a common corporate cuture, whie supporting new entrepreneurship and sociay vunerabe groups and strengthening the procedures and actions for good environmenta management. Finay, in order to continuousy improve their performance in Corporate Responsibiity, OTE and COSMOTE proceeded in 2014 to: deveop the Corporate Responsibiity Poicy and the Socia Charter of the Group redefine their stakehoders improve materiaity anaysis methodoogy and finay upgrade the approach for suppy chain management. ΟΤΕ Group Corporate Responsibiity The Poicy on Corporate Responsibiity, among other specifies: The way in which it evauated a CR issues and areas affected by it. The genera action pan impemented by the Group and the governance structure of Corporate Responsibiity to act as the basis for successfu management. In this Poicy, the basic corporate responsibiity principes that shoud be considered when panning actions of Corporate Responsibiity, and the obigations and duties of the authorities responsibe for the deveopment, monitoring and coordinating the impementation of operations through we-documented procedures, are set out. Its procedures wi aso make it possibe to record the performance and progress achieved, to identify opportunities for improvement and the optima CR measures deveopment, so as to respond to socia chaenges and priorities. Marketpace Empoyees 16 Sustainabiity Report 2014

18 It aso defines the governance structure of Corporate Responsibiity, identifies areas of responsibiities and tasks as we as the forms of cooperation on Corporate Responsibiity between the various stakehoders, and the Centra Administration of the Group and its subsidiaries. The Poicy was deveoped in 2014 and was approved according to the company procedures in Socia Charter of the ΟΤΕ Group decares its commitment to ethica corporate governance through the Group s new Socia Charter. The Socia Charter of the ays down the working conditions and socia standards, under which the Group s products and services are deveoped and suppied. At the same time, it sets the rues to be foowed by the entire Group, on human rights, sustainabe deveopment and environmenta protection, equa opportunities, heath and safety and empoyees rights. It has been deveoped in accordance with internationay accepted standards, guideines and reguations, the Internationa Bi of Human Rights, the Core Conventions of the Internationa Labour Organization, the guideines of the Organisation for Economic Cooperation and Deveopment and the Goba Compact of the United Nations. The text is in ine with the UN Guiding Principes on Business and Human Rights. The Charter is to be the guide for the conduct for a empoyees, investors, customers and suppiers of the Group. Marketpace Key achievements in 2014 Deveopment of the Corporate Responsibiity Poicy. Deveopment of the Socia Charter. Strengthening of the substantive sustainabiity issues anaysis process according to the approach of Corporate Risk of the Group. Participation in the FTSE4Good and Euronext Vigeo Eurozone 120 indices. Improvement of the communication of Corporate Responsibiity performance to stakehoders, adopting a new interactive on-ine presentation of this Sustainabiity Report. Empoyees 17 Sustainabiity Report 2014

19 2.2 CR Governance and Structure Empoyees Marketpace The new Corporate Responsibiity Poicy refects the integrated Corporate Responsibiity governance structure, through which the integration of issues reated to sustainabe deveopment in key business processes, is achieved. The subsidiaries of the Group deveop and impement their own Corporate Responsibiity activities, which are harmonized with the Corporate Responsibiity strategy of. The Board of Directors of OTE is responsibe for the performance of the Group with regards to Corporate Responsibiity. It is the competent body, according to the organizationa structure, and represents the interests of OTE as a whoe on Corporate Responsibiity issues. The OTE Board of Directors has assigned oversight of the Group s sustainabiity and Corporate Responsibiity issues, to the Chairman and CEO of. Specificay the Executive Director of Corporate Communications Division of and member of the Team of : Coaborates with the Chairman and CEO of the to formuate strategic panning, poicies and CR guideines for the entire Group. Participates in the Team, works with other management executives, to achieve the CR targets and identify new areas of synergy to enhance the performance of the Group on sustainabe deveopment issues. Acts as the foca point of communication between the CR bodies and as the officia spokesperson of the Group on any matter reated to Corporate Responsibiity. The Corporate Responsibiity Department/Fixed and Mobie, which fas under the Corporate Communications Division of the, is responsibe for the impementation of CR strategy and programs. In addition, it coordinates and manages the CR activities and monitors the impementation of the objectives and other reevant actions. It participates and supports the Internationa CR Managers Network of the DT Group. The functions of the Corporate Responsibiity Department incude, inter aia, the impementation and management of reguar communication with externa experts and stakehoders. In the new Corporate Responsibiity Poicy a the responsibiities of the Corporate Responsibiity Department and the Corporate Communications Division are detaied as we as the mode of cooperation with other organizationa units of the Group, as the CR issues affect a activities of companies. A Group subsidiaries are responsibe for impementing standards, requirements and Group Corporate Responsibiity objectives at oca eve and at the same time for keeping the Corporate Communications Division or the Corporate Responsibiity Department informed. 18 Sustainabiity Report 2014

