Disclaimers

This constitutes the report of Cyfrowy Polsat S.A. (the “Report”) prepared as required by Article 60 section 1 and Article 70 of the Ordinance of the Minister of Finance of March 29, 2018 regarding current and periodic information to be submitted by issuers of securities, and the conditions for recognizing equivalence of information required under non-member states regulations.

Presentation of financial data and other information

References to the Company or Cyfrowy Polsat contained in this Management Board’s report on the activities of Cyfrowy Polsat apply to Cyfrowy Polsat S.A., while all references to the Group or Polsat Plus Group apply to Cyfrowy Polsat S.A. and its consolidated subsidiaries. Expressions such as "we," "us," "our" and similar apply generally to the Company, unless it is clear from the context that they apply only to the Group. A glossary of terms used in this document is presented at the end of this Report.

This Report contains financial statements and financial information relating to the Company. In particular, this Report contains our financial statements for the financial year ended December 31, 2021, prepared in accordance with International Financial Reporting Standards as approved for use in the European Union ("IFRS") and are presented in millions of zlotys. The financial statements attached to this Report have been audited by an independent auditor.

Certain financial data contained in this Report have been subject to rounding adjustments. Accordingly, certain numbers presented as the sum may not conform exactly to the arithmetical sum of their components.

Forward-looking statements

This Report contains forward looking statements relating to future expectations, understood as all statements (other than statements of historical facts) regarding our financial results, business strategy, plans and objectives pertaining to our future operations (including development plans related to our products and services). These statements are expressed, without limitation, through words such as "may," "will," "expect," "anticipate," "believe," "estimate" and similar words used in this Report. Such forward-looking statements do not constitute a guarantee of future performance and involve risks and uncertainties which may affect the fulfilment of these expectations, as by their nature they are subject to many factors, risks and uncertainties. Accordingly, actual results may differ materially from those expressed or implied by the forward looking statements. Even if our financial results, business strategy, plans and objectives pertaining to our future operations are consistent with the forward-looking statements included herein, this does not necessarily mean that these statements will be true for subsequent periods. These forward-looking statements express our position only as at the date of this Report.

The cautionary statements set out above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We expressly disclaim any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained herein in order to reflect any change in our expectations, change of circumstances on which any such statement is based or any event that occurred after the date of this Report.

In this Report, we disclose important factors which may impact our future operating activities and financial results that could cause our actual results to differ materially from our expectations.

Industry and market data

In this Report, we set out information relating to our business and the markets in which we and our competitors operate. The information regarding the market, its size, the market share, the market position, the growth rates and other industry data relating to our business and markets in which we operate consists of data and reports compiled by various third-party entities, including other operators present on the Polish market, and our internal estimates.

We believe that industry publications, surveys and forecasts we use are reliable but we have not independently verified them and cannot guarantee their accuracy or completeness.

Moreover, in numerous cases we have made statements in this Report regarding our industry and our position in the industry based on our own experience and our examination of market conditions. We cannot guarantee that any of these assumptions properly reflect our market position. Our internal surveys have not been verified by any independent sources.

Financial data overview

The following tables set out selected financial data for the twelve-month periods ended December 31, 2021 and December 31, 2020. This information should be read in conjunction with the financial statements for the twelve-month period ended December 31, 2021 (including notes thereto) constituting part of this Report and the information included in item 4 of this Report – Operating and financial review of the Company.

Selected financial data:

●	from the income statement and the cash flow statement for the twelve-month periods ended December 31, 2021 and December 31, 2020 have been converted into euro at a rate of PLN 4.5674 per EUR 1.00, (average exchange rate in the period from January 1, 2021 to December 31, 2021 announced by the NBP)
●	from the balance sheet data as at December 31, 2021 and December 31, 2020 have been converted into euro at a rate of PLN 4.5994 per EUR 1 (average exchange rate on December 31, 2021 published by the NBP).

Such recalculations shall not be viewed as a representation that such zloty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate.

Income statement

	for the twelve-month period ended December 31
	2021		2020
	mPLN	mEUR	mPLN	mEUR
Revenue	2,448.6	536.1	2,401.0	525.7
Retail revenue	2,247.2	492.0	2,194.0	480.4
Wholesale revenue	103.1	22.6	114.7	25.1
Sale of equipment	25.8	5.6	22.1	4.8
Other sales revenue	72.5	15.9	70.2	15.4
Total operating cost	(2,056.7)	(450.3)	(1,950.0)	(426.9)
Content costs	(797.3)	(174.6)	(771.5)	(168.9)
Technical costs and cost of settlements with telecommunication operators	(495.4)	(108.5)	(461.8)	(101.1)
Distribution, marketing, customer relation management and retention costs	(308.7)	(67.6)	(313.8)	(68.7)
Depreciation, amortization, impairment and liquidation	(185.5)	(40.6)	(173.7)	(38.0)
Salaries and employee-related costs	(130.2)	(28.5)	(121.9)	(26.7)
Cost of equipment sold	(20.1)	(4.4)	(18.8)	(4.1)
Cost of debt collection services and bad debt allowance and receivables written off	(9.2)	(2.0)	(6.3)	(1.4)
Other costs	(110.3)	(24.1)	(82.2)	(18.0)
Other operating income/(cost), net	(5.3)	(1.2)	7.2	1.5
Profit from operating activities	386.6	84.6	458.2	100.3
Profit on investment activities, net	4,048.7	886.5	127.7	27.9
Financial costs, net	(103.3)	(22.6)	(89.7)	(19.6)
Gross profit for the period	4,332.0	948.5	496.2	108.6
Income tax	(726.1)	(159.0)	(91.2)	(20.0)
Net profit for the period	3,605.9	789.5	405.0	88.7
Basic and diluted earnings per share in PLN (not in millions)	5.68	1.24	0.63	0.14
Weighted number of issued shares (not in millions)	639.546.016		639.546.016
EBITDA(1)	572.1	125.2	631.9	138.3
EBITDA margin	23.4%	23.4%	26.3%	26.3%
COVID-related costs (incl. donations)	-	-	(8.1)	(1.8)
adjusted EBITDA(2)	572.1	125.2	640.0	140.1
adjusted EBITDA margin	23.4%	23.4%	26.7%	26.7%
Operating margin	15.8%	15.8%	19.1%	19.1%

(1)

We define EBITDA as net profit/(loss), as determined in accordance with IFRS, before depreciation and amortization (other than for programming rights), impairment charges and reversals on property, plant and equipment and intangible assets, net value of disposed property, plant and equipment and intangible assets, revenue obtained from interest, finance costs, positive/(negative) exchange rate differences, income taxes and share of net results of joint ventures. The reconciling item between EBITDA and reported operating profit/ (loss) is depreciation and amortization expense and impairment charges and reversals on property, plant and equipment and intangible assets and net value of disposed property, plant and equipment and intangible assets.

(2)

Adjusted EBITDA excludes costs related to the COVID-19 epidemic, including donations, incurred in 2020.

Cash flow statement

	for the twelve-month period ended December 31
	2021		2020
	mPLN	mEUR	mPLN	mEUR
Net cash from operating activities	441.1	96.6	507.8	111.2
Net cash used in investing activities	4,505.5	986.4	(27.2)	(6.0)
incl. capital expenditures(1)	(58.1)	(12.7)	(48.7)	(10.7)
Net cash used in financing activities	(3,847.2)	(842.3)	212.7	46.6
Net increase/(decrease) in cash and cash equivalents	1,099.4	240.7	693.3	151.8

(1)

Capital expenditures represent payments for our investments in property, plant and equipment and intangible assets. Excludes expenditures on purchase of reception equipment leased to our customers, which are reflected in the cash flow from operating activities, or payments for concessions, which are reported in a separate line of our cash flow statement.

Balance sheet

	December 31, 2021		December 31, 2020
	mPLN	mEUR	mPLN	mEUR
Cash and cash equivalents(1)	1,934.8	420.7	835.4	181.6
Assets	16,176.1	3,517.0	15,575.9	3,386.5
Non-current liabilities	3,272.1	711.4	3,457.1	751.6
Non-current financial liabilities	3,189.3	693.4	3,366.2	731.9
Current liabilities	1,613.6	350.8	1,208.1	262.7
Current financial liabilities	263.9	57.4	183.3	39.9
Equity	11,290.4	2,454.8	10,910.7	2,372.2
Share capital	25.6	5.6	25.6	5.6

(1)	Includes Cash and cash equivalents, deposits and restricted cash.

1. Characteristics of the Company

1.1. Who we are

Cyfrowy Polsat is the parent company of Polsat Plus Group - the largest provider of integrated media and telecommunications services in Poland.

Cyfrowy Polsat is the leading pay TV provider in Poland. We offer a complete package of multimedia services designed for the entire family: pay TV via satellite, terrestrial and online (IPTV and OTT) broadcasting and broadband Internet access, mainly in LTE and LTE Advanced mobile technologies as well as 5G technology.

Our mission is to create and deliver the most attractive TV and online content, telecommunications products and other services for the home as well as for individual and business customers, using state-of-the-art technologies, to provide top quality multiplay services that match the changing needs of our customers while maintaining the highest possible level of their satisfaction. We are guided by the principle “For everyone. Everywhere” and we aim to satisfy every customer’s needs with our products and services accessible at any time and on any device regardless of the method of service provisioning. We are constantly working on expanding our offering and entering new distribution markets. We pay attention to the development of unique content, acquired both internally and externally, as we consider it an important competitive advantage in our operations.

In December 2021, we adopted the Strategy 2023+ for our Group, which envisages the expansion of existing operating activities to a new area - clean energy production. The new operational pillar will open the possibility of building an additional revenue stream for Polsat Plus Group and will bring tangible social benefits in the form of greenhouse gas emissions reduction. In line with the concept of ESG, we want to create the value of our Group in a sustainable manner taking into account and addressing environmental, social, responsible and transparent business issues, to the benefit of the local society and all our Stakeholders. The superior goal of our strategy remains the sustained, long-term growth of the value of Cyfrowy Polsat S.A. for its Shareholders.

Pay TV

We are the largest pay TV provider in Poland. Since 2006, we are the leader on the Polish market in terms of the number of customers and active services, as well as DTH market share and we actively expand our pay TV offer by adding both new forms of service provisioning (IPTV and OTT). Moreover, we actively develop additional services which build customer value, such as Multiroom, VOD or paid video online subscriptions.

As at December 31, 2021, we provided 5.4 million pay TV services to B2C customers in both the contract and prepaid model.

Our offer includes mainly digital pay TV services distributed directly to end-users via Internet and satellite through set-top boxes and satellite antennas. Our programming strategy is to offer a wide range of channels that appeal to the whole family at attractive prices. At present we provide access to about 150 TV channels, including all of Poland’s main terrestrial channels as well as general entertainment, sports and e-sports, music, lifestyle, news/information, children’s, education and movie channels. In addition, we provide OTT services, such as Polsat Box Go, VOD/PPV, online video and music services, catch-up TV and Multiroom HD services.

Currently, we are the only operator in Poland to offer our customers high quality set-top boxes manufactured in our plant in Mielec, Poland. We systematically develop the software of our set-top boxes and improve their functionality, so as to better address changing consumer preferences and video consumption trends. We also dynamically expand next generations of our set-top boxes to offer, in particular, new devices which allow to receive our content via Internet links, both in IPTV and OTT technologies.

Online video

Starting from September 2021, our popular web services IPLA and Cyfrowy Polsat Go were replaced by Polsat Box Go service, which offer viewers a wide selection of online content accessible at any time, wherever viewers are and on a device of their choice.

Polsat Box Go offers content produced by the Group and external broadcasters, including over 120 TV channels, sports, movies, series, entertainment, news and cartoons, also in a subscription-based model without commercials. In turn, Polsat Go offers its viewers free of charge content from various Telewizja Polsat channels, including among others popular films, series and entertainment shows, and generates income from commercials.

Moreover, we offer our satellite TV customers the video on demand (VOD) “Home Film Rental” service which allows paid access to the latest novelties and film hits through a set-top box.

1.2. Information on organizational or capital connections with other entities

The table below shows the interests held by the Company in subsidiaries, associates and other entities as of certain dates.

Company	Registered office	Activity	Share in voting rights (%) as at
Company	Registered office	Activity	December 31, 2021	December 31, 2020
Polkomtel Sp. z o.o.	Konstruktorska 4, 02-673 Warsaw	telecommunication activities	100%	100%
Towerlink Poland Sp. z o.o. (formerly Polkomtel Infrastruktura Sp. z o.o.)	Konstruktorska 4, 02-673 Warsaw	telecommunication activities	-	74.98%
Interphone Service Sp. z o.o. (1)	Inwestorów 8, 39-300 Mielec	production of set-top boxes	99%	99%
Teleaudio Dwa Sp. z o.o. Sp.k.(1)	Al. Stanów Zjednoczonych 61, 04-028 Warsaw	call center and premium-rate services	99%	99%
Netia S.A.	Poleczki 13, 02-822 Warsaw	telecommunication activities	99.999%	65.98%
TVO Sp. z o.o.	Kielecka 5, 81-303 Gdynia	retail sales	-	75.96%
Plus Finanse Sp. z o.o.(1)	Konstruktorska 4, 02-673 Warsaw	other monetary brokerage	1%	-
Plus Pay Sp. z o.o.(1)	Konstruktorska 4, 02-673 Warsaw	monetary brokerage	1%	-
Esoleo Sp. z o.o.	Al. Wyścigowa 6, 02-681 Warsaw	technical services	51.25%	51.25%
CPSPV1 Sp. z o.o.	Łubinowa 4a, 03-878 Warsaw	technical services	100%	100%
CPSPV2 Sp. z o.o.	Łubinowa 4a, 03-878 Warsaw	technical services	100%	100%
Orsen Holding Ltd.	Level 2 West, Mercury Tower, Elia Zammit Street, St. Julian’s STJ 3155, Malta	holding activities	100%	100%
Orsen Ltd.(1)	Level 2 West, Mercury Tower, Elia Zammit Street, St. Julian’s STJ 3155, Malta	holding activities	0.2%	0.2%
MESE Sp. z o.o.	Al. Stanów Zjednoczonych 61A, 04-028 Warsaw	production of films, videos and television programs	10%	100%
Netshare Media Group Sp. z o.o.	Ostrobramska 77, 04-175 Warsaw	advertising activities	100%	100%
BCAST Sp. z o.o.	Rakowiecka 41/21, 02-521 Warsaw	telecommunication activities	70.02%	70.02%
INFO-TV-FM Sp. z o.o.(1)	Łubinowa 4a, 03-878 Warsaw	radio and television activities	73.5%	73.5%
Stork 5 Sp. z o.o.	Mielżyńskiego 14/p.7, Poznań	holding activities	100%	-
Vindix S.A.(2)	Al. Stanów Zjednoczonych 61A, 04-028 Warsaw	other financial services	46.27%	46.27%
Asseco Poland S.A.(2)	Olchowa 14, 35-322 Rzeszów	software activities	22.95%	22.95%
Modivo S.A. (formerly eObuwie.pl S.A.)(2)	Nowy Kisielin-Nowa 9, 66-002 Zielona Góra	retail	10%	-
Telewizja Polsat Sp. z o.o.	Ostrobramska 77, 04-175 Warsaw	broadcasting and television production	100%	100%
Polsat Media Biuro Reklamy Sp. z o.o. Sp. k.(1)	Ostrobramska 77, 04-175 Warsaw	media	37.75%	37.75%
Karpacka Telewizja Kablowa Sp. z o.o.	Warszawska 220, 26-600 Radom	dormant	99%	99%
Polskie Badania Internetu Sp. z o.o.(2)	Al. Jerozolimskie 65/79, 00-697 Warsaw	web portals activities	4.76%	4.76%
Exion Hydrogen Polskie Elektrolizery Sp. z o.o.	Al. Stanów Zjednoczonych 61A, 04-028 Warsaw	production of electrical equipment	10%	-

(1)	Cyfrowy Polsat owns directly and indirectly 100% of shares.
(2)	Shares in associates include shares in Asseco Poland S.A., Modivo S.A., Vindix S.A. and Polskie Badania Internetu Sp. z o.o.

1.3. Strategy of Polsat Plus Group

On December 20, 2021 the Management Board of the Company, which is the parent company of the Group, resolved to adopt of a new strategy for Polsat Plus Group.

1.3.1. Our Strategy 2023+

We are a Polish company and we offer high quality commodities for a reasonable price to the inhabitants of Poland. For everyone. Everywhere.

We believe that high-speed and reliable Internet within easy reach means freedom for everyone and everywhere. We believe in locally produced, unique content available wherever, whenever and on whatever device you want. We believe that the transition towards clean and affordable energy, in particular energy produced from renewable sources, is what our country needs and that it creates new development opportunities for our Group.

We want to create and deliver high quality commodities: high-speed and reliable connectivity, the most attractive and unique content and entertainment, clean and affordable energy and other services and commodities for the home and for individual and business customers, using state-of-the-art technologies to provide top quality services that meet the changing needs and expectations of our customers, so as to maintain the highest possible level of their satisfaction. Concurrently, in line with the concept of ESG, we want to create the value of our Company in a sustainable manner taking into account and addressing environmental, social, responsible and transparent business issues, to the benefit of local society and all our Stakeholders.

The superior goal of our strategy is the permanent, long-term growth of the value of Cyfrowy Polsat S.A. for its Shareholders. We intend to achieve this goal by implementing the key elements of our operating strategy based on three main pillars and supported by an effective financial policy.

PILLAR I - CONNECTIVITY	PILLAR II - CONTENT	PILLAR III – CLEAN ENERGY
High-speed and reliable connectivity is critical to our work, education and entertainment. Easy communication with friends and family	Attractive content and excellent user experience ensure entertainment wherever, whenever and on whatever device you want	Affordable, clean energy is essential to the daily functioning and further development of the Polish society and economy
● growth of revenue from services provided to individual and business customers through the consistent building of our customer base value by maximizing the number of users of our services as well as the number of services offered to each customer and simultaneously increasing average revenue per user (ARPU) and maintaining a high level of customer satisfaction		● building a position on the clean, energy market, in particular from the sun, wind, biomass, thermal waste treatment and building a complete value chain of a hydrogen-based economy, which creates opportunities to build a new stream of revenues for Polsat Plus Group and will bring tangible social benefits in the form of greenhouse gas emissions reduction ● analysis of additional development opportunities in other prospective directions such as Small Modular Reactors (SMR)
● growth of revenue from produced and purchased video content by expanding its distribution, including a search for new channels of exploitation of rights, maintaining the audience shares of channels produced by us
● use of opportunities arising from the advancing technological changes and market opportunities in order to expand the scope of our products and services
● effective management of the cost base of our integrated capital group by exploiting its inherent synergies and economies of scale
● effective management of the Group’s finances, including its capital resources

Growth of revenue from services provided to individual and business customers through the consistent building of our customer base value by maximizing the number of users of our services as well as the number of services offered to each customer and simultaneously increasing average revenue per user (ARPU) and maintaining a high level of customer satisfaction

Our goal is to effectively build revenue from the sale of products, services and commodities to our customers. By actively predicting new trends and reacting to the occurring market changes, we will continue to create products that will satisfy the evolving needs of our customers.

The factor that will have a positive impact on revenue is the possibility of cross-selling our existing and future products and services to the customer base of Polsat Plus Group. We create a unique portfolio of products and services which is targeted at customer bases of companies composing our Group. Properly addressed, both through the sale of additional single products or a multiplay offer, this potential may gradually increase the number of services per individual user, thus increasing revenue per customer and at the same time favorably impacting the level of satisfaction of our customers.

The integrated services market in Poland is still developing, especially outside big cities and therefore it has substantial growth potential. We intend to continue expanding our portfolio of products and services, relying both on own projects, as well as on strategic alliances or acquisitions. We trust that a comprehensive and unique offer of combined services (television offered in diversified access technologies including a model based on online applications, mobile Internet based in particular on the cutting-edge 5G technology, high-speed fixed broadband with high throughputs and voice services) and the possibility of up-selling additional services (e.g. clean energy from renewable sources, premium content services, entertainment services, financial products as well as other services or solutions for the home), when provided via diversified distribution platforms, will be decisive from the point of view of our competitive edge. It will also enable us to retain our existing customer base and offer an opportunity to acquire new customers on the pay TV, telecommunication and energy markets as well as in the area of other services for the home and for individual and business customers.

Growth of revenue from produced and purchased video content by expanding its distribution, including a search for new channels of exploitation of rights and maintaining the audience shares of the channels that we produce

The channels we produce and broadcast enjoy strong, well-established positions on the Polish TV and high ratings in their respective target groups. Our goal is to maintain our audience share at a stable level and consistently enhance our viewer profile. We believe that by making sensible investments in programming and wider distribution of our own content we will be able to gradually improve our viewer profile. This in turn will have a positive effect on the pricing of advertising airtime that we offer.

The second crucial element in building the segment's value is the widest possible distribution of produced and purchased TV content, both in terms of the customer groups it reaches (FTA, pay TV and online access) and the technologies they use (terrestrial, satellite, Internet, mobile). We want to invest in development and build the market position of our content brands, which will then be distributed via a number of channels adjusted to the evolving needs of our customers. These efforts, in our opinion, will not only allow us to maximize benefits of the wide-scale distribution of our video content, but will also ensure a higher level of satisfaction among our customers and viewers, who will have more freedom to decide what, where and when to watch.

Use of opportunities arising from the advancing technological changes and market opportunities in order to expand the scope of our products and services

We seek to offer wide accessibility to our products and services to each of our existing and potential new customers. Therefore, beside the continuous development of technologies which have built the scale of our company in the past, we pay attention to the development of new products which are meant to facilitate the availability of our content and the services we offer. For everyone. Everywhere.

The intertwining of the telecommunication and media worlds, in particular the wide availability of high speed mobile transfer technologies as well as the constantly improving quality of fixed-broadband connections, allows us to develop equipment and technologies which break the limitations with regard to accessibility or ownership of certain telecommunication infrastructure. The OTT (over-the-top) technologies are expanding distribution markets for content producers and we intend to actively leverage on that. We invest in new technologies, equipment and applications, and we pursue opportunities to enter into strategic alliances or acquisitions, with a view to facilitating access to the content we produce for our customers. We also intend to leverage on the changes on the Polish content market and take advantage of the opportunities presented by the evolving needs and expectations of Polish consumers, as well as changes in the ways of media consumption triggered by cutting-edge data transmission technologies in order to offer our customers an extensive range of services adjusted to their needs and expectations. By developing our content and telecommunication offer and expanding it to include complementary products and services, we seek to acquire new customers, build ARPU and improve customer satisfaction and loyalty.

An effective combination of telecommunication and content products provides new opportunities for distribution of content. Thanks to this combination, attractive content and a wide range of our services can be delivered through a variety of reliable distribution channels – via satellite (DTH), digital terrestrial television (DVB-T), Internet television (OTT), Internet platforms, applications and portals (video online), mobile (LTE and 5G) and fixed-line (IPTV) technologies – to all consumer devices from TV sets through PCs and tablets to smartphones.

Modern technology advancement is also a critical factor contributing to the transition in our country towards clean, zero and low-emission energy. We want to be an active participant of this transition. We intend to take advantage of emerging market opportunities and invest in technological innovations because we believe that they are essential in order to accelerate the energy transition and decarbonization in Poland. We set ourselves ambitious goals with respect to the construction of zero and low-emission sources of electric energy that on the one hand constitute an opportunity to continue the development of our business in the mid and long-term, and on the other support the sustainable development of the Polish society and economy.

Concurrently, we will analyze in detail emerging market and investment opportunities, such as investments in unique real estate or prospective business projects that have potential to generate high rates of return in the mid-term. We believe that such projects present an attractive opportunity to invest available funds.

Building a position on the clean energy market, in particular from the sun, wind, biomass, thermal waste treatment and building a complete value chain of a hydrogen-based economy, which creates opportunities to build a new stream of revenues for Polsat Plus Group and will bring tangible social benefits in the form of greenhouse gas emissions reduction

With a view to strengthening our unique offer of integrated services we have decided to establish a new, third strategic pillar based on affordable and clean energy. We believe that the transition towards clean, zero and low-emission energy in Poland is a perfect moment to enter this prospective market by new players and creates new development possibilities for Polsat Plus Group. We believe that investments in the development of clean, renewable energy sources constitute a practical implementation of the ESG concept and can bring our Group, our Stakeholders and the local society tangible economic and social benefits, in particular in the form of greenhouse gas emissions reduction. According to our estimates, our current investment plan, consisting in the installation of ca. 1000 MW of clean power generation capacity in the years 2022-2026, will contribute to the reduction of greenhouse gas emissions by over 2 million tons of CO2 equivalent annually.

We want to build a new stream of revenue from the sale of clean energy to business and individual customers. We expect that demand for clean energy in Poland will exhibit a strong, upward trend in the following years. This trend will be supported by a set of factors, including the consistent regulatory policy implemented at the European Union level and directed at achieving climate neutrality by 2050, the changing geopolitical situation and increasing demand for energy resulting from Poland’s economic growth. In order to build and successively strengthen our position on the energy market in Poland we intend to invest in projects related to the production of energy from photovoltaics, biomass, wind farms and thermal waste treatment. We also want to invest in the future by building a complete value chain of a hydrogen-based economy, which may contribute significantly to the reduction of harmful substance emissions (including CO2). Furthermore, we want to actively analyze the possibilities of investing in other prospective sources of energy such as Small Modular Reactors (SMR).

In the years 2022-2026 we plan to invest approximately PLN 5 billion in order to achieve ca. 1000 MW of clean power generation capacity and approximately PLN 0.5 billion in the construction of the value chain of an economy based on the fuel of the future - hydrogen.

Effective management of the cost base of our capital group by exploiting its inherent synergies and economies of scale

We are convinced that building a closely integrated group that combines connectivity, content and energy services offers an opportunity for tangible synergies and for securing significant competitive advantages. We implement numerous projects aimed at simplifying the Group’s structure by integrating relevant teams and harmonizing business processes and IT systems in the entire Group, which enables us to achieve tangible cost synergies. On a continuous basis we pursue optimization efforts aimed at adapting our cost base to current market conditions and our Group’s situation.

We believe that our engagement in the clean energy sector will also generate sizeable synergies and in the mid- and long-term will support operating in-line with a sustainable business-model. In particular, access to clean energy at lower prices will allow us to further optimize the costs of our operating activities and will also help us strengthen our relationships with B2B and B2C customers interested in purchasing clean energy, which will have a positive impact on the results of our strategy.

Effective management of the Group’s finances, including its capital resources

The financial policy and capital resources management policy that we adopted define the method of using funds generated from our operations. To guarantee the continuity and stability of the Group’s operations the generated free cash flow is used in the first place for financing current operations and for investments indispensable for the development of the Group. Simultaneously, we continually exploit arising development possibilities and investment opportunities, which allow us to make our products and services more attractive, provide new methods of their distribution or create additional value for our Shareholders.

Our capital resources management policy assumes maintaining a balance between leveraging on emerging market and investment opportunities and regular dividend payouts to Shareholders of the Company in accordance with the applicable dividend policy of Cyfrowy Polsat S.A. Concurrently, we intend to maintain the indebtedness of Polsat Plus Group at a safe level, ensuring an optimal structure of financing of our operating activities through the use of debt financing. When formulating the financing structure the Management Board will take into account in particular the expectations of the Shareholders of the Company expressed in the Articles of Association of Cyfrowy Polsat S.A.

1.3.2. Our ESG strategy

Along with the announcement of the Strategy 2023+, we have also structured our sustainable growth strategy which includes ESG (environmental, social responsibility and corporate governance) factors.

We take responsibility for preventing further climate changes and actively undertake steps to improve air quality in Poland.

(Environmental)

● New investments – by producing over 2 TWh of green energy per year we will contribute to the reduction of CO2 emissions in Poland by more than 2 million tons yearly.

● Renewable energy sources – by 2023 we will use the energy solely from low or zero emission sources(1).

● Car Fleet – we successively increase the share of low-emission vehicles in the car fleet of Polsat Plus Group (currently over 5% share).

● Circular economy – set-top boxes used by our customers, are coming back to the market after they are returned and refurbished while other equipment is being recycled.

(1) Applies at least to main operations operating companies of Polsat Plus Group: Cyfrowy Polsat, Telewizja Polsat, Polkomtel and Netia.

We are an active member of local society and – at the same time – we stimulate Poland’s economic and social development through our investments in digitization.

(Social)

● Counteracting digital divide – we dynamically develop the reach of modern, fast 5G Internet.

● Polsat Foundation – we are a key partner of the Foundation which during the last 25 years has helped to finance medical treatment and rehabilitation for 40 thousand suffering children.

● Responsible employer – we ensure friendly and safe working environment as well as equality and diversity to all our employees.

● Protection and safety of children – safety is DNA of our operations, therefore we take care of safety of the children and youth (among others, safety in the network and television content).

We develop our business in a transparent and sustainable manner to the benefit of all our stakeholders.

(Governance)

● Codes of Ethics – implemented codes of business conduct as well as internal procedures and systems guarantee the highest standard of integrity.

● Transparency – we ensure high quality financial and ESG reporting in combination with regular, transparent and direct communication with all our stakeholders.

● Cybersecurity – while being aware of challenges in this area, we aim at the best possible data security and protection for our customers and employees (ISO 27001 certificate).

● Experience, trust, reputation – our companies’ Management Boards are served by individuals with many years of work experience in the Group.

1.4. Competitive advantages

We are part of the leading integrated media and telecommunications group in the region

Our major competitive advantage is that we have gathered and manage autonomously all key assets within our Group. Thanks to this we can efficiently operate a diversified business comprising pay TV in DTH and online (IPTV, OTT), mobile and fixed-line telephony, mobile and fixed-line broadband Internet, wholesale business as well as TV broadcasting and production and on-line services of content, news and video sharing.

We are a leading player in the markets in which we operate. Since 2006, we are the leader of the Polish pay TV market both in terms of customers and the number of active services and market share. Our subsidiary, Polkomtel, which focuses on the provision of mobile telecommunication services under the ‘Plus’ brand, is one of the leading telecommunication operators in terms of generated revenues and the scale of the base of mobile telephony and the mobile broadband Internet access services. In turn, our subsidiary Netia is a leading provider in fixed-line services, including broadband Internet offered mainly in fiber optic technologies. At the same time we are the leading TV group in Poland in terms of advertising revenues and audience share and, starting from 2020, following the acquisition of Interia.pl Group we became one of the major Internet publishers in Poland.

Additionally, our advantage is that we have an extensive nationwide distribution network through which we sell most of the services offered by our Group. We simultaneously offer our services in alternative telemarketing, door-to-door channels as well as online in our own online stores. Furthermore, both Polkomtel and Netia have their own separate B2B sales and service channels and, additionally, Polkomtel has an extensive prepaid distribution network.

We have strong brand recognition and enjoy good reputation among our customers

Our core brands – ‘Plus’ and ‘Polsat Box’ – are well recognized by Polish consumers and we believe they are associated with high quality and value-for-money services addressed to the entire family.

We believe that our position as the largest pay TV operator in Poland and good relations with programming licenses providers give us a competitive advantage in obtaining high quality content on attractive market terms. Therefore, we are able to offer attractive programming packages at competitive prices which translates favorably into viewers’ opinions on us. At the same time, through investing in the latest technologies which allow to offer high quality telecommunication services, we constantly increase attractiveness of our services which contributes to high satisfaction levels among our customers.

We have a significant customer base to which we can up-sell a broad portfolio of services

Polsat Plus Group has a significant base of individual, business and corporate customers, as well as prepaid users. This base includes 6 million unique individual customers, bound by contracts for definite or indefinite periods of time, which generate a regular monthly revenues stream. We provide retail services to nearly every second household in Poland, which makes us one of the largest Polish service providers for residential customers.

Our strategy assumes up-selling to this base of an extensive portfolio of telecommunication, television and other services and products by our companies independently or in partnership with other entities, in order to increase revenues generated by every customers. We believe that up-selling services to our own base will enable us to increase revenue in a cost-effective way, while simultaneously offering to our customers attractive price terms, which should translated into an improvement of customer satisfaction and loyalty.

Multi-platform distribution of online video content and proprietary technology for video online content distribution

Our Polsat Box Go online video services is a leading platforms of video content distribution via the Internet in Poland. It offers access to unique content through a wide range of end-user devices, including computers/notebooks, tablets, smartphones, TV sets with Internet connections and set-top boxes, in line with our principle: “For everyone. Everywhere”. Our objective is to provide access to an extensive range of audio-visual content through any type of device for playing online multimedia files. We strive to ensure that each type of platform is supported by all major equipment manufacturers and operating systems.

Polsat Box Go strengthens our position as an aggregator and distributor of content and ensure an important competitive advantage. We continue to develop our services using our experience in sales of pay TV, which helps us achieve synergies in terms of costs and revenues.

We have also developed unique technological competences in encoding and streaming audio-visual content, as well as optimizing distribution of this type of signal. Unlike our competitors, we apply proprietary solutions to our online video platforms, which enables us to provide services that are optimally adjusted to the limited Internet infrastructure in Poland and the capacities of external systems with which our applications are integrated. In this way, we may offer services of higher quality than the widely used solutions, for instance, our system of HD video stream encoding helps reduce the broadband required to deliver the signal by half as compared with solutions implemented by other operators on the Polish market. Hence, the optimized technology has a direct effect on our projects, their coverage potential and the number of concurrent viewers.

New entrants must overcome significant regulatory and operational barriers or incur very significant investment outlays to compete effectively in the markets in which we operate

We believe that we benefit from significant market entry barriers that will aid us in maintaining our leading positions in the competitive Polish pay TV market. Unlike potential entrants to the Polish pay TV market, we benefit from economies of scale and a loyal customer base, and we can spread the relatively high cost of the necessary technologies over our large customer base and leverage the stronger bargaining power that comes with a leading market position.

We have strong, stable and diversified cash flows

Our Group’s large retail customer base, stable monthly subscription revenue and low churn rates provide us with significant predictability of future revenue and strong recurring cash flows, which have historically proven to be resilient, even during periods of challenging economic conditions, such as the COVID-19 pandemic.

In the case of our cost base, we focus on improving the efficiency while maintaining high quality by carrying out initiatives aimed at the development of in-house services and systems. Examples include our own set-top-boxes manufacturing plant or the gradual centralization of back-office processes within the Group.

We have experienced managing staff

Our management team consists of executives who were members of the management boards or served in other managerial positions within the media, TV and telecommunications industries and have extensive experience in these industries. What distinguishes us is a low factor of rotation among our key managing staff, which positively reflects on the stability of our business and excellent operating results. Our senior managers have a significant track record of increasing our customer base and market share and introducing new products in competitive environments while managing costs and increasing free cash flow.

1.5. Market opportunities

We believe that Poland is an attractive market for our current and planned products and services for a number of reasons. Key market opportunities are presented below.

Growing importance of bundled services

Convergence, understood as a combination of at least two services from different base groups of telecommunications services, is one of the strongest trends both on the Polish media and telecommunications market and worldwide. Operators develop their bundled offerings in response to changing preferences of customers, who more and more often seek media and telecommunications services provided at competitive prices by a single operator under a single contract, a single invoice and a single fee. Given the high saturation of the pay TV and mobile telephony markets, bundled services play an increasingly important role in maintaining the existing customer base.

In the wake of the increasing importance of convergence and bearing in mind the significant level of fragmentation of the broadband access market, it can be expected that the future shape of the Polish telecommunications and media market will be substantially impacted by consolidation trends which have been visible for a long time on more developed foreign markets, where mobile and fixed-line operators merge with content providers.

The acquisition of the fixed-line operator Netia by our Company in May 2018 can serve as an example of such consolidation in Poland. Thanks to this transaction we combined all assets necessary to provide fully convergent services within our Group. As a result we can adjust our offering to better match customers’ needs and we manage costs more effectively. Based on Netia’s infrastructure, we launched the fixed-line broadband Internet access offer under the ‘Plus’ brand. This offer was further expanded when we gained the possibility to provide services using networks of other operators who grant Netia access on wholesale terms. In turn, in the first quarter of 2019 we introduced the cable TV service in IPTV technology, which is available to customers of fixed-line Internet services offered by Plus, Netia and Orange. As a next step, in July 2019, we implemented our OTT television service, which can be accessed via the Internet delivered by any service provider.

The introduction of new Internet television services to our offering represents the next phase of the development of our Group and is our response to the changing needs and expectations of our customers who can now decide which content delivery channel suits them best.

Low penetration rate of multi-play services, in particular in low-urbanized areas

In the past integrated services in Poland were provided by cable TV operators and selected fixed-line telecommunication operators and were offered mainly in large and medium-sized cities, which among others results from the geographical coverage of their infrastructure telecommunications and cable infrastructure.

According to a report by the analytical company PMR, in 2017 45.6% of households in Poland declared using more than one service from the same provider, while in 2021 this indicator increased to 51.3%. Due to the low saturation with integrated services and the still underdeveloped fixed-line broadband access infrastructure in low-urbanized areas, Cyfrowy Polsat is gradually building its position of a leading provider of high-quality integrated services in Poland.

Growing market for new technologies and equipment and the resultant increase in access to and consumption of audiovisual content

As the market for innovative technologies is growing at a fast pace, the number of mobile devices (smartphones, notebooks and tablets or Smart TV sets) owned by consumers is on the rise as well. This has spurred a sharp increase in access to video content, and hence in video viewership. Consumers expect service providers to offer them the possibility of watching TV on any screen, anywhere and at any time. We perceive this group as a prospective customer segment for television services, opening also the opportunity for the monetization of our audiovisual content. At the same time, the above mentioned trend will translate into an increased demand of our customers for data transmission on mobile devices, which in turn will result in a growing stream of revenues from the sale of these services to our customers.

1.6. Development prospects

We are a parent company of the largest media and telecommunications group in Poland which has gathered under one roof key assets which allow us to offer customers a unique portfolio of products and services. In line with our strategy, we focus on marketing and sales activities aimed at cross-selling standalone products and services to our customer base and at selling our bundled services offer. We see our future development path in this strategy. We think that along with the development of modern fixed-line and nationwide radio infrastructures, connectivity will continue to shape not only the telecommunications market but also the content distribution market. We believe that broadband Internet access services that we offer in 5G and advanced fixed-line technologies will allow us to grow our customer base, with an emphasis on the integrated services customer base.

We develop our portfolio of integrated services. The Polish bundled services market is characterized by a low level of development. According to research conducted by the European Commission, saturation with bundled services in Poland is still significantly lower compared to the average saturation in the European Union. Concurrently, our customers are increasingly interested in bundled services, a trend reflected in the excellent sales results of our bundled services offer. We are convinced that our combination of pay TV and telecommunication services, including in particular broadband Internet access in both high quality 5G as well as fiber optic technologies, will allow us to benefit from the growth potential of the Polish bundled services market. By increasing the number of services sold to each customer we are able to generate growth of average revenue per customer (ARPU) and effectively increase our customers’ loyalty.

Polsat Plus Group is a leader in 5G development in Poland. At the beginning of 2020 our subsidiary Polkomtel began the construction of Poland’s first commercial 5G network based on the unique 2.6 GHz TDD band owned by our Group. Our 5G network became operational in May 2020 and at the end of 2021 it covered over 19 million people, i.e., more than half of the population of Poland, and the total number of active based stations increased to 3,000.

We address our convergent offering to new target groups. Furthermore, we use infrastructure of our subsidiary Netia to expand the reach of services provided by Polsat Plus Group in fixed-line technologies. In particular, Netia’s access network reach opened for us a new market of large cities and urban areas, which so far has been accessible mainly to cable network operators. We develop new TV products, such as, for example, television in IPTV and OTT technologies, which, in our opinion, will become an attractive alternative to offers of cable operators. We are of the opinion that assets owned by Polsat Plus Group, such as a widespread sales network and own advertising channels, shall allow us to achieve satisfying sales results on our fixed-line services while maintaining high cost efficiency of operations.

