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Cyfrowy Polsat in 2013

In 2013, the Cyfrowy Polsat Group continued to consistently implement its strategy, both in the area of services to residential customers and in the TV production and broadcasting segment.
On November 14th, Cyfrowy Polsat entered into an agreement to acquire a majority equity interest (83.8%) in Metelem Holding Company Limited, owner of Polkomtel, the Plus mobile telephony network operator, in exchange for Cyfrowy Polsat shares. It was an event of key importance to the Group: following completion of the transaction it will become one of the largest companies in Poland and a leading media and telecommunications group in the region.

The merger will create new opportunities for the distribution of TV programming content and further development of telecommunications services, launched by Cyfrowy Polsat in 2008. As a result, the broad array of Cyfrowy Polsat’s services and attractive programming content will be supplied through a wide range of highly reliable distribution channels – including satellite (DTH), digital terrestrial television (DVB-T), or 3G, 4G and LTE mobile technologies, to all client devices – from TV sets and personal computers to tablets and smartphones. Our unique service portfolio will be offered concurrently to both operators’ customers. Currently, work has started to integrate the two companies and develop a joint offering.

On February 18th 2014, Cyfrowy Polsat and Plus launched a joint scheme addressed to their customers – smartDOM. In its first phase, customers could bundle such products as TV, LTE broadband Internet access and telephony, and save PLN 10 a month on each new agreement they signed for any service from the product portfolios of both operators. Banking services offered by Plus Bank and electricity services were added in the next phases of the scheme. Joanna Brodzik and Paweł Wilczak, an authentic and credible pair of actors who are a well-tuned couple both in real life and on screen, have been chosen to be the ambassadors of the smartDOM project.

2013 also saw a number of other events which contributed strongly to the excellent operating performance and development of the Group.

In 2013, the coverage of our broadband Internet access services expanded significantly, translating into a substantial increase in the number of subscribers. Following the expansion of our partners’ networks, from the end of 2012 to the end of 2013 the coverage of LTE grew from 35.14% to about 67% of Poland’s population, while the coverage of HSPA/HSPA+ broadband Internet access expanded from 91% to almost 100%. We further improved our Internet-related offering by adding devices enabling data transfer with speeds of up to 150 Mbps (such as the Huawei Media Pad 10 FHD tablet), and introducing new Taryfy Multimedialne tariffs, which offer access to selected Internet content, including websites, video services and social networking sites, without reducing the number of gigabytes from the subscriber’s data package.

Our IPLA online television recorded strong growth in 2013. As part of dedicated service packages, Plus network subscribers can now watch online TV on their smartphones and tablets. Access to IPLA’s pay content under the IPLA application was also provided to the users of Cyfrowy Polsat set-top boxes. In addition, IPLA’s offering was further developed to include many new productions of the world’s largest film studios.

The TV production and broadcasting segment steadily pursued the strategy of competing effectively on the advertising market and maintaining our channels’ audience shares at 20-21% in the target group. On August 30th 2013, we finalised Telewizja Polsat’s acquisition of Polskie Media, which broadcasts TV4 and TV6 channels. With the acquisition of Polskie Media, Cyfrowy Polsat Group has made a strategic move towards strengthening the market position of Telewizja Polsat. It opens up opportunities for increasing the advertising revenue by leveraging the growing coverage and a stronger negotiating position of the Group, and offers synergies in: programming access and use, technical aspects, advertising, marketing and cross-promotions, as well as back-office assets.

At the same time, we also finalised Telewizja Polsat’s sale of RS TV to EmiTel, in line with our plans to focus the Group’s activities on two primary segments, namely services to residential customers, and TV production and broadcasting.

The effectiveness of our strategy and operations can be seen in the consistent improvement of our operating performance, which translated directly into the Group’s best ever financial results and an increase in the Company’s shareholder value.

RESIDENTIAL BUSINESS SEGMENT

  • The number of subscribers to our pay TV services is stable at around 3.54 million, representing more than 32% of the Polish market for pay TV.
  • The number of Internet subscribers increased 56% year on year, to 235 thousand.
  • High definition set-top boxes are used by 83% of Cyfrowy Polsat subscribers.
  • The Multiroom HD service is used by almost 19% of our subscribers (more than 660 thousand).
  • In 2013, ARPU of the Family Package increased 4.9%, to PLN 48.9, while ARPU of the Mini Package stood at PLN 13.1.
  • In 2013, the average monthly number of IPLA users (website and application) was approximately 3.9m.
  • Subscriber churn rate was stable at 9.5% for the 12 months ended December 31st 2013.
  • The number of VOD/PPV transactions was 1.1m in 2013, and since the launch of the service – 4.6m.

