Cyfrowy Polsat S.A. Ord

Good afternoon, ladies and gentlemen. It is my pleasure to welcome you to the earnings call of Polsat Plus Group for the fourth quarter of 2024 and the full year 2024. Could I please have the next slide? Today, the results will be presented to you by the CEO of Cyfrowy Polsat, Mr. Mirosław Błaszczuk, Vice President Responsible for Strategy, Mr. Maciej Stac, and the CFO and Management Board Member Responsible for ESG, Ms. Katarzyna Ostaptoman. As we proceed with the presentation, please post any questions you may have in the Q&A panel. Please remember to include your name and institution with your questions as we do not accept anonymous questions. This will help us address your queries more effectively and ensure a smooth Q&A session. Thank you very much and I pass the floor over to Mr. Błaszczuk.

Good morning everyone. I am pleased to welcome you to Polsat Plus Group's results conference for the fourth quarter of 2024 and the entire year 2024. Today's presentation will follow the standard plan. First, I will present the most important events that took place in the past year. Then Maciek will discuss the operational results of all our business segments and Kasia will present the Group's financial results. We will conclude the presentation with a brief summary of 2024 and our goals for 2025, followed by a Q&A session. Next slide, please. The year 2024 was a very good year for Polsat Plus Group. I'm very pleased with the operational results achieved in all our business segments. Combined with cost discipline, they translated into strong financial results. Let's move on to the next slide. Let's start with the telecommunication segment. We consistently implement our long-term multiply strategy, focusing on building customer value and loyalty. As a result, in 2024, the average revenue per B2C contract customer increased by 4.8% to 76.1 PLN and for B2B customer by 3.4% to over 1,500 PLN. I'm very pleased with the falling churn rate, which was only 7% in 2024. In this segment we continuously expand and improve our Plus 5G network. It now covers 26 million people, that's 70% of Poland's population. As you may remember, we decided to base our 5G network on the unique 2.6 GHz TDD frequency back in 2020, and in 2024 we renewed this reservation for another 15 years. Additionally, at the beginning of 2024 we obtained the reservation in the 3.6 GHz band, and just two weeks ago the 700 MHz auction was concluded, in which we acquired one block for 363 million PLN. This way we have secured frequency resources that we will use in the coming years to further develop our 5G network to provide our customers with the best quality of services. We are also consistently increasing the coverage of our fixed internet access service. Today we cover almost 11 million households using both our own network and wholesale access. Next slide, please. Moving on to the media segment, I am pleased to inform you that our TV channels achieved very good viewership results, capturing a 22% market share. I would also like to highlight the success of our portal InteriaPL, which in 2024 became the leader among Internet publishers in Poland. We have also strengthened our offering in the key sports segments by securing exclusive rights to broadcast several prestigious events. These include, among others, the Formula One Grand Prix, the UEFA Europe League, the UEFA Conference League, the German Bundesliga and the French League One. We are also very pleased with the return of the men's and women's national handball to Polsat. These sport rights will contribute to the attractiveness of our sport offering in the coming years. Next slide, please. In the green energy segment, we are consistently implementing the strategy 2023 plus and building our third business pillar. In 2024, we launched two more wind farms in Człuchów and Przerów. As a result, our installed wind power capacity increased to 150 MW. At the same time, we are dynamically building our largest wind farm in Dzerzewo with a capacity of 139 MW where 32 Ensemble turbines are already standing. In the green hydrogen area, I am very pleased to inform you that we have completed our green hydrogen value chain by launching green hydrogen production at our electrolyzer in Konin. Hydrogen is produced by a 2.5 MW PM air-chlorizer with a capacity of up to 1,000 kg of hydrogen per day. Additionally, we have put into operation more hydrogen refueling stations. Today, there are already six public Neso stations in Warsaw, Rybnik, Gdańsk, Gdynia, Lublin and Wrocław. We also won tenders for the delivery of 555 hydrogen-powered buses to various cities in Poland. Next slide, please. We ended 2024 with very good financial results. Kasia will, of course, present the details, but I would like to highlight the strong growth we recorded in 2024. The group's revenues were 4.7% higher year-on-year, amounted to 14.3 billion PLN. Adjusted EBITDA increased by 9.6% to 3.3 billion PLN. I would also like to underline that effective cash flow management within our wide portfolio of strategic investments is our priority. I would like to remind you of an important event that took place in the first quarter of this year. We decided to sell our stake in Asseco and allocated the proceeds to the partial early repayment of our loan in the amount of 681 million PLN, which further strengthens our financial position. Next slide, please. Ladies and gentlemen, the year 2024 was full of significant events for our group in each segment. It was a very successful year for our company, both in terms of business results and financial achievements. Our TMT business is developing organically according to plan. The execution of the strategy 2023 plus in the green energy segment is already bringing tangible results. Good operational results translated into significant increases in both revenues and EBITDA. I am proud of the achievements of the past year and I look to the future with optimism. Now let's move on to the detailed operational results of our business segments, starting with the media segment. Maciek, over to you.

