Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
Prepared in accordance
with International Financial Reporting Standards
as adopted by the European Union.
2
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Table of contents
Approval of the Financial Statements 4
Income Statement 5
Statement of Comprehensive Income 6
Balance Sheet 7
Cash Flow Statement 9
Statement of Changes in Equity 11
Notes to the Financial Statements 13
General information 13
1. The Company 13
2. Composition of the Management Board of the Company 13
3. Composition of the Supervisory Board of the Company 13
Principles applied in the preparation of financial statements 14
4. Basis of preparation of the financial statements 14
5. Accounting policies 15
6. Determination of fair values 29
7. Approval of the Financial Statements and identification of the Consolidates Financial Statements 29
Explanatory notes 29
8. Revenue 29
9. Operating costs 30
10. Gain on investment activities, net 31
11. Finance costs, net 31
12. Income tax 31
13. EBITDA (unaudited) 33
14. Basic and diluted earnings per share 34
15. Property, plant and equipment 35
16. Impairment test on goodwill allocated to the “B2C and B2B” cash-generating unit 37
17. Other intangible assets 38
18. Right-of-use assets 39
19. Investment property 40
20. Shares in subsidiaries, associates and other 41
21. Deferred distribution fees 45
22. Loans granted 45
23. Other non-current assets 46
24. Contract assets 46
25. Inventories 47
26. Trade and other receivables 47
27. Other current assets 48
3
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
28. Cash and cash equivalents 48
29. Equity 49
30. Hedge valuation reserve 51
31. Loans and borrowings 53
32. Issued bonds 56
33. Lease liabilities 58
34. Company as a lessor 59
35. Other non-current liabilities and provisions 59
36. Trade and other payables 60
Other notes 61
37. Financial instruments 61
38. Capital management 78
39. Barter transactions 79
40. Transactions with related parties 79
41. Litigations 82
42. Other disclosures 83
43. Remuneration of the Management Board 84
44. The Supervisory Board remuneration 84
45. Important agreements and events 85
46. Events subsequent to the reporting date 88
47. Judgments, financial estimates and assumptions 88
Financial results for the 3 months ended 31 December 2023 and 31 December 2022 92
48. Income Statement 92
49. Statement of Comprehensive Income 92
50. Revenue 93
51. Operating costs 93
52. Gain/(loss) on investment activities, net 94
53. Finance costs, net 94
4
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Approval of the Financial Statements
On 10 April 2024 the Management Board of Cyfrowy Polsat S.A. approved the financial statements of the Cyfrowy Polsat S.A. prepared in accordance with International Financial Reporting Standards as adopted by the European Union, which include:
Income Statement for the period
from 1 January 2023 to 31 December 2023 showing a net profit for the period of:
PLN 639.6
Statement of Comprehensive Income for the period
from 1 January 2023 to 31 December 2023 showing a total comprehensive income for the period of:
PLN 615.7
Balance Sheet as at
31 December 2023 showing total assets and total equity and liabilities of:
PLN 19,732.9
Cash Flow Statement for the period
from 1 January 2023 to 31 December 2023 showing a net increase in cash and cash equivalents amounting to:
PLN 1,762.9
Statement of Changes in Equity for the period
from 1 January 2023 to 31 December 2023 showing an increase in equity of:
PLN 615.7
Notes to the Financial Statements
The financial statements have been prepared in PLN million unless otherwise indicated.
Mirosław Błaszczyk
Maciej
Stec
Jacek Felczykowski
Aneta
Jaskólska
President of the Management Board
Vice-President of the Management Board
Member of the Management Board
Member of the Management Board
Agnieszka Odorowicz
Katarzyna
Ostap-Tomann
Agnieszka Szatan
Member of the Management Board
Member of the Management Board
Chief Accountant
Warsaw, 10 April 2024
5
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Income Statement
for the year ended
Note
31 December 2023
31 December 2022
Revenue
8
2,245.3
2,382.5
Operating costs
9
(2,064.1)
(2,042.1)
Other operating income/(costs), net
(9.6)
2.7
Profit from operating activities
171.6
343.1
Gain on investment activities, net
10
891.1
1,188.7
Finance costs, net
11
(404.9)
(241.9)
Gross profit for the period
657.8
1,289.9
Income tax
12
(18.2)
(41.3)
Net profit for the period
639.6
1,248.6
Basic and diluted earnings per share (in PLN)
14
1.16
2.24
6
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Statement of Comprehensive Income
for the year ended
Note
31 December 2023
31 December 2022
Net profit for the period
639.6
1,248.6
Items that may not be reclassified subsequently to profit or loss:
Actuarial gain/(loss)
(0.6)
0.7
Items that may be reclassified subsequently to profit or loss:
Valuation of hedging instruments
30
(23.3)
9.2
Other comprehensive income, net of tax
(23.9)
9.9
Total comprehensive income for the period
615.7
1,258.5
7
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Balance Sheet - Assets
Note
31 December 2023
31 December 2022
Reception equipment
15
362.6
331.8
Other property, plant and equipment
15
130.2
194.2
Goodwill
16
197.0
197.0
Other intangible assets
17
127.7
110.6
Right-of-use assets
18
21.5
15.8
Investment property
19
94.3
36.8
Shares in subsidiaries, associates and other, includes:
20
12,774.4
12,966.7
shares in associates
0.1
1,708.0
Non-current deferred distribution fees
21
19.5
17.7
Non-current loans granted
22
3,584.2
573.6
Other non-current assets, includes:
23
33.4
7.3
derivative instruments
30.1
6.6
Total non-current assets
17,344.8
14,451.5
Contract assets
24
72.0
93.3
Inventories
25
122.7
131.0
Trade and other receivables
26
189.5
212.1
Current loans granted
22
24.3
544.8
Income tax receivables
7.2
-
Current deferred distribution fees
21
48.0
54.3
Other current assets includes:
27
40.8
50.6
derivative instruments
15.9
16.5
Cash and cash equivalents
28
1,883.6
120.7
Total current assets
2,388.1
1,206.8
Total assets
19,732.9
15,658.3
8
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Balance Sheet - Equity and Liabilities
Note
31 December 2023
31 December 2022
Share capital
29
25.6
25.6
Share premium
29
7,174.0
7,174.0
Other reserves
29
2,909.6
2,933.5
Retained earnings
4,855.4
4,215.8
Treasury shares
29
(2,854.7)
(2,854.7)
Total equity
12,109.9
11,494.2
Loans and borrowings
31
2,022.0
1,047.8
Issued bonds
32
3,975.5
1,900.4
Lease liabilities
33
19.8
13.7
Deferred tax liabilities
12
40.3
58.7
Other non-current liabilities and provisions, includes:
35
58.7
2.1
derivative instruments
56.5
0.7
Total non-current liabilities
6,116.3
3,022.7
Loans and borrowings
31
185.7
250.7
Issued bonds
32
394.7
176.0
Lease liabilities
33
3.1
3.3
Contract liabilities
230.7
225.3
Trade and other payables, includes:
36
688.8
477.6
derivative instruments
15.5
-
Income tax liability
-
4.9
Deposits for equipment
3.7
3.6
Total current liabilities
1,506.7
1,141.4
Total liabilities
7,623.0
4,164.1
Total equity and liabilities
19,732.9
15,658.3
9
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Cash Flow Statement
for the year ended
Note
31 December 2023
31 December 2022
Net profit
639.6
1,248.6
Adjustments for:
(409.5)
(946.0)
Depreciation, amortization, impairment and liquidation
9
177.1
174.3
Interest expense
307.5
165.0
Change in inventories
8.3
(65.9)
Change in receivables and other assets
(4.8)
(52.2)
Change in liabilities and provisions
85.3
11.0
Change in contract assets
21.3
27.8
Change in contract liabilities
5.4
(8.6)
Income tax
12
18.2
41.3
Net increase in reception equipment
(163.5)
(132.6)
Dividends income and share in the profits of partnerships
10
(665.8)
(1,010.2)
Gain on sale of shares in an associate
10
(235.7)
(100.0)
Cost of premium for scheduled early redemption of bonds
10.1
-
One-time income resulting from modification of flows as a result of bond conversion
11
(31.3)
-
Valuation of hedging instruments
30
(28.8)
11.4
Foreign exchange losses/(gains), net
(10.4)
-
Estimated future losses
75.2
-
Other adjustments
22.4
(7.3)
Cash from operating activities
230.1
302.6
Income tax paid
(43.3)
(709.7)
Interest received from operating activities
54.6
23.8
Net cash used in/from operating activities
241.4
(383.3)
Received dividends and shares in the profits of partnerships
664.3
1,006.9
Acquisition of shares in subsidiaries and associates
20
(224.3)
(582.6)
Capital increase in subsidiaries and associates
20
(28.0)
(473.8)
Acquisition of property, plant and equipment
(24.5)
(86.4)
Acquisition of intangible assets
(37.1)
(38.6)
Proceeds from sale of shares in a subsidiary/associate
850.5
600.0
Loans granted
(3,121.6)
(728.1)
Loans repaid
557.4
198.4
Interest on loans repaid
61.1
17.3
Other inflows
20.2
13.6
Net cash used in/from investing activities
(1,282.0)
(73.3)
10
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
for the year ended
Note
31 December 2023
31 December 2022
Bond issuance (1)
32
2,165.8
-
Borrowings
31
1,605.4
-
Repayment of loans and borrowings
31
(591.5)
(156.0)
Payment of interest on loans, borrowings, bonds and commissions (2)
(382.6)
(156,8)
Dividend paid
-
(660.8)
Acquisition of treasury shares (3)
-
(393.9)
Inflows/(outflows) from realization of derivatives
14.5
19.7
Other outflows
(8.1)
(9.7)
Net cash used in/from financing activities
2,803.5
(1,357.5)
Net decrease/increase in cash and cash equivalents
1,762.9
(1,814.1)
Cash and cash equivalents at the beginning of period
120.7
1,934.8
Effect of exchange rate fluctuations on cash and cash equivalents
-
-
Cash and cash equivalents at the end of period
1,883.6
120.7
(1) Value of bond issue less bond interest and early redemption premium settled in conversion
(2) Includes payment for costs related to the new financing
(3) Includes payment for costs related to the acquisition of treasury shares
11
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Statement of Changes in Equity
for the year ended 31 December 2023
Share capital
Share premium
Other
reserves
Retained earnings (1)
Treasury shares
Total
Equity
Balance as at 1 January 2023
25.6
7,174.0
2,933.5
4,215.8
(2,854.7)
11,494.2
Total comprehensive income
-
-
(23.9)
639.6
-
615.7
Hedge valuation reserve
-
-
(23.3)
-
-
(23.3)
Actuarial profit/(loss)
-
-
(0.6)
-
-
(0.6)
Net profit for the period
-
-
-
639.6
-
639.6
Balance as at 31 December 2023
25.6
7,174.0
2,909.6
4,855.4
(2,854.7)
12,109.9
(1) In accordance with the provisions of the Commercial Companies Code, joint-stock companies are required to transfer at least 8% of their annual net profits to reserve capital until its amount reaches one third of the amount of their share capital. The capital excluded from distribution amounts to PLN 8.5 as at 31 December 2023.
12
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Statement of Changes in Equity
for the year ended 31 December 2022
Share capital
Share premium
Other
reserves
Retained earnings (1)
Treasury shares
Total
Equity
Balance as at 1 January 2022
25.6
7,174.0
2,923.8
3,628.0
(2,461.0)
11,290.4
Dividend approved and paid
-
-
-
(660.8)
-
(660.8)
Acquisition of treasury shares
-
-
(0.2)
-
(393.7)
(393.9)
Total comprehensive income
-
-
9.9
1,248.6
-
1,258.5
Hedge valuation reserve
-
-
9.2
-
-
9.2
Actuarial profit/(loss)
-
-
0.7
-
-
0.7
Net profit for the period
-
-
-
1,248.6
-
1,248.6
Balance as at 31 December 2022
25.6
7,174.0
2,933.5
4,215.8
(2,854.7)
11,494.2
(1) In accordance with the provisions of the Commercial Companies Code, joint-stock companies are required to transfer at least 8% of their annual net profits to reserve capital until its amount reaches one third of the amount of their share capital. The capital excluded from distribution amounts to PLN 8.5 as at 31 December 2022.
13
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Notes to the Financial Statements
General information
1. The Company
Cyfrowy Polsat S.A. (‘the Company’, ‘Cyfrowy Polsat’) was incorporated in Poland as a joint stock company. The Company’s shares are traded on the Warsaw Stock Exchange. The Company’s registered head office is located at 4a Łubinowa Street in Warsaw.
The Company operates in Poland as a provider of a paid digital satellite platform under the name of ‘Polsat Box’ and paid digital terrestrial television as well as telecommunication services provider.
The Company was incorporated under the Notary Deed dated 30 October 1996.
The Company is the Parent Company of Cyfrowy Polsat S.A. Capital Group (the ‘Group’). As at 31 December 2023 the Group encompasses the Company, Polkomtel Sp. z o.o. and its subsidiaries, Telewizja Polsat Sp. z o.o. and its subsidiaries and joint ventures, Netia S.A. and its subsidiaries, INFO-TV-FM Sp. z o.o., Interphone Service Sp. z o.o., Teleaudio Dwa Sp. z o.o. Sp. k., Netshare Media Group Sp. z o.o., Orsen Holding Limited and its subsidiaries, Esoleo Sp. z o.o. and its subsidiaries, Stork 5 Sp. z o.o. and its subsidiary, BCAST Sp. z o.o. , Plus Finanse Sp. z o.o., Vindix S.A. and its subsidiaries and Port Praski Sp. z o.o. and its subsidiaries and PAK-Polska Czysta Energia Sp. z o.o. and its subsidiaries.
2. Composition of the Management Board of the Company
• Mirosław Błaszczyk President of the Management Board,
• Maciej Stec Vice-President of the Management Board,
• Jacek Felczykowski Member of the Management Board,
• Aneta Jaskólska Member of the Management Board,
• Agnieszka Odorowicz Member of the Management Board,
• Katarzyna Ostap-Tomann Member of the Management Board.
3. Composition of the Supervisory Board of the Company
Composition of the Supervisory Board from 19 July 2023:
• Zygmunt Solorz Chairman of the Supervisory Board,
• Tobias Solorz Vice-Chairman of the Supervisory Board,
• Piotr Żak Vice-Chairman of the Supervisory Board,
• Józef Birka Member of the Supervisory Board,
• Jarosław Grzesiak Member of the Supervisory Board,
• Marek Grzybowski Member of the Supervisory Board,
• Alojzy Nowak Member of the Supervisory Board,
• Tomasz Szeląg Member of the Supervisory Board.
14
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Composition of the Supervisory Board to 19 July 2023:
• Zygmunt Solorz Chairman of the Supervisory Board,
• Marek Kapuściński Vice-Chairman of the Supervisory Board (until 31 May 2023),
• Józef Birka Member of the Supervisory Board,
• Jarosław Grzesiak Member of the Supervisory Board,
• Marek Grzybowski Member of the Supervisory Board,
• Alojzy Nowak Member of the Supervisory Board,
• Tobias Solorz Member of the Supervisory Board,
• Tomasz Szeląg Member of the Supervisory Board,
• Piotr Żak Member of the Supervisory Board.
Principles applied in the preparation of financial statements
4. Basis of preparation of the financial statements
Statement of compliance
These financial statements for the year ended 31 December 2023 have been prepared in accordance with the International Financial Reporting Standards as adopted by the EU (IFRS EU). The Company applied the same accounting policies in the preparation of the financial data for the year ended 31 December 2023 and the financial statements for 2022, presented in the annual report, except for the EU-endorsed standards and interpretations which are effective for the reporting periods beginning on or after 1 January 2023.
During the year ended 31 December 2023 the following became effective:
a) IFRS 17 Insurance Contracts and Amendments to IFRS 17,
b) Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information,
c) Amendments to IAS 1 Presentation of Financial Statements and IFRS Board guidelines: Disclosure of Accounting policies,
d) Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates,
e) Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction,
f) Amendments to IAS 12 Income Taxes: International Tax Reform – Pillar Two Model Rules.
Amendments and interpretations that apply for the first time in 2023 do not have a material impact on the financial statements of the Company.
Standards published but not yet effective:
a) Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback,
b) Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current,
c) Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements,
d) Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability.
The Company has not early adopted the new or amended standards in preparing these financial statements.
15
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
5. Accounting policies
The accounting policies set out below have been applied by the Company consistently to all periods presented in the financial statements.
a) Basis of measurement
The financial statements have been prepared on a historical cost basis, except for derivative financial instruments, which are valued at fair value.
b) Going concern assumption
These financial statements have been prepared assuming that the Company will continue as a going concern in the foreseeable future, not shorter than 12 months from 31 December 2023.
c) Functional currency and presentation currency
The financial data in the financial statements is presented in Polish zloty, rounded to million. The functional currency of the Company is the Polish zloty.
d) Judgments and estimates
The preparation of financial statements in conformity with EU IFRS requires the Management Board to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and costs. Estimates and underlying assumptions are based on historical data and other factors considered as reliable under the circumstances, and their results provide grounds for an assessment of the carrying amounts of assets and liabilities which cannot be based directly on any other sources. Actual results may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical estimates and judgements in applying accounting policies is included in note 47.
e) Comparative financial information
Comparative data or data presented in previously published financial statements has been updated, if necessary, in order to reflect presentational changes introduced in the current period. The changes had no impact on previously reported amounts of net income or equity.
f) Foreign currency
Transactions in foreign currencies are translated to Polish zloty at exchange rates effective on a day preceding the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with the balance sheet date into Polish zloty at the average exchange rate quoted by the National Bank of Poland (“NBP”) for that date. The foreign exchange differences arising on translation of transactions denominated in foreign currencies and from the balance sheet valuation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the average NBP exchange rate in effect at the date of the valuation. Non- monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at the average NBP foreign exchange rate in effect at the date the fair value was determined.
16
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
g) Financial instruments
Non-derivative financial instruments
Financial assets
Financial assets are classified in the following measurement categories depending on the business model in which assets are managed and their cash flow characteristics:
• assets measured at amortised cost - if the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and the contractual terms of this financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding;
• financial asset measured at fair value through other comprehensive income – if the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of this financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding;
• assets measured at fair value through profit or loss - all other financial assets.
Financial assets at initial recognition are measured at fair value plus, in the case of financial assets not measured at fair value through profit or loss, directly attributable transaction costs. Trade receivables that do not have a significant financial component are initially measured at their transaction price.
Financial assets measured at amortised cost
Financial assets measured at amortised cost include trade and other receivables, loans granted and cash and cash equivalents. Interest income from these financial assets is calculated using the effective interest rate method and is presented within Gain/(loss) on investment activities, net.
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss include derivative instruments not designated as hedging instruments and equity instruments for which the Company made such choice (shares of Asseco Poland S.A.). Financial assets classified to this category are measured at fair value and the subsequent changes in their fair value are recognized in profit or loss. The subsequent changes in their fair value of derivative instruments not designated as hedging instruments are presented in Gain/(loss) on investment activities, net or Finance costs, net depending on the economic substance of hedged transaction.
A financial asset is derecognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred substantially all the risks and rewards of the asset.
Financial liabilities
Financial liabilities include financial liabilities measured at amortised cost and financial liabilities measured at fair value through profit or loss.
Financial liabilities are recognised initially at fair value and, in the case of financial liabilities which are not measured at fair value through profit or loss, net of directly attributable transaction costs.
Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost include loans and borrowings, issued bonds, trade and other payables and lease liabilities. Interest expense related to these financial liabilities is calculated using the effective interest rate method and is presented within Gain/(loss) on investment activities, net or Finance costs, net.
17
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss include derivative instruments not designated as hedging instruments. Financial liabilities classified to this category are measured at fair value and the subsequent changes in their fair value are recognized in profit or loss. The subsequent changes in their fair value of derivative instruments not designated as hedging instruments are presented in Gain/(loss) on investment activities, net or Finance costs, net depending on the economic substance of hedged transaction.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the profit or loss. In case of early repayment, the difference between the carrying amount of the repaid liability and the carrying amount of the new liability is recognized in profit or loss.
Accounting policies related to gains and losses on investment activities and finance costs are presented in 5t.
Derivative financial instruments
Hedge accounting
The Company may use derivative financial instruments such as forward currency contracts, foreign exchange call options, interest rate swaps and cross-currency interest rate swaps to hedge its foreign currency and interest rate risks.
For the purpose of hedge accounting, the Company’s hedges are classified as cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
For cash flow hedges the effective portion of the gain or loss on the hedging instrument is recognized directly as other comprehensive income in the hedge valuation reserve, while any ineffective portion is recognized immediately in the profit or loss.
The amounts recognized within other comprehensive income are transferred from equity to the income statement when the hedged transaction affects profit or loss, such as when the related gain or loss is recognized in finance cost or when a forecast sale occurs.