TV PRODUCTION AND BROADCASTING SEGMENT

  • The audience share of the Telewizja Polsat Group channels stood at 21.1%.
  • POLSAT, our flagship channel, was at the top of the ratings with a 13.5% audience share.
  • Polsat’s share of the thematic channels audience grew to 7.6%.
  • According to our estimates, in 2013 we had a 24.1% share of the Polish TV advertising market, which is valued at approximately PLN 3.3bn.
KPI 2013 2012 % change
Residential business segment
Period-end number of pay TV subscribers 3,535,045 3,566,144 -0.9%
Subscriber churn rate 9,5% 8,6% 0.9 pp
Average revenue per user (ARPU) (PLN) 40,50 39,30 3.1%
Period-end number of mobile telephony customers 131,626 144,887 -9.2%
Period-end number of broadband customers 234,625 150,199 56.2%
TV production and broadcasting segment
Telewizja Polsat Group’s audience share 21.1% 20.5% 2.9%
Core channel’s audience share 13.5% 15.7% -14.0%
Thematic channels’ audience share 7.6% 4.8% 58.0%
Share in TV advertising market 24.1% 23.2% 4.1%

Effect of acquisitions on the Group’s financial performance

As in 2012, the financial results of the companies acquired by the Group, i.e. INFO-TV-FM Sp. z o.o., Grupa Redefine Sp. z o.o., Netshare Sp. z o.o., Frazpc.pl Sp. z o.o. and Gery.pl Sp. z o.o. (‘the entities acquired in 2012′) were consolidated from January 30th (INFO-TV-FM) and from April 2nd (the other companies), and the results of Polskie Media S.A. have been consolidated since September 1st 2013, our performance figures for 2013 and Q4 2013 are not fully comparable with the results for the corresponding periods of 2012. To ensure data comparability between 2013 and 2012, we have eliminated the effect of consolidation of the entities acquired in 2012 and the effect of consolidation of Polskie Media S.A. Additionally, for the purpose of comparison of the Q4 2013 and Q4 2012 results, we have eliminated the effect of consolidation of Polskie Media. However, the sale of RS TV on August 30th 2013 has not been eliminated in the analyses presented below, as the event had little effect on data comparability.

Revenue of the Cyfrowy Polsat Group

Revenue 2013 vs 2012

revenues_2013

Source: Consolidated financial statements for the financial year ended December 31st 2013 and in-house analyses.
¹ Including gain on disposal on RS TV (a subsidiary of TV Polsat).

Revenue structure (2013)

Revenue (all figures in PLN ’000)

Total revenue from sale of services, goods, merchandise and materials increased by PLN 132,544 (or 4.8%) year on year, from PLN 2,778,215 in 2012 to PLN 2,910,759 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., total revenue grew by PLN 102,937 (or 3.7%) year on year, from PLN 2,765,691 in 2012 to PLN 2,868,628 in 2013. The revenue improved on the back of the factors presented below.

Revenue from residential subscriptions (all figures in PLN ’000)

Revenue from residential subscriptions went up by PLN 96,896 (or 5.6%), from PLN 1,734,798 in 2012 to PLN 1,831,694 in 2013. Consolidation of the entities acquired in 2012 and of Polskie Media S.A. did not have any material impact on our revenue from residential subscriptions. This increase was mainly caused by: (i) higher subscription fees from subscribers to our DTH services and recognition of revenue from online TV services (no such revenue had been reported in the comparative period), and (ii) higher revenue from telecommunications services and traffic.

Advertising and sponsorship revenue (all figures in PLN ’000)

Advertising and sponsorship revenue increased by PLN 17,270 (or 2.0%), from 852,580 in 2012 to PLN 869,850 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., advertising and sponsorship revenue decreased by PLN 25,270 (or 3.0%) year on year, from PLN 837,595 in 2012 to PLN 812,325 in 2013. This decrease resulted mainly from reduced advertising revenue of Telewizja Polsat Group.

Revenue from cable and satellite operator fees (all figures in PLN ’000)

Revenue from cable and satellite operator fees grew by PLN 3,662 (or 3.9%), from PLN 93,660 in 2012 to PLN 97,322 in 2013, driven primarily by the expanded distribution of Telewizja Polsat channels. Consolidation of the entities acquired in 2012 and of Polskie Media S.A. did not have any material impact on the revenue from cable and satellite operator fees.