20 They are soey responsibe for the impementation of oca organizationa structures of Corporate Responsibiity, for defining their own CR objectives and tasks, for compying with ega requirements and Group Corporate Responsibiity Strategy, and for impementing their own budget. Aso, the Group s subsidiaries are required to cooperate, within the CR Manages Network, with the Corporate Responsibiity Department and participate in the Internationa CR Managers Network of DT Group. More information on Corporate Responsibiity performance of the OTE Group s subsidiaries presented in the section of ΟΤΕ Group. For the management of Corporate Responsibiity issues, appropriate quaity, heath and safety and environment management systems have been The organization structure is presented in the foowing graph. deveoped. These systems form the Integrated System, which is overseen by the Systems Steering Committee. More information can be found in the a section. The Corporate Responsibiity Department coordinates the impementation of the socia and environmenta actions of the Companies, through the operation of Corporate Responsibiity and a Sections. With the aim of being informed about trends and deveopments in CR matters, staff of the Corporate Responsibiity Department participated in 2014 in events and training seminars on current and running issues of Corporate Responsibiity, such as the detais of the Socia Return On Investment (SROI) method and the GRI G4 guideines. Marketpace Boards of Directors of OTE & COSMOTE Chairman & CEO Organisation Structure Systems Steering Committee Empoyees Corporate Communications Division Corporate Responsibiity Team Corporate Responsibiity Department Fixed & Mobie Corporate Responsibiity Representatives OTE and COSMOTE Corporate Responsibiity Section a Section a Team of OTE and COSMOTE In order to coect information regarding the performance of Corporate Responsibiity and to further disseminate the CR principes and actions in different business units of the Companies, a Corporate Responsibiity Team OTE-COSMOTE has been created, with 50 representatives from a business units. The Corporate Responsibiity Team is chaired by the Executive Director of Corporate Communications at. A members of the Corporate Responsibiity Team contributed significanty to raising awareness and mobiizing empoyees of two Companies, to enhancing the visibiity of Corporate Responsibiity within the Companies, to meeting CR objectives and to creating of a common corporate CR cuture. Corporate Responsibiity KPI s embodied in the aims of persona assessment and individua operating targets executives for Corporate Communications Division, and Corporate Responsibiity aspects into account in the annua performance evauation process in the section on Performance Evauation and. 19 Sustainabiity Report 2014

21 2.3 Corporate Governance The term Corporate Governance refers to a system of principes adopted by a company in order to protect the performance and the interests of sharehoders and a its stakehoders. Recognizing the importance of corporate governance principes, and the benefits arising from their adoption, OTE, as a isted company, compies with a ega obigations, foows internationa practices and standards in this area and opts for the systematic impementation of these principes in a its activities. In particuar, OTE as a arge capitaization company isted on the Athens and London Stock Exchanges compies with appicabe nationa and internationa aw on corporate governance, incorporating reguations and compiance practices in its mode of operation. At the same time, aiming at transparency, efficient administration and optimum operating performance, OTE foows, athough not required by aw, best practices for compiance. In this context, OTE compies with the Heenic Corporate Governance Code (HCG Code) and the Heenic Corporate Governance Counci (HCCG, a joint initiative of HELEX and Heenic Federation of Enterprises) adopted in October 2013, pubishing and justifying any deviations in its Corporate Governance Statement (principe of compy or expain ), which is part of the Annua Report of the Board of Directors to the Genera Meeting of Sharehoders. A reevant provisions and practices are incorporated in the company s Artices of Incorporation, the Interna Operations Reguation, the Code of Conduct of ΟΤΕ Group and other Poicies adopted by the competent corporate bodies and appy to its operations. has estabished the necessary mechanisms in order to amend and update at reguar intervas its Reguations and Poicies aiming to ensure compiance with existing egisation and best internationa poicies. The fundamenta principes of OTE s corporate governance system comprise mainy the foowing: Two-way communication between company stakehoders and the of the Company. Transparency, and contro of the. Assurance of operationa efficiency. OTE appies corporate governance reguations and practices on the basis of three key priorities which incude: the designation of the capacities of the Members of the Board of Directors (Executive, Non-Executive and Independent Members) as we as the procedures for the required audit of the company s operations, the protection of sharehoder rights, and the enhancement of transparency and information discosure. Marketpace Empoyees 20 Sustainabiity Report 2014