We consistently strive to strengthen our position as the aggregator and distributor of content. We believe that as a Group we have a unique, hard to duplicate and at the same time highly attractive programing offer. Currently, the attractive content and wide range of Polsat Plus Group’s services are delivered through a variety of reliable distribution channels – via satellite (DTH), digital terrestrial television (DVB-T), LTE and 5G mobile technologies and fixed-line technologies (FTTH, HFC, ETTH, OTT, IPTV) – to all consumer devices, from TV sets and PCs to tablets and smartphones. We closely study the evolution of our customers’ expectations and work to satisfy their growing needs. We believe that the introduction of our IPTV and OTT television offers in 2019 represents a significant step in Polsat Plus Group’s continued development on the pay TV market. The services live up to customers’ expectations by offering an access to a wide range of the unique content in flexible tariff plans and short subscription period.

2. Business overview of the Company

2.1. Activities on the pay TV market

2.1.1. Pay TV market in Poland

Market value and growth dynamics

The Polish pay TV market is a mature market characterized by a high degree of penetration. On the one hand, a high level of market penetration with pay TV services (estimated by PMR at ca. 70% of households) leads to a low growth potential. On the other hand, pay TV operators actively increase the loyalty of their subscriber bases, mainly through service packaging, i.e. by combining pay TV with telecommunication services (Internet, phone), or developing and offering to customers their own online video services, enabling users to consume content on demand on a wide range of mobile devices. This trend leads to an increasingly strong interpenetration of pay TV and telecommunication markets.

Both in terms of the number of subscribers and value, the situation on the Polish pay TV market is stable. According to PMR estimates, in 2020 the market was worth PLN 6.2 billion (+1.2% YoY), with a stable customer base at the level of approximately 10 million subscribers. At the same time ARPU from pay TV services in Poland continues to be among the lowest in Europe. In this context the strategy of competing for customers with the merit and quality of the offered content rather than with price is one of the key trends affecting the value of the pay TV market. Operators expand their offers by adding premium packages and proposing attractive film or sports content, which leads to higher ARPU from a stable base. Also the dynamically growing IPTV segment, and the systematically increasing penetration of customer base with multiroom services, are the factors influencing the value of pay TV market.

Source: PMR, Pay TV and VOD market in Poland, 2021

Competitive environment

Pay TV services in Poland are offered by satellite platform operators (DTH), cable TV operators as well as by IPTV providers. According to our estimates, sector data and PMR forecasts, in 2020 operators of satellite TV platforms had the dominant share, both in terms of the number of subscribers and revenue, on the pay TV market – approximately 51% in terms of subscriber base, followed by cable TV operators with approximately 32%. IPTV is the pay TV market segment which demonstrates the strongest growth and its market share increased to 13% in 2020. Pay TV services provided by operators of satellite platforms and cable TV are in principle substitutes. At the same time competition between the two technologies of access to pay TV services is restricted due to different geographical reach of each of these services. DTH operators are able to provide their services to both, the customers who live in cities as well as to those living in less densely populated and rural areas without incurring significant additional costs, whereas cable TV operators concentrate on the inhabitants of densely inhabited areas where highly developed fixed-line network infrastructure already exists or in locations where the establishment of such infrastructure involves a relatively low cost per customer. Since cable infrastructure in Polish towns with up to 20 thousand inhabitants, as well as in suburban and rural areas which are inhabited by more than half of Poland’s population, is poorly developed, hence these areas are not attractive for cable TV operators and they remain the natural target markets for DTH.

DTH operators. According to our estimates and PMR forecasts, the subscriber base of the DTH market in Poland remains under moderate pressure and in 2020 was amounted to around 5.3 million (-4% YoY). DTH platforms are losing users in favor of the more advanced technologically IPTV offers, especially in areas with access to high quality broadband infrastructure.

Three DTH platforms operate in Poland: Polsat Box (until August 2021 it operated under the Cyfrowy Polsat brand), Canal+ (operating until September 2019 under the nc+ brand) and Orange, while the market is practically divided between the first two. Orange does not offer pay TV as a standalone service but only as an add-on to its integrated offer.

Source: Based on own estimates, sector data and PMR estimates

Polsat Box is the market leader in terms of the number of pay TV customers. We actively expand our offer by selling paid access to online television in our Polsat Box Go service or the Multiroom HD option, as a result of which as at December 31, 2021 we provided over 5 million contract pay TV services (together with the services of paid access to online television). We have also actively entered the Internet TV market (IPTV, OTT with a set-top box). Based on own and PMR forecasts, we estimate that at the end of 2020 the share held in the Polish pay TV market by our platform Polsat Box, in terms of the number of subscribers, was approximately 33%.

The second player in terms of subscriber base was the platform Canal+ which provided services to approximately 1.9 million subscribers in 2020, according to PMR data. This translated into a share of ca. 20% in the pay TV market.

In less populated rural and suburban areas, where cable and broadband infrastructure is underdeveloped, digital terrestrial TV with around 30 channels in the DVB-T standard, presents a real alternative to satellite pay TV services. Rapid growth of interest in this form of access to television occurred in 2013, as the process of digitization of terrestrial TV in Poland reached its completion, and it has continued on a slight upward trend since. According to PMR estimates, in 2020 a little under 34% of households in Poland used the free-to-air DVB-T television only, while in 2026 this share is expected to increase to 37%, according to PMR forecasts. However, it is worth noting that the pay TV offer surpasses alternative solutions, such as DVB-T digital terrestrial TV, in terms of the quality of the programming offer. Dedicated and premium content, exclusive content available only from a given operator, live programs, or coverage of attractive sports events remain the key distinctive features.

Cable TV operators. The Polish cable TV market is strongly fragmented, with ca. 300 companies operating on it, according to UKE. The three dominating players, however, are: Vectra Group, UPC Polska and Inea. PMR estimates that in 2020 the combined share held in the Polish cable TV market by these three operators exceeded 80% in terms of the number of subscribers.

Possibilities of acquiring new subscribers are limited due to high penetration with cable TV in urban areas as well as the reluctance of cable TV operators to make investments in cable TV infrastructure in less urbanized and rural areas of Poland.

Consolidation continues on the Polish cable TV market. In February 2020, as a result of the finalization of the acquisition of 100% of shares of Multimedia Polska by Vectra, the second and the third biggest cable TV operator consolidated and hence Vectra Group surpassed the to-date leader, UPC, in terms of the number of subscribers. Consolidation of cable TV operators increases chances for larger scale transactions between sectors, and subsequently the construction of convergent offers (combining mobile and fixed-line services) by mobile operators. Taking control by Polsat Plus Group over Netia in 2018 or the ongoing process of taking control over UPC by the mobile operator Play can serve as examples of such transactions.

Digital television through the IP protocol (IPTV). The leading IPTV providers in Poland are Orange Polska and Netia, a company belonging to Polsat Plus Group. The remaining part of the IPTV market is fragmented between Vectra Group and local Internet service providers (ISPs). The predominant model of sale of IPTV services on the market relies on bundling of the service, especially with broadband Internet access. In 2020, Cyfrowy Polsat also introduced an IPTV offer to the market – the offer is available through broadband Internet access offered by Plus, Netia or Orange.

IPTV is the most rapidly growing segment of the pay TV market, among others due to the improving quality of broadband connections, fiber optic networks in particular, following infrastructural investments. In spite of the high growth dynamics, IPTV market still encounters barriers, mainly due to technological obstacles which result from still restricted coverage of advanced infrastructure capable of offering sufficient data throughputs for providing IPTV services, especially outside big cities.

IPTV development enhances competition between IPTV operators and cable TV operators, especially in big cities where high quality broadband infrastructure exists, including fiber optic links. In less populated areas, on which DTH operators focus their activities, the influence of the expansion of IPTV is less pronounced due to the underdeveloped infrastructure for broadband Internet access. At present, it is difficult to estimate whether and when operators will be able to develop, to a substantial degree, their IPTV offer in rural, suburban areas and small and medium sized towns, and the impact of such a development on the operations of DTH providers. At the same time it is worth stressing that the effect of outflow of DTH and cable TV subscribers is to some extent compensated for by the migration of these customers to the IPTV standard, as a result of which the total pay TV subscriber base in Poland remains stable.

Simultaneously, mobile operators who strive to propose convergent offerings to their customers become players on the pay TV market through entering into cooperation with operators who own fixed-line broadband infrastructure. An example of such cooperation can be seen in the agreement signed between Orange Polska and T-Mobile Polska, thanks to which T-Mobile has been providing its services on part of the FTTH network owned by Orange since July 2019. Moreover, mobile operators strive to offer TV products based on similar partnerships, currently mostly in the form of IPTV or OTT services built by themselves (Play Now TV) or purchased directly from content providers (e.g. Polsat Box Go or HBO Go offered by T-Mobile).

Video on demand

Poland has also seen the successive development of the video-on-demand market – VOD (video on demand) and OTT (over the top). Video content is supplied to customers directly as a stand-alone service, offered via Internet connection, or as an element of pay TV packages. Progressing improvement of the quality of broadband Internet connections, and consequently of data transmission speed offered to customers, as well as changing preferences of consumers who wish to have access to their favorite content at the time, the device and place of their choice are the factors that have a positive influence on the growth of the OTT and VOD services market in Poland.

The Polish VOD market is highly fragmented. Several dozen online services operate on the market, including those offered by TV broadcasters, DTH satellite platform operators, cable TV networks or telecommunication operators as well as by global players (like US giants Netflix or Amazon Prime Video). In terms of the number of users, the most popular online services include Netflix, Polsat Box Go, player.pl, cda premium, HBO GO and Canal+. At the same time new players are successively entering the market – Viaplay started its operations in 2021, HBO MAX in 2022, and the launch of Disney+ is expected shortly.

It is difficult to estimate the size of the Polish VOD market due to the lack of publicly available data from service operators, multiple distribution platforms for a given service or the so-called overlap, i.e., the simultaneous use of many services by the same user. Nevertheless, PMR estimates that in 2020 there were approximately 11 million users of VOD services, up by around 10% year–on-year.

At the same time, the trend of Poles becoming increasingly accustomed to paying for online video content is becoming more distinct, which is reflected by the growing number of users of paid VOD services. According to PMR in 2020 nearly 60% of VOD users in Poland decided to use the services in a paid model. The trend of migration of users to paid services is, among others, the outcome of the attractive premium content offered by these services and it is also reinforced by the social isolation due to the COVID-19 pandemic. According to PMR, penetration of households by paid VOD services is approximately 40% and demonstrates systematic growth, which points to a high potential of monetization of services of this type. At the same time, at present the growing interest in paid services in Poland does not translate into a visible, in terms of scale, phenomenon of cord-cutting, i.e., giving up traditional pay TV services.

Source: PMR, Pay TV and VOD market in Poland, 2021

As per PMR estimates, the value of the Polish VOD market was PLN 1.3 billion in 2020 and demonstrated year-on-year growth dynamics of approximately +24%. The dynamic growth is primarily associated with the growing acceptance of Poles to pay for content on the Internet and the rapid development of the paid access model. In particular, the segment of the VOD market which developed fastest in Poland was the segment of subscription-based services, generating 65% of the total revenue on the VOD market in 2020.

OTT and VOD services exert limited substitution pressure on the pay TV market in Poland. PMR studies show that at this point VOD is rather a service which is complementary to traditional pay TV – more than 2/3 of households that use paid subscription services simultaneously have traditional TV subscriptions. This trend is influenced to a significant extent by the popularity of distributing VOD services via the operator channel. A majority of the most popular VOD services are available from the offers of telecom and pay TV operators. According to PMR data, 39% of the total number of subscription service users used their services via another operator in 2020. Moreover, pay TV operators effectively compete against global VOD players by developing their own VOD platforms and offering Polish-language content which is better adapted to local viewers, premium content or exclusive coverage of sports events. Bundling of services, in particular by combining TV services with Internet access, is important and has a positive influence on the loyalty of pay TV services users.

Development forecasts for the pay TV market

According to PMR forecasts, in the years 2022-2026 the pay TV market in Poland will remain stable, both in terms of the number of customers and market value, with low average yearly change dynamics, not exceeding -1%. The market should remain under the influence of three major trends: high market penetration of pay TV services, dynamic growth of IPTV technology and high saturation of the target group for terrestrial TV services with DVB-T standard.

According to PMR, in the years 2022-2026 satellite platforms will remain the biggest segment of the pay TV market in Poland, reaching market share of ca. 44% in terms of subscriber numbers at the end of the forecast period. Cable TV operators will remain the second major segment, with a market share of approximately 33% at the end of the forecast period. Thanks to the highest growth dynamics IPTV services will systematically gain importance, on the back of the dynamic development of broadband Internet access networks, including fiber optic networks. According to PMR by the end of 2026 IPTV operators will have a market share of around 24% in terms of the number of subscribers, however growth of the market share measured in terms of market value will be slower.

Pay TV operators will aim to increase their competitiveness by proposing unique offers to their customers. Bundled offers containing telecommunication and content services combined with sales of equipment (tablets, smartphones, laptops, TV sets) and supplementary services as well as an extended offer of exclusive content are of key importance for the enhancement of customer loyalty and own customer base retention. Access to broadband Internet, including fiber optic access, is a particularly important element, which at the time of the pandemic became key from the point of view of maintaining customer loyalty. Offering premium content will continue to be crucial, as, on the one hand, it will attract subscribers looking for unique, high quality content, and on the other it will support ARPU growth.

State-of-the-art technologies will continue to gain in importance at a fast pace as they enable operators to provide personalized content (such as content on demand) via the Internet, to mobile devices in particular. Substitution pressure from independent providers of OTT and VOD services present on the market (e.g., Netflix, CDA, HBO MAX or Amazon Prime) will still continue to be limited in Poland. Moreover, pay TV providers will compete with the offers of the above mentioned services by developing their own VOD platforms, which are complementary to traditional TV services, and by introducing mobile solutions. We think that in upcoming years VOD services will supplement and extend the offers available on the market instead of substituting linear TV. According to PMR estimates, the number of VOD service users will stabilize at the level of ca. 13 million in 2026, whereas the pace of growth of this segment will successively decelerate due to the high level of market saturation with pay TV services.

It can be expected that the Polish pay TV market will continue to see consolidation trends, both within the sector as well as between cable TV and telecommunication operators, which can be exemplified by the acquisition of UPC cable TV by P4, telecommunication operator.

2.1.2. Our pay TV offer

We build customer loyalty by offering a wide array of channels at competitive prices, attractive additional services, state-of-the-art set-top boxes and a variety of ways to deliver TV services - in line with our principle: “For everyone. Everywhere". In order to meet the changing trends in television content consumption, we provide our customers with TV services in both satellite technology (DTH) and Internet technologies (IPTV and OTT). We make sure that our pay TV packages offer very good value for money. Currently, our customers have access to over 150 TV channels which focus on diverse topics: general, sports, movie, lifestyle, education, music, information and children’s channels. Premium content is an important element that builds the value of our pay TV offer, and this is one of the reasons why we have introduced sports and film TV packages to our offer, such as Polsat Sport Premium, Eleven Sports, Canal+ Sports 3 and 4, HBO and FilmBox.

We offer our customers, who decide to select satellite television or cable TV in IPTV technology, four basic packages for a period of 24 months - S,M, M Sports and L – and 9 additional packages, available for a defined or undefined period of time, which offer freedom in setting up an offering.

●	S Package (at PLN 20 per month) offers 51 channels, including basic channels and a package of Polsat channels;
●	M Package (at PLN 30 per month) offers 73 channels, including channels from the S Package + channels from the TVN Discovery portfolio (including Eurosport channels) + TVP Seriale and TVP HD + TV Republika;
●	M Sports Package (at PLN 60 per month) offers 79 channels, including channels from the M Package + Polsat sports channels (including Eleven Sports) + promotional sports channels Canal+ Sport 3 and 4;
●	L package (at PLN 60 per month) offers 131 channels, including channels from the M Package + over 50 additional channels with movies, cartoons and educational programs.

In addition to the basic and additional channels, our offer also provides access to the Polsat Box Go service and application. Polsat Box Go offers paid (also subscription-based and without advertisement) content of the Group and external producers and broadcasters (including an extensive library of VOD content and online channels). As part of the subscription fee Polsat Box customers have free access to content of Polsat Box Go corresponding to their subscription package.

In order to offer our TV customers a better insight into our programming offer and enable them to tailor our offer to their individual needs and expectations, each of our basic packages comes with various bonuses, such as providing access to the full TV offer free of charge for up to several months. In addition, we offer our satellite TV customers a VOD package, which enables paid on-demand access to new movies and hits via set-top boxes.

In order to meet the changing trends in television content consumption, we offer cable TV service in IPTV technology, thanks to which viewers are able to watch TV channels over fixed broadband Internet offered by certain operators, that is without the need to install a satellite antenna. We also offer OTT television service, which enables access to television channels via the Internet provided by any service provider in any technology, both wireless (via Wi-Fi or mobile network) and fixed-line. Moreover, we offer our satellite TV customers the video on demand (VOD) “Home Film Rental” service which allows paid access to the latest novelties and film hits through a set-top box. The service does not require additional technological solutions, it is available through the TV set.

As part of our pay TV offer we lease set-top boxes to our customers. The price of a purchased set-top box depends on the pay TV package chosen by the customer. The higher the price of the package the lower the price of the set-top box and the higher set-top box subsidy incurred by us. We view subsidizing of set-top boxes as a necessary component of acquiring new customers. We have a professional set-top box warranty service designed to help ensure customer satisfaction. All new set-top boxes are produced in-house at our manufacturing plant in Mielec. We constantly work on developing the portfolio of available set-top boxes. In 2021 we launched two new models on the market - Polsat Box 4K and Polsat Box 4K Lite - with the Duo functionality which enables easy change of the TV signal reception technology.

2.1.3. Offer of the Polsat Box Go entertainment service

Our online entertainment service Polsat Box Go offers the most versatile database of legal video content and live broadcasts in Poland and over 120 online TV channels, live coverage of major national and international sports events, a vast and regularly expanded library of feature films, TV series and television programs provided by both domestic and foreign licensors. Polsat Box Go offers on average several hundreds of hours of live coverage per month from the largest sports events nationwide and worldwide.

In 2021, the platform's sports content offer was expanded to include the broadcasts of PKO BP Ekstraklasa football matches, and we are the only company to broadcast all football matches of Fortuna 1 Liga and volleyball games of Tauron Liga. The offer also began to regularly and exclusively present full seasons of premium series.

Polsat Box Go provides users with content in one of two paid models. The first one is single access, in which the customer pays a fixed amount for access to a specific material. The second model includes access to a package of materials and/or channels in return for a periodic (e.g. monthly) access fee. Polsat Box Go also offers the possibility to download selected content and view it offline.

Thanks to the www.polsatboxgo.pl website and dedicated applications the content of Polsat Box Go is available on a wide array of consumer devices, including the most popular Internet browsers on computers and mobile devices as well as in native mobile apps powered by iOS, Android, on TV sets with Internet connections and set-top boxes.

2.1.4. Technology and infrastructure pay TV services

Conditional access system

Access to TV channels offered in our pay TV packages is secured with a conditional access system that we lease from the company Nagravision SA. We use this system to control access to particular paid programming packages. Upon signing a contract for our services, the customer receives a set-top box together with an access card, which allows him/her to receive the paid programming offer. We routinely undertake activities to identify unauthorized access to our service because of the significant risks that unauthorized access poses to our business and revenues. According to our agreement with Nagravision, in the event of a breach of our systems, which cannot be remedied, Nagravision is obligated, under certain conditions, to replace the conditional access system together with the cards provided to our customers and, if necessary, to adapt the set-top boxes to the new system. Nagravision is paid a monthly fee on a per-customer basis.

Moreover, we cooperate with another provider of a conditional access system - the company Irdeto B.V. Beside securing digital content transmitted using DVB-T technology, the Irdeto system also provides security of the satellite system (DHT) and IPTV. Furthermore, Irdeto provides us with specialized and complete monitoring of the Internet enabling the collection and analysis of occurrences that may infringe copyrights of entities in our Group.

Satellite

We have signed a long-term contract with Eutelsat S.A. regarding the use of capacity on Hot Bird satellites. In September 2017 we have prolonged this agreement and we have extended the satellite capacity available to us by 33 MHz. As a result we currently dispose of capacity on 8 transponders dedicated to HD, SD, and 4K TV channels.

Broadcasting center

Our broadcasting center is located in Warsaw and enables us to transmit TV channels to the transponders we use on the Hot Bird satellites. The center is equipped with up-to-date information, audio and video systems, which allows us to broadcast TV channels in SD, HD and 4K quality.

We also have a backup broadcasting center located in Radom, which guarantees broadcasting continuity in the event of bad weather conditions or the necessity to carry out maintenance operations in our broadcasting center.

To mitigate risks of failure or shutdown of our broadcasting center or any of its parts, our broadcasting, transmission and multiplexing equipment has redundancy solutions on critical nodes of our broadcasting network. In addition, if necessary, Eutelsat S.A. is obligated to provide us with replacement capacity.

Compression and TV signal multiplexing systems

Compression and TV signal multiplexing systems allow for efficient use of satellite capacity by digital edition of the signal. We regularly modernize our compression systems dedicated to service 8 transponders. Thanks to such operations we gain capacity for additional TV channels without incurring additional costs related to transponder capacity and we maintain a very high quality of broadcas programs.

Services for television and radio broadcasters

We provide signal broadcast services to television and radio broadcasters. These services include the provision of transponder bandwidth, broadcasting and encoding the signal and its distribution to networks of other operators, including cable operators.

We also consequently develop our system of broadcasting chosen TV programs to the main Internet Exchange Point in Warsaw – Equinix. Thanks to this solution we can distribute our TV programs to other operators as well as receive TV programs from other broadcasters through dedicated fiber optic lines.

Services provided in DVB-T technology

Our Mobile TV services are provided in DVB-T technology on the multiplex dedicated to mobile television. The service is provided on 470-790 MHz frequencies (assigned to provide mobile audio-visual media services including broadcasting of radio and television nationwide channels in the radio communication broadcasting service) owned by our subsidiary INFO-TV-FM Sp. z o.o.

Internet content distribution

In 2021, our IPLA online television was merged with the Cyfrowy Polsat Go service to form a completely new, modern streaming platform Polsat Box Go, whose applications were built using modern UX/UI (User Experience and User Interface) trends. Polsat Box Go uses our own platform adapted to the most important operating systems and a wide range of consumer devices. We have developed unique technological competences in encoding and streaming audiovisual content on the Internet, as well as optimizing distribution of this type of signal. Unlike our competitors, we apply proprietary solutions, which enable us to provide services optimally adjusted to the limitations of Internet infrastructure in Poland and the capacities of external systems with which our applications are integrated. We use our own servers and our own CDN (Content Distribution Network) infrastructure. Additionally, we use technologies that make us independent in the choice of any distribution system. As a result we can offer services of the highest quality while optimizing transmission costs. It is particularly important in the case of broadcasting over 100 linear channels or carrying out PPV transmissions. Our platform uses a proprietary system of recommendations that enable us to deliver content tailored to the customer’s individual preferences. Our Multi DRM protection system also enables us to offer paid content on different browsers, mobile devices, smart TV sets and independent set-top boxes. This makes our platform meet the trends and expectations of our customers to watch video content regardless of the place, time and device they are using.

2.2. Activities on the bundled services market

2.2.1. Bundled services market in Poland

Bundling of services is one of the strongest trends on Polish media and telecommunications market. Operators develop their offers of bundled services in response to the changing preferences of customers, who seek media and telecommunications services from one provider at affordable prices, under one contract, with one subscription fee and one invoice. At the same time, given the high level of saturation of the pay TV and mobile telephony markets, bundling of services plays an increasingly important role in retaining existing customers. Offering bundled services allows operators to increase customer loyalty and, consequently, reduce churn rates. It also contributes to the growth of average revenue per customer.

The Polish multi-play services market has been growing systematically and recorded an average annual growth rate of nearly 9% in terms of the number of services sold in packages in the years 2013-2020. According to PMR estimates, at the end of 2020 the number of services sold in bundles increased to over 30 million, while the total number of subscribers (both individual and business) using bundled services amounted to approximately 9.7 million. As a result, at the end of 2019 the number of services per subscriber was 2.5.

Source: Own study based on PMR Report on bundled telecommunication services in Poland, 2021

Similarly to growth in quantitative terms, the bundled services market in Poland has been also demonstrating consistent growth in terms of value. According to PMR estimates, in 2020 the value of the bundled services’ market in Poland grew at the pace of ca. 8% year-on-year, and reached PLN 10.7 billion. Service bundling is a strong tool supporting increase of the customer base’s loyalty and customer value building. This is confirmed by the ARPU figures which continued on an upward trend and exceeded PLN 93 at the end of 2020 (CAGR 2013-2020 +2.4% YoY).

Source: Own study based on PMR’s Report on bundled telecommunication services in Poland, 2021

Bundled services in Poland are provided primarily by cable TV operators and telecommunications service providers. According to PMR, at the end of 2019 three quarters of the bundled services market, in terms of the number of subscribers, was held by six major players – Polsat Plus Group, Play-UPC partnership, Orange, T-Mobile, and combined group of Vectra and Multimedia. With respect to the number of subscribers, the share that Polsat Plus Group held on the bundled services market in Poland at the end of 2019 was approximately 23.5%, according to PMR estimates.

When analyzing the structure of bundled services in Poland, one should bear in mind that the majority of operators provide multiplay services on the basis of wholesale agreements with other operators since they themselves do not have the relevant infrastructure or supporting business services to be able to create a complete portfolio of convergent services. For example, T-Mobile provides fixed-line broadband Internet access using the infrastructure of Orange Polska. Cable TV operators, in turn, offer mobile voice services in an MVNO model and acquire the entire content for their TV services from third party TV production companies. Our important competitive advantage on this market comes from the fact that within Polsat Plus Group we have all the assets which are required to be able to offer customers a fully convergent offer of telecommunication and TV services, enriched with unique content which we produce ourselves.

Both fixed-line telecommunication and cable TV operators offer their bundled services mainly in large and medium sized cities, mainly due to the geographical limitations of their landline access infrastructure. The multi-play services market in Poland is, in turn, relatively underdeveloped in less urbanized areas and therefore has the potential to grow rapidly in the suburbs, small towns and rural areas. In addition to the low penetration rate of multi-play services in less densely populated areas, Internet services provided by cable operators typically suffer in quality of service due to the limitations of the existing infrastructure. This creates an opportunity for satellite pay TV providers, such as Polsat Box, who are not bound by geographic reach, to become the leading providers of high quality multi-play services to consumers in suburbs, small towns and rural areas in Poland.

According to PMR, in 2017, 45.6% of households declared that they use more than one service provided by the same supplier, while in 2021 this ratio increased to 51.3%.

Research by PMR demonstrates that a bundle combining two services remains the most popular option. It was chosen by 52% of households in Poland in February 2021. At that time, 26% of Poles used triple-play services, while 14% of customers decided to purchase a bundle containing four services. Only 8% of households purchased five or more services in a bundle.

As for the structure of the bundles, 95% of the bundles contained mobile telephony in a contract or prepaid model, pay TV was included in 70% of packages and fixed Internet in 61%. 45% of purchased bundles included mobile Internet access and only a third a fixed line service. The importance of services other than telecommunication is growing in bundling, although their popularity is still low. A clear upward trend can be seen in the case of VOD services (included in 43% of packages in 2020) and electricity (23% of packages).

Development forecasts for the bundled services market

According to PMR forecasts, the bundled services market will consistently grow in subsequent years, both in terms of the number of subscribers and value, which results from the fact that service bundling has become a strategic goal for telecommunication and pay TV operators. According to PMR expectations, the growth rate of the bundled services market in Poland will slow down in coming years and the expected average annual compound growth rate will be 3.3% in 2020-2025. A factor supporting further growth of the bundled services market will be an increase in the quality of services stimulated by the development of fiber optic networks and the expansion of 5G networks.

In subsequent years, the development of the Polish market of bundled services will be influenced not only by the low level of saturation of this market with services but also by the systematic roll out of fixed-line infrastructure and improving quality of network access, in particular higher throughput. COVID-19 pandemic is an important factor which, in our opinion, will have a positive influence on the bundled services market. As a result of a substantial part of the society migrating to a remote work and learning model, in the years 2020-2021 we observed significant growth of demand for higher speed Internet connections, which creates a bigger potential for upselling additional services as an element of service bundles. For example, the prospect of offering video-on-demand content is improving.

Operators’ strategies based on combining telecommunication and media services with services from outside the telecommunications sector are also an important factor. The bundled offers of leading operators on the Polish market comprise, among others, additional services, such as the sale of electricity, as well as financial and insurance products. Consolidation trends, observed on the media and telecommunications market, may also affect the development of the bundled services market.

2.2.2. Bundled services offer

Our bundled services offer is an important tool, which strategically helps us to retain existing customers and expand our customer base, while simultaneously increasing customer satisfaction and loyalty. In day-to-day business the multi-play offer enables us to increase ARPU and further reduce our churn rate.

SmartDOM and smartFIRMA are unique savings programs that offer a wide array of products and services and enable our customers to create a comfortable, safe and modern home or effectively run a business. They are based on a simple and flexible mechanism – a customer subscribed to one service receives an attractive discount for the entire term of the contract for every additional product or service purchased from the Group’s portfolio. Thanks to the unique formula of the smartDOM and smartFIRMA programs, the customer can create a tailor-made set of services for the family or the company, additionally ensuring savings on each service purchased.

Currently, under the smartDOM and smartFIRMA programs customers enjoy a wide selection of basic services and a variety of additional services which play an important role in the household and in the company. Our flagship and core products and services include mobile telephony (including wireless home telephony), LTE/5G and fixed Internet, also in fiber optic technology, and television services in any technology (satellite TV, cable IPTV, Internet TV and digital terrestrial TV).

2.3. Sales and marketing

Marketing and branding

Company image and brand recognition have a significant impact on purchasing decisions of most of our customers. We strive to continuously improve our customers’ satisfaction, particularly in terms of products and services available, the quality, usability and accessibility of our customer service department and the usability of automated information and self-service channels. We continuously expand our brand portfolio and build products tailored to customer needs.

The year 2021 in Polsat Plus Group was marked by the strategic harmonization of our key brands. The brand harmonization and rebranding project implemented by the Group was a very complex marketing project, carried out by the Group's employees with the support of a leading global strategic consulting firm.

This project resulted in the development of a new strategic direction for the Group as well as for its leading brands – Polsat, Plus and Polsat Box. In the course of the conducted strategic analyses and extensive marketing research (performed in cooperation with the research company IPSOS), the strategic direction proposed by the American consulting company Straightline was selected.

Our aim and ambition is to use the new brand strategy, building on the heritage and strength of our brands, to lead the Company and its customers into the future. A future that is already increasingly and strongly intertwining two worlds: technology and content. The strategic direction itself has emerged from the observation of customers who expect the brand to respond to their individual needs. It is the customers who want to decide - to have a wide range of choices according to their expectations and needs.

The assumptions of the strategy were translated into a new visual language of the brands by the renowned international agency Saffron Brand Consultants, which was responsible for creating new logotypes, coherent signet rings and the so-called "skins". The developed system of our identification sets a new canon in the history of creating a unique language of visual communication which will be characteristic for individual brands of the Group.

The changes also included the creation of a new brand Polsat Box which replaced the existing Cyfrowy Polsat brand. At the same time, the Polsat Box Go service and application replaced Ipla and Cyfrowy Polsat Go.

To promote our services we use mainly TV advertising (spots, sponsorship billboards and product placement activities), Internet and outdoor advertising. We also run a number of nationwide campaigns on the radio and in the cinema. We support key national campaigns with local activities. Each campaign regarding our products and services is supported by social media.

Commercial websites of our brands are an important channel of communication with new and existing customers. In addition, we maintain communication with our existing customers using telemarketing tools, email bulletins, a dedicated customer channel and the Internet Customer Service Center.

Retail sales channels

We sell our services through a number of diversified channels.

Physical sales network. As at December 31, 2021, the sales network of the Group covered 1,017 physical points of sale nationwide. These points of sales offer pay TV under the Polsat Box brand, as well as a number of other products and services offered by the remaining companies of Polsat Plus Group.

Direct sales. We use the direct door-to-door sales channel (D2D) for distribution of our pay TV products and services, which enables us to directly access selected customer groups, to maintain direct contact with customers, and to expand the reach of the sales network.

Call center. We provide call center numbers of Polsat Box, Plus and Netia in materials promoting our services in various media to enable potential customers to obtain information about our services, place orders or ask for directions to the nearest point of sale.

Within the Group we have approximately 1,650 operator stands as well as approximately 920 back-office stands which handle written and electronic requests (including technical requests). Our call center services are available to our present and potential customers 24 hours a day, seven days a week, and are responsible for providing comprehensive and professional customer service. The call center operators provide information on our services, enter into service agreements with customers, accept customer complaints and provide information on payments, technical support and other support for customers.

Telemarketing. As at December 31, 2021 the Group had 8 telemarketing centers (own and external), whose role was customer retention and the sale of core products.

Online communication. In the era of the pandemic and the associated numerous restrictions and lockdowns, online sales channels play an increasingly important role in the commercial area, ranging from the presentation of a rich offer to the possibility of conducting the full purchase process and after-sales service on-line. Online communication provides users with a quick and easy opportunity to familiarize themselves with the programming, multimedia and telecommunication offers of Polsat Plus Group, order services or selected equipment together with a package of their choice without leaving their home or finding the nearest point of sale.

Our commercial website contains detailed information on respective products and services offered by Polsat Box brand. On our website www.polsatbox.pl customers can find information about the current pay TV offer, the Group's bundled offer and additional TV services, such as, for example, VOD or Polsat Box Go and HBO Max online services.

2.4. Customer relations and retention management

Customer relations management

We consistently improve the quality of our customer service using the latest technologies. An experienced and committed staff with a highly flexible approach and supported by a quick decision making process is our strong side.

We use an advanced customer relationship management IT system developed by our specialists based on an integrated platform handling telephone, e-mail, SMS, TTS (text to speech) communications and mail. Our customer relationship management system makes it possible to comprehensively document and handle all requests placed by customers in a timely and effective manner.

The core of the Group’s customer service is the customer service call center. This system comprises eight separate call centers integrated through an intelligent call routing system. It guarantees reliability and an uninterrupted twenty-four hour, seven-day a week phone service. The intelligent distribution system handles calls depending on the subject matter and forwards the call to appropriate agents, which reduces customer service time. We actively develop alternative forms of contact through social media and chat. The post-sale telephone customer service also involves active up-selling of products and increasing customer loyalty.

We also provide customer service using advanced self-service solutions to manage subscriber accounts. These solutions are offered in a form of such online services and mobile applications as iPolsatBox (dedicated to customers of our TV services) and iPlus (dedicated to customers of telecommunication services), while the functionalities available within each service and application vary slightly. These tools include, among others, constant and free-of-charge access to up-to-date information on billing, current offers, current usage, they allow to purchase additional packages and services, effect online payments and modify contact details. Moreover, our services include a technical support section including, among others, technical specifications and user manuals for the equipment, automatic diagnosis and repair of technical issues, FAQs, an online contact form based on the mechanism that ensures automated analysis of customers' queries and automatic response sent to the customer prior to forwarding the question to an agent, and an online communication channel offering customer support via electronic mail and Live Chat.

Customer retention management

Customer retention is one of our key business areas. Our goals in this field are to minimize churn in terms of both volume and value, thus securing revenue from our customer base.

As part of the customer retention process we constantly develop our offer, processes and methods of operations to obtain the highest possible effectiveness while ensuring high quality of provided services. We carry out activities both in reactive and proactive processes. The proactive process is initiated by us. It starts prior to the expiration of the basic term of a contract with an aim to encourage customers to extend their contract on new terms. The reactive process is initiated by the customer who expresses the intention to resign from using our services. Under this program, a dedicated team of consultants contacts the customer and presents new, attractive terms of further cooperation in order to encourage such a customer to stay in our Group. Retention activities under both processes are carried out based on analyses of the customer’s current portfolio of services. We make all efforts to present the best possible offer, tailored to specific needs of the customer.

Our retention offers can be executed via any sales channel – through the Internet, by phone with home delivery, or at any point of sales where, during the pandemic, we put the safety of our customers and employees first. In addition, we strive to enhance our communication, working constantly on its efficiency and adjustment to our customers’ preferences.

2.5. Other aspects of our business

Significant investments in minority interests

Below we present a description of the most significant investments of Polsat Plus Group in assets other than those used in the core business, in which the shares are valued using the equity method.

Asseco Poland S.A. In 2019 and 2020, the Company acquired a total stake of 22.95% in Asseco Poland S.A., a leading IT solutions provider, for approximately PLN 1.2 billion. Currently, the Company is the largest shareholder of Asseco Poland S.A.

The Company considers the investment in shares of Asseco Poland S.A. as a long-term transaction. This is a strategic alliance of two Polish leaders of the TMT sector who have cooperated in the past, among others, on the implementation of the Group's new IT environment.

In our opinion, closer cooperation through capital engagement makes it possible to achieve synergies in the form of: (i) further increasing the efficiency in the Group's IT area, (ii) even better servicing of existing customers and acquiring new ones, and (iii) development of new products and services.

The Company and Asseco Poland do not plan a merger and shall continue to operate autonomously. Their joint potential, however, allows for the development of a rich offering of advanced telecommunications and IT services.

Asseco Poland is listed on the Warsaw Stock Exchange. According to the share price of Asseco Poland as at December 31, 2021, the value of the block of 19,047,373 million shares owned by Cyfrowy Polsat was PLN 1.65 billion.

At the same time, Asseco Poland is a company with a long-term dividend profile. Thus the investment in this asset translates positively into generating a recurring cash stream for Polsat Plus Group.

Modivo S.A. In June 2021, the Company acquired a 10% stake in eObuwie.pl S.A. (currently Modivo S.A.) from CCC Group as a pre-IPO investment for PLN 500 million.

The Company treats the investment in Modivo as a financial investment, with a specified method and potential timing for exiting the investment, which will be Modivo's initial public offering, currently planned for 2022 or 2023.

Taking into account Modivo's very good results and the dynamically developing market segment in which it operates, we believe the investment can generate an attractive rate of return.

The majority shareholder of Modivo is the WSE-listed CCC Group (holding 75% of shares), a leader on the Polish footwear retail market and one of the largest footwear manufacturers in Poland.

Research and development - new services and implementations

In 2021, we continued our efforts in the field of implementation of state-of-the-art technologies and latest technical solutions which offer superior quality and enhanced functionality of services to Polsat Group customers and enable us to expand our offer by adding new services and products.

New 4K set-top boxes. In November 2021, we introduced a modern, compact and lightweight set-top box - Polsat Box 4K Lite. The set-top box provides excellent picture quality, has functions allowing to watch content independently of the TV scheduling, a built-in Wi-Fi module and a Bluetooth remote control. The device can be used in any of the three technologies in which Polsat Box provides TV services: satellite, cable IPTV and the Internet. Selected programs can be viewed in 4K quality. The Polsat Box 4K Lite set-top box also features the DUO functionality which is new on the market and unique in Poland. It enables seamless switching between satellite and cable IPTV within the same TV offer. Thus, the viewer choose the source of the TV signal - satellite or cable IPTV. The viewer can change them whenever and as often as he/she wishes within the same TV package. The DUO function does not allow switching from satellite or cable IPTV to Internet TV.