Revenue from sale of equipment (all figures in PLN ’000)

Revenue from sale of equipment went up by PLN 22,936 (or 122.2%), from PLN 18,770 in 2012 to PLN 41,706 in 2013. This increase resulted primarily from lower revenue from sale of DVB-T reception equipment for our Mobile TV service, and a significant growth in revenue from sale of laptop computers and tablets following the launch of instalment sales (this revenue had been low in the comparative period). Consolidation of the entities acquired in 2012 and of Polskie Media S.A. did not have any material impact on the revenue from the sale of equipment.

Other revenue (all figures in PLN ’000)

Other revenue went down by PLN 8,220 (or 10.5%), from PLN 78,407 in 2012 to PLN 70,187 in 2013. This decrease was mainly due to the acquisition and consolidation of Polskie Media S.A., as we had recognised revenue from sale of broadcasting and signal transmission services to this company in the comparative reporting period. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., other revenue increased by PLN 5,108 (or 6.2%) year on year, from PLN 82,707 in 2012 to PLN 87,815 in 2013.

Operating costs

Costs: 2013 vs 2012

koszty_21031

Cost structure (2013)

Source: Consolidated financial statements for the financial year ended December 31st 2013 and in-house analyses.
Note (1) One-off decrease in costs of PLN 25.4m recognised in 2012, resulting from Telewizja Polsat’s arrangement with copyright collectives.

Our operating costs increased by PLN 186,007 (or 9.4%) year on year, from PLN 1,971,663 in 2012 to PLN 2,157,670 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., total operating costs grew by PLN 196,984 (or 10.1%) year on year, from PLN 1,940,924 in 2012 to PLN 2,137,908 in 2013. The costs increased on the back of the factors presented below (all figures in PLN ’000).

Programming costs

Programming costs increased by PLN 47,452 (or 13.2%) year on year, from PLN 360,311 in 2012 to PLN 407,763 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., programming costs grew by PLN 71,034 (or 19.6%) year on year, from PLN 362,939 in 2012 to PLN 433,973 in 2013. The growth was attributable to a number of factors, notably: (i) exchange rate fluctuations resulting in lower costs, (ii) other factors, including increased royalties paid by Telewizja Polsat to copyright collectives in 2013; the company had agreements signed with those organisations for a one-off reduction of those costs in 2012, and (iii) increased cost of DTH licence related to addition of new channels to new programme packages, with a view to building strong ARPU in the future.

Costs of internal and external TV production and amortisation of sports broadcasting rights

Costs of internal and external TV production and amortisation of sports broadcasting rights went up by PLN 33,709 (or 9.6%), from PLN 351,489 in 2012 to PLN 385,198 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., the costs increased by PLN 29,956 (or 8.5%) year on year, from PLN 350,910 in 2012 to PLN 380,866 in 2013. This increase resulted primarily from higher costs of internal TV production for the core POLSAT channel, mainly due to introduction of new programmes and higher cost of sports broadcasting rights.

Distribution, marketing, customer relation management and retention costs

Distribution, marketing, customer relation management and retention costs increased by PLN 19,237 (or 6.2%) year on year, from PLN 312,723 in 2012 to PLN 331,960 in 2013. This increase was caused primarily by higher cost of distribution of DVB-T reception equipment for our Mobile TV service, whose distribution continued on the large scale until the end of July 2013, and by more effective retention programmes, which will have a positive impact on the Group’s performance in the future. Consolidation of the entities acquired in 2012 and of Polskie Media S.A. did not have any material impact on those costs.

Amortisation and depreciation, disposals and impairment

Amortisation, depreciation, disposal and impairment costs grew by PLN 13,350 (or 5.5%), from PLN 243,066 in 2012 to PLN 256,416 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., the costs increased by PLN 13,224 (or 5.5%) year on year, from PLN 239,552 in 2012 to PLN 252,776 in 2013. The increase in the cost of amortisation, depreciation, impairment and disposals was driven by a sharp rise in the number of set-top boxes, modems, set-top box hard drives and routers provided to subscribers (recognised as property, plant and equipment), as well as lower impairment of set-top boxes.

Salaries and employee-related costs

Salaries and employee-related costs were PLN 178,626 in 2013, almost flat on 2012 (up 0.1%). Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., the costs were PLN 173.519 and remained relatively unchanged on 2012 (up 0.6%).