22 For more information pease visit the webpages of OTE and COSMOTE: corporate-governance T13_20/section/Corporate_Governance It shoud be noted that aso COSMOTE continues to compy vountariy with the same corporate governance standards, despite the cessation of trading of its shares on the Athens Stock Exchange. Boards of Directors The Boards of Directors (BoD) of OTE and COSMOTE constitute the top administrative bodies of the companies. Their aim is to safeguard the genera interests of the companies and ensure their operationa efficiency. The Boards responsibiities incude, among others, convening Genera Assembies of Sharehoders, preparing and submitting the Annua Report and financia statements to the Annua Genera Assemby of Sharehoders and setting and approving the corporate strategy, whie monitoring its execution. The OTE Genera Assemby of Sharehoders is aso responsibe for appointing the Independent Non Executive Members of the Board of Directors and the Members of the Audit Committee, according to the criteria set by the Law, taking into account corporate governance and avoidance of confict of interest poicies. Both companies have the same person as Chairman of the BoD, who is aso the CEO. The OTE Artices of Incorporation (Artice 10.1) and the COSMOTE Artices of Incorporation (Aritce 19.1) provide that the offices of Chairman of the Board of Directors and CEO may be hed by the same person. ΟΤΕ s Board of Directors, on 31 December 2014 consisted of eeven (11) members, eected for a three-year term. Of the eeven (11) members, two (2) were Executive, four (4) were Non-Executive and (5) Independent Non-Executive. The gender composition of the Board was ten (10) mae and one (1) femae. COSMOTE s Board of Directors, on 31 December 2014, consisted of nine (9) members, eected for a three-year term. A membes were mae. The operation of the Board of Directors of OTE is supported by OTE s Audit Committee and Compensation and Human Resources Committee, as we as of the OTE Compiance, Enterprise Risks and Corporate Governance Committee, whie the Board of Directors of COSMOTE, unti December 31, 2014, was supported respectivey by the Audit Committee and the Remuneration and Nomination Committee. The OTE s Compensation and Human Resources Committee, is responsibe among others, for defining the principes of Corporate Responsibiity practices. In 2014 there was no officia practice for the evauation of the Boards of Directors of OTE and COSMOTE and their Committees; however the Companies are considering their compiance with this requirement of the Greek Code of Corporate Governance. Compensation of a the Board of Directors Members is approved by the Sharehoders Genera Assemby. The compensation of executive members of the Board of Directors is covered by empoyment contracts, the terms of which are approved by the Sharehoders Genera Assemby. In accordance with the provisions of Artice 9, paragraph 7 of OTE s Artices of Incorporation, the Executive Members of the Board (in 2014, the Chief Executive Officer and the Chief Financia Officer of the ) receive no compensation for their participation in the Board of Directors Meetings or its Committees. The Chairman and CEO, in the scope of the annua review of the Group strategic objectives, requests from the Boards of Directors, information and the views of their members on CR issues. Marketpace Empoyees 21 Sustainabiity Report 2014

23 2.4 Risk and Compiance and Poicies Empoyees Marketpace Business activities are subject to uncertainty. This uncertainty may originate outside the company or resut from the company s own actions. Often, uncertainty is synonymous with the definition of risk. By systematicay tracking uncertainty, it is possibe to adopt appropriate measures eary on, reduce risks and make systematic use of opportunities. For this reason, a we-functioning risk and compiance management system is a core eement of vaue-based corporate management supporting efforts to secure the company s success in a sustainabe way. 22 Sustainabiity Report 2014

24 As part of a comprehensive compiance, risk and insurance management process, the Compiance, ERM and Insurance Directorate supports the Board of Directors and in the performance of their tasks in managing the Group and meeting their obigations. The OTE Group Compiance, ERM and Insurance Directorate is responsibe for the continuous deveopment of the risk and compiance management systems and for the Group-wide insurance strategy. To that purpose, has put in pace: The Risk and Insurance System (RIMS) that supports in its strategic decisions, through the identification, evauation and prioritization of risks, foowed by coordinated and costeffective appication of resources to monitor, contro, and minimize the probabiity and the impact of unfortunate events. The Compiance System (CMS), to deveop a program for managing noncompiance risk and panning preventive measures for their avoidance with the aim of safeguarding the Group s companiesreputation and to protecting their empoyees. The effectiveness and efficiency of the above mentioned Systems (RIMS and CMS) is monitored by the OTE Compiance, Enterprise Risks and Corporate Governance Committee (OTE GRC Committee) 1. More information about the composition and the roe of the Committee can be found in the Corporate Governance Report Compiance, ERM and Insurance Directorate on a quartery basis prepare and submit its report to the OTE Compiance, Enterprise Risks and Corporate Governance Committee for its review, evauation and submission to the competent corporate bodies (Audit Committee and Board of Directors OTE) Enterprise Risk and Insurance System The Risk and Insurance System (RIMS) at comprises a continuous process for the eary identification, assessment, management, communication and contro of risks. Its key goa is to safeguard the existence and maintain corporate success. The anaysis of risks and opportunities are not just imited pure financia view but covers a Enterprise Risk (ERM) dimensions. The Enterprise Risk Department, supports decision making in risk management issues and is responsibe for the continuous deveopment of an eary warning system for the identification and management of corporate risks. It is aso responsibe for the insurance strategy, at Group eve. In the context of impementation of the Risk and Insurance System, the foowing OTE Group Poicies are in force: Risk and Insurance Poicy. Goba Poicy on Pensions and Risk Benefits of. Detaied information for RIMS andthe process of identification, evauation and management of corporate risks, as we as the main achievements of ERM Department for 2014, are presented in Corporate Governance Report Indicativey, in 2014 four Risk Reports were presented in which the major corporate risks of and the respective reduction actions were anayzed. A Carried Interim Risk Assessment (Risk Puse) exercise was carried out to assess, by the business units invoved, the most critica risks, such as those described in the Corporate Risk Register in order to spur optimization of the mitigation procedures. In addition the Caims System was estabished for more a efficient management of the existing insurance poicies of the Group, whie the Corporate Risk Department participated in the project for the creation and estabishment of a singe corporate risk management methodoogy for the DT Group. 1 An equivaent GRC Committee with simiar powers and responsibiities has been estabished in COSMOTE (COSMOTE CEO Decision No. D25/ ). Both Committees manage CMS and RIMS issues for a Companies that have adopted such systems. 2 Simiar are the obigations of the business units of theexecutive Director Compiance, ERM and Insurance to the COSMOTE Compiance, Enterprise Risks and Corporate Governance Committee.. Reevant reports are submitted to the Cosmote Board of Directors. Marketpace Empoyees 23 Sustainabiity Report 2014