Thank you, Mirek. Hello, everyone. Indeed, like Mirek said, we had very good results in our operating segments in the fourth quarter and 2024. So let me start with the media segment. Next slide, please. The fourth quarter was very good for TV Polsat. We had a strong position both in terms of viewership and advertising. The audience share of our thematic channels grew to 15.2%, driving up the total audience share of our channels to 22.7%. Our main channel Polsat had a share of 7.5%, which is a stable result year over year. Advertising spending in the fourth quarter grew at a rate of almost 3%. During this time, our TV advertising revenue increased by 1.8%, which gave us a market share of 28%. Can I have the next slide, please? In my opinion, it's always better to look at the performance of our media segment over a longer time horizon because of seasonality. On this slide, we have the results for the full year. Our position in terms of audience shares remained strong throughout the year. Our main channel Polsat achieved 7.1% of audience shares and our thematic channels had 14.9%. As a result, our portfolio of TV channels maintained high stable audience share of 22%. This is an excellent result because please remember that last year we had the Olympic Games in Paris and the UEFA European Championships in Germany, which were broadcast by our competitors. So I'm very satisfied that we maintained a stable position, which is in line with our long-term strategy. In 2024, the TV advertising market expanded at 5.9%, our advertising revenue grew at a slightly lower rate of 4.2%, reaching almost 1.4 billion zlotys. And as a result, we had 28% of market share at the end of last year, so a very good result. Can I have the next slide, please? Let's move on to our online business. We are particularly proud of the results of Polsat Interior because, as you can see on this slide, we have successfully built our position in the online market. In 2024, Polsat Interior Group was the number one internet publisher in Poland in terms of real users. We are also very pleased that in 2024 Polsat Interior Group remained the market leader in the mobile category because the amount of content consumed on the small screen is rapidly growing and this leading position gives us a competitive edge. In the fourth quarter of 2024, the average monthly number of our users reached 20.8 million and the number of page views exceeded 1.8 billion, demonstrating our strong market presence. We see synergies between Interia and Polsat on a daily basis and this business leg delivers consistent, solid financial results. Next slide, please. Summarizing, 2024 was a very good year for both Television and Interia. Our TV channels had an audience share of 22% and we increased advertising and sponsorship revenues by over 4%, while Interia became a leading player in the online market. As you can see, we focus on producing engaging content, particularly our own published productions, which are extremely important to our viewers. In the first column, you can see our own productions. These are proven formats, series and content that are well known and loved by our viewers. This attractive own content in the Polish language translates into a very good viewership results for our channels both in 2024 and at the beginning of 2025. The second pillar is strengthening the sports channel offering. As you can see on the left side, we are extremely pleased with our sports offering for the coming years. As you know, we have acquired the rights to Formula One, which is performing very well on 11 sport channels network. We also purchased the rights to the Europa League and Conference League, where Polish teams are playing and they are doing very well. We are broadcasting Bundesliga since the beginning of 2025 and we have renewed the rights to broadcast the French League, Ligue 1. And the last but not least, we are also very happy that national handball, both women's and men's, is returning to Polsat Sport channels. So we have two pillars, entertainment and series production and sports focused on major rights, but also on Polish sports. We expect that in 2025 we will continue our good streak, both in terms of viewership and advertising market. Next slide, please. Moving on to the B2C and B2B services segment, I can say that we had a very good quarter and year in this segment as well. Let's look at the results. Next slide, please. As you know, in this segment we have been consistently implementing the Multiplay strategy for many years and we focus our efforts on building customer value and loyalty. We have a high and stable base of Multiplay customers despite challenging market conditions. We operate in a highly competitive environment and we are facing macroeconomic headwinds. Interest rates remain high at 5.75%. and high cumulated inflation over the past years. Despite all of this, our multiple customer base increased by 2.4% to over 2.5 million customers, representing 44% of our total customer base. This group contracted a total of 7.7 million services, making an increase of 261,000 year-on-year. At the end of the fourth quarter of 2024, churn decreased to only 7%. This shows customer loyalty and the very good quality of these services relative