Among the channels delivered by Polsat Box there are 4 that allow to watch content in 4K quality: Eleven Sports 1 4K, Insight TV UHD, Fashion TV 4K and NASA TV UHD. Polsat Box subscribers also have access to pay VOD content in 4K quality via the Polsat Box Go service. They can watch them both in the application on the Polsat Box 4K Lite set-top box and on mobile devices.

IT systems

IT systems are crucial in multiple aspects of our business operations. We use numerous systems, applications and dedicated software, both developed in-house, as well as by leading local and international suppliers.

We use IT systems facilitating effective and efficient management of our customer base. These systems include, among others, a customer relationship management system, sales support system, online customer accounts and a transaction support system. With regard to customer service and billing, we use systems that allow for flexible billing for different contract and prepaid plans. Our customer service systems enable us to address the needs of our customers through different communication channels (such as call centers, e-mail, Interactive Voice Response, SMS, points of sales and Internet). Moreover, we use a wide range of applications that support customer segmentation, product definition and the selection of sales channel and communication method.

With respect to systems designed for set-top boxes, we use applications and software enabling us to offer our products as efficiently as possible. As the owner of the systems and holder of intellectual property rights related to them, we are able to respond quickly and successfully to all the needs of our customers.

We also use systems licensed from third parties, such as a conditional access system securing access to channels offered in our paid DTH packages. At the same time, while looking for cost optimization in the area of small volume development in the high-end line, we cooperate with experienced suppliers, as in the case of the EVOBOX and Polsat Box set-top boxes, which are integrated hybrid solutions with PVR enabling access to content in 4K resolution.

Thanks to services developed by our Internet Projects Division we provide customers who use Internet links and broadband mobile Internet access the possibility of consumption of premium audio, video and text content. The Polsat Box Go application is available on the majority of popular multimedia devices in Poland, including computers, smartphones and new generation TV sets. The multi-node multimedia distribution network supports simultaneous access to offered multimedia for tens of thousands of Internet users. The content we distribute is developed, secured and monetized using mainly our proprietary solutions as well as systems provided by third party suppliers and our business partners.

We use management systems that include, among other things, financial control, revenue assurance, fraud detection, rating and scoring systems and those that support the reporting process for internal and regulatory purposes. Apart from the main data center, our subsidiary Polkomtel maintains a back-up data center, which holds duplicated information from major systems and data of decisive nature to ensure that, in the event of a potential malfunction, it can assure continuity of the most critical services.

Simplification and modernization of software development processes and their reorientation towards specific business goals has played an important part in improving the efficiency of our IT systems in recent years.

As part of the operational integration of companies from the Group and relying on the Group's existing IT solutions, we are executing in cooperation with Asseco, a project aimed at developing a shared system environment to develop joint multi-product offers comprising the services of both Cyfrowy Polsat and Polkomtel. These efforts will also enable us to achieve further cost optimization and leverage significant synergies in both know-how and resources. The transformation of IT systems is an essential element of this undertaking.

The prepared eco-system will enable improved, simpler and more efficient management of sales as well as the ability to respond flexibly to market dynamics – launching of new products and services will become easier and faster. A central catalogue of the Group’s services and products will be created with one, consistent and effective sales solution which will be common for all channels of contact with the customer. IT infrastructure will be simplified and will become more flexible, which will enable the reduction of the time and cost of new business implementations.

The implemented solution will contribute to further development of joint sales of numerous services offered by the Group and it will enable a flexible response to market changes while offering newer products related to various aspects of life and packaged sale of these products.

Insurance agreements

We maintain insurance coverage for our Company and its operations, substantially against all risks and with sums insured at levels typical of pay TV providers in Poland.

We have motor vehicle insurance policies, all risk property insurance policies, as well as third party liability insurance on business operations and professional liability insurance on broadcasting activity, liability on business interruption, and third-party liability insurance for members of management and supervisory boards of the companies that belong to Polsat Plus Group.

In 2021, the Company was party to the insurance agreements described below.

In the scope of property insurance general agreements were concluded for the years 2019-2022 with TUiR Warta S.A. in co-insurance with STU Hestia S.A. regarding the insurance of assets against all risks, electronic equipment insurance, insurance of machinery against damages, loss-of-profit insurance, insurance of assets in domestic and international transport (cargo).

In the scope of third-party liability insurance a general agreement was concluded for the years 2019-2022 with TUiR Warta S.A. in co-insurance with STU Ergo Hestia S.A. regarding third-party liability insurance, including professional liability insurance. Furthermore, an agreement regarding bookkeeping liability insurance was concluded with PZU S.A. The following insurers are engaged in the liability insurance policy of directors and Management Board members of the Company: TUiR Allianz Polska S.A., Colonnade Insurance S.A. Branch in Poland, Chubb Branch in Poland, TUiR WARTA S.A and TU Generali Polska S.A.

In 2021, the international business travel health insurance and personal injury insurance with Aviva Towarzystwo Ubezpieczeń Ogólnych S.A. were continued.

We believe that our insurance coverage is in line with the practice followed by other pay TV providers in Poland.

Business Contingency Plan

As a Group we have over 10 years of experience in business continuity. The Business Contingency Plan of Polkomtel was established in 2010 on the basis of the then norm BS 25999. The current Business Contingency Plan, built in compliance with the norm PN-EN ISO 22301:2014, covers processes and critical services executed and provided by Polkomtel and Cyfrowy Polsat. The periodic conduction of the Business Impact Analysis is the key element of the Business Contingency Plan and includes an update of the list of processes and critical services which is approved by resolution of both companies’ management boards. Within the current and periodic (once every two years) update of the Business Contingency Plan we examine threats and vulnerabilities in critical processes and services, and perform risk analysis aimed at identifying main threats and defining recommendations with respect to groups of resources, such as locations, human resources, external and internal service providers, office infrastructure, data stored in both an electronic and paper form, the technical and IT infrastructure.

Within the Business Contingency Plan we maintain a dedicated structure - the Crisis Management Centre – which is targeted to prevent crisis situations in the Group thanks to reacting to incidents which exceed the competences of individual managers running separate organizational units as well as coordinating all emergency and restoration actions of the organization in the crisis mode. The practical test of the Business Contingency Plan’s implementation by the Group was our effective and quick reaction to the threat which emerged in the beginning of 2020 in connection with the coronavirus pandemic and smooth transition of the majority of employees to remote, rotation or shift mode of working. The prepared Survival Strategy and alternative operating methods as well as periodic testing of essential elements of the Plan and ongoing training of new staff and crisis team members ensure business continuity of critical processes and services covered by the Business Contingency Plan.

Charity and sponsorship activities

Our Group has been involved in corporate social responsibility activities for many years. We pursue our social mission in the areas of safety, aid to children promotion of sports and physical activity, environmental protection and social education.

In the scope of safety, for 18 years Plus network has been tightly cooperating with mountain and water rescue organizations. We provide special emergency phone numbers, the Integrated Rescue System and a special mobile app Rescue (Ratunek). We are also actively involved in fighting TV piracy, including through numerous educational activities.

Aid to children has always been one of the pillars of Polsat Plus Group’s social mission. We approach this task in a variety of ways, one of which is the cooperation with Polsat Foundation. During 25 years of its activities Polsat Foundation strives incessantly to improve the situation and health of the youngest patients in Poland, in line with the motto “We are here to save the health and lives of the youngest.” The Foundation donated over PLN 260 million for aid to children, providing aid to 40,000 little patients and offering financial support to more than 2,600 hospitals, medical centers as well as schools, kindergartens and foster care centers. We also organize numerous charity actions to support the development of disabled children as an element of employee volunteering.

In order to promote sports we produce and air thousands of hours of sports coverage yearly on channels of TV Polsat, we support amateur and professional sports events, we educate viewers in the area of healthy lifestyle and our Plus mobile network is a long-standing sponsor of Polish volleyball.

For years we have been also working intensely on issues related to environmental protection. We focus predominantly on topics such as clean energy, green hydrogen, energy efficiency, ecological products, renewable energy and waste reduction. For this reason Polsat Plus Group has expanded its strategy to include the production and sale of clean energy. Creating a new business segment dedicated to clean energy is aligned with Polsat Plus Group’s ESG strategy and will support our effort to build the value of the Group in a sustainable manner.

We have been engaged in social education for years. Our activities in this area are intertwined with mission, activities and initiatives of Polsat Foundation associated with current health-related challenges. We try to familiarize people with important and difficult issues from the field of specialist medical treatment, among others by airing dedicated TV programs on our channels. We also strive to disseminate knowledge on ecology and we promote and environment-friendly approach. To achieve this we actively participate in the initiatives of the Clean Poland Program Association (Stowarzyszenie Program Czysta Polska), we air educational programs on natural environment, we publish special articles on this subject on our portals Zielona.Interia.pl and Polsatnews.pl. We are also active in terms of prevention of digital divide through the development and popularization of state-of-the-art Internet access technologies and long-term cooperation of Plus network with the Copernicus Science Center.

The chart below presents the split of expenses on sponsorship and charity activities incurred by Polsat Plus Group in 2021.

The details of our charity and sponsoring activities along with key nonfinancial performance indicators are described in the “Sustainability Report of Polsat Plus Group for 2021.”

3. Significant investments, agreements and events

3.1. Corporate events

Increasing capital engagement of Cyfrowy Polsat in Netia

On April 15, 2021, the Company decided to continue acquiring shares of Netia. This decision confirmed the Company's declaration that it did not exclude potential further increase of its holding in the total number of votes at the general meeting of Netia, as expressed in the tender offer of December 23, 2020 to place subscriptions to sell shares of Netia.

Subsequently, on April 30, 2021, the Company decided to increase the amount dedicated to acquiring shares of Netia in such a way that the purchase price of one Netia share should not exceed PLN 7.00 and the total purchase price of all Netia shares remaining in the holding of minority shareholders of Netia should not exceed PLN 604.1 million. Moreover, the Company’s decision of December 31, 2021 stipulated that the acquiring of Netia shares might be effected within 12 months from the date of adoption of the resolution by the Company's Management Board.

As a result of the above mentioned decisions, in the period from April 2021 until July 2021 the Company increased its shareholding in Netia to 328,275,387 shares representing 97.82% of its share capital and carrying the right to 97.82% of total votes at Netia’s General Meeting. In consequence, on July 30, 2021, Cyfrowy Polsat announced a compulsory buyout of the remaining Netia shares.

On August 6, 2021, the Company acquired a total of 2.18% of Netia shares as a result of the compulsory buyout. In consequence, as at the date of this Report the Company holds 335,574,367 Netia shares representing 99.999% of Netia’s share capital and carrying the right to 99.999% of total votes at Netia’s General Meeting. Furthermore, the Company applied to the management board of Netia for the registration in the name of Cyfrowy Polsat of 3,977 ordinary bearer shares of Netia, which were not dematerialized and the binding force of which expired by law on March 1, 2021. As a result of the executed compulsory buyout Cyfrowy Polsat became the sole shareholder of Netia.

On December 31, 2021 Netia’s shares were delisted from the WSE.

Distribution of profit for the financial year 2020

On May 27, 2021, the Management Board of the Company adopted a resolution concerning the distribution of the Company’s profit for the financial year 2020. The Management Board’s recommendation, which the Company’s Supervisory Board approved, assumed:

●	to allocate the entire net profit earned by the Company in the financial year 2020, amounting to PLN 405.0 million, for distribution as dividends to the shareholders of the Company, and
●	to allocate the amount of PLN 362.4 million from the reserve capital for distribution as dividends to the shareholders of the Company. As at December 31, 2020, the amount of the reserve capital available for distribution was approximately PLN 3.3 billion.

The total amount of the recommended dividend to the shareholders of the Company amounted to PLN 767.4 million, i.e., PLN 1.20 per share.

Furthermore, the Management Board of the Company recommended that the dividend day be scheduled for September 15, 2021, and the dividend payout be made in two tranches as follows:

●	the first tranche in the amount of PLN 255.8 million, i.e., PLN 0.40 per share – on September 28, 2021, and
●	the second tranche in the amount of PLN 511.6 million, i.e., PLN 0.80 per share – on December 10, 2021.

On June 24, 2021, the Annual General Meeting of Cyfrowy Polsat resolved a dividend payout for the year 2020 in the total amount of PLN 767.4 million, i.e., PLN 1.20 per share, in accordance with the above mentioned recommendation of the Company’s Management Board. The dividend was paid on the dates indicated above.

Statement of Mr. Zygmunt Solorz regarding Polsat Plus Group

On September 27, 2021, Mr. Zygmunt Solorz, the founder and main shareholder of the Company, published a statement regarding Polsat Plus Group.

Mr. Solorz presented the path which the Group has followed so far - from one TV channel of Telewizja Polsat to the largest media and telecommunications group in Poland, fully prepared to effectively operate on the media and telecommunications markets in the future, including further, cost-effective roll-out of its 5G network based on the partnership with Cellnex Telecom. Mr. Solorz concluded that the vision he had assumed is being realized successfully and is yielding the planned and desired effects. The execution of the strategy of the Group as well as the operating and financial results it achieves constitute also, in Mr. Solorz’s opinion, a fulfillment of the obligation towards shareholders, who decided to invest in Cyfrowy Polsat in 2008. Since the debut of our Group on the Warsaw Stock Exchange the price of our shares has tripled and the capitalization of the Group has increased six-fold. What is more, over this period of time shareholders of the Group received a total of PLN 2.7 billion in dividends.

Furthermore, Mr. Solorz stated that at present Polsat Plus Group is at a very important point in time. As the Group’s customers are facing new challenges, which in the opinion of the main shareholder create new opportunities, he intends to encourage the Group to respond to these challenges by opening up to new areas of business. In parallel, Mr. Solorz declared that his vision of the Group’s future development is aimed solely at further strengthening its position and building value for its shareholders in the years to come and that operations on the media and telecommunications markets will remain crucial and the key focus of the Group.

Realizing that part of the current shareholders may not intend to remain investors of the Group given the above developments, Mr. Solorz announced that he will present a proposal which enables the sale of shares of the Company at a fair price.

Acquisition of own shares

On September 28, 2021, Cyfrowy Polsat, in agreement with its parent companies, announced a tender offer for the sale of 263,807,651 shares of the Company at PLN 35.00 per share. The Company’s intent was to acquire in the tender offer no more than 82,904,517 own shares. Subscriptions for the sale of shares were taken from October 18, 2021 to November 16, 2021.

The General Meeting adopted on November 16, 2021 a resolution to authorize the Management Board to acquire own shares and create a capital reserve for the purposes of the own shares buy-back program.

The main objectives of the program are as follows:

●	the Company may acquire up to 83,250,000 fully covered own shares, i.e., the own shares with a total nominal value not exceeding 20% of the share capital of the Company, including the nominal value of the remaining shares of the Company which are held by the Company;
●	the Company may acquire the own shares in any form, including their direct acquisition by the Company, the acquisition through the intermediary of an investment firm, the acquisition of the own shares under the tender offer to subscribe for the sale of shares or by any other manner stipulated in law provisions;
●	the purchase price of the own shares may not be lower than PLN 0.04 and may not be higher than PLN 60.00 per one own share;
●	the total maximum price for purchasing all own shares increased by the cost of their acquisition shall not exceed PLN 2.93;
●	the authorization for the Management Board to acquire the own shares shall be valid for a period of five years starting from the date of the adoption of the resolution, however not longer than until the funds allocated for the acquisition of the own shares are exhausted;
●	the own shares acquired by the Company under the own shares buy-back program may be redeemed by the Company under a separate procedure or disposed of by the Management Board of the Company in another manner, taking into account the needs arising from the operations conducted by the Company;
●	the acquisition of the own shares pursuant to this resolution does not exclude the acquisition of the Company’s own shares by the Company in cases where law provisions allow so.

Furthermore, the draft resolution provides that in order to finance the own shares buy-back program a capital reserve in the amount of PLN 2.93 billion will be created by transferring the above mentioned amount from the Company’s supplementary capital.

As a result of the settlement of the tender offer, on November 24, 2021 the Company acquired directly 11,768,260 own shares constituting in total 1.84% of the share capital of the Company and carrying the right to 11,768,260 votes at the general meeting of the Company, representing 1.44% of the total number of votes at the general meeting of the Company at a purchase price of PLN 35.00 per one share. Neither Reddev nor Mr. Zygmunt Solorz acquired directly any shares in the tender offer.

As part of its share buyback program, on November 26, 2021, the Company acquired 27,400,000 ordinary shares of the Company from Reddev at a purchase price of PLN 35.00 per share. On December 22, 2021, the Company acquired 32,005,866 ordinary shares of the Company from Embud 2 at a purchase price of PLN 34.06 per share.

As at the date of publication of this Report, the Company held a total of 71,174,126 own shares, representing 11.13% of the Company's share capital and carrying the right to 71,174,126 votes at the Company's General Meeting, representing 8.69% of the total number of votes at the Company's General Meeting. Pursuant to Article 364(2) of the Commercial Companies Code, Cyfrowy Polsat does not exercise the participation rights attached to its own shares.

Adoption of the strategy of Polsat Plus Group - Strategy 2023+

On December 20, 2021 the Management Board of the Company adopted the strategy of Polsat Plus Group – Strategy 2023+. The superior goal of the strategy of Polsat Plus Group is the permanent, long-term growth of the value of the Company for its Shareholders. The Management Board of the Company intends to achieve this goal by implementing the key elements of our operating strategy based on three main pillars and supported by an effective financial policy. The pillars of the new strategy are: telecommunication, content and clean energy. The new operational pillar – clean energy production – will open the possibility of building an additional revenue stream for Polsat Plus Group and will bring tangible social benefits in the form of greenhouse gas emissions reduction.

A detailed description of the adopted Strategy 2023+ has been presented in chapter 1.5 - Characteristics of the Company - Strategy of the Group.

Adoption of the Company's dividend policy for the years 2022-2024

On December 20, 2021 the Management Board of Cyfrowy Polsat S.A. adopted a resolution on adoption of a dividend policy, assuming annual submission of a proposal of dividend payment to the General Meeting together with a recommendation of the Management Board.

The Management Board of the Company, after having reviewed the investment plans of Polsat Plus Group and evaluated the possibilities of allocating the expected cash resources of the Group with an aim to pay out dividends to the Shareholders of the Company, in the years 2022-2024 the Management Board of the Company intends to recommend to the General Meeting dividend payout in the total amount of not less than PLN 3.00 per share in three installments as follows:

●	at least PLN 1.00 per share to be paid out from net profit generated in 2021;
●	at least PLN 1.00 per share to be paid out from net profit generated in 2022;
●	at least PLN 1.00 per share to be paid out from net profit generated in 2023.

The new dividend policy takes effect from January 1, 2022.

A detailed description of the dividend policy adopted for the years 2022-2024 was presented in chapter 7.4 - Cyfrowy Polsat on the capital market – Dividend policy.

3.2. Business related events

Sale of shares of Polkomtel Infrastruktura

On February 26, 2021, the Company and its subsidiary Polkomtel Sp. z o.o. entered into a conditional share sale agreement with Cellnex Poland Sp. z o.o., a subsidiary of Cellnex Telecom S.A., concerning the sale of shares of Polkomtel Infrastruktura, the subsidiary responsible for part of the technical network infrastructure. In particular, it owns the passive and active access layers of the mobile telecommunication infrastructure used by Polsat Plus Group, consisting, as of December 31, 2020, of approx. 7 thousand sites and approx. 37 thousand various systems on-air and a transmission network.

Under the sales agreement, the Company undertook to sell all of its shares constituting 74.98% of the share capital of Polkomtel Infrastruktura, and Polkomtel undertook to sell its shares constituting 25.01% of the share capital. The sales agreement was finalized on July 8, 2021. The total value of the transaction amounted to approximately PLN 7.1 billion, whereas the cash proceeds of the Company related to the transaction amounted to PLN 5.3 billion. On July 12, 2021, Polkomtel Infrastruktura Sp. z o.o. changed its name to Towerlink Poland Sp. z o.o.

After the transaction closing, Polkomtel’s core network and all frequencies crucial for providing first-to-market real 5G as well as 2G/3G/LTE services continued to remain in Polsat Plus Group’s possession.

Acquisition of 10% of the share capital of eObuwie.pl S.A.

On March 11, 2021, the Management Board of the Company made a decision to enter into exclusive negotiations with CCC S.A. regarding a potential acquisition of 10% of the share capital of eObuwie.pl S.A. within the scope of a pre-IPO investment for a consideration of PLN 500 million.

Following the conducted due diligence, on March 31, 2021 the Company signed with CCC S.A. a preliminary agreement for the sale of shares of eObuwie.pl and with CCC S.A. and another investor a shareholders’ agreement regulating, among others, the future corporate governance principles of eObuwie.pl. The settlement of the investment took place on June 22, 2021 following the fulfillment of the conditions precedent, including obtaining relevant consents of banks financing the operating activities of entities from CCC’s capital group as well as the consent of the general shareholders meeting of eObuwie.pl for the sale of shares in eObuwie.pl.

Agreements to acquire shares in PAK-Polska Czysta Energia sp. z o.o., Port Praski sp. z o.o. and Pantanomo Limited

In connection with the new strategy of Polsat Plus Group, on December 20, 2021 the Company entered into the following agreements:

●	a preliminary agreement with ZE PAK S.A. concerning the purchase by the Company of shares in PAK-Polska Czysta Energia Sp. z o.o.(PAK-PCE), representing 67% of the share capital of PAK-PCE,
●	a preliminary agreement with Enbud 2 Sp. z o.o. S.K.A. concerning the purchase by the Company of 1,070,000 shares in Port Praski Sp. z o.o., representing approximately 66.94% of share capital of Port Praski Sp. z o.o.,
●	a preliminary agreement with Tobe Investments Group Limited concerning the purchase by the Company of 4,705 shares in Pantanomo Limited, representing approximately 32% of share capital of Pantanomo Limited.

PAK-PCE is a holding company serving as the core for a structure of subsidiaries engaged in the development of renewable energy projects and the generation and utilization of hydrogen. The agreed purchase price for the 67% stake in PAK-PCE is PLN 800.5 million and may be subject to additional adjustments under the locked-box mechanism. As at September 30, 2021, adjusted net debt of the purchased assets amounted to PLN 355.9 million. Based on the valuation performed, Deloitte Advisory Sp. z o.o. Sp.k. prepared a fairness opinion for the transaction price agreed by the parties.

The finalization of the transaction is subject to, among others, obtaining relevant corporate approvals and execution by ZE PAK of the process of transferring to PAK-PCE part of the assets used for generation of electricity based on zero- and low-emission technologies, in particular from biomass. The Company intends to finance the transaction from its own funds.

Port Praski is a company engaging in real property development business through its subsidiaries, and owns assets related to, among others, the Port Praski project located in the Praga-Północ district of Warsaw. Pantanomo engages in the business of, among others, managing its properties and holds a non-controlling interest in Port Praski Sp. z o.o. Cyfrowy Polsat's intention is to increase the capital in Port Praski Sp. z o.o. and to buy back the non-controlling interest from Pantanomo.

The determined purchase price and the value of funds for capital increase amounts to PLN 879.4 million and will be subject to additional adjustments. As at September 30, 2021, the adjusted net cash of the assets purchased amounted to PLN 176.1 million. Based on the valuation performed, Deloitte Advisory Sp. z o.o. Sp.k. prepared a fairness opinion for the transaction price agreed by the parties.

Finalization of the transaction is subject to obtaining, among other things, relevant corporate approvals. The Company intends to finance the transaction with its own funds.

Detailed information on the concluded agreements has been presented in the Company's current report no. 38/2021 dated December 20, 2021.

New Polsat Plus Group brands

In June 2021, we initiated evolutionary changes in the portfolio of brands of our Group and the strategy of their communication. In the first step, new logotypes for the Plus and Polsat brands were introduced. These two brands are of strategic importance and stand, respectively, for our telecommunication services of the highest quality, and for the most attractive content.

In the next step, at the end of July 2021 we presented new logotypes for the remaining main brands of the Group. The Cyfrowy Polsat brand changed to the new Polsat Box brand. Ipla and Cyfrowy Polsat Go evolved into a single service called Polsat Box Go. Moreover, a new service called Polsat Go, offering Polsat TV content, was created.

Simultaneously, we presented a new main slogan for brands of Polsat Plus Group: “Choose your everything”. What unites all the brands is the possibilities they offer to each and every customer and viewer, i.e. the possibility of choosing attractively priced services, products and content that match one’s individual needs in any way one likes and at the time and place of one’s convenience.

The new logotypes have been designed in such a way to ensure their clarity and ease of reception by our viewers and customers: on the one hand, making sure that they are visually associated with the Group, and on the other - that they retain their individual values. In addition, in our corporate communication we have started using a new name of the Group, a name that underscores the relationship and cooperation between the areas of services offered under the brands of Plus (telecommunication) and Polsat (content): Polsat Plus Group.

The branding changes of the Group’s companies are going to be gradual and are planned and scheduled to take place in several phases. Cyfrowy Polsat S.A. will continue to be the provider of the services offered by Polsat Box and Polsat Box Go, which replaced Cyfrowy Polsat, Ipla and Cyfrowy Polsat GO brands. Plus is the brand of Polkomtel Sp. z o.o., while Polsat and Polsat Go are the brands of Telewizja Polsat Sp. z o.o.

4. Operating and financial review of the Company

4.1. Operating review

The Company does not publish separate KPIs with respect to its core business. Key performance indicators (KPI) presented below present the operating results of Polsat Plus Group.

Due to the continued development of Polsat Plus Group, in particular due to the increased capital engagement in our subsidiary Netia in the third quarter of 2021 and the resulting delisting of Netia shares from trading on the Warsaw Stock Exchange, we decided to modify key performance indictors (KPIs) which describe current operating results of our strategy. These modifications are intended to provide better dimensioning of our specific operations which have gained a significantly stronger position on the B2B market following the acquisition of Netia. It should also be noted that as a general rule B2B customers are characterized by visibly different demand patterns for our services than B2C customers and therefore we believe that reporting current operating results of the B2C and B2B areas separately will ensure better understanding of the results that we achieve.

In parallel, due to the implementation of the regulation imposing cap MTR and FTR interconnection rates since the beginning of July 2021 we reached the conclusion that it is justified to exclude revenue from these settlements from ARPU calculation in the reported areas. Our decision is based on the fact that a several-years-long path of gradual reductions of cap rates applicable in interconnection settlements would translate negatively into the pace of building our customers’ value in the next years, which could mislead with regard to the assessment of the effectiveness of the strategy that we are executing.

When assessing our operating results in the B2C area, we analyze contract services and prepaid services separately. In the case of contract services we consider the number of unique, active services provided in the contract model (RGUs), the number of customers, churn rate and average revenue per customer (ARPU). When analyzing prepaid services we consider the number of unique, active services provided in the prepaid model (prepaid RGUs) as well as average revenue per prepaid RGU. The number of reported RGUs of prepaid services of mobile telephony and internet access refers to the number of SIM cards which received or answered calls, sent or received SMS/MMS or used data transmission services within the last 90 days.

In turn, the B2B area is analyzed by us across two base dimensions. We focus on maintaining and building the scale of our customer base, expressed as the number of businesses serviced by us, as well as on measuring their value through ARPU. Building the value of our B2B base in founded in a natural way on unique services provided to our business customers. However, due to widely diverse prices of particular services offered in this segment, we think that in the B2B area the number of services is a secondary indicator, the interpretation of which could lead to misleading conclusions.

	for the 3-month period ended December 31		change / %
	2021	2020	nominal	%
B2C AND B2B SERVICES SEGMENT 1
Contract services for B2C customers
Total number of B2C RGUs(2) (EOP) [thous.], incl.	13,465	13,169	296	2.2%
Pay TV	5,264	5,355	(91)	(1.7%)
Mobile telephony	6,195	5,810	385	6.6%
internet	2,006	2,004	2	0.1%
Number of B2C customers (EOP) [thous.]	6,047	6,004	44	0.7%
ARPU per B2C(3) customer [PLN]	69.1	66.2	2.9	4.4%
ARPU per B2C(3) customer (YTD) [PLN]	68.2	64.5	3.7	5.7%
Churn in B2C(4) subsegment	6.9%	6.9%	0.0 p,p,	-
RGU saturation per one B2C customer	2.23	2.19	0.04	1.8%
Prepaid services
Total number of RGUs (EOP) [thous.], including:	2,667	2,618	49	1.9%
Pay TV	90	114	(25)	(21.6%)
Mobile telephony	2,537	2,446	92	3.7%
internet	39	58	(18)	(31.5%)
ARPU per prepaid RGU(5) [PLN]	16.6	15.8	0.8	5.1%
ARPU per prepaid RGU(5) (YTD) [PLN]	16.2	15.5	0.7	4.5%
Contract services for B2B customers
Total number of B2B customers (EOP) [thous.]	68.9	69.3	(0.4)	(0.6%)
ARPU per B2B(3) customer [PLN]	1,403	1,384	19	1.4%
ARPU per B2B(3) customer (YTD) [PLN]	1,390	1,381	10	0.7%

(1)	Customer – a natural person, legal entity or an organizational unit without legal personality who has at least one active service provided in the contract model. A customer is identified by a unique national identification number (PESEL), tax identification number (NIP) or national business registry number (REGON).
(2)	RGU (revenue generating unit) – a single, active and retail revenue generating service of pay TV provided in all types of access technologies, mobile or fixed-line internet access, or mobile telephony provided in the contract or prepaid model.
(3)	ARPU per B2C/B2B customer - average monthly revenue per customer generated in a given settlement period.
(4)	Churn - termination of the contract with a B2C customer by means of a termination notice, collections or other activities resulting in the situation that after the termination of the contract the customer does not have any active services provided in the contract model. Churn rate presents the relation of the number of customers for whom the last service has been deactivated (by means of a termination notice as well as deactivation as a result of collection activities or other reasons) within the last 12 months to the annual average number of customers in this 12-month period.
(5)	ARPU per prepaid RGU - average monthly revenue per prepaid RGU generated in a given settlement period.

Contract services for B2C customers

The total number of B2C customers to whom we provided contract services as at the end of 2021 was 6,047 thousand (+0.7% YoY). The main reason behind the increase of the contract customer base was the consolidation from July 2021 of the results of Premium Mobile. Simultaneously, the process of further merging of contracts under one common contract for the household continued within our base, which is reflected in the growing RGU saturation per customer ratio (increase by 1.8% YoY to 2.23 RGU per customer). In line with our strategic assumptions, we avoid conducting an aggressive sales policy on individual products and focus rather on increasing customer loyalty, in particular through offering a wide portfolio of bundled services, as well as on increasing ARPU per contract customer.

The number of contract services for B2C customers provided by us at the end of 2021 increased by 296 thousand compared to the previous year (+2.2%) YoY, reaching 13,465 thousand RGUs. A strong increase of contract mobile telephony services for B2C customers – by 385 thousand (+6.6%) YoY to the level of 6.195 thousand was the main driver behind this growth. This result was achieved thanks to the successful implementation of our strategy of cross-selling, including 5G services, which are in our offer since May 2020. At the same time, we effectively care about customer satisfaction, which translated into a low churn ratio. An additional factor which contributed to the growth in the analyzed period was the acquisition of Premium Mobile.

At the end of December 2021 our B2C customers used 5,264 thousand contract pay TV services. The number of pay TV RGUs decreased in 2021 by 91 thousand (-1.7% YoY), mainly due to the lower number of provided satellite TV services as well as the repositioning of pricing and change in strategy for offering our online services. This decrease was successfully compensated by the increasing number of TV services offered in online technologies (IPTV/OTT).

In 2021, the number of Internet access services provided to B2C customers in the contract model remained at a stable level of 2,006 thousand. A factor that supports the maintenance of our Internet RGU base is the constantly improving quality of our telecommunications network – a consequence of the investments we made, exemplified by the rapid roll-out of the 5G network and the gradual modernization of our fixed-line network.

We observe a steadily increasing saturation of our B2C customer base with integrated services, which is reflected in the growing ratio of contract services per customer. As at the end of 2021 every customer had on average 2.23 contract services (+1.8% YoY). We believe that further saturation of our customer base with integrated services, including our flagship product smartDOM to which we systematically add new products, will positively influence the growth of the number of contract RGUs provided by us in the future.

In line with the assumptions of our long-term strategy, we aim to maximize revenue per contract B2C customer through cross-selling, i.e., selling additional products and services to our customer base within the framework of our bundled services offer. In 2021, average revenue per B2C customer increased to PLN 68.2 (+5.7% YoY) while in the fourth quarter of 2021 alone it increased to PLN 69.1 (+4.4% YoY). The dynamic growth of ARPU per B2C contract customer results, in particular, from the continuous building of customer value. We believe that our decisions to rapidly build out the 5G network roll-out and growing popularity of tariff plans enabling the use of this technology by our customers will contribute to the further building of customer value, reflected in the level of ARPU.

Our churn rate remained unchanged at a level of 6.9% in the twelve-month period ended December 31, 2021. Low churn is primarily the effect of a high level of loyalty of our customers of bundled services, which results from the successful implementation of our multiplay strategy, as well as our actions aimed at fostering high customer satisfaction. In addition, a more conservative offering policy than in the past of mobile operators translates into a steady decrease of the number of customers migrating between networks, which also impacts our churn rate favorably.

Our bundled services offer, based on a mechanism of offering attractive discounts on every additional product or service purchased from the Group’s portfolio, remains very popular and continues to record very good sales results, which has a positive effect on the churn rate, RGU saturation per customer rate and ARPU per contract B2C customer. At the end of December 2021, 2,457 thousand customers were using our bundled services, which constitutes an increase of 88 thousand (+3.7%) YoY and translates to a 40.6% saturation of our contract customer base with multiplay services. This group of customers was using 7,338 thousand RGUs as at the end of 2021, by 286 thousand more (+4.1%) YoY. Bearing in mind the long-term goal of our Group - the maximization of revenue per contract customer through cross-selling of additional products and services - our bundled services offer is perfectly in line with our strategy.

Prepaid services

The number of prepaid services provided by us increased by 49 thousand (+1.9%) YoY and amounted to 2,667 thousand as at December 31, 2021.

The number of prepaid mobile telephony services increased in the analyzed period by 92 thousand (+3.7%) YoY, to 2,537 thousand RGUs while the number of prepaid broadband Internet services decreased by 18 thousand YoY. This change was driven primarily by the increasing popularity of data transmission packages in mobile telephony tariff plans (smartphones) which is associated with diminishing differences between the sizes of data packages offered in both product lines. At the same time, the scale of our mobile telephony customer base was favorably impacted in the reported period by the consolidation of the results of Premium Mobile. The number of prepaid TV services provided by us decreased by 25 thousand to the level of 90 thousand at the end of 2021, as a result of a lower volume of one-time sports broadcasts purchased by our customers.

In 2021, average revenue per prepaid RGU amounted to PLN 16.2 (+4.5% YoY) while in the fourth quarter of 2021 it amounted to PLN 16.6 (+5.1% YoY). Revenues from both content and telecommunication services contributed to the increase in prepaid APRU.

Contract services for B2B customers

The total number of B2B customers to whom we provided contract services as at the end of 2021 was 68.9 thousand (-0.6% YoY). The scale of our B2B customer base remains stable in the long term, proving high efficiency of our actions directed at fostering high satisfaction of our business customers. At the same time, we maintain a stable level of ARPU from B2B customers, which reached PLN 1,390 (+0.7% YoY) per month on average in the twelve-month period ended December 31, 2021.

The B2B area continues to be under strong competitive pressure, which translates into pricing levels for traditional telecommunication services. In order to maintain the value of our B2B base, we aim at constantly expanding our offering for business customers by additional services which generate incremental revenue. The continued expansion of data center resources offered to business customers, cybersecurity solutions or cloud computing can serve as an example. In parallel, we seek to provide specialized IT solutions for specific sectors of the economy (finance and banking, real estate, hotels, energy production, etc.). We believe that thanks to a comprehensive telecommunication and IT services offering for our B2B customers we will be in a position to maintain their high level of satisfaction and therefore to secure our revenue in this market segment.

4.2. Key positions in the income statement

Revenue

Revenue is derived from retail revenue, wholesale revenue, sale of equipment and other revenue sources.

Retail revenue consists primarily of:

(i)	monthly subscription fees paid by our satellite and Internet pay television contract customers for programming packages,
(ii)	subscription fees paid by our contract customers for telecommunication services,
(iii)	fees for services provided to our contract customers, which are not included in the subscription fee,
(iv)	fees for the lease of set-top boxes,
(v)	activation fees,
(vi)	penalties, and
(vii)	fees for additional services.

Total revenue from pay television and telecommunication subscription fees depends on the number of customers and the number of services provided to them, as well as on the amount of monthly subscription fees paid for our programming and telecommunication packages and the amount of additional services provided to our customers in the given period. Activation fees are collected at the moment of activation and amortized over the life of the contract.

Our wholesale revenue comprises:

(i)	advertising and sponsorship revenue,
(ii)	revenue from the sale of broadcasting and signal transmission services, and
(iii)	revenue from the sale of licenses, sublicenses and property rights.

Sale of equipment consists mostly of revenue from sales of set-top boxes, STB hard disk drives, antennas, Internet modems, tablets, laptops, routers, TV sets, accessories and other devices.

Other revenue sources consist primarily of revenue from the lease of premises and facilities, revenue from interest on installment plan purchases and other sales revenue.

Operating costs

Operating costs consist of:

(i)	content costs,
(ii)	distribution, marketing, customer relation management and retention costs,
(iii)	depreciation, amortization, impairment and liquidation,
(iv)	technical costs and cost of settlements with mobile network operators,
(v)	salaries and employee-related costs,
(vi)	cost of equipment sold,
(vii)	cost of debt collection services and bad debt allowance and receivables written off, and
(viii)	other costs.

Content costs consist primarily of programming license costs, which include monthly license fees due to television broadcasters, license fees for materials broadcast on VOD and royalties due to collective copyright management organizations and the Polish Film Institute.

Distribution, marketing, customer relation management and retention costs consist of:

(i)	marketing costs,
(ii)	customer service and retention costs,
(iii)	commissions due to authorized retail points of sale as remuneration for concluded agreements with our customers for pay television and telecommunication services,
(iv)	costs of courier services, distribution of reception equipment, storage costs and costs associated with services of our regional agents,
(v)	costs of warranty service, and
(vi)	costs of sales network maintenance.

Marketing expenses consist of expenses on TV and radio commercials, press, online and outdoor advertising, promotional activities and materials, as well as other expenses incurred to increase sales and brand recognition.

Customer relation management and retention costs consist of mailing costs, call center costs and other customer relation management costs.

Depreciation, amortization, impairment and liquidation costs primarily consist of:

(i)	depreciation of set-top boxes and other equipment leased to our customers,
(ii)	depreciation of plant and equipment, TV and broadcasting equipment,
(iii)	amortization of intangible assets, including customer relationships, trademarks and IT programs,
(iv)	non-current assets impairment allowance, and
(v)	net value of disposed property, plant and equipment as well as intangible assets, no longer suitable for use.

Technical costs and cost of settlements with telecommunication operators comprise:

(i)	IT systems maintenance costs,
(ii)	costs of using satellite transponders,
(iii)	payments for the use of conditional access system,
(iv)	interconnection charges, and
(v)	other costs.

Salaries and employee-related expenses consist of salaries paid to employees under employment contracts (excluding salaries and social security contributions of factory employees, which are included in the costs of manufacturing of reception equipment and salaries and social security contributions relating to employees directly involved in the production of IT software, which are capitalized on intangible assets) or project-specific contracts, managerial contracts, remuneration of our Supervisory Board members, social security costs and other employee benefits.

Cost of equipment sold relates mostly to set-top boxes, STB hard disk drives, antennas, Internet modems, routers, tablets, laptops, TV sets, accessories and other equipment that we sell to our customers.