Gains and losses from the settlement of derivative instruments that are designated as, and are effective hedging instruments, are presented in the same position as the impact of the hedged item. The derivative instrument is divided into a current portion and a non-current portion only if a reliable allocation can be made.
In accordance with IFRS 9, the Company chose to apply hedge accounting requirements as in IAS 39 instead of those included in IFRS 9.
18
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
h) Equity
Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.
Preferred shares
Preference share capital is classified as equity, if it is non-redeemable, or redeemable only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognized as distributions within equity.
Costs attributable to the issue and public offer of shares
Costs attributable to a new issue of shares are recognized in equity while costs attributable to a public offering of existing shares are recognized directly in finance costs. These costs relating to both new issue and sale of existing shares are recognized on a pro-rata basis in equity and finance costs.
Share premium
Share premium includes the excess of issue value over the nominal value of shares issued decreased by share issuance-related consulting costs.
Retained earnings
Retained earnings include net result, reserve capital and effect of merger with the Company. Effect of merger is calculated as the difference between assets and liabilities of the merged entity.
In accordance with the provisions of article 396 of the Commercial Companies Code, joint- stock companies are required to transfer at least 8% of their annual net profits to reserve capital until its amount reaches one third of the amount of their share capital. This capital is excluded from distribution, however, it can be utilised to cover accumulated losses.
i) Property, plant and equipment
Property, plant and equipment owned by the Company
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost includes purchase price of the asset and other expenditure that is directly attributable to the acquisition and bringing the asset to a working condition for its intended use, including initial delivery as well as handling and storage costs. The cost of purchased assets is reduced by the amounts of vendor discounts, rebates and other similar reductions received.
The cost of self-constructed assets and assets under construction includes all costs incurred for their construction, installation, adoption, and improvement as well as borrowing costs incurred until the date they are accepted for use (or until the reporting date for an asset not yet accepted for use). The above cost also may include, if necessary, the estimated cost of dismantling and removing the asset and restoring the site. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Investment property
Investment property is defined as a property (land, building, or both) held by the Company to earn rentals or for capital appreciation or both.
19
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Investment property is measured initially at cost.
Once recognized all investment property held by the Company are measured using the cost model as set out in IAS 16. This means that the assets are recognized at cost model as presented above in point Property Plant and Equipment owned by the Company.
Investment property is removed from the balance sheet on disposal or when it is permanently withdrawn from use and no further economic benefits are expected from its disposal.
Subsequent costs
Subsequent cost of replacing a component of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Company and the amount of the cost can be measured reliably. Replaced item is derecognised. Other property, plant and equipment related costs are recognized in profit and loss as incurred.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.
Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.
Land is not depreciated.
The estimated useful lives for property, plant and equipment are as follows:
Reception equipment
2 or 3 or 5
years
Buildings and structures
2-61
years
Technical equipment and machinery
2-22
years
Vehicles
2-10
years
Other
2-26
years
Depreciation methods, useful lives and residual values of material assets are reviewed at each financial year-end and adjusted if appropriate.
Leased assets
Assets used by the Company under lease, tenancy, rental or similar contracts which meet lease definition, are classified separately in the balance sheet as right-of-use assets.
Equipment that is provided to customers under operating lease agreements are recognized within non-current assets (Reception equipment in the balance sheet) and depreciated as described in point related to depreciation. The set-top boxes are depreciation over a period that exceeds the period the lease agreements are entered into.
Carrying amounts of reception equipment and other items of property, plant and equipment as well as right-of-use assets may be reduced by impairment losses whenever there is uncertainty as to those assets’ revenue generating potential or their future use in the Company’s operations. The accounting policies relating to impairment are presented in note 5m.
Detailed accounting policies related to lease contracts are described in point 5u.
20
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
j) Intangible assets
Goodwill
Goodwill is presented at purchase price less accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if possible impairment is indicated. Goodwill is allocated to acquirer’s cash-generating units for the purpose of testing for impairment. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.
Other intangible assets
The Company capitalizes costs of IT software internally generated, including employee- related expenses, directly resulting from generating and preparing an asset to be capable of operating, if the Company is able to demonstrate: the technical feasibility of completing the intangible asset so that it will be available for use or sale; its intention to complete the intangible asset and use or sell it; its ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits, the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; its ability to measure reliably the expenditure attributable to the intangible asset during its development.
Other intangible assets acquired by the Company are stated at cost less accumulated amortization and impairment losses.
Subsequent expenditure on existing intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in the profit or loss as incurred.
Amortization is based on the cost of an asset less its residual value.
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.
The estimated useful lives for respective intangible assets groups are as follows:
• Computer software: 2-15 years,
• Other: 2-10 years.
k) Shares in subsidiaries and associates
Shares in subsidiaries and associates are measured at cost less impairment losses. Accounting principles relating to impairment testing are presented in note 5m.
Subsidiaries are entities controlled by the Company. Associates are all entities over which the Company has significant influence but not control or joint control, over the financial and operating policies. This is generally the case where the Company holds between 20% and 50% of the voting rights.
l) Inventories
Inventories are measured at the lower of cost or net realizable value. Cost of acquisition or production cost of inventories is determined by using the weighted average cost of acquisition or production cost of inventory.
The cost of inventories includes purchase price, costs relating directly to the acquisition and the costs related to preparing the inventory for use or sale.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. In the case of set-top boxes, mobile phones, modems and tablets, which under the business model applied by the Company are sold below cost, the loss on the sale is recorded when transferred to the customer.
21
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The Company creates an allowance for slow-moving or obsolete inventories.
m) Impairment of assets
Financial assets measured at amortised cost
The Company measures the loss allowance at an amount equal to lifetime expected credit losses for trade receivables and contract assets. The trade receivables and loans receivables are assessed for impairment collectively in groups that share similar credit risk characteristics. The expected credit losses are estimated based on historical pattern for overdue receivables collection adjusted with currently available forward-looking information. The credit risk characteristics of contract assets correspond to the credit risk characteristics of trade receivables for a particular type of contract.
The Company considers financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full.
The Company considers a financial asset to be credit impaired when events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred, including significant financial difficulty of the debtor or a breach of contract, such as a default or past due event.
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Non-financial assets
The carrying amounts of non-financial assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of intangible assets which are not yet ready for use is assessed at each financial year-end.
The Company considers on annual basis whether there are indicators that investments in subsidiaries suffered any impairment (i.a. value of net assets). If so, then the impairment test is performed and the recoverable amount of the investment is estimated based on value-in- use calculations
An impairment loss is recognized when the carrying amount of an asset or a cash-generating unit is greater than its recoverable amount. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Impairment losses are recognized in the income statement. An impairment loss for a cash-generating unit is initially recognized as a decrease of goodwill assigned to this unit (group of units), then it proportionally reduces the carrying amount of other assets from this unit (group of units).
The recoverable amount of an asset or a cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In the case of assets that do not generate independent cash flows, the value in use is estimated for the smallest identifiable cash-generating unit to which the asset belongs.
An impairment loss for goodwill cannot be reversed. As for other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss other than that in respect of goodwill is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
22
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
n) Employee benefits
Defined contribution program
The Company is obliged, under applicable regulations, to collect and remit the contribution to the state pension fund. These benefits, according to IAS 19 Employee Benefits represent state plans and are classified as defined contribution plans. Therefore, the Company’s obligations for each period are estimated as the amount of contributions to be remited for a given period.
Defined benefit program – retirement benefits
The Company is obliged to pay retirement benefits calculated in accordance with the relevant provisions of the Polish labour code. The minimum retirement benefit is as per the labour code provisions at the moment of payment.
The calculation is carried out using the Projected Unit Credit Method. Employee rotation is estimated based on historical experience and forecasts of future employment levels.
Changes in the value of the retirement benefit provision are recognized in the income statement. Actuarial gains and losses are recognized in the equity, in other comprehensive income in full in the period they originated.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are recognized as an expense as the related service is provided.
The Company recognizes a liability and charges the income statement for the amounts expected to be paid under short-term bonuses, if the Company has a legal or constructive obligation to make such payments as a result of past services provided by the employees and the obligation can be estimated reliably.
o) Provisions
A provision is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where the effect of the time value of money is material, the Company discounts the provision, using a pre-tax discount rate that reflects current market assessments of the time value of money and those risks specific to the component of the liability.
Certain disclosures may not be included in these financial statements as they relate to sensitive information.
Warranty provision
A warranty provision is recognized when products or goods, for which the warranty was granted, are sold. The amount of the provision is based on historical warranty data and on a weighted average of all possible outflows connected with warranty claims against their associated probabilities.
p) Contingent liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events, but its amount cannot be estimated reliably or it is not probable that there will be an outflow of resources embodying economic benefits.
23
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
A contingent liability is disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote.
Unless the possibility of any outflow in settlement is remote, the Company discloses for each class of contingent liability at the end of the reporting period a brief description of the nature of the contingent liability and, where practicable:
• an estimate of its financial effect,
• an indication of the uncertainties relating to the amount or timing of any outflow, and
• the possibility of any reimbursement.
q) Revenue
Identifying a contract with a customer
The Company applies contract-by-contract approach, meaning that the transaction price and separate performance obligations and rights arising under the contract are determined at the level of a distinct contract with a subscriber. The Company does not apply portfolio approach.
Determination of the transaction price
The estimation regarding transaction price is updated during contract period. If a contract is based on a variable consideration, the Company always recognizes the minimum value of consideration at the moment of concluding the contract. Contract length is assumed to be the nominal basic period resulting from the contract terms.
In case of prepaid services, the value of the balance unused by the customer is recognized as revenue when the grace period of the account expires.
The time value of money is included in the transaction price if the contract contains a material financing factor. This factor is considered at the distinct contract level. The Company recognizes a significant financing factor only within installment sales. Identification of the discount causes a reduction in nominal sales revenues by the financing factor value and recognition of interest during the term of the contract. To calculate the significant financing factor the Company uses a discount rate that reflects the customer's credit risk at the moment of concluding the contract.
The Company adopted the following hierarchy of methods for determining the fair price (unit price) of equipment (the preferred method is the method of prices obtained from the sale of similar goods):
a) Price obtained from the sale of similar goods,
b) Price based on accounting cost.
Company adopted the following hierarchy of methods for determining the unit price of a service:
a) Price obtained from the sale of similar goods,
b) Residual approach (in the B2B area).
Revenue recognition
Revenues are recognized in the amount of transaction price for the sale of services and equipment, net of value of discounts, refunds and rebates, in the ordinary course of business. Revenue is recognized only when there is a high probability that the subscriber makes payment, the associated expenses can be reliably assessed and the revenue amount can be reliably measured. If there is a likelihood of granting rebates whose value can be precisely measured, such rebates decrease sales revenue upon their recognition.
In order to properly recognize revenue, the Company assesses at the contract inception whether each separate performance obligation is satisfied over time or at a point in time.
24
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The Company’s main sources of revenue are recognized as follows:
• Retail revenue consists primarily of subscription fees paid by our pay digital television contract customers and our contract customers for telecommunication services. Retail revenue also includes received contractual penalties related to terminated agreements which are recognized when the contract is terminated and revenue from the rental of reception equipment. Revenue from above mentioned services is recognized as these services are provided.
Revenue from the rental of reception equipment is recognized on a straight-line basis over the minimum base period of the subscription contract.
Revenues from prepaid mobile services are recognized in profit or loss once the prepaid credit is utilised or forfeited.
• Wholesale revenue consists of revenue from the sale of broadcasting and signal transmission, advertising and sponsorship revenue, revenue from the sale of licenses, sublicenses and property rights.
Wholesale revenue is recognized, net of any discount given, when the services are provided.
Revenue from sale of equipment is measured at the fair value of the consideration received or receivable, in case of multi-element contracts after the allocation of the transaction price based on the standalone selling price, net of discounts, rebates and returns. Revenue from the sale of goods is recognized in profit or loss when the control has been transferred to the customer.
• Other revenue is recognized, net of any discount given, when the relevant goods or service are provided.
The Company’s process for revenue recognition from multi-element contracts consists of:
• assessment of all goods and services provided to the client under the contract and identifying separate performance obligations in that contract,
• determining and allocating the transaction prices to separate performance obligations in the contract; the allocation is based on the reference to their relative standalone selling prices that could be obtained if the promised goods and services were sold individually in a separate transaction.
Contract asset is the Company’s right to remuneration in exchange for goods or services that the Company has transferred to a customer. It includes in particular corrections of consideration due according to the contract with customer regarding promotional offer that includes initial discounted periods.
Contract liabilities is the Company’s obligation to transfer services to a customer in exchange for remuneration the Company received (or the remuneration is due). It includes the correction of consideration due according to the contract with customer for the current or previous periods, allocated to obligations not completely fulfilled or partially unfulfilled.
r) Distribution fees
Commissions for distributors for registering new subscribers and for retention of existing subscribers are recognized during the minimum basic period of the subscription agreement and presented in the income statement in Distribution, marketing, customer relation management and retention costs.
Turnover commissions for concluding a certain number of subscription contracts are recognized in the income statement as they are due.
Commissions for distributors which will be settled within the period of 12 months after the balance sheet date are presented as current assets, however, the commissions, which will be
25
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
settled after the 12-month period from the balance sheet date, are presented as non-current assets.
s) Revenues and costs of barter transactions
Revenues from barter transactions for dissimilar services or goods are recognized when the services are rendered or goods are delivered. Programming licenses, products or services are expensed or capitalized when received or used. The Company recognizes barter transactions based on the estimated fair value of the received programming licenses, products or services.
t) Gains and losses on investment activities and finance costs
Gains and losses on investment activities income includes interest income on funds invested, interest expenses (including interest on lease liabilities but other than interest expenses on borrowings), dividends income, share in the profits of partnerships, net foreign currency gains/losses, result from disposal of shares in subsidiaries and results on completed forward exchange contracts and call options related to investment activities, impairment losses recognized on financial assets. Interest income and expense (other than interest expense on borrowings) is recognized as it accrues in profit or loss using the effective interest rate method. Dividends income is recognized in profit or loss on the date that the Company’s right to receive payment is established, with the exception of advance dividend shown as other liabilities, if there is a likelihood of the return on the basis of the final distribution of financial results of the subsidiaries. Share in the profits of partnerships are recognized once unconditional right to the division of these profits is gained. Share in the losses of partnerships are recognized in accordance with the partners’ agreements.
Finance costs comprise interest expense on borrowings (including bank loans and issued bonds), foreign exchange gains/losses on bank loans and issued bonds, realization and valuation costs of hedging instruments and instruments not under hedge accounting related to finance activities, bank and other charges on borrowings as well as guarantee fees resulting from the indebtedness. Borrowing costs are recognized in profit or loss using the effective interest rate method.
u) Leasing
Company as a lessor
Agreements which meet the lease definition are classified as finance lease or operating lease. The main criterion is the extent to which the risks and rewards associated with the leased asset are transferred between the Company and the lessee.
Similarly to agreements in which the Company acts as a lessee, the Company as a lessor also determines for each agreement: commencement date, lease term, lease payments and interest rate. At the commencement date lessor accounts for the finance lease by:
• excluding carrying amount of the underlying asset,
• recognizing net investment in the lease,
• recognizing selling profit or loss in profit and loss statement (if applicable).
For operating leases, the Company recognizes revenue in profit and loss statement on a straight line basis.
Company as a lessee
Assets
Assets used under agreements which meet the lease definition are recognized as right-of-use assets and lease liabilities representing the Company’s obligation to make payments for the underlying assets on the day when the leased assets are available for use by the Company.
26
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
At the commencement date, the right-of-use assets are measured at cost and consist of the following:
• the amount of the initial measurement of the lease liability,
• any lease payments made at or before the commencement date, less any lease incentives received,
• any initial direct cost incurred by the lessee,
• an estimate of costs of dismantling, removing and restoring the underlying asset and/or the site where it is located.
After the commencement date, the right-of-use assets are measured at cost less accumulated depreciation, accumulated impairment losses and adjusted for remeasurement of the lease liability resulting from reassessment or lease modification which does not require recognition of a separate lease component.
Right-of-use assets are depreciated on a straight-line basis over the shorter of: the term of the lease agreement or the useful life of the underlying asset. If the Company is reasonably certain that ownership of the underlying asset will be transferred to the lessee by the end of the lease term – then the right-of-use asset shall be depreciated from the commencement date to the end of its useful life.
The Company depreciates the right-of-use assets as follows:
• office space and other premises: 3-13 years,
• points of sale premises: 2 years,
• vehicles: 4-5 years.
Right-of-use assets are subject to impairment based on the accounting policies as presented in note 5m.
Liabilities
At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable,
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date,
• the exercise price of purchase option if the lessee is reasonably certain to exercise that option,
• payments of penalties for early terminating the lease (understood as any economic factors discouraging the Company from terminating the contract), if the lease term reflects that the lessee will exercise the option to terminate the lease,
• amounts expected to be payable by the lessee under residual value guarantees.
Lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. Otherwise the lessee’s incremental borrowing rate is used.
After the commencement date, the Company measures the lease liability by:
• increasing the carrying amount to reflect interest expense on the lease liability;
• reducing the carrying amount to reflect the lease payments made;
• remeasuring the carrying amount to reflect any reassessment or lease modifications, e.g. change in the lease term or the amount of future lease payments.
Interest expenses on lease liabilities are recognized in profit or loss over the term of the lease.
27
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
v) Income tax
Income tax expense/benefit for the year comprises current and deferred tax. Income tax is recognized in profit or loss except for items recognized directly in other comprehensive income.
Current tax is the tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the balance sheet method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxes are measured based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, respectively, using tax rates enacted or substantively enacted at the balance sheet date.
The Company does not recognize deferred tax liability for taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements when the Company is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be partly or wholly realised. When not recognized deferred tax asset becomes recoverable, it is recognised to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.
The Company recognizes a deferred tax asset used to carry over unused tax losses to the extent that it is probable that the future taxable profits will be available and unused tax losses may be utilized. While assessing whether the future taxable profits available will be sufficient, the Company takes into account inter alia forecasted future tax revenues.
Deferred tax assets and liabilities are offset by the Company as criteria for offsetting from IAS 12 are fulfilled.
w) Earnings per share
The Company presents basic and diluted earnings per share for its ordinary and preference shares. Basic earnings per share are calculated by dividing the period’s profit or loss from continuing operations attributable to ordinary and preference shareholders of the Company by the weighted average number of ordinary and preference shares outstanding during the period. Diluted earnings per share are calculated by dividing the period’s profit or loss from the continued operations attributable to ordinary and preference shareholders by the weighted average number of ordinary and preference shares adjusted for all potentially dilutive ordinary and preference shares.
x) Segment reporting
The Company operates in the individual and business customers segments which relates to the provision of services to the general public, including digital television transmission signal, mobile services, the Internet access services, the mobile TV services and the online TV services.
The Company conducts its operating activities in Poland.
Further information on segments is presented in the consolidated financial statements of the Group.
28
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
y) Cash flow statement
Cash and cash equivalents in the cash flow statement are equal to cash and cash equivalents presented in the balance sheet.
The purchase of reception equipment provided to clients under operating lease contracts is classified in the cash flow statement in operating activities. The purchase and sales of reception equipment are classified in the cash flow statement in operating activities and presented as Net disposals/(additions) in reception equipment provided under operating lease.
Purchases of property, plant and equipment or intangible assets are presented in their net amount (net of VAT).
z) Business combinations among entities under common control
In principle, the issues relating to acquisitions and business combinations are regulated by IFRS 3 “Business combinations”. However, transactions under common control are excluded from the scope of this standard. The situation in which a given transaction or business phenomenon that require recognizing in financial statements prepared in accordance with IFRS are not regulated by the provisions of the individual standards is regulated by the provisions of IAS 8, points 10-12. These provisions put an entity which prepares its financial statements in accordance with IFRS under an obligation to determine an accounting policy and to use it on a consistent basis for similar transactions.
The Company decided to apply the predecessor accounting method to account for the combination of entities that are under common control. This method is based on the assumption that the entities combining were, both before and after the transaction, controlled by the same shareholder and, therefore, the financial statements reflect the continuity of joint control.
The predecessor accounting method guidelines for the merger of the parent company with its subsidiaries are as follow:
• Assets and liabilities are not adjusted to reflect fair values as at the merger date. Instead, the acquirer recognizes in its financial statements assets and liabilities in the amount as recognized in the financial statements of the predecessor. “Predecessor values” are the carrying amounts of the merged subsidiary, which were recognized in the consolidated financial statements of the parent company. These amounts include the goodwill on acquisition of shares in a subsidiary recognized in the consolidated financial statements of the parent company.
• Intercompany transactions and balances between the merging entities are eliminated.
• Goodwill other than already recognized in the consolidated financial statements of the parent company is not recognized.
• Share capital of the combined entity is the share capital of the acquiring entity. Share capital of a predecessor is eliminated.