to their prices. This makes me very happy because it indicates a long-term relationship with our customers. We are confident that as we continue our multiplayer offerings, we will maintain this low churn rate in the future. Can I have the next slide, please? We provided over 13 million contract services to our B2C customers by the end of the fourth quarter of 2024. Mobile telephony and internet services were the key drivers of this growth. We added 191,000 mobile voice services, reaching a total of 6.4 million. Internet access services also grew by 95,000 up to 2.1 million. Our pay TV base is facing some pressure, but we successfully mitigate this with a growing number of pay TV services in IPTV and OTT technologies. These new technologies are helping us offset the decline in traditional pay TV services. Next slide, please. ARPU per contract B2C customer remains on a dynamic growth path, reflecting the success of our multi-play strategy and the strong demand for our services. In the fourth quarter of 2024, ARPU increased by 5.2% year-over-year up to 77.4 zloty. Effective upselling of products to our existing and new customers is a strong driver of this increase and is reflected in the high level of RGU saturation per customer. In the fourth quarter of 2024, it was 2.3 services per customer. Additionally, growing demand for data driven by the popularization of 5G terrorists is a positive factor for us. As Mirek mentioned in the introduction, we acquired 5G frequencies, the C-band and the 700 MHz, and we renewed the 2.6 GHz TDD frequency. All these frequencies will help us to improve both coverage and quality of our 5G network and will support our results going forward. Next slide, please. In the prepaid segment, we provided 2.5 million services at the end of 2024. I want to emphasize that we have maintained a stable base of prepaid services in a highly competitive market. We focus on building ARPU. Despite a slight decrease in the base, we maintain a stable ARPU level of 17.3 slots at the end of the fourth quarter. This is a good result, especially considering the fierce competition in this market segment. Next slide please. I'm also very pleased with our performance in the B2B segment in the fourth quarter of 2024 and the full year. As you can see, we consistently maintain a high and stable base over 68,000 B2B customers over the long term. At the same time, RPO per B2B customer increased by 4.6%, close to 5% in the fourth quarter to 1,530 zlotys. This increase in ARPU highlights our commitment to delivering high-value, tailor-made services to our business customers that meet their needs and expectations. Before we move to the green energy, let me briefly sum up our results in the B2C and B2B services segment. This was a very good quarter and entire year for us. We continue to grow thanks to our multiplayer strategy. ARPU growth is consistently high in our key customer groups, 5.2% per B2C customer and 4.6% per B2B customer in the fourth quarter. Also, churn is consistently low and falling only 7% at the end of 2024. These results showcase our strategic goal, which is to build customer value and loyalty. Can I have the next slide, please? Today I'm very excited to share some remarkable achievements in our green energy segment. Only three and a half years ago, in December 2021, we announced our ambitious strategy 2023+, aiming to transform Pulsat Plus Group into a leader in connectivity, content and clean energy. We set two new goals to become a leading producer of clean green energy and green hydrogen. This afternoon, I'm delighted to announce that we have successfully realized these objectives. Can I have the next slide, please? We achieved our first goal and today we are leading producer of clean green energy. We have 105 MW installed in two biomass units and 82 MW completed in photovoltaic farms. Recognizing the potential of wind power, we decided to focus our investments in this renewable energy source. It will soon have nearly 300 MW installed, including our flagship Drzezewo wind farm with a capacity of 139 MW. With these strategic investments, we are on track to reach over 1,700 GWh of clean energy production within just five years after announcing our strategy. To put this into perspective, 1,700 GWh represent approximately 1% of Poland's total energy consumption, a truly remarkable achievement. Furthermore, we will reach this milestone with lower investment costs than we initially projected. By 2026, our investment expenditures will amount to about 3.9 billion zlotys, which is 1.1 billion less than our 2021 guidance. We have also reached our second major goal by establishing a complete green hydrogen value chain. Today we produce green hydrogen using renewable energy thanks to our 2.5 MW electrolyzers in Konin, which can produce even 1000 kg of green hydrogen every day. That's enough to refuel about 40-50 Neso buses daily. We are also working on 0.5 MW alkaline electrolyzer, which will boost our hydrogen production capacity in the future. We use 10 hydrogen trailers to store and transport our hydrogen to our network of 6 publicly available hydrogen refueling stations across Poland. We have developed a hydrogen-powered bus, the NesoBus. Already 90 NesoBuses were