Report 2009
Transkrypt
Report 2009
Annual Report 2009 POLKOMTEL S.A. ANNUAL REPORT 2 POLKOMTEL S.A. 2009 This document includes information on major events during the financial year 2009 having a significant impact on performance of Polkomtel S.A. It includes information on the position of the Company in the market, meaningful technological achievements as well as current and forecast financial situation and growth prospects. 3 4 ANNUAL REPORT POLKOMTEL S.A. 2009 Index LETTER FROM THE PRESIDENT OF THE MANAGEMENT BOARD ................................................ 7 MANAGEMENT BOARD MEMBERS ....................................................................................... 10 SUPERVISORY BOARD MEMBERS ......................................................................................... 12 SHAREHOLDERS OF POLKOMTEL S.A. ................................................................................... 13 MOBILE TELEPHONY MARKET IN 2009 ................................................................................ 14 COOPERATION AMONG OPERATORS ..................................................................................... 20 CUSTOMER SERVICE ............................................................................................................. 26 NEW PRODUCTS AND PRODUCT INNOVATIONS .................................................................... 30 TECHNOLOGICAL INNOVATIONS IN IT ................................................................................... 40 SALES ................................................................................................................................. 44 INFRASTRUCTURE AND NETWORK DEVELOPMENT ................................................................. 46 EMPLOYEES ......................................................................................................................... 52 GROUP OF COMPANIES ....................................................................................................... 58 OPERATING RESULTS AND FINANCIAL STATEMENTS ............................................................. 60 SELECTED FINANCIAL DATA ................................................................................................. 64 INDEPENDENT AUDITOR’S REPORT ...................................................................................... 66 SPONSORSHIP AND CORPORATE SOCIAL RESPONSIBILITY ..................................................... 82 AWARDS AND DISTINCTIONS IN 2009 ................................................................................. 94 5 6 ANNUAL REPORT POLKOMTEL S.A. 2009 Ladies and Gentlemen, We publish the Annual Report outlining the operation and performance of Polkomtel S.A. in 2009. For Polkomtel S.A. it was a good year, though difficult for the telecommunication sector as for the Polish economy as a whole. Plus maintained its leading position among mobile networks in the Polish market with respect to both the number of users as well as the financial results achieved by the Company (the highest revenues totalling 7.77bn zlotys, highest EBITDA – 2.67bn zlotys). The policy of offering the latest solutions and keeping ahead of Customers’ expectations has proved to be effective. An Increasing number of individual and corporate customers want to use Plus – a company dedicated to innovation and quality. 7 Mobile telephony is the basic service provided by mobile operators. However, mobile Internet is the service which shows the greatest future potential. The testament to our leading position in this field is not only from our customer’s opinions but also from research conducted by experts. In January 2009 an independent report regarding wireless Internet offered by mobile operators in Poland was published and iPlus scored the best grade; so we are unrivalled with regard to the speed of downloading data and stability of connection. We may state that the previous year began and ended in a symbolic manner – it was inaugurated with the report proving that Plus is a leader in the mobile Internet sector and over the last weeks of 2009 we announced the availability of mobile Internet in HSPA+ technology. What previously seemed to be technology belonging to science fiction is now at our fingertips. We were pioneers in launching this solution and I assure our users that we will continue to offer a state-of-the-art service designed to facilitate communication. This is our mission and our philosophy of operations. Last year we successively expanded and enhanced projects that we commenced in previous months and years. A good example is Muzodajnia – the largest music store launched in 2008 that gives the opportunity to download music for little more than a penny. In 2009 the number of users for this service exceeded 100,000. When reporting on our successes I cannot miss out one more achievement – that delights not only us, all the employees of Polkomtel S.A., but also all Poles which is the victory won by Polish men’s and women’s volleyball teams, their champion’s titles and the moments of unforgettable emotion invoked by their triumphs. Polkomtel S.A. 8 ANNUAL REPORT POLKOMTEL S.A. 2009 has long supported Polish Volleyball – as an Official Sponsor it may boast of its contribution to creating conditions which enable the triumphs. We are proud that Polish volleyball players wear the Plus logo on their shirts and as a consequence Plus, among others, is such a strong and positively associated brand. The leading position and trust placed in us by millions of Customers, obliges Polkomtel S.A. to support significant social initiatives. The calendar of events in the fields of culture, sport and education which we assisted is exceptionally rich and I will only mention the most spectacular events. We continued to support the Polish Volunteer Water Rescue Service (WOPR), the Polish Volunteer Mountain Rescued Service (GOPR) and the Tatra Mountain Volunteer Rescue Service (TOPR) through joint actions to promote safe recreation in mountains and on water. Plus was also a partner for such cultural events as festivals Plus Camerimage or Off Plus Camera. On top of that it sponsored important and highly popular exhibitions at the National Museum in Warsaw. I invite acquaintance by through reading this Report. It demonstrates that the strategy of investing in cutting-edge solutions based on accurate anticipation of Customers’ needs brings beneficial results, even in an unfavourable time for the market. Jarosław Bauc PRESIDENT OF THE MANAGEMENT BOARD GENERAL DIRECTOR 9 ANNUAL REPORT POLKOMTEL S.A. 2009 Management Board Jarosław Bauc PRESIDENT OF THE MANAGEMENT BOARD, GENERAL DIRECTOR 10 Krzysztof Kilian VICE PRESIDENT OF THE MANAGEMENT BOARD, MARKETING AND CUSTOMER RELATIONS DIRECTOR Wojciech Dylewski MEMBER OF THE MANAGEMENT BOARD, OPERATIONS DIRECTOR Bogusława Matuszewska MEMBER OF MANAGEMENT BOARD, SALES DIRECTOR Miguel Marin Martin Moorhouse MEMBER OF MANAGEMENT BOARD, FINANCIAL DIRECTOR MEMBER OF MANAGEMENT BOARD, TECHNICAL DIRECTOR 11 CHAIRMAN OF THE SUPERVISORY BOARD Tomasz Zadroga Arkadiusz Gierałt Supervisory Board COMPOSITION AS OF 31 DECEMBER 2009 Ian Gray Tim Harrabin Sławomir Jędrzejczyk Dariusz Jacek Krawiec Marek Trawiński Herbert Wilhelm Wirth 12 ANNUAL REPORT POLKOMTEL S.A. 2009 Shareholders of Polkomtel S.A. 13 Mobile telephony market 14 ANNUAL REPORT POLKOMTEL S.A. 2009 in 2009 The worldwide downturn which was characterized the whole of 2009, was primarily manifested in Poland by a decrease in the economic growth rate. Unlike other sectors of the telecoms market the deterioration took place but to a limited extent. Shifts in consumer attitudes as well in economic environment, especially in fluctuations in foreign exchange rates, prompted the necessity for swift reaction and amendment of some elements in marketing strategy as well as the pursuit of more effective methods to reach and win consumers. 15 Even though symptoms of the slump had a profound effect on our corporate Customers who pressed hard for a reduction of operating costs, Polkomtel S.A. retained its position as the leader in CMA and SME segments. In addition, due to a flexible offer for SOHO segment, Polkomtel S.A. bolstered its position in this segment. A strong competitive environment in the market of individual customers did not threaten the leadership of the Company in the contract segment (post-paid and mix). An ever increasing number of users of MixPlus and loyal post-paid Customers have been contributing to increased share of contract Customers in the base for a numerous years.. Operators’ share of the individual contract market POLKOMTEL – 32.30% PTC – 31.80% PTK – 29.80% P4 – 6.10% Source: Research study dy of the market situation, 2009 November, IQS & QUANT Groupp Despite aggressive actions undertaken by competitors, Polkomtel S.A. retained a strong position on the prepaid services market. Simplus was a leading brand through implementing, among other products, innovative offer solutions based on customer’s behavioural profiles – providing ease and flexibility of contact with others without any minutes restrictions. The prepaid offer on the youth market is completed with the brand 36.6. In 2009 awareness of this brand considerably increased among the target group through the creation of a superhero – TurboDymoMen which became an idol of many young people, and quotations from advertisements entered into colloquial language. 16 MOBILE TELEPHONY MARKET IN 2009 ANNUAL REPORT POLKOMTEL S.A. 2009 In an ever expanding mobile Internet market, iPlus strengthened its leadership. Having over half a million of users it ranked as the third largest Internet provider in Poland. Advances in technologies offered with commensurate increase in speed, combined with maintaining highest quality standards are behind the growing popularity of solutions for Internet access offered by Polkomtel S.A.. An independent report by the Audytel consulting company confirmed that the highest quality of mobile Internet available is provided by the iPlus brand. The Plus offer is distinguished with the best connection stability and speed among all mobile Internet offers. In December 2009 Customers in 11 cities were offered the opportunity to deploy HSPA+ technology (transfer speed up to 21 Mbps). At this juncture it should be noted that the success of Plus is also related to continued expansion of its offers and introduction into the market of innovative products such as iPlusopobieracz – a service enabling almost unlimited mobile Internet from midnight until 9 a.m. Operators’ shares of mobile Internet access market POLKOMTEL – 34.86% PTC – 24.00% PTK – 27.00% P4 – 14.00% Source: Research study off the market situation, November 2009, IQS & QUANT Group 17 Nevertheless, Plus offers much more than the opportunity to talk, text message or the use of mobile Internet. On top of that Plus provides rich and ever expanding offers of innovative extra services: basic, information-entertainment or special solutions. It is worthwhile noting the large number of entries into mobile portals available – plus.pl, which offers (as the only operator on the Polish market) free of charge browsing through messages and information on entertainment, sport and culture. The mobile portal also offers access for our Customers to apply the unique service Muzodajnia which gives an opportunity to buy music for a lump-sum fee and then download it directly to the mobile phone or computer. On the portal plus.pl we also find a rich base of Java games, wallpapers, ring tones and Time Charmers (Czasoumilacze) together with the option of watching video. Plus Customers may make small minor payments though the mobile phone using the mobile payments service. Thanks to effective and comprehensive activities focused on the active management of our Customer’s base quality, the Company has reinforced its leading position with regard to both the size of the customer base as well as revenues attained and therefore the year 2009 is definitely regarded as most successful. A leading operator on the market HIGHEST SHARES IN THE MARKET AT THE END OF 2009 (NUMBER OF CUSTOMERS %) PLUS – 31.20% ERA – 30.00% ORANGE – 30.50% PLAY & MVNOS – 8.30% 18 45.00 mln Customers (4Q 2009) MOBILE TELEPHONY MARKET IN 2009 ANNUAL REPORT Customer base of high quality POLKOMTEL S.A. 57.8 55.1 52.6 49 42.2 44.9 47.4 51 2006 2007 2008 2009 2009 INCREASING SHARE OF CONTRACT CUSTOMERS, CRUCIAL FOR STABILIZATION OF REVENUES WITHOUT CONTRACT CONTRACT The customer base of Plus was distinguished by the largest proportion of satisfied customers as well as the highest tendency to recommend the brand to others. Furthermore, the company enjoyed the highest satisfaction ratio among competitors in relation to the range and quality of connections The results of the research carried out also show high ratios for intentions to buy the brand which is evidenced by the record number of transactions concluded over the last quarter of the year. The efficiency of campaigns run over 2009 is reflected in the highest level of spontaneous recognition of Plus advertisements when compared with competitors; they may be described in terms of high potency to memorize the essential advertising message. These ads, on one hand, communicate the consumers fundamental information concerning solutions offered in an intelligible manner and with an unprecedented sense of humour. On the other hand, they boost the brand image associated with such values as attractive products and services, stability, confidence, sense of humour as well as association with a brand already possessed by numerous acquaintances. 