Signal transmission costs

Signal transmission costs increased by PLN 3,554 (or 2.4%), from PLN 149,731 in 2012 to PLN 153,285 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., signal transmission costs decreased by PLN 10,779 (or 7.6%) year on year, from PLN 140,911 in 2012 to PLN 130,132 in 2013. This was mainly caused by lower costs of analogue terrestrial broadcasting and higher costs of terrestrial digital signal transmission.

Amortisation charges on film licences

Amortisation charges on film licenses were up by PLN 21,935 (or 19.6%), from PLN 112,107 in 2012 to PLN 134,042 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., amortisation charges on film licences increased by PLN 15,677 (or 14.2%) year on year, from PLN 110,530 in 2012 to PLN 126,207 in 2013. This increase was attributable mainly to higher cost of films broadcast on the core POLSAT channel.

Mobile traffic and interconnect fees

Mobile traffic and interconnect fees grew by PLN 33,802 (or 76.6%), from PLN 44,110 in 2012 to PLN 77,912 in 2013. The increase was mainly caused by a dynamic growth in the number of subscribers and higher average usage of data packages under our broadband service. Consolidation of the entities acquired in 2012 and of Polskie Media S.A. had no effect on the mobile traffic and interconnect fees.

Cost of equipment sold

Cost of equipment sold increased by PLN 27,762 (or 76.8%), from PLN 36,152 in 2012 to PLN 63,914 in 2013. The increase resulted chiefly from higher cost of sale of DVB-T reception equipment for our Mobile TV service, laptops, tablets and set-top boxes, following a major increase in their sales volume. Consolidation of the entities acquired in 2012 and of Polskie Media S.A. had no effect on those costs.

Costs of debt collection, recognition of impairment losses on receivables and receivables written off

Costs of debt collection, recognition of impairment losses on receivables and receivables written off increased by PLN 720 (or 2.6%) year on year, from PLN 27,457 in 2012 to PLN 28,177 in 2013. Consolidation of the entities acquired in 2012 and of Polskie Media S.A. did not have any material impact on those costs.

Other costs

Other costs decreased by PLN 15,767 (or 10.1%), from PLN 156,144 in 2012 to PLN 140,377 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., other costs decreased by PLN 4,354 (or 3.0%) year on year, from PLN 144,097 in 2012 to PLN 139,743 in 2013.

Other operating income/(cost), net

In 2013, net other operating income amounted to PLN 36,764, while in 2012 net other operating income and costs amounted to PLN (17,373). Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., net other operating income and costs amounted to PLN 36,217 in 2013, against PLN (17,649) in 2012. The increase was chiefly attributable to the recognition of a one-off gain on disposal of RS TV.

Gains and losses on investing activities

Gains and losses on investing activities increased by PLN 1,705 year on year, from PLN 14,353 in 2012 to PLN 16,058 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., gains and losses on investing activities were PLN 16,260 in 2013, having decreased PLN 1,809 year on year. This decrease was mainly due to a net effect of: (i) lower net interest income in 2013 and (ii) higher other foreign exchange gains in 2013.

Finance costs

Finance costs increased by PLN 105,232 year on year (or 95.0%), from PLN 110,782 in 2012 to PLN 216,014 in 2013. The increase was attributable to a number of factors, including a foreign exchange loss on valuation of Senior Notes recognised in 2013 vs a foreign exchange gain reported under this item in 2012, partially offset by lower interest on a credit facility extended under the Senior Facilities Agreement, which resulted from the lower nominal amount of the credit facility as per the repayment plan, prepayment of PLN 200,000 in August 2012, and two prepayments made in 2013 in the total amount of PLN 200,000, as well as a lower interest rate (lower WIBOR and bank margin, in accordance with the margin reduction mechanism linked to the reduction of the net debt/EBITDA ratio). Consolidation of the entities acquired in 2012 and of Polskie Media S.A. did not have any material impact on finance costs.

Net profit (all figures in PLN ’000)

Net profit decreased by PLN 72,853 (or 12.2%) year on year, from PLN 598,298 in 2012 to PLN 525,445 in 2013.

EBITDA and EBITDA margin (all figures in PLN ’000)

EBITDA was PLN 1,046,269 in 2013, having remained broadly flat relative to PLN 1,032,245 in 2012. EBITDA margin decreased from 37.2% in 2012 to 35.9% in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., EBITDA decreased by PLN 26,957 (or 2.6%) year on year, from PLN 1,046,670 in 2012 to PLN 1,019,713 in 2013. Net of the effect of consolidation of the entities acquired in 2012 and of Polskie Media S.A., EBITDA margin decreased from 37.8% in 2012 to 35.5% in 2013.

