Consolidated Annual Report for 2011
Total Page:16
File Type:pdf, Size:1020Kb
CONSOLIDATED ANNUAL REPORT OF CYFROWY POLSAT S.A. CAPITAL GROUP FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2011 Place and date of publication : Warsaw, March 12, 2012 Content of the annual report: Letter of the President of the Management Board Management Board’s report on the activities of Cyfrowy Polsat S.A. Capital Group in the financial year ended December 31, 2011 Management Board’s representations Opinion of the independent auditor Consolidated Financial Statements for the year ended December 31, 2011 Report supplementing the auditor's opinion on the consolidated financial statements for the Financial Year ended December 31, 2011 Interim Condensed Consolidated Financial Statements for the 3 and 12 Months Ended December 31, 2011 2 Ladies and Gentlemen, It is with great pleasure that I present to you the 2011 Annual Report of the Cyfrowy Polsat Group. The previous year saw many events and projects which proved to be important steps in the consistent implementation of the Group’s growth strategy, designed to strengthen our leading position on the market of pay TV and television broadcasters, as well as a steady development of our competencies in the telecommunications sector. The stable growth of our business is best demonstrated by the Group’s improved operating and financial performance. The pay TV subscriber base grew to 3.55 million, which represents an over 30% share in the market, whereas the number of broadband Internet and mobile phone users was 73 thousand and 143 thousand, respectively. In our second business segment, we proved to be the fastest growing broadcaster. Our main TV channel – POLSAT – enjoyed the largest audience share, with a 16.45% share in the market, while the thematic channels in our portfolio jointly accounted for 4.35% audience share. We estimate that in 2011 we gained a 22.6% share in the Polish TV advertising market worth approximately PLN 3.9 billion. Please note that thanks to our carefully planned programming and the expanded distribution of thematic channels, we outperformed the market in terms of advertising revenue. Another source of satisfaction is the Group’s robust financial performance. Total consolidated revenue from sales of products, services, goods and materials in 2011 grew by 60%, to PLN 2.37 billion, while net profit came in at PLN 160 million. The completion of the purchase of 100% shares in Telewizja Polsat S.A. for PLN 3.75 billion will remain in our memory for a long time. This transaction positioned the Cyfrowy Polsat Group as the undisputed market leader. The formation of Poland’s largest multimedia group with Telewizja Polsat has also paved the way for us to effectively capitalize on technology, marketing, product and administration synergies. The operations of both companies naturally complement each other, which has not only put us at a considerable competitive advantage, but has also strengthened our position and diversified our revenue streams – now derived from subscriptions and commercials. To ensure continuing enhancement of customer satisfaction, we regularly expanded our pay TV offer to include new channels and products. To address the customers’ growing interest in VOD – Home Movie Rental, in April 2011, as the first satellite TV operator in Poland, we launched catch-up TV services to provide customers with free-of-charge Internet access to selected programmes broadcast on channels included in their TV packages. At the beginning of 2012, in cooperation with Redefine, we rolled out VOD services for computer users. And then in August 2011, as the first operator in Poland, we proudly launched the fastest and most advanced LTE-based mobile broadband Internet, with download speeds of up to 100 MB/s. We strongly believe that over the long term, as the necessary radio infrastructure and LTE-enabled devices develop, the technology will revolutionize not only the broadband Internet market but also content distribution. In 2011, Cyfrowy Polsat Technology, our production facility, produced the three millionth set-top-box. So far we have launched six set-top-box models, two of which support HD TV, and a 320GB USB hard drive. The latest product of that largest maker of digital set-top-boxes in Poland is a set-top box for digital terrestrial TV reception, whose sales will be launched in the near future. Having in mind further implementation of our strategy aiming for the widest possible content distribution based on all latest technologies and devices, we bought INFO-TV-FM. The purpose of the acquisition was to enable us to launch mobile DVB-T TV using the acquired company’s frequencies. DVB-T TV services are a good fit for our business plans, are in line with current market trends and meet customers’ needs. Our long-term objectives include stable development of the Group, maintaining our leading position on the pay TV market, successful offering of telecommunications services, improved audience ratings of Telewizja Polsat channels and, as a consequence, building our presence on the TV advertising market. We intend to develop modern content distribution channels, such as mobile TV and online services, hoping that in the long-term these initiatives will attract more customers, increase the average revenue per subscriber and enhance customer loyalty. In turn, the achievement of these goals, coupled with efficient financial management, will stimulate growth of the shareholder value. Yours sincerely Dominik Libicki President of the Management Board, Cyfrowy Polsat S.A. 3 MANAGEMENT BOARD ’S REPORT ON ACTIVITIES OF CYFROWY POLSAT S.A. CAPITAL GROUP IN THE FINANCIAL YEAR ENDED DECEMBER 31, 2011 4 Management Board’s report on activities of Cyfrowy Polsat S.A. Capital Group in the financial year ended December 31, 2011 (all financial data presented in PLN thousand, unless otherwise stated) _________________________________________________________________________________________________________________ Table of content Item 1. Introduction ............................................................................................................................................................. 7 Item 2. Currency presentation and exchange rate information ........................................................................................... 9 Item 3. Selected financial data .......................................................................................................................................... 11 Item 4. Presentation of our Capital Group ......................................................................................................................... 13 Item 4.1. General information about our Capital Group .............................................................................................. 13 Item 4.2. Organizational structure of the Capital Group ............................................................................................. 15 Item 4.3. Changes to the principle rules of management of our Company and the Capital Group ............................ 17 Item 4.4. Strategy, market opportunities and comparative advantage of the Capital Group ...................................... 17 Item 4.4.1. Group strategy ........................................................................................................................................ 17 Item 4.4.2. Market opportunities ............................................................................................................................... 18 Item 4.4.3. Competitive advantage ........................................................................................................................... 20 Item 4.5. Retail business segment ............................................................................................................................. 22 Item 4.5.1. Market overview ..................................................................................................................................... 22 Item 4.5.1.1. Pay-TV market ................................................................................................................................ 22 Item 4.5.1.2. Internet market ................................................................................................................................ 23 Item 4.5.1.3. Mobile telephony market ................................................................................................................. 25 Item 4.5.1.4. Multi-play services market ............................................................................................................... 26 Item 4.5.2. Offer ........................................................................................................................................................ 27 Item 4.5.2.1. DTH offer ......................................................................................................................................... 27 Item 4.5.2.2. Internet offer .................................................................................................................................... 29 Item 4.5.2.3. Mobile telephony offer ..................................................................................................................... 30 Item 4.5.2.4. Multi-play offer ................................................................................................................................. 30 Item 4.5.3. Marketing and sales, customer service and maintenance .....................................................................