Annual Report for the Financial Year Ended December 31, 2014
Total Page：16
File Type：pdf, Size：1020Kb
CYFROWY POLSAT S.A. CAPITAL GROUP Annual Report for the financial year ended December 31, 2014 Place and date of publication: Warsaw, March 4, 2015 Annual Report of Cyfrowy Polsat S.A. Capital Group for the financial year ended December 31, 2014 CONTENT OF THE ANNUAL REPORT Letter of the Chairman of the Supervisory Board Letter of the President of the Management Board Report of the Management Board on the activities of Cyfrowy Polsat S.A. Capital Group in the financial year ended December 31, 2014 Management Board’s representations Opinion of the independent auditor on the audit of the consolidated financial statements for the year ended December 31, 2014 Consolidated Financial Statements for the year ended December 31, 2014 Interim Condensed Consolidated Financial Statements for the 3 and 12 months ended December 31, 2014 (unaudited) 2 Annual Report of Cyfrowy Polsat S.A. Capital Group for the financial year ended December 31, 2014 LETTER OF THE CHAIRMAN OF THE SUPERVISORY BOARD Ladies and Gentlemen, 2014 was a breakthrough year and one of the most important years in the history of Cyfrowy Polsat. Polkomtel, the operator of Plus network, joined the Group, thus leading to the creation of the biggest media and telecommunication group in Poland, as well as in the region. Thanks to this, we have created a solid foundation for the future development and successful operations of the entire Cyfrowy Polsat Group, consisting of Cyfrowy Polsat, Polkomtel, Telewizja Polsat and IPLA platform. The Group has acquired new possibilities of development in the dynamically changing and very competitive market environment. I am pleased that the Companies’ Management Boards acted promptly in seizing the opportunity coming from the cooperation of Cyfrowy Polsat and Polkomtel. Thanks to this, we managed to introduce a pioneer and unique offer of integrated services – the smartDOM program – addressing new market conditions and consumer expectations and building the competitive advantage of the Group. I truly appreciate the pace of operational integration within the Group – thanks to this, we may now focus all our activities on the accomplishment of the basic objective, that is building of a leading position on the multimedia entertainment and telecommunication market in Poland. I believe that Cyfrowy Polsat Group will continue to effectively implement its goals and strategy, which will allow for continuing its development, thus gaining a permanent advantage over all the competitors. Undoubtedly, one of the key strengths of the Group is a broad offer of new services, including financial services – prepared in cooperation with PlusBank, electricity supply services – sold by Plus network and subsequent, new services from other areas which will bring additional benefits both for the individual and corporate customers. Cyfrowy Polsat Group together with Polkomtel has also strengthened its leading position on state-of-the-art technology market. The Group is the provider of the fastest Internet access in Poland in LTE technology and offers the broadest coverage of LTE in terms of population. The Group was the first operator in Poland to carry out successful tests of LTE- Advanced technology, through the combination of two carrier frequencies - 1800 MHz and 2600 MHz, VoLTE (Voice over LTE) and LTE Broadcast. I am pleased with both operating and financial performance of the Group last year, including effectively pursued objectives in all of its key operating segments – on pay TV and television broadcasting, telecommunication and online services markets. It is worth mentioning that the excellent performance of the Group was delivered in an extremely challenging market environment, with the Group effectively competing in all important areas of its operations. I would like to thank our Shareholders, as well as the Subscribers and Customers of Cyfrowy Polsat Group for the confidence they have placed in us. I would like to offer particular thanks to the Group’s Management Boards and Employees for their effective work and commitment, which has significantly contributed to the achievements of our goals and objectives. I am convinced that Cyfrowy Polsat Group will continue its effective operations, which will translate into consistent building of Group’s value for the benefit of its Shareholders. Yours sincerely, Zygmunt Solorz-Żak Chairman of the Supervisory Board Cyfrowy Polsat S.A. 3 Annual Report of Cyfrowy Polsat S.A. Capital Group for the financial year ended December 31, 2014 LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD Ladies and Gentlemen, It is with great pleasure that I present to you the 2014 Annual Report of Cyfrowy Polsat Capital Group. As a result of the transaction, finalized on May 7, 2014, of the acquisition by Cyfrowy Polsat of