• Other elements of predecessor’s equity are added to the relevant items of the acquiring company’s equity. The difference between the value of net assets and payment is recognized in the Retained earnings.
Pursuant to the predecessor accounting method, the Company recognizes in its financial statements the assets and liabilities of the acquired subsidiary at their carrying amounts as recognized in the consolidated financial statements of the Group.
The Company recognized business combinations under common control prospectively from the date of the merger, i.e. standalone financial statements of the Company will include the assets, liabilities, income, costs and cash flows of acquired entities from the date of the legal merger. Comparative data will remain unchanged.
29
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
6. Determination of fair values
A number of accounting principles and disclosures require the determination of fair value for both financial and non-financial assets and liabilities. The methods for determining fair values are described below. In justified cases, further information on methods of fair value measurement is described in the appropriate notes specific to that asset or liability.
Derivatives
The fair value of derivatives is calculated based on their quoted closing bid price at the balance sheet date or, in the lack thereof, other inputs that are observable for the asset or liability, either directly (i. e. as prices) or indirectly (i. e. derived from prices). In the second case, the fair value of derivatives is estimated as the present value of future cash flows, discounted using the market interest rate at the reporting date. Information on the structure of Polish and Eurozone interest rates and Polish zloty exchange rate are used in order to estimate future cash flows and market interest rate.
Non-derivative financial assets
The fair value of non-derivative financial asset for disclosure purposes is estimated as the present value of future cash flows discounted using a market interest rate as at the balance sheet date. If instruments are quoted, the fair value is estimated based on market prices.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on liabilities’ quoted closing bid price at the balance sheet date or, in the lack thereof, estimated on the present value of future principal and interest cash flows, discounted using the market interest rate at the reporting date. Market interest rate is estimated as interbank interest rate for a given currency zone (WIBOR, EURIBOR) plus a margin regarding the Company’s credit risk. A market interest rate for a lease contract is estimated based on interest rates for similar lease contracts.
7. Approval of the Financial Statements and identification of the Consolidates Financial Statements
These financial statements were approved for publication by the Management Board on 10 April 2024.
The Company as the Parent Company prepared consolidated financial statements for the year ended 31 December 2023 which were approved for publication by the Management Board on 10 April 2024.
Explanatory notes
8. Revenue
for the year ended
31 December 2023
31 December 2022
Retail revenue
2,048.8
2,182.6
Wholesale revenue
76.0
84.8
Sale of equipment
29.7
31.6
Other revenue
90.8
83.5
Total
2,245.3
2,382.5
30
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Retail revenue mainly consists of pay-TV, telecommunication services, revenue from rental of reception equipment and contractual penalties related to terminated agreements.
9. Operating costs
for the year ended
Note
31 December 2023
31 December 2022
Content costs
856.7
850.5
Technical costs and costs of settlements with telecommunication operators
440.8
463.4
Distribution, marketing, customer relation management and retention costs
299.2
280.9
Depreciation, amortization, impairment and liquidation
177.1
174.3
Salaries and employee-related costs
a)
163.1
149.6
Cost of equipment sold
22.3
21.1
Cost of debt collection services and bad debt allowance and receivables written off
6.7
3.3
Other costs
98.2
99.0
Total
2,064.1
2,042.1
a) Salaries and employee-related costs
for the year ended
31 December 2023
31 December 2022
Salaries
133.0
125.4
Social security contributions
21.5
19.4
Other employee-related costs
8.6
4.8
Total
163.1
149.6
Average headcount of non-production employees*
for the year ended
31 December 2023
31 December 2022
Employment contracts (full-time equivalents)
966
904
* excluding workers who did not perform work in the reporting period due to long-term absences
31
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
10. Gain on investment activities, net
for the year ended
Note
31 December 2023
31 December 2022
Dividends
659.5
945.4
Share in the profits of partnerships
6.3
64.8
Gain on sale of shares in a subsidiary/associate
20, 45
235.7
100.0
Interest income on loans granted
112.4
46.3
Interest income other
54.7
23.7
Exchange rate differences
(86.3)
(2.3)
Estimated future losses on loans granted
(75.2)
-
Other income/(expense)
(16.0)
10.8
Total
891.1
1,188.7
11. Finance costs, net
for the year ended
31 December 2023
31 December 2022
Interest expense on loans and borrowings
139.4
98.1
Interest expense on issued bonds
348.0
155.6
Exchange rate differences on loan valuation
(57.9)
-
One-time revenue resulting from modification of cash flows as a result of bond conversion
(20.8)
-
Valuation and realization of hedging instruments
(14.4)
(19.8)
Guarantee fees
8.9
6.2
Bank and other charges
1.7
1.8
Total
404.9
241.9
12. Income tax
Income tax in the income statement
for the year ended
31 December 2023
31 December 2022
Corporate income tax
31.1
65.5
Change in deferred income tax in the income statement
(12.9)
(24.2)
Income tax expense in the income statement
18.2
41.3
32
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Change in deferred income tax
for the year ended
31 December 2023
31 December 2022
Receivables and other assets
(2.3)
4.9
Liabilities
(16.6)
(25.0)
Deferred distribution fees
(0.9)
(1.6)
Tangible and intangible non-current assets
6.9
(2.5)
Change in deferred income tax - total
(12.9)
(24.2)
Income tax recognized in other comprehensive income
for the year ended
31 December 2023
31 December 2022
Change in deferred income tax on hedge valuation
(5.5)
2.2
Income tax expense recognized in other comprehensive income - total
(5.5)
2.2
Effective tax rate reconciliation
for the year ended
31 December 2023
31 December 2022
Profit before income tax
702.8
1,289.9
Profit before tax multiplied by the statutory tax rate in Poland of 19%
133.5
245.1
Dividend received from subsidiaries
(126.5)
(191.9)
Other
11.2
(11.9)
Tax charge for the year
18.2
41.3
Effective tax rate
2.6%
3.2%
Deferred tax assets
31 December 2023
31 December 2022
Liabilities
108.6
76.1
Receivables and other assets
26.6
18.5
Total deferred tax assets
135.2
94.6
Offsetting of deferred tax liabilities and deferred tax assets
(135.2)
(94.6)
Deferred tax assets in the balance sheet
-
-
33
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Deferred tax liabilities
31 December 2023
31 December 2022
Receivables and other assets
53.6
47.8
Deferred distribution fees
12.8
13.7
Tangible and intangible non-current assets
81.2
74.3
Liabilities
27.9
17.5
Total deferred tax liabilities
175.5
153.3
Offsetting of deferred tax liabilities and deferred tax assets
(135.2)
(94.6)
Deferred tax liabilities in the balance sheet
40.3
58.7
The tax authorities may at any time inspect the books and records within 5 years from the end of the year when a tax declaration was submitted, and may impose additional tax assessments with penalty interest and penalties. Furthermore, on 15 July 2016 provisions of General Anti- Avoidance Rule (GAAR) were introduced, which aim at preventing establishing and using artificial legal arrangements with tax savings as its principal purpose. Frequent amendments in the tax laws and contradicting legal interpretations among the tax authorities result in uncertainties and lack of consistency in the tax system, which in fact lead to difficulties in the judgement of the tax consequences in the foreseeable future.
13. EBITDA (unaudited)
EBITDA (earnings before interest, taxes, depreciation, amortization, impairment and liquidation) presents the Company’s key measure of earnings performance. The level of EBITDA measures the Company’s ability to generate cash from recurring operations, however it is neither a measure of liquidity nor cash level. The Company defines EBITDA as operating profit adjusted by depreciation, amortization, impairment and liquidation. EBITDA is not an IFRS EU measure, and as such can be calculated differently by other entities.
for the year ended
31 December 2023
31 December 2022
Net profit for the period
639.6
1,248.6
Income tax (see note 12)
18.2
41.3
Gain/(loss) on investment activities, net (see note 10)
(891.1)
(1,188.7)
Finance costs, net (see note 11)
404.9
241.9
Depreciation, amortization, impairment and liquidation* (see note 9)
177.1
174.3
EBITDA (unaudited)
348.7
517.4
* depreciation, amortization, impairment and liquidation comprise depreciation and impairment of property, plant and equipment, amortisation and impairment of intangible assets and right-of-use assets as well as net book value of disposed property, plant, equipment and intangible assets
34
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
14. Basic and diluted earnings per share
As at the balance sheet date, the Company did not have financial instruments that could have a dilutive effect, therefore the Company’s diluted earnings per share are equal to basic earnings per share.
for the year ended
31 December 2023
31 December 2022
Net profit for the period
639.6
1,248.6
Weighted average number of ordinary and preference shares in the year
550,703,531
557,758,269
Earnings per share in PLN (not in millions)
1.16
2.24
35
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
15. Property, plant and equipment
Reception equipment
Land
Buildings and structures
Technical equipment and machinery
Vehicles
Other
Tangible assets under construction
Advances for tangible assets under construction
Other property, plant and equipment
Cost
Cost as at 1 January 2023
1,387.6
15.6
111.1
186.5
0.7
24.0
103.5
-
441.4
Additions
163.5
-
0.6
11.4
0.1
0.3
-
-
12.4
Transfer from assets under construction
-
-
59.9
13.3
-
1.0
(74.2)
-
-
Transfer between groups
-
-
(53.1)
-
-
-
-
-
(53.1)
Disposals
(81.4)
-
(1.1)
(4.9)
-
-
(5.9)
-
(11.9)
Cost as at 31 December 2023
1,469.7
15.6
117.4
206.3
0.8
25.3
23.4
-
388.8
Accumulated impairment losses
Accumulated impairment losses as at 1 January 2023
4.1
-
-
0.1
-
-
-
-
0.1
Additions
0.8
-
-
-
-
-
-
-
-
Decrease
-
-
-
-
-
-
-
-
-
Accumulated impairment losses as at 31 December 2023
4.9
-
-
0.1
-
-
-
-
0.1
Accumulated depreciation
Accumulated depreciation as at 1 January 2023
1,051.7
-
62.0
164.2
0.7
20.2
-
-
247.1
Additions
130.5
-
4.5
11.6
-
1.2
-
-
17.3
Disposals
(80.0)
-
(1.0)
(4.9)
-
-
-
-
(5.9)
Accumulated depreciation as at 31 December 2023
1,102.2
-
65.5
170.9
0.7
21.4
-
-
258.5
Carrying amount
Carrying amount as at 1 January 2023
331.8
15.6
49.1
22.2
-
3.8
103.5
-
194.2
Carrying amount as at 31 December 2023
362.6
15.6
51.9
35.3
0.1
3.9
23.4
-
130.2
The Company recognized creation of an impairment loss on items of property, plant and equipment. The impairment allowance is recognized in ‘depreciation, amortization, impairment and liquidation’.
36
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Reception equipment
Land
Buildings and structures
Technical equipment and machinery
Vehicles
Other
Tangible assets under construction
Advances for tangible assets under construction
Other property, plant and equipment
Cost
Cost as at 1 January 2022
1,392.5
15.5
109.9
185.5
0.7
23.3
22.6
-
357.5
Additions
133.2
0.1
0.9
2.9
-
0.7
82.4
-
87.0
Transfer from assets under construction
-
-
0.9
0.6
-
-
(1.5)
-
-
Transfer between groups
-
-
(0.6)
-
-
-
-
-
(0.6)
Disposals
(138.1)
-
-
(2.5)
-
-
-
-
(2.5)
Cost as at 31 December 2022
1,387.6
15.6
111.1
186.5
0.7
24.0
103.5
-
441.4
Accumulated impairment losses
Accumulated impairment losses as at 1 January 2022
3.9
-
-
0.1
-
-
-
-
0.1
Additions
0.7
-
-
-
-
-
-
-
-
Decrease
(0.5)
-
-
-
-
-
-
-
-
Accumulated impairment losses as at 31 December 2022
4.1
-
-
0.1
-
-
-
-
0.1
Accumulated depreciation
Accumulated depreciation as at 1 January 2022
1,056.1
-
58.0
156.7
0.7
19.1
-
-
234.5
Additions
132.2
-
4.0
10.0
-
1.1
-
-
15.1
Disposals
(136.6)
-
-
(2.5)
-
-
-
-
(2.5)
Accumulated depreciation as at 31 December 2022
1,051.7
-
62.0
164.2
0.7
20.2
-
-
247.1
Carrying amount
Carrying amount as at 1 January 2022
332.5
15.5
51.9
28.7
-
4.2
22.6
-
122.9
Carrying amount as at 31 December 2022
331.8
15.6
49.1
22.2
-
3.8
103.5
-
194.2
The Company recognized creation as well as utilization of an impairment loss on items of property, plant and equipment. The impairment allowance is recognized in ‘depreciation, amortization, impairment and liquidation’.
37
37
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
16. Impairment test on goodwill allocated to the “B2C and B2B” cash- generating unit
The Company recognized goodwill in the amount of PLN 197.0 on the acquisition of M.Punkt Holdings Ltd. and Redefine Sp. z o.o. in the financial statements and allocated them to the “B2C and B2B services” cash-generating unit. “B2C and B2B services” cash-generating unit is equivalent to the Company. Upon merger of M.Punkt Holdings and Redefine with the Company recognized in the consolidated financial statements was disclosed in the standalone financial statements (see accounting policy in note 5z).
Goodwill was tested for impairment as at 31 December 2023. The impairment test did not indicate impairment.
The impairment test was based on the recoverable amounts of the cash-generating unit to which the goodwill has been allocated. The recoverable amount of the cash-generating unit is determined based on the value-in-use calculations. The Company tests the total carrying amount of the cash-generating unit and any impairment identified is recognized in the profit or loss immediately with respect to goodwill first and is not subsequently reversed. If goodwill is fully impaired the remaining amount of the impairment loss is allocated to other assets of the cash-generating unit on a pro rata basis.
In the annual impairment test performed by the Company as at 31 December 2023 the calculation of value-in-use was based on discounted free cash flows and involved the use of estimates related to cash flow before tax projections based on actual financial business plans covering the 5-year period until 2028. Cash flow projections after 5-year forecast period are estimated using the terminal growth rate. Terminal growth rate does not exceed the long-term average growth rate for the country in which the Company operates.
The key financial assumptions
The most sensitive key financial assumptions used in the value-in-use calculations of the “B2C and B2B services” cash-generating unit were as follows:
• discount rate,
• terminal growth rate used for estimating free cash flows beyond the period of financial plans.
B2C and B2B services
2023
2022
Terminal growth
2.0%
2.0%
Discount rate before tax
9.9%
12.7%
Discount rate – the discount rate reflects the estimate made by the management of the risks specific to cash-generating unit, taking into account the time value of money and risks specific to the asset. The discount rate was estimated on the basis of weighted average cost of capital method (WACC) and considered Company’s business environment. WACC considers both debt and equity. Cost of equity is based on the return on investment expected by the Company’s investors while cost of debt is based on the interest bearing debt instruments. Operating segment - specific risk is considered by the estimation of beta. Beta is estimated annually and is based on the market data.
Terminal growth rate – growth rates are based on widely available published market data.
38
38
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Sensitivity analysis of key financial assumptions
The Company believes that the key assumptions made in testing for impairment of the cash- generating unit as at 31 December 2023 are reasonable and are based on our experience and market forecasts that are published by the industry experts. Management believes that any reasonably possible change in the key assumptions on which the cash-generating unit’s recoverable amount is based would not cause the impairment charge to be recognized.
17. Other intangible assets
Software and licenses
Other
Under development
Total
Cost
Cost as at 1 January 2023
264.4
5.7
65.3
335.4
Additions
18.7
-
17.9
36.6
Transfer from intangible assets under development
40.2
-
(40.2)
-
Disposals
(12.1)
-
-
(12.1)
Cost as at 31 December 2023
311.2
5.7
43.0
359.9
Accumulated amortization
Accumulated amortization as at 1 January 2023
223.3
1.5
-
224.8
Additions
19.1
0.4
-
19.5
Disposals
(12.1)
-
-
(12.1)
Accumulated amortization as at 31 December 2023
230.3
1.9
-
232.2
Carrying amounts
Carrying amounts as at 1 January 2023
41.1
4.2
65.3
110.6
Carrying amounts as at 31 December 2023
80.9
3.8
43.0
127.7
39
39
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Software and licenses
Other
Under development
Total
Cost
Cost as at 1 January 2022
253.2
5.6
51.3
310.1
Additions
4.9
0.1
30.6
35.6
Transfer from intangible assets under development
16.6
-
(16.6)
-
Disposals
(10.3)
-
-
(10.3)
Cost as at 31 December 2022
264.4
5.7
65.3
335.4
Accumulated amortization
Accumulated amortization as at 1 January 2022
212.7
1.0
-
213.7
Additions
20.8
0.5
-
21.3
Disposals
(10.2)
-
-
(10.2)
Accumulated amortization as at 31 December 2022
223.3
1.5
-
224.8
Carrying amounts
Carrying amounts as at 1 January 2022
40.5
4.6
51.3
96.4
Carrying amounts as at 31 December 2022
41.1
4.2
65.3
110.6
18. Right-of-use assets
Vehicles
Points of sale
premises
Office space and other
premises
Total
Cost
Cost as at 1 January 2023
0.1
0.4
29.7
30.2
Additions
-
-
9.6
9.6
Disposals
(0.1)
(0.4)
(0.9)
(1.4)
Cost as at 31 December 2023
-
-
38.4
38.4
Accumulated amortization
Accumulated amortization as at 1 January 2023
0.1
0.2
14.1
14.4
Additions
-
0.1
3.7
3.8
Disposals
(0.1)
(0.3)
(0.9)
(1.3)
Accumulated amortization as at 31 December 2023
-
-
16.9
16.9
Carrying amount
Carrying amount as at 1 January 2023
-
0.2
15.6
15.8
Carrying amount as at 31 December 2023
-
-
21.5
21.5
40
40
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Vehicles
Points of sale
premises
Office space and other
premises
Total
Cost
Cost as at 1 January 2022
0.5
0.5
29.0
30.0
Additions
-
0.2
0.7
0.9
Disposals
(0.4)
(0.3)
-
(0.7)
Cost as at 31 December 2022
0.1
0.4
29.7
30.2
Accumulated amortization
Accumulated amortization as at 1 January 2022
0.2
0.3
10.5
11.0
Additions
0.1
0.1
3.6
3.8
Disposals
(0.2)
(0.2)
-
(0.4)
Accumulated amortization as at 31 December 2022
0.1
0.2
14.1
14.4
Carrying amount
Carrying amount as at 1 January 2022
0.3
0.2
18.5
19.0
Carrying amount as at 31 December 2022
-
0.2
15.6
15.8
19. Investment property
2023
2022
Cost
Cost as at 1 January
52.2
47.5
Additions
8.9
4.1
Transfer between groups
53.1
0.6
Cost as at 31 December
114.2
52.2
Accumulated depreciation
Accumulated depreciation as at 1 January
15.4
13.2
Additions
4.5
2.2
Accumulated depreciation as at 31 December
19.9
15.4
Carrying amounts
Carrying amounts as at 1 January
36.8
34.3
Carrying amounts as at 31 December
94.3
36.8
41
41
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
20. Shares in subsidiaries, associates and other
Shares in subsidiaries, associates and other as at 31 December 2023
Company’s registered office
Activity
Voting rights percentage (%)
Cost and carrying amount
Polkomtel Sp. z o.o.
Konstruktorska 4, 02-673 Warsaw
telecommunication activities
100%
4,498.7
Telewizja Polsat Sp. z o.o.
Ostrobramska 77,
04-175 Warsaw
broadcasting and television production
100%
3,899.0
Netia S.A.
Poleczki 13,
02-822 Warsaw
telecommunication activities
100%
2,062.6
Asseco Poland S.A.
Olchowa 14,
35-322 Rzeszów
software activities
10.13%
614.4
PAK-Polska Czysta Energia Sp. z o.o.
Kazimierska 45,
62-510 Konin
holding activities
50.5%
595.7
Port Praski Sp. z o.o.
Krowia 6,
03-711 Warsaw
implementation of
construction
projects
66.94%
553.7
Pantanomo Limited
3 KRINOU,
Limassol 4103,
Cyprus
property management, holding activities
32%
284.3
Vindix S.A.
Al. Stanów
Zjednoczonych 61A,
04-028 Warsaw
other financial
services
100%
72.7
Interphone Service Sp. z o.o. (**)
Inwestorów 8,
39-300 Mielec
production of set-top boxes
99%
64.0
Orsen Holding Limited
Level 2 West, Mercury Tower, Elia Zammit Street, St. Julian’s STJ 3155, Malta
holding activities
100%
34.9
INFO-TV-FM Sp. z o.o. (**)
Łubinowa 4a,
03-878 Warsaw
radio and TV activities
73.5%
29.3
Polsat Media Sp. z o.o. (formerly Polsat Media Biuro Reklamy Sp. z o. o. Sp. k.) (***)
Ostrobramska 77,
04-175 Warsaw
media
37.75%
25.2
Teleaudio Dwa Sp. z o.o. Sp. k. (**)
Al. Stanów
Zjednoczonych 61,
04-028 Warsaw
call center and premium rate services
99%
21.0
Stork 5 Sp. z o.o.