19 Cooperation among operators In 2009, within cooperation among operators, Polkomtel S.A. continued its strategy based on optimising costs of traffic service incurred by Polkomtel S.A. along with providing the broadest possible spectrum and the highest possible quality of services for its own Customers and increasing revenues from wholesale services rendered within its own network. 20 ANNUAL REPORT POLKOMTEL S.A. 2009 Inter-network traffic exchange In 2009 a significant increase was recorded in number of operators (both mobile as well as land-line) interested in undertaking cooperation with Polkomtel S.A. with regard to combining network connection, and applying to enter into negotiations in this respect. The cooperation with national operators in 2009 was characterized by interventions of Regulatory Bodies with regard to cooperation conditions among operators in the mobile telephony market, notably in the determination of mobile termination rates (MTR). By virtue of the regulatory decision issued by the President of the Office of Electronic Communications (UKE), the MTR rate applied by Polkomtel S.A. (similarly the MTR rate for direct competitors such as PTC Sp. z o.o. and PTK Sp. z o.o.) was reduced from 33.87 groszy/minute to 16.77 groszy/minute. It was accompanied by the continuance by the President of the Office of Electronic Communications (UKE) of the policy which aims at deploying asymmetrical settlements for MTR on the market in favour of P4 Sp. z o.o. At the end of 2009 Polkomtel S.A. entered into 20 agreements on network connections with Polish and foreign operators. As part of standard operations concerned with maintaining existing and establishing new telecom network connections between Polkomtel S.A. and other operators’ networks, the Company endeavoured to safeguard optimisation for managing telecommunication traffic which consequently enabled Polkomtel S.A. to reduce costs for terminating traffic in other operators’ networks. These operations were undertaken while ensuring that Customers of the Plus network had access to services provided by other operators’ networks and the users of other operators’ networks had access to services provided by the Polkomtel S.A. network respectively. 21 Towards the end of 2009 the Company completed works initiated in 2008 which made it possible to terminate traffic in the TP S.A. network by the use of lump-sum interconnect rate (so called Flat Rate). Launching new points of network interconnection with TP S.A. settled in accordance with the Flat Rate as well as the expansion of previously activated points of network interconnection Flat Rate with TP S.A., it will enable us to propose a more advantageous offer to our Customers regarding connections with fixed phone numbers in the TP S.A. network in coming years. The conclusion of the agreement between the President of the Office of Electronic Communication (UKE) and TP S.A. was a crucial factor. As a result TP S.A. withdrew all appeals against the decisions issued by the President of UKE which amended the agreements regarding the network connection between TP S.A and Polkomtel S.A., filed with the Court of Competition and Consumer Protection (SOKiK). Consequently removing the previous risk of raising Polkomtel’s S.A. costs for terminating calls in TP S.A. network. With regard to cooperation with mobile operators, Polkomtel S.A. concluded relevant annexes to the Inter-operator agreements which resulted in reduction of wholesale fees for services MMS from 90 gr/100 kB up to 30 gr/100 kB since November 2009, the move should have a positive impact on boosting the popularity of MMS service among our Customers. In 2009 Polkomtel S.A. continued to be active on the market of call transfers from domestic and foreign networks to mobile network operators in Poland. The Company exploited agreements concluded on network interconnection as well as available infrastructure resources with a view to allowing operators to terminate calls in other mobile operators’ networks in Poland through the Polkomtel S.A. network. In spite of a significant decline in the effective rate MTR in 2009 Polkomtel S.A. raised the level of EBITDA margin achieved out of transit traffic as compared to 2008. 22 COOPERATION AMONG OPERATORS ANNUAL REPORT POLKOMTEL S.A. 2009 Wholesale sales The largest customer of wholesale services provided by Polkomtel S.A. remained the company P4 Sp. z o.o. operating under the Play brand which exploits National Roaming in the network of Polkomtel S.A.. Settlement to the agreement on the National Roaming entered into in 2009 will guarantee Polkomtel S.A. revenues from the service of National Roaming in coming years. Polkomtel S.A. continued its expansion of wholesale sales for SP/MVNO partners in 2009 which thus produced: – growth of user base actively using services rendered by SP/MVNO partners that operate in the Polkomtel S.A. network, – commercial inauguration of retail services provision by SP/MVNO partners: in May 2009 by GG Network S.A. under the brand GaduAir and in October 2009 by FM Group Mobile Sp. z o.o. under the brand FM Group Mobile. Towards the end of 2009 Polkomtel S.A. cooperated with five virtual operators of mobile telephony : CP Telecom Sp. z o.o. (operating under the Carrefour Mova brand), Aspiro Sp. z o.o., which used to operate under the brand emFinanse Sp. z o.o. (operating under the brand of Bank Mobile), GG Networks S.A. (operating under the brand of GaduAir), FM Group Mobile Sp. z o.o. (operating under the brand of FM Group Mobile) and Telefonia Dialog S.A. (operating under the brand of Diallo). 23 International roaming The market of international roaming across the world has been undergoing critical changes for a few years now and it is increasingly regarded by mobile operators as an extra channel for sales of telecom services in international markets and optimisation of costs related to the provision of international roaming to their own users. The strategy for international roaming offered by Polkomtel S.A. does not only strive to provide roaming to its own users in the greatest possible number of countries but also to sell dynamically roaming services within its own network and to enhance pressure for reduction of roaming costs in networks of roaming partners. As to international roaming for the Plus Customers staying outside the territory of Poland, the Company renegotiated the roaming agreements with regard to settlement rates and it was advancing necessary tools and functionalities to manage roaming traffic. The abovementioned activities contributed to optimisation of financial results by Polkomtel S.A. in this area of operations. Furthermore, activities undertaken in the wholesale domain have had direct implications on the operations of the Company in retail roaming. Due to reduced roaming rates negotiated it becomes possible to propose attractive offers relating to international roaming to selected retail users of Polkomtel S.A. . 24 COOPERATION AMONG OPERATORS ANNUAL REPORT POLKOMTEL S.A. 2009 In 2009 Polkomtel S.A. consolidated its position in international roaming among domestic mobile operators through: – maintaining its leadership with regard to the coverage of international roaming for voice calls, offering services to its subscribers and users in 202 countries/areas; – maintaining its leadership with regard to availability of package service for data transfer in international roaming which is available in 138 countries/areas; – winning the leading position with regard to coverage of international roaming in UMTS/3G technology which is already available in 67 countries/areas; – fostering opportunities for exchange of MMS traffic in international roaming to 79 international networks; – negotiating preferential conditions for use of 56 international networks worldwide. 25 Customer service 26 ANNUAL REPORT POLKOMTEL S.A. 2009 We retained the leadership on the market primarily because we provide top quality Customer service which has long been a standard for us. This service, which is highly appreciated by our Customers, includes: the professional approach presented by our consultants in Call Centres, continuous work on possible improvements in Customer service and development of service tools having the capability to anticipate growing demand for diverse forms of communication between the Customer and the service provider. Findings from marketing research conducted in 2009 showed that our consultants are ranked as the best on the market, especially with regard to evaluation of their knowledge, involvement and efficiency. The major contributor to maintaining such high standards in service has been the emphasis placed on progression of customer service personnel through a comprehensive and continual training process. In 2009 we launched the project “Modern personnel” to cover 600 employees which is accomplished with the assistance of the European Social Fund. This wide-ranging project, carried out till 2011, was designed to further develop the competency of our consultants, adopt new trends in phone based Customer service and recent professional standards for service deployed across the world. 27 One of the benefits of improving the service process was a considerable reduction of waiting time for customer connection with a consultant, by means of launching queue “Super” in the prepaid segment addressed to the most valuable users of Simplus, MixPlus, Sami Swoi and 36.6. We also effected considerable reduction of waiting time in post-paid SOHO segment. In addition, we implemented extension of the unique system of calling back on request (Call Back) giving the opportunity for carrying out requests for callback to a Customer on the following day. We activated the module in a vindicatory system to forecast optimal days and time for contacts with a Customer, which then enables us to boost the efficiency of reaching Customers in phone channels (IVR vindicatory and calls from consultants). In 2009 we upgraded self-service channels which are increasingly popular among our Customers (www, IVR, SMS, USSD). We also worked on a new version of the Internet shop and we implemented a service of informing via SMS on status and resolution of the technical problem raised by a Customer. An audit was conducted each year, verifying the certificate of ISO 9001:2008 in the field of Customer service and retention as well as receivables collection control. 28 CUSTOMER SERVICE ANNUAL REPORT POLKOMTEL S.A. 2009 Our Call Centre participated in the accomplishment of the programme “Youth in Łódź” coordinated by the Municipal Office; the project involved institutions of higher education and leading employers from the region. The programme aims at encouraging students to take up internships and search for employment in the Łódź region. At the same time we promoted professional incentives for people threatened by social exclusion, by employing persons with severe disability as consultants. In 2009 we were recognized as the best social enterprise in Łódź region and at the annual Social Entrepreneurship Gala in Łódź, Polkomtel S.A. was awarded with a prize in the category “The company supporting social integration”, a statuette “Golden Ear” (Złoty Kłos), a diploma and a title of “The company supporting social integration in 2009”. As in previous years, consultants of the Polkomtel S.A. Customer Service Centre manned hotlines while auctions of Golden Hearts and Cards were held at the Finale of the Great Orchestra of Christmas Aid and 180 employees volunteered to support a TV auction. We also provided the organizers with technical support and our company was honoured with Orchestra’s Quality Mark. 29 New Products 30 ANNUAL REPORT POLKOMTEL S.A. 2009 In 2009 Polkomtel S.A. retained the leading position on the mobile Internet market, in the 4th quarter there were over 500,000 Customers taking up the Plus offer. An essential competitive advantage is guaranteed by the network quality, enabling fast data transmission with a speed of 7.2 Mb/s within the 3G network coverage and up to 21 Mb/s in selected cities (the fastest mobile Internet access in commercial mobile networks worldwide). Polkomtel S.A. succeeded in holding the leading position also due to innovative products only available in the Plus network, such as iPlus better together (iPlus razem lepiej) – offering additional toll-free activation of the iPlus service for Customers possessing 2 SIM cards, iPlus extra – enabling renewal of data transmission package in the offer on iPlus and iPlusopobieracz – an offer giving an opportunity for unlimited Internet access at night. and product innovations Due to our consistent promotion of free of charge access to the mobile portal plus.pl and continued extension of service offers, there was an increase in the number of loyal users of the portal by over 40%; the number totalled over 2 million. The major items introduced in the portal in 2009 are the following: pracuj.pl, centre “Champions League” and centre with live coverage of the European Volleyball Championships. Plus was the first operator in Poland to launch commercial services of mobile payments. In 2009 the company widened the spectrum of services based on this technology, holding out the possibility to pay telecom bills through mobile payments. 