In the group of costs of debt collection services and bad debt allowance and receivables written off we present:

(i)	bad debt recovery fees,
(ii)	bad debt allowance and the cost of receivables written off, and
(iii)	gains and losses from the sales of debts.

Key items of other costs include:

(i)	the cost of SMART and SIM cards provided to customers,
(ii)	legal, advisory and consulting costs,
(iii)	property maintenance costs,
(iv)	taxes and other charges, and
(v)	other costs.

Other operating income/costs, net consist of:

(i)	inventory impairment write-downs/reversals, and
(ii)	other operating revenue/costs, not derived in the ordinary course of business.

Gains and losses on investment activities, net include interest income on funds invested, dividends income, share in profits of partnerships, fair value gains/losses on financial instruments at fair value through profit or loss, impairment losses recognized on financial assets, unwinding of the discount on provisions.

Finance costs comprise interest on borrowings (including bank loans and bonds), bank and other charges on borrowings and guarantee fees resulting from indebtedness. Borrowing costs are recognized in profit or loss using the effective interest method.

4.3. Review of the Company’s financial situation

The following review of results for the twelve-month period ended December 31, 2021 was prepared based on the financial statements for the twelve-month period ended December 31, 2021, prepared in accordance with International Financial Reporting Standards as approved for use by the European Union and based on internal analyses.

4.3.1. Income statement analysis

The table below presents the Company's income statement for the twelve-month period ended December 31, 2021. Please note that we have presented the adjusted EBITDA result for the comparative period, which excludes costs related to the COVID-19 epidemic, including donations, incurred in 2020.

[mPLN]	for the 12 month period ended December 31		change
[mPLN]	2021	2020	[mPLN]	[% / pp]
Revenue	2,448.6	2,401.0	47.6	2.0%
Operating costs	(2,056.7)	(1,950.0)	(106.7)	5.5%
Other operating income/(costs), net	(5.3)	7.2	(12.5)	n/a
Profit from operating activities	386.6	458.2	(71.6)	(15.6%)
Gain on investment activities, net	4,048.7	127.7	3,921.0	>100%
Finance costs, net	(103.3)	(89.7)	(13.6)	15.2%
Gross profit for the period	4,332.0	496.2	3,835.8	>100%
Income tax	(726.1)	(91.2)	(634.9)	>100%
Net profit for the period	3,605.9	405.0	3,200.9	>100%
EBITDA	572.1	631.9	(59.8)	(9.5%)
EBITDA margin	23.4%	26.3%	-	(2.9 pp)
Costs related to COVID (incl. donations)	-	(8.1)	8.1	(100%)
EBITDA adjusted	572.1	640.0	(67.9)	(10,6%)
EBITDA adjusted margin	23.4%	26.7%	-	(3.3 pp)

Revenue

[mPLN]	for the 12 month period ended December 31		change
[mPLN]	2021	2020	[mPLN]	[%]
Retail revenue	2,247.2	2,194.0	53.2	2.4%
Wholesale revenue	103.1	114.7	(11.6)	(10.1%)
Sale of equipment	25.8	22.1	3.7	16.7%
Other revenue	72.5	70.2	2.3	3.3%
Revenue	2,448.6	2,401.0	47.6	2.0%

Our total revenue increased by PLN 47.6 million (+2.0%) YoY in 2021 and amounted to PLN 2,448.6. Retail revenue from individual and business customers was the main driver behind the increase in total revenue.

In 2021, retail revenue increased by PLN 53.2 million (+2.4%) YoY, mainly as a result of the successful execution of our strategy aimed at building customer value. Despite a decline in the number of satellite TV customers we derive higher revenue from pay TV due to the gradual migration of our customers to higher packages. At the same time, it should be noted that in connection with the Polsat Plus Group’s rebranding, as of the third quarter of 2021 we have ceased active sales of the mobile Internet service under the Cyfrowy Polsat brand, which will be reflected in the level of retail revenue of the Company in subsequent periods.

The increase in retail revenue was partly offset by a decrease in wholesale revenue by PLN 11.6 million (-10.1%) YoY, mainly due to lower advertising revenue. This was primarily the result of our strategic decision made in 2021 to change the model of offering our online video services.

Operating costs

[mPLN]	for the 12 month period ended December 31		change
[mPLN]	2021	2020	[mPLN]	[%]
Content costs	797.3	771.5	25.8	3.3%
Technical costs and cost of settlements with telecommunication operators	495.4	461.8	33.6	7.3%
Distribution, marketing, customer relation management and retention costs	308.7	313.8	(5.1)	(1.6%)
Depreciation, amortization, impairment and liquidation	185.5	173.7	11.8	6.8%
Salaries and employee-related costs	130.2	121.9	8.3	6.8%
Cost of equipment sold	20.1	18.8	1.3	6.9%
Cost of debt collection services and bad debt allowance and receivables written off	9.2	6.3	2.9	46.0%
Other costs	110.3	82.2	28.1	34.2%
Operating costs	2,056.7	1,950.0	106.7	5.5%

Our operating costs increased by PLN 106.7 million (+5.5%) YoY in 2021. Technical costs and cost of settlements with telecommunication operators increased by PLN 33.6 million (+7.3%) YoY, reflecting mostly the purchase of higher network capacity from our subsidiary Polkomtel in connection with the increased demand from our customers for data transmission and higher cost of capacity on satellite transponders used for broadcasting our pay TV channels. Content costs increased by PLN 25.8 million (+3.3%) YoY as a result of the gradual migration of our customers to higher pay TV packages with more attractive programming content. Moreover, in 2021 we recorded an increase of other costs by PLN 28.1 million (+34.2%) YoY, mainly as a result of higher costs of consulting services associated with a number of strategic projects carried out by the Company. In parallel, depreciation, amortization, impairment and liquidation costs increased by PLN 11.8 million (+6.8%) YoY in connection with systematically incurred investment expenses. In turn, salaries and employee-related costs increased by PLN 8.3 million (+6.8%) YoY, as a result of an increase of the headcount in the Company by 33 FTEs (+4.1%) YoY.

Average employment	for the 12 month period ended December 31		Change
Average employment	2021	2020	[FTEs]	[%]
Permanent workers not engaged in production(1)	844	811	33	4.1%

(1) Excluding workers who did not perform work in the reporting period due to long-term absences

Gain on investment activities, net amounted to PLN 4,048.7 million in 2021, compared to a gain net of PLN 127.7 million in 2020. This increase was mainly the effect of the recognition of the one-off gain on the disposal of Polkomtel Infrastruktura to Cellnex Group.

Finance costs, net increased by PLN 13.6 million (+15.2%) YoY, mainly due to the recognition of higher costs of servicing our debt following the issuance in April 2020 of the green Series C bonds with a total nominal value of PLN 1 billion and active use in 2021 of the available additional financing, including our revolving credit facility.

Income tax was higher by PLN 634.9 million YoY mainly as a result of the recognition of income tax on the one-off gain on the disposal of Polkomtel Infrastruktura in 2021, which is subject to cash settlement in the first half of 2022.

As a result of the changes described above net profit for 2021 increased by PLN 3,200.9 million YoY and amounted to PLN 3,605.9 million.

EBITDA of the Company decreased by PLN 59.8 million (-9.5%) YoY to the level of PLN 572.1 million in 2021 with EBITDA margin reaching 23.4% (-2.9 p.p. YoY).

Adjusted EBITDA excluding the costs related to the COVID-19 epidemic amounted to PLN 572.1 million in 2021 and was lower by PLN 67.9 million (-10,6%) YoY compared to PLN 640.0 million in 2020, resulting in an EBITDA margin of 23.4% (-3.3 p.p. YoY).

4.3.2. Analysis of the Company’s balance sheet

As at December 31, 2021 our balance sheet amounted to PLN 16,176.2 million and was higher by PLN 600.3 million compared to its level as at December 31, 2020.

Assets

[mPLN]	December 31 2021	December 31 2020	Change
[mPLN]	December 31 2021	December 31 2020	[mPLN]	[%]
Reception equipment	332.5	343.1	(10.6)	(3.1%)
Other property, plant and equipment	122.9	112.8	10.1	9.0%
Goodwill	197.0	197.0	-	-
Brands	-	7.8	(7.8)	(100.0%)
Other intangible assets	96.4	72.1	24.3	33.7%
Right-of-use assets	19.0	23.0	(4.0)	(17.4%)
Investment property	34.3	36.4	(2.1)	(5.8%)
Shares in subsidiaries, associates and other	12,410.3	13,428.8	(1,018.5)	(7.6%)
includes shares in associates	1,749.9	1,260.2	489.7	38.9%
Non-current deferred distribution fees	17.1	26.5	(9.4)	(35.5%)
Other non-current assets	446,5	87,1	359,4	(>100%)
includes derivative instruments	4.1	-	4.1	(>100%)
Total non-current assets	13,676.0	14,334.6	(658.6)	(4.6%)
Contract assets	121.1	160.2	(39.1)	(24.4%)
Inventories	65.1	46.7	18.4	39.4%
Trade and other receivables	288.3	118.7	169.6	>100%
Current deferred distribution fees	63.7	64.2	(0.5)	(0.8%)
Other current assets	27.1	16.1	11.0	68.3%
includes derivative instruments	9.3	-	9.3	n/d
Cash and cash equivalents	1,934.8	835.4	1,099.4	>100%
Total current assets	2,500.1	1,241.3	1,258.8	>100%
Total assets	16,176.1	15,575.9	600.2	3.9%

In 2021, our non-current assets decreased by PLN 658.6 million (-4.6%) and accounted for 84.5% of total assets as at December 31, 2021 compared to 92.0% at the end of 2020. The change in the value of non-current assets was driven mainly by the lower value of our shares in subsidiaries and associates, partly offset by an increase in the value of other non-current assets. The value of shares in subsidiaries and associates decreased by PLN 1,018.5 million (-7.6%) YoY, reflecting the transactions effected during 2021, i.e., the disposal of shares in our subsidiary Polkomtel Infrastruktura, the acquisition of the 10% stake in eObuwie S.A. and the increased capital engagement in Netia S.A. In turn, an increase in the value of other non-current assets by PLN 359.4 million YoY was mainly due to the loans granted by us during 2021 to two of our subsidiaries: Netia S.A. (for the full repayment of its revolving credit facility drawn the past) and Esoleo S.A. (for the development of Esoleo's operating activities), as well as granting loans to entities from outside Polsat Plus Group for the purpose of developing activities in the area of energy production from renewable sources.

In 2021, our current assets increased by PLN 1,258.8 million and accounted for 15.5% of total assets of the Company as at the end of 2021 compared to 8.0% at the end of 2020. The value of non-current assets was higher mainly due to an increase in cash and cash equivalents by PLN 1,099.4 million. This increase was the net effect of the cash inflow resulting from the settlement of the disposal of Polkomtel Infrastruktura, the payout of the second tranche of the dividend for 2019 and the full dividend for 2020, the acquisition of nearly 71.2 million of own shares by Cyfrowy Polsat and as well as the acquisitions executed in 2021, including in particular the purchases of the additional stake of shares of Netia and the 10% stake of shares of eObuwie S.A.

Equity and liabilities

[mPLN]	December 31 2021	December 31 2020	Change
[mPLN]	December 31 2021	December 31 2020	[mPLN]	[%]
Share capital	25.6	25.6	-	-
Share premium	7,174.0	7,174.0	-	-
Other reserves	8.8	(8.5)	17.3	n/d
Retained earnings	3,628.0	3,719.6	(91.6)	(2.5%)
Treasury shares	(2,461.0)	-	(2,461.0)	n/d
Reserve for Treasury Shares Purchase Program	2,915.0	-	2,915.0	n/d
Total equity	11,290.4	10,910.7	379.7	3.5%
Loans and borrowings	1,230.7	1,387.1	(156.4)	(11.3%)
Issued bonds	1,942.1	1,959.2	(17.1)	(0.9%)
Lease liabilities	16.5	19.9	(3.4)	(17.1%)
Deferred tax liabilities	80.7	84.6	(3.9)	(4.6%)
Other non-current liabilities and provisions	2.1	6.3	(4.2)	(66.7%)
includes derivative instruments	-	4.7	(4.7)	(100.0%)
Total non-current liabilities	3,272.1	3,457.1	(185.0)	(5.4%)
Loans and borrowings	193.8	140.9	52.9	37.5%
Issued bonds	66.4	38.7	27.7	71.6%
Lease liabilities	3.7	3.7	-	-
Contract liabilities	233.9	246.1	(12.2)	(5.0%)
Trade and other payables	463.3	353.3	110.0	31.1%
includes derivative instruments	-	5.5	(5.5)	(100.0%)
Liabilities to shareholders related to dividend	-	415.7	(415.7)	(100.0%)
Income tax liability	649.1	6.4	642.7	>100%
Deposits for equipment	3.4	3.3	0.1	3.0%
Total current liabilities	1,613.6	1,208.1	405.5	33.6%
Total liabilities	4,885.7	4,665.2	220.5	4.7%
Total equity and liabilities	16,176.1	15,575.9	600.2	3.9%

During 2021, equity increased by PLN 379.7 million (+3.5%) to PLN 11,290.4 million as at December 31, 2021. This was the result of profit generated in 2021 in the amount of PLN 3,605.9 million reduced by the result of the share buy-back execution in the amount of PLN 2,461.0 million and the settlement of the dividend for 2020 in the amount of PLN 767.5 million.

Total liabilities increased by PLN 220.5 million (+4.7%) YoY and amounted to PLN 4,885.8 million as at December 31, 2021, out of which current liabilities amounted to PLN 1,613.6 million and non-current liabilities were PLN 3,272.1 million (constituting 33.0% and 67.0% of total liabilities, respectively). Compared to the end of December 2020, the value of current liabilities increased by PLN 405.5 million (+33.6%) while non-current liabilities decreased by PLN 185.0 million (-5.4%). The main factor driving the decrease of the value of non-current liabilities was the recognition of lower value of loans and borrowings following the resumption of scheduled installment repayments of Tranche A of the SFA starting from the second quarter of 2021. In turn, the increase in the value of current liabilities was impacted in particular by higher by income tax liabilities by the amount of PLN 642.7 million, due to the completed disposal of shares of Polkomtel Infrastruktura, as well as an increase in the value of trade and other payables, including payables to related parties. In parallel, the full settlement of the dividends due to our shareholders for the years 2019-2020 reduced to null the value of our liabilities to shareholders related to dividend compared to their level of PLN 415.7 million as at the end of December 2020.

Contractual liabilities related to purchases of non-current assets

Total amount of contractual liabilities resulting from agreements for property construction and improvements was PLN 77.2 million as at December 31, 2021 (PLN 0.2 million as at December 30, 2020). Additionally, the amount of deliveries and services committed to under agreements for the purchases of licenses and software was sets was PLN 0.3 million as at December 31, 2021 (PLN 0.3 million as at December 30, 2020).

Future contractual obligations

As at December 31, 2021 and December 31, 2020 the Group had future liabilities due for transponder capacity agreements. The table below presents future payments (total):

[mPLN]	December 31, 2021	December 31, 2020
within one year	122.1	122.5
between 1 to 5 years	366.2	489.9
Total	488.3	612.4

4.3.3. Analysis of the Company’s cash flow

The table below presents selected data from the cash flow statement for the twelve-month periods ended December 31, 2021 and December 31, 2020.

[mPLN]	for twelve months ended December 31		Change
[mPLN]	2021	2020	[mPLN]	[% / pp]
Net profit	3,605.9	405.0	3,200.9	>100%
Net cash from operating activities	441.1	507.8	(66.7)	(13.1%)
Net cash from / (used) in investing activities	4,505.5	(27.2)	4,532.7	n/a
Capital expenditures	(58.1)	(48.7)	(9.4)	19.3%
Capital expenditures /revenue	2.4%	2.0%	n/a	0.4 p,p,
Net cash from / (used) in financing activities	(3,847.2)	212.7	(4,059.9)	n/a
Net increase/(decrease) in cash and cash equivalents	1,099.4	693.3	406.1	58.6%
Cash and cash equivalents at the beginning of the period	835.4	142.1	693.3	>100%
Cash and cash equivalents at the end of the period	1,934.8	835.4	1,099.4	>100%

Net cash from operating activities

Net cash received from operating activities amounted to PLN 441.1 million in 2021 and decreased by PLN 66.7 million (-13.1%) YoY. The decrease in net cash from operating activities was impacted mainly by higher engagement of working capital which was partly offset by lower level of the income tax settled in cash and lower value of equipment forwarded in 2021 to pay TV customers.

Net cash from investing activities

Net cash received from investing activities amounted to PLN 4,505.5 million in 2021 compared to PLN 27.2 million of net cash used in investing activities in 2020. This change was mainly caused by the inflow of proceeds from the disposal of shares of our subsidiary Polkomtel Infrastruktura in the amount of PLN 5,269.5 million as well as received dividends in the amount of PLN 1,029.8 million (+ PLN 909.6 million YoY). These factor offset in full a cash outflow related to the purchase the 10% stake in eObuwie.pl S.A., the continued increase of our capital engagement in Netia and their M&A projects totaling PLN 1,293.3 million (+ PLN 1,267.5 million YoY) as well as loans granted to two of our subsidiaries Netia and Esoleo and to entities from outside Polsat Plus Group for the purpose of developing activities in the area of energy production from renewable sources (an increase of the total amount of loans granted reduced by loans repaid by PLN 377.3 million YoY).

In turn, capital expenditures on the purchase of property, plant and equipment, and intangible assets amounted to PLN 58.1 million in 2021 and increased by PLN 9.4 million (+19.3%) YoY. In 2021, capital expenditures included, in particular, the development of our content services, including, among others, the development of functionalities of applications and streaming platforms (Polsat Box Go and Cyfrowy Polsat Go) as well as modernization and expansion of our broadcasting infrastructure and recording studios.

Net cash used in finance activities

Net cash used in financing activities amounted to PLN 3,847.2 million in 2021 compared to PLN 212.7 million of cash received from financing activities in 2020. The increase of this item in the 2021 was due, among others, to the expenditure of PLN 2,464.0 million for the share buy-back program, the return to regular quarterly repayments of Tranche A of our SFA as well as the payout of the second tranche of dividend for 2019 in the amount of PLN 415.7 million and two tranches of dividend for 2020 in the amount of PLN 767.5 million. At the same time, during 2021, Cyfrowy Polsat actively used the revolving credit facility, having repaid it in full as at December 31, 2021.

4.3.4. Liquidity and capital resources

We maintain cash to fund the day-to-day requirements of our business. Our objective is to ensure cost-efficient access to various financing sources, including bank loans, bonds and other borrowings.

We believe that our cash balances and cash generated from our current operations, as well as funds available under our revolving facilities (described below) should be sufficient to satisfy the future needs related to our operating activities, development of our services, service of our debt as well as for the execution of a majority of investment plans in the field of the Company’s activity.

Due to the fact that the Company is one of the borrowers under the SFA, which also covers selected subsidiaries of Cyfrowy Polsat, the information on indebtedness presented below refers to indebtedness at the group level.

The table below presents a summary of the indebtedness of the Group as at December 31, 2021.

	Balance value as at December 31, 2021 [mPLN]	Coupon / interest / discount	Maturity date
SFA (Tranche A and B)	8,738.8	WIBOR + margin	Tranche A - 2024 Tranche B - 2025
Revolving Credit Facility (RCF)	-	WIBOR + margin	-
Series B and C Bonds	2,008.5	Series B - WIBOR + 1.75% Series C - WIBOR + 1.65%	Series B – 2026 Series C – 2027
Leasing and other	704.3	-	-
Gross debt	11,451.6	-	-
Cash and cash equivalents1	(3,644.3)	-	-
Net debt	7,807.3	-	-
EBITDA LTM	7,699.6	-	-
Total net debt / EBITDA LTM	1.01x	-	-
Weighted average interest cost2	-	5.1%	-

(1)	This item comprises cash and cash equivalents, including restricted cash, as well as short-term deposits.
(2)	Prospective average weighted interest cost of the SFA (including the Revolving Credit Facility) and the Series B and Series C Bonds, excluding hedging instruments, as at March 15, 2022 assuming WIBOR 1M of 3.71% and WIBOR 6M of 4.69%.

The graphs below present the debt maturity profile of Polsat Plus Group’s debt as well as its structure according to instrument type and currency (expressed in nominal values and excluding the indebtedness under the RCF and leasing) as at December 31, 2021.

Below we present information on significant financing agreements executed by the Company and the Group companies, which remain in force as at the date of approval of this Report.

Senior Facilities Agreement

On September 21, 2015, the Company, as the borrower, along with Telewizja Polsat, Cyfrowy Polsat Trade Marks, Polsat License Ltd. and Polsat Media Biuro Reklamy concluded a Senior Facilities Agreement with a consortium of Polish and foreign financial institutions, led by Powszechna Kasa Oszczędności Bank Polski S.A., Bank Zachodni WBK S.A., ING Bank Śląski S.A., Société Générale (Global Banking Coordinators) with the participation of PZU Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych BIS 1, PZU Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych BIS 2, BNP Paribas Fortis SA/NV, Bank Polska Kasa Opieki S.A., The Bank of Tokyo-Mitsubishi UFJ Ltd., Bank of China (Luxembourg) S.A., Credit Agricole Corporate & Investment Bank, Credit Agricole Bank Polska S.A., DNB Bank Polska S.A., DNB Bank ASA, HSBC Bank Polska S.A., HSBC Bank plc, Bank Handlowy w Warszawie S.A., CaixaBank S.A. (Spółka Akcyjna) Oddział w Polsce, mBank S.A., Bank Millennium S.A., Raiffeisen Bank Polska S.A., Goldman Sachs Bank USA, Erste Group Bank AG, Deutsche Bank Polska S.A., and UniCredit Bank AG, London Branch, acting as the Facility Agent and the Security Agent (the “CP Facilities Agreement”).

Moreover, on September 21, 2015, a Senior Facilities Agreement was concluded between Polkomtel as the borrower along with Eileme 2, Eileme 3, Eileme 4, Plus TM Management, TM Rental, Plus TM Group and the consortium of Polish and foreign financial institutions indicated above (the “PLK Facilities Agreement”).

Based on the CP Facilities Agreement the Company had been awarded a term facility loan up to PLN 1,200.0 million and a revolving facility loan up to PLN 300.0 million. Based on the PLK Facilities Agreement Polkomtel has been awarded a term facility loan up to PLN 10,300.0 million and a revolving facility loan up to PLN 700.0 million.

The Company utilized the funds obtained under the CP SFA in particular to repay the indebtedness under the refinanced CP Senior Facilities Agreement of April 11, 2014 between the Company (as the borrower) and a consortium of financial institutions. Polkomtel utilized the funds granted under the PLK Term Facility in particular to fully repay the outstanding debt under the Facilities Agreement of June 17, 2013 concluded between Polkomtel, Eileme 2, Eileme 3 and Eileme 4, and a consortium of Polish and foreign banks and financial institutions (the repayment took place on September 28, 2015), and to fully repay the indebtedness under the PLK Senior Notes (the repayment took place on January 29, 2016). Furthermore, the Group uses the funds obtained under the CP and PLK SFA to finance general corporate needs.

In connection with the redemption on February 1, 2016 of the PLK Senior Notes, amendments, provisioned for in the Amendment, Restatement and Consolidation Deed of September 21, 2015 were incorporated to the CP SFA (for details see current report no. 42/2015 dated September 21, 2015). The amendments consisted, in particular, in increasing the maximum amount of the term loan to PLN 11,500.0 million and of the revolving facility to PLN 1,000.0 million and the repayment in full of the indebtedness under the PLK SFA. Furthermore, Polkomtel and other subsidiaries of the Company, who were parties to the PLK SFA, have acceded to the CP Senior Facilities Agreement as a borrower and guarantor or guarantor and additional security interests were established as required by the Amendment, Restatement and Consolidation Deed.

On March 2, 2018, the Group concluded the Second Amendment, Restatement and Consolidation Deed incorporating further changes in the CP SFA. The modification related, among others, to the extension of the term of repayment of the Term Loan until September 30, 2022, which entailed a modification of the repayment schedule and the modification of the ratio of consolidated net debt to consolidated EBITDA, below which the Company will not be obligated to establish or maintain securities in connection with the CP Facilities Agreement (excluding the release of guarantees granted pursuant to the CP Facilities Agreement), by revising it from 1.75:1 up to 3.00:1.

We will refer to the CP SFA amended by both aforementioned Amendment, Restatement and Consolidation Deeds as the SFA, and the term loan and revolving facility granted under this agreement as Tranche A of the Term Loan and Revolving Credit Facility (RCF), respectively.

On April 27, 2020, the Group concluded the Third Amendment and Restatement Deed incorporating further changes in the SFA. The modification related, among others, to the extension of the term of repayment of the Term Loan until September 30, 2024, which entailed a modification of the repayment schedule and the amendments relating to the implementation of IFRS 16, in particular an appropriate increase in the level of specified financial covenants by 0.3:1, among others for the purposes of setting the limit for the distribution of dividends, financial covenant levels in the margin grid while maintaining the nominal margin levels, the modification of the ratio of consolidated net debt to consolidated EBITDA, below which the Company will not be obligated to establish or maintain securities in connection with the SFA (excluding the release of guarantees granted pursuant to the SFA), by revising it from 3.00:1 up to 3.30:1 and adjustment of the relevant definitions for the purposes of calculating the financial covenants, in particular raising the maximum permitted ratio of consolidated net debt to consolidated EBITDA (Total Leverage) to 4.5:1, the maximum permitted ratio of consolidated secured net debt to consolidated EBITDA (Secured Leverage) to 3.8:1 and lowering the minimum permitted Debt Service Cover to 1.1:1.

Tranche A of the Term Facility and the RCF bear interest at a variable rate equal to WIBOR for the relevant interest period plus margin. The margin on Tranche A of the Term Facility and the RCF depends on the ratio of net consolidated indebtedness to consolidated EBITDA in such a way that the lower the ratio – the lower the margin, with the maximum margin level applicable within one year from the date of entering into the Third Amendment and Restatement Deed if the net consolidated indebtedness to consolidated EBITDA ratio exceeds 3.50:1, and the minimum margin level applicable when that ratio is no higher than 1.50:1. In turn, after one year from the date of entering into the Third Amendment and Restatement Deed the maximum margin shall be applicable when the net consolidated indebtedness to consolidated EBITDA ratio exceeds 3.80:1, and the minimum margin level when that ratio is no higher than 1.80:1, whereas the value of consolidated net debt used in the calculation of this ratio, pursuant to the definition set out in the SFA, does not include debt instruments under which capital is repaid not sooner than 6 months after the term of repayment of Tranche A of the Term Facility and the RCF and interest is not paid in cash on a current basis. Pursuant to the provisions of the amended SFA the final repayment date for Tranche A of the Term Facility and the RCF is September 30, 2024.

Pursuant to the SFA the Company and its Group companies establish, in specified cases, certain collaterals for the credit facilities granted thereunder. In particular, these collaterals include registered pledges on collections of movables and economic interests of variable composition comprised in the enterprise of the Company and its selected subsidiaries, registered and financial pledges on shares in the Company’s subsidiaries, registered and financial pledges on receivables related to bank accounts kept for the Company or its selected subsidiaries, ordinary and registered pledges on selected trademarks, assignments of rights for security, mortgages, notarial submissions to enforcement and similar collaterals on shares or assets of the Company’s subsidiaries, to be governed by foreign laws. A detailed description of established securities is presented in item 4.4.5. of this Report – Operating and financial review of Cyfrowy Polsat– Review of the Company’s financial situation - Information on guarantees granted by the Company or subsidiaries.

Pursuant to the provisions of the SFA and the Third Amendment and Restatement Deed, when the net consolidated indebtedness to consolidated EBITDA ratio falls to or below 3.30:1, the Company will have a right to demand that the collaterals for the Senior Facilities Agreement be released (save for guarantees granted on the basis of the SFA). However, such released collateral will need to be re-established if the net consolidated indebtedness to consolidated EBITDA ratio again rises above 3.30:1. Additionally, if certain members of the Company’s Group incur secured indebtedness, a pari passu collateral will need to be established in favor of the Security Agent (acting for, among others, the lenders under the Senior Facilities Agreement).

Furthermore, in accordance with the provisions of the SFA the Company and other entities from the Group may incur additional facilities. The terms of such additional facilities will be established individually in separate additional facility accession deeds and their terms will have to satisfy certain criteria, depending on the net consolidated indebtedness to consolidated EBITDA ratio.

Pursuant to the SFA, certain members of the Group are to grant guarantees under the English law to each of the financing parties under the SFA and other finance documents executed in relation thereto. The amount of the guarantees will be equal to the amount of the facility increased by all fees and receivables contemplated in the SFA or other finance documents executed in relation thereto. The guarantees secure:

(i)	the timely discharge of the obligations under the SFA and other finance documents executed in relation thereto,
(ii)	a payment of amounts due under the SFA 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 unenforceability, ineffectiveness or unlawfulness of any obligation secured by these guarantees. The period of the guarantees has not been specified. The guarantors will be remunerated at arm’s length for granting the guarantees.

The CP SFA, PLK SFA and the Amendment and Restatement Deed of September 21, 2015 provided for typical conditions precedent for the disbursement of the contemplated facilities and certain conditions subsequent for the disbursement of the contemplated facilities, also typical for this kind of transactions.

On July 19, 2018, the SFA was entered into by Netia as an additional borrower and an additional guarantor pursuant to the resolution of the Management Board of Netia dated June 13, 2018 of which Netia informed in its current report No. 35/2018 dated June 13, 2018.

Based on the resolution of the Management Board of Aero 2 Sp. z o.o., dated February 25, 2020, concerning the resignation from the financing and the resignation letter signed by the Company and Aero 2 Sp. z o.o. on February 26, 2020, along with entering into the Third Amendment and Restatement Deed on April 27, 2020 Aero 2 Sp. z o.o. withdrew from the SFA.

On November 27, 2019, the Company, acting in its own name and as an obligors’ agent, concluded an additional facility accession deed with certain Polish and foreign financial institutions. In order to reflect the amendments to the Senior Facilities Agreement set forth in the draft Third Amendment and Restatement Deed, on 27 April 2020, the Company entered into the first amendment and restatement deed to the additional facility accession deed. The additional term facility amounts to up to PLN 1,000.0 million and bears interest at a variable rate equal to WIBOR for the relevant interest period plus margin (Tranche B of the Term Loan). The margin on Tranche B of the Term Loan depends on the ratio of net consolidated indebtedness to consolidated EBITDA in such a way that the lower the ratio – the lower the margin, with the maximum margin level applicable within one year from the date of entering into the first amendment and restatement deed to the additional facility accession deed if the net consolidated indebtedness to consolidated EBITDA ratio exceeds 3.50:1, and the minimum margin level applicable when that ratio is no higher than 1.50:1. After one year from the date of entering into the first amendment and restatement deed to the additional facility accession deed the maximum margin level shall be applicable when the net consolidated indebtedness to consolidated EBITDA ratio exceeds 3.80:1, and the minimum margin level applicable when that ratio is no higher than 1.80:1. Tranche B of the Term Loan will be repaid in one bullet installment on the final repayment date which falls to March 31, 2025. The receivables arising under Tranche B of the Term Loan are secured by the same package of security interests and guarantees extended by some of the Company’s group members as granted under the Second Amendment and Restatement Deed.

Series B Bonds

Pursuant to the resolution of the Management Board adopted on April 16, 2019, Cyfrowy Polsat issued on April 26, 2019 1,000,000 unsecured series B bearer bonds with a nominal value of PLN 1,000.0 each and a total nominal value of PLN 1,000.0 million, maturing on April 24, 2026. The Series B Bonds were issued within the actions taken to reduce costs of servicing the indebtedness under the Series A Bonds issued by the Company and maturing on July 21, 2021, which were fully repurchased from investors and prematurely redeemed in April and May 2019 using funds obtained from the issuance of Series B Bonds. The Series B Bonds were issued by way of a public offering addressed to professional clients. Detailed terms and conditions of the Series B Bonds’ issuance, redemption and payment of interest are specified in the Series B Bonds Terms.

The interest rate on the Series B Bonds is floating and based on the WIBOR rate for six-month deposits denominated in PLN, increased by a margin whose value depends on the value of the Leverage Ratio (defined in the Series B Bonds Terms as the ratio of the net financial indebtedness to EBITDA):

(i)	the margin amounts to 175 bps if the Leverage Ratio in the given period is less than or equal to 3.5:1,
(ii)	the margin amounts to 200 bps if the Leverage Ratio in the given period is greater than 3.5:1 but less than or equal to 4.0:1,
(iii)	the margin amounts to 250 bps if the Leverage Ratio in the given period is greater than 4.0:1.

The coupon on Series B bonds is paid biannually on April 26 and October 26 (excluding the last interest period in which April 24 is the last day).

In accordance with the provisions of the Series B Bonds Terms, the Company may exercise at any time an early redemption of all or part of the Series B Bonds, however, the early redemption may not apply to Bonds that constitute less than 10% of the total nominal value of the Series B Bonds. An early redemption may be exercised based on the Series B Bonds’ nominal value together with the accrued interest and a possible premium for the early redemption.

In case if the early redemption, performed as a result of exercising an issuer’s right to early redemption by the Company, occurs:

●	before one year from the issuance date, the premium shall be equal to 3% of the nominal value of the Series B Bonds subject to the early redemption,
●	before two years from the issuance date but after one year from the issuance date, the premium shall be equal to 1.5% of the nominal value of the Series B Bonds subject to the early redemption,
●	before three years from the issuance date but after two years from the issuance date, the premium shall be equal to 0.75% of the nominal value of the Series B Bonds subject to the early redemption,
●	before four years from the issuance date but after three years from the issuance date, the premium shall be equal to 0.5% of the nominal value of the Series B Bonds subject to the early redemption,
●	if the early redemption occurs after four years from the issuance date, the Series B Bonds shall be redeemed according to their nominal value.

Additionally, pursuant to the Series B Bonds Terms, the Company and its subsidiaries are obliged to maintain required levels of certain financial ratios and are subject to restrictions, with respect to (but not limited to):

(i)	acquisition or taking up of shares in other companies,
(ii)	extending guarantees or granting sureties, accession to debt or release from liability,
(iii)	granting loans,
(iv)	disposing of assets,
(v)	payment of dividends or advance dividends, payment of the price for own shares, or returns of additional payment to shareholders,
(vi)	incurring of financial indebtedness and
(vii)	entering into potential composition agreements with creditors which are regulated by the Restructuring Act or another regulation which could replace this law.

In the event of a breach of restrictions specified in the Series B Bonds Terms, Bondholders are entitled to demand an early redemption of Series B Bonds held by those Bondholders with the consent of the Meeting of Bondholders.

In the event of change of control, as defined in the Series B Bonds Terms, cessation of business activity or insolvency by the Company, i.a. by declaring bankruptcy or liquidation of the Company, Bondholders are entitled to demand an early redemption of Series B Bonds held by those Bondholders.

The Series B Bonds have been traded since May 31, 2019 under the abbreviated name “CPS0426” in the continuous trading system called the Alternative Trading System, operated by the Warsaw Stock Exchange within the Catalyst market.

The Series B Bonds are issued under Polish law and any potential disputes related to the Series B Bonds shall be resolved in proceedings at the Polish common court having jurisdiction over the registered office of the Company.

Series C Bonds

Pursuant to the resolution of the Management Board adopted on December 11, 2019, Cyfrowy Polsat issued on February 14, 2020 1,000,000 unsecured series C bearer bonds with a nominal value of PLN 1,000.0 each and a total nominal value of PLN 1,000.0 million, maturing on February 12, 2027. The proceeds from the Series C Bonds issue shall be used to refinance pro-environmental projects, including the improvement of energy efficiency of the Group and the reduction of the carbon footprint associated with the production of electronic devices by Polsat Group. The Series C Bonds were issued by way of a public offering addressed to professional clients. Detailed terms and conditions of the Series C Bonds’ issuance, redemption and payment of interest are specified in the Series C Bonds Terms.

The interest rate on the Series C Bonds is floating and based on the WIBOR rate for six-month deposits denominated in PLN, increased by a margin whose value depends on the value of the Leverage Ratio (defined in the Series C Bonds Terms as the ratio of the net financial indebtedness to EBITDA):

(i)	the margin amounts to 165 bps if the Leverage Ratio in the given period is less than or equal to 3.5:1,
(ii)	the margin amounts to 190 bps if the Leverage Ratio in the given period is greater than 3.5:1 but less than or equal to 4.0:1,
(iii)	the margin amounts to 240 bps if the Leverage Ratio in the given period is greater than 4.0:1.

The coupon on Series C bonds is paid biannually on February 14 and August 14 (excluding the last interest period in which February 12 is the last day).

In accordance with the provisions of the Series C Bonds Terms, the Company may exercise at any time an early redemption of all or part of the Series C Bonds, however, the early redemption may not apply to Bonds that constitute less than 10% of the total nominal value of the Series C Bonds. An early redemption may be exercised based on the Series C Bonds’ nominal value together with the accrued interest and a possible premium for the early redemption.

In case if the early redemption, performed as a result of exercising an issuer’s right to early redemption by the Company, occurs:

●	before one year from the issuance date, the premium shall be equal to 3% of the nominal value of the Series C Bonds subject to the early redemption,
●	before two years from the issuance date but after one year from the issuance date, the premium shall be equal to 1.5% of the nominal value of the Series C Bonds subject to the early redemption,
●	before three years from the issuance date but after two years from the issuance date, the premium shall be equal to 0.75% of the nominal value of the Series C Bonds subject to the early redemption,
●	before four years from the issuance date but after three years from the issuance date, the premium shall be equal to 0.5% of the nominal value of the Series C Bonds subject to the early redemption,
●	if the early redemption occurs after four years from the issuance date, the Series C Bonds shall be redeemed according to their nominal value.

Additionally, pursuant to the Series C Bonds Terms, the Company and its subsidiaries are obliged to maintain required levels of certain financial ratios and are subject to restrictions, with respect to (but not limited to):

(i)	acquisition or taking up of shares in other companies,
(ii)	extending guarantees or granting sureties, accession to debt or release from liability,
(iii)	granting loans,
(iv)	disposing of assets,
(v)	payment of dividends or advance dividends, payment of the price for own shares, or returns of additional payment to shareholders,
(vi)	incurring of financial indebtedness, and
(vii)	entering into potential composition agreements with creditors which are regulated by the Restructuring Act or another regulation which could replace this law.

Furthermore, the Series C Bonds Terms impose on the Company and its subsidiaries an obligation to use the proceeds from the issue on refinancing the expenditures incurred in 2017-2019 for, among others, upgrading and modernizing the Group’s telecommunication infrastructure in terms of its energy efficiency, including in particular:

●	replacement of old energy intensive technology such as 2G and 3G with advanced 4G LTE, which has potential to reduce network energy intensity per unit of data traffic
●	retrofitting and replacement of outdated fixed-line network infrastructure, such as the replacement of conventional copper-based technology with fiber optic technology, which allows for faster transmission of data over longer distances, requires less maintenance and offers reduction in energy consumption
●	investments in energy efficient solutions which support free cooling systems, intelligent lighting, optimization of power storage, server virtualization as well as machine learning and artificial intelligence.

In the event of a breach of restrictions specified in the Series C Bonds Terms, Bondholders are entitled to demand an early redemption of Series C Bonds held by those Bondholders with the consent of the Meeting of Bondholders.

In the event of change of control, as defined in the Series C Bonds Terms, cessation of business activity or insolvency by the Company, i.a. by declaring bankruptcy or liquidation of the Company, Bondholders are entitled to demand an early redemption of Series C Bonds held by those Bondholders.