Łubinowa 4A,
03-878 Warsaw
holding activities
100%
8.3
BCAST Sp. z o.o.
Rakowiecka 41/21,
02-521 Warsaw
telecommunication activities
70.02%
7.5
Esoleo Sp. z o.o.
Al. Wyścigowa 6,
02-681 Warsaw
technical services
51.25%
-
Netshare Media Group Sp. z o.o.
Ostrobramska 77, 04-175 Warsaw
advertising activities
100%
2.1
Karpacka Telewizja Kablowa Sp. z o.o.
Warszawska 220,
26-600 Radom
dormant
99%
0.9
42
42
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
(*) Shares in associates include shares in Polskie Badania Internetu Sp. z o.o.
(**) The Company holds directly and indirectly 100% shares.
(***) On 2 January 2023, Polsat Media Sp. z o.o. was registered. The Company was established as a result of transformation from Polsat Media Biuro Reklamy Sp. z o.o. Sp. k.
(cont.)
Company’s registered office
Activity
Voting rights percentage (%)
Cost and carrying amount
Polskie Badania Internetu Sp. z o.o. (*)
Aleje Jerozolimskie 65/79,
00-697 Warsaw
web portals activities
4.76%
0.1
Orsen Limited (**)
Level 2 West, Mercury Tower, Elia Zammit Street, St. Julian’s STJ 3155, Malta
holding activities
0.2%
0.0
Plus Pay Sp. z o.o. (**)
Konstruktorska 4,
02-673 Warsaw
monetary intermediation
1%
0.0
Plus Finanse Sp. z o.o.
Konstruktorska 4,
02-673 Warsaw
other monetary intermediation
100%
0.0
Exion Hydrogen Polskie Elektrolizery Sp. z o.o.
Ku Ujściu 19,
80-701 Gdańsk
production of electronic equipment
10%
0.0
Total
12,774.4
43
43
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
31 December 2022
Additions
Decreases
31 December 2023
Polkomtel Sp. z o.o.
4,498.7
-
-
4,498.7
Telewizja Polsat Sp. z o.o.
3,899.0
-
-
3,899.0
Netia S.A.
2,062.6
-
-
2,062.6
Asseco Poland S.A.
1,229.2
-
(614.8) (1)
614.4
PAK-Polska Czysta Energia Sp. z o.o.
478.7
117.0 (2)
-
595.7
Port Praski Sp. z o.o.
553.7
-
-
553.7
Pantanomo Limited
-
284.3 (3)
-
284.3
Vindix S.A.
44.7
28.0 (4)
-
72.7
Interphone Service Sp. z o.o.
64.0
-
-
64.0
Orsen Holding Limited
34.9
-
-
34.9
INFO-TV-FM Sp. z o.o.
29.3
-
-
29.3
Polsat Media Sp. z o.o. (formerly Polsat Media Biuro Reklamy Sp. z o.o. Sp. k.)
25.2
-
-
25.2
Teleaudio Dwa Sp. z o.o. Sp. k.
21.0
-
-
21.0
Stork 5 Sp. z o.o.
8.2
0.1
-
8.3
BCAST Sp. z o.o.
7.5
-
-
7.5
Esoleo Sp. z o.o.
6.9
-
(6.9) (7)
-
Netshare Media Group Sp. z o.o.
2.1
-
-
2.1
Karpacka Telewizja Kablowa Sp. z o.o.
0.9
-
-
0.9
Polskie Badania Internetu Sp. z o.o.
0.1
-
-
0.1
Orsen Limited
0.0
-
-
0.0
CPSPV1 Sp. z o.o.
0.0
-
(0.0) (5)
-
CPSPV2 Sp. z o.o.
0.0
-
(0.0) (5)
-
Mese Sp. z o.o.
0.0
-
(0.0) (6)
-
Plus Pay Sp. z o.o.
0.0
-
-
0.0
Plus Finanse Sp. z o.o.
0.0
-
-
0.0
Exion Hydrogen Polskie Elektrolizery Sp. z o.o.
0.0
-
-
0.0
Total
12,966.7
429.4
(621.7)
12,774.4
(1) On 21 September 2023 Cyfrowy Polsat sold 12.82% shares of Asseco Poland S.A. Consequently, Cyfrowy Polsat holds 10.13% shares of Asseco Poland S.A.
(2) On 3 July 2023 Cyfrowy Polsat acquired from ZE PAK S.A. about 10.1% of shares in PAK-Polska Czysta Energia Sp. z o.o. As a result of the transaction and taking into account the shares previously acquired by Cyfrowy Polsat in PAK-Polska Czysta Energia Sp. z o.o., Cyfrowy Polsat holds about 50.5% of shares in PAK-Polska Czysta Energia Sp. z o.o.
(3) On 3 July 2023 Cyfrowy Polsat acquired from Tobe Investments Group Limited 32% shares of Pantanomo Limited.
(4 On 7 June 2023 share capital increase in Vindix S.A. was registred by the court. Cyfrowy Polsat took up all of the issued shares.
(5) On 27 November 2023 Cyfrowy Polsat sold 100% shares of CPSPV1 Sp. z o.o. and CPSPV2 Sp. z o.o. to Polkomtel Business Development Sp. z o.o.
(6) On 12 October 2023 Cyfrowy Polsat sold 10% shares of Mese Sp. z o.o. to PAK PCE Wiatr Sp. z o.o.
(7) Impairment on shares.
Due to the identification of impairment indicators related to shares in Esoleo Sp. z o.o. and Vindix S.A. as at 31 December 2023, the Company tested these shares for impairment. Based on the results of the tests, as at 31 December 2023, the Company recognized impairment on shares in Esoleo Sp. z o.o. and Vindix S.A.
44
44
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
31 December 2021
Additions
Decreases
31 December 2022
Polkomtel Sp. z o.o.
4,498.7
-
-
4,498.7
Telewizja Polsat Sp. z o.o.
3,899.0
-
-
3,899.0
Netia S.A.
2,062.6
-
-
2,062.6
Asseco Poland S.A.
1,229.2
-
-
1,229.2
Modivo S.A.
500.0
-
(500.0) (6)
-
Port Praski Sp. z o.o.
-
553.7 (3)
-
553.7
PAK-PCE Biopaliwa i Wodór Sp. z o.o.
-
478.7 (4)
(478.7) (5)
-
PAK-Polska Czysta Energia Sp. z o.o.
-
478.7 (5)
-
478.7
Interphone Service Sp. z o.o.
64.0
-
-
64.0
Vindix S.A.
20.7
24.0 (1)
-
44.7
Orsen Holding Limited
34.9
-
-
34.9
INFO-TV-FM Sp. z o.o.
29.3
-
-
29.3
Polsat Media Sp. z o.o. (formerly Polsat Media Biuro Reklamy Sp. z o.o. Sp. k.)
25.2
-
-
25.2
Teleaudio Dwa Sp. z o.o. Sp. k.
21.0
-
-
21.0
Stork 5 Sp. z o.o.
8.2
-
-
8.2
BCAST Sp. z o.o.
7.5
-
-
7.5
Esoleo Sp. z o.o.
6.9
-
-
6.9
Netshare Media Group Sp. z o.o.
2.1
-
-
2.1
Karpacka Telewizja Kablowa Sp. z o.o.
0.9
-
-
0.9
Polskie Badania Internetu Sp. z o.o.
0.1
-
-
0.1
Orsen Limited
0.0
-
-
0.0
CPSPV1 Sp. z o.o.
0.0
-
-
0.0
CPSPV2 Sp. z o.o.
0.0
-
-
0.0
Mese Sp. z o.o.
0.0
-
-
0.0
Plus Pay Sp. z o.o.
0.0
-
-
0.0
Plus Finanse Sp. z o.o.
0.0
(0.0) (2)
-
0.0
Exion Hydrogen Polskie Elektrolizery Sp. z o.o.
0.0
-
-
0.0
Total
12,410.3
1,535.1
(978.7)
12,966.7
(1) On 19 January 2022 Cyfrowy Polsat acquired 53.73% shares of Vindix S.A. Consequently, Cyfrowy Polsat holds 100% shares of Vindix S.A.
(2) On 2 February 2022 Cyfrowy Polsat acquired from Polkomtel Sp. z o.o. 99% of shares in Plus Finanse Sp. z o.o. As a result of the transaction Cyfrowy Polsat holds 100% of shares in Plus Finanse Sp. z o.o.
(3) On 1 April 2022 Cyfrowy Polsat acquired 66.94% shares of Port Praski Sp. z o.o.
(4) On 12 May 2022 Cyfrowy Polsat acquired 49% shares of PAK-PCE Biopaliwa i Wodór Sp. z o.o.
(5) On 27 July 2022 share capital increase in PAK-Polska Czysta Energia Sp. z o.o. was registred by the court. Consequently, Cyfrowy Polsat holds 40.41% shares of PAK-Polska Czysta Energia Sp. z o.o. - more details on this acquisition are presented in note 45 .
(6) On 28 September 2022 Cyfrowy Polsat sold 9.96% shares of Modivo S.A. to Embud 2 Sp. z o.o. SKA.
No impairment on shares in subsidiaries and associates was recognized as at 31 December 2022 (except shares in Karpacka Telewizja Kablowa Sp. z o.o. and Vindix S.A.).
45
45
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
21. Deferred distribution fees
31 December 2023
31 December 2022
Deferred distribution fees
67.5
72.0
Of which: Current
48.0
54.3
Non-current
19.5
17.7
Deferred distribution fees include commissions for distributors for contracts effectively concluded with subscribers. These costs are recognized by the Company to profit or loss over the minimum base period of the subscription contracts.
As at 31 December 2023, the balance of distribution fees relating to agreements whose basic period as at the date of signing was more than 12 months amounted to PLN 67.5 (as at 31 December 2022: 72.0 PLN).
22. Loans granted
31 December 2023
31 December 2022
Current loans granted
24.3
544.8
Non-current loans granted
3,584.2
573.6
Total
3,608.5
1,118.4
Change in loans granted
2023
Loans granted as at 1 January
1,118.4
Repayment of granted loans – capital
(557.4)
Repayment of granted loans – interests*
(83.2)
Granting new loans
3,121.6
Interest accrued**
131.7
Foreign exchange
(47.4)
Expected credit loss
(75.2)
Loans granted as at 31 December
3,608.5
* Includes VAT paid on interests
** Includes VAT on accrued interests
46
46
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Borrower
Currency
Amount of loan
(in millions in the currency of the loan)
Maturity date
Interest rate
Carrying amount as at
31 December 2023
Polkomtel Sp. z o.o.
PLN
1,650.0
31 December 2028
WIBOR + margin
1,586.6
PLN
739.5
31 December 2025
WIBOR + margin
874.3
PAK-Polska Czysta Energia Sp. z o.o.
EUR
684.2
31 December 2025
EURIBOR + margin
375.1
PLN
97.9
2024 - 2025
WIBOR + margin
100.4
Esoleo Sp. z o.o.
EUR
37.5
2024 - 2025
EURIBOR + margin
152.8
Netia S.A.
PLN
350.0
2025
WIBOR + margin
344.9
Pantanomo Ltd
EUR
24.0
30 September 2026
EURIBOR + margin
96.7
PLN
23.6
2024 - 2031
WIBOR + margin
53.1
Other
EUR
26.6
2026 - 2031
EURIBOR + margin
24.6
Total
3,608.5
23. Other non-current assets
31 December 2023
31 December 2022
Non-current trade receivables*
-
0.4
Other deferred costs
3.2
0.2
Derivative instruments assets (see note 37)
30.1
6.6
Long-term deposits paid to suppliers
0.1
0.1
Total
33.4
7.3
* Long-term receivables are denominated in PLN.
24. Contract assets
Change in contract assets
Contract assets
31 grudnia 2023
Contract assets as at 1 January
96.6
Additions
31.4
Decreases (invoiced amounts transferred to trade receivables)
(52.7)
Contract assets as at 31 December
75.3
Write-off
(3.3)
Contract assets as at 31 December
72.0
47
47
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
25. Inventories
Types of inventories
31 December 2023
31 December 2022
Set-top boxes and disc drives
93.3
107.1
Mobile phones, modems, tablets and laptops
3.2
2.6
Other inventories
26.2
21.3
Total
122.7
131.0
Write-downs of inventories
2023
2022
Opening balance
2.4
6.4
Increase
0.2
2.8
Utilisation
(0.2)
(6.1)
Decrease
(0.5)
(0.7)
Closing balance
1.9
2.4
26. Trade and other receivables
31 December 2023
31 December 2022
Trade receivables from related entities
67.3
36.0
Trade receivables from non-related entities
29.4
31.8
Tax and social security receivables
23.1
77.4
Other receivables
69.7
66.9
Total
189.5
212.1
Trade receivables from non-related entities include receivables from individual clients, distributors and others.
Trade receivables by currency
Currency
31 December 2023
31 December 2022
PLN
84.4
46.4
EUR
11.6
15.2
USD
0.7
6.2
Total
96.7
67.8
Movements in bad debt allowance on trade receivables – short-term and log-term
2023
2022
Opening balance as at 1 January
17.2
19.7
Increase
2.3
1.4
Reversal
(1.7)
(1.7)
Utilisation
(4.0)
(2.2)
Closing balance as at 31 December
13.8
17.2
Of which: Short-term
13.8
17.2
48
48
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
27. Other current assets
31 December 2023
31 December 2022
Other deferred costs
6.1
5.0
Unbilled revenue
16.8
26.7
Derivative instruments assets (see note 37)
15.9
16.5
Other
2.0
2.4
Total
40.8
50.6
28. Cash and cash equivalents
31 December 2023
31 December 2022
Current accounts
22.2
15.6
Deposits *
1,861.4
105.1
Total
1,883.6
120.7
* with maturity of up to 3 months from the date of establishing the deposit
The Company places its cash and cash equivalents in banks and financial institutions with reliability proven by ratings awarded by universally recognized agencies Standard & Poor's, Moody's or Fitch, as required by the loan agreement and policies adopted therein. As at 31 December 2023, the largest concentration of funds in one bank was 79% (rated A3 rating by Moody's stable outlook). As at 31 December 2022, the largest concentration of funds in one bank was 80%.
Currency
31 December 2023
31 December 2022
PLN
910.2
120.5
EUR
973.3
-
USD
0.1
0.1
CHF
-
0.1
Total
1,883.6
120.7
As the Company cooperates with well-established Polish and international banks, the risks relating to deposited cash are considerably limited.
49
49
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
29. Equity
Share capital
Presented below is the structure of the Company’s share capital as at 31 December 2023 and 31 December 2022:
Share series
Number of shares *
Nominal value of shares
Type
A
2,500,000
0.1
registered preference shares (2 voting rights)
B
2,500,000
0.1
registered preference shares (2 voting rights)
C
7,500,000
0.3
registered preference shares (2 voting rights)
D
166,917,501
6.7
registered preference shares (2 voting rights)
D
8,082,499
0.3
ordinary bearer shares
E
75,000,000
3.0
ordinary bearer shares
F
5,825,000
0.2
ordinary bearer shares
H
80,027,836
3.2
ordinary bearer shares
I
47,260,690
1.9
ordinary bearer shares
J
243,932,490
9.8
ordinary bearer shares
Total
639,546,016
25.6
* not in millions
50
50
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The shareholders’ structure as at 31 December 2023 was as follows:
Number of shares *
Nominal value of shares
% of share capital held
Number of votes *
% of voting rights
Zygmunt Solorz, through
396,802,022
15.9
62.04%
576,219,523
70.36%
TiVi Foundation, including through:
386,745,257
15.5
60.47%
566,162,758
69.13%
Reddev Investments Ltd., including through:
386,745,247
15.5
60.47%
566,162,738
69.13%
Cyfrowy Polsat S.A. 1
88,842,485
3.6
13.89%
88,842,485
10.85%
Tobias Solorz 2 , including through:
10,056,765
0.4
1.57%
10,056,765
1.23%
ToBe Investments Group Ltd.
4,449,156
0.2
0.70%
4,449,156
0.54%
Others
242,743,994
9.7
37.96%
242,743,994
29.64%
Total
639,546,016
25.6
100%
818,963,517
100%
* not in millions
1 The acquired own shares under the share buy-back program announced on 16 November 2021. According to Art. 364 Section 2 of the Commercial Companies Code, Cyfrowy Polsat S.A. does not exercise voting rights from the own shares.
2 Person is under the presumption of the existence of an agreement referred to in Art. 87 Section 1 Item 5 of the Public Offering Act.
The shareholders’ structure as at 31 December 2022 was as follows:
Number of shares *
Nominal value of shares
% of share capital held
Number of votes *
% of voting rights
Zygmunt Solorz, through
396,802,022
15.9
62.04%
576,219,523
70.36%
TiVi Foundation, including through:
386,745,257
15.5
60.47%
566,162,758
69.13%
Reddev Investments Ltd., including through:
386,745,247
15.5
60.47%
566,162,738
69.13%
Cyfrowy Polsat S.A. 1
88,842,485
3.6
13.89%
88,842,485
10.85%
Tobias Solorz 2
5,607,609
0.2
0.88%
5,607,609
0.68%
ToBe Investments Group Ltd.
4,449,156
0.2
0.70%
4,449,156
0.54%
Nationale-Nederlanden PTE
41,066,962
1.6
6.42%
41,066,962
5.02%
Others
201,677,032
8.1
31.53%
201,677,032
24.63%
Total
639,546,016
25.6
100%
818,963,517
100%
* not in millions
1 The acquired own shares under the share buy-back program announced on 16 November 2021. According to Art. 364 Section 2 of the Commercial Companies Code, Cyfrowy Polsat S.A. does not exercise voting rights from the own shares.
2 Person is under the presumption of the existence of an agreement referred to in Art. 87 Section 1 Item 5 of the Public Offering Act.
Share premium
Share premium includes the excess of issue value over the nominal value of shares issued decreased by share issuance-related consulting costs.
Retained earnings
On 29 June 2023 the Annual General Meeting of the Company adopted a resolution on the distribution of the Company’s net profit for the financial year 2022. In accordance with the
51
51
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
provisions of the resolution, the net profit in the amount of PLN 1,248.6 is allocated to the res erve capital.
Other reserves
Other reserves include mainly the reserve capital created for the purposes of the share buyback program in the amount of PLN 2,914.8.
Treasury shares
As at 31 December 2023 and as at 31 December 2022 t reasury shares include a total of 88,842,485 (not in millions) own shares, representing in total 13.89% of the share capital of the Company and entitling to exercise 88,842,485 (not in millions) votes at the general meeting of the Company, constituting 10.85% of the total number of votes at the general meeting of the Company.
30. Hedge valuation reserve
The Company concluded the following interest rate swap transactions which exchanges interest payments based on a floating rate WIBOR 3M into interest payments based on a fixed interests rate:
Trade date
Counterparty
Hedged nominal amount
Effective date
Termination date
Fixed interest rate
26.11.2021
Santander Bank Polska S.A.
125.0
31.03.2022
31.12.2024
3.0925%
18.02.2022
BNP Paribas
125.0
30.09.2022
31.12.2024
4.1550%
25.03.2022
PKO Bank Polski S.A.
125.0
30.09.2022
31.12.2024
5.7200%
29.04.2022
Santander Bank Polska S.A.
125.0
31.03.2023
31.03.2025
6.5750%
19.05.2022
Santander Bank Polska S.A.
125.0
31.03.2023
31.03.2025
6.2450%
22.07.2022
BNP Paribas
125.0
31.03.2023
30.06.2025
6.0600%
The Company concluded the following currency interest rate swap type CIRS (Cross Currency Interest Rate Swap) which exchanges interest payments denominated in euros based on a floating rate EURIBOR 3M into interest payments based on a fixed interests rate:
Trade date
Counterparty
Hedged nominal amount
Effective date
Termination date
Fixed interest rate
26.09.2023
Societe Generale
25.0
29.09.2023
30.09.2026
3.6350%
17.11.2023
Societe Generale
25.0
28.03.2024
31.03.2027
3.1020%
52
52
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The Company concluded the following forward transactions which involve the purchase of the euro currency by the Company at a fixed date in the future at the exchange rate established on the date of the transaction:
Trade date
Counterparty
Hedged nominal amount
Maturity
Date
Forward rate
20.10.2023
PKO Bank Polski S.A.
0.65
31.01.2024
4.4865
20.10.2023
PKO Bank Polski S.A.
0.55
29.02.2024
4.4939
20.10.2023
PKO Bank Polski S.A.
0.55
28.03.2024
4.5017
08.11.2023
PKO Bank Polski S.A.
