Annual Report 2016 2016 Worldreginfo - 328323B6-F7b5-4A3d-B011-F108d442dc80 Facts & Figures
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Annual Report Annual Report 2016 2016 WorldReginfo - 328323b6-f7b5-4a3d-b011-f108d442dc80 Facts & Figures Customers by subscription type (in percent) Landline 3.346 network 12.5% million Mobile network Subscription 71.6% type Internet 11.0% Customers With more than 3.3 million customers, Sunrise TV is the leading alternative telecom provider 4.8% in Switzerland, both in the mobile and landline network sectors. Additionally, Sunrise is the third largest provider of landline network, Internet and TV services. connect test history since 2009 (in points) Sunrise Swisscom Salt 500 1, 656 450 400 Employees 350 30% of the total number of 1,723 Sunrise 300 employees (1,656 FTEs) are women. Approxi- mately 43% of Sunrise employees are citizens 250 of countries other than Switzerland. Sunrise trains 109 apprentices for positions in five 2009 2010 2011 2012 2013 2014 2015 2016* apprenticeship programs. * In 2016 connect used a 1000-point scoring system. The values in the chart have been adjusted to the 500-point scoring system of previous years. Customer service Key performance indicators from January 1 to 89 December 31, 2016. 92% Offices and retail stores Availability With 83 retail locations, Sunrise has a presence 92% of callers spoke to an agent. in all regions of Switzerland. The Company is headquartered in Zurich and has additional 84% business offices in Prilly, Geneva, Bern, Basel Efficiency 84% of issues were resolved on first contact. and Lugano. www.sunrise.ch/customersatisfaction WorldReginfo - 328323b6-f7b5-4a3d-b011-f108d442dc80 Content 2 Message to 65 Compensation Report Shareholders 66 Introduction 67 Compensation Governance 69 Compensation System 7 Financial and 74 Board of Directors Compensation 76 Executive Leadership Team Operational KPIs Compensation 8 Financial KPIs 79 Shareholdings of the Board of Directors and Executive Leadership 9 Operational KPIs Team 80 Audit Report 11 Operational and Financial Review 83 Consolidated Financial 12 Business Activities Statements 12 Sunrise Strategy 84 Consolidated Statements of Income 15 Market Environment 85 Consolidated Statements of 16 Products, Services and Sales Channels Comprehensive Income 21 Network 86 Consolidated Statements of Financial 22 Regulatory Environment Position 24 Corporate Responsibility 88 Consolidated Statements of Cash Flow 25 Employees 89 Consolidated Statements of Changes in Equity 28 Environment 90 Notes to the Consolidated 29 Customers Financial Statements 29 Community 142 Audit Report 30 Major Events 30 Financial Review 35 Risks 149 Statutory Financial 35 Additional Disclosures 37 Outlook Statements 150 Income Statement 151 Balance Sheet 152 Notes to the Statutory 39 Corporate Governance Financial Statements 40 Group Structure and Shareholders 158 Appropriation of Available Earnings 41 Capital Structure and Capital Reserves 42 Board of Directors 160 Audit Report 55 Executive Leadership Team 61 Compensation, Share holdings and Loans 61 Shareholders’ Participation Rights 62 Change of Control Provision 63 Auditor 63 Information Policy 64 Subsequent Events after December 31, 2016 Content | Sunrise 1 WorldReginfo - 328323b6-f7b5-4a3d-b011-f108d442dc80 Message to Shareholders Message to Shareholders Peter Kurer Chairman of the Board (left) Olaf Swantee Chief Executive Officer (right) Dear Shareholders, In 2016 we launched a number of initiatives to solidify our role as the leading market challenger, building on proven concepts and further strengthening our position as an agile, customer-oriented and cutting-edge telecommunications provider. Strict cost control produces solid results Despite growing competition, Sunrise added 85,700 new customers in the mobile postpaid sector (+6.1%). The landline Internet sector also grew compared to the previous year, with a total of 30,200 new customers (+8.9%). The strongest growth driver was Sunrise Smart TV, with 29,000 (+21.7%) new subscriptions. This growth, however, did not entirely compensate for the decline in revenue to CHF 1,897 million. Despite this contraction, adjusted EBITDA decreased only slightly to CHF 611 million thanks to streamlined organizational and management structures and higher cost efficiency. Following the loss in the previous year caused by the one-time impact of the IPO and of refinancing, Sunrise ended the year 2016 with a net profit of CHF 87 million which is a reflection of the Company’s hard work. Positive second year as a publicly listed company Our second year on the exchange was marked by the exit of CVC Capital Partners as a shareholder along with above-average share price performance, leaving Sunrise in a significantly better position than the market as a whole. After more than five years under