The Series C Bonds have been traded since February 24, 2020 under the abbreviated name “CPS0227” in the continuous trading system called the Alternative Trading System, operated by the Warsaw Stock Exchange within the Catalyst market.

The Series C Bonds are issued under Polish law and any potential disputes related to the Series C Bonds shall be resolved in proceedings at the Polish common court having jurisdiction over the registered office of the Company.

Ratings

The table below presents a summary of ratings assigned to Polsat Plus Group as at the date of publication of this Report.

Rating agency	Rating / outlook	Previous rating / outlook	Rating / outlook date	Last review date
Moody’s Investor Service	Ba1 / on review for downgrade	Ba1 / stable	11.06.2019	23.12.2021
S&P Global Ratings	BB+/ negative	BB+/ positive	26.01.2022	26.01.2022

Rating agency

Rating / outlook

Previous rating / outlook

Rating / outlook date

Last review

date

Moody’s Investor Service

Ba1 / on review for downgrade

Ba1 / stable

11.06.2019

23.12.2021

S&P Global Ratings

BB+/ negative

BB+/ positive

26.01.2022

On December 23, 2021, Moody’s Investors Service placed the Group’s corporate family rating (currently at the level of Ba1) under review for downgrade, at the same time changing the rating outlook from “stable” to “rating under review”. Moody’s stated that its action followed the announcement of the Company dated December 20, 2021 regarding concluded preliminary agreements for the acquisition of equity stakes in PAK Polska Czysta Energia Sp. z o.o. and Port Praski Sp. z o.o. for the total amount of approximately PLN 1.7 billion, and the Group’s plan to invest an additional PLN 5.5 billion in renewable green energy over the years 2022-2026. Moody’s informed that placing the Group’s rating on review for downgrade reflects the Group's decision to relax its financial policy in order to accommodate the above mentioned investments, which in Moody’s opinion is likely to lead to a prolonged deterioration of the Group’s credit metrics to levels not consistent with the current Ba1 rating.

On January 26, 2022, S&P Global revised the Group’s outlook to “negative” from “positive”, affirming the rating at BB+. In its updated credit opinion, S&P Global assessed that the Group's investments in a new business line, i.e. green energy and hydrogen, in the total amount of PLN 5.5 billion will weaken the adjusted debt to EBITDA ratio to above 3.0x (according to S&P’s methodology) and free operating cash flow to debt to below 10%. Nevertheless, S&P Global believes that resilient performance of the Group’s telecommunications and media segments, which operate based on a convergent offering, will continue to support the Group's business profile. The negative outlook indicates that the Group’s rating could be downgraded, if adjusted debt to EBITDA ratio further deteriorates to 3.5x or higher, or if free operating cash flow to debt ratio falls below 5%.

4.3.5. Information on guarantees granted by the Company or subsidiaries

Securities related to the Senior Facilities Agreement

In order to secure the repayment of claims under the Senior Facilities Agreement the following encumbrances over assets of the Group have been established by the Company and other Group companies:

(i)	registered pledges over variable collections of movable property and rights comprised in the enterprises of the Company, Polsat Media Biuro Reklamy Spółka z ograniczoną odpowiedzialnością Sp.k., Telewizja Polsat, Polkomtel and Plus Flota Sp. z o.o., governed by Polish law.
(ii)	financial and registered pledges on shares in Telewizja Polsat (with an aggregate nominal value of PLN 236,945,700), governed by Polish law, together with powers of attorney to exercise corporate rights attached to the shares in the said company. The pledged shares represent 100% less 10 shares of the share capital of the company and are held by the Company as a long-term capital investment.
(iii)	financial and registered pledges on shares in Polkomtel (with a total nominal value of PLN 2,360,068,800), governed by Polish law, together with powers of attorney to exercise corporate rights attached to the shares in the said company. The pledged shares represent 100% less 10 shares of the share capital of the company and are held by the Company as a long-term capital investment.
(iv)	financial and registered pledges on shares in Netia S.A. (with a total nominal value of PLN 110,702,441), governed by Polish law, together with powers of attorney to exercise corporate rights attached to the shares in the said company, the pledged shares represent 32.99% of the share capital of the company.
(v)	financial and registered pledges on shares in TV Spektrum Sp. z o.o. (with a total nominal value of PLN 2,400,000), governed by Polish law, together with powers of attorney to exercise corporate rights attached to the shares in the said company, the pledged shares represent 49.48% of the share capital of the company.
(vi)	financial and registered pledges on receivables under bank account agreements of the Company, Polsat Media Biuro Reklamy Spółka z ograniczoną odpowiedzialnością Sp.k., Telewizja Polsat, and Polkomtel, governed by Polish law.
(vii)	powers of attorney to bank accounts of the Company, Polsat Media Biuro Reklamy spółka z ograniczoną odpowiedzialnością Sp.k., Telewizja Polsat, Polkomtel, Dwa Sp. z o.o., Teleaudio Dwa Spółka z ograniczoną odpowiedzialnością Sp. k., Polsat Media Biuro Reklamy Sp. z o.o., Interphone Service Sp. z o.o., Muzo.fm Sp. z o.o., INFO-TV-FM Sp. z o.o., Polkomtel Business Development Sp. z o.o., TM Rental Sp. z o.o., Liberty Poland S.A. and Plus Flota Sp. z o.o., governed by Polish law.
(viii)	ordinary and registered pledges on protection rights to trademarks vested in Telewizja Polsat and Polsat Investments Ltd. (formerly Polsat Brands AG), governed by Polish law.
(ix)	assignment for security of certain property rights in Polsat Media Biuro Reklamy Spółka z ograniczoną odpowiedzialnością Sp.k., governed by Polish law.
(x)	contractual joint mortgage under Polish law on the following real properties owned by the Company: (a) land located in Warsaw, Targówek district, vicinity of ul. Łubinowa, Title and Mortgage Register WA3M/00102149/9, (b) land located in Warsaw, Targówek district, ul. Łubinowa, Title and Mortgage Register WA3M/00136943/2, (c) land located in Warsaw, Targówek district, ul. Łubinowa, Title and Mortgage Register WA3M/00102615/7, (d) land located in Warsaw, Targówek district, ul. Łubinowa, Title and Mortgage Register WA3M/00101039/8, (e) land located in Warsaw, Targówek district, ul. Łubinowa, Title and Mortgage Register WA3M/00132063/1, (f) land located in Warsaw, Targówek district, ul. Łubinowa, Title and Mortgage Register WA3M/00104992/7, (g) land located in Warsaw, Targówek district, vicinity of ul.Łubinowa, Title and Mortgage Register WA3M/00100109/3, (h) land located in Warsaw, Targówek district, ul. Łubinowa, Title and Mortgage Register WA3M/00103400/4, (i) land located in Warsaw, Targówek district, vicinity of ul.Łubinowa, Title and Mortgage Register WA3M/00100110/3, (j) land located in Warsaw, Targówek district, ul. Łubinowa, Title and Mortgage Register WA3M/00131411/9.
(xi)	contractual mortgage governed by Polish law on the land property owned by Polkomtel and located in Warsaw, Ursynów district, in the vicinity of Baletowa street, comprising plots of land no. 131/4 and 132/6, Land and Mortgage Register No. WA5M/00478842/7.
(xii)	assignment for security of receivables under hedge agreements of the Company and Polkomtel, governed by English law.
(xiii)	assignment for security of rights under insurance agreements covering the property referred to in item (i) and item (ix) above.
(xiv)	pledge on shares in Polsat License Ltd. (with an aggregate nominal value of CHF 1,000,000), governed by the Swiss law, the pledged shares represent 100% of the company’s share capital and are held by the Company as a long-term capital investment.
(xv)	assignment for security of: (a) receivables due from various debtors, (b) receivables and rights to and in bank accounts. and (c) rights under insurance agreements of Polsat License Ltd., governed by the Swiss law.
(xvi)	assignment for security of rights under a license agreement between Polsat Investments Ltd. (formerly Polsat Brands AG) and Polsat License Ltd. and rights under bank account agreements, governed by the Swiss law.
(xvii)	pledge on bank accounts taken over by Cyfrowy Polsat following the merger with Metelem, governed by Cypriot law.
(xviii)	assignment for security of receivables and rights to and in bank accounts taken over by Cyfrowy Polsat following the merger with Metelem, governed by the Swiss law.
(xix)	pledge on shares in Polsat Investments Ltd. (formerly Polsat Brands AG) (with the total nominal value of CHF 250,074), governed by the Swiss law.
(xx)	pledge on receivables under bank account agreements taken over by Polkomtel following the merger with Litenite, governed by Swiss law.
(xxi)	statements of the Company, Polsat Media Biuro Reklamy Spółka z ograniczoną odpowiedzialnością sp.k., Telewizja Polsat, Polkomtel, and
(xxii)	statement of Polsat Brands AG on the submission to enforcement on the basis of a notarial deed executed under the Polish law (concerning all property located in Poland or governed by Polish law).

5. Other significant information

5.1. Transactions concluded with related parties on conditions other than market conditions

Transactions with parties related to the Company in the financial year ended December 31, 2021 have been concluded exclusively on market conditions and are described in Note 38 of the financial statements for the financial year ended December 31, 2021.

5.2. Information on loans granted

Information on loans granted is presented in Note 35 of the financial statements for the financial year ended December 31, 2021.

5.3. Discussion of the difference of the Company's results to published forecasts

Cyfrowy Polsat had not published any financial forecasts.

5.4. Material proceedings at the court, arbitration body or public authorities

Management believes that the provisions for litigations as at December 31, 2021 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.

Proceedings before the Office of Competition and Consumer Protection (UOKiK)

On December 30, 2016, the President of UOKiK issued a decision stating that the Company’s operations were allegedly infringing collective consumer interests by presenting advertising slogans, which in the opinion of the authorities were misleading and suggested that the LTE data transmission will not be limited. Pursuant to the decision of the President of UOKiK the Company was charged with a penalty in the amount of PLN 5.3 million. The Company appealed to SOKiK against the decision. On August 7, 2019, the court dismissed the appeal of the Company. The Company appealed against the decision. Pursuant to the Court of Appeals verdict from March 11, 2021, the Company paid a penalty of PLN 5.3 million on March 26, 2021. On June 24, 2021 the Company filed a cassation appeal to the Supreme Court. On January 12, 2022, the Supreme Court accepted the Company's cassation appeal for consideration.

On December 30, 2016, the President of UOKiK issued a decision stating that the Company’s operations were allegedly infringing collective consumer interests by presenting sale 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 million. The Company appealed to SOKiK against the decision. On October 14, 2019 SOKiK dismissed the appeal. The Company appealed against the decision. On December 31, 2020 the Company’s appeal was dismissed. On January 14, 2021 the Company paid the penalty. The Company submit a cassation appeal to the Supreme Court.

On December 19, 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 incomplete and unreliable information to consumers in response to reports 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 million. The company appealed against this decision to SOKiK. On February 14, 2022 First Instance Court dismissed the Company’s appeal in its entirety. The Company plans to file an appeal.

Other proceedings

On April 28, 2017, Association of Polish Stage Artists (“ZASP”) filed a lawsuit against Cyfrowy Polsat for payment of PLN 20.3 million. The Company issued an objection in the writ-of-payment proceedings and filed for its dismissal entirely. On January 10, 2018, the Court issued a decision to refer the case to mediation proceedings. Mediation ended without a settlement. The last hearing took place on May 8, 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 May 6, 2020, the Company received a letter from the Court, included the mediator's position summarizing the course of mediation, with a request to refer to its content. On May 25, 2020, the Company submitted a response informing the Court about the settlement being impossible to reach by the parties. The hearing took place on October 20, 2021. The next hearing is scheduled for May 11, 2022.

By lawsuit, delivered to the Company on December 16, 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 August 20, 2009 to August 20, 2019. In the claim for payment, SAWP claims PLN 153.3 million 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 March 16, 2022, the hearing was postponed without a deadline.

The initiation by the European Commission of the procedure based on Art. 108 sec. 2 of the European Union Treaty

In the beginning of October 2020, Cyfrowy Polsat and Sferia S.A. (Sferia), a company owned by Polsat Plus Group in 51% since February 29, 2016, received from the Ministry of Digital Affairs a copy of the European Commission’s decision dated September 21, 2020 regarding the initiation of the formal investigation procedure against the Republic of Poland concerning the alleged illegal state aid provided to Sferia. The alleged illegal state aid relates to granting in 2013 to Sferia the right to use a frequency block of 800 MHz range in place of the frequency 850 MHz range previously held by Sferia. According to the decision, the European Commission intends to investigate, whether the state aid was granted, and if so, whether it can be considered compatible with the internal market. On February 4, 2022, the European Commission began consultations on this matter and Cyfrowy Polsat and Sferia submitted their comments. Both companies believe that no illegal state aid was granted.

In addition to the matters described above, there are also other proceedings, for which provisions have been made according to the best estimates of the Management Board as to potential future outflows of the economic benefits required for their settlement. Information regarding the amount of provisions was not separately disclosed, as in the opinion of the Group's Management, such disclosure could prejudice the outcome of the pending cases.

5.5. Changes to the principle rules of management of our Company

There were no changes to the principle rules of management of our Company in the year 2021.

5.6. Information on seasonality

Our revenues are not directly subject to substantial seasonal fluctuations

5.7. Sales markets and dependence on the supplier and customer markets

All our services are offered in Poland. The share of any of our suppliers or customers does not exceed 10% of our operating revenues.

5.8. Disclosure of non-financial information

On March 24, 2022, we published the “Sustainability Report of Polsat Plus Group for 2021,” which comprehensively addresses key non-financial issues pertaining to our Group and demonstrates how we aim to achieve our strategic goals in a sustainable and responsible manner. The publication complies with the Global Initiative Reporting Standard, in the Core option, as well as Article 49b items 2-8 of the Accounting Act. The report contains detailed information relating to environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters with respect to both Polsat Plus Group and Cyfrowy Polsat as the parent company of the Group.

The “Sustainability Report of Polsat Plus Group for 2021” is available on Polsat Plus Group’s corporate website.

5.9. Factors that may impact our operating activities and financial results

5.9.1. Factors related to social-economic environment

Impact of the military conflict on the territory of Ukraine on Polsat Plus Group’s current operations and expected results

On February 24, 2022, the armed forces of the Russian Federation launched an invasion and hostilities on the territory of Ukraine, a country that directly borders the Republic of Poland at a distance of 535 km. The Management Board of Cyfrowy Polsat unequivocally condemns this unjustified aggression, and stands in full solidarity with the Ukrainian community in its defensive war.

Taking into account the lack of significant exposure of operating activities of Polsat Plus Group companies on the territory of Ukraine, Russia or Belarus, in the face of Russian aggression the priority of Polsat Plus Group was to support refugees from Ukraine. From the first days of the Russian invasion Polsat Plus Group has been actively involved in providing communication and contact with family to the refugees from Ukraine (i.e., free international calls to Ukrainian networks, delivery and assistance in registration of free starters, waiver of roaming fees). We also provide reliable information in the news channels of Telewizja Polsat - Polsat News and Wydarzenia24, as well as on the news portals Interia.pl and Polsatnews.pl. We also support the Ukrainian media by broadcasting free-to-air news channels Ukraina24 and Freedom on Polsat Box, Polsat Box Go, Netia and Interia.pl. Interia.pl also launched a news section in Ukrainian.

We also provide active operational and financial support for a number of activities conducted by the Polsat Foundation under the "Polsat Foundation to Children of Ukraine" campaign.

In the opinion of the Management Board, despite the lack of significant direct exposure of Polsat Plus Group to the Ukrainian, Russian or Belarusian markets, the war started by the Russian Federation may have a long-lasting effect on the operational and financial results of Polsat Plus Group companies. In particular, escalating inflation, raised interest rates and disruptions in the supply of raw materials and fossil fuels may be reflected in costs of our current operating activities to a degree which cannot be quantified at present.

Leaving aside macroeconomic and geopolitical factors which are likely to affect every branch of the Polish economy to a varying degree, Polsat Plus Group assesses its operating prospects as relatively stable. At the moment - contrary to the situation at the beginning of the COVID-19 pandemic outbreak - we do not see a strong reduction in advertising campaigns from all of our advertisers. This does not mean that possible long-term effects of the expected economic slowdown will not affect the prospects of our media segment in the coming quarters and years. However, the Group is currently unable to present a reliable estimate of this impact on its revenues.

At the same time, as part of our assistance to refugees from Ukraine, by the date of publication of this Report, we have registered over 100,000 prepaid starters on behalf of Ukrainian citizens, which will translate into am increase in the scale of our prepaid customer base reported for the first quarter of 2022. However, given that these starters enable free calls to victims of the conflict, this will not have a material impact on our financial results in the short term.

The Management Board notes that the above factors have been described based on the best knowledge of the Management Board as at the date of publication of this Report. The ultimate impact of the war caused by the Russian Federation on the operational and financial activities of both the Company and the entire Polsat Plus Group cannot be predicted as of today and depends on many factors beyond the Group's control, in particular the duration of the armed activities and their further development, as well as further potential actions that may be taken by the Polish government, the authorities of the European Union and NATO. At the same time, the Management Board continuously analyzes the situation related to the development of the armed conflict and assesses its influence on the Group's activities. In case of identifying new factors, which may have a significant influence on the Group's operations and financial results, the Company will inform the market in an appropriate form.

Economic situation in Poland and in the world

Macroeconomic trends in the Polish economy as well as global market conditions have thus far affected our operations and operating results, and are expected to continue affecting them in the future. The key factors that impact our operations, in particular the demand for advertisements, the level of expenditures for our services as well as demand for end-user devices that we sell, include GDP fluctuations, inflation, unemployment rate, dynamics of salaries in real terms, social transfers, household consumption, and capital expenditure incurred by enterprises.

After the global and domestic economic slowdown in 2020 following the coronavirus pandemic, Poland's GDP returned to strong growth in 2021 (+5.7% according to the European Commission estimates), and the European Commission forecasts indicated a continuation of high national GDP growth rates (+5.5% and +4.2% for 2022-2023, respectively).

At the same time, inflationary pressure in Poland has intensified in recent months, with the average inflation rate in 2021 estimated by the European Commission at 5.2%. The European Commission forecasts from February 2022 indicated that the inflation rate in Poland in 2022-2023 may reach 6.8% and 3.8%, respectively. We would like to point out that as a result of the armed conflict in Ukraine, macroeconomic indicators, including the inflation rate, may be revised. We expect that the persistently high level of inflation may translate in subsequent periods into an increase in the cost of our business, for example, in the cost of electricity or an increase in costs related to all types of services that we buy. We also expect that in the next periods our employee-related costs will remain under inflationary pressure and will be impacted by changes in the Polish tax system introduced at the turn of 2021 and 2022.

Disruption in global supply chains remains an issue on a worldwide scale. The continuation of this phenomenon and a prolonged reduction in the supply of components in Asian markets could translate into supply delays and higher prices for imported equipment offered to our customers and components used by us in our operations and investment activities.

Situation on the pay TV market in Poland

Our revenue from subscription fees depends on the number of our customers and their loyalty, the pricing of our services and the penetration rate of pay TV in Poland, which we consider to be a saturated market.

The high level of competition and the dynamically evolving market environment (including consolidation processes on the cable TV market as well as the continued convergence of mobile and fixed-line services) impact promotional offerings addressed to our new customers. In addition, due to high competition, we continuously invest in customer retention programs and building the loyalty of our customers.

We believe that at present our programming packages offer attractive value-for-money on the Polish pay TV market. Moreover, we invest in new, attractive and unique content. This gives us a chance to attract a significant portion of migrating customers to our platform. What is more, we offer pay TV services as part of our integrated offer, which has a positive impact of the level of loyalty of our customer base and contributes to maintaining a low churn rate.

Dynamic growth of non-linear distribution of content, delivered by video on demand and OTT (over-the-top) services is a global trend. This market is still underdeveloped in Poland as compared to Western Europe or the United States and in our opinion has significant growth prospects, especially in light of the improving quality of fixed broadband links. The launch of services by global players, such as Netflix, Amazon Prime or NENT, is proof that Poland is considered an attractive market. The situation caused by the COVID-19 pandemic has deepened the existing trend of consuming film content at leisure and on various devices. In our opinion, this trend will be sustained after the end of the epidemic. In view of the above, we systematically develop our VOD and online television services and applications.

Growing importance of convergent services and consolidation trends

Convergence of services is one of the strongest trends both on the Polish media and telecommunications market and worldwide. Operators develop their bundled offerings in response to changing preferences of customers, who seek media and telecommunications services provided at competitive prices by a single operator under a single contract, a single invoice and a single fee. Given the high saturation of the pay TV and mobile telephony markets, bundled services play an increasingly important role in maintaining the existing customer base.

In the wake of the increasing importance of convergence and bearing in mind the significant level of fragmentation of the broadband access market, it can be expected that the future shape of the Polish telecommunications and media market will be substantially impacted by consolidation trends which have been visible for a long time on more developed foreign markets where mobile and fixed-line operators merge with content providers.

The acquisition of a controlling stake in the fixed-line operator Netia by Polsat Plus Group in 2018 can serve as an example of such consolidation in Poland. Thanks to this acquisition we combined within our Group all assets necessary to provide fully convergent services, which facilitates better adjustment of the offering to customers’ needs and more effective cost management.

5.9.2. Factors related to the operations of the Company

Growing importance of integrated services

Growing interest in integrated services, observed among our customers, provides us with the possibility to generate growth of average revenue per customer. We carefully follow the evolution of consumption patterns and our customers’ expectations striving to meet their growing needs by combining our pay TV, broadband access and mobile telephony services into attractive packages, complementing them with products and services outside our core activity. We are aspiring that our services meet the needs of every customer and are available everywhere. That is why we constantly work on expanding our offering and enter new distribution markets for our services.

Our bundled services offers, addressed both to our individual and business customers, enable our customers to combine products in a flexible way and benefit from attractive discounts. The possibility of selling additional products and services (cross-selling) to our customer base has a positive impact both on our stream of revenue and the level of ARPU per contract customer, and contributes to increasing the loyalty of customers, who use our bundled services.

Furthermore, we offer a broad range of complementary services to every basic service. We combine our traditional pay TV services provided in the satellite and Internet (OTT, IPTV) technologies with VOD, PPV, Multiroom and online video services.

Effective use of the potential in the area of provision of integrated services and value added services to our customers, both through up-selling of single products and value added services, as well as through the sale of bundled offers and cross-selling, may significantly increase the number of services used by each individual customer, thus increasing average revenue per customer (ARPU) and concurrently maintaining the churn ratio on a low level.

Entering the market for energy production from low- and zero-emission sources

The Polish energy sector is currently at the threshold of a transformation involving the need to replace coal in the national electricity generation mix with clean, renewable energy sources and building energy independence in view of geopolitical challenges. An important driving force behind the changes in the Polish energy sector is the growing awareness, both in Poland and at a global level, of the need to combat climate change as well as the consistent climate policy of the European Union, which, on the one hand, offers significant support for the development of renewable energy sources, and on the other hand, strongly limits the possibilities of financing investments based on conventional fuels.

We believe that Poland's energy transformation towards clean, zero- and low-emission energy constitutes an excellent moment for new players to enter this promising market and creates new development opportunities for Polsat Plus Group. We believe that solar and wind power plants as well as stable low-emission sources, such as biomass boilers, will dynamically gain in importance. At the same time we believe that from the perspective of strengthening the energy independence of Europe and Poland a step into the future is already necessary, towards an economy and society based on green hydrogen. In our opinion, hydrogen technology will be important in reducing greenhouse gas emissions on a global scale due to its wide applications in industry, transport and power generation.

In December 2021, we expanded our strategy to include a new business pillar based on clean energy production. Between 2022 and 2026, we want to invest ca. PLN 5 billion to achieve about 1,000 MW of installed clean energy production capacity and ca. PLN 0.5 billion to build the full value chain of the economy based on the fuel of the future, that is hydrogen. In particular, we intend to invest in projects related to the production of energy from photovoltaics, biomass, wind farms and thermal waste treatment. We also want to invest in the future by building a complete value chain of a hydrogen-based economy, which may contribute significantly to the reduction of harmful substance emissions (including CO2). Furthermore, we want to actively analyze the possibilities of investing in other prospective sources of energy such as off-shore wind farms and Small Modular Reactors (SMR).

According to our estimates, our investment plan will contribute to the reduction of greenhouse gas emissions by over 2 million tons of CO2 equivalent per year, while creating an additional recurring EBITDA stream of PLN 500-600 million per year by 2026. Furthermore, by operating on the clean energy market, we will be able to manage energy costs, especially in the telecommunication area, in a more optimal way, which is particularly important in light of record high energy prices in Poland.

Sale of Polsat Plus Group’s mobile infrastructure

In July 2021, we sold to Cellnex Poland 74.98% of shares of Polkomtel Infrastruktura, the owner of the passive and active access layers of the mobile telecommunication infrastructure of Polsat Plus Group, consisting, as at December 31, 2021, of ca. 7 thousand sites, ca. 37 thousand various systems on-air and a transmission network (for details of the transaction see item 3.2. – Significant investments, agreements and events – Business events).

The strategic interest of the partnership with Cellnex is based on a concept of active and passive infrastructure sharing, where the mobile network operator is predominantly interested in product quality and end-user experience, while the infrastructure owner is responsible for delivering ordered network capacity in the most cost-efficient manner. First, this approach will strengthen the investment capacity, which has already entered a new investment cycle with the roll-out of the first 5G network in Poland and will seek additional sites to expand the coverage of the new technology. Second, it is open to cooperation with additional tenants with an intention to achieve higher cost efficiency of network roll-out in the future. Third, the partnership will provide a higher customer experience, faster deployment of new technologies and better optimization of existing tower portfolios in Poland.

Development of streaming platforms

Our Internet services and applications Polsat Box Go and Polsat Go strengthen our position as an aggregator and distributor of content and ensure an important competitive advantage. We continue to develop our services using our experience in sales of pay TV, which helps us achieve synergies in terms of costs and revenues. The distinguishing element of our platforms is the unique, local content produced by Telewizja Polsat.

Mobile video traffic is the fastest growing segment of global mobile data traffic. Bearing this in mind, we believe that online television will make an increasingly significant element of our business in the future. Therefore, we pay attention to providing users of our video services with a wide variety of attractive content. In particular, the coronavirus epidemic and the accompanying lockdowns contributed to higher interest of customers in online television offer, especially with regard to sports events, film and series content as well as entertainment shows. We think that such a trend will continue in the future and that we will benefit from it thanks to investments in the development of this segment of our operations.

5.9.3. Financial factors

Exchange rates fluctuations

The Polish zloty (PLN) is our functional and reporting currency. Our revenue is primarily denominated in PLN, whereas a portion of our expenses and capital expenditures is denominated in foreign currencies.

Foreign exchange rate fluctuations have historically affected the level of our operating costs, finance costs, as well as the profit or loss on investing activities, and are expected to do so in the future. In particular, our exposure to foreign exchange rate fluctuations stems from our foreign currency payments made in different areas of our operations. These include, among others, payments for license fees, transponder capacity, purchase of content and equipment, or international roaming and interconnect agreements.

We have no control over how exchange rates change in the future, and consequently foreign exchange rate fluctuations will continue to affect (positively or negatively) our operations and financial results. Considering our open exposure to currency exchange risk, we have in place a market risk management policy and use, inter alia, natural hedging and hedging transactions.

Interest rate fluctuations

Market interest rate fluctuations do not impact our revenue directly, but they affect our cash flows from operating activities through the amount of interest on current bank accounts and deposits, and also cash flows from financing activities through the Company's costs of servicing debt. In particular, our liabilities under the SFA and our liabilities under the Series B Bonds Terms and the Series C Bonds Terms are calculated based on variable WIBOR, EURIBOR or LIBOR interest rates subject to periodical changes, increased by a relevant margin.

Although the Company intends to maintain certain hedging positions, the goal of which is to hedge against WIBOR fluctuations, there is no assurance that such hedging will continue to be possible or that it will be available on acceptable terms. We systematically analyze interest rate risk on an on-going basis, including refinancing and risk hedging scenarios, which are used to estimate the impact of specific interest rate fluctuations on our financial result.

In 2021, the NBP increased the reference interest rate three times - by 40 basis points on 7 October 2021, by 75 basis points on 4 November 2021 and by 50 basis points on 9 December 2021. Further increases in the reference interest rate occurred in early 2022, i.e. on January 5, 2022 and February 9, 2022 - in both cases by 50 basis points, and on March 8, 2022 by 75 basis points. The interest rate increases to date will translate into a significant increase in our interest expense in 2022. Moreover, based on the current rhetoric of the President of the National Bank of Poland, further increases in domestic interest rates in the coming months should be expected.

Fluctuations in interest rates could limit our ability to meet our current obligations and could have a material effect, both positive and negative, on our results of operations, financial condition and prospects.

5.10. Key market trends

The main trends which we believe are likely to have a material impact on the development prospects of Polsat Plus Group, its revenue and profitability before in the current financial year include:

●	high level of market penetration with services provided by the Company as well as a high level of competitiveness of the markets in which we operate;
●	bundling of media and telecommunications services, as well as services from other sectors, such as electric energy, gas or other products and services for the home;
●	dynamic development of non-linear video content, distributed via VOD and OTT services;
●	steady increase in users’ willingness to pay for video content online, in particular in the subscription model, associated, among others, with the production of high quality exclusive content for individual VOD services;
●	entry of a number of global VOD and OTT players to the Polish market, as well as investments of operators already present on the market in content in order to adjust it to the preferences of local viewers;
●	increased TV content production costs, resulting both from more intense competition for access to attractive content and from the increasing costs of day-to-day content production;
●	increasing sales of smart-TVs;
●	technological changes in provisioning pay TV services, resulting, among others, from increased consumer demand for non-linear content delivery;
●	ongoing consolidation in the pay TV market, particularly in the cable TV segment;
●	economic and demographic effects of the military conflict in Ukraine.

6. Risk factors

Cyfrowy Polsat is part of Polsat Plus Group, whose strategy is to build value primarily based on a convergent offer. A natural consequence of this strategy is a strong integration of operations of the Company and its subsidiaries, among others through integration of back-office functions within the Group or development of a common commercial offer for the Group, in order to achieve synergies in the form of increased efficiency and cost minimization. In view of the foregoing, we are of the opinion that an analysis of the risk and threat factors for the Company independently of the risk and threat factors for the Group may lead to erroneous conclusions about the Company.

The following is a list of risk factors and threats specific to the Company and its operations. These descriptions have been developed and expanded to include significant issues related to the operations of the entire Polsat Plus Group in chapter 6 of the Management Board report on the activities of Polsat Plus Group for the financial year ended December 31, 2021.

●	The performance of our pay TV and broadcasting and television production operations depends on our customers' satisfaction, the acceptance of our programming content by viewers, as well as our ability to generate profit from our own productions or from acquired broadcasting rights
●	We may be unable to attract or retain customers and advertisers if we fail to conclude or extend the license agreements under which we distribute key programs
●	Our ability to increase sales of our services depends on the effectiveness of our sales network
●	In our business, we depend on third-party providers for certain services, infrastructure or equipment. If these are delivered late or if they are not delivered at all our services may be delayed or even suspended
●	We may be unable to keep pace with new technologies used on markets, on which we operate
●	We might be unable to maintain good name of the major brands in our portfolio
●	Goodwill and brand values may be impaired
●	We may lose our management staff and key employees
●	Disruptions to set-top box production may adversely affect our reputation and increase customer churn
●	Network infrastructure, including information and telecommunications technology systems, may be vulnerable to circumstances beyond the Group control that may disrupt service provision
●	We could become a party to labor disputes or experience growth of employment costs
●	The administrative and court proceedings in which we are involved may result in unfavorable rulings
●	Should any claims related to the infringement of third-party intellectual property rights be brought against us, we may be forced to incur substantial expenses to defend against those claims, to acquire a license for a third-party technology, or to redefine our business methods to eliminate the infringement
●	Our own intellectual property rights and other means of protection may not adequately protect our business, and insufficient protection of our programming content, proprietary technologies and know-how may cause profit erosion and customer churn
●	We may not be able to reap the expected benefits of the past or future Group’s acquisitions and strategic alliances

Risk factors associated with the Group’s financial profile

●	The servicing of our debt is very cash-intensive, and our debt servicing liabilities may impair our ability to finance our business operations
●	We might be unable to refinance our existing debt, secure favorable refinancing terms, or raise capital to finance new projects
●	We might be unable to repay our debts if control of the Company changes

Risk factors associated with the market environment and economic situation

●	We are exposed to the effects of the regional or global economic slowdown and supply shocks being felt on the Polish advertising market and affecting consumer spending in Poland
●	We face competition from entities offering alternative forms of entertainment and leisure
●	We are exposed to the effects of the occurrence of extraordinary events such as a pandemic, epidemic or war
●	Given the intense competition across all market segments in which we operate, there can be no assurance that in the future our customers and advertisers will use our services rather than those of our competitors

Factors relating to market risks

When conducting its business operations, the Company is exposed to a number of financial risk factors, including:

●	credit risk
●	liquidity risk
●	market risk, including currency risk and interest rate risk

The 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 risk factors that the Company is subjected to in its activities. Therefore, the Management Board has established an overall risk management framework as well as specific risk management policies with respect to market, credit and liquidity risks.

Detailed information about the Company’s and Group’s exposure to each of the above risk factors, the Company’s and the Group’s objectives, policies and processes for measuring and managing risk were presented, respectively, in Note 35 to the Company’s financial statements for the financial year ended December 31, 2021 and Note 40 to the Company’s consolidated financial statements for the financial year ended December 31, 2021.

Risk factors associated with the legal and regulatory environment

●	The complexity, lack of clarity, and frequent amendments of Polish tax laws may lead to disputes with tax authorities
●	The tax regime applicable to our operations and the sector in which we operate create numerous uncertainties
●	Pending or future tax inspections, tax and customs inspections, tax proceedings and other reviews of the Group companies to which Group companies are parties conducted by Polish tax authorities or local tax authorities abroad may result in additional tax liabilities in the countries where the Group conducted, conducts and will conduct its business (in particular in Poland)
●	We are exposed to changes of Polish law which may adversely affect labor costs
●	There can be no assurance that in the competition and consumer protection authorities will not deem – despite our different assessment – the practices we use as limiting competition or violating the Polish consumer protection laws
●	We may violate the acts of law and regulations governing our satellite TV distribution business as well as telecommunications, TV broadcasting, advertising and sponsoring activities, which are subject to periodic amendments
●	No assurance can be given that we will not breach any personal data protection laws or regulations, or that we will not fail to meet requirements imposed by the President of the Personal Data Protection Office and we may incur pecuniary penalties for non-compliance with GDPR

Risk factors associated with the Series B and C Bonds

Risk factors associated with the Series B and C Bonds have been described in detail in the Information Note on the issuance of Series B Bonds dated May 24, 2019 and the Information Note on the issuance of Series C Bonds dated January 31, 2020 which are available in Polish on the Company’s corporate website.

Risk factors associated with climate

Climate-related risk factors addressing the guidelines of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations are described in the "Sustainability Report of Polsat Plus Group for 2021,” which is available on the Polsat Plus Group corporate website.

7. Cyfrowy Polsat on the capital market

7.1. Shares of Cyfrowy Polsat

Shares of Cyfrowy Polsat are listed on the Warsaw Stock Exchange since May 6, 2008. The table below presents the characteristics of the shares issued as of December 31, 2021:

Series	Number of shares	Type of shares	Number of votes at the General Meeting	Face value [PLN]
A	2,500,000	Preferred shares (2 voting rights)	5,000,000	100,000.0
B	2,500,000	Preferred shares (2 voting rights)	5,000,000	100,000.0
C	7,500,000	Preferred shares (2 voting rights)	15,000,000	300,000.0
D	166,917,501	Preferred shares (2 voting rights)	333,835,002	6,676,700.0
D	8,082,499	Ordinary shares, introduced to trading	8,082,499	323,300.0
E	75,000,000	Ordinary shares, introduced to trading	75,000,000	3,000,000.0
F	5,825,000	Ordinary shares, introduced to trading	5,825,000	233,000.0
H	80,027,836	Ordinary shares, introduced to trading	80,027,836	3,201,113.4
I	47,260,690	Ordinary shares, introduced to trading	47,260,690	1,890,427.6
J	243,932,490	Ordinary shares, introduced to trading	243,932,490	9,757,299.6
Total	639,546,016		818,963,517	25,581,840.6
including:	179,417,501	not traded	358,835,002	7,176,700.0
including:	460,128,515	traded	460,128,515	18,405,140,6

The share capital of the Company is PLN 25,581,840.64, divided into 639,546,016 shares. The total number of votes at the General Meeting is 818,963,517.

As at 31 December 2021, 71,174,126 ordinary shares, representing 11.13% of the capital, were held by Cyfrowy Polsat as a result of the acquisition of treasury shares initiated by Resolution No. 7 of the Extraordinary General Meeting of Shareholders of November 16, 2021. Pursuant to Article 364(2) of the Commercial Companies Code, the Company does not exercise the participation rights from its own shares.

Basic data on Cyfrowy Polsat shares in trading

Date of first quotation		May 6, 2008
Component of indices		WIG, WIG20, WIG30, WIG-ESG, WIGtech
Macrosector		Technology
Market		main
Quotation system		continuous
International Securities Identification Number (ISIN)		PLCFRPT00013 (shares admitted and introduced to trading) PLCFRPT00062 (shares with preferential voting rights)
Cyfrowy Polsat’s identification codes		● WSE: CPS ● Reuters: CYFWF.PK ● Bloomberg: CPS:PW

7.2. Shares quotes

Performance of Cyfrowy Polsat shares in 2021

(indexed; 100 = closing price on December 31, 2020)

Performance of Cyfrowy Polsat shares since the debut on the WSE in May 2008 until the end of 2021 compared to selected WSE indexes

(indexed; 100 = closing price on May 6, 2008)

(1) change December 30, 2021 vs. May 6, 2008

(2) change December 17, 2021 vs. May 6, 2008, index published until December 17, 2021

Performance of Cyfrowy Polsat shares since the debut on the WSE (PLN)

(1)	Share price on August 30, 2021
(2)	Share price on July 15-16, 2008, March 12, 2009
(3)	On April 20, 2011, the Company issued 80,027,836 ordinary bearer H Series shares with a nominal value of PLN 0.04 each. These shares were registered on May 30, 2011 in the Central Securities Depository of Poland under ISIN code PLCFRPT00013, and were admitted to trading on the main market. The proceeds from the issue of H Series shares were used as part of financing the acquisition of Telewizja Polsat. All H Series shares were taken up by the shareholders of Telewizja Polsat.
(4)	On May 7, 2014 the Company issued 47,260,690 Series I shares and 243,932,490 Series J shares with the nominal value of PLN 0.04 each. On May 14, 2014 these shares were registered in the Central Securities Depository of Poland with ISIN codes PLCFRPT00013 and PLCFRPT00021, respectively. Series I shares were admitted to trading on May 12, 2014 and Series J shares – on April 20, 2015. The issue of Series I and J shares provided the source of financing of the transaction of acquisition of Metelem Holding Company Limited, an indirect owner of Polkomtel sp. z o.o. The issued shares were acquired by shareholders of Metelem Holding Company Limited.

Cyfrowy Polsat shares on the stock exchange in 2021

		2021	2020
Year-end price	PLN	34.72	30.28
High for the year	PLN	37.86	30.68
Low for the year	PLN	27.28	20.20
Average for the year	PLN	32.13	26.77

Average daily turnover	PLN ‘000	15,878	14,950
Average daily trading volume	shares	496,766	568,826

Number of shares (as at year-end)	shares	639,546,016(1)	639,546,016
Bearer shares	shares	460,128,515(1)	460,128,515
Market capitalization (as at year-end)	PLN ‘000	22,205,038	19,365,453

(1)	including 71,174,126 own shares acquired under the buy-back program announced on November 16, 2021. Pursuant to Article 364(2) of the Commercial Companies Code, Cyfrowy Polsat S.A. does not exercise the participation rights from its own shares.