Capital expenditure (all figures in PLN ’000)

Our capital expenditure amounted to PLN 91,177 in 2012 and PLN 122,886 in 2013. The capital expenditure to revenue ratio was 3.3% in 2012 and 4.2% in 2013. In 2013, capital expenditure related chiefly to the maintenance, modification and upgrade of IT systems, modernisation and construction/installation projects, purchase of technical and IT equipment, and payments to the National Broadcasting Council (KRRiT) for the licence to broadcast the core POLSAT channel and the Polsat Sport News channel.

Cash flows

12 months ended December 31st
2013 2012
Net cash from operating activities 802.659 781.367
Net cash used in investing activities (133.837) (133.431)
Net cash used in financing activities (596.464) (653.347)
Net change in cash 72.358 (5.411)

Cash flows from operating activities (all figures in PLN ’000)

In 2013, net cash flows from operating activities were positive and totalled PLN 802,659, mainly on the back of the net profit of PLN 525,445, adjusted for a number of factors, including in particular: (i) amortisation, depreciation, impairment and disposal, amortisation charges on film licences and sports broadcasting rights; (ii) interest expense; (iii) income tax and change in receivables and other assets; (iv) higher net value of reception equipment under operating lease; and (v) change in liabilities, provisions and deferred income. Net cash from operating activities reached PLN 781,367 in 2012, mainly on the back of the net profit of PLN 598,298, adjusted for a number of factors, including in particular: (i) amortisation, depreciation, impairment losses and disposal, interest expense and income tax; (ii) amortisation charges on film licences and sports broadcasting rights; (iii) payments for film licences and sports broadcasting rights; (iv) higher net value of reception equipment under operating lease; (v) net foreign exchange gains; (vi) increase in receivables and other assets; and (vii) change in liabilities, provisions and deferred income.

Cash flows from investing activities (all figures in PLN ’000)

In 2013, net cash used in investing activities totalled PLN 133,837. The amount was chiefly attributable to the acquisition of property, plant and equipment, intangible assets and shares in Polskie Media S.A. (net of cash acquired), and the sale of 100% interest in RS TV S.A. In 2012, net cash used in investing activities totalled PLN 133,431. The amount was primarily attributable to the acquisition of property, plant and equipment, intangible assets and shares in subsidiaries (net of cash acquired).

Cash flows from financing activities (all figures in PLN ’000)

Net cash flows from financing activities in 2013 were negative at PLN 596,464, and were attributable mainly to prepayments under a term loan facility (totalling PLN 200,000), scheduled repayment of the principal and interest, and repayment of a credit facility of Polskie Media S.A. acquired in 2013. In 2012, net cash used in financing activities stood at PLN 653,347. The amount was chiefly attributable to voluntary prepayment and scheduled repayments of principal under a credit facility, and repayment of a credit facility taken over upon the acquisition of companies of the Redefine Group, in the aggregate amount of PLN 453,324, as well as payment of commission fees and interest on credit facilities, loans, notes and finance leases, totalling PLN 195,934.

Balance sheet

The table below presents key changes to the Group’s balance sheet in 2013.

CYFROWY POLSAT GROUP

CONSOLIDATED BALANCE SHEET (PLN ’000) Dec 31 2013 Dec 31 2012 % change
ASSETS
Total non-current assets 4,455,845 4,476,148 -0.5%
Reception equipment 407,579 420,060 -3.0%
Other property, plant and equipment 251,152 276 407 -9,1%
Goodwill 2,602,804 2,568,033 1.4%
Brands 890,800 847,800 5.1%
Other intangible assets 137,401 81,380 68.8%
Non-current programming assets 71,571 97,988 -27.0%
Total current assets 1,220,385 1,085,197 12.5%
Current programming assets 181,341 141,652 28.0%
Inventories 146,771 161,974 -9.4%
Trade and other receivables 374,424 375,659 -0.3%
Cash and cash equivalents 342,251 270,354 26.6%
Total assets 5,676,230 5,561,345 2.1%
EQUITY AND LIABILITIES
Total equity 3,001,213 2,468,403 21.6%
Total non-current liabilities 1,700,186 2,026,162 -16.1%
Loans and borrowings 239,889 592,003 -59.5%
Senior Notes payable 1,340,010 1,316,479 1.8%
Total current liabilities 974,831 1,066,780 -8.6%
Loans and borrowings 245,994 275,608 -10.7%
Senior Notes payable 98,659 97,256 1.4%
Trade and other payables 413,210 472,094 -12.5%
Deferred income 209,485 201,238 4.1%
Total equity and liabilities 5,676,230 5,561,345 2.1%

All figures in the following discussion are given in PLN ’000.

