Cyfrowy Polsat S.A. Ord

Ladies and gentlemen, welcome to Polsat's H1 2020 results conference call. I will now give the floor to Mr Miroslav Plaszczyk, CEO of Polsat. Sir, you may begin.

Good afternoon, everyone, and welcome to Polsat Group's Q2 2020 results call. Today, I will take you through the key events that took place in the second quarter. Sasek and Matik will tell you about the operating results of both our business segments, followed by Kasia with our final performance. As always, we will end the presentation with a short summary and Q&A session. Ladies and gentlemen, I would like to ask you to look at the results of this quarter from a different perspective. Today, the coronavirus situation seems relatively stable, Life has almost returned to normal and investors tend to quickly forget the past. So I would like to remind you all of the reality we faced in Poland in March and April when schools, shopping malls, most public facilities were shut down. When we were only required to stay at home and work remotely. When the level of uncertainty was at its highest point. That was the reality of the second quarter that we report today. During this most difficult time, we were focused on maintaining continuity of operation and ensuring at the same time the safety of our employees. We are focused on supporting those points of faith that had to be locked down. We are focused on delivering the highest quality of services to our customers especially as telecommunication and how entertainment services have become absolutely crucial for so many people during this time. Please remember all this when listening to today's presentation. Like I said, the adjustment of our business operation to the new, difficult reality of the state of pandemic was one of our priorities this quarter, and I think we did this very efficiently. We are also very active in supporting the Polish society and healthcare services in the fight against the coronavirus epidemic in Poland, in particular with donations of about 30 million zlotys. But the coronavirus did not stop us from developing our business according to plan. We strengthened the position of Polsat Group in the Internet through the fast finalization of the acquisition of interior.pl in the beginning of July. We have also launched a completely new product. We have started operation on the photovoltaics market in Poland, introducing our new brand ESOL. I believe it is a very promising business in steel coal-dominated Polish energy production. Last but not least, we have decided to share profits with our shareholders and pay a record high dividend of 640 million zloty or one zloty per share. This proposal has been fully accepted also by you on the company's general shareholders meeting. Summing up, a challenging and a very dynamic quarter when our focus was on business continuity but also numerous new strategic initiatives. I believe we did very well in this context, even though the situation was very complex. Staszek, please tell us how our media business was conducted during this turbulent time.

Thank you, Mirek. I have to admit that this was a challenging quarter for our television business. The coronavirus epidemic and the imposed lockdown had a profound impact on the advertising market, a major source of our revenue. Still, I believe we did a pretty good job of mitigating the negative impact of the breakdown on the ad market. Let's begin with our viewership figures. The lockdown and coronavirus threat forced us to review our internal production basically from day to day. As a result, we had to withhold the spring programming schedule. Also, the numerous sport events to which we hold broadcasting rights, football in particular, were suspended. I am very pleased to say that the majority of these events have already been relaunched. We all had the pleasure of watching the finals of the Champions League last Sunday. All in all, despite these challenges, our viewership figures in Q2 remain within our target audience shares, that is, at 23% in the commercial group. Our main channel podcast gained 9.2% of audience shares, and our thematic channels retained their strong position, gaining almost 14% of audience shares. I have to underline our news channels did a great job doubling or even tripling their viewership results. Let's look at revenues perspective. The TV market took a really hard hit this quarter, declining by 35.4% year-on-year. We did a little better than the broad market and recorded a decrease in ad revenues by 34.5%. This result gave us 27.4% share in the market. So, a turbulent time for all media businesses. where fast decision-making was crucial in order to protect value for shareholders. The next slide describes our response to these challenges. Looking at the overall financial results of the TV segment, in Q2, our total revenue fell by 21%, entirely due to the breakdown on the ad market. We have not seen any major problems with our sound sales of channels to our cable and satellite providers which helps us in minimizing stop-line pressure. On the other hand, our strong side is that we are very flexible in respect to cost. If the need arises, we can quickly adjust the cost side to match it with the condition of the advertising market and consequently reduce pressure on EBITDA. This is what happened in this quarter. We cut costs by 18% and as a result we posted EBITDA at the level of $122 million, down by $39 million. I believe TV Poltar did a lot in order to mitigate top-line pressure. Looking at the results in the longer, happier perspective, you can see that our viewership figures remain in the line with our strategy. Our main channel, Polsat, had 9.5%, and our thematic channel had 13.6%, which gives the total share of Polsat Group at the level of 23.1% in the commercial group of viewers in the first half of 2020. On the next slide, we can see how these audience shares translated into ad market shares. In the first half of 2020, our ad revenues fell by 20%, which is in line with broad market trend to 475 million. We maintained the high market share of 27.7%. As media business changes dynamically this year, in order to conclude, let's look at the six-month financial performance of TVPulsar. The financial results are presented on site 13. we posted revenue of $873 million down by 10%. Naturally, the decline comes from the breakdown of the ad market in the second quarter. As I have already told you, we have adjusted operating costs, which fell by 9% to $604 million in the half-year perspective. Accounting for the financial aid and other COVID-related costs, The adjusted EBITDA of the TV segment for six months amounted to $269 million, recording a drop by $38 million. That was H1, while right now we are already at the end of August. As mentioned, the situation changes very dynamically this year, so let me now give you some insight into the second part of the year. I would like to tell you that the figures for July and preliminary readings for August look very promising. It seems that the TV ad market is following a V-shaped recovery path and has the potential to be flat in the second half of the year. Assuming that the epidemic situation does not get worse than expected in autumn, I believe the value loss of the Polish TV advertising market could be limited to around 10% in a full year perspective. Now over to Maciej who will tell you more about our retail business.