0.40
31.01.2024
4.4815
08.11.2023
PKO Bank Polski S.A.
0.60
30.04.2024
4.5040
21.12.2023
PKO Bank Polski S.A.
0.40
29.02.2024
4.3629
21.12.2023
PKO Bank Polski S.A.
0.60
31.05.2024
4.3858
Impact of hedging instruments valuation on assets and liabilities as at 31 December 2023
IRS
CIRS
Forward Transactions
Assets
Short-term
4.3
-
-
Liabilities
Long-term
(2.0)
(5.2)
-
Short-term
(3.7)
(0.6)
(0.4)
Total
(1.4)
(5.8)
(0.4)
Impact of hedging instruments valuation on assets and liabilities as at 31 December 2022
IRS
Assets
Long-term
6.6
Short-term
16.5
Liabilities
Long-term
(0.7)
Total
22.4
Impact of hedging instruments valuation on hedge valuation reserve
2023
2022
Balance as at 1 January
18.2
9.0
Valuation of cash flow hedges
(28.8)
11.4
Deferred tax
5.5
(2.2)
Change for the period
(23.3)
9.2
Balance as at 31 December
(5.1)
18.2
53
53
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
31. Loans and borrowings
31 December 2023
31 December 2022
Short-term liabilities
185.7
250.7
Long-term liabilities
2,022.0
1,047.8
Total
2,207.7
1,298.5
Change in loans and borrowings liabilities:
2023
2022
Balance as at 1 January
1,298.5
1,424.5
Term loan inflows
2,284.9
-
Loan conversion
(679.5)
-
Repayment of capital
(591.5)
(156.0)
Repayment of interest and commissions
(186.2)
(68.1)
Interest and commissions accrued
139.4
98.1
Exchange rate differences
(57.9)
-
Balance as at 31 December
2,207.7
1,298.5
Conclusion of Senior Facilities Agreement with a consortium of financial institutions
On 28 April 2023, Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o. and other subsidiaries of the Cyfrowy Polsat S.A. Capital Group concluded the Senior Facilities Agreement, sustainability linked financing (the “Facilities Agreement”), with a consortium of Polish and foreign financial institutions, including, among others, Santander Bank Polska S.A. acting as an Agent and Bank Polska Kasa Opieki S.A. acting as a Security Agent.
The Facilities Agreement provides to the Company and Polkomtel Sp. z o.o. for PLN term facility loan to be granted up to a maximum amount of PLN 7,255.0, an EUR term facility loan up to a maximum amount of EUR 506.0 (the “Term Facilities”) and a revolving facility loan up to a maximum amount of the equivalent of PLN 1,000.0 (the “Revolving Facility”).
The Term Facilities and the Revolving Facility bear interest at a variable rate equal to WIBOR/EURIBOR for the relevant interest periods plus margin. The margin of the Term Facilities and the Revolving Facility depends on the level of the consolidated total debt ratio (net debt to consolidated EBITDA) calculated jointly for certain entities from the Company’s capital group, and also on the achievement by the Cyfrowy Polsat S.A. Capital Group of certain targets concerning green energy production and zero-carbon electricity consumption by certain entities from the Company’s capital group.
The Term Facilities and the Revolving Facility will be used by the Company in particular for:
a) repayment of all indebtedness under the Senior Facilities Agreement concluded on 21 September 2015, as amended by agreements dated 2 March 2018 and 27 April 2020,
b) making funds available to companies implementing investment projects defined in the Facilities Agreement, and
c) financing general corporate needs of the Company’s capital group.
The Facilities Agreement provides for the establishment by the Company and other entities in the Cyfrowy Polsat S.A. Capital Group of collateral securing the repayment of loans granted thereunder.
54
54
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The term of the Term Facilities and the Revolving Facility is 5 years from the date of execution of the Facilities Agreement and the final repayment date of each of these facilities is 28 April 2028. The PLN term facility will be repaid in quarterly installments of varying amounts. The EUR term facility will be repaid in one installment on the final repayment date.
Decision on early repayment of facility loans
On 9 May 2023 Cyfrowy Polsat and Polkomtel Sp. z o.o. (a subsidiary of the Company) submitted to the facility agent an irrevocable instruction to activate the procedure for early repayment of the full amount of the term facility loan and the revolving facility loan granted under the Senior Facilities Agreement concluded on 21 September 2015, as amended by agreements dated 2 March 2018 and 27 April 2020.
A prepayment in the aggregate amount of PLN 8,843.7 was made on 16 May 2023.
As a result of the prepayment, the Company and Polkomtel Sp. z o.o. repaid the entire debt under the indicated facilities agreement.
Security
Pursuant to the Facilities Agreement, certain members of the Company’s capital group are to grant guarantees under the English law to each of the financing parties under the Senior Facilities Agreement and other finance documents executed in relation thereto (in the amount of the facility increased by all fees and receivables contemplated in the Senior Facilities Agreement or other finance documents executed in relation thereto). The guarantees secure:
(i)
the timely discharge of the obligations under the Senior Facilities Agreement and other finance documents executed in relation thereto,
(ii)
a payment of amounts due under the Senior Facilities Agreement and other finance documents executed in relation thereto, and
(iii)
an indemnification of the financing parties referred to above against any liabilities, costs and losses that such financing parties may incur in relation to the unenforceability, ineffectiveness or unlawfulness of any obligation secured by the guarantee described above.
The period of the guarantees has not been specified. The guarantors will be remunerated at arm’s length for granting the guarantees.
In order to secure the repayment of claims under the Senior Facilities Agreement, the Company, other Group companies listed below, as guarantors, and the Security Agent, entered into and signed agreements and other documents providing for the establishment of the following collateral:
(i)
registered pledges over collections of movables and property rights of variable composition, included in the enterprises of the Company, Polkomtel Sp. z o.o., Telewizja Polsat Sp. z o.o., Netia S.A., Polsat Media Biuro Reklamy Sp. z o.o., Polsat Media Sp. z o.o. and Muzo.fm Sp. z o.o.;
(ii)
financial and registered pledges over all shares in Polkomtel Sp. z o.o. and Telewizja Polsat Sp. z o.o. held by the Company, as well as over all shares in Netia S.A. held by the Company, and all shares in Polsat Media Biuro Reklamy Sp. z o.o. and Muzo.fm Sp. z o.o. held by Telewizja Polsat Sp. z o.o., and over all shares in Polsat Media Sp. z o.o. held by the Company, Telewizja Polsat Sp. z o.o. and Polsat Media Biuro Reklamy Sp. z o.o., for which the applicable law is Polish law, together with powers of attorney to exercise corporate rights attached to the shares in the aforementioned companies;
55
55
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
(iii)
financial and registered pledges over the receivables related to the bank accounts of the Company, Polkomtel Sp. z o.o., Telewizja Polsat Sp. z o.o., Netia S.A., Polsat Media Biuro Reklamy Sp. z o.o., Polsat Media Sp. z o.o. and Muzo.fm Sp. z o.o., for which the applicable law is the Polish law;
(iv)
powers of attorney to the bank accounts of the Company, Polkomtel Sp. z o.o., Telewizja Polsat Sp. z o.o., Netia S.A., Polsat Media Biuro Reklamy Sp. z o.o., Polsat Media Sp. z o.o. and Muzo.fm Sp. z o.o., for which the applicable law is the Polish law;
(v)
registered pledges over the rights to the trademarks of the Company, Polkomtel Sp. z o.o., Telewizji Polsat Sp. z o.o., Netia S.A., Polsat Media Sp. z o.o., for which the applicable law is Polish law;
(vi)
assignment of receivables for security under hedging agreements payable to the Company and Polkomtel Sp. z o.o., for which the applicable law is English law;
(vii)
assignment of rights for security under insurance agreements for real properties and assets made by the Company, Polkomtel Sp. z o.o., Telewizja Polsat Sp. z o.o., Netia S.A., Polsat Media Biuro Reklamy Sp. z o.o., Polsat Media Sp. z o.o. and Muzo.fm Sp. z o.o.;
(viii)
statements of the Company, Polkomtel Sp. z o.o., Telewizja Polsat Sp. z o.o., Netia S.A., Polsat Media Biuro Reklamy Sp. z o.o., Polsat Media Sp. z o.o. and Muzo.fm Sp. z o.o. on submission to enforcement under a notarial deed, for which the applicable law is Polish law;
(ix)
a joint contractual mortgage, governed by Polish law, over the following real properties owned by or in perpetual usufruct of the Company: (a) land property located in Warsaw, Targówek district, in the area of ul. Łubinowa, land and mortgage register No. WA3M/00104992/7, (b) land property located in Warsaw, Targówek district, in the area of ul. Łubinowa, land and mortgage register No. WA3M/00102149/9, (c) land property located in Warsaw, Targówek district, in the area of ul. Łubinowa, land and mortgage register No. WA3M/00103400/4, (d) land property located in Warsaw, Targówek district, in the area of ul. Zabraniecka, land and mortgage register No. WA3M/00131411/9, (e) land property located in Warsaw, Praga Północ district, in the area of ul. Zabraniecka, land and mortgage register No. WA3M/00100110/3, (f) land property located in Warsaw, Praga Północ district, in the area of ul. Zabraniecka, land and mortgage register No. WA3M/00100109/3, (g) land property located in Warsaw, Praga Północ district, land and mortgage register No. WA3M/00102615/7, (h) land property located in Warsaw, Praga Północ district, in the area of ul. Zabraniecka, land and mortgage register No. WA3M/00132063/1, (i) land property located in Warsaw, Targówek district, in the area of ul. Zabraniecka, land and mortgage register No. WA3M/00101039/8, (j) land property located in Warsaw, Targówek district, in the area of ul. Zabraniecka, land and mortgage register No. WA3M/00136943/2, (k) land held in perpetual usufruct and a building constituting a separate property located in Warsaw, Targówek district, in the area of ul. Utrata, land and mortgage register No. WA3M/00186120/2;
(x)
a contractual mortgage, governed by Polish law, over land property located in Warsaw, Ursynów district, in the area of ul. Baletowa and Puławska, land and mortgage register No. WA5M/00478842/7, owned by Polkomtel Sp. z o.o.;
(xi)
a joint contractual mortgage, governed by Polish law, over the following properties owned or co-owned by Netia S.A.: (a) land property located in Jawczyce, Ożarów Mazowiecki commune, land and mortgage register WA1P/00133706/7, (b) land property located in Kraków, Podgórze district, in the area of ul. Luciany Frassati-
56
56
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Gawrońskiej, land and mortgage register KR1P/00359665/5, (c) land property located in Warsaw, Ursynów district, in the area of ul. Poleczki, land and mortgage register WA2M/00142936/8, (d) land property located in Warsaw, Ursynów district, in the area of ul. Poleczki, land and mortgage register WA5M/00468204/0, (e) land property located in Warsaw, Ursynów district, in the area of ul. Tango, land and mortgage register WA2M/00138733/4.
32. Issued bonds
31 December 2023
31 December 2022
Short-term liabilities
394.7
176.0
Long-term liabilities
3,975.5
1,900.4
Total
4,370.2
2,076.4
Change in issued bonds:
2023
2022
Balance as at 1 January
2,076.4
2,008.5
Bond issue (series D bonds)
2,670.0
-
Bond issue (series E bonds)
820.0
-
Bond issue (series F bonds)
400.0
-
Redemption of series B and series C*
(1,688.1)
-
Repayment of interest and commissions
(254.8)
(87.7)
Cumulative catch-up
(20.8)
-
Interest accrued and commissions
367.5
155.6
Balance as at 31 December
4,370.2
2,076.4
* redemption through conversion into series D and series E bonds
** including interest and early redemption premium on bonds settled in conversion
Issuance of Series D, Series E and series F bond and refinancing of debts under Series B and Series C
On 16 December 2022 the Management Board of the Company adopted resolutions on:
• issuance of no more than 2,670,000 (not in millions) unsecured series D bearer bonds with the nominal value of PLN 1,000 (not in millions) each and the total nominal value of no more than PLN 2,670 (“series D bonds”)
• purchase by the Company from the bondholders of the series B bonds and series C bonds issued by the Company, some or all of the series B bonds and series C bonds for the purpose of their redemption, based on sale and set-off agreements to be entered into by the Company with those of the series B bonds and series C bonds bondholders who declare their intention to sell such bonds and have their receivables for the series B bonds and series C bonds sale credited against the purchase price of the series D bonds.
On 11 January 2023, the issue of 2,670,000 (not in millions) series D bonds, with the total nominal value of PLN 2,670 was completed. The maturity date of the series D bonds is 11 January 2030. Interest on the series D bonds is paid in arrears every six months. The first interest payment was made on 11 July 2023.
57
57
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The first trading day for the series D bonds in the Alternative Trading System as part of the Catalyst market (in the continuous trading system) was set for 20 January 2023.
At the same time, on 11 January 2023, Cyfrowy Polsat S.A. repurchased for redemption 691,952 (not in millions) series B bearer bonds with the total nominal value of PLN 692 issued by the Company on 26 April 2019 with the redemption date set for 24 April 2026 and 835,991 (not in millions) series C bearer bonds with the total nominal value of PLN 836 issued by the Company on 14 February 2020, with the redemption date set for 12 February 2027 (collectively “Bonds Repurchased for Redemption”) from investors holding rights to the Bonds Repurchased for Redemption who paid the issue price of the series D bonds, registered on 11 January 2023 with the securities depository, by setting off the amounts due to the Company from the issuance of the series D bonds against the amounts due to the relevant investors in respect of the sale of the Bonds Repurchased for Redemption to the Company.
On 11 January 2023 the Management Board of the Company adopted a resolution to redeem the Bonds Repurchased for Redemption.
On 7 September 2023 the Management Board of the Company adopted resolutions on:
• issuance of no more than 820,000 (not in millions) unsecured series E bearer bonds with the nominal value of PLN 1,000 (not in millions) each and the total nominal value of no more than PLN 820 (“series E bonds”)
• purchase by the Company from the bondholders of the series B bonds and series C bonds issued by the Company, some or all of the series B bonds and series C bonds for the purpose of their redemption, based on sale and set-off agreements to be entered into by the Company with those of the series B bonds and series C bonds bondholders who declare their intention to sell such bonds and have their receivables for the series B bonds and series C bonds sale credited against the purchase price of the series E bonds.
On 28 September 2023, the issue of 820,000 (not in millions) series E bonds, with the total nominal value of PLN 820 was completed. The maturity date of the series E bonds is 11 January 2030. Interest on the series E bonds is paid in arrears every six months. The first payment is scheduled to be made on 11 January 2024.
The first trading day for the series E bonds in the Alternative Trading System as part of the Catalyst market (in the continuous trading system) was set for 28 September 2023.
At the same time, on 28 September 2023, Cyfrowy Polsat S.A. repurchased for redemption 84,250 (not in millions) series B bearer bonds with the total nominal value of PLN 84 issued by the Company on 26 April 2019 with the redemption date set for 24 April 2026 and 75,956 (not in millions) series C bearer bonds with the total nominal value of PLN 76 issued by the Company on 14 February 2020, with the redemption date set for 12 February 2027 (collectively “Bonds Repurchased for Redemption”) from investors holding rights to the Bonds Repurchased for Redemption who paid the issue price of the series E bonds, registered on 28 September 2023 with the securities depository, by setting off the amounts due to the Company from the issuance of the series E bonds against the amounts due to the relevant investors in respect of the sale of the Bonds Repurchased for Redemption to the Company.
On 28 September 2023 the Management Board of the Company adopted a resolution to redeem the Bonds Repurchased for Redemption.
On 11 December 2023 the Managament Board of the Company adopted resolution on issuance of 400,000 (not in millions) unsecured series F bearer bonds with the nominal value of PLN 1,000 (not in millions) each and the total nominal value of PLN 400 (”series F bonds”).
58
58
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Issuance of 400,000 (not in millions) series F bonds of the total nominal value of PLN 400 was executed on 21 December 2023. All series F bonds were allocated to one investor, i.e. PFR Investment Fund Closed of Non-Public Assets.
On 21 December 2023 series F bonds have been entered in the securities register kept by Trigon Dom Maklerski S.A., acting as issuing agent for series F bonds. The Company does not intend to apply for the introduction of series F bonds to the alternative trading system operated by the Wasaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.) within the Catalyst market.
The interest rates on the Series D, E and F bonds are variable and depend on both financial ratios and the sustainability index, i.e. the share of electricity from zero-carbon sources in the total consumption of electricity for the Group's own consumption of selected companies. Interest on Series D, E and F bonds is paid semi-annually on January 11 and July 11.
In accordance with Article 35 Paragraphs 1a and 1c of the Bond Law, the Company presented on its website in the investor relations section forecasts of the development of financial liabilities, including the estimated value of financial liabilities and the estimated structure of financing understood as the value and percentage of liabilities from loans and borrowings, issued bonds and leases in the total equity and liabilities of the Company's balance sheet.
The following table compares the forecast with actual results based on the Company's standalone balance sheet.
31 December 2023 forecast
[PLN billion]
31 December 2023 actual results
[PLN billion]
Value of financial liabilities (from loans and borrowings, issued bonds and leasing)
6.6
6.6
Share in total equity and liabilities
33%
33%
The value of financial liabilities (from loans and borrowings, issued bonds and leases) as at 31 December 2023 and the share of this value in the Company's total equity and liabilities do not deviate from the published estimates.
33. Lease liabilities
31 December 2023
31 December 2022
Short-term liabilities
3.1
3.3
Long-term liabilities
19.8
13.7
Total
22.9
17.0
59
59
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Change in lease liabilities:
2023
2022
Balance as at 1 January
17.0
20.2
Change in the period
9.4
(0.8)
Interest accrued
0.9
0.8
Repayment of capital and interest
(4.4)
(3.2)
Balance as at 31 December
22.9
17.0
34. Company as a lessor
Operating leases
The Company entered into contracts with third parties, which are classified as operating leases due to their economic substance. The contracts relate to rental of digital satellite reception equipment, lease of TV production studio and garage. Assets connected with such contracts are presented as property, plant and equipment.
Lease contracts for set-top boxes are concluded for a basic contractual period ranging from 12 to 24 months. After the basic period, the contracts are converted into contracts with indefinite terms, unless terminated by subscribers or new contracts are signed.
Future minimum lease payments under operating lease are as follows:
31 December 2023
31 December 2022
within 1 year
162.4
154.8
between 1 and 5 years
77.9
74.7
Total
240.3
229.5
In 2023 the Company generated revenues from operating lease agreements in the amount of PLN 217.6 (in 2022 PLN 244.6).
35. Other non-current liabilities and provisions
31 December 2023
31 December 2022
Other provisions
2.2
1.4
Derivative instruments liabilities (see note 37)
56.5
0.7
Total
58.7
2.1
60
60
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
36. Trade and other payables
31 December 2023
31 December 2022
Trade payables to related parties
99.6
102.8
Trade payables to non-related parties
22.4
21.3
Taxation and social security payables
12.3
12.5
Payables relating to purchases of non-current assets
2.1
12.8
Accruals
289.7
276.3
Short-term provisions
44.7
31.4
Other
218.0
20.5
Total
688.8
477.6
Accruals
31 December 2023
31 December 2022
Salaries
30.2
31.9
Licence fees and royalties for copyright management organizations
126.3
147.3
Distribution costs
2.8
1.0
Marketing costs
19.7
16.2
Other
110.7
79.9
Total
289.7
276.3
Short-term and long-term provisions
2023
2022
Opening balance as at 1 January
32.8
22.6
Increases
29.5
10.6
Reversal
(15.4)
(0.4)
Closing balance as at 31 December
46.9
32.8
Of which: Short-term
44.7
31.4
Long-term
2.2
1.4
Provisions comprise mainly of provisions for license fees, litigation and disputes.
Trade payables and payables relating to purchases of non-current assets by currency
Currency
31 December 2023
31 December 2022
PLN
109.5
110.3
EUR
1.2
0.3
USD
13.4
26.2
CHF
-
0.1
Total
124.1
136.9
61
61
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Accruals by currency
Currency
31 December 2023
31 December 2022
PLN
271.7
252.1
EUR
13.5
16.4
USD
3.7
7.0
GBP
0.8
0.8
Total
289.7
276.3
Other notes
37. Financial instruments
Overview
Cyfrowy Polsat S.A. is exposed to the following financial risks:
• credit risk,
• liquidity risk,
• market risk:
- currency risk,
- interest rate risk.
The Company’s risk management policies are designed to reduce the impact of adverse conditions on the Company’s results.
The Management Board is responsible for oversight and management of each of the risks faced by the Company. Therefore, the Management Board has established an overall risk management framework as well as risk management policies on market, credit and liquidity risks.
This note presents information about the Company’s exposure to each of the above risks and the Company’s objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are also included throughout these financial statements.