31 Services based on data transmission • GG Plus – deployment of the mobile version of Gadu-Gadu communicator for Plus Customers, • iPlus manager 2.1 – new version of the programme designed for Internet connection service, • iPlus Better Together (iPlus Razem Lepiej) – an option to connect Internet through a mobile phone and a modem – without additional charge within a single fixed monthly fee, • iPlus lowend – new, cheaper Plus tariffs, • informing users about 3G coverage – deployment of the solution consisting of displaying on the phone screen information on availability of 3G network, • iPlus mailbox – an offer of business mail box alongside mobile access (iPlus mailbox BlackBerry and iPlus mailbox ActiveSync), • iPlusopobieracz – an offer enabling unlimited Internet access at night Entertainment and information services • MUZODAJNIA.PL – the first music store in Poland offering access to music in exchange for a lump-sum subscription fee, enriched its catalogue with premiere records by such artists as: Sting, Agnieszka Chylińska, Kayah, 50 Cent, Timbaland, Rihanna, Lady GaGa. The service makes a wide music repertoire available, ranging from rock music through dance, jazz, classic music up to recent songs from hit charts – in short hits and evergreens, all possible music trends on a single service platform. Muzodajnia is the first portal in Poland and one of the few across the world providing an opportunity to download hundreds of thousands 32 NEW PRODUCTS AND PRODUCT INNOVATIONS ANNUAL REPORT POLKOMTEL S.A. 2009 of music files on mobile phones, computers or any portable devices based on the model of monthly subscription fee. In 2009 the number of customers who used the commercial Muzodajni offer exceeded 100,000. They have a chance to exploit the most innovative offer on the Polish market available with options tailored to the needs of diverse Customers groups: an offer for new Customers of MisPlus, Plus Music Store (Muzyczny Sklep Plusa) – for subscribers of Plus and MixPlus, Music Rental Shop (Muzyczna Wypożyczalnia) – for all Customers of Polkomtel S.A. (including Simplus, 36.6, Sami Swoi) and an offer for all Internet users (not exclusively Customers of Polkomtel S.A.) • MIXPLUS WITH MUZODAJNIA – an offer for new MixPlus users and those extending their agreement, where Customers within obligatory top-up scheme receive access to Muzodajnia. While selecting a fee commitment of PLN 40, PLN 60 or PLN 100 in MixPlus, a Customer may choose one of three options from the Muzodajnia offer: for PLN 5 – 25 songs monthly (20 groszy per a song), for PLN 10 – 100 songs monthly (10 groszy per a song), for PLN 20 – 250 songs monthly (8 groszy for a song, within a fee commitment of only PLN 100). • EXTENSION OF JAVA GAMES OFFER – as a result of continued expansion of the portfolio of content providers and acquiring new brands, the number of games available commercially on the plus.pl portal exceeded 2300. • OCCASIONAL EVENT CENTRES ON THE WAP.PLUS.PL PORTAL – over the year there were several dedicated WAP services launched, collecting information, location services and entertainment content related to holidays, film premieres, sports events and other important events. • MOBILE TELEVISION – in October 2009 a new music video channel on live “eska TV” was inaugurated which delivers music and show business information on a daily basis. Eska TV it is a musical nutshell of the hottest and latest hits on Radio eska and eska TV. 33 • VIDEO – throughout the year few themed video services on WAP were launched with, among others, dedicated contents for motoring enthusiasts as well as a centre for women. • EDUCATIONAL SERVICES – following the commercial success of sound summary of “Lalka” by Bolesław Prus, in December 2009 an innovative product providing an audio summary of books on prescribed reading lists. • “PROMOTION OF YOUTUBE IN PLUS NETWORK” – in August 2009 within wap.plus.pl portal, free of charge access to Youtube service for users of Plus network was launched. The promotional campaign was continued and in November it was supported with a television campaign (within MixPlus acquiring campaign). The promotion provoked a considerable interest among users. • COOPERATION WITH SOCIAL NETWORK SERVICES – in November the WAP service for Association Spring (Stowarzyszenie Wiosna) was launched, in December the cooperation with a Snap shot (Fotka) service started meant to distribute common services for Plus Customers. • ROAD GUIDE (DROGOWSKAŹNIK) – mobile navigation adapter for a wide range of phones available in the Plus offer, enhanced by a navigation service. • PILGRIMAGE – information network service designed to handle pilgrimages. • WHERE IS THE KID – service enabling tracking the child’s location. 34 NEW PRODUCTS AND PRODUCT INNOVATIONS ANNUAL REPORT POLKOMTEL S.A. 2009 Roaming services • PROMOTIONAL ACTIVITIES FOR GPRS IN ROAMING – scaling down prices for use of GPRS roaming in the EU countries (post-paid + prepaid) and opening up opportunities for defining packages as well as bonuses and discounts (post-paid). • INFORMATION ON PRICES WHILE COMPILING PACKET DATA TRANSMISSION IN ROAMING – implementing EU standards to inform first-time users of services based on packet data transmission in roaming, of prices for these services while applying roaming in EU countries. Services for mobile payments and mobile advertising • PAYMENT OF THE RECENT PLUS INVOICE THROUGH MOBILE PAYMENTS – integration of mobile payment system “Pay with your mobile phone” with billing systems supporting Subscribers. • PAY WITH YOUR MOBILE PHONE – mobile payments – providing access to pay parking fees in the following cities: Kraków, Łódź, Ostrów Wlkp., Tarnów, Bydgoszcz, Krosno, Nysa, Grudziądz; – launching promotional top-up for Simplus, 36.6 i Sami Swoi through mobile payments; – payments for public transport tickets in Lublin. In 2009 Plus continued to strengthen its position on the mobile advertisement market, advancing advertising products launched the previous year such as: advertisement in games 35 and applications, advertisement in lookr.tv, display advertisement in SMS gateway or full screen advertisement so-called Spotler on the Plus mobile portal, displayed in between changing sites. In collaboration with Internet advertising broker Advice the requirements were formulated and displaying advertisements on SMS gate commenced. Communication products and those facilitating the use of services • NEW SMS GATEWAY – deployment of a new Internet application (http://sms.plus.pl/) intended for sending text messages in both chargeable and free of charge options. Customers may use an address book, and recipients of text messages from chargeable messages may reply. • Deployment of new version of the system supporting user’s shifting of applications that require logging in the area of plus.pl following single authorization. • MMS/FOTOKARTKA GATEWAY – a new version of application was launched designed to send text messages from the site plus.pl. The new version contains modules: to send MMS messages, to send standard postcards from the Internet site as well as allowing to serve banner ads. • CMIS MT – a new platform was launched enabling a charging toll for received messages (SMS, MMS, wap-push). • BCMS – a new platform was deployed in order to manager and distribute binary content. 36 NEW PRODUCTS AND PRODUCT INNOVATIONS ANNUAL REPORT POLKOMTEL S.A. 2009 • For the post-paid Customer market (individual, business) CLIRBLOCK service was initiated, making it possible to block calls coming from ex-directory numbers by our Subscribers. • MULTIINFO is consistently upgraded in accordance with Customers’ requirements and expectations. In 2009 few crucial solutions were implemented, among others, Reception module intended to provide services to small medical centres, sms2email module or dedicated customized solutions. MultiInfo service was also applied to support such events as: Plus Camerimage 2009 or to select the best MVP player in volleyball World League. • SOCIAL NETWORK SERVICES – HELPLINE FOR CHILDREN AND YOUTH 116 111. Upgrading the platform with new functionalities allow efficient and effective aid for those calling. The platform was extended and equipped new stands for consultants. Tariff products 2009 OFFER FOR INDIVIDUAL CUSTOMERS • SIBERIAN SUPERCARDS (SUPERKARTY SYBERYJSKIE) – a tariff offer for Customers using their own phones, relying on a price list of Siberian Tariffs with an increased number of minutes in subscription. The offer is available for 12 month contracts. • SIBERIAN TARIFFS (TARYFY SYBERYJSKIE) – reduction of the basic rate to all networks (except Play). The rate and promotional period are determined by the subscription amount. The higher the subscription the lower the basic rate and longer the promotional period. Furthermore, the package and promotional period during which the package to be granted for PLN 0 were extended. 37 • RARKA IN PLUS – a simple promotional offer with an increased number of call minutes compared to the price offer and with a rate scaled down up to 29 groszy per minute to all networks. The offer includes subscriptions from PLN 55. • YOUR PROFILE (TWÓJ PROFIL) – a new tariff offer for Simplus brand, characterized by promotional services under the name “profiles”, ensuring adaptation to diverse Customers needs, guaranteeing stability of principles (the Customer keeps profiles for ever) and building perception of price advantage (due to mutual exclusion it was possible to offer a low pricing tariff in certain profiles). • 14.400 SUMMER TALES IN MIXPLUS (14.400 LETNICH GAWĘD W MIXPLUS) – an offer addressed to MixPlus users that holds out the possibility of receiving 14.400 call minutes within the Plus network. OFFER FOR BUSINESS CUSTOMERS • CHEAP TALKATIVE TARIFFS (TARYFY TANIOROZMOWNE) – an offer designed for SOHO market. A solution based on minutes included in the subscription to all national networks. The price offer also involves extra discounts enabling cheap calls to selected numbers, in selected location or within internal numbers of the Customer’s enterprise. • On the basis of Cheap Talkative Tariffs (Taryfy Taniorozmowne) numerous promotions were created bringing such benefits as: toll-free calls to selected numbers within Plus network, extra packages of minutes, discounts for subscription or reduced rates for calls after using up minutes from the subscription. • The offers were also extended by a promotional price plan with a subscription fee of PLN 20 which serves as lowend product. 38 NEW PRODUCTS AND PRODUCT INNOVATIONS ANNUAL REPORT POLKOMTEL S.A. 2009 OFFER FOR PREPAID CUSTOMERS • YOUR PROFILE TARIFF (TARYFA TWÓJ PROFIL) – a new tariff in Simplus allowing creation of own offer through selection of the appropriate Profile (Cheaply to All - Tanio do Wszystkich, Cheaply to Plus -Tanio do Plus-, Testimonies in Plus - Wynurzenia w Plusie-). • NEW PROMOTIONAL SCHEME FOR 36.6 TARIFFS – introduction of 3 new promotional solutions: – 36 numbers in the Chatter Pack (Paczka Gadaczka) service; – Internet packages following top-up; – possibility to activate GG following top-up. • NEW MB PACKAGES – launching 4 new packages for Internet and WAP (25 MB, 100 MB, 250 MB, 500 MB). • In addition in 2009 there was a dynamic advancement in electronic methods on account top-ups for prepaid users. Activities promoting these channels are the following: • Plusoteria – promotion of top-ups through an Internet channel; promotion combined with a competition which featured a car as the main prize, • Impulse promotions of top-ups in a bank channel – promotions for top-ups with attractive top-up bonuses (+20%) for the top-up service carried out by banks. Numerous promotions, of acquisition and retention nature, for prepaid Customers on the following brands: Simplus (promotions Toll-free Number - Darmowy Numer, Testimonies Profile - Profil Wynurzenia, Presents-Prezenty), 36.6 (promotions Esy Darmesy, Chatter Pack - Paczka Gadaczka, 50% more for each top-up) oraz Sami Swoi (promotion Extra zloty after top-up-Extra złotówki po zasileniu). For prepaid users – brands Simplus, MixPlus, 36.6 and Sami Swoi offered over 40 promotions. 