Cyfrowy Polsat Sa
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CYFROWY POLSAT S.A. CAPITAL GROUP Interim Consolidated Report for the three month period ended March 31, 2016 Place and date of publication: Warsaw, May 12, 2016 Place and date of preparation: Warsaw, May 11, 2016 WorldReginfo - b94c8abb-ccbc-4909-a6b3-90c99b512da7 Interim Consolidated Report of Cyfrowy Polsat S.A. Capital Group for the three month period ended March 31, 2016 TABLE OF CONTENTS REPORT OF THE MANAGEMENT BOARD ON THE ACTIVITIES OF CYFROWY POLSAT S.A. CAPITAL GROUP FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016 Polsat Group at a glance ......................................................................................................................................................... 4 Disclaimers ............................................................................................................................................................................... 5 Financial data overview ........................................................................................................................................................... 7 1. Characteristics of Polsat Group ..................................................................................................................................... 9 1.1. Composition and structure of the Group ...................................................................................................................... 9 1.2. Shareholders holding material bundles of shares of the Company ............................................................................ 12 1.3. Shares of Cyfrowy Polsat S.A. owned by the members of the Management Board and the Supervisory Board ...... 12 2. Business review of Polsat Group................................................................................................................................. 13 2.1. Segment of services to individual and business customers ....................................................................................... 13 2.2. Broadcasting and television production segment ....................................................................................................... 16 3. Significant events .......................................................................................................................................................... 19 3.1. Corporate events ........................................................................................................................................................ 19 3.2. Business related events ............................................................................................................................................. 21 3.3. Events after the balance date .................................................................................................................................... 21 4. Operating and financial review of Polsat Group......................................................................................................... 23 4.1. Operating review of the Group ................................................................................................................................... 23 4.2. Key positions in the consolidated income statement ................................................................................................. 28 4.3. Review of our financial situation ................................................................................................................................. 30 5. Other information important for the assessment of the Company’s personnel, economic and financial position, as well as financial results ........................................................................................................................................... 49 5.1. Transactions concluded with related parties on conditions other than market conditions ......................................... 49 5.2. Discussion of the difference of the Company's results to published forecasts .......................................................... 49 5.3. Material proceedings at the court, arbitration body or public authorities .................................................................... 49 5.4. Factors that may impact our results in at least the following quarter ......................................................................... 50 Glossary .................................................................................................................................................................................. 57 INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016 INTERIM CONDENSED FINANCIAL STATEMENT FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016 WorldReginfo - b94c8abb-ccbc-4909-a6b3-90c99b512da7 2 Report of the Management Board on the activities of Polsat Group for the three month period ended March 31, 2016 REPORT OF THE MANAGEMENT BOARD ON THE ACTIVITIES OF CYFROWY POLSAT S.A. CAPITAL GROUP FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2016 WorldReginfo - b94c8abb-ccbc-4909-a6b3-90c99b512da7 3 Report of the Management Board on the activities of Polsat Group for the three month period ended March 31, 2016 POLSAT GROUP AT A GLANCE Polsat Group is Poland’s leading multimedia group. Within the scope of our activities we provide a comprehensive array of integrated media and telecommunication services within the following areas: • pay digital TV services offered by Cyfrowy Polsat – the largest pay TV provider in Poland and one of the leading satellite platforms in Europe. We offer our customers access to over 170 TV channels, including 69 channels in high definition standard, as well as additional modern OTT services (e.g. Cyfrowy Polsat GO, PPV, VOD Home Movie Rental, TV online, catch-up TV) and Multiroom. We also provide online video services through IPLA – the leader on Poland’s online video market; • mobile telecommunication services, including voice and data transmission services, which we provide mainly through our subsidiary Polkomtel – one of Poland’s leading telecommunications operators; • mobile broadband Internet, offered under two alternative brands: Cyfrowy Polsat and Plus. We also provide these services in the state-of-the-art LTE technology. We offer the largest LTE coverage in Poland and our customers attain the highest data transmission speed among offers provided by national mobile network operators technologies; • broadcasting and television production through Telewizja Polsat, leading commercial TV broadcaster on the Polish market, offering 32 popular TV channels, including 12 in HD standard. • wholesale services to other operators, including i.a. network interconnection, transit of traffic and national and international roaming services. The Group operates in two business segments: segment of services to individual and business customers which relates to the provision of services to the general public and the broadcasting and television production segment. Our mission and main strategic goals Our mission is to create and deliver the most attractive TV content, telecommunication products and other services for the home, as well as residential and business customers, using state-of-the-art technologies to provide top quality multi-play services that match the changing needs of the market, while maintaining the highest possible level of customer satisfaction. The superior goal of our strategy is the permanent growth of the value of Cyfrowy Polsat for its shareholders. We intend to achieve this goal by implementing the major elements of our operational strategy which include: • growth of revenue from services provided to residential and business customers through consistent building of the customer base value by maximizing the number of users of our services as well as the number of services offered to each customer, while simultaneously increasing average revenue per user (ARPU) and maintaining high levels of customer satisfaction, • growth of revenue from produced and purchased content by expanding its distribution, maintaining the audience shares of our channels and improving our viewer profile, • effective management of the cost base of our integrated media and telecoms group by exploiting its inherent synergies and economies of scale, and • effective management of the Group’s finances, including its capital resources. WorldReginfo - b94c8abb-ccbc-4909-a6b3-90c99b512da7 4 Report of the Management Board on the activities of Polsat Group for the three month period ended March 31, 2016 DISCLAIMERS This constitutes the quarterly report of Cyfrowy Polsat Capital Group S.A. prepared as required by Paragraph 82 section 1 and 2 and Paragraph 87 of the Regulation of the Minister of Finance of February 19, 2009 concerning the submission of current and periodic information by the securities' issuers and the conditions of recognizing as equal the information demanded by the national lawful regulation of a country which does not hold the membership in European Union. Presentation of financial and other information References to the Company and Cyfrowy Polsat contained in this Management Board’s report on the activities of Cyfrowy Polsat S.A. Capital Group (hereafter "Report") apply to Cyfrowy Polsat S.A., while all references to the Group, Polsat Group, the Capital Group, Cyfrowy Polsat Group or Cyfrowy Polsat Capital Group apply to Cyfrowy Polsat S.A. and its consolidated subsidiaries. Expressions such as "we", "us", "our" and similar apply generally to the Group, unless from the context