sold or are contracted by various cities in Poland. Finally, we want to set a good example and decarbonize our car fleet at Polsat Plus Group by using 150 hydrogen-powered cars. Just three years after announcing our strategy 2023+, we've established a fully operational green hydrogen chain. As we move forward, we'll be testing, optimizing and scaling it according to the market demand. Next slide, please. Over the past year, we have recorded a dynamic growth in our green energy production, driven by our expanding capacity for wind energy generation. In the fourth quarter of 2024, our green energy production increased by an impressive 64% year-over-year, reaching 295 GWh. And this significant increase was the effect of commissioning of 123 MW at the Człuchów and Przydów wind farms. But the successful and timely development of our wind projects not only highlights our commitment to sustainable energy, but also shows our ability to execute large-scale projects efficiently. For the entire year of 2024, our green energy production grew by 53% compared to the previous year, exceeding 1000 GWh. It means we produced more than 1 TWh of the green clean energy. One of our most ambitious projects, the construction of the largest wind farm in Drzezewo with a capacity of 139 megawatts is progressing ahead of schedule. I would say we have already assembled 32 turbines out of 63. At this rate, we are likely to launch the first turbine in technical commissioning before the end of the second quarter, which means that this farm will start to generate revenue very soon. Next slide, please. And now it's my great pleasure to report that in 2024 we have generated already 282 million zlotys of EBDA in our green energy segment. This is a very impressive result considering that it has only been three and a half years since we started to build this business segment. In the fourth quarter of 2024, EBDA of the green energy segment was 79 million zlotys. This result was driven mainly by the expansion of our renewable energy capacity to 338 MW at the end of the year from 215 MW at the end of 2023. Additionally, in 2024, we were able to secure favorable terms for the supply of biomass and we also enjoyed a stable regulatory environment, which is very important in the energy sector. As I have already mentioned, EBITDA for the full year amounted to 282 million zlotys. Please remember that we started to consolidate our green energy segment since July 2023, so the results for the full year are not fully comparable. Looking ahead to 2025, with the completion of the Drzezewo wind farm, we will double our installed capacity in wind power and this expansion will further support our EBDA growth in the future and solidify our position in the renewable energy market. Next slide, please. On this slide, I'm very pleased to present the progress we've made with our 2023 plus strategy. I'm incredibly proud because today we can say that we will successfully meet our ambitious target of 500 million Zloty of VBDA by 2026. What's more, we will achieve this target with lower capex. We will spend 1.1 billion Zloty less than we assumed. Back in 2021, we announced that we want to generate 500-600 million zlotys of incremental EBDA annually from our new energy business in 2026. In 2024, we have already reached nearly 300 million zlotys with the contribution from Drzezhevo Wind Farm. I'm confident that in 2026, we will deliver the promised EBDA of about 500 million zlotys. We estimate that in 2026 our energy production capabilities will reach 1.7 TWh annually, representing approximately 1% of Poland's total energy consumption. Just three years after announcing the strategy, we already have assets that allowed us to produce over 1 TWh of green energy in 2024. More importantly, we achieved all this with the lower investment expenditures. By the end of 2024, we have spent 3.2 billion zlotys in total and we anticipate that at the end of 2026 our capex for the development of this segment will settle at about 3.9 billion zlotys. That is 1.1 billion zlotys less than the originally assumed 5 billion. Ladies and gentlemen, this was my last slide. I would quickly like to sum up my part of the presentation. All our business segments performed very well, both in the fourth quarter and the full year 2024. In the B2C and B2B segment we execute our long-term multiplayer strategies centered around increasing customer value and customer loyalty. This is reflected in growing RP in our key customer segments and consistently low churn. In the media segment we maintain very good viewership figures on a strongly fragmented market and we have a solid position in TV advertising, We are also successfully building the position of POSAT Interia Group, which is now a leading player in the online market. And finally, in the green energy segment, we are finalizing our strategic investments and this business segment is moving from the development phase to the business as usual phase. I'm extremely happy to confirm that in 2026 we will deliver on our promises by generating approximately 500 million zlotys of VBDA from our energy segment using less capex by 1.1 billion zlotys. And that's all from me today. Thank you very much for your attention. Kasia, over to you.