Our balance-sheet total stood at PLN 5,676,230 and PLN 5,561,345 as at December 31st 2013 and December 31st 2012, respectively.

Non-current assets totalled PLN 4,455,845 as at December 31st 2013 and PLN 4,476,148 as at December 31st 2012, and represented 78.5% and 80.5% of total assets, respectively.
The value of reception equipment was PLN 407,579 as at December 31st 2013, close to its value of PLN 420,060 as at December 31st 2012.

Other property, plant and equipment decreased by PLN 25,255, or 9.1%, to PLN 251,152 as at December 31st 2013, from PLN 276,407 as at December 31st 2012. The decrease was chiefly the result of the depreciation charges for the period and the sale of the property, plant and equipment of RS TV S.A., which was partially offset by the purchase of new plant and equipment, expenditure on property, plant and equipment and property, plant and equipment under construction, as well as the acquisition of Polskie Media S.A.

Goodwill grew by PLN 34,771, or 1.4%, from PLN 155,748 as at December 31st 2012 to PLN 2,602,804 as at December 31st 2013, which was attributable to the acquisition of Polskie Media S.A.
As at December 31st 2013, the value of the brand stood at PLN 890,800, having increased by PLN 43,000 from PLN 847,800 as at December 31st 2012 as a result of the acquisition of Polskie Media S.A.

Other intangible assets grew by PLN 56,021, or 68.8%, from PLN 81,380 as at December 31st 2012 to PLN 137,401 as at December 31st 2013, principally on the back of the Group’s taking over a television broadcasting licence following the acquisition of Polskie Media S.A., and the prepayment for the licence to broadcast the core POLSAT channel and the Polsat Sport News channel.

The value of non-current and current programming assets went down by PLN 13,272, or 5.5%, from PLN 239,640 as at December 31st 2012 to PLN 252,912 as at December 31st 2013. The increase was a net effect of the purchase of film licences, activation of sports broadcasting rights and amortisation for the period. Current assets totalled PLN 1,220,385 as at December 31st 2013 and PLN 1,085,197 at December 31st 2012, and represented 21.5% and 19.5% of total assets, respectively.

Inventories stood at PLN 146,771 as at December 31st 2013, having dropped by PLN 15,203, or 9.4%, from PLN 161,974 as at December 31st 2012. The drop was a net effect of a number of factors, including primarily: (i) decrease in the value of set-top boxes and hard drives for set-top boxes, (ii) decrease in the value of end equipment for receiving digital terrestrial television signal, (iii) reduction in inventories of materials used in the production of set-top boxes, and (iv) increase in the value of set-top boxes.

Trade and other receivables were PLN 374,424 as at December 31st 2013, having remained broadly flat on PLN 375,659 as at December 31st 2012.

Cash and cash equivalents went up by PLN 71,897, or 26.6%, from PLN 270,354 as at December 31st 2012 to PLN 342,251 as at December 31st 2013.

Equity grew by PLN 532,810, or 21.6%, from PLN 2,468,403 as at December 31st 2012 to PLN 3,001,213 as at December 31st 2013. The key driver of the equity increase was the PLN 525,445 profit posted for 2013.

Liabilities (current and non-current) under loans and borrowings decreased by PLN 381,728, or 44.0%, from PLN 867,611 as at December 31st 2012 to PLN 485,883 as at December 31st 2013. The change was mainly attributable to two prepayments made in 2013, in the aggregate amount of PLN 200,000, and scheduled repayments under the term facility loan.

Liabilities (current and non-current) under the Senior Notes went up by PLN 24,934, or 1.8%, from PLN 1,413,735 as at December 31st 2012 to PLN 1,438,669 as at December 31st 2013, which was mainly due to an increase in the EUR/PLN exchange rate used to measure the carrying amount of the Notes.

Non-current and current deferred income increased by PLN 7,145, or 3.5%, from PLN 206,419 as at December 31st 2012 to PLN 213,564 as at December 31st 2013, which was chiefly attributable to subscription fee overpayments.

Trade and other payables went down by PLN 58,884, or 12.5%, from PLN 472,094 as at December 31st 2012 to PLN 413,210 as at December 31st 2013. The decrease was chiefly attributable to lower trade payables as well as lower accruals and deferred income. The decrease was partially offset by an increase in liabilities under the purchase of programming assets and public charges payable.