Metelem, indirectly controlling 100% of Polkomtel’s shares, last year was marked by the integration of Cyfrowy Polsat and Polkomtel, which is also reflected in this report comprehensively describing our Group in the new shape, both from the operating and financial perspective. By adding the operator of Plus network to Cyfrowy Polsat Group, it has become the biggest media and telecommunication group in the region, servicing 6.1 million contract customers and providing a total of 16.5 million pay television, mobile telephony and LTE Internet services, as well as one of the biggest private Polish enterprises with the capitalisation of ca. PLN 15 billon. Total consolidated revenue of Cyfrowy Polsat Group in 2014 amounted to PLN 7.4 billion, with EBITDA standing at PLN 2.7 billion, and profit at PLN 292.5 million. Operational integration was the natural consequence of our acquisition of Polkomtel. The process was completed last year with respect to the Group’s business areas. At the same time we have started numerous joint projects in the area of marketing, sales, customer service and retention, IT and finance, in order to achieve the announced revenue, cost and financial synergies. All projects related to revenue synergies (ca. PLN 2 billion in the years 2014-2019) and cost synergies (ca. PLN 1.5 billion in the years 2014-2019) proceeded as planned. Whereas already in August last year, as a result of the successful process of partial refinancing of the Group’s indebtedness, we increased our expectations regarding financial synergies – up to the amount of PLN 700 million until the end of 2019. Thanks to the integration, carried out in accordance with our multi-play strategy, we have created a unique offer of integrated services – the smartDOM program – which is our response to the dynamically changing market environment and customer expectations and which builds our competitive advantage. This offer, under which the customer may, among others, purchase the second product with a 50% discount, and the third one for as little as PLN 1, has been very well received by the customers and proved to be a commercial success already during the first few months. 569 thousand customers joined the smartDOM program last year and the total number of services held by this group of customers amounted to 1.753 million. Cyfrowy Polsat Group also includes the segment of television broadcasting and production as well as the biggest Polish online television service, IPLA, where we have been consistently strengthening our leading position. Our flagship channel POLSAT maintained its high audience share at the level of 13.3%, and the audience share of our thematic channels amounted to 10.4%, which translated into a total market share of 23.7%. We saw the Group’s share in the TV advertising and sponsorship market rise to 25.1%, and our revenue in this area, thanks to the carefully selected programming schedule and optimal investments in programming content, showed growth dynamics exceeding the market average. Our online television service, IPLA, saw significant development of its content and functionality, which contributed to the growth of revenue of the services, as well as its user base. The strategy of our Group remains unchanged. We will continue activities aimed at maintaining the leading position on the multimedia entertainment and telecommunication markets. Using the best and state-of-the-art technology we will create and deliver superior quality programming content and telecommunication products which will be offered by us under attractive packages of integrated services addressing the evolving needs of customers and improving their satisfaction with the cooperation. We still believe that investments in the LTE high speed Internet, of which we are the pioneer and leader in terms of development on the Polish market, is very important for the development of the Group in the future. We expect that the aforementioned activities will contribute to a systematic increase in the number of customers, their loyalty and ARPU per customer. Successful fulfilment of these objectives, combined with effective financial management, will have a positive impact on creating value for our Shareholders. Yours sincerely, Tomasz Gillner-Gorywoda President of the Management Board Cyfrowy Polsat S.A. 4 Report of the Management Board on the activities of Cyfrowy Polsat S.A. Capital Group for the financial year ended December 31, 2014 REPORT OF THE MANAGEMENT BOARD ON THE ACTIVITIES OF CYFROWY POLSAT S.A. CAPITAL GROUP IN THE FINANCIAL YEAR ENDED DECEMBER 31, 2014 5 Report of the Management Board on the activities of Cyfrowy Polsat S.A. Capital Group for the financial year ended December 31, 2014 TABLE OF CONTENTS Cyfrowy Polsat Group at a glance .........................................................................................................................................