Bank loans, bonds, cash, interest rate swaps, currency interest rate swaps and short-term bank deposits are the main financial instruments used by the Company, with the intention of securing the financing for the Company’s activities. The Company also holds other financial instruments including trade receivables and payables and payables relating to purchases of tangible and intangible assets which arise in the course of its business activities.
62
62
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
F INANCIAL ASSETS
Carrying amount
31 December 2023
31 December 2022
Financial assets measured at amortized cost, including:
5,658.5
1,374.2
Loans granted
3,608.5
1,118.4
Trade and other receivables from related parties
70.4
36.0
Trade and other receivables from non-related parties
29.7
34.3
Share in the profits of partnerships receivables
66.3
64.8
Cash and cash equivalents
1,883.6
120.7
Financial assets at fair value through profit or loss
614.4
-
Investments in equity instruments
614.4
-
Hedging derivative instruments:
4.3
23.1
Interest rate swaps
4.3
23.1
Derivatives other than hedging instruments
41.7
-
Financial PPA
41.7
-
F INANCIAL LIABILITIES
Carrying amount
31 December 2023
31 December 2022
Financial liabilities measured at amortised cost, including:
7,220.8
3,829.2
Loans and borrowings
2,207.7
1,298.5
Issued bonds
4,370.2
2,076.4
Lease liabilities
22.9
17.0
Trade payables and other payables to third parties and deposits
40.4
42.2
Trade and other payables to related parties
289.9
118.8
Accruals
289.7
276.3
Hedging derivative instruments:
11.9
0.7
Interest rate swaps
5.7
0.7
Currency interest rate swaps
5.8
-
Forward transactions
0.4
-
Derivatives other than hedging instruments
60.1
-
Financial PPA
60.1
-
Credit risk
Credit risk is defined as the risk that counterparties of the Company will not be able to meet their contractual obligations, which could result in a financial loss for the other party. Exposure to credit risk is related to three main areas:
• the creditworthiness of the customers with whom physical sale transactions are undertaken,
• the creditworthiness of the financial institutions (banks/brokers) with whom, or through whom, hedging or other derivative transactions are undertaken,
63
63
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
• the creditworthiness of the entities in which investments are made, or whose securities are purchased.
Credit risk arises mainly on trade receivables and contract assets. In the financial year ended 31 December 2023 the Company’s customer base includes a large number of individual subscribers dispersed geographically over the country who prepay subscription fees. Receivables from subscribers are constantly monitored and recovery actions are taken, including blocking of the signal transferred to subscribers or termination of services to Internet clients.
The Company pursues a credit policy under which credit risk exposure is constantly monitored.
Due to diversification of risk in terms of the nature of individual entities, their geographical location and cooperation with highly-rated financial institutions, also taking into consideration the fair value of liabilities arising from derivative transactions, the Company is not materially exposed to credit risk as a result of derivative transactions entered into.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as at the reporting date was as follows:
Maximum exposure to credit risk
Carrying amount
31 December 2023
31 December 2022
Loans granted
3,608.5
1,118.4
Trade and other receivables from related parties
70.4
36.0
Trade and other receivables from non-related parties
29.7
34.3
Share in the profits of partnerships receivables
66.3
64.8
Contract assets
72.0
93.3
Cash and cash equivalents
1,883.6
120.7
Hedging derivative instruments
4.3
23.1
Interest rate swaps
4.3
23.1
Derivatives other than hedging instruments
41.7
-
Financial PPA
41.7
-
Total
5,776.5
1,490.6
The maximum exposure to credit risk for trade and other receivables and assets related to contracts, by type of customer, was:
Carrying amount
31 December 2023
31 December 2022
Receivables from subscribers
80.8
103.1
Receivables from distributors
1.8
1.4
Receivables from media companies
12.3
15.2
Receivables and loans granted to related parties, including share in the profits of partnerships receivables
3,745.1
1,218.8
Other receivables and loans granted to non-related parties
6.9
8.3
Total
3,846.9
1,346.8
64
64
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The ageing of trade and other receivables and contract assets at the reporting date was:
31 December 2023
31 December 2022
Gross
Impairment
Net
Gross
Impairment
Net
Not past due
115.8
1.6
114.2
112.4
3.1
109.3
Past due 0-30 days
12.2
0.9
11.3
10.4
0.4
10.0
Past due 31-60 days
4.3
0.2
4.1
2.6
0.4
2.2
Past due more than 60 days
44.6
7.8
36.8
23.6
10.0
13.6
Total
176.9
10.5
166.4
149.0
13.9
135.1
Contract assets
75.3
3.3
72.0
96.6
3.3
93.3
Total
252.2
13.8
238.4
245.6
17.2
228.4
To estimate impairment due to expected loss model the Company performed analysis using an expected loss model. Bad debt allowance is recognized for trade and other receivables in the amount of expected credit losses in instrument’s life cycle.
Liquidity risk
The Company’s objective in liquidity management is to ensure that it always has sufficient funds to meet its liabilities when due. Surplus cash is invested in bank deposits.
The Company prepares, on an ongoing basis, analyses and forecasts of cash requirements based on projected cash flows.
65
65
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The following are the contractual maturities of the Company’s financial liabilities, which will be settled in the net amount in the relevant age ranges, based on the remaining period until the expiry of the contractual maturity date at the balance sheet date.
31 December 2023
Carrying amount
Contractual cash flows
6 months and less
6-12 months
1-2 years
2-5 years
more than 5 years
Loans and borrowings
2,207.7
2,887.3
81.0
109.8
214.5
2,482.0
-
Issued bonds
4,370.2
6,850.4
194.9
211.0
423.1
1,530.5
4,490.9
Lease liabilities
22.9
27.4
2.0
2.3
4.3
11.8
7.0
Trade and other payables to non-related parties and deposits
40.4
40.4
40.4
-
-
-
-
Trade and other payables to related parties
289.9
289.9
289.9
-
-
-
-
Accruals
289.7
289.7
289.7
-
-
-
-
Hedging derivative instruments:
IRS 1
5.7
5.9
1.0
2.8
2.1
-
-
CIRS
5.8
-inflows
(14.9)
(3.1)
(3.1)
(4.5)
(4.2)
-
-outflows
22.1
3.0
3.9
7.7
7.5
-
Forward transactions
0.4
-inflows
(16.3)
(16.3)
-
-
-
-
-outflows
16.7
16.7
-
-
-
-
Derivatives other than
Hedging instruments:
Financial PPA
60.1
945.9
6.1
7.9
16.4
82.1
833.4
7,292.8
11,344.5
905.3
334.6
663.6
4,109.7
5,331.3
1 pursuant to the agreements settlements shall be on a net basis
66
66
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
31 December 2022
Carrying amount
Contractual cash flows
6 months and less
6-12 months
1-2 years
2-5 years
more than 5 years
Loans and borrowings
1,298.5
1,512.7
133.2
130.5
210.2
1,038.8
-
Issued bonds
2,076.4
2,731.0
91.8
91.4
183.8
2,364.0
-
Lease liabilities
17.0
20.0
2.0
1.9
2.3
6.4
7.4
Trade and other payables to non-related parties and deposits
42.2
42.2
42.2
-
-
-
-
Trade and other payables to related parties
118.8
118.8
118.8
-
-
-
-
Accruals
276.3
276.3
276.3
-
-
-
-
Hedging derivative instruments:
IRS 1
0.7
0.8
-
-
0.2
0.6
-
3,829.9
4,701.8
664.3
223.8
396.5
3,409.8
7.4
1 pursuant to the agreements settlements shall be on a net basis
The Company may utilize revolving facility line of credit up to the amount of PLN 1,000 with final repayment date of 28 April 2028. As of 31 December 2023 the Company did not use the revolving credit facility.
Market risk
The Company has an active approach to managing its market risk exposure. The objectives of market risk management are:
• to limit fluctuations in profit/loss before tax,
• to increase the probability of meeting budget assumptions,
• to maintain the healthy financial condition, and
• to support the process of undertaking strategic decisions relating to investing activity, with attention to sources of capital for this activity.
All the market risk management objectives should be considered as a whole, while their realisation is dependant primarily upon the internal situation and market conditions.
The Company applies an integrated approach to market risk management. This means a comprehensive approach to the whole spectrum of identified market risks, rather than to each of them individually. The primary technique for market risk management is the use in the Company of hedging strategies involving derivatives. Apart from this, natural hedging is also used to the extent available.
All of the potential hedging strategies and the selection of those preferred reflect the following factors: the nature of identified market risk exposures of the Company, the suitability of instruments to be applied and the cost of hedging, current and forecasted market conditions. In order to mitigate market risk, derivatives are primarily used. The Company transacts only those derivatives for which it has the ability to assess their value internally, using standard pricing models appropriate for a particular type of derivative, and also these which can be traded without significant loss of value with a counterparty other than the one with whom the transaction was initially entered into. In evaluating the market value of a given instrument, the Company relies on information obtained from particular market leading banks, brokers and information services.
67
67
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
It is permitted to use the following types of instruments:
• Swaps (IRS/CIRS),
• Forwards and futures,
• Options.
Currency risk
One of the main risks to which the Company is exposed is currency risk related to fluctuations in the exchange rate between the Polish zloty and other currencies. The revenues generated by the Company are denominated mainly in Polish zloty, however, a portion of operating costs and capital expenditures are incurred in foreign currencies. The Company’s currency risk is related to royalties for TV and radio broadcasters (USD and EUR), transponder capacity agreements (EUR), fees for conditional access system (EUR and USD), purchases of reception equipment and accessories for reception equipment (USD and EUR) and term facility loan (EUR).
In respect of license fees and transponder capacity agreements, the Company partly reduces its currency risk exposure by means of an economic hedge as it denominates receivables from signal broadcast and marketing services in foreign currencies.
The Company’s exposure to foreign currency was as follows based on currency amounts:
31 December 2023
31 December 2022
EUR
USD
GBP
EUR
USD
GBP
Loans granted
154.7
-
-
84.0
-
-
Trade receivables
2.7
0.2
-
3.2
1.4
-
Cash and cash equivalents
223.9
-
-
-
-
-
Liabilities from loans and borrowings
(356.1)
-
-
-
-
-
Lease liabilities
-
-
-
-
-
-
Trade payables
(0.3)
(3.4)
-
(0.1)
(6.0)
-
Accruals
(3.1)
(0.9)
(0.2)
(3.5)
(1.6)
(0.2)
Gross balance sheet exposure
21.8
(4.1)
(0.2)
83.6
(6.2)
(0.2)
Currency interest rate swaps
1.9
-
-
-
-
-
Forward transactions
3.8
-
-
-
-
-
Net exposure
27.5
(4.1)
(0.2)
83.6
(6.2)
(0.2)
Following foreign exchange rates were applied in the presented periods:
Average rate
Rates at the balance sheet date
(in PLN)
2023
2022
31 December 2023
31 December 2022
1 EUR
4.5430
4.6869
4.3480
4.6899
1 USD
4.2021
4.4607
3.9350
4.4018
1 GBP
5.2216
5.4986
4.9997
5.2957
1 CHF
4.6760
4.6693
4.6828
4.7679
For the purposes of exchange rate volatility sensitivity analysis as at 31 December 2023 and 31 December 2022 it was assumed that probable volatility will be in the +/- 5% band. This analysis assumes that all other variables, in particular interest rates, remain constant.
68
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
2023
2022
As at 31 December 2023
As at 31 December 2022
in currency
in PLN
Estimated change in exchange rate in %
Estimated change in profit
in PLN
Estimated change in other comprehensive income
in PLN
in currency
in PLN
Estimated change in exchange rate in %
Estimated change in profit
in PLN
Estimated change in other comprehensive income
in PLN
Loans granted
EUR
154.7
672.5
5%
33.8
-
84.0
394.0
5%
19.6
-
Trade receivables
EUR
2.7
11.6
5%
0.7
-
3.2
15.2
5%
0.6
-
USD
0.2
0.7
5%
0.1
-
1.4
6.2
5%
0.3
-
Cash and cash equivalents
EUR
223.9
973.3
5%
48.9
-
0.0
0.0
5%
-
-
USD
0.0
0.1
5%
-
-
0.0
0.1
5%
-
-
CHF
0.0
0.0
5%
-
-
0.0
0.1
5%
-
-
Liabilities from loans and borrowings
EUR
(356.1)
(1,548.5)
5%
(77.2)
-
0.0
0.0
5%
-
-
Lease liabilities
EUR
0.0
0.0
5%
-
-
0.0
(0.2)
5%
-
-
Trade payables
EUR
(0.3)
(1.2)
5%
(0.2)
-
(0.1)
(0.3)
5%
(0.2)
-
USD
(3.4)
(13.4)
5%
(0.6)
-
(6.0)
(26.2)
5%
(1.5)
-
CHF
0.0
0.0
5%
-
-
0.0
(0.1)
5%
-
-
69
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Accruals
EUR
(3.1)
(13.5)
5%
(0.7)
-
(3.5)
(16.4)
5%
(0.8)
-
USD
(0.9)
(3.7)
5%
(0.0)
-
(1.6)
(7.0)
5%
(0.4)
-
GBP
(0.2)
(0.8)
5%
(0.2)
-
(0.2)
(0.8)
5%
(0.3)
-
Change in operating profit
4.6
-
17.3
-
Currency interest rate swaps
EUR
1.9
8.3
5%
-
0.4
0.0
0.0
5%
-
-
Forward transactions
EUR
3.8
16.5
5%
-
0.8
0.0
0.0
5%
-
-
Income tax
(0.7)
(0.2)
(2.8)
-
Change in net profit
3.9
1.0
14.5
-
70
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
2023
2022
As at 31 December 2023
As at 31 December 2022
in currency
in PLN
Estimated change in exchange rate in %
Estimated change in profit
in PLN
Estimated change in other comprehensive income
in PLN
in currency
in PLN
Estimated change in exchange rate in %
Estimated change in profit
in PLN
Estimated change in other comprehensive income
in PLN
Loans granted
EUR
154.7
672.5
-5%
(33.8)
-
84.0
394.0
-5%
(19.6)
-
Trade receivables
EUR
2.7
11.6
-5%
(0.7)
-
3.2
15.2
-5%
(0.6)
-
USD
0.2
0.7
-5%
(0.1)
-
1.4
6.2
-5%
(0.3)
-
Cash and cash equivalents
EUR
223.9
973.3
-5%
(48.9)
USD
0.0
0.1
-5%
-
-
0.0
0.1
-5%
-
-
CHF
0.0
0,0
-5%
-
-
0.0
0.1
-5%
-
-
Liabilities from loans and borrowings
EUR
(356.1)
(1,548.5)
-5%
77.2
-
0.0
0.0
-5%
-
-
Lease liabilities
EUR
0.0
0.0
-5%
-
-
0.0
(0.2)
-5%
-
-
Trade payables
EUR
(0.3)
(1.2)
-5%
0.2
-
(0.1)
(0.3)
-5%
0.2
-
USD
(3.4)
(13.4)
-5%
0.6
-
(6.0)
(26.2)
-5%
1.5
-
CHF
0.0
0.0
-5%
-
-
0.0
(0.1)
-5%
-
-
71
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Accruals
EUR
(3.1)
(13.5)
-5%
0.7
-
(3.5)
(16.4)
-5%
0.8
-
USD
(0.9)
(3.7)
-5%
0.0
-
(1.6)
(7.0)
-5%
0.4
-
GBP
(0.2)
(0.8)
-5%
0.2
-
(0.2)
(0.8)
-5%
0.3
-
Change in operating profit
(4.6)
-
(17.3)
-
Currency interest rate swaps
EUR
1.9
8.3
-5%
-
(0.4)
0.0
0.0
-5%
-
-
Forward transactions
EUR
3.8
16.5
-5%
-
(0.8)
0.0
0.0
-5%
-
-
Income tax
0.7
0.2
2.8
-
Change in net profit
(3.9)
(1.0)
(14.5)
-
72
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
2023
2022
Estimated change in profit
in PLN
Estimated change in other comprehensive income
in PLN
Estimated change in profit
in PLN
Estimated change in other comprehensive income
in PLN
Estimated change in exchange rate by 5 %
EUR
4.5
1.0
16.1
-
USD
(0.4)
-
(1.3)
-
GBP
(0.2)
-
(0.3)
-
Estimated change in exchange rate by -5 %
EUR
(4.5)
(1.0)
(16.1)
-
USD
0.4
-
1.3
-
GBP
0.2
-
0.3
-
Had the Polish zloty strengthened 5% against the basket of currencies as at 31 December 2023 and 31 December 2022, the Company’s net profit would have increased by PLN 3.9 and by PLN 14.5 respectively and other comprehensive income would have increase by PLN 1.0 in 2023 and would have been unchanged in 2022. Had the Polish zloty appreciated 5%, the Company’s net profit would have been decreased by PLN 3.9 and by PLN 14.5 respectively and other comprehensive income would have decrease by PLN 1.0 in 2023 and would have been unchanged in 2022. Assuming that all other variables remain constant. Estimated future revenue and costs denominated in foreign currencies are not taken into account.
Interest rate risk
Changes in market interest rates have no direct effect on the Company’s revenues, however, they do have an effect on net cash from operating activities due to interest earned on overnight bank deposits and current accounts, and on net cash from financing activities due to interest charged on bank loans and bonds.
The Company regularly analyses its level of interest rate risk exposure, including refinancing and risk minimising scenarios. Based on these analyses, the Company estimates the effects of changes in interest rates on its profit and loss.
In order to reduce interest rate risk exposure resulting from interest payments on floating rate senior facility, the Company stipulated interest rate swaps as well as currency interest rate swaps.
At the reporting date, the interest rate risk profile of interest-bearing financial instruments was:
Carrying amount
31 December 2023
31 December 2022
Fixed rate instruments
Financial assets *
62.8
421.9
Variable rate instruments
Financial assets *
3,839.3
781.3
Financial liabilities *
(6,456.8)
(3,291.1)
Net interest exposure
(2,617.5)
(2,509.8)
* nominal values
73
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The Company’s management classifies loan liabilities as variable rate instruments. Changes in the interest rate components do not result in a change in the carrying amount of the loan liability. The changes are reflected prospectively in the interest expense on loans and borrowings.
Cash flow sensitivity analysis for variable rate instruments (pre-tax effect):
Income statement
Other comprehensive income
Equity
Increase by 100 bp
Decrease by 100 bp
Increase by 100 bp
Decrease by 100 bp
Increase by 100 bp
Decrease by 100 bp
31 December 2023
Variable rate instruments *
(26.2)
26.2
14.5
(14.5)
(11.7)
11.7
Cash flow sensitivity (net)
(26.2)
26.2
14.5
(14.5)
(11.7)
11.7
31 December 2022
Variable rate instruments *
(25.1)
25.1
15.0
(15.0)
(10.1)
10.1
Cash flow sensitivity (net)
(25.1)
25.1
15.0
(15.0)
(10.1)
10.1
* include sensitivity in fair value changes of derivative instruments (interest rate swaps and currency interest rate swaps) due to changes in interest rate
The Company applies cash flow hedge model under IAS 39 for interest rate exposure from floating rate interest payments in PLN by interest rate swaps, currency interest rate swaps and forward transactions.
Fair value vs. carrying amount
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data
74
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Presented below are fair values and carrying amounts of financial assets and liabilities not measured in fair value.
31 December 2023
31 December 2022
Category according to IFRS 9
Level of the fair value hierarchy
Fair value
Carrying amount
Fair value
Carrying amount
Loans granted
A
2
3,696.8
3,608.5
1,105.7
1,118.4
Trade and other receivables
A
*
166.4
166.4
135.1
135.1
Cash and cash equivalents
A
*
1,883.6
1,883.6
120.7
120.7
Loans and borrowings
B
2
(2,341.6)
(2,207.7)
(1,299.0)
(1,298.5)
Issued bonds
B
1
(4,454.9)
(4,370.2)
(1,982.1)
(2,076.4)
Lease liability
B
2
(22.9)
(22.9)
(17.0)
(17.0)
Accruals
B
*
(289.7)
(289.7)
(276.3)
(276.3)
Trade and other payables and deposits
B
*
(330.3)
(330.3)
(161.0)
(161.0)
Total
(1,692.6)
(1,562.3)
(2,373.9)
(2,455.0)
Unrecognized gain/(loss)
(168.4)
81.1
A – assets subsequently measured at amortised cost
B – liabilities subsequently measured at amortised cost
* it is assumed that the fair value of these financial assets and liabilities is equal to their nominal value, therefore no evaluation methods were used in order to calculate their fair value.
When determining the fair value of loans granted, forecasted cash flows from the reporting date to assumed dates of repayments of the loans were analyzed. The discount rate for each payment was calculated as an applicable WIBOR or EURIBOR interest rate plus a margin regarding the credit risk.
Trade and other receivables, accruals and trade and other payables and deposits comprise mainly receivables and payables which are settled no later than at the end of the first month after the reporting date. It was therefore assumed that the effect of their valuation, taking the effect of time value of money into account, would approximately be equal to their nominal value.