the control of CVC Capital Partners managed 2 Sunrise | Message to Shareholders WorldReginfo - 328323b6-f7b5-4a3d-b011-f108d442dc80 funds, freenet AG (“freenet”) became the new majority shareholder in March of In 2016, 2016 by acquiring more than 23.8% of Sunrise shares (around 10.7 million shares). freenet is the largest network-independent provider of mobile telecommunica- Sunrise tions services in Germany. received The Sunrise share price rose by 13.9% in 2016. In comparison, the Swiss Perfor- mance Index showed only a slight increase of 1%. During the same timeframe, wide the STOXX Europe 600 Telecommunications Index (€) lost 11.7%. In terms of total return (stock price change plus profit distribution), Sunrise achieved above- recognition average results due to the additional high dividend payout. At the Annual General Meeting, a higher ordinary dividend payout of CHF 3.33 per share will for its high- be proposed. This corresponds to a total dividend of approx. CHF 150 million and an attractive 11% dividend growth compared to the previous year. quality Changes to the Board of Directors and management network. After Dr. Dominik Koechlin’s passing in the summer of 2015, Lorne Somerville stepped into the role of Chairman of the Board on ad interim basis. In the spring Olaf Swantee of 2016, he handed the reins to Peter Kurer, the newly elected Chairman of the Chief Executive Officer Board. At the 2016 Annual General Meeting, the existing members of the Board of Directors, Jesper Ovesen, Peter Schöpfer and Lorne Somerville, were re-elect- ed for another year. Meanwhile, Robin Bienenstock, Michael Krammer, Joachim Preisig and Christoph Vilanek joined the Board as newly elected members. On May 9, 2016, Libor Voncina handed over leadership of the organization to the new Sunrise CEO, Olaf Swantee. With the goals of further strengthening the organization, developing its potential, streamlining structures and promoting diversity, Mr. Swantee reviewed and adapted the Sunrise management structure in collaboration with the Board of Directors. Network and quality awards Sunrise won several awards over the course of 2016: — The Swiss business magazine Bilanz evaluated Sunrise in the areas of quality, innovation and flexibility, naming Sunrise the best mobile network and TV provider in Switzerland for the second consecutive year. Sunrise also received recognition for its Internet services and landline telephony. Subsequently, Sunrise was chosen as the best universal provider for private and business customers looking to obtain services from a single source. — In 2016 Sunrise broke every record in the mobile network test published by connect, Europe’s largest trade magazine, winning the overall test and beating out Swisscom for the first time. In another first, Sunrise became the first company ever to receive a rating of “Outstanding” in a connect test. In addition to the best mobile calling network, Sunrise also has the fastest mobile Internet in Switzerland as well as the entire DACH region. — In 2016, Sunrise was the first Swiss mobile phone provider to become ISO 9001:2015 certified – evidence that it adheres to the strictest audit requirements in the mobile sector. Furthermore, an external audit confirmed the ISO 27001 certification of the Sunrise information security management system, making Sunrise the only telecom provider in Switzerland to have its entire organization (company-wide technology infrastructures and operational processes) certified under ISO 27001. Message to Shareholders | Sunrise 3 WorldReginfo - 328323b6-f7b5-4a3d-b011-f108d442dc80 Continuous Continuous growth in customer base Sunrise considers customer orientation one of its most important company investments values, and its customers once again demonstrated their high level of satisfaction with Sunrise products. Despite a highly competitive market environment, in 2016 and a focus on Sunrise was able to increase its number of mobile postpaid customers by 6.1% (net growth of 85,700 customers), ending the year with a total of 1.49 million quality led subscriptions. Thanks to the Company’s first-rate Sunrise Smart TV offer and attractive rates, Internet and TV customer numbers posted increased as well. to excellent Altogether, net growth in TV subscriptions totaled 29,000 (+21.7%) in 2016. ratings in Strategic partnerships with global leaders such as Microsoft, Cisco, Alcatel Lucent, Apple, IBM and Huawei were another important source of customer 2016. growth. In addition to its partnership with Telefónica, Sunrise has also become a member of the FreeMove Alliance, allowing the Company to increase its Peter Kurer competitiveness and generate further growth. It also gives Sunrise access to the Chairman of the Board networks of the four large Alliance providers as well as their partner networks in more than 100 countries. This