39 Technological innovations in IT 40 ANNUAL REPORT POLKOMTEL S.A. 2009 In 2009 IT implemented a series of solutions crucial to our Customers, including: BLACKBERRY: Integrated IT environment for comprehensive management of BlackBerry services was implemented. It enables us to: • reduce costs for supporting BlackBerry through making it available in self-service channels; • significantly increase Customer base using the BlackBerry service due to introduction of the offer to the mass market (individual Customers, small business entities); • restrict manual handling of activation and modification of service thanks to implementation of the fully automated processes for service management; • enable creation of more attractive and economic solutions on the basis of the BlackBerry service, including the possibility of creating dedicated tariffs to the service; • considerably reduce the time necessary for activation/modification of the service. 41 SIEBEL : deployment of the Siebel CRM platform in the area of management of marketing campaigns facilitates: • to standardise the process of management and conducting marketing campaigns; • to further improve Customer service. PLUSCONNECT: As part of the project of PlusConnect deployment the following were implemented: • agreement on internal roaming; • all agreements on international roaming and roaming SMS/MMS; • MVNO platform enabling quick and cost effective implementation of current agreements and their extension; • Protector (Protektor) – a system for secure transfer of data files on settlements; • The cheapest Routing – at present it shores up creation of optimal routing tables for international traffic. 42 INNOWACYJNOŚĆ TECHNOLOGICZNA W IT ANNUAL REPORT POLKOMTEL S.A. 2009 THE IMPLEMENTATION PROCESS WA S HELD CONCURRENTLY WITH PROFOUND SHIFTS ON THE WHOLESALE MARKET AND THEREFORE IT RESULTED IN: • Few amendments to business requirements for interconnect agreements, including by far the most spectacular – introduction of the lump-sum model apart from the classic one; • Process of forming MVNO business models which then prompted the occurrence of numerous extra business requirements. All the new requirements were satisfied, providing our Customers with technologically advanced tools for management of roaming costs and safeguarding the use of mobile services while travelling abroad. 43 Sales 44 ANNUAL REPORT POLKOMTEL S.A. 2009 For sales, 2009 was characterized by a high share of transactions related to agreement extension in the general scale of transactions. In total 5.6m transactions were concluded in order to acquire Customers, including 1.3m transactions for postpaid services and mix., At the same time, Customers extended over 1.8m contracts. The sales network structure for the mass market comprised of channels targeted to acquisition of individual Customers as well as small businesses and providing complex comprehensive services to them, represented by: –26 company stores and 132 shops, – 809 authorised points of sale, – 50 distributors and 29 partners of electronic top-ups (Simplus, Sami Swoi, 36.6). In total the abovementioned sales channels for individual Customers amount to about 40,000 points of sale of starter packages and 70,000 point of sale of top-up cards (reload cards)/electronic top-ups and 408 outlets offering data services. Acquisition and complex servicing of medium and large businesses were performed in a double-track manner – by means of Polkomtel’s S.A. own sales channels, being responsible for cooperation with the largest Customers of Plus network as well as through external sales channels such as: – 573 business consultant agents of Plus, – 44 telemarketing partners. Due to new agreements with partners, Polkomtel S.A. raised its influence over distribution of prepaid cards in local distributors’ networks, thus increasing the significance of direct cooperation at points of sale. 45 Infrastructure 46 ANNUAL REPORT POLKOMTEL S.A. 2009 and network development 1. In 2009 investments made by Polkomtel S.A. into telecommunication networks attained almost PLN 1bn. The major reason behind it was a rapid growth of UMTS network coverage, evolution of the high speed data transmission technology in the UMTS network (HSPA) and related outlay for extension of the transmission network. Within the 10 largest Polish cities and metropolitan areas HSPA+ technology was launched, allowing data transmission and Internet access at speeds up to21 Mb/s to the subscriber’s terminal. Within the remaining coverage area of UMTS network, the HSPA technology guarantees data transmission and Internet access at speeds up to 7.2 Mb/s to the subscriber’s terminal and up to 1.8 Mb/s from the terminal to the network. 47 Towards the end of 2009 the UMTS technology covered 52% population of Poland in over 1800 cities and towns; 44% of Polish population inhabit the areas where the high speed data transmission technologies in UMTS network are applied. In 2009 the breakthrough was in the domain of transport network for such cities as: Wrocław, Poznań, Łódź and Kraków partially as well as in scores of smaller towns through exchange of wireless access to base stations. New wireless systems provide Ethernet transport with data transmission capacity of 32 MB/s to the base station location which has the potential to rise up to 150 Mb/s. This modernization made it possible for Polkomtel S.A. to offer data transmission service at speeds up to 21 Mb/s. Outside the territory where the 3G technology operates, EDGE technology network was extended. EDGE technology is currently available for 90% of the population in Poland, in the area which generates over 95% data transmission traffic. 2. An increase in network capacity for voice services within the year reached 16%, which corresponded to the boost of voice traffic in 2G and 3G network by 7% compared to the previous year. Over the last week of 2009, the network was capable of transferring over 250,000 erlangs during rush hours. The development of the voice core network was based primarily on the 3GPP Release4 (R4) architecture, exploiting IP technology for transport. The share of traffic handled by this infrastructure exceeded 55% in 2009 and will continue 48 INFRASTRUCTURE AND NETWORK DEVELOPMENT ANNUAL REPORT POLKOMTEL S.A. 2009 to increase significantly in the coming years. It is also worth noting that traffic migration from 2G to 3G network increased strongly and towards the end of the year, voice services under the 3G network amounted to 11% of all voice calls in the whole network, and over 20% in cities and conurbations 3. The annual growth of signalling traffic in the network attained 25%. In 2009 the reconfiguration process for the signalling network continued, the process aimed at migration of some traffic (IN-ALU, HLRy, NP) on new signalling nodes. Subsequent MSC were equipped with HW facilitating the exchange of SS7 signalling into IP. The signalling migration from TDM technology onto IP to SGNS was initiated. Four new points of interconnection were activated for signalling exchange with other operators. Alongside the migration of subscribers to R4 and migration of prepaid onto IN-ALUplatform, a predominant carrier for signalling in Core was IP technology with Sigtran protocol; in December 2009, 55% of the signalling traffic was transferred through IP. In terms of Inter-network traffic exchange, towards the end of 2009 the Company had 22 points of exchange of interconnection for international exchange. The migration process of Points of Interconnection (POI) onto R4 began. At the end of 2009 there were 10 POI to mobile networks opened up and a subsequent 2 are being tested. In total at the end of 2009 there were opened up 242 POI and a further 3 were being tested. 49 4. The distinct boom of the network into packet transport technology and packet data transmission in the investments was determined by the demand of mobile users to access high-speed data transmission technologies, and by continued voice traffic migration to the 3GPP Release4 architecture. Users of data transmission services have sent 625 terabytes (TB) in December 2009, and the upstream of Internet traffic reached 3.7 Gbit/s during the rush hours. In absolute values this means that the monthly volume increased by as much as 295 TB. In this way the annual growth dynamic trend held on a level slightly outperforming the previous year. In order to ensure service support of future traffic, with a growth rate over 200% per annum, an innovative solution was implemented based on Release7 of the 3GPP architecture, which allowed optimising the process of package data transmission through the packet network, the so-called “Direct Tunel”. This innovation represents the initial step for the network architecture migration to move into 4th generation technology architecture. 50 INFRASTRUCTURE AND NETWORK DEVELOPMENT ANNUAL REPORT POLKOMTEL S.A. 2009 5. In 2009 as in previous years the construction of the stations within the process “Turn Key” was being continued in cooperation with external partners. The plan was 100% achieved. The year hit a record in terms of launching 3G stations – 1118 new stations were made available for commercial use, that is almost 40% of all 3G stations which operated in the network at the end of 2009. Towards the end of the year, the Company possessed 2889 3G stations in total transmitting the traffic. Additionally, 50 sites were selected for the project of sharing locations with Orange. 6. For the long term prospects of the transport networks, the capacity of the DWDM systems was augmented, which then contributed to enhance the security of the network and safeguard demand for increasing capacity in connection with a significant traffic growth – especially data transmission. In 2009 transport resources were markedly optimized in its access and aggregation area through wide-range application of band oversubscription in an ATM aggregated network. The optimization triggered radical growth, from the perspective of numerous stations, reaching as much as 400% of the maximum capacity from the 3F station, which directly entails maximum possible speed for data transmission obtained by our Customers. 51 Employees 52 ANNUAL REPORT POLKOMTEL S.A. 2009 The level of employment in Polkomtel S.A. as of 31 December 2009 amounted to 3,652 permanent employees (calculated as full-time equivalents) and the average of 160 temporary employees over the year which makes 3,812 employees in total. Full-time and temporary employees 516 513 3387 2005 400 157 160 3396 3355 3602 3652 2006 2007 2008 2009 A AVERAGE NUMBER OF TEMPORARY EMPLOYEES IN A YEAR NUMBER OF FULL-TIME EQUIVALENTS 53 EMPLOYMENT STRUCTURE BY SEX AND AGE The average age in the Company as of 31 December 2009 was 33.4 yrs. For women the average age was 32.2 yrs, for men 34.6 yrs. Average age of employees in 2007-2009 32.4 2007 8,49 32.3 8,5 2008 33.4 2009 Women constituted 47.8% (1,905) of all employees, which means that the proportion of women employees in the Company declined compared to the previous year, when Polkomtel S.A. employed 1,889 women (48.41% of employees). The share of men increased from 51.59% (2,013) in 2008 to 52.2% (2,080 men) in 2009. 54 EMPLOYEES ANNUAL REPORT POLKOMTEL S.A. 2009 EMPLOYMENT STRUCTURE BY JOB SENIORITY In the structure of Polkomtel S.A. 35% of all employees are those with employment term shorter than two years. Employees with employment term from 3 till 5 years constitute 16% of all employed, the same percentage regards employees with job seniority from 6 till 8 years. Those employed over 8 years represent 33% of all employees. Job seniority in proportion to all employees 0 – 1 YEARS – 10% 1 – 2 YEARS – 25% 3 – 5 YEARS – 16% 6 – 8 YEARS – 16% 9 – 13 YEARS – 33% Average employment term for Polkomtel S.A. employees amounted to 6 years. 