Market capitalization of Cyfrowy Polsat since its debut on the WSE

With market capitalization of PLN 22.2 billion at the end of 2021 Cyfrowy Polsat is the largest media and telecommunications company quoted on the Warsaw Stock Exchange and one of the largest in Middle and Eastern Europe.

7.3. Analysts’ recommendations

Brokers covering the Company:

Local

International

• Dom Maklerski BOŚ S.A.

• Biuro Maklerskie mBanku S.A.

• Dom Maklerski PKO BP S.A.

• Trigon Dom Maklerski S.A.

• IPOPEMA Securities S.A.

• Biuro Maklerskie Pekao

• Barclays

• Citigroup Global Markets Inc.

• ERSTE Group Research

• Goldman Sachs

• Haitong Bank S.A.

• Raiffeisen Centrobank AG

• Wood&Company

• Santander Biuro Maklerskie

Recommendations for the shares of Cyfrowy Polsat issued in 2021

Date	Institution	Recommendation	Target price [PLN]
December 14, 2021	IPOPEMA Securities S.A.	Hold	32.5
December 14, 2021	Haitong Bank S.A.	Neutral	34.9
December 9, 2021	Trigon Dom Maklerski S.A.	Buy	39.0
December 5, 2021	DM BOŚ S.A.	Neutral	35.5
December 3, 2021	Santander Biuro Maklerskie	Sell	33.2
November 29, 2021	Wood&Co	Hold	34.0
November 9, 2021	Santander Biuro Maklerskie	Sell	34.9
October 19, 2021	Barclays	Overweight	40.0
October 6, 2021	Biuro maklerskie mBanku S.A.	Hold	36.2
October 1, 2021	Goldman Sachs	Sell	28.6
September 30, 2021	Citigroup Global Markets Inc.	Neutral	35.0
September 2, 2021	Haitong Bank S.A.	Neutral	36.7
August 31, 2021	Santander Biuro Maklerskie	Hold	35.6
August 31, 2021	Barclays	Overweight	39.0
August 23, 2021	DM PKO BP S.A	Buy	39.2
July 26, 2021	IPOPEMA Securities S.A.	Buy	38.0
July 23, 2021	Citigroup Global Markets Inc.	Neutral	29.8
July 21, 2021	Barclays	Overweight	36.0
21 July, 2021	Trigon Dom Maklerski S.A.	Buy	36.0
20 July, 2021	DM BOŚ S.A.	Buy	30.5
25 June, 2021	ERSTE Group Research	Buy	36.0
2 June, 2021	Goldman Sachs	Sell	27.2
28 May, 2021	Santander Biuro Maklerskie	Buy	33.7
14 May, 2021	IPOPEMA Securities S.A.	Buy	37.0
April 26, 2021	Trigon Dom Maklerski S.A.	Buy	34.0
March 29, 2021	Barclays	Overweight	35.0
February 5, 2021	Santander Biuro Maklerskie	Hold	28.8
January 16, 2021	Goldman Sachs	Sell	28.3

Recommendations released in 2022

Date	Institution	Recommendation	Target price [PLN]
March 9, 2022	Santander Biuro Maklerskie	Underperform	28.4

Close dialogue with the capital market

The goal of our corporate strategy is to create sustainable value of the Company. We support this strategy through regular and open communication with all capital market participants.

In order to ensure current access to information we participate in conferences with investors, we organize numerous individual meetings and roadshows both in Europe and in the United States. Moreover, every quarter, after the publication of our financial results, we organize periodical meetings with investors and sell-side analysts, as well as teleconferences with Members of the Company’s Management Board. Both are open events. In 2021, we held meetings with approximately 230 representatives of the capital market, including over 20 virtual conferences. Due to the COVID-19 pandemic, in 2021 they were held in the form of online meetings and teleconferences.

When communicating with the capital market we are guided by the main principle of transparency and equal access to information. Following this principle, we introduced the rule of limited communication before the publication of our financial results. Under this rule the representatives of the Company avoid discussions or meetings with analysts and investors two weeks prior to the publication of the quarterly results. This rule is meant to increase transparency and ensure equal access to information about the Company before the publication of our financial results.

To ensure proper fulfillment of the information obligations imposed by the relevant regulations, including the MAR Regulation, we have implemented, at the Group level, detailed internal rules which define, among others, the principles of analysis and identification of events occurring within our organization, the procedures to be followed upon obtaining any information which is subject to reporting as well as the deadlines for fulfillment of information disclosure requirements. We have also adopted an Individual Reporting Standard which supports the identification and classification of events as inside information.

In order to reach a wide audience we also use modern tools to communicate with capital market representatives, such as a website dedicated to investors (http://www.grupapolsat.pl/en/investor-relations), a reliable and practical source of information about Polsat Plus Group, electronic newsletters, selected social media, periodic newsletters including both information on current events in Polsat Plus Group and latest market developments (press review), as well as reminders of the most important events in the Company. Since the outbreak of the COVID-19 pandemic, we have been using online meeting tools to enable all interested investors and analysts to actively participate in the Company's events.

Numerous distinctions presented to Cyfrowy Polsat in the field of investor relations are the confirmation of our efforts which are aimed at guaranteeing high quality and top standards of the Group’s communication with the capital markets in Poland and around the world. Numerous times we were, among others, ranked top and distinguished in the Best Listed Company of the Year ranking organized by Puls Biznesu daily and in investor relations surveys among WIG30 companies prepared by the daily Parkiet and the Chamber of Brokerage Houses based on annual polls of representatives of financial institutions. In 2021, we were among the winners of the IR Magazine Awards - Europe 2021 competition, winning awards in three categories: best investor relations in the sector: communications, best investor relations professional (small and medium-sized companies) - for Grzegorz Para, Director of Investor Relations, and best investor relations (medium-sized companies). Moreover, the jury of "The Best Annual Report 2020" competition, organized by the Institute of Accounting and Taxes, recognized our "Corporate Governance Statement" as the best among the statements published by private companies.

7.4. Dividend policy

On December 20, 2021, the Management Board of the Company adopted a new dividend policy of the Company for the years 2022-2024.

The main goal of the strategy of the Group is the permanent growth of the value of the Company for its Shareholders. We intend to achieve this goal by implementing the major elements of our operational strategy which include:

●	growth of revenue from services provided to individual and business customers through the consistent building of our customer base value by maximizing the number of users of our services as well as the number of services offered to each customer and simultaneously increasing average revenue per user (ARPU) and maintaining a high level of customer satisfaction;
●	growth of revenue from produced and purchased video content by expanding its distribution, including a search for new channels of exploitation of rights, maintaining the audience shares of channels produced by us;
●	use of opportunities arising from the advancing technological changes and market opportunities in order to expand the scope of our products and services;
●	building a position on the clean, renewable energy market, in particular from the sun, wind, biomass, thermal waste treatment and building a complete value chain of a hydrogen-based economy, which creates opportunities to build a new stream of revenues for Polsat Plus Group and will bring tangible social benefits in the form of greenhouse gas emissions reduction;
●	effective management of the cost base of our integrated capital group by exploiting its inherent synergies and economies of scale, and
●	effective management of the Group’s finances, including its capital resources.

Predictable dividend payouts to Shareholders is one of the main goals underlying the capital resources management policy of the Company. At the same time, bearing in mind the goal to achieve and maintain a low level of indebtedness, designated by the General Meeting of Shareholders in the Articles of Association of the Company (the “Target Leverage Ratio”), the Management Board of the Company is obligated to formulate the financial policy of Polsat Plus Group in such a way, so as to meet the expected Target Leverage Ratio. In view of the above, the Management Board of the Company intends to present a proposal concerning dividend payout together with the Management Board’s recommendation to the General Meeting annually, subject to the observance of the following general principles:

●	the amount of a dividend paid out every year shall guarantee an attractive return on invested capital to the Company’s Shareholders;
●	the level of the obtained return shall be shaped in relation to the commonly available on the Polish market forms of safe investing of funds, in particular in relation to the level of bank deposits rates, while taking into account a risk premium associated with floating of Cyfrowy Polsat’s share prices on the Warsaw Stock Exchange;
●	the annually submitted proposal for distribution of the Company’s net profit for the previous financial year should allow for the continuation of gradual reduction of the net debt of Polsat Plus Group in order to achieve the Target Leverage Ratio.

In regard to the above, after having reviewed the investment plans of Polsat Plus Group and evaluated the possibilities of allocating the expected cash resources of the Group with an aim to pay out dividends to the Shareholders of the Company, in the years 2022-2024 the Management Board of the Company intends to recommend to the General Meeting dividend payout in the total amount of not less than PLN 3.00 per share in three installments as follows:

●	at least PLN 1.00 per share to be paid out from net profit generated in 2021;
●	at least PLN 1.00 per share to be paid out from net profit generated in 2022;
●	at least PLN 1.00 per share to be paid out from net profit generated in 2023.

Simultaneously, the Management Board underscores that every time when presenting a proposal for distribution of the profit for the previous year it will take into account the Group’s net profit, financial standing and liquidity, existing and future liabilities (including potential restrictions related to facility agreements and other financial documents), the assessment of the Group’s prospects in specific market and macroeconomic conditions, potential necessity of spending funds for the Group’s development, in particular through acquisitions and embarking on new projects within the framework of the Group’s strategy, one-off items, as well as valid legal regulations. The dividend policy will be subject to regular verification by the Company’s Management Board. The new dividend policy will take effect from January 1, 2022.

Distribution of net profit of Cyfrowy Polsat for 2020

Acting in accordance with resolution no. 27 of the Ordinary General Meeting, held on June 24, 2021, regarding profit distribution, net profit earned by the Company in the financial year ended December 31, 2020 in the amount of PLN 405.0 million was allocated to the dividend payout. Furthermore, the amount of PLN 362.5 million from the reserve capital created from the profits earned in previous years was also allocated to the dividend payout. The total amount of the dividend was PLN 767.5 million, i.e., PLN 1.20 per share.

8. Corporate governance Statement

8.1. Principles of corporate governance which the Company issuer is subject to

As at December 31, 2021, Cyfrowy Polsat S.A was subject to corporate governance principles outlined in the “Best Practices of WSE Listed Companies in 2021” (“Best Practices 2021”), constituting an appendix to resolution No. 13/1834/2021 of the Council of WSE of March 29, 2021 (this document is available on the official website of the Warsaw Stock Exchange dedicated to the issues of the corporate governance of listed companies - https://www.gpw.pl/dobre-praktyki2021).

Application of principles outlined in the Best Practices 2021

On July 1, 2021, the Management Board of the Company adopted the recommendations and principles specified in the Best Practices 2021. In the second half of 2021, when the Best Practices 2021 were binding, the Company did not comply with principles set out in items 1.4., 1.4.1., 2.1., 2.2., 3.2., 3.6., 3.7., 3.9., 3.10., 4.1. i 4.9.1.

Below, the Company presents explanations regarding non-compliance or partial application of:

●	Principle 1.4. regarding the ensuring of quality communications with stakeholders, as a part of the business strategy, companies publish on their website information concerning the framework of the strategy, measurable goals, including in particular long-term goals, planned activities and their status, defined by measures, both financial and non-financial. The above principle was partly fulfilled in 2021. The assumptions of the business strategy, along with the description of the non-measurable and selected measurable goals, as well as the information on the results achieved and the accomplishment of the strategic goals are published by the Company on its website as well as in its annual reports and sustainability reports. However, due to the fact that the Company did not formulate long-term measurable financial and non-financial goals in 2021, hence such goals were not published by the Company on its website, as required by the principle 1.4. In parallel, please note that on December 20, 2021 the Company adopted and published the assumptions of the new strategy of Polsat Plus Group. The strategy assumes maintaining a strong market position in respect of the existing operating segments of the Group while focusing, among others, on the development of new areas of activity, inter alia in the area of energy production from zero- and low-emission sources leading, according to the assumptions of the strategy, to significant reduction of greenhouse gas emissions in the medium and long term. In connection with the announcement of the new strategy, the Management Board defined and published on the Company’s website its set, measurable, long-term strategic goals, both financial and operational, as well as its non-financial objectives, in particular those related to the expected reduction of greenhouse gas emissions.
●	Principle 1.4.1. stating that information concerning the ESG strategy should explain, among others, how the decision-making processes of the company and its group members integrate climate change, including the resulting risks. In 2021, the Company did not publish information on its website regarding the assumptions and the goals of its strategy in the ESG area. Nonetheless, in its sustainability reports the Company publishes detailed information regarding governance principles and procedures covering environmental issues that are valid in the Company as well as in the Group’s important member companies. The Company also describes in detail the efforts of the entire Group in the areas of conservation of natural environment and education of the public in this area. In 2021, the Company did not publish in its reports any information regarding the risks associated with climate changes. Nonetheless, the Company is aware of the high importance of these issues and plans to include them in its reports for subsequent reporting periods. In parallel, please note that on December 20, 2021 the Company adopted and published the assumptions of the new strategy of Polsat Plus Group, which included strategic assumptions in the ESG area. The Management Board has identified an unfavourable local energy mix, translating into both air quality (social aspect) and the cost of conducting business or living in Poland (economic aspect), as a key challenge for the Polish society and economy. Therefore, within the framework of its new strategy Polsat Plus Group intends to focus, among others, on the development of new areas of operation, in particular on the area of production and sales of energy from zero- and low-emission sources. In the opinion of the Management Board of the Company, the implementation of the newly adopted strategy has a chance to effectively combine ESG aspects with building a new revenue stream for Polsat Plus Group, with a long-term benefit for the Company's shareholders.
●	Principle 2.1. stating that companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%. The Company has a diversity policy in place which also operates in the companies that belong to Polsat Plus Group. The provisions of the diversity policy apply to all employees, including Management Board and Supervisory Board members. The Company notes that a high degree of diversity is assured in the Management Board and the Supervisory Board in areas such as age, education, competence and professional experience. Moreover, in spite of the lack of a defined goal, the Management Board fulfills the diversity principle related to gender as women make up 50% of the Management Board. The diversity policy adopted by the Company and member companies of the Group prohibits discrimination of any kind related to employment, direct or indirect, especially in respect of gender, age, sexual orientation, competence, experience, potential disability, nationality, ethnic and social origin, skin color, language, parental status, religion, denomination or lack of denomination, political views as well as in respect of the location of the place of performing work, form of employment, trade union membership, or any other dimension of diversity as defined by valid law. The diversity policy does not define the minimum goal for diversity in terms of gender of the employees, hence the Company does not apply principle 2.1.
●	Principle 2.2. stating that decisions to elect members of the management board or the supervisory board of companies should ensure that the composition of those bodies is diverse by appointing persons ensuring diversity, among others in order to achieve the target minimum participation of the minority group of at least 30% according to the goals of the established diversity policy referred to in principle 2.1. The provisions of the Group’s diversity policy apply to all of the Group’s employees, including also the Management Board and the Supervisory Board members. The Company’s goal is to assure diversity, including diversity in terms of gender, for higher ranking positions, nevertheless the persons who make decisions while selecting Management Board and Supervisory Board members are above all guided by the candidates’ competences, their professional experience and education.
●	Principle 3.2. stating that the companies’ organization includes units responsible for the tasks of individual systems and functions unless it is not reasonable due to the size of the company or the type of its activity. Even though the Company effectively carries out the tasks listed in principle 3.1, no dedicated organizational units with the responsibility of managing risk and compliance issues have been established in the Company’s organizational structure. Relevant internal processes and procedures have been implemented and operate in the Company, assuring management of financial and operational risks as well as monitoring of compliance of the Company’s operations with the valid regulations. High-level managers, managing respective areas covered by the specific procedures, are responsible for the efficiency and the proper functioning of these procedures. In spite of the lack of a centralized compliance system, internal regulations assure control of compliance of the Company’s operations in various areas with the valid regulations. Compliance control takes place at the level of individual organizational units which are responsible for a given area of operations in the Group. The Management Board verifies on an on-going basis the correctness of functioning of the internal processes in the areas of risk management and compliance of the operations with the valid regulations, and takes action whenever necessary. The Supervisory Board, and the Supervisory Board’s Audit Committee in particular, monitors and assesses the effectiveness of functioning of the internal processes of operational and financial risk management, including the process of drafting of financial statements on the basis of the documents and reports presented by the Management Board and by the person responsible for internal audit as well as on the basis of other information obtained in the course of the Supervisory Board’s on-going activity.
●	Principle 3.6. stating that the head of internal audit reports organizationally to the president of the management board and functionally to the chair of the audit committee or the chair of the supervisory board if the supervisory board performs the functions of the audit committee. In accordance with the organizational structure adopted in the Company, the internal auditor reports directly to the Management Board Member responsible for Finance – based on IIA (The Institute of Internal Auditors) standards. The internal auditor functionally reports to the Chairman of the Audit Committee. In the opinion of the Company’s Management Board, the internal audit function in the Company operates in an effective and independent manner.
●	Principle 3.7. stating that principles 3.4 to 3.6 (concerning, the linking of the remuneration of persons responsible for risk and compliance management and of the head of internal audit with the performance of delegated tasks rather than short-term results of the company, the direct reporting of persons responsible for risk and compliance management report to the president or other member of the management board and the direct reporting of the head of internal audit reports organizationally to the president of the management board and functionally to the chair of the audit committee or the chair of the supervisory board if the supervisory board performs the functions of the audit committee, respectively) apply also to members of the company’s group which are material to its activity if they appoint persons to perform such tasks. The principles are applied partially by the Company. Principles 3.4. and 3.5. also apply to those members of Polsat Plus Group who are material to the Group’s operations. Principle 3.6, in turn, does not apply to companies which are material to the Group since in selected companies of the Group the internal audit function is fulfilled by the same internal audit and control unit as in the Company itself. In face of the above, the person managing the internal audit function in selected companies that are material to the Group reports directly to the Management Board Member responsible for financial matters in the Company, as stipulated by the IIA (The Institute of Internal Auditors) standards.
●	Principle 3.9. stating that the supervisory board monitors the efficiency of the systems and functions referred to in principle 3.1 among others on the basis of reports provided periodically by the persons responsible for the functions and the company’s management board, and makes annual assessment of the efficiency of such systems and functions according to principle 2.11.3. Where the company has an audit committee, the audit committee monitors the efficiency of the systems and functions referred to in principle 3.1, which however does not release the supervisory board from the annual assessment of the efficiency of such systems and functions. The Supervisory Board, the Audit Committee in particular, monitors and assesses the effectiveness of functioning of the internal processes in the scope of operational and financial risk management, including the process of drafting of financial statements, on the basis of the documents and reports presented by the Management Board and by the person responsible for internal audit as well as on the basis of other information obtained in the course of the Supervisory Board’s on-going activity. The Company does not apply the principle 3.9 with regard to the risk and compliance management systems due to the lack of centralized, formal risk and compliance management systems, which has been explained in the justification concerning partial application of the principle 3.2. As at the date of publication of this statement, further formalization of this area is subject of discussions within the Supervisory Board.
●	Principle 3.10. stating that companies participating in the WIG20, mWIG40 or sWIG80 index have the internal audit function reviewed at least once every five years by an independent auditor appointed with the participation of the audit committee. The Supervisory Board, the Audit Committee specifically, monitors and assesses the efficiency of internal processes, which includes on-going monitoring of the efficiency of the internal audit function.
●	Principle 4.1. stating that companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a position to provide the technical infrastructure necessary for such general meeting to proceed. Neither Polish, nor foreign shareholders have so far notified the Company of an interest in or the need for organizing general meetings in such a form. The Management Board, in turn, considers assuring efficient course of debates of general meetings as well as correctness of adoption of resolutions by general meetings a priority. The adopted practice of holding general meetings is intended to reduce the risk of occurrence of any organizational and technical problems during the meetings, potentially causing disruption of the efficient course of the general meetings, as well as the legal risks, especially the ones which could potentially result in the resolutions adopted by a general meeting being questioned due possible transmission delays, technical faults, both on the Company’s end as well as in the locations of the shareholders who participate remotely in the meetings.
●	Principle 4.9.1. stating that candidates for members of the supervisory board should be nominated with a notice necessary for shareholders present at the general meeting to make an informed decision and in any case no later than three days before the general meeting; the names of candidates and all related documents should be immediately published on the company’s website. The Company encourages its shareholders to put forward their candidates at within the timeframe indicated in principle 4.9.1, i.a. by publishing the relevant information in notices on convening the general meetings. However, due to the fact that the Company’s internal regulations do not provide for any mode of appointing the Supervisory Board members other than stipulated by the generally valid legal regulations, especially in terms of restricting the time during which the candidates for supervisory board members may be put forward, and considering that the to-date practice of putting forward candidates for Supervisory Board members differed from the requirements of principle 4.9.1, hence the Company may not assure that the principle will be applied in the future.

8.2. Internal control systems and risk management applied with respect to the process of preparing financial statements

The Management Board is responsible for internal control system in Polsat Plus Group and its effectiveness in the process of preparing financial statements and interim reports prepared and published in accordance with the provisions of the Ordinance of the Minister of Finance of March 29, 2018 regarding current and periodic information to be submitted by issuers of securities, and the conditions for recognizing equivalence of information required under non-member states regulations.

We draw on our employees' extensive experience in the identification, documentation, recording and controlling of economic operations, including numerous control procedures supported by modern information technologies used for recording, processing and presentation of operational and financial data.

In order to ensure the accuracy and reliability of the accounts of the parent and subsidiary companies, we apply accounting policies for Polsat Plus Group and various internal procedures relating to transaction control systems and processes resulting from the activities of the Company and the Group.

We keep our accounts in IT systems integrated with the underlying source systems and auxiliary books. We ensure data security through the use of access rights aligned with the needs and requirements of granted to authorized users. Systems operations are assured by the specialists with extended experience in this field. In addition, the system security is ensured by applying the appropriate solutions for physical security of the equipment. We have a complete IT system documentation in all its areas. In accordance with Article 10 of the Accounting Act of September 29, 1994, the accounting information systems documentation is periodically reviewed and updated upon approval by heads of units.

An important element of risk management, in relation to the financial reporting process, is ongoing internal control exercised by the Finance and Controlling Department. The Internal Audit Department conducts an independent verification of functioning of the internal control system and, as such, complements its efficient operation.

The Internal Audit functions on the basis of the Audit Charter adopted by the Management Board and the Audit Committee of the Supervisory Board. Its primary task is to test and evaluate controls for the reliability and consistency of financial data underlying the preparation of financial statements and management information.

The Controlling department functions on the basis of financial controlling system and business controlling system, and exercises control over both the current processes and the implementation of financial and operating plans, and preparation of financial statements and reports.

An important element of quality control and data review is the use of a management reporting system on a standalone and consolidated basis, as well as regular monthly analyses by the Management Board of financial and operational performance, and other key indicators. The monthly results analysis is carried out in relation to both the current financial and operating plan and the prior period results.

The budgetary control system is based on monthly and annual financial and operating plans and long-term business projections. Achieved financial and operating results are monitored regularly in relation to the financial and operating plans. During the year, we perform additional reviews of the financial and operating plans for the year if the need arises. The financial and operating plans are adopted by the Management Board and presented to the Supervisory Board.

One of the basic elements of control in the process of preparation of financial statements of the Company and the Group is the verification carried out by independent auditors. An auditor is chosen from a group of reputable firms, which guarantee a high standard of service and independence. The Supervisory Board of the Company chooses the Company’s auditor. In the subsidiaries, the auditor is chosen by either the Supervisory Board, the General Meeting or the Meeting of Shareholders. The tasks of the independent auditor include, in particular: a review of semi-annual standalone and consolidated financial statements and audit of annual standalone and consolidated financial statements. The auditor's independence is fundamental to ensure the accuracy of the audit.

The Audit Committee, appointed within the Company's Supervisory Board, supervises the financial reporting process in the Company. The Audit Committee oversees the financial reporting process, in order to ensure sustainability, transparency and integrity of financial information. As at the date of approval of this Report, two out of three Members of the Audit Committee meet the requirements listed in article 129 item 3 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight.

Moreover, under article 4a of the Accounting Act of September 29, 1994, the duties of the Supervisory Board include ensuring that the financial statements and the report on activities meet the requirements of the law, and the Supervisory Board carries out this duty using its competences under applicable law and the Articles of Association of the Company. This is yet another level of control exercised by an independent body to ensure the accuracy and reliability of the information presented in the standalone and consolidated financial statements.

8.3. Share capital and shareholding structure of Cyfrowy Polsat

8.3.1. Shareholders with qualifying holdings of shares of Cyfrowy Polsat

The table below presents Shareholders of Cyfrowy Polsat S.A. holding at least 5% of votes at the General Meeting of the Company as at the date of publication of this Report, i.e. March 24, 2022.

Shareholder	Number of shares	% of shares	Number of votes	% of votes
Zygmunt Solorz, through:	387.506.625	60.59%	566,924,126	69.22%
TiVi Foundation, including through:	353.348.370	55.25%	532,765,871	65.05%
Reddev Investments Limited, including through:	353.348.360	55.25%	532,765,851	65.05%
Cyfrowy Polsat S.A.(1)	71.174.126	11.13%	71,174,126	8.69%
Embud 2 Sp. z o.o. S.K.A.	32.005.867	5.00%	32,005,867	3.91%
Tipeca Consulting Limited(2)	2.152.388	0.34%	2,152,388	0.26%
Nationale Nederlanden PTE S.A.	41.066.962	6.42%	41,066,962	5.02%
Others	210.972.429	32.99%	210,972,429	25.76%
Total	639.546.016	100.00%	818,963,517	100.00%

(1)	Own shares acquired under the buy-back program announced on November 16, 2021. Pursuant to Art. 364 Item 2 of the Commercial Companies Code, Cyfrowy Polsat S.A. does not exercise voting rights attached to own shares.
(2)	Company under the presumption of the existence of an agreement referred to in Art. 87 Section 1 Item 5 of the Public Offering Act.

Changes in the structure of ownership of significant number of shares of the Company in the period since the publication of the last periodic report

From the date of publication of the previous interim report, i.e. November 9, 2021 (report for the third quarter of 2021), until the date of publication of this Report, i.e. March 24, 2022, the structure of ownership of significant blocks of the shares of the Company changed as described below.

1.	On November 24, 2021, the shares in the total number of votes at the Company's general meeting, held indirectly by Mr. Zygmunt Solorz and TiVi Foundation, and directly by Reddev, changed as a result of the settlement of transactions concluded under the tender offer for the sale of the Company's treasury shares, announced on September 28, 2021 by the Company, Reddev and Mr. Zygmunt Solorz. As a result of the settlement of the tender offer, the Company acquired 11,768,260 ordinary treasury shares constituting 1.84% of the share capital of the Company and entitling to 11.768.260 votes at the general meeting of the Company, representing 1.44% of the total number of votes at the general meeting of the Company. Neither Reddev nor Mr. Zygmunt Solorz acquired any shares of the Company directly under the tender offer. At the same time, as a result of the above-mentioned transaction, Mr. Zygmunt Solorz's indirect share in the total number of votes at the Company's General Meeting increased to 67.44%, exceeding the threshold of 66% indicated in Art. 73 Section 1 of the Public Offering Act.
2.	On November 26, 2021, the shares in the total number of votes at the general meeting of the Company, held indirectly by Mr. Solorz and TiVi Foundation, and directly held by Reddev and the Company, changed. The change of shares took place as a result of:
	a.	the disposal by Reddev of 42,039,946 dematerialized ordinary bearer shares constituting 6.57% of the share capital of the Company, entitling to 42,039,946 votes at the general meeting of the Company, representing 5.13% of the total number of votes at the general meeting of the Company. From the above shares, 27,400,000 dematerialized ordinary bearer shares, constituting 4.28% of the share capital of the Company, entitling to 27,400,000 votes or 3.35% of the total number of votes at the general meeting of the Company, were acquired by the Company under the own shares buyback program; and
	b.	the acquisition by Reddev of 14,639,946 dematerialized registered privileged shares of the Company, constituting 2.29% of the share capital of the Company, entitling to exercise 29,279,892 votes at the general meeting of the Company, representing 3.58% of the total number of votes at the general meeting of the Company.
3.	On December 22, 2021, the shares in the total number of votes at the Company's general meeting, held indirectly by TiVi Foundation and Reddev, and directly by Embud 2 and the Company, changed as a result of the acquisition by the Company of 32,005,866 ordinary bearer shares from Embud 2 under the own shares buyback program.
4.	On December 27, 2021, the Company was informed that as a result of the acquisition of the Company's shares in transactions on the WSE, the funds managed by Nationale-Nederlanden Powszechne Towarzystwo Emerytalne S.A. increased their total ownership of the Company's shares to over 5% of votes at the Company's general meeting.

The table below summarizes the above mentioned changes in the structure of ownership of significant blocks of the Company's shares.

Shareholder	Holding as at November 9, 2021	Acquisitions	Disposals	Holding as at March 24, 2022
Zygmunt Solorz, through:	375,738,365	11,768,260	-	387,506,625
TiVi Foundation, including through:	309,574,244	43,774,126	-	353,348,370
Reddev Investments Limited, including through:	309,574,234	43,774,126	-	353,348,360
Cyfrowy Polsat S.A	-	71,174,126	-	71,174,126
Embud 2 Sp. z o.o. S.K.A.	64,011,733	-	32,005,866	32,005,867
Tipeca Consulting Limited	2,152,388	-	-	2,152,388
Nationale Nederlanden PTE S.A.	n/a	n/a	n/a	41,066,965

8.3.2. Information on material agreements, which can result in a change in the proportion of shares held by hitherto shareholders in the future

As at the date of this Report, i.e. March 24, 2022, the Company did not have any information on agreements which can result in a change in the proportion of shares held by hitherto shareholders in the future.

8.3.3. Shares of Cyfrowy Polsat held by Members of the Management Board and the Supervisory Board

To the Company’s best knowledge Members of the Management Board did not hold any shares of the Company, directly or indirectly, as at the date of publication of this Report, i.e. March 24, 2022 as well as at the date of publication of the previous interim report, i.e. November 9, 2021 (report for the third quarter of 2021).

Furthermore, the table below presents the number of shares of Cyfrowy Polsat which, according to the Company’s best knowledge, were held, directly or indirectly, by Members of the Company’s Supervisory Board as at the date of publication of this Report, i.e. March 24, 2022, along with changes in shareholding from the date of publication of the previous report, i.e. November 9, 2021 (report for the third quarter of 2021).

Name and Surname / Function	Holding as at November 9, 2021	Acquisitions	Disposals	Holding as at March 24, 2022
Mr. Zygmunt Solorz(1) Chairman of the Supervisory Board	375,738,365	11,768,260	-	387,506,625
Mr. Marek Kapuściński Deputy Chairman of the Supervisory Board	22,150	-	-	22,150
Mr. Tomasz Szeląg(2) Member of the Supervisory Board	25,500	-	-	25,500

(1)	Zygmunt Solorz has been serving as Chairman of the Company’s Supervisory Board from June 24, 2021. Zygmunt Solorz owns the Company’s shares through the following companies: TiVi Foundation (the parent of Reddev Investments Limited), Embud 2 Sp. z o.o. S.K.A. and Tipeca Consulting Limited.
(2)	Tomasz Szeląg holds the Company’s shares indirectly, through Pigreto Ltd.

To the Company’s best knowledge the remaining Members of the Supervisory Board did not hold any shares of the Company, directly and indirectly, as at the date of publication of this Report, i.e. March 24, 2022, nor at the date of publication of the previous report, i.e. November 9, 2021 (report for the third quarter of 2021).

8.3.4. Securities with special controlling rights

Current shareholders do not have any rights in the General Meeting of Shareholders other than those resulting from holding the Company’s shares. As at December 31, 2021 the shares of the A through D series are preferred shares as to the voting rights in the way that:

●	Series A shares totaling 2,500,000 have preferential voting rights entitling their holder to two votes per share;
●	Series B shares totaling 2,500,000 have preferential voting rights entitling their holder to two votes per share;
●	Series C shares totaling 7,500,000 have preferential voting rights entitling their holder to two votes per share;
●	Series D shares totaling 166,917,501 numbered 1-166,917,501 have preferential voting rights entitling their holder to two votes per share.

8,082,499 D Series shares, numbered 166,917,502-175,000,000; 75,000,000 E Series shares; 5,825,000 F Series shares, 80,027,836 H Series shares, 47,260,690 I Series shares and 243,932,490 J Series shares are ordinary bearer shares.

8.3.5. Limitations related to shares

As at the date of this Report, i.e. on March 24, 2022, the Company held 71,174,126 of its own ordinary shares constituting 11.13% of the share capital of the Company and entitling to 71,174,126 votes at the general meeting of the Company, representing 8.69% of the total number of votes at the general meeting of the Company. The above mentioned shares were purchased under the own shares buyback program announced on November 16, 2021. Pursuant to Art. 364 Section 2 of the Code of Commercial Companies of Cyfrowy Polsat S.A. does not exercise voting rights attached to the held treasury shares.

Except for the mentioned above limitations and the limitations regarding our securities ownership rights transfer resulting from the general provisions of the law there are no other limitations, in particular contractual limitations, regarding our securities ownership rights transfer.

8.4. Rules of amending the Articles of Association of the Company

An amendment to the Articles of Association of the Company requires a resolution of the General Shareholders’ Meeting and a registry in the Court register. The general provisions of law, the Articles of Association and the Bylaws of the General Shareholders’ Meeting govern the procedure for adopting resolutions regarding amendments to the Articles of Association.

Pursuant to the provisions of the Articles of Association and taking into account the provisions of art. 417 § 4 of the Commercial Companies Code, an amendment to the Articles of Association may take place without a share buyback.

8.5. General Shareholders’ Meeting

The General Shareholders’ Meeting acts pursuant to the provisions of the Commercial Companies’ Code, the Articles of Association, and the Bylaws of General Shareholders’ Meeting adopted by Resolution 6 of the Extraordinary Shareholders’ Meeting dated December 4, 2007 and amended by Resolution 29 of the Extraordinary Shareholders’ Meeting dated April 23, 2009.

The General Shareholders’ Meeting adopts resolutions regarding, in particular, the following issues:

a)	reviewing and approving the Management Board’s Report and the report of the Supervisory Board as well as the financial statements of the Company for the preceding accounting year and the consolidated financial statements,
b)	decisions on dividing the profit or on the manner of covering the losses,
c)	acknowledgement of the fulfilment of duties by the Supervisory Board Members and Management Board Members,
d)	establishing the remuneration of Supervisory Board Members, subject to the provision of Article 18 sec. 3 c) of the Articles of Association, i.e., determining the amount of remuneration of Supervisory Board Members delegated to perform temporarily the tasks of a Management Board Member,
e)	amending the Articles of Association,
f)	modifying the scope of the Company’s operations,
g)	increasing or decreasing share capital,
h)	merging, dividing, or transforming the Company,
i)	winding up and liquidating the Company,
j)	issuing convertible bonds or senior bonds as well as issuing subscription warrants,
k)	selling or leasing the enterprise, its organized part or property components constituting a significant part of the enterprise as well as establishing limited rights in rem in the aforementioned scope,
l)	granting consent to any acquisition and sale of real property, perpetual usufruct right or interest in real property, as well as granting consent to establishing a limited right in rem on real property, perpetual usufruct right or interest in real property with a value exceeding the 0.2% ratio of the Company’s unit EBITDA for the preceding accounting year as stipulated in Article sec. 3.19 of the Articles of Association,
m)	any and all issues connected with claims for remedying a loss caused upon the formation of the Company or in the course of its management or supervision.

As of January 1, 2025, the General Shareholders Meeting shall not be entitled to grant consent to the Company to incur any liability whatsoever if incurring it may result in the debt ratio, expressed as the ratio of the Group’s net debt to EBITDA, exceeding a threshold of 2.0x.

The General Meeting shall be attended by persons who are shareholders of the Company sixteen days prior to the date of the General Meeting (the day of registration for participation in the General Meeting). The date of registration for participation in the General Meeting is consistent for bearer shares and preferred shares holders. Pledgees and usufructuaries who are entitled to vote, have the right to participate in the General Meeting if establishment of a limited right on their behalf is registered on a securities account on the day of registration for participation in the General Meeting.

A shareholder, being a natural person, is entitled to participation in the General Shareholders’ Meeting and execution of voting rights in person, or through a proxy. A shareholder, being a legal entity, is entitled to participation in the General Shareholders’ Meeting and execution of voting rights through a person authorized to make representations of intent on its behalf, or through a proxy.

The power of attorney to attend the General Meeting and exercise voting rights requires a written or electronic form. The shareholder must notify the Company about electronically granting the power of attorney by providing information specifying the Shareholder and the Shareholder's proxy, including the name and surname or company (the name) and address (seat), and indicating the number of shares and votes, of which the proxy is authorized to exercise to the address: akcjonariusze@cyfrowypolsat.pl.

The General Meeting should be attended by Members of the Management Board and Supervisory Board - in the composition which allows for substantive answers to the questions posed during the General Meeting.

The General Meeting shall be opened by the Chairperson or, in his/her absence, the Deputy Chairperson of the Supervisory Board (if appointed). In their absence, the General Meeting shall be opened by the President of the Management Board or a person nominated by the President. Next, the General Meeting shall appoint the Chairperson of the Meeting from among persons authorised to participate in the General Meeting.

Each participant in the General Meeting is entitled to be elected the Chairman of the General Meeting, and also nominate one person as candidate to the position of Chairman of the General Meeting. Decisions shall not be made until Chairman of the General Meeting is elected.

The Chairman of the General Meeting directs proceedings in accordance with the agreed agenda, provisions of law, the Articles of Association and the Bylaws, and in particular: gives the floor to speakers, orders voting and announces the results thereof. The Chairman ensures efficient proceedings and respecting of the rights and interests of all Shareholders. The Chairman may decide on procedural matters.

After the drawing up and signing of the attendance list the Chairman determines that the Shareholders’ Meeting has been convened in a proper manner and is authorized to adopt resolutions; presents the agenda and orders the selection of the Ballot Committee.

The General Meeting may pass a motion regarding nonfeasance of voting over an item on the agenda, and also on adjourning the order of issues on the agenda. However, removing an item from the agenda, or its adjourning upon the request of shareholders, requires prior consent of all the shareholders present who have forwarded such a motion, supported by a majority of votes of the General Meeting. Motions regarding the aforementioned issues shall be justified in detail.

The Chairman, after opening an item on the agenda, may give the floor in order of application to speakers. In the event of a significant number of applications the Chairman may set a time limit or limit the number of speakers. The floor may be taken regarding items on the agenda and currently under discussion only. The Chairman may give the floor outside of the order of application to the Members of the Management Board or Supervisory Board, and also to the Company experts called by them.

The Meeting may not adopt resolutions regarding items that are not on the agenda unless all the share capital is represented in the General Meeting and none of the present in the Meeting raises any objections as to the adoption of a resolution.

Voting shall proceed in a manner adopted by the General Meeting using a computerized system of casting and counting votes, ensuring that votes are cast in the number corresponding to the number of shares held and - in case of a secret ballot - allowing to eliminate the possibility of detecting the manner of voting by individual shareholders.

Subject to mandatory provisions of law, the General Meeting shall be valid, if attended by shareholders representing jointly more than 50% of the total number of votes in the Company. The resolutions of the General Meeting shall be adopted by an absolute majority of votes cast, unless the provisions of the Commercial Companies’ Code or the provisions of Company’s Articles of Association provide for a greater majority.