As at 31 December 2023 and 31 December 2022 loans and borrowings comprised term facility loan. The discount rate for each payment was calculated as a sum of implied WIBOR/EURIBOR interest rate and a margin regarding the Company’s credit risk. When determining the fair value of senior facility as at 31 December 2023, forecasted cash flows from the reporting date to 28 April 2028 were analyzed. When determining the fair value of senior facility as at 31 December 2022, forecasted cash flows from the reporting date to 30 September 2024 (assumed date of repayment of the loan obtained in 2015, changed in 2018 and changed in 2020) and to 31 March 2025 (assumed date of repayment of the additional loan obtained in 2019 and changed in 2020).
The fair value of bonds as at 31 December 2023 and 31 December 2022 is calculated based on the last bid price as at the balance sheet date as quoted on the Catalyst market.
75
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
As at 31 December 2023, the Company held the following financial instruments carried at fair value on the statement of financial position:
A SSETS MEASURED AT FAIR VALUE
31 December 2023
Level 1
Level 2
Level 3
Derivatives other than hedging instruments
-
-
41.7
financial PPA
-
-
41.7
Hedging derivative instruments
-
4.3
-
IRS
-
4.3
-
Investments in equity instruments
614.4
-
-
Total
614.4
4.3
41.7
L IABILITIES MEASURED AT FAIR VALUE
31 December 2023
Level 1
Level 2
Level 3
Derivatives other than hedging instruments
-
-
60.1
financial PPA
-
-
60.1
Hedging derivative instruments
-
11.9
-
IRS
-
5.7
-
CIRS
-
5.8
-
Forward
-
0.4
-
Total
-
11.9
60.1
The fair value of interest rate swaps, currency interest rate swaps and forward transactions is determined using financial instruments valuation models, based on generally published interest rates. Fair value of derivatives is determined based on the discounted future cash flows from transactions, calculated based on the difference between the forward price and the transaction price.
The fair value of financial PPA transactions was determined using financial instrument pricing models, using expert assumptions on energy price levels, seasonality, production profile as well as using generally available interest rates. The fair value is determined based on discounted future transaction flows calculated on the basis of the difference between the market price over the contract horizon and the settlement price (plus the inflation rate).
76
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
As at 31 December 2022, the Company held the following financial instruments carried at fair value on the statement of financial position:
A SSETS MEASURED AT FAIR VALUE
31 December 2022
Level 1
Level 2
Level 3
Hedging derivative instruments
-
23.1
-
IRS
-
23.1
-
Total
-
23.1
-
L IABILITIES MEASURED AT FAIR VALUE
31 December 2022
Level 1
Level 2
Level 3
Hedging derivative instruments
-
0.7
-
IRS
-
0.7
-
Total
-
0.7
-
Items of income, costs, profit and losses recognized in profit or loss generated by loans and borrowings and issued bonds (including hedging transactions)
For the period from 1 January 2023 to 31 December 2023
Loans and borrowings
Issued bonds
Hedging
instruments
Total
Interest expense on loans and borrowings
( 139.4 )
-
14.4
(125.0)
Interest expense on issued bonds
-
(327.2)
-
(327.2)
Exchange rate differences
57.9
-
-
57.9
Total finance costs
(81.5)
(327.2)
14.4
(394.3)
Total gross profit/(loss)
(81.5)
(327.2)
14.4
(394.3)
Hedge valuation reserve
-
-
(28.8)
(28.8)
For the period from 1 January 2022 to 31 December 2022
Loans and borrowings
Issued bonds
Hedging
instruments
Total
Interest expense on loans and borrowings
( 98.1 )
-
19.8
(78.3)
Interest expense on issued bonds
-
( 155.6 )
-
(155.6)
Total finance costs
( 98.1 )
(155.6)
19.8
(233.9)
Total gross profit/(loss)
( 98.1 )
(155.6)
19.8
(233.9)
Hedge valuation reserve
-
-
11.4
11.4
77
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Hedge accounting and derivatives
Cash Flow Hedge of interest rate risk of interest payments
At 31 December 2023, the Company held a number of interest rate swaps, designated as hedges of floating interest payments on senior facility denominated in PLN.
The terms of the interest rate swaps have been negotiated to match the terms of the floating rate financing in PLN. The ineffective part of the IRS valuation identified in the reporting period was recognized in the profit and loss.
Table below presents the basic parameters of IRS designated as hedging instruments, including the periods in which cash flows occur due to cash flow hedges, periods they will affect the financial results and fair value in PLN of hedging instruments as at the balance sheet date.
31 December 2023
31 December 2022
Type of instrument
Interest rate swap
Interest rate swap
Exposure
Floating rate interest payments in PLN
Floating rate interest payments in PLN
Hedged risk
Interest rate risk
Interest rate risk
Notional value of hedging instrument (PLN)
750.0
1,125.0
Fair value of hedging instruments
(1.4)
22.4
Hedge accounting approach
Cash Flow Hedge
Cash Flow Hedge
Expected period the hedge item affect income statement
Until 30 June 2025
Until 30 June 2025
Cash Flow Hedge of interest rate risk of interest payments
At 31 December 2023, the Company held a number of interest rate swaps in different currencies (CIRS), designated as hedges of floating interest payments on senior facility denominated in EUR.
The terms of the currency interest rate swaps have been negotiated to match the terms of the floating rate financing in EUR. The ineffective part of the CIRS valuation identified in the reporting period was recognized in the profit and loss.
Table below presents the basic parameters of CIRS designated as hedging instruments, including the periods in which cash flows occur due to cash flow hedges, periods they will affect the financial results and fair value of hedging instruments as at the balance sheet date.
31 December 2023
31 December 2022
Type of instrument
Currency interest rate swap
-
Exposure
Floating rate interest payments in EUR
-
Hedged risk
Interest rate risk and currency risk
-
Notional value of hedging instrument (EUR)
50.0
-
Fair value of hedging instruments
(5.8)
-
Hedge accounting approach
Cash Flow Hedge
-
Expected period the hedge item affect income statement
Until 31 March 2027
-
78
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Cash Flow Hedge of currency risk of interest payments
At 31 December 2023, the Company held a number of forward contracts, designated as hedges of exchange rate of interest payments on senior facility denominated in EUR.
The terms of the forward transaction have been negotiated to match the terms of the interest payments on senior facility denominated in EUR. In the reporting period, the ineffective part of the valuation of forward contracts was not identified and recognized in the profit and loss.
Table below presents the basic parameters of forward contracts designated as hedging instruments, including the periods in which cash flows occur due to cash flow hedges, periods they will affect the financial results and fair value of hedging instruments as at the balance sheet date.
31 December 2023
31 December 2022
Type of instrument
Currency forward contract
-
Exposure
Interest payments in EUR
-
Hedged risk
Currency risk
-
Notional value of hedging instrument (EUR)
3.7
-
Fair value of hedging instruments
(0.4)
-
Hedge accounting approach
Cash Flow Hedge
-
Expected period the hedge item affect income statement
Until 31 May 2024
-
Change in fair value of cash flow hedges recognized in equity is presented below (pre-tax):
2023
2022
Opening Balance
22.4
13.4
Effective part of valuation recognized in equity
(16.8)
26.3
Amounts recognized in equity transferred to the profit and loss statement, of which:
(13.2)
(17.3)
• adjustment of interest costs
(14.4)
(19.8)
• recognition of ineffective part
1.2
2.5
Closing Balance
(7.6)
22.4
38. Capital management
This note presents information about the Company’s management of capital. Further quantitative disclosures are also included throughout these financial statements.
The goal of capital management is to maintain the Company’s ability to operate as a going concern in order to provide the shareholders return on investment as well as benefits for other stakeholders. The Company might issue shares, increase debt or sell assets in order to maintain or improve the equity structure.
79
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The Company monitors capital on the basis of leverage ratio, which is calculated as a ratio of net debt to sum of equity and net debt. Net debt represents interest-bearing loans and borrowings and issued bonds less cash and cash equivalents (including restricted cash).
Carrying amount
31 December 2023
31 December 2022
Loans and borrowings
2,207.7
1,298.5
Issued bonds
4,370.2
2,076.4
Cash and cash equivalents
(1,883.6)
(120.7)
Net debt
4,694.3
3,254.2
Equity
12,109.9
11,494.2
Equity and net debt
16,804.2
14,748.4
Leverage ratio
0.28
0.22
39. Barter transactions
The Company is a party to barter transactions. The table below presents revenues and costs of barter transactions executed on an arm’s-length basis. Revenue comprise revenue from services, goods and materials sold, costs comprise costs of sales.
for the year ended
31 December 2023
31 December 2022
Revenues from barter transactions
5.9
5.8
Cost of barter transactions
5.6
5.9
31 December 2023
31 December 2022
Barter receivables
1.8
2.6
Barter payables
0.8
1.8
40. Transactions with related parties
R ECEIVABLES
31 December 2023
31 December 2022
Subsidiaries
135.4
100.0
Joint ventures and associates
-
0.3
Entities controlled by a person (or a close member of that person's family) who has control, joint control or significant influence over Cyfrowy Polsat S.A.
1.3
1.1
Total
136.7
101.4
A significant portion of receivables is represented by receivables from share of the profits of partnerships and receivables related to sale of Telewizja Polsat, Netia and Polkomtel Sp. z o.o. (‘Polkomtel’) services.
80
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
O THER ASSETS
31 December 2023
31 December 2022
Subsidiaries
57.9
22.3
Joint ventures and associates
-
1.4
Entities controlled by a person (or a close member of that person's family) who has control, joint control or significant influence over Cyfrowy Polsat S.A.
-
1.3
Total
57.9
25.0
Other current assets comprise mainly financial instruments entered into with Pak-Volt and unbilled revenue from Netia, Polkomtel and InterPhone Service.
L IABILITIES
31 December 2023
31 December 2022
Subsidiaries
297.9
183.9
Joint ventures and associates
-
5.6
Entities controlled by a person (or a close member of that person's family) who has control, joint control or significant influence over Cyfrowy Polsat S.A.
179.4
3.4
Total
477.3
192.9
A significant portion of liabilities is represented by liabilities from acquisition of shares, Polkomtel, InterPhone and Liberty Poland services, financial instruments liabilities and lease liabilities.
L OANS GRANTED
31 December 2023
31 December 2022
Subsidiaries
3,608.3
673.2
Joint ventures and associates
-
444.9
Total
3,608.3
1,118.1
Loans granted as at 31 December 2023 mainly include loans to Polkomtel Sp. z o.o., PAK- Polska Czysta Energia Sp. z o.o., Netia S.A., Esoleo Sp. z o.o. and i Pantanomo Ltd. with repayment due date in 2024 – 2031.
81
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
R EVENUES
for the year ended
31 December 2023
31 December 2022
Subsidiaries
111.6
123.8
Joint ventures and associates
1.3
0.2
Entities controlled by a person (or a close member of that person's family) who has control, joint control or significant influence over Cyfrowy Polsat S.A
2.1
1.5
Total
115.0
125.5
The most significant transactions include revenues from subsidiaries from accounting services, signal broadcast, programming fees, programming licences, property rental and advertising services.
E XPENSES
for the year ended
31 December 2023
31 December 2022
Subsidiaries
701.5
704.1
Joint ventures and associates
2.4
5.1
Entities controlled by a person (or a close member of that person's family) who has control, joint control or significant influence over Cyfrowy Polsat S.A.
13.0
25.7
Total
716.9
734.9
The most significant transactions include data transfer services.
The Company also pays license fees for broadcasting Telewizja Polsat’s programmes, commissions on sales, and incurs programming fees, expenses for IT services, property rental costs, advertising production and telecommunication services with respect to the Company’s customer call center.
G AIN /( LOSS ) ON INVESTMENT ACTIVITIES , NET
for the year ended
31 December 2023
31 December 2022
Subsidiaries
684.9
978.4
Joint ventures and associates
93.8
84.1
Entities controlled by a person (or a close member of that person's family) who has control, joint control or significant influence over Cyfrowy Polsat S.A.
-
608.7
Total
778.7
1,671.2
Gains and losses on investment activities comprises mostly of dividends, income from share of the profits of partnerships, sale of shares and guarantees granted by the Company in respect to Polkomtel’s term facilities.
82
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
F INANCE COSTS
for the year ended
31 December 2023
31 December 2022
Subsidiaries
9.4
6.2
Total
9.4
6.2
Finance costs comprise mostly of guarantee fees in respect to the term facilities.
The related party transactions has been described also in note 45.
41. Litigations
Management believes that the provisions for litigations as at 31 December 2023 are sufficient to cover potential future outflows and the adverse outcome of the disputes will not have a significant negative impact on the Company’s financial situation. Information regarding the amount of provisions was not separately disclosed. as in the opinion of the Company’s Management such disclosure could prejudice the outcome of the pending cases.
On 30 December 2016 the President of UOKiK issued a decision stating that the Company’s operations were allegedly infringing collective consumer interests by presenting promotional offers, which in the opinion of the authorities were impossible to conclude. Pursuant to the decision of the President of UOKiK the Company was charged with a penalty in the amount of PLN 4.4. The Company appealed to SOKiK against the decision. On 14 October 2019 SOKiK dismissed the appeal. The Company appealed against the decision. On 31 December 2020 the Company’s appeal was dismissed. On 14 January 2021 the Company paid the penalty. The Company submitted a cassation appeal to the Supreme Court. On 20 April 2022, the Supreme Court accepted the Company's cassation appeal for consideration. At a closed session on 25 May 2023, the company's cassation appeal was dismissed.
On 19 December 2019 the President of UOKiK issued a decision stating that the operations of the Company were allegedly infringing collective consumer interests by hindering access to ZDF and Das Erste channels during the Euro 2016 championship by removing these channels and by giving incomplete and unreliable information to consumers in response to claims regarding unavailability of the above programs. Pursuant to the decision of the President of UOKiK the Company was charged with a penalty in the amount of PLN 34.9. The company appealed against this decision to SOKiK. On 14 February 2022 First Instance Court dismissed the Company’s appeal in its entirety. The Company submit a cassation appeal to the Court of Appeal in Warsaw. The appeal hearing took place on 21 October 2022. On 21 November 2022, the Court of Appeal in Warsaw repealed the appealed judgment in its entirety and referred the case to the Regional Court in Warsaw for examination and resolution. On 24 July 2023 Company's appeal was again dismissed. On 6 September 2023 the Company filed an appeal against the judgment. To date, hearing date has not been set.
Other proceedings
On 28 April 2017, Association of Polish Stage Artists (“ZASP”) filed a lawsuit against Cyfrowy Polsat for payment of PLN 20.3. The Company issued an objection in the writ-of-payment proceedings and filed for its dismissal entirely. On 10 January 2018 the Court issued a decision to refer the case to mediation proceedings. Mediation ended without a settlement. The last hearing took place on 8 May 2019. Both parties have submitted an application for re- referral to the mediation proceedings for a period of three months. The court approved application and postponed the hearing without a deadline. Mediation ended without a settlement. On 6 May 2020, the Company received a letter from the Court, containing the mediator's position summarizing the course of mediation, with a request to refer to its content. On 25 May 2020, the Company submitted a response informing the Court about the settlement
83
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
being impossible to reach by the parties. The hearing took place on 20 October 2021. At the end of March 2022, the Company received a letter extending the previous claim by the period from 1 January 2010 to 31 December 2020, the value of the lawsuit was increased by over PLN 120.0. The court set the hearing dates for: 15 December 2023 and 17 April 2024. The hearing on 15 December 2023 has been canceled.
By lawsuit, delivered to the Company on 16 December 2019, the Association of Performing Artists (SAWP) filed two claims against the Company: information claim and claim for payment. The information claim relates to television programs rebroadcasted by the Company in the period from 20 August 2009 to 20 August 2019. In the claim for payment, SAWP claims PLN 153.3 for the alleged violation of related rights to artistic performances of musical and verbal - musical works through their non-contractual cable rebroadcast. The Company filed for the dismissal entirely. The last hearing took place on 17 January 2024 . The hearing was postponed without a date.
42. Other disclosures
Other securities
In connection with the implementation of investment projects by its subsidiaries involving the construction of renewable energy installations, the Company has granted guarantees of significant value for the performance of agreements for the implementation of individual wind farm projects, in particular agreements for the supply and installation of wind turbines concluded with Vestas Poland S.A. and Nordex Poland S.A. As of December 31, 2023, the total value of sureties and guarantees granted to the above-mentioned entities for wind farm projects amounted to EUR 328.3 with expiration dates falling on various dates in 2024-2026. The financial terms of the guarantees or sureties granted do not differ from market conditions.
In addition, the Company granted corporate guarantees and sureties in EUR and USD, which guarantee the trade payables of its subsidiary Polkomtel Sp. z o.o. to its suppliers. As of 31 December 2023, the total value of granted guarantees, converted into PLN at the exchange rate as of the balance sheet date, amounted to PLN 217.4. The guarantees expire 2024-2026. The financial terms of the granted guarantees and warranties do not differ from market terms.
Contractual liabilities related to purchases of non-current assets
Total amount of capital commitments resulting from agreements for property construction and improvements was PLN 14.6 as at 31 December 2023 (PLN 19.2 as at 31 December 2022).
Future contractual obligations
As at 31 December 2023 and 31 December 2022 the Company had future liabilities due to transponder capacity agreements.
The table below presents future payments (in total):
31 December 2023
31 December 2022
within one year
112.8
121.7
between 1 to 5 years
112.8
243.4
Total
225.6
365.1
84
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
43. Remuneration of the Management Board
The table below presents the total of basic remuneration of the Management Board members of the Cyfrowy Polsat S.A. for management functions due from Cyfrowy Polsat S.A. in 2023 and 2022.
Name
Function
2023
2022
Mirosław Błaszczyk
President of the Management Board
0.8
0.8
Maciej Stec
Vice-President of the Management Board
0.4
0.4
Jacek Felczykowski
Member of the Management Board
0.2
0.2
Aneta Jaskólska
Member of the Management Board
0.6
0.6
Agnieszka Odorowicz
Member of the Management Board
0.6
0.6
Katarzyna Ostap-Tomann
Member of the Management Board
0.5
0.5
Total
3.1
3.1
The bonuses payable to each member of the Management Board of the Cyfrowy Polsat S.A. for years 2023 and 2022 from Cyfrowy Polsat S.A. and subsidiaries are presented below:
Name
Function
2023
2022
Mirosław Błaszczyk
President of the Management Board
2.5
2.5
Maciej Stec
Vice-President of the Management Board
1.3
5.0
Jacek Felczykowski
Member of the Management Board
1.5
1.5
Aneta Jaskólska
Member of the Management Board
1.9
1.9
Agnieszka Odorowicz
Member of the Management Board
1.0
0.8
Katarzyna Ostap-Tomann
Member of the Management Board
3.4
2.4
Total
11.6
14.1
The table below presents the remuneration of the Management Board of Cyfrowy Polsat S.A. in 2023 and 2022 from other related companies for management functions:
Name
Function
2023
2022
Mirosław Błaszczyk
President of the Management Board
0.2
0.2
Maciej Stec
Vice-President of the Management Board
-
0.2
Jacek Felczykowski
Member of the Management Board
0.8
0.8
Aneta Jaskólska
Member of the Management Board
0.3
0.3
Katarzyna Ostap-Tomann
Member of the Management Board
0.5
0.5
Total
1.8
2.0
44. The Supervisory Board remuneration
The Supervisory Board receives remuneration based on the resolution of the Extraordinary General Shareholders’ Meeting of Cyfrowy Polsat S.A. dated 5 September 2007. On 29 June 2016 the Annual General Meeting adopted the resolution concerning changes in remuneration of members of the Supervisory Board.
85
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
The table below presents the total remuneration payable to the Supervisory Board members in 2023 and 2022:
Name
Function
2023
2022
Zygmunt Solorz
Chairman of the Supervisory Board
0.24
0.24
Marek Kapuściński
Vice-chairman of the Supervisory Board (until 31 May 2023)
0.08
0.18
Józef Birka
Member of the Supervisory Board
0.18
0.18
Jarosław Grzesiak
Member of the Supervisory Board
0.18
0.18
Marek Grzybowski
Independent Member of the Supervisory Board
0.18
0.18
Tobias Solorz
Member of the Supervisory Board
0.18
0.18
Tomasz Szeląg
Member of the Supervisory Board
0.18
0.18
Piotr Żak
Member of the Supervisory Board
0.18
0.18
Total
1.40
1.50
45. Important agreements and events
Conclusion of financial PPA agreements
In March 2023, Cyfrowy Polsat S.A. entered into so-called financial PPA (Power Purchase Agreement) agreements with PAK-PCE Fotowoltaika Sp. z o.o. and PAK-Volt S.A. regarding electricity generated by a photovoltaic farm in the Brudzew municipality. The financial PPA agreements were concluded for a period of 15 years, with the possibility of termination in certain situations and are effective since April 2023.