55 EMPLOYMENT STRUCTURE BY EDUCATION 49.03% of the Company employees have higher education (1,954 persons) and 49.28% – secondary and postsecondary education (1,964 persons). DEVELOPMENT OF EMPLOYEES In 2009 611 persons were promoted within the Company. This number refers to both vertical and horizontal promotions. Such a high number of promotions is a consequence of a deliberate policy towards employees. This policy serves to motivate and retain talent within the company. Recruitment process and internal promotions EXTERNAL RECRUITMENT – 39% INTERNAL PROMOTIONS – 61% 56 EMPLOYEES ANNUAL REPORT POLKOMTEL S.A. 2009 TRAINING In 2009 employees of Polkomtel S.A. were trained during 15.535 training days. There were 4.29 training days per employee, including 1.65 days of English language course. Total number of customers per one employee (FTE) 2318 3072 3879 3855 3683 2005 2006 2007 2008 2009 The ratio of the total number of Customers to the number of employees (full time and temporary) in Polkomtel S.A. amounted to 3,683 at the end of 2009, which constitutes a decline by 4.46% in relation to the 2008 ratio. 57 Group of companies In 2009 Polkomtel S.A. held shares in the following commercial law entities: 1) Nordisk Polska Sp. z o.o. (hereafter referred to as Nordisk), having its registered office in Warsaw (100% shares owned by Polkomtel S.A.); 2) Liberty Poland S.A. (hereafter referred to as Liberty) having its registered office in Bytom (ownership structure: Polkomtel S.A. –38.42% shares and Telera Holding B.V. – 61.58% shares). 3) Mobile TV Sp. z o.o. (hereafter referred to as Mobile TV) having its registered office in Warsaw, owned in equal parts (25% each), by the largest mobile operators on the Polish market: Polska Telefonia Cyfrowa Spółka z ograniczoną odpowiedzialnością, Polska Telefonia Komórkowa – Centertel Spółka z ograniczoną odpowiedzialnością, P4 Spółka z ograniczoną odpowiedzialnością and Polkomtel. 58 ANNUAL REPORT POLKOMTEL S.A. 2009 NORDISK POLSKA SP. Z O.O. In 2009 the company was selling fixed line and Internet access services, increasingly boosting its sales volume. LIBERTY POLAND S.A . In 2009 Liberty, being a long-standing partner of Polkomtel S.A., was consistently extending their network of telecommunication services sales and authorized 12 new points of sale. As a result of these measures there were 146 shops operating in the Liberty network at the end of 2009. MOBILE TV SP. Z O.O. Mobile TV Spółka z ograniczoną odpowiedzialnością was set up on 29 December 2008 by four leading mobile operators including Polkomtel S.A., in order to participate in the tender to reserve the frequency for mobile television DVB-H. On 15 January 2009 Mobile TV submitted its offer for frequency reservation for the purpose of DVB-H. On 6 March 2009 the President of the Office of Electronic Communications (UKE) announced the results of the tender as well as awarding entity – the company Info-TV-FM, which was granted the frequency reservation on 26 June 2009. In the situation lacking the possibility for connection with little chance of achieving the goal for which Mobile TV was established, the company shareholders made a decision to pursue new projects to be carried out on the basis on the existing company. It should be underlined that all shareholders reaffirm their intention to continue the cooperation and exploit Mobile TV for activities which would not stand a chance of being accomplished without complete involvement of four Polish operators. 59 Operating results and financial statements 60 ANNUAL REPORT POLKOMTEL S.A. 2009 CUSTOMER BASE The total base of customers of Plus mobile services at the end of 2009 amounted to 14,038,000. This constitutes a decline by 3% in relation to the level as at the end of 2008. The contract customer base (subscribers and MixPlus users with a contract) increased to 7,240,000 and the base of prepaid users dropped to 6,798,100,. This constitutes an increase of 5.6% and decline by 10.8%, respectively. In 2009 as in previous years, most – that is 79% – of newly acquired Customers were users of prepaid services. However, owing to the high monthly average churn rate of 5% (in 2008 – 5.5%) in this group, a net decrease by 821,300,000 was reported, whereas the contract Customer base in 2009 went up by 385,600 it was the contract customers who accounted for the majority of net increase (newly acquired minus churn) in 2008. CHURN RATE In 2009 monthly average churn rate in Plus network declined to the level of 2.9% compared with the churn rate in the preceding year amounting to 3.1%. This was due to a lower outflow of Customers from the prepaid base. AVERAGE REVENUE PER USER The average revenue per user (ARPU) in 2009 totalled to PLN 43.2 monthly, that is PLN 3.8 less compared to PLN 47 in 2008. A decrease in ARPU refers to both prepaid Customers as well as contract ones. Decline of ARPU in the segment of prepaid Customers in 2009 to the level of PLN 16.4 (PLN 18.3 reported in 2008) is chiefly caused by a fall in MTR rates for incoming calls (inter-operator settlements) as well as by pricing pressure from P4. The actions mentioned triggered a decline in revenues from voice services use per call minute of 23%. The effect was partially offset by an increase in average voice services use (by 22%). 61 In 2009 ARPU for contract Customers amounted to PLN 71.3 which constituted a decrease by 10% compared to the preceding year. The decline of ARPU was effected by the introduction of: lower MTR rates, new tariffs and promotions offering ever-increasing favourable prices for telecommunication services. FINANCIAL STATEMENTS FINANCING OF OPERATIONS In 2009 Polkomtel S.A. financed its operations both with its own funds as well as with external funds in the form of bank loans and a bond issue scheme. In 2009 the Company paid out the dividend for 2008, in two instalments, in an aggregated amount of PLN 1,250.3 million. In addition the Company paid out in December 2009 an advanced dividend for 2009 to the amount of PLN 464.3 million. The total debt resulting from bank loans and bond issues as of the end of 2009 reached PLN 2,2021 million. At the end of 2009, the Debt/EBITDA ratio amounted to 0.78 which indicates an increase compared to 2008 when it amounted to 0.45. In order to finance its operations, in 2009 Polkomtel S.A. used three revolving loans, four overdrafts and bond issue scheme. The crucial source of financing, which at the end of 2009 were fully taken up, was a revolving loan granted under the agreement of 6 July 2006, with a group of the following banks: Bank BPH S.A., Bank Handlowy w Warszawie S.A., Bank Pekao SA, BNP Paribas/BNP Paribas S.A. Branch in Poland, ING Bank Śląski S.A./ING Bank N.V., J. P. Morgan PLC/J. P. Morgan Europe Limited, Powszechna Kasa Oszczędności Bank Polski S.A., Societe Generale S.A. Branch in Poland and Nordea Bank Polska S.A, which joined the group of financing banks in 2007. This loan, granted for the amount of PLN 1,600 million, is allocated to the general needs of the Company. The total repayment of the loan should take place within five years following the date of signing the loan agreement, i.e. in July 2011. 62 1 This item includes the capital increased by accrued interests and commissions OPERATING RESULTS AND FINANCIAL STATEMENTS ANNUAL REPORT POLKOMTEL S.A. 2009 The remaining two revolving loans, also fully taken up at 31 December 2009 represent the loans regulated by bilateral agreement with Nordea Bank Polska S.A. for the amount PLN 140 million and Bank of Tokyo Mitsubishi for the amount of PLN 100 million. In 2009 Polkomtel S.A. used also overdrafts. The debt in short-term overdraft lines amounted to PLN 450 million as of the end of the year. In order to manage the liquidity gaps flexibly, Polkomtel S.A. used the five-year bond issue scheme with the maximum debt set at of PLN 1,000 million, organised in 2005. Owing to a significant deterioration of conditions on the commercial papers market, the scheme was applied to a minimal extent and therefore the face value of issued bonds amounted to PLN 75 million as of 31 December 2009. RESULTS ON FINANCIAL ACTIVITIES In 2009 the balance on financial operations was negative and amounted to PLN 146.2 million. A significant component in these costs, amounting to PLN 42 million, was the interest presented as discount related to the valuation of the UMTS license. The financial activity involved interest expenses and commissions on contracted loans, amounting to PLN 58.8 million, which compared to the previous year (90.2 million), is a result of a decrease in the average level of debt and a decrease in short-term interest rates. The fact that the Polish Zloty continued to strengthen influenced the results in the form of foreign exchange rate gains of PLN 34.3 million. Hedging operations, including realized and unrealized gains and losses on derivatives together with paid and received interest on these instruments, had negative results to the amount of) PLN 47.2 million. A major component in these costs involved a negative change in valuation of derivatives resulting from significant appreciation of the national currency. The financial risk is subject to hedging principles amended by the Supervisory Board in 2009 and set forth in the document “Financial Risk Management Policy”. The activities in this area are governed by detailed procedures which allow effective measurement and hedging against market risks. 63 Selected financial data 64 ANNUAL REPORT POLKOMTEL S.A. 2009 CONSOLIDATED PROFIT AND LOSS ACCOUNT Net sales and sales equivalent Profit on sale Profit on operation Gross profit Net profit 7,773,231,409.35 1,275,516,261.81 1,373,830,830.28 1,224,668,998.09 976,674,856.80 CONSOLIDATED BALANCE SHEET Non- current assets Current assets Total assets Shareholders’ equity 7,374,254,566.56 1,363,997,005.21 8,738,251,571.77 3,204,922,290.45 CONSOLIDATED CASH FLOW Operations (plus) Investments (minus) Financial operations (minus) OTHER INFORMATION Number of users (31 December 2009) Number of employees (December 2009) including 2 persons on foreign contract Investments in fixed asset Share capital SELECTED FINANCIAL RATIO Fixed Asset Turnover (Sales/Assets) Net Return on Sales (Net result/Sales) Return on Equity (Net result/Equity) Liquidity ratio (Current assets – short-term prepayments)/ short-term liabilities Increased liquidity ratio (Current assets – short-term prepayments-inventories)/ short-term liabilities 2,526,824,705.07 (1,345,262,858.41) (1,181,585,824.25) 14,038,017 3,602.1 1,245,948,343.31 2,050,000,000.00 89% 12.6% 30.5% 0.3 0.3 65 Independent Auditor’s report 66 ANNUAL REPORT POLKOMTEL S.A. 2009 TO THE SHAREHOLDERS AND SUPERVISORY BOARD OF THE POLKOMTEL S.A . We have audited the consolidated financial statements of the Polkomtel S.A. Group, whose Parent Company is Polkomtel S.A. with its registered office in Warsaw, ul. Postępu 3, containing: introduction to the consolidated financial statements, consolidated balance sheet as at 31 December 2009, consolidated profit and loss account, the statement of changes in consolidated shareholders’ equity, the consolidated cash flow statement for the financial year beginning on 1 January 2009 and ending on 31 December 2009 with extra information and explanatory notes. On 27 April we issued an unqualified opinion on the full financial statements. The consolidated financial statement audited by us was the basis for drawing up the accompanying abridged consolidated financial statements. Preparation of the accompanying consolidated financial statements in compliance with applicable law is the responsibility of the Management Board of the Parent Company. Furthermore, the Management Board and members of the Supervisory Board are obliged to ensure that the consolidated financial statements complied with the requirements provided for in the Accounting Act of 29 September 1994 (Dziennik Ustaw – Journal of Laws 2009 No. 152, Item 1223, as amended) Our responsibility was to ensure the compliance of the abridged consolidated financial statements with the full version of the consolidated financial statements. In our opinion the accompanying abridged consolidated financial statements were prepared in all material aspects in accordance with the full version of the consolidated financial statements for the financial year ended 31 December 2009. The full version of the consolidated financial statements which was subject to our examination contains notes, not being included in the accompanying abridged consolidated financial statements. Maria Rzepnikowska Certified Auditor conducting the audit No. 3499 Warsaw, 27 April 2010 Persons representing the entity entity authorized to audit financial statements, entered in the list of authorized entities maintained by the National Council of Certified Auditors (KRBR) under registration number 73 67 Assets as at A . NON- CURRENT ASSETS 1. Intangible assets 1.1 Research & development costs 1.2 Goodwill 1.3 Other intangible assets 1.4. Prepaid intangible assets 2. Goodwill in subordinate entities 2.1. Goodwill - subsidiaries 2.2. Goodwill – joint subsidiaries 3. Tangible assets 3.1. Completed tangible asset 3.1.1. Lands (including right of perpetual usufruct) 3.1.2. Buildings. premises