As at December 31, 2021 the shareholders participating in the General Meeting had the number of votes corresponding to the number of shares held, with the stipulation that shares listed in item 8.3.4. – Securities with special controlling rights – are preferential in such a way that each of them entitles to two votes at the General Meeting.

The Chairman of the General Meeting closes the General Meeting upon exhausting its agenda.

8.6. Management Board of the Company

8.6.1. Rules regarding appointment and dismissal of the management

Pursuant to article 14 of the Articles of Association of the Company the Management Board consist of one or more members, including the President of the Management Board. The President of the Management Board shall be appointed and dismissed by TiVi Foundation with its registered office in Vaduz, Liechtenstein as a personal right vested in that shareholder. The remaining Management Board Members shall be appointed and dismissed by the Supervisory Board. The number of Management Board Members in any given term of office shall be determined by the Supervisory Board. The term of office of the Management Board is joint and lasts three years.

The Management Board of the Company shall consist in their majority of persons holding Polish citizenship. Prior to their appointment, the Company’s Management Board Members are required to submit a written statement that they have familiarized themselves with the Company’s Articles of Association, the Bylaws of the Management Board, the Bylaws of the Supervisory Board, the Company’s Organizational Regulations, Work Regulations and Employee Remuneration Rules, and that they undertake to strictly observe and apply them.

8.6.2. Composition of the Management Board and changes in 2021

As at January 1, 2021 the Management Board comprised the following Members:

●	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.

In 2021 there were no changes to the composition of the Management Board.

The following table presents names, surnames, functions, dates of appointment and dates of expiry of the current term of particular Members of the Management Board as at December 31, 2021.

Name and surname	Function	First appointment	Appointment for current term	Expiry of term
Mirosław Błaszczyk	President of the Management Board	2019	2019	2022
Maciej Stec	Vice-President of the Management Board	2014	2019	2022
Jacek Felczykowski	Member of the Management Board	2019	2019	2022
Aneta Jaskólska	Member of the Management Board	2010	2019	2022
Agnieszka Odorowicz	Member of the Management Board	2016	2019	2022
Katarzyna Ostap-Tomann	Member of the Management Board	2014	2019	2022

Mirosław Błaszczyk has been President of the Management Board of Cyfrowy Polsat S.A since April 2019. He is also President of the Management Board of the following companies: Polkomtel Sp. z o.o. (since April 2019), Plus Pay Sp. z o.o. and Plus Finanse Sp. z o.o. and Supervisory Board Member of the following companies: Telewizja Polsat Sp. z o.o., Info-TV-FM Sp. z o.o., Muzo FM Sp. z o.o. Plus Flota Sp. z o.o., Liberty Poland S.A., Ossa Medical Center Sp. z o.o. and CKS Ossa Sp. z o.o. In addition, he holds a position of Member of the Council of the Polsat Foundation. In years 2007-2019, has served as President of the Management Board of Telewizja Polsat Sp. z o.o., and, until March 2019, as President of the Management Board of Lemon Records sp. o.o. and Eska TV S.A.

Mirosław Błaszczyk has extensive experience gained during over 30 years of work in management positions in various industries. From 1984 to 1988 he worked as director at Wrocław University of Technology, later he worked for a year as Assistant to President and Sales Representative of the company "Intersoft", next, from 1990 to 1991, as Sales Representative in Munich-based company "Ampol". From 1992 he worked for Przedsiębiorstwo Zagraniczne "Solpol"; until 1993 as Deputy Director, and later as Director of Legal Office. In 1994 he joined Telewizja Polsat, where, until 2007, he held the position of Director of Management Board Office and served as Proxy. At the same time, from March 2005 to September 2006, he was Deputy General Director of Polska Telefonia Cyfrowa Sp. z o.o. Mr. Błaszczyk also served in the past as Member of the Supervisory Boards in, among others, Plus Bank S.A. and Elektrim S.A.

Mirosław Błaszczyk graduated from the German Faculty at the Wrocław University.

Maciej Stec has been Vice President of the Management Board of Cyfrowy Polsat since April 2019 and is responsible for strategy and new areas of business development. He has been serving as Member of the Company’s Management Board since November 2014. In April 2019 he became Vice-President of the Management Board of Polkomtel and Member of the Supervisory Board of Telewizja Polsat Sp. z o.o. Mr. Stec is a Member of the Supervisory Boards of ZE PAK S.A., PAK-Polska Czysta Energia Sp z o.o., Exion Hydrogen Polskie Elektrolizery Sp. z o.o., Grupa Interia.pl Sp. z o.o., Polsat Boxing Promotion Sp. z o.o., Mobiem Polska Sp. z o.o., BCast Sp. z o.o., Esoleo Sp. z o.o.,, Muzo.fm Sp. z o.o. He also holds the function of Management Board Member at Polsat Ltd. and Polsat JimJam Ltd. Moreover, he is a member of the supervisory body in the Clean Poland Program Association.

Maciej Stec has versatile and extensive experience in the field of telecommunication and media. Ever since the beginning of his professional career he has been linked with the television market. In 2007-2019 he was Member of the Management Board and Sales & Foreign Acquisition Director of Telewizja Polsat while in 2018-2019 he served as President of the Management Board of Eleven Sports Network Sp. z o.o. From 1998 he worked, among others, for OMD Poland media house, owned by Omnicom Group, where in the years 1998-2003 he held the position of Managing Director of Brand&Media OMD. From February 2003 to May 2007 he was Managing Director of Telewizja Polsat's advertisement office - Polsat Media Sp. z o.o. (currently Polsat Media Biuro Reklamy Sp. z o.o. Sp.k.).

Maciej Stec also has competences in the field of clean energy and has been gaining experience in this area through his involvement since 2020 in the supervisory bodies of companies from the ZE PAK S.A. group as well as managing the Polsat Plus Group’s companies operating in the zero and low-emission energy sector - Esoleo and Exion Hydrogen Polskie Elektrolizery.

Maciej Stec graduated from the Management and Marketing Faculty of the Leon Kozminski Academy of Entrepreneurship and Management in Warsaw.

Jacek Felczykowski has been Member of the Management Board of Cyfrowy Polsat since April 2019. He is responsible in the Group for the telecommunication network and technology. Mr. Felczykowski has long-term and versatile experience in company management within the areas of finance and innovative technologies, such as IT and telecommunications. Since 2015 he has been a Member of the Management Board of Polkomtel Sp. z o.o. He is also a Member of the Management Board of BCast Sp. z o.o. and sits on the Supervisory Boards of Interphone Service Sp. z o.o. and Info-TV-FM Sp. z o.o.,

In the years 2006-2008 he served as President of the Management Board of Centrum Obsługi Wierzytelności Cross Sp. z o.o., and from 2007 to 2008 as Member of the Management Board of TFI Plejada S.A. In the years 2008-2010 he managed, as President of the Management Board, NFI Midas S.A., one of the world’s pioneers in the implementation of fast, mobile Internet in the LTE technology. In the years 2010-2012 he was President of the Management Board of Sferia S.A. and from 2011 to 2013 he was President of the Management Board of IT Polpager S.A.

Aneta Jaskólska has been a Member of the Management Board of Cyfrowy Polsat since July 2010. She is responsible for the Customer Service Department as well as Information Security and Safety Department, including cybersecurity. Ms. Jaskólska is also President of the Management Board of Info-TV-FM Sp. z o.o. and Member of the Management Boards of Liberty Poland S.A., CPSPV1 Sp. z o.o., CPSPV2 Sp. z o.o. and Polkomtel Sp. z o.o., as well as a Member of the Supervisory Board of Vindix S.A. She also serves as Vice-President of the Clean Poland Program Association.

Between 2004 and 2007 Ms. Jaskólska held the position of Proxy and Director of Legal Department at UPC Polska Sp. z o.o. She was also a Member of the Copyright Committee (Komisja Prawa Autorskiego). She has many years of experience in legal advisory and services to large business entities.

Ms. Jaskólska graduated from the Faculty of Law and Administration at the Warsaw University and completed legal internship with the District Chamber of Legal Advisers in Warsaw, receiving the title of a solicitor. She also graduated from Copyright, Publishing and Press Law Faculty at the Department of Management and Social Communication of the Jagiellonian University.

Agnieszka Odorowicz has been a Member of the Company’s Management Board since March 1, 2016 and is responsible for film production and management of the Group’s studios.

From 2001 until 2009 she was an academic staff member at the Department of Trade and Market Institutions at the Cracow Academy of Economics and the author of publications on cultural management and economics as well as the promotion of regions. In the years 2002-2004 the authorities of the Academy appointed her to the position of director of the Development and Promotion Center of the Cracow Academy of Economics. In the years 2003-2004 she acted as deputy Minister of Culture for structural funds, responsible for negotiations with the European Commission regarding the use of EU funds for the development of cultural infrastructure. During the years 1997-2003 she was the artistic director of the International Competition of Contemporary Chamber Music and producer of several dozen shows for public television. In the years 2004-2005 she held the position of Secretary of State at the Ministry of Culture, where she was responsible for the legal and economic departments as well as cooperation with the Parliament. During this period she was the Chairwoman of the inter-ministerial group for the media policy of the State. In the years 2005-2010 she was the first director of the Polish Film Institute. Reelected as director in a competition in 2010, she managed the Polish Film Institute until October 2015. In the years 2014-2015 she served as Member of the Supervisory Board of Polskie Radio S.A.

Ms. Odorowicz is a graduate of the Cracow University of Economics, an economist and a cultural manager. She is a co-author of numerous publications on culture economy. Awarded for her merit for culture, among others with the Officer's Cross of the Order of Polonia Restituta.

Katarzyna Ostap-Tomann has been connected with Polsat Plus Group since 2009. In the years 2015-2016 she assumed the position of deputy CFO of the Group and she has been a Member of the Management Board responsible for the finance of the Group since October 2016. She also holds the position of Member of the Management Board of Polkomtel Sp. z o.o., INFO-TV-FM Sp. z o.o., CPSPV1 Sp. z o.o., CPSPV2 Sp. z o.o., CPE Sp. z o.o. and Polsat License Ltd. She is also a Member of the Supervisory Board of Plus Bank S.A., a Member of the Polsat Foundation Council and a Proxy at HCH SPV1 Sp. z o.o. Earlier, until April 2019, she was also a Member of the Management Board of Telewizja Polsat Sp. z o.o.

She has extensive competence and knowledge in the field of accountancy and financial reporting gained during many years of experience on managerial positions, especially in companies operating in media and telecommunication sectors.

In the years 1996–2004 she was employed at various positions at Philip Morris in Poland and in the regional headquarters of the company in Switzerland, where she gained considerable experience in the fields of corporate finance, financial reporting, management accounting and internal audit. In the years 2004-2009 she worked for TVN Group as Financial Controller of the capital group. She was responsible for the preparation of financial statements at the capital group level and internal management reporting. In 2009 she took the position of Director of Controlling at Cyfrowy Polsat, where she became Financial Director in 2012. In 2011 she was appointed to the position of Financial Director at Telewizja Polsat, and then Member of the Management Board in 2014.

She has been a member of the ACCA since 2001. In 2013-2017 she was a member of the ACCA Council in Poland. Ms. Ostap-Tomann is a graduate of the Warsaw School of Economics with a major in International Economics and Political Relations and also holds the title of MBA from Oxford Brookes University.

8.6.3. Competences and Bylaws of the Management Board

In accordance with the Company’s Articles of Association, the Management Board conducts the business of the Company and represents it in external relations.

The following are entitled to submit statements on our behalf:

●	in the case of one person Management Board – the President of the Management Board acting together with a commercial proxy, and
●	in the case of a more numerous Management Board – the President of the Management Board, a Management Board Member, and the commercial proxy acting jointly.

The Management Board operates under legal regulations in force, the Company’s Articles of Association, the Bylaws of the Management Board, the Bylaws of the Supervisory Board, the Company’s Organizational Regulations, Work Regulations, and Employee Remuneration Rules as well as under the resolutions of the General Meeting of Shareholders.

The Management Board performs its obligations collectively whereas each of its members manages specific areas of the Company's operations within the division of tasks, in accordance with the descriptions included in the biographical notes in item 8.6.2.

All issues related to our management, not restricted by the provisions of the law or the Articles of Association to the competence of the Supervisory Board or the General Meeting, are within the scope of competence of the Management Board.

Decisions regarding an issue or buyback of the Company’s shares are within the competence of the General Shareholders’ Meeting. The competences of the Board in respect to the above are limited to the execution of any resolutions adopted by the General Shareholders’ Meeting.

In accordance with the provisions of Art. 13 of the Company’s Articles of Association, as of January 1, 2025, the Company’s Management Board is obliged to manage the business of the Group in such a way that the debt ratio, calculated as the quotient of the Group’s net financial debt and EBITDA, never exceeds 2.0x. In the period until December 31, 2024, the Company’s Management Board shall be obligated to manage the business of the Group in such a way that a debt ratio not exceeding 2.0x is achieved by December 31, 2024 at the latest. The value of the Group’s debt ratio as at December 31, 2024 shall ensue upon the Company’s Management Board and the Company’s Supervisory Board approving the consolidated financial statements for the accounting year ended on December 31, 2024.

Members of the Management Board may attend the sessions of the Supervisory Board. Furthermore, Members of the Management Board may participate in the sessions of any General Meeting. They provide substantive answers to questions asked during the General Meeting in accordance with the binding laws.

The Management Board conducts the Company’s business on the basis of adopted resolutions.

The resolutions of the Management Board are adopted during Management Board’s meetings. In extraordinary cases, the resolutions of the Management Board may be adopted without holding a meeting either in writing or using means of distance communication. Management Board resolutions adopted at a Management Board meeting are passed by an absolute majority of votes. If the votes are distributed equally, the President of the Management Board has a casting vote. Management Board resolutions may only be adopted, if all Management Board Members have been duly notified of a Management Board meeting and if the meeting is attended by more than half of the Management Board Members.

Management Board resolutions may be adopted in writing or using means of distance communication, if the draft of the resolution has been effectively served to all Management Board Members and the Chairperson of the Supervisory Board, if all Management Board Members take part in the vote, and if an absolute majority of Management Board Members consent to the resolution. Immediately after a resolution is adopted, the President of the Management Board is obliged to deliver it to the Chairperson of the Supervisory Board in the adopted wording together with information on the result of the vote.

Management Board meetings may be attended by the Chairperson of the Supervisory Board and a Supervisory Board Member or Supervisory Board Members appointed by the Chairperson of the Supervisory Board in writing. The President of the Management Board is obliged to notify the Chairperson of the Supervisory Board in writing of the date and agenda of Management Board meetings. The aforementioned notification shall be served at least 72 hours prior to the appointed time of the meeting. In extraordinary cases, said notification may be served within a shorter time-limit upon the written consent of the Chairperson of the Supervisory Board. Management Board meetings may also be attended by the Company’s commercial proxy. The Company’s Management Board notifies the commercial proxy of the date and agenda of the meeting.

The Company’s Management Board is obliged to maintain the continuity of the commercial power of attorney; in particular, if the commercial power of attorney expires for any reason whatsoever, the Company’s Management Board shall be obliged to appoint another commercial proxy immediately. Granting a commercial power of attorney requires the consent of all Management Board Members, subject to the stipulation that it shall only be permitted to grant a commercial power of attorney obliging the commercial proxy to perform transactions jointly with the President of the Management Board and a Management Board Member. A commercial power of attorney may only be granted by the Company’s Management Board to candidates approved by the Supervisory Board. A commercial power of attorney can be revoked by any Management Board Member.

8.6.4. Remuneration of the Members of the Management Board

Rules for remuneration of Members of the Management Board are regulated by the Remuneration Policy for the Management Board and Supervisory Board Members. Information regarding remuneration of Members of the Management Board in 2021 is included in Note 41 of the financial statements for the financial year ended December 31, 2021.

8.6.5. Managerial contracts with Members of the Management Board setting out severance packages payout as a result of their resignation or dismissal from the position without a material cause

The Company has concluded managerial contracts with the following Members of the Management Board: Aneta Jaskólska, Agnieszka Odorowicz and Katarzyna Ostap-Tomann. These contracts do not provide for the payment of severance packages as a result of the resignation of the mentioned above Members of the Management Board or their dismissal from the position without a material cause, or in the case when their resignation or dismissal results from a merger by acquisition of the Company.

8.7. Supervisory Board of the Company

8.7.1. Rules regarding appointment and dismissal of the Supervisory Board

In accordance with Art. 19 of the Company’s Articles of Association, the Supervisory Board consists of five to nine members, including the Chairperson of the Supervisory Board. A Supervisory Board Member may be appointed Deputy Chairperson of the Supervisory Board by resolution of the General Shareholders Meeting. The Chairperson of the Supervisory Board is appointed and dismissed by TiVi Foundation with its registered office in Vaduz, Liechtenstein as a personal right vested in that shareholder. The remaining Members of the Supervisory Board are appointed and dismissed by the General Shareholders Meeting.

The Supervisory Board is appointed for a joint five-year term of office. The number of Supervisory Board Members in any given term of office shall be determined by the General Shareholders Meeting.

The Supervisory Board of the Company shall consist in their majority of persons holding Polish citizenship. Prior to their appointment, the Company’s Supervisory Board Members are required to submit a written statement that they have familiarized themselves with the Company’s Articles of Association, the Bylaws of the Management Board, the Bylaws of the Supervisory Board, the Company’s Organizational Regulations, Work Regulations, and Employee Remuneration Rules, and that they undertake to strictly observe and apply them.

The Supervisory Board consists of two Members meeting the criteria of an independent Member of the Supervisory Board as set out in article 129 item 3 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight which fulfills the principle 2.3. of the Best Practices 2021. A Supervisory Board Member is required to submit a statement to the Management and Supervisory Boards of the Company on his or her compliance with the independence criteria.

8.7.2. Composition of the Supervisory Board

As at January 1, 2021 the Supervisory Board comprised the following Members:

Name and surname	Function
Marek Kapuściński	Chairman of the Supervisory Board Member of the Remuneration Committee
Józef Birka	Member of the Supervisory Board
Marek Grzybowski	Independent (1) Member of the Supervisory Board Chairman of the Audit Committee
Robert Gwiazdowski	Member of the Supervisory Board
Aleksander Myszka	Member of the Supervisory Board
Leszek Reksa	Member of the Supervisory Board
Tomasz Szeląg	Member of the Supervisory Board Chairman of the Remuneration Committee Member of the Audit Committee
Paweł Ziółkowski	Independent (1) Member of the Supervisory Board Member of the Audit Committee
Piotr Żak	Member of the Supervisory Board

(1)	conforms with the independence criteria listed article 129 item 3 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight and in principle II.Z.4 of the Best Practices 2016.

Based on the resolutions adopted on June 24, 2021, the Annual Shareholders Meeting of the Company resolved, in connection with the expiry of the term of office of members of the Supervisory Board, that the Supervisory Board of the new joint 5-year term of office shall consist of nine members. Simultaneously, the Annual Shareholders Meeting resolved to appoint the following persons to the Supervisory Board of the Company, effective June 24, 2021: Mr. Marek Kapuściński to the position of Vice-Chairman of the Supervisory Board and Mr. Józef Birka, Mr. Jarosław Grzesiak, Mr. Marek Grzybowski, Mr. Alojzy Nowak, Mr. Tobias Solorz, Mr. Tomasz Szeląg and Mr. Piotr Żak to the positions of Members of the Supervisory Board of the Company.

In accordance with § 19 item 2 of the Articles of Association of the Company, TiVi Foundation, the Company’s shareholder, elected Mr. Zygmunt Solorz as the Chairman of the Supervisory Board on June 24, 2021.

Acting pursuant to § 7 item 3 of the Bylaws of the Supervisory Board, on June 29, 2021 the Supervisory Board appointed Mr. Marek Grzybowski, Mr. Alojzy Nowak and Mr. Tomasz Szeląg as Members of the Audit Committee. In addition, the Supervisory Board, acting pursuant to § 2 item 5 of the Bylaws of the Audit Committee, appointed Mr. Marek Grzybowski as Chairman of the Audit Committee.

The following table presents names, surnames, functions, dates of appointment and dates of expiry of the current term of particular Members of the Supervisory Board as at December 31, 2021.

Name and surname	Function	First appointment	Appointment for current term	Expiry of term
Zygmunt Solorz	Chairman of the Supervisory Board	2008	2021	2026
Marek Kapuściński	Vice-Chairman of the Supervisory Board Member of the Remuneration Committee	2016	2021	2026
Józef Birka	Member of the Supervisory Board	2015	2021	2026
Jarosław Grzesiak	Member of the Supervisory Board	2021	2021	2026
Marek Grzybowski	Independent(1) Member of the Supervisory Board Chairman of the Audit Committee	2020	2021	2026
Alojzy Nowak	Independent(1) Member of the Supervisory Board Member of the Audit Committee	2021	2021	2026
Tobias Solorz	Member of the Supervisory Board	2021	2021	2026
Tomasz Szeląg	Member of the Supervisory Board Chairman of the Remuneration Committee Member of the Audit Committee	2016	2021	2026
Piotr Żak	Member of the Supervisory Board	2018	2021	2026

(1)	conforms with the independence criteria listed article 129 item 3 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight.

Zygmunt Solorz was appointed to the position of Chairman of the Supervisory Board of the Company of the current term of office in July 2021 whereas he performed previously this function in years 2008-2016. Zygmunt Solorz is one of the largest private investors in Poland, conducting business activities in various areas of the economy for almost 30 years.

He is widely acknowledged as one of the most reputable, effective and successful Polish entrepreneurs, who build from zero the largest Polish private company based on Polish capital. Zygmunt Solorz focuses his activities on media, telecommunications and clean energy production.

The greatest success and the crowning achievement of Zygmunt Solorz's business path is the creation of the largest Polish private company - Polsat Plus Group. Its members are: Cyfrowy Polsat S.A., Telewizja Polsat Sp. z o.o. (of which both Zygmunt Solorz is also the founder), Polkomtel Sp. z o.o., Netia S.A. and Interia.pl Group that jointly form the largest media and telecommunications group in Poland and CEE. From 2021, the strategy of Polsat Plus Group also includes involvement in the production of clean, green energy.

Zygmunt Solorz’s areas of investment activity include also the companies operating in, among others, finance and banking (Plus Bank S.A.) and real estate (Port Praski Sp. z o.o.) as well as the largest Polish private jet airline (Jet Story Sp. z o.o.).

Apart from the above-mentioned areas of business activity, Zygmunt Solorz is also involved in many different philanthropic activities. He is, inter alia, the originator and creator of Polsat Foundation, one of the largest non-governmental organizations in Poland, which helps in the treatment of sick children and supports hospitals and medical centers throughout the country.

In 2019, Zygmunt Solorz established the Association - Clean Poland Program. It is one of the elements of the implementation of Zygmunt Solorz's vision, the aim of which is to improve the condition of the natural environment in Poland, in particular air quality.

Zygmunt Solorz has many years of experience in working in the statutory bodies of commercial companies, currently he performs, among others, the function of Chairman of the Supervisory Board in such companies as Telewizja Polsat Sp. z o.o., Polkomtel Sp. z o.o., ZE PAK S.A. or Interia.pl Group.

Marek Kapuściński joined the Company’s Supervisory Board in October 2016, and from October 2016 to June 2021 he performed the function of its Chairman while also serving as Member of the Remuneration Committee. In June 2021 he was appointed as Vice-Chairman of the Supervisory Board of the Company. Mr. Kapuściński graduated from the Faculty of Trade of the Academy of Planning and Statistics in Warsaw (now the Warsaw School of Economics) and completed postgraduate studies at SEHNAP in cooperation with Stern School of Business – New York University.

Until the end of September 2016, for over 25 years, he has been part of the Procter&Gamble team. From July 2011 as a General Manager and Vice President (that is President of the Management Board/CEO) for nine key markets of the Central Europe, and before that – from January 2007 he was responsible for Poland and the Baltic states. Currently, he is a Member of the Supervisory Boards of Bank Handlowy w Warszawie S.A. and Cydrownia S.A. and provides consulting services through Essences Consulting Group. He is also involved in the activities of public benefit organizations supporting the development of the young Polish culture and arts.

Józef Birka joined the Company’s Supervisory Board in April 2015. He is an advocate and graduate of the Faculty of Law of the Wroclaw University. He has been associated with Telewizja Polsat S.A. since its inception. He held the function of President of the Management Board of Telewizja Polsat during the first licensing procedure granting terrestrial license to broadcast the first independent countrywide TV channel in Poland. Since its establishment, he is a Member of the Board of the Polsat Foundation, one of the largest non-governmental organizations operating in Poland.

Mr. Józef Birka has extensive experience in working in statutory bodies of commercial-law companies. He is a Member of the Supervisory Boards of Polkomtel Sp. z o.o., Telewizja Polsat Sp. z o.o. and Elektrim S.A. Between 2004 and 2006 he was also the Supervisory Board Member of Polska Telefonia Cyfrowa Sp. z o.o. He acted actively in the Association of Private Media Employers, incorporated into Polish Confederation of Private Employers "Lewiatan.” He was honored by the Polish Bar Council with a medal “Commendable Service to the Advocates Bar.”

Jarosław Grzesiak was appointed as Member of the Company’s Supervisory Board in June 2021. He is the Chief Executive Advisor to Mr. Zygmunt Solorz, responsible for supervising the capital group controlled by Mr. Solorz and also a Member of the Supervisory Board of Cyfrowy Polsat, member of the Supervisory Board of Port Praski and member of the Supervisory Board of ZE PAK. Jarosław is a graduate of the Faculty of Law of the Jagiellonian University and has been an advocate since 1995.

From 2012 to 2021, he was the Managing Partner of Greenberg Traurig in Poland and prior to that from 1999 to 2012, the Managing Partner of the Warsaw office of Dewey & LeBoeuf law firm. Previously, from 1995 to 1999, he was the Director of the Legal Department of PepsiCo, Inc. responsible for Poland and CEE.

He has led a vast number of capital markets transactions, including issuances and public offers of shares and bonds, in Poland and on international markets; mergers and acquisitions; private equity as well as restructuring and privatization of enterprises.

He was awarded the Golden Cross of Merit for his work on the development of the Polish economy and the capital market. In 2018, he was named "Lawyer of the Thirty Years" by the Rzeczpospolita daily and the Polish Association of Legal Employers. In 2011, American Lawyer awarded him the prestigious title of "Dealmaker of the Week". The most important international and Polish legal rankings: Chambers and Partners, IFLR, EMEA Legal 500, as well as Rzeczpospolita, for over 15 years recognized him as the leading lawyer in Poland in the area of mergers and acquisitions, capital markets, private equity as well as banking and finance.

Jarosław Grzesiak is a member of the Young Presidents' Organization - Gold and the American Chamber of Commerce. He is a former member of the Polish Business Council, former board member of the Polish Association of Legal Employers and the Executive Committee of Greenberg Traurig, responsible for the most important decisions regarding the strategy of the law firm at the global level.

Marek Grzybowski was appointed as Member of the Company’s Supervisory Board in July 2020, where he is also Chairman of the Audit Committee. Associate Professor Marek Grzybowski PhD has been an employee of the Faculty of Law and Administration of Warsaw University since 1977.

He has authored and co-authored numerous academic publications: monograph studies, commentaries to the Act on the Bank Guarantee Fund, professional journal articles, and judicial interpretations. His academic research interests relate in the main to public policy issues of banking law, including regulation and supervision of financial markets and bank deposit guarantee schemes.

He is an attorney-at-law and, since 1983, a member of the Warsaw Bar Association of Attorneys-at-Law. Between 1987 and 2000, he was a partner in the law firms: Consultor LC and T. Komosa, C. Wiśniewski, M. Grzybowski and Wspólnicy LP. In the years 2001 – 2003, he was partner at the international law firm Linklaters LP, and, until 2020, attorney-at-law and proxy representing the firm. In the period 1995 – 1999, he sat on the Board of Directors of the Bank Guarantee Fund and was elected President of the Board of Directors of the Bank Guarantee Fund for the term of 1999 – 2003.

In 2005, he was awarded the Golden Cross of Merit for service to the Polish banking system.

Since 1997, he has been editor-in-chief of “GLOSA” – a monthly law journal until 2005, subsequently a quarterly, published by Wolters Kluwer. In the years 1999 – 2007, he was an editorial board member of the “Bezpieczny Bank” (Safe Bank) quarterly, and its editor-in-chief between 1999 and 2003. He currently sits on the editorial board of The European Journal of Legal Education.

Since 2012, he has been deputy dean in charge of financial affairs of the Faculty of Law and Administration of Warsaw University.

In 2014, he was elected member of the Board of the European Law Faculties Association (ELFA), of which he is now president since April 2019.

Alojzy Nowak was appointed as Member of the Company’s Supervisory Board in June 2021. He graduated from the Academy of Planning and Statistics in Warsaw in 1984 (currently: the Warsaw School of Economics). In 1991 he obtained a doctoral, and in 1995 - a PhD degree. In 1992 he studied economics at the University of Illinois in Urbana-Champaign, USA. In 1993 he completed studies in banking, finance and insurance at the University of Exeter in Great Britain; in 1996 he studied international economics at the Free University of Berlin, and in 1997 he studied international economics at RUCA (Antwerp). In 2002, he obtained the academic title of professor of economics.

He is a laureate of many awards and distinctions, including Rector's Awards for scientific achievements (annually since 1997), Award of the Minister of Education for the book: "European integration. An opportunity for Poland?" and a book entitled “Banks and households – development dynamics.” He is a member of numerous scientific organizations and program councils of journals, including, as a member of the editorial boards of "Foundations of Management", "Journal of Interdisciplinary Economics", "Yearbook on Polish European Studies" and "Mazovia Regional Studies"; member of the "Gazeta Bankowa" Program Council; reviewer of PWE SA Warsaw. A long-standing member of the "Teraz Polska" Emblem Chapter and a member of the "European Studies" Scientific Council.

He gained knowledge and experience working, among others, as: the head of the Department of International Economic Relations at the Faculty of Management of the University of Warsaw, the head of the Department of National Economy at the Faculty of Management of the University of Warsaw, the director of the European Centre of the University of Warsaw, the deputy dean of the Faculty of Management at the University of Warsaw for International Cooperation, the dean of the Faculty of Management at the University of Warsaw and Vice-Rector for Scientific Research and Cooperation at the University of Warsaw. For 15 years he was also the head of the Department of Finance at the Kozminski University. Apart from the University of Warsaw, he also delivers lectures in France, Great Britain, USA, Russia, China, Korea, Germany, and Russia.

In addition, he held or still holds the functions of: an advisor to the prime minister, advisor to the Minister of Agriculture, Minister of Finance, president of the Academic Sports Association in Poland, as well as at the University of Warsaw, a member of the NewConnect advisory committee at the Management Board of the Warsaw Stock Exchange, a member of the Council of the National Bank of Poland Foundation, Chairman of the Scientific Council of the National Bank of Poland. Over the years, he was or has been a member of supervisory boards, including PTE WARTA S.A., PKO BP S.A., JSW S.A., PZU S.A., Bank Millennium S.A. He was the Chairman and Vice-Chairman of the Supervisory Board of EUROLOT S.A.

He is a member of the National Development Council, appointed by President Andrzej Duda.

In December 2018, together with 22 prominent economists from around the world – among whom there are 4 Nobel Prize laureates – he became a member of the Scientific Council of the Institute of New Structural Economics at the University of Beijing.

Tobias Solorz was appointed as Member of the Company’s Supervisory Board in June 2021. He is a graduate of the Faculty of Management and Marketing at the University of Warsaw.

He has many years of professional experience in the field of telecommunication, finance and controlling. He began his career in 2003 at Telewizja Polsat Sp. z o.o. Between 2007 and 2008 he held the position of Promotion Manager at Cyfrowy Polsat. Between 2008 and 2010 he was a Member of the Management Board of Sferia S.A., where he also served as Marketing, Sales and Operations Director. He was a Member of the Management Board of Polkomtel Sp. z o.o., Plus network operator, from November 2011 and President of the Management Board from February 2014 until March 2019. In the years 2014-2019 he sat on the Management Board of Cyfrowy Polsat S.A., first in the capacity of Management Board Member, then since December 2014 as Vice-President of the Management Board and from 2016 until 2019 as President of the Management Board.

Since 2019 he is a Supervisory Board Member in Polkomtel Sp. z o.o. and Telewizja Polsat Sp. z o.o., and since 2020 also in Group Interia.pl Sp. z o.o. He is also a Member of the Supervisory Boards of Liberty Poland S.A. and Polkomtel Business Development Sp. z o.o. Since 2021 he also serves on the Supervisory Boards of selected SPVs of Port Praski Sp. z o.o. and in 2022 he was appointed to the Supervisory Board of ZE PAK S.A. Moreover, he is a Member of the Board of Polsat Foundation, one of the largest NGOs in Poland that helps to provide treatment for ill children and also supports hospitals and medical center across the country.

Tomasz Szeląg has been a Member of the Company’s Supervisory Board since October 2016, where he is also Chairman of the Remuneration Committee and Member of the Audit Committee. He graduated from the National Economy Faculty of the Economic Academy of Wrocław, with a major in International Economics and Political Relations specializing in Foreign Trade. He has been involved with Cyfrowy Polsat since 2009. Apart from the Company, he was appointed a Member of Supervisory Boards of, among others, Polkomtel Sp. z o.o., Telewizja Polska Sp. z o.o., Netia S.A., ZE PAK S.A., PAK-PCE Sp. z o.o. and Port Praski Sp. z o.o.

He has extensive knowledge and competences in the field of media and telecommunication, finance and banking as well as preparing and auditing financial statements.

In 2000-2003, he was an assistant at the Foreign Trade Faculty of the Economic Academy of Wrocław. In May 2003 he received his PhD title for a thesis on hedging transactions used by world copper producers and went on to become a lecturer in the Faculty of International Economic Relations of the Economic Academy of Wrocław. Between 2003 and 2004 he also held a position of lecturer at the Wrocław School of Banking - at the Faculty of International Economic Relations. Parallel to his academic career Mr. Szeląg also developed his professional career gaining experience in managerial positions in the area of finance and investment. From 2003, he was Chief Specialist in the Currency Risk Department of KGHM Polska Miedź S.A., and then of the Market Risk and Analysis Department. In September 2004, he became Director of the Department. In December 2004, he became Director of Hedging Department of KGHM and held the function until March 2007. From April 2007 to June 2008 he worked as Director of Branch of Société Générale Bank in Wrocław. In July 2008, he took the position of Vice-president for Finance in Telefonia Dialog S.A., which he held until March 2009. In Telefonia Dialog S.A. he was responsible for finance, accounting, controlling, and budgeting management, and also owner supervision and capital investment, logistics and purchases, project management and IT.

From May 2009 until September 2016 he held the position of Member of the Management Board and Chief Financial Officer at Cyfrowy Polsat and was responsible for broadly understood finances in Polsat Group. In the years 2010-2016 Mr. Szeląg was Member of the Management Boards of numerous companies from Polsat Plus Group, including Telewizja Polsat (October 2011-October 2014), INFO-TV-FM (July 2012 – November 2016), CPSPV1 and CPSPV2 (April 2013 – November 2016), Plus TM Management (April 2014-December 2016) and Polkomtel (September 2014-December 2016). He was also President of the Management Board of Cyfrowy Polsat Trade Marks Sp. z o.o. (2010-2016) and Telewizja Polsat Holdings Sp. z o.o. (2012-2016).

Piotr Żak was appointed as Member of the Company’s Supervisory Board in June 2018. He holds a graduate degree in economics from Royal Holloway, University of London. He also graduated from the Faculty of Management of the Warsaw University.

He has been pursuing business operations in Poland since 2014, among others in the area of establishing and supporting start-up enterprises. He focuses his activities on the high-technology sector, particularly on creating and developing innovative projects that exploit the potential of Internet and traditional media, Internet entertainment, and the use of data transmission in solutions, services and products addressed to individual and business customers. He pursues his professional interests also by developing and implementing modern marketing communications tools for enterprises from the media and telecommunications sector.

He is the founder of, among other, Frenzy Sp. z o.o., a company that conducts e-sports and gaming events on an international scale and since 2018 also produces programs for the channel Polsat Games. At the end of 2021 Frenzy was sold to ESE Entertainment, a Canadian entertainment and technology group. He also founded and is the co-owner of Golden Coil Sp. z o.o., a company operating in the field of marketing and Internet advertising.

Since March 2016 he serves as Supervisory Board Member of Telewizja Polsat Sp. z o.o., the leading television broadcaster on the Polish market. In June 2018 he was appointed to the Supervisory Boards of Cyfrowy Polsat S.A., the parent of Polsat Plus Group, and Netia S.A., one of the largest Polish telecommunication operators belonging to Polsat Plus Group, in which he serves as Chairman. In April 2019 he was appointed to the Supervisory Board of Polkomtel Sp. z o.o., the operator of Plus network. He has been serving on the Supervisory Boards of Asseco Poland S.A. and Mobiem Polska Sp. z o.o. since July 2020, and in November 2020 he was appointed to the Supervisory Board of Grupa Interia.pl Sp. z o.o. In May 2021 he was appointed to the Supervisory Board of Asseco Cloud Sp. z o.o. Since December 2021 he has been discharging supervisory responsibilities in SPVs belonging to Port Praski Sp. z o.o. In March 2022 he was appointed as Supervisory Board Member in ZE PAK S.A.

8.7.3. Competences and Bylaws of the Supervisory Board

The Supervisory Board acts pursuant to the Commercial Companies Code and also pursuant to the Articles of Association of the Company and the Bylaws of the Supervisory Board.

Pursuant to the Articles of Association of the Compan,y the Supervisory Board performs ongoing supervision of the Company’s operations in all its fields. In order to exercise supervision in the scope and under the terms stipulated in the Articles of Association, the Supervisory Board is entitled to review any documents of the Company, request reports and explanations from the Management Board, and review the status of the Company’s assets. The Supervisory Board performs its obligations collectively but may also delegate its members to perform specific supervisory activities independently. The Supervisory Board is entitled to establish committees in circumstances provided for under applicable law. The Supervisory Board is also be entitled to appoint other committees and determine the scope and terms of their operation.

The Chairperson of the Supervisory Board is authorized to perform individually supervisory tasks with regard to the manner of performing obligations by the Management Board stipulated under Article 13 sec. 1.3 of the Articles of Association as well as to the activity of the Management Board with respect to agreements, revenue, costs, and expenses.

The competences of the Supervisory Board include matters restricted by the Commercial Companies Code and provisions of the Company’s Articles of Association, in particular:

a)	reviewing the annual financial statements of the Company and the consolidated financial statements with respect to their consistency with both the books and documents and the facts; reviewing the annual Management Board Report on the Company’s operations and the assessment of the Management Board’s work, reviewing the Management Board’s motions with respect to distributing profits or covering losses, and submitting a written report on the results of the aforementioned reviews to the Annual Shareholders Meeting,
b)	drafting a report on the activities of the Supervisory Board, the assessment of the Company’s standing, the assessment of the manner of performing the information obligations by the Company, the assessment of the rationality of the policy pursued by the Company, including but not limited to the price policy, and the assessment of the internal control system and the system for managing significant risks for the Company, in each case in accordance with the terms of corporate governance adopted by the Company, and presenting them to the Annual Shareholders Meeting,
c)	delegating Supervisory Board Members to perform temporarily the tasks of a Management Board Member who has been revoked, has resigned or is unable to perform his/her duties for other reasons, for a period not longer than three months,
d)	determining the remuneration of Management Board Members,
e)	appointing a statutory auditor to audit the financial statements of the Company,
f)	granting consent to the payment of an advance towards the predicted dividend to the shareholders,
g)	approving the terms, plans and prices of acquisition or sale of goods and services by the Company in the scope stipulated under the Bylaws of the Management Board or a resolution of the Supervisory Board.