In April 2023, Cyfrowy Polsat S.A. entered into so-called financial PPA (Power Purchase Agreement) agreements with Park Wiatrowy Pałczyn 1 Sp. z o.o. and PAK-Volt S.A. regarding electricity generated by a wind farm in the Miłosław municipality. The financial PPA agreements were concluded for a period of 15 years and 6 months and shall be effective since January 2024.
In November 2023, Cyfrowy Polsat S.A. entered into so-called financial PPA (Power Purchase Agreement) agreements with Great Wind Sp. z o.o. and PAK-Volt S.A. regarding electricity generated by a wind farm in the Człuchów municipality. The financial PPA agreements were concluded for a period of 15 years with the possibility of their termination in certain situations, and will take effect from August 2024, with the parties allowing for the possibility of postponing this date to December 2024.
The Company committed in the financial PPA agreements to make financial settlements in order to ensure a fixed price for the sale or purchase of electricity (so-called contract on difference). The settlement price in the financial PPA agreements was established for the first year of the term and will be indexed in subsequent years by the inflation rate, subject to applicable legal regulations specifying the maximum sales price of electricity produced from renewable sources.
86
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Conclusion of annex to the preliminary share purchase agreement concerning PAK- Polska Czysta Energia Sp. z o.o. and the acquisition of shares in PAK-Polska Czysta Energia Sp. z o.o.
On 3 July 2023 Cyfrowy Polsat signed with ZE PAK S.A. (a related company) an annex to the preliminary agreement of 20 December 2021 regarding the Company's acquisition of shares in PAK-Polska Czysta Energia Sp. z o.o.
According to annex, Cyfrowy Polsat and ZE PAK S.A. agreed that the subject matter of the final agreement ("Final Agreement") will be 2,390,600 (not in millions) shares in PAK-Polska Czysta Energia Sp. z o.o. ("PAK-PCE Shares"), representing approximately 10.1% of the share capital of PAK-Polska Czysta Energia Sp. z o.o. and approximately 10.1% of votes at the shareholders' meeting of PAK-Polska Czysta Energia Sp. z o.o. ("Transaction").
In addition, the Company and ZE PAK S.A. agreed that two companies from the PAK-Polska Czysta Energia Sp. z o.o. group: Przedsiębiorstwo Remontowe "PAK Serwis" Sp. z o.o. and PCE-OZE 5 Sp. z o.o. will be transferred to ZE PAK S.A. before closing the Transaction and therefore will not be subject of Transaction.
On 3 July 2023 the Company concluded with ZE PAK S.A. the Final Agreement under which the Company acquired the PAK-PCE Shares from ZE PAK S.A. The final price for the PAK- PCE Shares amounted to PLN 117.0.
Following Transaction and taking into account the shares previously acquired and subscribed for by the Company in PAK-Polska Czysta Energia Sp. z o.o., Cyfrowy Polsat holds approximately 50.5% of the shares in the share capital of PAK-Polska Czysta Energia Sp. z o.o.
Acquisition of shares in Pantanomo Limited
On 3 July 2023 the Company and Tobe Investments Group Limited entered into a share purchase agreement, pursuant to which Cyfrowy Polsat acquired from Tobe Investments Group Limited 4,705 (not in millions) shares in Pantanomo Limited, representing approximately 32% of Pantanomo's share capital.
The purchase price for the Pantanomo Limited shares amounts to PLN 307.2 and will be paid by the Company in instalments, the first instalment in the amount of PLN 107.2 by 31 October 2023, the second instalment in the amount of PLN 100.0 by 30 April 2024, and the remaining part of the price in the amount of PLN 100.0 will be paid by 31 October 2024.
Sale of shares in Asseco Poland S.A.
On 21 September 2023, as part of the share buyback announced by Asseco Poland S.A., the Company sold 10,642,046 (not in million) ordinary bearer shares of Asseco Poland S.A. The total proceeds from the sale of shares, reduced of transaction costs, amounted to PLN 850.5.
Provision of guarantees for the implementation of wind power plants "Drzeżewo I-IV"
On 2 October 2023 in connection to realization of the wind power plant project „Drzeżewo I- IV”, the company Eviva Drzeżewo Sp. z o.o. (the Company subsidiary) entered into a contract with Vestas Poland Sp. z o.o. for the supply of turbines, their installation, and commissioning, as well as a service agreement for maintenance work and a guarantee of availability of the
87
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
aforementioned turbines by Vestas Poland Sp. z o.o. for a period of 15 years from the date of commissioning.
Decision of the Head of the Małopolska Tax Office in Cracow
On 15 February 2018 the Head of the Małopolska Tax Office in Cracow (“Tax Office”) issued the decision assessing the tax liability from uncollected withholding corporate income tax in 2012 in the amount of PLN 24.2 increased by interest on tax arrears.
In the issued decision the Tax Office contested the Company’s right to an exemption from the obligation to withhold income tax on certain interest payments in 2012. The Company appealed against the decision of the Tax Authority on the basis of acquired opinions issued by renowned entities. The Company has not created any provisions encumbering its financial results.
On 10 July 2018 the Tax Office upheld the previous decision dated 15 February 2018. The Company does not agree with the decision of the Tax Office in question and appealed against it to the Voivodship Administrative Court in Cracow. The Voivodship Administrative Court in Cracow dismissed the complaint in the ruling as of 21 February 2019. The Company does not agree with this decision and filled a cassation complaint to the Supreme Administrative Court in Warsaw. The Supreme Administrative Court upheld the complaint and transferred the case to the Voivodship Administrative Court for re-examination in its decision on 17 August 2022. The Voivodship Administrative Court, at the hearing on 15 March 2023, revoked the decision of the Head of the Małopolska Tax Office in Kraków and referred the case for reconsideration by this authority. On 23 January 2024, the Company received the decision of the tax authority discontinuing the proceedings in the case.
The Tax Office control activities in the aforesaid matter were in progress in relation to 2013 and 2014.
The Head of the Małopolska Tax Office in Cracow issued a decision on 19 July 2019 in respect to the year 2013. The decision assessed the Company’s tax liability from uncollected withholding corporate income tax in 2013 in the amount of PLN 25.1 increased by interest on tax arrears. The Company appealed against the decision, but on 14 February 2020 the Tax Authority maintained its position. The Company filed a complaint against the decision to the Administrative Court. On 15 October 2020, the Voivodship Administrative Court in Cracow dismissed the complaint. The Company, based on the opinions of reputable advisers, does not agree with the court's decision and filed a cassation appeal to the Supreme Administrative Court in Warsaw. The Supreme Administrative Court, at the hearing on 10 January 2024, dismissed the judgements of the first instance court and the decisions of the Head of the Małopolska Tax Office in Cracow issued in these cases in the second instance. Company is waiting for the above-mentioned actions of tax authority consuming the court's position and guidelines. The Company has not created any provisions encumbering its financial results.
The Head of the Małopolska Tax Office in Cracow issued a decision on 20 September 2019 in respect to the year 2014. The decision assessed the Company’s tax liability from uncollected withholding corporate income tax in 2014 in the amount of PLN 1.7 increased by interest on tax arrears. The Company appealed against the decision of the Tax Authority. In a second instance decision issued on 8 June 2020, the Tax Authority fully maintained its position. The Company filed a complaint against the decision to the Administrative Court. On 20 October 2020, the Voivodship Administrative Court in Cracow dismissed the complaint. The Company, based on the opinions of reputable advisers, does not agree with the court's decision and filed a cassation appeal to the Supreme Administrative Court in Warsaw. The Supreme Administrative Court, at the hearing on 10 January 2024, dismissed the judgments of the first instance court and the decisions of the Head of the Małopolska Tax Office in Cracow issued in these cases in the second instance. Company is waiting for the above-mentioned
88
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
actions of tax authority consuming the court's position and guidelines. The Company has not created any provisions encumbering its financial results.
46. Events subsequent to the reporting date
Early redemption of Series B and C Bonds
On 17 January 2024 the Management Board has decided to carry out an early redemption (”Early Redemption”) of all bonds outstanding:
• PLN 223,798 (not in millions) Series B bearer bonds with a total nominal value of PLN 223.8 issued by the company on 26 April 2019 with redemption date set for 24 April 2026 and
• PLN 88,053 (not in millions) Series C bearer bonds with a total nominal value of PLN 88.1 issued by the Company on 14 February 2020 with redemption date set for 12 February 2027.
Early redemption was executed by the Company on 5 February 2024 by payments:
• for each series B bond, the cash amount at its nominal value, i.e. PLN 1,000 (not in millions), plus accrued interest of PLN 20.46 (not in millions) and
• for each series C bond, the cash amount at its nominal value, i.e. PLN 1,000 (not in millions), plus accrued interest of PLN 39.41 (not in millions) and bonus for Early Redemption in amount of PLN 5.00 (not in millions).
In connection with the Early Redemption, all Series B bonds and Series C bonds were cancelled.
47. Judgments, financial estimates and assumptions
The preparation of financial statements in conformity with IFRS EU requires the Management Board to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and costs. Estimates and underlying assumptions are based on historical data and other factors considered as reliable under the circumstances, and their results provide grounds for an assessment of the carrying amounts of assets and liabilities which cannot be based directly on any other sources. Actual results may differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The most significant estimates and assumptions made primarily related to the following:
• Classification of lease agreements
In the case of contracts where the Company acts as a lessor, the Company classifies leasing agreements as operating or financial based on the assessment as to what extent the risks and rewards incidental to ownership of a leased asset lie with the lessor or the lessee. The assessment is based on the economical substance of each transaction. The Company concludes agreements for the rental of reception equipment (set-top boxes, modems and routers) to its customers in the course of its business operations. These lease agreements are classified as operating leases as the Company holds substantially all the risks and rewards incidental to ownership of the reception equipment. For more information see note 34.
• Lease term
For agreements which meet the lease definition, the Company determines the lease term as the non-cancellable period of a lease, together with both: periods covered by an option to
89
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
extend the lease if the lessee is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. While determining the lease term, the Company considers all relevant facts and circumstances, which could indicate that the Company will exercise the option to extend the lease. A lessee has to reassess an extension option upon the occurrence of either a significant event or significant change in the circumstances that are within the control of the lessee. In terms of contracts with an indefinite period, the lease term is determined based on a professional judgment regarding the contract term. The Company estimates lease term to be 2 years for point of sale agreements with indefinite periods.
• Discount rate used by the lessee
Discount rate is understood as the interest rate implicit in the lease (if that rate can be readily determined) or the incremental borrowing rate of the Company, determined as the cost of interest on the loan, which the Company would have to incur when taking a loan to purchase a given asset with adequate security. The incremental borrowing rate can be defined as the sum of the risk free rate and the Company’s credit risk premium. Discount rates applied by the Company take into account the maturity and the currency of lease contracts.
• Depreciation rates of property, plant and equipment and intangible assets with definite useful lives
Depreciation rates are based on the expected economic useful lives of property, plant and equipment (including reception equipment provided to customers under lease agreements) and intangible assets. The expected economic useful lives are reviewed on an annual basis based on current estimates.
The process of verification also accounts for climatic factors, including physical and transition risks. In particular, the Company defines whether the climate-related legislation and regulations can potentially have impact on the useful life of assets, e.g. by introducing bans, restrictions, or by imposing additional requirements, such as energy performance with regard to the Company’s buildings.
The economic useful lives of the set-top boxes rented to customers under operating lease agreements are estimated for 5 years, modems and routers 3 years. For information on the useful lives of property, plant and equipment, programming assets and other intangible assets with definite useful lives see notes 5i and 5j. For information on the depreciation charge for the period by the category of property, plant and equipment and intangible assets with definite useful lives and right-of-use assets see notes 15, 17 and 18.
• The impairment of goodwill
The Company performed impairment test on goodwill arising on the acquisition of M.Punkt Holdings and Redefine. The impairment test was based on the value-in-use calculations of the “B2C and B2B Services” cash-generating unit to which the goodwill has been allocated on the initial recognition. The value-in-use calculations included estimation of discounted cash flows for the given cash-generating unit. The value of goodwill tested at each cash-generating unit, the key assumptions used in the value-in-used calculations for each cash-generating unit, test results and sensitivity analysis of reasonably possible changes in the key assumptions are presented in note 16.
• The impairment of investment in subsidiaries
The Company analyzed whether any indicators of potential impairment of investments in subsidiaries exist as at the balance sheet date. The analysis did not indicate such impairment indicators (with the exception of recognised impairment loss of shares in Karpacka Telewizja Kablowa Sp. z o.o., Vindix S.A. and Esoleo Sp. z o.o.). Impairment value of shares in Karpacka Telewizja Kablowa Sp. z o.o., Vindix S.A. and Esoleo Sp. z o.o. are presented in note 20.
90
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
• The impairment of non-financial non-current assets
As at the reporting date the Company has assessed whether there are any indications that intangible and tangible assets with definite useful lives may be impaired. The impairment loss recognised equals the difference between net book value and recoverable amount.
It is also climatic factors, such as climate-related legislation, that can affect the residual value of fixed assets. Additionally, extreme weather such as thunderstorms, torrential rains or hurricanes can cause damage to the broadcasting infrastructure, the antenna dishes in particular. Nonetheless these antennas are designed and built in a way to allow the antenna dishes to withstand hurricane-force winds. Hence even hurricanes, which have become more frequent in Poland, should not cause damage to antenna dishes.
At the same time, weather phenomena, which are accompanied by heavy clouds which accumulate big volumes of water, can interfere with satellite signal transmission. Bearing such threats in mind, two redundant transmission centers were built – in Warsaw and in Radom. If weather conditions are unfavorable in one location, the other one will seamlessly take over. The solution can also help continue trouble-free operations in case of other problems (e.g. persisting power outages).
The amounts of depreciation and amortization charges are presented in notes 15 and 17. As of 31 December 2023 no reasons existed which could lead to impairment of fixed assets due to climate-related factors.
• Impairment of receivables
The value of receivables is updated taking into account the expected credit losses for trade receivables and contract assets in the amount corresponding to the expected credit losses throughout the life of the instrument. The amount of expected losses is calculated on the basis of historical data regarding the repayment of receivables and the effectiveness of debt collection, taking into account current expectations regarding the future development of these parameters. For more information see notes 5m, 26 and 37.
• Provisions for pending litigation
During the normal course of its operations the Company participates in several court proceedings, usually typical and repeatable and which, on an individual basis, are not material for the Company, its financial standing and operations. The provisions are estimated based on the court documentation and the expertise of the Company’s lawyers who participate in the current litigations and who estimate Company’s possible future obligations taking the progress of litigation proceedings into account. The Company also recognizes provisions for potential unreported claims resulting from past events, should the Management Board find that the resulting outflow of economic benefits is likely. Provisions regarding probable claims are recognized as a result of Management Board’s estimates based on accessible information regarding market rates for similar claims. Management believes that the provisions as at 31 December 2023 are sufficient to cover potential future outflows and the adverse outcome of the disputes will not have a significant negative impact on the Company’s financial situation.
• Deferred tax
Deferred taxes are recognised for all temporary differences, as well as for unused tax losses, except for the cases excluding recognition in accordance with IAS 12 and taking into account the possibility of deferred tax asset realization. The key assumption in relation to deferred tax accounting is the assessment of the expected timing and manner of realization or settlement of the carrying amounts of assets and liabilities held at the reporting date. In particular, assessment is required of whether it is probable that there will be suitable future taxable profits against which any deductible temporary differences can be utilized. At the end of the reporting period unrecognised deferred tax assets are re-assessed. A previously unrecognised deferred
91
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
tax asset is recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. For further details refer to notes 5v and 12.
• Fair value of financial instruments
Fair value of financial instruments for which there is no active market is estimated using appropriate techniques of measurements. The techniques are chosen based on the professional judgment. For more information about the method of establishing the fair value of financial instruments and key assumption made see note 5g.
• Loan liabilities measured at amortised cost
The Term Facility and the Revolving Facility bear interest at a variable rate equal to WIBOR/EURIBOR for the relevant interest period plus margin. The margin on the Term Facility and the Revolving Facility depends on the ratio of net consolidated indebtedness to consolidated EBITDA and on reaching by the capital group Cyfrowy Polsat S.A. particular targets regarding green energy production and utilization of zero-emission energy by the group companies. Accordingly, the Company’s management classifies loan liabilities as variable rate instruments.
• Valuation of Financial PPA contracts
Financial PPAs are valued at fair value through profit or loss. The fair value of financial PPAs for which there is no active market is determined using appropriate valuation techniques. The Company uses judgment in selecting appropriate assumptions. The valuation model takes into account (i) technical data from market reports on the seasonality of renewable energy production, (ii) market prices based on futures contracts on POLPX with maturities of up to 2 years (iii) expert energy price paths for periods of more than 2 years available from an external party, (iv) inflation forecasts published by the National Bank of Poland, (v) a discount rate based on the market interest rate curve adjusted for counterparty credit risk.
• Climatic issues and impact on financial statements
Being aware of the importance and the scale of climatic changes, while using various scenarios the Company carried out the analysis of the climate-related risks affecting its own operations, as well as the operations of the Company’s capital group as a whole. The full analysis of climate-related risk factors, including analysis of climate-development scenarios and the climate resilience of the business models used in respective segments of the Group’s operations, is found in the Sustainability Report of Polsat Plus Group for 2023.
• Presentation of Asseco Poland S.A. shares
Asseco Poland S.A. shares are presented as long-term assets due to the fact that they are not regarded as held for sale.
92
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
Financial results for the 3 months ended 31 December 2023 and 31 December 2022
48. Income Statement
for the 3 months ended
31 December 2023 unaudited
31 December 2022 unaudited
Revenue
557.5
593.8
Operating costs
(538.1)
(528.8)
Other operating income/(costs), net
0.6
2.2
Profit from operating activities
20.0
67.2
Gain/(loss) on investment activities, net
(136.6)
43.9
Finance costs, net
(40.8)
(66.2)
Gross profit/(loss) for the period
(157.4)
44.9
Income tax
27.1
(3.6)
Net profit/(loss) for the period
(130.3)
41.3
Basic and diluted earnings/(loss) per share (in PLN)
(0.24)
0.07
49. Statement of Comprehensive Income
for the 3 months ended
31 December 2023 unaudited
31 December 2022 unaudited
Net profit/(loss) for the period
(130.3)
41.3
Items that may not be reclassified subsequently to profit or loss :
Actuarial gain/(loss)
(0.6)
0.7
Items that may be reclassified subsequently to profit or loss :
Valuation of hedging instruments
1.1
(13.0)
Other comprehensive income/(loss), net of tax
0.5
(12.3)
Total comprehensive income/(loss) for the period
(129.8)
29.0
93
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
50. Revenue
for the 3 months ended
31 December 2023 unaudited
31 December 2022 unaudited
Retail revenue
512.8
540.5
Wholesale revenue
19.0
21.2
Sale of equipment
2.7
9.3
Other revenue
23.0
22.8
Total
557.5
593.8
51. Operating costs
for the 3 months ended
Note
31 December 2023 unaudited
31 December 2022 unaudited
Content costs
215.8
217.1
Technical costs and costs of settlements with telecommunication operators
107.4
114.6
Distribution, marketing, customer relation management and retention costs
85.5
71.6
Depreciation, amortization, impairment and liquidation
46.5
43.7
Salaries and employee-related costs
a)
49.9
49.2
Cost of equipment sold
1.1
6.3
Cost of debt collection services and bad debt allowance and receivables written off
2.1
1.1
Other costs
29.8
25.2
Total
538.1
528.8
a) Salaries and employee related costs
for the 3 months ended
31 December 2023 unaudited
31 December 2022 unaudited
Salaries
40.8
42.7
Social security contributions
5.7
5.1
Other employee-related costs
3.4
1.4
Total
49.9
49.2
94
Cyfrowy Polsat S.A.
Financial Statements for the year ended 31 December 2023
(all cash amounts presented in text are in million with currency specification, all amounts are in PLN million, except where otherwise stated)
52. Gain/(loss) on investment activities, net
for the 3 months ended
31 December 2023 unaudited
31 December 2022 unaudited
Share in the profits of partnerships
0.3
21.2
Interest income on loans granted
52.9
17.0
Other interest income
19.3
10.3
Exchange rate differences
(122.4)
(9.2)
Estimated future losses
(75.2)
-
Other
(11.5)
4.6
Total
(136.6)
43.9
53. Finance costs, net
for the 3 months ended
31 December 2023 unaudited
31 December 2022 unaudited
Interest expense on loans and borrowings
42.5
28.0
Interest expense on issued bonds
98.2
44.6
Exchange rated differences on loan valuation
(102.5)
-
Valuation and realization of hedging instruments
(0.6)
(8.3)
Guarantee fees
2.7
1.5
Bank and other charges
0.5
0.4
Total
40.8
66.2