and civil engineering facilities 3.1.3. Technical equipment and machinery 3.1.4. Means of transport 3.1.5. Other tangible assets 3.2. Assets under construction 3.3. Advances on assets under construction 4. Non-current receivables 4.1. From affiliates 4.2. Other 5. Non-current investments 5.1. Real estate 5.2. Intangible assets 68 31.12.2009 31.12.2008 7,374,254,566.56 7,350,346,412.08 2,148,434,212.22 0.00 0.00 1,984,248,270.03 164,185,942.19 2,221,363,069.22 0.00 0.00 2,145,500,993.31 75,862,075.91 14,969,422.73 14,969,422.73 0.00 0.00 0.00 0.00 4,883,803,595.99 4,358,773,555.83 31,925,713.24 90,856,563.30 4,177,475,747.60 18,272,720.50 40,242,811.19 524,789,619.83 240,420.33 4,860,725,848.43 4,096,340,077.50 30,902,825.48 111,703,692.47 3,882,824,601.64 17,682,503.53 53,226,454.38 764,158,211.96 227,558.97 0.00 0.00 0.00 0.00 0.00 0.00 17,191,407.74 0.00 0.00 20,504,853.43 0.00 0.00 CONSOLIDATED BALANCE SHEET ANNUAL REPORT POLKOMTEL S.A. 5.3. Non-current financial assets 17,191,407.74 5.3.1. In subsidiaries and joint subsidiaries which are not valued using capital consolidation method or proportional consolidation method 0.00 5.3.1.1. Shares 0.00 5.3.1.2. Other securities 0.00 5.3.1.3. Loans 0.00 5.3.1.4. Other 0.00 5.3.2. In subsidiaries and joint subsidiaries valued using equity method 17,081,407.74 5.3.2.1. Shares 17,081,407.74 5.3.2.2. Other securities 0.00 5.3.2.3. Loans 0.00 5.3.2.4. Other 0.00 5.3.3. In other entities 110,000.00 5.3.3.1. Shares 110,000.00 5.3.3.2. Other securities 0.00 5.3.3.3. Loans 0.00 5.3.3.4. Other 0.00 5.4. Other long term investments 0.00 6. Non-current prepayments 6.1. Deferred tax 6.2. Other prepayments B. CURRENT ASSETS 309,855,927.88 308,413,449.42 1,442 ,478.46 2009 20,504,853.43 0.00 0.00 0.00 0.00 0.00 20,504,853.43 20,504,853.43 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 247,752,641.00 244,993,135.06 2,759,505.94 1,363,997,005.21 1,566,357,031.76 1. Inventory 1.1. Materials 1.2. Semi-finished products and work in progress 1.3. Finished product 1.4. Goods 1.5. Advances on deliveries 131 932 087,71 2,611,121.21 0.00 0.00 129,320,966.50 0.00 192 777 185,07 3,166,872.17 0.00 0.00 189,610,312.90 0.00 2. Current receivables 2.1. From affiliates 2.1.1. Trade receivables falling due: 2.1.1.1. Up to 12 months 2.1.1.2. After more than 12 months 2.1.2. Other 839,601,735.21 44,197,175.47 44,197,175.47 44,197,175.47 0.00 0.00 893,160,754.49 33,844,655.84 33,844,655.84 33,844,655.84 0.00 0.00 69 2.2. Receivables from other entities 2.2.1. Trade receivables falling due: 2.2.1.1. Within 12 months 2.2.1.2. After more than 12 months 2.2.2. Taxes. subsidies. social security. health insurance and other benefits receivables 2.2.3. Other 2.2.4. Receivables in court 795,404,559.74 720,803,790.87 720,803,790.87 0.00 859,316,098.65 814,261,519.32 814,261, 519.32 0.00 59,663,124.07 14,937,644.80 0.00 27,275,047.66 17,779,531.67 0.00 3. Current investments 3.1. Current financial assets 3.1.1. In subsidiaries and joint subsidiaries 3.1.1.1 Shares 3.1.1.2. Other securities 3.1.1.3. Loans 3.1.1.4. Other 3.1.2. In associates 3.1.2.1 Shares 3.1.2.2. Other securities 3.1.2.3. Loans 3.1.2.4. Other 3.1.3. In other entities 3.1.3.1. Shares 3.1.3.2. Others securities 3.1.3.3. Loans 3.1.3.4. Other 3.1.4. Cash. cash equivalents and other monetary assets 3.1.4.1. Cash in hand and cash at bank 3.1.4.2. Other cash and cash equivalents 3.1.4.3. Other monetary assets 3.2. Other current investments 38,405,448.57 23,933,292.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12 ,594.72 12 ,594.72 0.00 0.00 0.00 23,920,697.48 23,920,697.48 0.00 0.00 14,472,156.37 95,433,881.80 23,944,675.07 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 23,944,675.07 22,776,856.81 1,167,818.26 0.00 71,489,206.73 354,057,733.72 384,985,210.40 4. Current prepayments TOTAL ASSETS 70 8,738,251,571.77 8,916,703,443.84 CONSOLIDATED BALANCE SHEET ANNUAL REPORT POLKOMTEL S.A. 2009 EQUITY AND LIABILITIES as at A . EQUITY 1. Share capital 31.12.2009 31.12.2008 3,204,922,290.45 3,942,867,433.65 2,050,000,000.00 2,050,000,000.00 2. Called-up share capital (negative value) 0.00 0.00 3. Equity shares (negative value) 0.00 0.00 642,186,886.54 533,459,365.80 0.00 0.00 385,547.11 314,058.56 7. Exchange rates differences 0.00 0.00 8. Retained earnings (loss) 0.00 0.00 976,674,856.80 1,359,094,009.29 10. Deductions from net profit during the accounting year (negative value)(464,325,000.00) 0.00 B. MINORITY INTEREST 0,00 0,00 C . NEGATIVE GOODWILL IN SUBORDINATE ENTITIES 0,00 0,00 1. Negative goodwill – subsidiaries 0.00 0.00 2. Negative goodwill – joint subsidiaries 0.00 0.00 4. Supplementary capital 5. Revaluation capital 6. Other reserve capital 9. Net profit (loss) 71 D. LIABILITIES AND PROVISIONS FOR LIABILITIES 1. Provisions for liabilities 1.1. Deferred tax provision 1.2. Pension and other benefits provision 1.2.1. Non-current 1.2.2. Current 1.3. Other provisions 1.3.1. Non-current 1.3.2. Current 603,191,449.17 347,589,260.47 5,516,964.26 5,300,343.22 216,621.04 250,085,224.44 41,394,871.91 208,690,352.53 571,815,031.05 348,420,546.82 4,547,052.94 4,335,320.19 211,732.75 218,847,431.29 50,720,602.33 168,126,828.96 2. Non-current liabilities 2.1. To affiliates 2.2. To other entities 2.2.1. Borrowings 2.2.2. Issue of debt securities 2.2.3. Other financial liabilities 2.2.4. Other 855,226,307.60 0.00 855,226,307.60 0.00 0.00 0.00 855,226,307.60 885,567,824.98 0.00 885,567,824.98 0.00 0.00 0.00 885,567,824.98 2 897,735,203.31 640,943.41 640,943.41 640,943.41 0.00 0.00 2,892,698,104.57 2,127,624,141.30 74,419,591.66 38,203,311.91 467,362,938.18 467,362,938.18 0.00 2,463,241,959.09 762,122.05 762,122.05 762,122.05 0.00 0.00 2,457,607,897.74 1,573,303,173.89 0.00 3,167,429.87 590,049,968.32 590,049,968.32 0.00 3. Current liabilities 3.1. To affiliates 3.1.1. Trade payables falling due: 3.1.1.1. within 12 months 3.1.1.2. after more than 12 months 3.1.2. Other 3.2. To other entities 3.2.1. Borrowings 3.2.2. Issue of debt securities 3.2.3. Other financial liabilities 3.2.4. Trade payables falling due: 3.2.4.1. Within 12 months 3.2.4.2. After more than 12 months 72 5,533,329,281.32 4,973,836,010.19 CONSOLIDATED BALANCE SHEET ANNUAL REPORT 3.2.5. Advances on deliveries received 3.2.6. Promissory notes 3.2.7. Taxes. custom duties. insurance and other benefits 3.2.8. Payroll 3.2.9. Other 3.3. Special funds 4. Accruals and deferred income 4.1. Negative good will 4.2. Other accruals and deferred income 4.2.1. Non-current 4.2.2. Current TOTAL EQUITY AND LIABILITIES POLKOMTEL S.A. 2009 0.00 0.00 105,187,958.29 11,639.43 79,888 ,523.80 4,396,155.33 0.00 0.00 210,650,640.17 11,639.43 80,425,046.06 4,871,939.30 1,177,176,321.24 0.00 1,177,176,321.24 0.00 1,177,176,321.24 1,053,211,195.07 0.00 1,053,211,195.07 0.00 1,053,211,195.07 8,738,251,571.77 8,916,703,443.84 73 for the year 01.01.2009 31.12.2009 01.01.2008 31.12.2008 I. SALES AND EQUIVALENT INCOME . INCLUDING: 7,773,231,409.35 8,482,085,193.95 - from related entities which are not covered by consolidation methods or proportional consolidation method 325,790,265.78 200,688,718.22 1. Net sales from products 7,634,057,136.68 8,318,371,507.60 2. Movement in products 0.00 0.00 3. Work performed by the enterprise and capitalised 0.00 0.00 4. Net sales from goods and materials 139,174,272.67 163,713,686.35 II. OPERATING EXPENSES 1. Depreciation and amortization 2. Material and energy used 3. Third party services 4. Taxes and charges, including: 4.1. Excise duty 5. Salaries 6. Social security and other benefits 7. Other 8. Value of goods and materials sold 6,497,715,147.54 6,623,637,994.96 1,297,390,336.08 1,211,220,245.29 91,248,438.00 74,194,047.65 2,821,985,237.13 3,111,271,298.18 105,714,772.09 58,228,663.78 0.00 0.00 377,181,925.75 352,567,909.97 67,807,311.34 65,414,293.60 281,269,520.67 303,390,723.33 1,455,117,606.48 1,447,350,813.16 III. PROFIT (LOSS) ON SALES (I-II) 1,275,516,261.81 1,858,447,198.99 IV. OTHER OPERATING INCOME 1. Profit on the disposal of fixed assets 2. Grants 3. Other 384,042,166.37 592,427.01 0.00 383,449,739.36 333,640,069.59 259,705.56 0.00 333,380,364.03 V. OTHER OPERATING EXPENSES 1. Loss on disposal of non-financial non-current assets 2. Revaluation of non-financial assets 3. Other 285,727,597.90 0.00 139,288,205.02 146,439,392.88 305,640,324.14 0.00 93,858,803.55 211,781,520.59 VI. PROFIT (LOSS) ON OPERATIONS (III+IV-V) 74 VII. FINANCIAL INCOME 1. Dividends and interest in profits received, including: - from affiliates 2. Interests received. including: - from affiliates 1,373,830,830.28 1,886,446,944.44 113,092,357.52 0.00 0.00 55,604,071.34 0.00 138,431,684.85 0.00 0.00 37,357,538.98 0.00 CONSOLIDATED PROFIT AND LOSS ACCOUNT ANNUAL REPORT 3. Profit on disposal of investment 4. Revaluation of investments 5. Other VIII. FINANCIAL EXPENSES 1. Interest for: - affiliates 2. Loss on disposal of investment 3. Revaluation of investment 4. Other IX . PROFIT (LOSS) ON SALES OF ALL OR PART OF SHARES IN SUBSIDIARY ENTITIES X . PROFIT (LOSS) ON BUSINESS (VI+VII-VIII+/-IX) XI. EXTRAORDINARY ITEMS (XI.1.-XI.2.) 1. Profits 2. Losses XII. WRITE OFF OF GOODWILL 1. Write off of goodwill – subsidiaries 2. Write off of goodwill – joint subsidiaries XIII. WRITE OFF OF NEGATIVE GOODWILL 1. Write off of negative goodwill – subsidiaries 2. Write off of negative goodwill – joint subsidiaries XIV. PROFIT (LOSS) FROM SHARES IN SUBSIDIARY ENTITIES VALUED USING THE EQUITY METHOD XV. GROSS PROFIT (LOSS) (X+/-XI-XII+XIII+/-XIV) XVI. INCOME TAX POLKOMTEL S.A. 2009 18,233,102.39 1,166,388.09 38,088,795.70 12,319,977.48 80,006,786.23 8,747,382.16 259,337,313.16 132,497,336.33 4,695.79 0.00 92,040,337.68 34,799,639.15 349,292,951.51 169,221,099.38 0.00 0.00 10,900,000.00 169,171,852.13 0,00 0,00 1,227,585,874.64 1,675,585,677.78 0,00 0.00 0.00 0,00 0.00 0.00 516,186.99 516,186.99 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (2,400,689.56) 0.00 1,224,668,998.09 1,675,585,677.78 247,994,141.29 316,491,668.49 XVII. OTHER COMPULSORY PROFIT DECREASE (LOSS INCREASE) 0.00 0.00 XVIII. MINORITY PROFIT (LOSS) 0.00 0.00 XIX . NET PROFIT (LOSS) (XV-XVI-XVII+/-XVIII) 976,674,856.80 1,359,094,009.29 75 for the period 01.01.2009 31.12.2009 01.01.2008 31.12.2008 I. EQUITY AT THE BEGINNING OF THE PERIOD (OPENING BALANCE) 3,942,867,433.65 3,516,318,424.36 a) changes in accounting principles (policy) 0.00 0.00 b) adjustments of errors 0.00 0.00 I.A . ADJUSTED EQUITY AT THE BEGINNING OF THE PERIOD (OPENING BALANCE) 3,942,867,433.65 3,516,318,424.36 1. Share capital at the beginning of the period 2,050,000,000.00 2,050,000,000.00 1.1. Change in share capital 0.00 0.00 a) increase 0.00 0.00 b) decrease 0.00 0.00 1.2. Share capital at the end of the period 2,050,000,000.00 2,050,000,000.00 2. Called-up share capital at the beginning of the period 2.1. Change in called-up share capital a) increase b) decrease 2.2. Called-up share capital at the end of the period 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3. Equity shares at the beginning of the period a) increase b) decrease 3.1. Equity shares at the end of the period 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 533,459,365.80 108,727,520.74 108,727,520.74 0.00 108,727, 520.74 0.00 0.00 0.00 642,186,886.54 424,904,956.67 108,554,409.13 108,554,409.13 0.00 108,554,409.13 0.00 0.00 0.00 533,459,365.80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4. Supplementary capital at the beginning of the period 4.1. Changes in supplementary capital a) increase (by virtue of) - share premium - distribution of profits (statutory) - distribution of profits (above statutory minimum value) b) decrease (by virtue of) - loss coverage 4.2. Supplementary capital at the end of the period 76 5. Revaluation reserve at the beginning of the period – changes in accounting principles (policy) 5.1. Changes in revaluation reserve (fund) a) increase b) decrease (by virtue of) - disposal of tangible assets STATEMENT OF CHANGES IN CONSOLIDATED EQUITY ANNUAL REPORT 5.2. Revaluation reserve (fund) at the end of the period 0.00 314,058.56 71,488.55 71,488.55 71,488.55 0.00 385,547.11 183,353.54 130,705.02 130,705.02 130,705.02 0.00 314,058.56 0.00 0.00 1,359,094,009.29 1,359,094,009.29 0.00 0.00 1,359,094,009.29 0.00 0.00 1,359,094,009.29 108,727,520.74 71,488.55 0.00 1,250,295,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,041,230,114.15 1,041,230,114.15 0.00 0.00 1,041,230,114.15 0.00 0.00 1,041,230,114.15 108,554,409.13 130,705.02 0.00 932,545,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 512,349,856.80 976,674,856.80 0.00 (464,325,000.00) 1,359,094,009.29 1,359,094,009.29 0.00 0.00 7. Foreign exchange differences on translation of foreign operation 9. Net result a) net profit b) net loss c) deductions from profit II. EQUITY (FUND) AT THE END OF THE PERIOD (CLOSING BALANCE) 2009 0.00 