25 2.4.2 Compiance System and Poicies Ensuring compiance is a priority of OTE s and COSMOTE s Boards of Directors, as we as of a companies beonging to in Greece and abroad. Compiance constitutes a soid commitment to the principes of integrity, transparency, justice, professionaism, team spirit, and respect of the rues and principes, which are essentia in governing the functions of the Companies. To this purpose, the has adopted and impemented a Compiance System (CMS), which covers the compiance of a personne and with the egisation in force, the Code of Conduct and interna poicies of the Group. In doing so a sharehoders, the Companies per see, the empoyees, the customers, the suppiers and the pubic, benefit. The effectiveness of the Compiance System is based on the creation of a strategy for the deveopment of a risk management program and reated preventive measures to address them, with a view to safeguarding corporate reputation and the protection of empoyees and Companies of the Group. In order to provide the possibiity of fiing tip-offs regarding vioations of poicies, of reguations and of the egisation in force, a companies of the have estabished a Whistebowing Poicy and necessary communication channes. Under this Poicy, each empoyee and/ or third parties (customers, suppiers, partners, etc.) can, eponymousy or anonymousy, report through the reevant communication channes, non- compiance incidents, deinquent behavior or express a concern or a compaint on possibe vioations of corporate poicies or egisation. In the context of impementation of the Compiance System, the foowing Poicies and Codes are in force, which are reviewed and revised at reguar intervas or when a reevant need arises because of egisation: Group Code of Conduct. Code of Conduct for the protection of the Individua s Right to Privacy in the handing of Persona Data within. Code of Ethics for Senior Financia Officers. Whiste-bowing Poicy. Poicy on Avoiding Sexua Harassment within the. Poicy on Accepting and Granting of Benefits (updated in 2014). Poicy on Donations and Sponsorships (updated in 2014). Events Poicy (updated in 2014). Anti-Fraud Poicy. Insider Trading Poicy (updated in 2014). Poicy on Avoiding corruption and other Conficts of Interest (updated in 2014). Poicy on Empoyee Reations within. Poicy on Anti-Trust Law. The Code of Conduct and reevant poicies, among others, prohibit corporate donations or contributions to poitica organizations or persons, or the use of OTE funds or assets for poitica purposes. In addition, the organization of a company event, the acceptance or the rejection of a sponsorship or donation or corporate gift, must be approved foowing specific rues that are defined by the Compiance System and are appicabe to a empoyees. In 2014, the OTE, COSMOTE and Teekom Romania Compiance Systems were successfuy reviewed and certified regarding the risk area: Ant-Trust, according to the Ass S 980 standard by independent externa auditors, who confirmed the adequacy, impementation and effectiveness of the CMS procedures (Certification for Compiance with the Law of Free Competition» Anti-Trust Certification 2014). The audit incuded: Review of the Compiance System procedures comcerning this risk area, to ensure that they compy with the requirements of the standard, and that the procedures adopted and impemented by the companies in order to ensure that issues reated to egisation on free competition are reviewed and/or approved by the responsibe ega department/s. Training (elearning and cassroom trainings) addressd to the executives of the organizationa units deaing with competition issues, in order for them to understand issues of Anti-trust egisation. Marketpace Empoyees 24 Sustainabiity Report 2014