Moreover, the competences of the Supervisory Board include:

a)	reviewing and issuing opinions on issues that shall constitute the object of the resolutions of the General Shareholders Meeting,
b)	approving quarterly, annual, and multi-year plans for the Company’s operations drafted by the Management Board and monitoring their performance on an ongoing basis,
c)	determining the amount of remuneration of Supervisory Board Members delegated to perform temporarily the tasks of a Management Board Member,
d)	granting consent to the appointment and dismissal of supervisory board members of the following companies: Telewizja Polsat sp. z o.o. with its registered office in Warsaw, Polkomtel sp. z o.o. with its registered office in Warsaw, Netia S.A. with its registered office in Warsaw, and every company from the Group if that company’s EBITDA in the preceding 12 months exceeded 5% of the Group’s consolidated EBITDA, excluding supervisory board members of the above mentioned companies who are appointed and dismissed on the basis of personal rights granted to a partner or a shareholder of these companies,
e)	granting consent to the performance by the Company of any legal transaction that does or can result in the disposal in favor of or liability on any account towards a single entity in the value exceeding 0.2% of the Company’s standalone EBITDA in the previous accounting year,
f)	approving the selection of bidders in the procurement proceedings held by the Company and approving bids submitted by the Company in procurement proceedings,
g)	granting consent to any acquisition and sale of real property, perpetual usufruct right or interest in real property, as well as to establishing a limited right in rem on real property, perpetual usufruct right or interest in real property with a value up to the 0.2% ratio of the Company’s standalone EBITDA for the preceding accounting year,
h)	granting consent to hiring for the positions of director, deputy director, expert or consultant, irrespective of the basis for such employment, including in particular on the basis of employment relationship and other legal relationships. Modification and termination of the aforementioned employment shall also require the consent of the Supervisory Board.
i)	approving the Work Regulations and Employee Remuneration Rules,
j)	granting consent to the application for, modification or waiver of any license or permit stipulated under Article 6 sec. 2 of the Articles of Association, as well as to transferring or granting access to them to third parties,
k)	granting consent to the conclusion of any agreement on consultancy services by the Management Board,
l)	granting consent to the issue of bonds by the Company other than bonds convertible to shares or senior bonds,
m)	granting consent to any acquisition, sale, assumption or encumbrance of shares and stock in companies as well as any participation titles in entities and organizations other than companies,
n)	approving plans for merging or dividing the Company before they are passed and any plans for the reorganization of the Company.

As from January 1, 2025, the Company’s Supervisory Board shall not be entitled to grant consent to the Company to incur any liability whatsoever if incurring it may result in the debt ratio, expressed as the ratio of the Group’s net debt to EBITDA, exceeding a threshold of 2.0x.

The detailed terms of activity and operation of the Supervisory Board, including but not limited to the terms of operation of its respective committees, are determined in the Supervisory Board Regulations approved by the General Shareholders Meeting. Any amendment to the Supervisory Board Regulations shall require a resolution of the General Shareholders Meeting.

Meetings of the Supervisory Board take place at least once a quarter. Supervisory Board meetings are convened by the Chairperson of the Supervisory Board. In the absence of the Chairperson, a Supervisory Board meeting shall be convened by the Deputy Chairperson of the Supervisory Board (if appointed) or, if no Deputy Chairperson has been appointed, the meeting is convened by a Supervisory Board Member so nominated in writing by the Chairperson. Supervisory Board meetings are convened ex officio upon the motion of the Management Board or at least two Supervisory Board Members. Supervisory Board meetings are chaired by the Chairperson of the Supervisory Board or, in the Chairperson’s absence, by the Deputy Chairperson (if appointed) or, if no Deputy Chairperson has been appointed, by a Supervisory Board member nominated by the Chairperson.

Apart from Supervisory Board Members, Supervisory Board meetings may be attended by Management Board Members, the commercial proxy, and invited guests. The person chairing a Supervisory Board meeting is entitled to order persons other than Supervisory Board Members to leave the room where the meeting is held.

Supervisory Board resolutions shall be by two-thirds of cast votes. All Supervisory Board Members must be invited to a Supervisory Board meeting and more than 50% of Supervisory Board Members must attend the meeting for the Supervisory Board resolutions to be binding. Supervisory Board Members shall be entitled to participate in adopting Supervisory Board resolutions by casting their vote in writing through the agency of another Supervisory Board Member. Casting a vote in writing shall not apply to issues added to the agenda at the meeting of the Supervisory Board.

The resolutions of the Company’s Supervisory Board may be adopted without holding a meeting either in writing or using means of distant communication. Resolutions adopted in writing or using means of distant communication as well as electronically are passed, if the draft resolution has been effectively served to all Supervisory Board Members, if all Supervisory Board Members take part in the vote, and if at least two-thirds of Supervisory Board Members vote for the resolution. Resolutions may also be adopted electronically. An electronic vote shall be ordered by the Chairperson of the Supervisory Board. In the absence of the Chairperson, an electronic vote shall be ordered by the Deputy Chairperson of the Supervisory Board (if appointed) or, if no Deputy Chairperson has been appointed, by a Supervisory Board Member nominated by the Chairperson.

In 2021, the Supervisory Board held 9 meetings. Due to the ongoing COVID-19 epidemic, most of the meetings of the Supervisory Board were held remotely and resolutions were adopted in accordance with Article 21 item 4 of the Company’s Articles of Association and Article 5 item 4 of the Bylaws of the Supervisory Board, i.e., using means of distant communication. In 2021, the average attendance at the Supervisory Board meetings was 100%.

The table below presents the attendance of the Supervisory Board Members in meetings held in 2021.

Name of Supervisory Board Member	Attendance
Zygmunt Solorz(1)	100%
Marek Kapuściński	100%
Józef Birka	100%
Jarosław Grzesiak(1)	100%
Marek Grzybowski	100%
Robert Gwiazdowski (2)	100%
Aleksander Myszka(2)	100%
Alojzy Nowak(1)	100%
Leszek Reksa(2)	100%

(1)	Supervisory Board Member from June 24, 2021 to December 31, 2021, attendance for the indicated period.
(2)	Supervisory Board Member from January 1, 2021 to June 24, 2021, attendance for the indicated period.

8.7.4. Committees of the Supervisory Board

Pursuant to the Bylaws of the Supervisory Board, the Supervisory Board may appoint permanent committees, in particular an Audit Committee, a Remuneration Committee, or a Strategic Committee, as well as ad hoc committees to investigate certain issues remaining in the competence of the Supervisory Board or acting as advisory and opinion bodies of the Supervisory Board.

The functioning of the Audit Committee is regulated by the Bylaws of the Audit Committee. The provisions of the Bylaws of the Supervisory Board apply to meetings, resolutions, and minutes of remaining committees of the Supervisory Board.

The aforesaid committees may be appointed by the Supervisory Board from among its Members by means of a resolution. The committee appoints, by means of a resolution, the Chairman of the particular committee from among its Members. The mandate of a Member of a particular committee expires upon expiry of the mandate of the Member of the Supervisory Board. The Supervisory Board may, by means of a resolution, resolve to dismiss a Member from the composition of a particular committee before the expiry of the mandate of the Member of the Supervisory Board. Dismissal from membership in a committee is not tantamount to dismissal from the Supervisory Board.

The first meeting of a committee is convened by the Chairman of the Supervisory Board or another Member of the Supervisory Board indicated by him or her. Meetings of the committees are convened as the need arises, ensuring thorough delivery of duties assigned to a particular committee. Minutes of committee's meetings and adopted resolutions are made available to the Members of the Supervisory Board that are not Members of the committee. The Chairman of a given committee chairs its proceedings. The Chairman also performs supervision over the preparation of the agenda, distribution of documents, and preparation of minutes of the meetings of the committee.

Pursuant to article 128 item 1 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight, an Audit Committee functions in the Company.

As at January 1, 2021, the Audit Committee comprised the following Members of the Supervisory Board:

Name and surname	Function
Marek Grzybowski	Chairman of the Audit Committee Independent Member of the Supervisory Board
Tomasz Szeląg	Member of the Supervisory Board
Paweł Ziółkowski	Independent Member of the Supervisory Board

Due to expiration of the term of office and the appointment of the Supervisory Board for a new term on June 24, 2021, pursuant to § 7 item 3 of the Bylaws of the Supervisory Board, on June 29, 2021 the Supervisory Board appointed to the Audit Committee Mr. Marek Grzybowski, Mr. Alojzy Nowak and Mr. Tomasz Szeląg. In addition, pursuant to § 2 item 5 of the Bylaws of the Audit Committee, the Supervisory Board appointed Mr. Marek Grzybowski as Chairman of the Audit Committee.

As at December 31, 2021, the Audit Committee comprised the following Members:

Name and surname	Function
Marek Grzybowski	Chairman of the Audit Committee Independent Member of the Supervisory Board
Alojzy Nowak	Member of the Audit Committee Independent Member of the Supervisory Board
Tomasz Szeląg	Member of the Audit Committee

The composition of the Audit Committee meets the requirements listed in article 128 item 1 and article 129 item 3 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight.

In 2021, the Audit Committee held seven meetings. Due to the ongoing COVID-19 epidemic, most of the meetings of the Audit Committee were held remotely and resolutions were adopted in accordance with Article 21 item 4 of the Company’s Articles of Association and Article 5 item 4 of the Bylaws of the Supervisory Board, i.e., using means of distant communication. In 2021, the average attendance at the Audit Comittee meetings was 100%.

The table below presents the attendance of the Audit Committee Members at meetings held in 2021.

Name of Audit Committee Member	Attendance
Marek Grzybowski	100%
Alojzy Nowak(1)	100%
Tomasz Szeląg	100%
Paweł Ziółkowski(1)	100%

(1) Audit Committee Member from June 24, 2021 to December 31, 2021, attendance for the indicated period.

(2) Audit Committee Member from January 1, 2021 to June 24, 2021, attendance in 2020 for the indicated period.

A Remuneration Committee also functions within the Supervisory Board of the Company which, as at January 1, 2021, comprised the following Members of the Supervisory Board:

Name and surname	Function
Tomasz Szeląg	Chairman of the Remuneration Committee
Marek Kapuściński	Member of the Remuneration Committee

During 2021 the composition of the Remuneration Committee remained unchanged.

In 2021, the Remuneration Committee held one meeting. Due to the ongoing COVID-19 epidemic, the meeting was held remotely and resolutions were adopted using means of distant communication.

The table below presents the attendance of the Remuneration Committee Members at meetings held in 2021.

Name of Remuneration Committee Member	Attendance
Tomasz Szeląg	100%
Marek Kapuściński	100%

Audit Committee

In accordance with the Bylaws of the Audit Committee, the Committee consists of at least three Members, appointed for the term of office of the Supervisory Board. The Chairman of the Committee is appointed by the Company’s Supervisory Board. Most Members of the Committee, including its Chairman, are independent from the Company that is they meet the independence criteria set out in Article 129 item 2 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight.

Among the Members of the Audit Committee, the statutory independence criteria are met by Mr. Marek Grzybowski and Mr. Alojzy Nowak

The independence of the indicated Members of the Supervisory Board has been verified by the Supervisory Board on the basis of statements submitted by them confirming that they meet the independence criteria set forth in Article 129 item 2 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight and, moreover, based on information gathered by the Company and sourced in the Company concerning the relations of the persons in question with the Company and other companies from Polsat Plus Group, in particular the capital structure and the composition of governing bodies of Polsat Plus Group and legal relations between the persons in question and the Company and the companies from Polsat Plus Group.

Members of the Audit Committee: Mr. Marek Grzybowski, Mr. Alojzy Nowak and Mr. Tomasz Szeląg, possess knowledge and skills in accounting and/or auditing financial statements which were obtained during studies, scientific career and/or extensive professional practice.

Furthermore, Mr. Tomasz Szeląg possesses knowledge and skills with regard to the sectors in which the Group operates, gained during many years of professional career on key managerial positions within Polsat Plus Group, among others, as Member of the Management Board responsible for finance in Cyfrowy Polsat.

Regulations of the Audit Committee apply to the meetings, resolutions and minutes of meetings of the Audit Committee.

Meetings of the Audit Committee are convened by the Chairman of the Audit Committee or a Member of the Audit Committee authorized by the Chairman and are held at least once a quarter, at dates determined by the Chairman of the Audit Committee. Additional meetings of the Audit Committee may be convened by the Chairman of the Audit Committee at the request of a Member of the Audit Committee, Chairman of the Supervisory Board or another Supervisory Board Member, as well as at the request of the Management Board.

The Audit Committee passes resolutions, if at least half of its Members are present at the meeting and all Members were properly invited. Resolutions are passed by an absolute majority of votes and in the case of an equal number of votes, the Chairman of the Audit Committee shall have a casting vote. Members of the Audit Committee may participate in the Committee’s meetings and vote in person, or by means of distant communication.

The work of the Audit Committee is managed by its Chairman who is responsible for preparing an agenda of each meeting or may appoint a Secretary of the Audit Committee whose tasks include in particular the preparation of an agenda of each meeting and organization of the distribution of documents for the Committee’s meetings. A notification of the meeting, including its agenda together with all required materials, must be delivered to the Members of the Audit Committee at least 7 days before the meeting and in extraordinary circumstances a Committee’s meeting may be convened at a shorter notice than the above mentioned deadline.

The Chairman of the Audit Committee may ask a relevant Management Board Member to prepare appropriate materials.

Minutes are taken of every meeting of the Audit Committee and are then signed by all Members who participated in a given meeting. Minutes of the Audit Committee meetings, including conclusions, instructions, opinions and recommendations are presented to the Supervisory Board at its next meeting as well as to the Management Board.

Members of the Supervisory Board who are not part of the Audit Committee may, at their own initiative, participate in the Committee’s meeting, however without a voting right. The Chairman of the Audit Committee may invite Members of the Supervisory Board, auditors, employees of the Company and other persons as experts.

The tasks of the Audit Committee include in particular monitoring of the financial reporting process, efficiency of internal control systems and risk management systems as well as internal audit and performing financial revision activities, in particular carrying out audits by an audit company.

Pursuant to the Audit Charter, the Internal Audit Director meets directly the Audit Committee. In addition, at the request of the Audit Committee he or she joins its sessions and presents additional/supplementary information.

The Audit Committee evaluates, controls and monitors independence of a certified auditor and audit company, in particular in the case when the audit company provides the Company with services other than auditing of financial documents in the Company. The Audit Committee grants consent to provision of such services by the audit company. The Audit Committee notifies the Company’s Supervisory Board about the results of audit and the role of the Committee in the auditing process as well as explains how this audit contributed to the reliability of financial reporting in the Company.

The tasks of the Audit Committee also include developing a policy of selection of an audit company to carry out the audit as well as developing a policy of provision by the selected audit company, its affiliated entities and members of the audit company’s network of permitted services which are not part of the audit.

Main assumptions underlying the selection of an auditor in Cyfrowy Polsat

●	In accordance with the Company’s Articles of Association, the Company’s Supervisory Board is the party selecting the chartered accountant (the auditor) for carrying out the statutory audit, while the General Meeting of Shareholders of the company is the party approving the Company’s financial statement.
●	The first contract with an auditor for carrying out the statutory audit is concluded by the Company for the period of at least 2 years, subject to the possibility of terminating the contract, if justified grounds to do so emerge. It is assumed that the contract for the statutory audit can be extended once for another period of 2 years, however the maximum uninterrupted period of time during which statutory audits can be conducted by the same auditor or by a company related to that auditor, or any member of a given chain of companies operating in EU states of which such companies are members, may not exceed 5 years.
●	The Audit Committee approves the procedure of selection of the auditor for performing the statutory audit. The auditor selection procedure is determined at the Audit Committee’s discretion.
●	If an auditor for statutory audit is selected, the selection procedure must meet the following criteria:

		the auditor on its own, or as part of a chain of companies operating on the territory of the European Union, has not conducted statutory audits for the Company for a period of at least past 5 consecutive years, or of if such a company did conduct a statutory audit for the Company for a continuous period of 5 consecutive years in the past, then the period of at least 4 years has already elapsed since the last of such audits,
		the organization of the tender process does not exclude from the selection process companies which have obtained less than 15% of their total remuneration on account of auditing public interest units in the Republic of Poland during the past calendar year which are found in the list of auditors published on the website of the Audit Oversight Committee (Komisja Nadzoru Audytowego) (a sub-page of www.mf.gov.pl).
		neither the auditor, nor any member of the chain, of which the auditor is a member, has provided, either directly or indirectly to the Company or to its subsidiaries, any prohibited services, as defined by Article 136 of the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Oversight, during the current financial year (the first year of the period covered by the tender), as well as any services related to the development and implementation of internal control procedures or risk management procedures associated with the development or control of financial information, or the development and implementation of any technological systems concerning financial information during the preceding year (the year preceding the first year of the period covered by the tender).

●	The value of permitted services, other than required by the law as provided by the auditor performing a statutory audit of the company and by all of the entities being members of its chain, may not exceed 70% of the average compensation for the audits during the past 3 years.

Major assumptions of the policy of provision to Cyfrowy Polsat of permitted services which are not audit services by the selected auditor, its related companies or members of the chain of which the auditor is a member

●	The Company shall not conclude, with the auditor, its related companies or the members of the chain of which the auditor is a member, any agreements for the provision of prohibited services, as defined in Article 5, section 1, paragraph 2 of the Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC.
●	Prior to contracting any work, being permitted services and not being an audit, the Audit Committee performs an assessment of the threats and safeguards related impartiality, mentioned in Articles 69-73 of the Act on Statutory Auditors, Audit Firms and Public Oversight. The Audit Committee also oversees compliance of the performed work with the valid law.
●	Permitted services include:

		services involving due diligence procedures related to the Company’s economic-and-financial standing;
		issuing comfort letters in connection with prospectuses issued by the audited entity, carried out in accordance with the national standard for related services and consisting of performance of agreed procedures;
		assurance services related to pro forma financial information, forecasts of results or estimated results which are included in the audited unit’s prospectus;
		audit of historical financial information to be included in the prospectus which is mentioned in the Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements;
		verification of consolidation packages;
		confirmation of fulfillment of the terms of facility agreements concluded by the Company based on the financial information coming from the financial statements examined by a given auditor;
		assurance services in the scope related to reporting on corporate governance, risk management and corporate social responsibility;
		services involving assessment of the compliance of the disclosures made by financial institutions and investment firms with the requirements related to disclosure of information concerning capital adequacy and variable components of remuneration;
		assurance concerning financial statements or other financial information intended for the supervisory authority, the supervisory board or any other supervising body of the company, or the owners whose scope exceeds the scope of the statutory audit and which are intended to assist these authorities in the fulfillment of their statutory duties.

The Audit Committee provides the Supervisory Board with a recommendation regarding the selection of audit company.

In the financial year 2018 the Audit Committee recommended to the Supervisory Board to appoint Ernst & Young Audyt Polska Spółka z ograniczoną odpowiedzialnością Sp. k. , with its registered office in Warsaw, to audit the financial statements of the Company and the consolidated financial statements of the Company’s capital group for the years 2018 and 2019. The recommendation fulfilled the criteria set in the adopted policy of selection of an audit company and followed the selection procedure organized by the Company which met the binding criteria. The recommendation was accepted by the Supervisory Board.

Additionally, the Audit Committee presents recommendations to the Company’s Management Board aimed at ensuring the reliability of financial reporting in the Company.

8.7.5. Agreements with the entity certified to perform an audit of the financial statements

On July 6, 2018, the Company entered into an agreement with Ernst & Young Audyt Polska Spółka z ograniczoną odpowiedzialnością Sp. k., with registered office in Warsaw, for the performance of the audit of standalone financial statements of Cyfrowy Polsat S.A. and the consolidated financial statements of the Company’s capital group for the financial years ended December 31, 2018 and December 31, 2019.

On February 26, 2020, the Company’s Supervisory Board consented to extend the agreement and choose Ernst & Young Audyt Polska Spółka z ograniczoną odpowiedzialnością Sp. k., with its registered office in Warsaw, for the performance of the audit of standalone financial statements of Cyfrowy Polsat S.A. and the consolidated financial statements of Polsat Plus Group for the financial years ended December 31, 2020, December 31, 2021 and December 31, 2022.

The following summary presents a list of services provided by the certified auditor and remuneration for the services in the twelve month period ended on December 31, 2021 and December 31, 2020.

[mPLN]	For the year ended December 31
[mPLN]	2021	2020
Review of interim financial statements	0.1	0.1
Audit of financial statements for the year and other services	0.4	0.4
Total	0.5	0.5

In the financial year 2021, Ernst & Young Audyt Polska Spółka z ograniczoną odpowiedzialnością Sp. k. provided the following permitted services other than audit services: (i) the review of financial statements, (ii) the execution of agreed procedures with regard to verification of the fulfillment of conditions of concluded credit agreements, based on the analysis of the financial information from the audited consolidated financial statements of Cyfrowy Polsat Group and (iii) the audit of the reports on remuneration of the Members of the Management Board and the Supervisory Board of the Company, after being granted consent from the Audit Committee.

8.7.6. Remuneration of the Members of the Supervisory Board

Rules for remuneration of Members of the Supervisory Board are regulated by the Remuneration Policy for the Management Board and Supervisory Board Members. Information regarding remuneration of Members of the Supervisory Board in 2021 is included in Note 42 of the financial statements for the financial year ended December 31, 2021.

8.8. Information on remuneration policy of Cyfrowy Polsat S.A.

On July 23, 2020, the Annual General Meeting adopted, based on a draft resolution proposed by the Company’s Management Board and taking into account the opinion of the Supervisory Board’s Remuneration Committee, the Remuneration Policy for the Management Board and Supervisory Board Members of Cyfrowy Polsat S.A. The full wording of the policy is publically available at the following address:

https://grupapolsat.pl/sites/default/files/remuneration_policy_for_mb_and_sb_20200723.pdf

The adopted policy aims to ensure sustained growth of the Company’s value, the achievement of which by the Management Board and the Supervisory Board requires, among others, setting up of a relevant structure of remuneration of the members of the Management Board and the Supervisory Board on account of their overall duties. This aim is accomplished by restricting the remuneration of these individuals to a fixed part, allowing them to perform their duties concerning the overall operations of the Company without focusing on the pursuit of selected specific goals only.

The Remuneration Policy for the Management Board and Supervisory Board Members of Cyfrowy Polsat S.A. is based on a general assumption that market volatility, the social and economic situation as well as the need for a flexible response to the emerging risks and business opportunities provide no justification for setting fixed goals. The required flexible response to the changing situation and to the emerging challenges is assured – in the case of Management Board Members – by potential bonuses that can be awarded to them. Such a solution offers flexibility in terms of assuring stable operations of the Company and pursuing its long-term interests.

The remuneration of Management Board Members consists of a fixed part, having the form of a base salary. Management Board Members may have the title to a bonus on the terms defined in the deed establishing their corporate relation or their employment relation. Subject to the terms set by the Supervisory Board in the deed establishing a corporate relation or an employment relation, the Management Board Members may be also covered by additional pension schemes.

In addition, Management Board Members may be entitled to additional benefits of permanent or periodic nature. These include in particular healthcare services for a Management Board Member or for the members of his/her family, right to use the elements of the Company’s property, and life insurance and D&O insurance.

Moreover, Management Board Members employed under an employment contract are entitled to the same rights as all other employees of the Company by virtue of the Labor Code regulations, as defined by Article 9 of the Labor Code. Remuneration and other benefits also include benefits on account of the Management Board’s activities in the Company’s subsidiaries.

The Supervisory Board, based on the recommendation issued by the Supervisory Board’s Remuneration Committee, is entitled to determine the amount of the base salary, the conditions for acquiring the right to a bonus as well as other components of the remuneration and benefits in the resolution serving as the basis for entering by a Management Board Member into a corporate relation or into an employment relation, and depending on the nature of the duties of a given Management Board Member as well as the conditions of his/her employment.

Supervisory Board Members receive fixed remuneration on account of the function performed on the basis of a corporate relation. The remuneration may differ depending on the function in the Supervisory Board, especially in connection with participation in the work of respective Supervisory Board committees. In justified cases a Supervisory Board Member may receive additional remuneration. The amount of the remuneration of the Supervisory Board members is determined by the General Meeting.

There were no changes to the Remuneration Policy since the date of its adoption. In parallel, the Remuneration Policy stipulates that it will be adopted by the General Meeting not less frequently than once every four years.

The shape of the Remuneration Policy as proposed by the Management Board and adopted by the General Meeting derives from the many years of remuneration practice developed within Polsat Plus Group and, given the Company’s proven track record of achieving long-term value growth for its Shareholders as well as the Group’s stable functioning, is evaluated as an effective tool for remunerating and motivating the Company’s Management Board and Supervisory Board Members.

Reports on the remuneration of the Management Board and the Supervisory Board Members of Cyfrowy Polsat S.A. are publically available at the Polsat Plus Group’s website.

8.9. Diversity policy applicable to administrative, managing and supervising bodies of the Company

Polsat Plus Group adopted the Diversity and Human Rights Policy which has the purpose of supporting the pursuit of the Group’s business goals. The policy enables the Group to respond in a better way to the employees’ expectations, make full use of their potential and at the same time help the companies who are part of the Group to adjust to the changes occurring on the labor market. We trust that diversity is one of the sources of our competitive advantage, and competing views, opinions, work styles, skills and experience generate new quality and enable companies to achieve better business results.

The basic principles of Polsat Plus Group’s Diversity Policy include respect for human rights and prohibition of any discrimination due to gender, age, sexual orientation, competence, experience, potential degree of disability, nationality, ethnic and social origin, color of skin, language, parental status, religion, confession or lack of any confession, political views, or any other dimensions of diversity which are defined by valid law.

Within the empowerment of these principles, we have developed separate documents which protect diversity and indicate the basic ethical rules. These include, among others, the following policies: Human Resources Policy, Anti-Mobbing Policy, Code of Ethics, Work Regulations, Remuneration Regulations or working time register. The Diversity Policy is implemented, among others, by including diversity-related issues in HR processes and tools, such as organization of training and staff development sessions and recruitment. We expect our leaders to have skills that allow for managing diversified teams and benefit from their diversity in order to fully leverage the potential of employees that make up those teams. An Ethics Officer has been appointed in the Group whose tasks include, among others, the prevention of discrimination and mobbing.

The provisions of Polsat Plus Group’s Diversity Policy apply to all employees, including Management Board Members and Supervisory Board Members. While our aim is to promote gender equality among top managerial positions, our policy is above all to appoint persons with appropriate competences, professional experience and education to the Management and Supervisory Boards of the Company. The diagrams below present the gender and age structures of the Members of the Management and Supervisory Boards of Cyfrowy Polsat.

As at December 31, 2021 three men and three women sat on Cyfrowy Polsat’s Management Board while the Supervisory Board included nine men.

Members of the Management Board and the Supervisory Board have education in fields such as management and marketing, law, economy, finance, or technical education as well as rich and diverse professional experience.

Mirosław Błaszczyk President of the Management Board		Katarzyna Ostap-Tomann Member 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

Warsaw, March 23, 2022

Glossary

Capitalized terms used herein and not defined in this Report shall have the meaning assigned to them below, unless the context requires otherwise.

Glossary of general terms

Term	Definition
Aero 2	Aero 2 spółka z ograniczoną odpowiedzialnością entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000305767, subsidiary of Polkomtel.
Asseco	Asseco Poland Spółka Akcyjna entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000033391.
Act of Public Offering	Act of July 29, 2005 on public offering and the conditions of introducing financial instruments to an organized system of trading and on public companies (Journal of Laws of 2019 Item 623)
Amendment, Restatement and Consolidation Deed	Agreement concluded on September 21, 2015 between the Company, Polkomtel, Telewizja Polsat, Cyfrowy Polsat Trade Marks, Polsat License Ltd. and Polsat Media Biuro Reklamy, Eileme 2, Eileme 3, Eileme 4, Plus TM Management, TM Rental, Plus TM Group and a consortium of Polish and foreign financing institutions, amending and consolidating the CP SFA and the PLK SFA.
B2B	Business to Business, a transaction between businesses.
B2C	Business to Consumer, a transaction between a business and a consumer.
Catalyst	Trading system of debt instruments operating on markets organized by the WSE and Bondspot, as defined in § 1 of the Catalyst Operating Rules adopted pursuant to resolution no. 59/2010 of the Management Board of WSE on January 27, 2010, as amended.
CP Revolving Facility Loan	The revolving facility loan of up to PLN 300 million, issued under the CP Senior Facilities Agreement, with the maturity date of September 30, 2024.
CP Senior Facilities Agreement, CP SFA	The Senior Facilities Agreement of September 21, 2015 between the Company, Telewizja Polsat, CPTM, Polsat License Ltd. and Polsat Media Biuro Reklamy, and a syndicate of Polish and foreign banks, covering the CP Term Facility Loan and the CP Revolving Facility Loan.
CP Term Facility Loan	The term facility loan of up to PLN 1.2 billion, issued under the CP Senior Facilities Agreement of September 21, 2015, with the maturity date of September 30, 2024.
Cyfrowy Polsat, the Company	Cyfrowy Polsat Spółka Akcyjna, entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000010078.
EEA, European Economic Area	Internal Market guaranteeing free move of goods, services, capital and persons, comprising EU Member States and Island, Norway and Lichtenstein.
Embud2	Embud2 spółka z ograniczoną odpowiedzialnością spółka komandytowo-akcyjna (Limited Liability Company Limited Joint-Stock Partnership) entered in the register of entrepreneurs of the National Court Register under entry No. 0000676753, legal successor of Embud spółka z ograniczoną odpowiedzialnością.
Esoleo	Esoleo spółka z ograniczoną odpowiedzialnością entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000541114, operating previously under the company name Alledo Sp. z o.o.
IFRS	The International Accounting Standards, International Financial Reporting Standards and the related Interpretations by the Standing Interpretations Committee and International Financial Reporting Interpretations Committee, adopted pursuant to Commission Regulation (EC) No. 1126/2008 of November 3, 2008, adopting certain international accounting standards in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council (OJ L 320/1 of November 29, 2008, as amended), as defined in Art. 2 of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards (OJ L 243/1 of September 11, 2002, as amended).
Interia, Interia.pl Group	Grupa Interia.pl Sp. z o.o. spółka z ograniczoną odpowiedzialnością entered in the register of entrepreneurs of the National Court Register under entry No. 0000324955 and Grupa Interia.pl Media Sp. z o.o. Sp.k. spółka z ograniczoną odpowiedzialnością spółka komandytowa entered in the register of entrepreneurs of the National Court Register under entry No. 0000392344 jointly with their subsidiaries.
Karswell	Karswell Limited, a company under Cypriot law with its registered office in Nicosia, Cyprus.
KRRiT	Krajowa Rada Radiofonii i Telewizji, National Broadcasting Council.
NBP	Narodowy Bank Polski, the central bank of the Republic of Poland.
Netia	Netia spółka akcyjna entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000041649, a telecommunications operator providing, among others, online solutions and multimedia entertainment.
Netia Group	Netia and the indirect and direct subsidiaries of Netia.
Orange, Orange Polska	Orange Polska Spółka Akcyjna, entered in the register of entrepreneurs of the National Court register under entry No. KRS 0000010681, previously operating under the name of Telekomunikacja Polska Spółka Akcyjna.
P4	P4 spółka z ograniczoną odpowiedzialnością, entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000217207, operator of mobile network Play.
PLK Revolving Facility Loan	The revolving facility loan of up to PLN 700 million, issued under the PLK Senior Facilities Agreement of September 21, 2015, with the maturity date of September 30, 2024.
PLK Senior Facilities Agreement, PLK SFA	The Senior Facilities Agreement of September 21, 2015 between Polkomtel, Eileme 2, Eileme 3, Eileme 4, Plus TM Management, TM Rental and Plus TM Group and a syndicate of Polish and foreign financial institutions, covering the PLK Term Facility Loan and the PLK Revolving Facility Loan.
PLK Term Facility Loan	The term facility loan of up to PLN 10,300 million, issued under the PLK Senior Facilities Agreement of September 21, 2015, with the maturity date of September 30, 2024.
Plus Bank	Plus Bank Spółka Akcyjna entered in the register of entrepreneurs of the National Court Register under entry No. 0000096937.
Polkomtel	Polkomtel spółka z ograniczoną odpowiedzialnością, entered in the register of entrepreneurs of the National Court Register under entry No. 0000419430. The company was established following the transformation of Polkomtel Spółka Akcyjna, which was entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000020908.
Polkomtel Group	Polkomtel jointly with its indirect and direct subsidiaries.
Polsat Media Biuro Reklamy	Polsat Media Biuro Reklamy spółka z ograniczoną odpowiedzialnością sp.k. entered in the register of entrepreneurs of the National Court Register under entry No. 0000467579.
Reddev	Reddev Investments Limited, a company under Cypriot law with its registered office in Nicosia, Cyprus.
Second Amendment and Restatement Deed	Agreement concluded on March 2, 2018 between the Company and UniCredit Bank AG, London Branch, amending and consolidating the CP SFA and the PLK SFA and amending the Amendment, Restatement and Consolidation Deed.
Senior Facilities Agreement, SFA	CP SFA of September 21, 2015 as amended by the Amendment, Restatement and Consolidation Deed of September 21, 2015, the Second Amendment and Restatement Deed of March 2, 2018 and the Third Amendment and Restatement Deed of April 27, 2020.
Series B Bonds	Dematerialized, interest-bearing, senior and unsecured Series B bearer bonds with the total nominal value of PLN 1 billion and the nominal value of PLN 1,000 each, issued pursuant to the Resolution of the Management Board of the Company No. 01/29/01/2020 dated January 29, 2020.
Series C Bonds	Dematerialized, interest-bearing, senior and unsecured Series C bearer bonds with the total nominal value of PLN 1 billion and the nominal value of PLN 1,000 each, issued pursuant to the Resolution of the Management Board of the Company No. 1/25/03/2019 dated March 25, 2019.
Sferia	Sferia Spółka Akcyjna, entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000246663.
SOKiK	The District Court in Warsaw, 17th Department for Competition and Consumer Protection.
Telecommunications Law	Telecommunications Law of July 16, 2004 (Dz. U. of 2004, No. 171, item 1800, as amended).
Telewizja Polsat, TV Polsat	Telewizja Polsat spółka z ograniczoną odpowiedzialnością, entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000388899. The company was established following the transformation of Telewizja Polsat Spółka Akcyjna, which was entered in the register of entrepreneurs of the National Court Register under entry No. KRS 0000046163.
Telewizja Polsat Plus Group, TV Polsat Plus Group	Telewizja Polsat together with its direct and indirect subsidiaries.
Third Amendment and Restatement Deed	Agreement concluded on April 27, 2020 between the Company and UniCredit Bank AG, London Branch, amending the SFA along with the Amendment, Restatement and Consolidation Deed and the Second Amendment, Restatement and Consolidation Deed.
T-Mobile, T-Mobile Polska	T-Mobile Polska Spółka Akcyjna, entered in the register of entrepreneurs of the National Court register under entry No. KRS 0000391193, previously operating under the name of Polska Telefonia Cyfrowa Spółka Akcyjna.
Towerlink Poland sp. z o.o. (formerly Polkomtel Infrastruktura Sp. z o.o.)	Towerlink Poland spółka z ograniczoną odpowiedzialnością entered in the register of entrepreneurs of the National Court register under entry No. 0000476879, starting from July 2021 controlled by Cellnex group of Spain.
UKE	The Office of Electronic Communications (Urząd Komunikacji Elektronicznej).
UOKiK	The Office of Competition and Consumer Protection (Urząd Ochrony Konkurencji i Konsumentów).

Technical terms

Term	Definition
2G	Second-generation cellular telecommunications networks commercially launched on the GSM standard in Europe.
3G	Third-generation cellular telecommunications networks that allow simultaneous use of voice and data services.
4G	Fourth-generation cellular telecommunications networks.
5G	Fifth-generation cellular telecommunications networks.
Add-on sales	Sales technique combining cross-selling and up-selling.
ARPU per B2C customer	Average monthly revenue per Customer generated in a given settlement period.
ARPU per prepaid RGU	Average monthly revenue per prepaid RGU generated in a given settlement period.
CAGR	Compounded Annual Growth Rate – the average annual growth rate calculated for a given value using the following formula: where: rp – start year, rk – end year, Wrp – value in start year, Wrk – value in end year.
Catch-up TV	Services providing access to view selected programming content for a certain period after it was broadcast. Cyfrowy Polsat provides such services from 2011.
Churn	Termination of the contract with B2C Customer by means of the termination notice, collections or other activities resulting in the situation that after termination of the contract the Customer does not have any active service provided in the contract model. Churn rate presents the relation of the number of customers for whom the last service has been deactivated (by means of the termination notice as well as deactivation as a result of collection activities or other reasons) within the last 12 months to the annual average number of customers in this 12-month period.
Converged (integrated) services	A package of two or more services from our pay TV, mobile telecommunications and broadband Internet access offering, provided under a single contract and for a single subscription fee.
Customer	Natural person, legal entity or an organizational unit without legal personality who has at least one active service provided in a contract model. A customer is identified by a unique ID number (PESEL or REGON).
DTH	Satellite pay TV services provided by us in Poland from 2001.
DTT	Digital Terrestrial Television.
DVB-T	Digital Video Broadcasting – Terrestrial technology.
FTE	Headcount expressed in full-time equivalents.
HD	Above-standard resolution signal (High Definition).
IPTV	Technology enabling transfer of a television signal over IP broadband networks (Internet Protocol Television).
LTE	Long Term Evolution - a standard for high-speed, wireless data transmission also referred to as 4G. Based on a carrier bandwidth limited to a maximum of 20MHz it supports data transmission speed of up to 150 Mbps (downlink, using MIMO 2x2 antennas).
LTE Advanced	Subsequence standard for high-speed, wireless data transmission of the fourth generation (4G). Through carrier aggregation from different bandwidths (a total of up to 100 MHz) it allows to significantly increase maximum data transmission speed up to 3 Gbps (downlink, using MIMO 8x8 antennas).
Multiroom	Our service providing access to the same range of TV channels on several television sets in one household for a single subscription fee.
ODU-IDU	Outdoor Unit Indoor Unit, a proprietary solution of Polsat Plus Group based on a set comprising an external LTE modem (ODU) and an indoor WiFi router (IDU), which increases effective coverage and improve the quality of the LTE signal.
PPV	Services providing paid access to selected TV content (pay-per-view).
PVR	Electronic commodity hardware for digital recording of TV programs on its hard drive (Personal Video Recorder).
RGU (Revenue Generating Unit)	Single, active and generating retail revenue service of pay TV in all types of access technology, mobile and fixed-line Internet Access or mobile telephony provided in contract or prepaid model.
SD	Standard-resolution television signal (Standard Definition).
Site	(or: mast/tower/roof construction) – a single steel construction located in a separated geographical region which allows to install one or a number of base stations in order to provide radio signal to mobile terminals of end-users within that region.
Streaming	A technical process initiated by the user, enabling the replaying (of video or audio/video content) of material available on the Internet on the user's terminal device, without it being necessary to download the entire content. The process involves the sending of digital data streams, being sections of the entire content spread over time, instead of the entire material.
Usage definition (90-day for prepaid RGU)	Number of reported RGUs of prepaid services of mobile telephony and Internet access refers to the number of SIM cards which received or answered calls, sent or received SMS/MMS or used data transmission services within the last 90 days. In the case of free of charge Internet access services provided by Aero 2, the Internet prepaid RGUs were calculated based on only those SIM cards, which used data transmission services under paid packages within the last 90 days.
VOD - Home Movie Rental	Our video on demand services.