6. Other reserves (funds) at the beginning of the period 6.1. Changes in other reserves a) increase (by virtue of) - distribution of profit b) decrease 6.2. Other reserves (reserve funds) at the end of the period 8. Retained earnings (loss) at the beginning of the period 8.1. Retained earnings years at the beginning of the period a) changes in accounting policy b) adjustments of errors 8.2. Adjusted retained earnings at the beginning of the period a) increase (by virtue of) - distribution of retained profits b) decrease (by virtue of) - allocation to supplementary capital - allocation to other reserve - coverage of retained loss - dividend 8.3. Retained earnings at the end of the period 8.4. Retained loss at the beginning of the period a) changes in accounting principles (policy) b) adjustments of errors 8.5. Adjusted retained loss at the end of the period a) increase (by virtue of) - carryforward of retained loss for coverage b) decrease 8.6. Retained loss at the end of the period 8.7. Retained profit (loss) at the end of the period POLKOMTEL S.A. 3,204,922,290.45 3,942,867,433.65 77 for the period 01.01.2009 31.12.2009 01.01.2008 31.12.2008 A . C A S H F L O W F R O M O P E R AT I O N S I. NET PROFIT (LOSS) II. TOTAL ADJUSTMENTS 1. Minority profit (loss) 1,550,149,848.27 1,232,405,003.33 0.00 0.00 2,400,689.56 0.00 1,297,390,390.18 1,212,297,786.66 516,186.99 0.00 5. Write off of negative goodwill 0.00 0.00 6. Exchange rate (gains) losses 0.00 0.00 7. Interest and shares in profits (dividends) 59,822,097.35 86,319,092.33 8 Profit (loss) on investment 84,668,848.75 (75,062,844.87) 9. Changes in provision 43,335,838.82 102,368,822.35 10. Changes in inventories 61,255,324.13 5,917,162.54 11. Changes in receivable 54,073,552.75 (43,927,513.38) (148,728,632.74) (26,062,690.95) 2. Profit (loss) on shares in entities valued using the equity method 3. Depreciation 4. Write of goodwill 12. Changes in current payables (other than overdrafts and loans) 78 976,674,856.80 1,359,094,009.29 CONSOLIDATED CASH FLOW STATEMENT ANNUAL REPORT 13. Changes in prepayments and accruals 14. Other adjustments from operations III. NET CASH FLOW FROM OPERATIONS (A .I.+/- A .II.) POLKOMTEL S.A. 2009 95,415,552.48 (29,444,811.35) 0.00 0.00 2,526,824,705.07 2,591,499,012.62 77,715,169.97 88,881,963.20 8,291,022.73 7,371,766.80 0.00 0.00 2,174,144.22 2,174,144.22 0.00 0.00 0.00 0.00 0.00 0.00 67,250,003.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 81,510,196.40 B. CA SH FLOW FROM INVESTMENTS I. REVENUES 1. Disposal of intangible assets and tangible non-current asset 2. Disposal of investment into real estate and intangible asset 3. From financial assets including: a) in entities valued using the equity method b) other - disposal of financial assets - dividends and shares in profits - payment of granted long term loans - interest - other revenues from financial assets 4. Other revenues from investment II. EXPENSES 1. Acquisition of intangible assets and tangible non-current asset 2. Investments in real property and intangible asset (1,422,978,028.38) (1,623,344,872.46) (1,347,917,321.85) (1,526,140,300.35) 0.00 0.00 79 3. On financial assets, including: a) in entities valued using the equity method b) other - acquisition of financial asset - long-term loans extended (11,483,488.75) (95,000,00) (11,388,488.75) 0.00 (11,388,488.75) (31,404,853.43) (31,404,853.43) 0.00 0.00 0.00 4. Dividends and other shares in profit distributed among minority shareholders 0.00 0.00 5. Other investment expenses (53,013,813.56) (65,799,718.68) 6. Net expenses for acquisition of subsidiaries (10,563,404.22) 0.00 III. NET CASH FLOW FROM INVESTMENTS (B.I.- B.II.) (1,345,262,858.41) (1,534,462,909.26) C . C A S H F L O W F R O M F I N A N C I A L O P E R AT I O N I. PROCEEDS 1,948,174,354.54 3,146,918,742.74 0.00 0.00 1,857,511,639.54 1,823,211,874.10 3. Issue of debt securities 90,662,715.00 1,323,706,868.64 4. Other financial revenue 0.00 0.00 1. Net proceeds from issue of shares and other equity instruments, and additional payments to capital 2 Loans and overdrafts II. EXPENSES (3,129,760,178.79) (4,201,581,762.38) 1. Acquisition of equity shares 2. Dividend and other payments to owner 0.00 0.00 (1,702,346,780.63) (938,039,550.60) 3. Payments to owners by virtue of distribution of profit other than dividend 80 0.00 0.00 CONSOLIDATED CASH FLOW STATEMENT ANNUAL REPORT 4. Repayments of credit and loan POLKOMTEL S.A. 2009 (1,347,774,518.25) (1,400,000,000.00) (20,000,000.00) (1,778,000,000.00) 6. Other financial liabilities 0.00 0.00 7. Financial leasing payments 0.00 0.00 (59,638,879.91) (85,542,211.78) 0.00 0.00 5. Redemption of debt securities 8. Interest 9. Other financial expense III. NET CASH FLOW FROM FINANCIAL OPERATIONS (C .I. – C .II.) (1,181,585,824.25) (1,054,663,019.64) D . T O TA L N E T C A S H F L O W (A + / – B + / – C (23,977.59) 2,373,083.72 E. CASH BALANCE CHANGE INCLUDING: (23,977.59) 2,373,083.72 (23,525.50) 51,382.16 F. C A S H AT T H E B E G I N N I N G O F T H E P E R I O D 23,944,675.07 21,571,591.35 G . C A S H AT T H E E N D O F T H E P E R I O D (F + / – D) INCLUDING: 23,920,697.48 23,944,675.07 11,883,024.42 15,263,085.62 - change in cash balance due to exchange rate differences - with a limited availability 81 Sponsorship and corporate social responsibility 82 ANNUAL REPORT POLKOMTEL S.A. 2009 From the outset of its operations Polkomtel S.A. brought info effect their corporate social responsibility principles through participation in socially and economically important aspects of life. The Company policy in this respect is based on a thoroughly thought out long term strategy. Therefore Polkomtel S.A. is engaged in initiatives dedicated to safety on water and in mountains, cooperation in creation of a helpline for children and teenagers as well as in numerous other pro-social projects. Additionally the Plus network has a long association with Polish volleyball and its successes, and with other prestigious cultural undertakings, but just as important are the Company partnerships with charity organizations. COLLABORATION WITH VOLUNTEER EMERGENCY SERVICES (TATRA MOUNTAIN VOLUNTEER RESCUE SERVICE - TOPR, POLISH VOLUNTEER MOUNTAIN RESCUED SERVICE - GOPR AND POLISH VOLUNTEER WATER RESCUE SERVICE - WOPR) Since 2000 the Company, as part of their sponsoring strategy, has been supporting emergency rescue organizations that sustain human life and health, and support for these organizations is not solely restricted to providing financial funds for their statutory goals. Polkomtel S.A., above all, holds out the possibility to benefit from the cutting-edge telecommunication and IT solutions. Over 2008/2009, the coordination centres of the Integrated Rescue System received several thousands calls via emergency numbers at waterside - 601 100 100 and in mountains - 601 100 300. In 2009 one of the crucial events in relation to cooperation with rescue services was the conclusion of new agreements with the TOPR and the WOPR from Mazury and Sopot as well as launching the Visual Information System designed for tourists in the Tatra mountains – a project accomplished together with TOPR. 83 In 2009 within the project Safety the Company arranged special, colourful arm badges for children. The badge featured the emergency number on waterside - 601 100 100 and space for a contact phone number to be filled in by the child’s parent or guardian. The WOPR rescue teams distributed the badges at seaside beaches, at lakes and during aquatic events held under the patronage of Simplus on water and at water sport training centres on the Hel peninsula. The campaign principally aimed at preventing lost children and guaranteeing safe and relaxing recreation on water for the whole family. Support of operations for the public benefit 116 111 – HELPLINE FOR CHILDREN AND YOUTH In 2008 as a result of collaboration between Polkomtel S.A. and the “Nobody’s Children” Foundation the helpline number 116 111, the first in Poland from the number group 116, was activated. Over 2009, the first full year of operation of the toll-free and nationwide number, 85,000 calls were recorded, 89 interventions undertaken with respect to children and youth and 36 interventions undertaken under the agreement as of 5 November 2008 on cooperation of the police and the Foundation to facilitate the service “National Helpline for Children and Youth”. This innovative service, enjoying enormous popularity, targets 84 SPONSORSHIP AND CORPORATE SOCIAL RESPONSIBILITY ANNUAL REPORT POLKOMTEL S.A. 2009 children and young people who found themselves in danger. The phone number provides a lifeline to all those needing support, care and protection with instant access to contact trained professionals and receive their advice and support. The Company established the technological platform which makes 116 111 number available for all those seeking aid, regardless of the network. Polkomtel S.A. also catered for the Foundation’s needs with a professional call centre to handle the calls. There is a website dedicated to the Helpline 116 111 handled by the Foundation: www.116111.pl, which since its launch, that is since 6 November 2008, within 14 months, has been visited by over 70,000 users who left almost 2,500 anonymous inquiries. GREAT ORCHESTRA OF CHRISTMAS AID In 2009, just as in previous years, the Company provided organizational and technological support for the Finale of the Great Orchestra of Christmas Aid. Polkomtel S.A. employees volunteered to man the telephone hotline during the television auction. Moreover, Polkomtel S.A. furnished the organizers with a package of test phones, activated free of charge SMS numbers to further money collection and donated valuable electronic gadgets for the auction. In addition, to safeguarding health and security, Polkomtel S.A. developed and deployed a special application “First Aid” to be downloaded free of charge to the mobile phone in all networks during major concerts performed by the Orchestra which were held in the largest Polish cities. The application was downloaded by several thousands users though Bluetooth, www.plus.pl and wap.plus.pl websites 85 COOPERATION WITH OPOKA FOUNDATION Plus network serves as the technological partner of the Opoka Foundation, running the largest catholic Internet portal www.opoka.org.pl. The collaboration includes, among others, support for pilgrimages to the sanctuary Jasna Góra. In 2009 each pilgrim had an opportunity to become a multimedia reporter for the service e-Pielgrzymka.pl, set up by the portal Opoka and the Plus network. Plus also made facilities available for pilgrims to charge their mobiles at special points along the route of the pilgrimage without charge. The operator also equipped the largest pilgrimages with phones which enabled communication on the route. Further works on development of the social network portal e-pielgrzymka (e-pilgrimage) comprising virtual pilgrimage maps, pilgrimage guide, e-letters from pilgrims, MMD gallery and pilgrimage microblog were supported. In 2009 during the pilgrimage season the portal had almost 2 million views ECOLOGY – ELECTRIC WA STE A crucial aspect of the Company’s pro-social activities is its commitment to environmental protection. Since 2009 all Plus stores collect used electromagnetic equipment e.g. phones or accessories and provide safe disposal for recycling. The collection of electronic waste is arranged from the Company headquarters and from key Customers of Polkomtel S.A. on a regular basis. In 2009 Plus outlets were provided with stickers informing customers of the opportunity to dispose of used equipment. In a concerted effort with other mobile operators Polkomtel S.A. conducted a social campaign “Give back the phone” which promoted collection of used mobile phones, batteries and mobile accessories. Ecological solutions were also employed in increasingly advancing IT system of the company, in compliance 86 SPONSORSHIP AND CORPORATE SOCIAL RESPONSIBILITY ANNUAL REPORT POLKOMTEL S.A. 2009 with the slogan “Green IT”. Due to virtualization over 100 physical servers were removed from data centres of the Plus network. Costs related to electrical energy consumption and air conditioning were reduced by 50%, which then brought regular savings of 700,000 annually. Reduction of energy consumption entails reducing CO2 emissions into the atmosphere and produces significant financial savings. In Plus stores logo has been associated with LED lights, environmentally sustainable bags, energy-saving bulbs, and circuit breakers as standard. And recently cars with low CO2 emissions extended the company car fleet. GRANT AWARDED THROUGH THE CONTEST: “CHANGE THE WORLD” The underlying feature of pro-social activities by Polkomtel S.A. is the ability to be responsive and sensitive to others’ needs. Many employees of the Company promote these values beyond their professional environment, engaging in voluntary activity in pro-social organizations. With these activities in mind Polkomtel S.A. organized a grant prize for the “Change the World” competition in 2009. Each employee could become an ambassador of the institution with which he cooperates and submit the project to the competition. The aim of the contest was to promote social involvement in pro-social initiatives in which the employees of Polkomtel S.A. participate. 11 projects were submitted to the competition from among which 3 projects were awarded with financial prizes: PLN 15,000 (1st prize), PLN 10,000 (2nd prize) and PLN 5,000 (3rd prize). The projects were evaluated by Company employees, by voting on the Plus Planet. Over 500 persons participated in the voting. 87 Sponsorship of sport VO L L E Y B A L L 2009 may be regarded as the golden year for the Polish volleyball, as teams sponsored by the Company won prestigious trophies: the gold medal at the European Male Volleyball Championship and the bronze medal at the European Female Volleyball Championship. Plus actively assisted these tournaments, organizing supporter centres throughout Poland where volleyball fans were able to watch matches live and join victory celebrations. As the General Sponsor of the Polish Volleyball the Company arranged a festive welcome for the European Champions at its headquarters, with participation of Polkomtel S.A. employees as well as a meeting celebration rally with almost 10,000 fans on the Defilady Square in Warsaw. The Volleyball project also includes sponsorship of: • Headline sponsorship for the volleyball league – PlusLiga for men’s teams and PlusLiga Kobiet for women’s teams; • all youth national teams; • Headline sponsorship of Poland’s Women Beach Volleyball Championship – the Simplus Cup; • Poland’s disabled persons national team. Polkomtel S.A. , once again, actively participated in organization of the World League and World Grand Prix. The volleyball engagement of the Company was augmented with organization of the 8th staging of Poland’s Women Beach Volleyball Championship – Simplus Cup. As part of the initiative for disabled people Polkomtel S.A. assumed the role of the Main Sponsor 88 SPONSORSHIP AND CORPORATE SOCIAL RESPONSIBILITY ANNUAL REPORT POLKOMTEL S.A. 2009 of European Championships Wheelchair Volleyball. This event was recognized as the best Polish event for disabled people in 2009. Once again the Company became the headline sponsor of the Volleyball Pluses Plebiscite which every year selects the best stars of Polish volleyball. The company implemented innovative marketing solutions meant to enhance its involvement in sport sponsorship including, sales of tickets for volleyball matches in the Plus stores, live broadcasting of all matches during the European Championship on wap.plus.pl services and selection of the best players through SMS. The successful accomplishment of the largest sponsorship programme in Poland received public appreciation by prestigious awards Demes 2009 in the category: Sponsor of Sport and Special Honorary Demes for all activities supporting volleyball. Moreover, the project Volleyball received the statuette Impactor 2009 award and volleyball itself was rewarded by Internet users in the category Sport Experience of the Year and in the category Sport Event of the Year. TENNIS In 2009 Polkomtel S.A. as the Main Sponsor and Technological Partner was involved in three tennis tournaments of the ATP rank: • KGHM Dialog Polish Indoors; • Porsche Poznań Open; • Pekao Szczecin Open together with taking patronage over music festival - Plus Tennis Music Festival. The above tournaments have been hailed as the largest events held in Poland. They enjoy an enormous popularity and an excellent reputation. Participation in them provides an opportunity to come into contact with Corporate Customers and strengthen relations with them. 89 TOUR DE POLOGNE The Cycle race Tour de Pologne enjoys an 80 year tradition and is recognized as one of the key sports events in Poland. Since 2005 the race, as the only single sport even in Central and Eastern Europe, is featured in the calendar of Pro Tour UCI, the most prestigious cycling race series worldwide. Polkomtel S.A., from its inception, is engaged in the organization of Tour de Pologne, holding the role of the Official Sponsor and Technological Partner. Tour de Pologne is the greatest sports event in terms of organizational and logistic range, held in Poland. Representatives of the world’s best teams participate in the race. The latest two stagings of the race earned the rank of grand media events as they attracted millions of viewers. Along the route there were almost 2,800,000 fans. Sponsoring of culture In 2009 Polkomtel S.A. continued its commitments to protect and promote the national cultural heritage through support of valuable and socially vibrant initiatives and projects. These projects involve, among others: • Patronage for the National Museum in Warsaw; • Plus Camerimage and Off Plus Camera – Łódź and Kraków; • International open-air festival, Jazz in the Old Town – Warsaw; • International Festival of Country Music “Picnic Country” – Mrągowo. 90 SPONSORSHIP AND CORPORATE SOCIAL RESPONSIBILITY ANNUAL REPORT POLKOMTEL S.A. 2009 T H E N AT I O N A L MU S E U M I N WA R S AW Cooperation with the National Museum in Warsaw dates back to 2001 and was initiated with the impressive exhibition of the French impressionists and post-impressionists from the collection of Parisian Musee d’Orsay, entitled “From Manet to Gaugin”. Subsequent joint ventures involved the unprecedented exhibitions of works by Albrecht Dürer, Pablo Picasso, Tadeusz Makowski, Salvador Dali, Rembrandt and exposition “Transalpinum. From Giorgion and Dürer to Titian and Rubens”, displaying one of the most precious collections of the European painting worldwide from the collection of Kunsthistorisches Museum in Vienna. Each exhibition exposed the Polish people to a variety of masterpieces by the most renowned masters of European art. Plus network was twice rewarded for its efforts and support in projects with prize Muzeon, presented to distinguished partners of this prominent institution. In 2009 the National Museum in Warsaw organized eight exhibitions, including two most significant ones with the collaboration of Polkomtel S.A. - “Le siécle franc,ais – French painting and drawing of the 18th century from the Polish collections” and “Photosensitive. Photographs collections in the National museum in Warsaw”. INTERNATIONAL FILM FESTIVAL OF THE ART OF CINEMATOGRAPHY PLUS CAMERIMAGE Since 2007 Polkomtel S.A. has been the headline sponsor of the largest worldwide festival devoted to the art of cinematography Plus Camerimage. It is exceptionally significant event in the world film environment. The Festival hosts filmmakers from all over the world, and the awards presented there are in recognition of exceptional cinematographic achievements. The most prestigious prize – Golden Frog – is awarded, by the international jury, to filmmakers for the best cinematography in the previous year. Increasingly Plus Camerimage 91 has been gaining significance in the world festival schedule. Numerous filmmakers participating in celebration of the international cinema in Łódź, present their most outstanding works which attests the prestigious standing of the festival. INTERNATIONAL FESTIVAL OF INDEPENDENT CINEMA OFF PLUS CAMERA Polkomtel S.A. commenced its collaboration with the Festival of Independent Cinema Off Plus Camera in 2009. As a result, the 2nd edition of the festival was held under the name Off Plus Camera. Off Plus Camera is a venture organized and dedicated to Polish and international independent cinema. Its goal is to assist young filmmaking talents at the start of their career. However, its programme features masterworks of highly regarded filmmakers. The festival pursues its ambition to showcase the classic art cinema alongside more recent films. An integral element of the festival is the competition for films made by the use of the mobile phone “Grab and shoot”. THE INTERNATIONAL OPEN-AIR FESTIVAL JAZZ IN THE OLD TOWN The international open-air festival Jazz in the Old Town is the most popular and one of the largest jazz festivals in Poland, in terms of public audience size. It is held every summer in Warsaw Old Town. Over 14 years of the festival’s existence which created its own brand, 700,000 jazz enthusiasts of various ages listened to 130 concerts. Each week the Saturday concerts attracted over 4,000 people who could listen to and watch the performances of such artists as: Bobo Stenson Trio, Katy Roberts or Malene Mortensen. The collaboration between Polkomtel S.A. and the festival organizers has continued uninterrupted since 1997. 92 SPONSORSHIP AND CORPORATE SOCIAL RESPONSIBILITY ANNUAL REPORT POLKOMTEL S.A. 2009 INTERNATIONAL FESTIVAL OF COUNTRY MUSIC “PICNIC COUNTRY” – MRĄGOWO Piknik Country is an international festival of country music held annually at the turn of July and August in Mragowo since 1983. The festival features performances by Polish, international artists and country music stars as well artists performing other music genres. In 2009 within the cooperation with the festival, a special emphasis was placed on promotion of the Muzodajnia service, which was presented during the broadcasting the festival concerts on TV Polsat. APART FROM PARTICIPATION IN KEY PROJECTS PLUS WAS ALSO COMMITTED TO SUPPORT OTHER IMPORTANT MUSICAL, THEATRICAL AND CINEMA UNDERTAKINGS ACROSS POLAND IN 2009, AMONG THEM: • Szczecin Music Fest – a series s of concerts presenting stars of jazz and world music; • Plus Grand Prix Jazz Fans – prestigious Jazz Oscar awards presented at the jazz gala, Plus Grand Prix Jazz Devotees, in Łódź; • Series of concerts and performances The Summer Scene at the Lapidarium Theatre in the Historic Museum of Warsaw; • Shakespeare’s Festival in Gdańsk; • Theatre Summer in the Agnieszka Osiecka Theatre Atelier in Sopot; • Screening a documentary “Sometimes Life is Bearable”; by Katarzyna Kolenda-Zaleskia, featuring Wisława Szymborska • Museum Night. 93 Awards and distinctions in 2009 94 ANNUAL REPORT PREMIUM BAND 2009 POLKOMTEL S.A. 2009 – Plus network won the ranking Premium Brand 2009 – Independent Ranking of Brand Reputation receiving the title Brand of Highest Reputation 2009 in the category “Telecommunications”. The rankings tend to present brands and companies enjoying the highest reputation among Polish people and in the business environment. It is the only one ranking of this type in Poland. PLAYERS OF THE YEAR 2010 – the President of the Management Board won the ranking PLAYERS OF THE YEAR 2010 organized by “Forbes” monthly in the category “New Technologies, Media, Telecommunication and IT”. The results of the ranking were announced on 15 December 2009 at the annual conference “Forbes CEO Forum”. “Forbes” awarded the persons who set the trend in their branch of commerce. GOLDEN EAGLES – Plus was awarded with the special prize Golden Eagle for the most courageous Customer for their advertising series featuring the Mumio cabaret group. 95 DEMES AWARD 2009 – in a ballot organized as part of the 8th edition of the Sports Marketing Days in Warsaw, Plus was presented with Sports Business Awards in two categories: – SPONSOR OF THE YEAR 2009 – in recognition for development of Polish sport, effective sponsoring of volleyball, the manner of formulating the sponsoring scheme, its execution and long term strategy of the company; – HONORARY DEMES – for long-standing innovative activities within sports marketing, contributing to the marketing successes of Plus and development of Polish volleyball. TOP BRAND – Plus outperformed others in the ranking of telecommunication companies, scoring the top position in a survey, conducted by Press-Service Media Monitoring, which examined 50 the most active brands in media in the 10 categories most frequently referred to by media. T H E B E ST PA R T N E R I N B U S I N E S S – Muzodajnia store was rewarded by a monthly “Home&Market” with the award The Best Partner in Business in the category “Strategic projects”. 96 AWARDS AND DISTINCTIONS IN 2009 ANNUAL REPORT POLKOMTEL S.A. 2009 SUPPORTIVE COMPANY – at the Social Entrepreneurship Gala Plus received the statuette Golden Ear, the diploma and the title “The company supporting social integration in 2009” in connection with employment of people with severe disabilities in an Operational Department of a Call Center in Łódź. VIRTUAL TELEPHONES – the monthly „Mobile Internet” presented Virtual Telephones for the ninth time with the prize for leaders of the telecommunication and IT market for outstanding achievements as well as products and services. Plus received four awards: – MANAGER OF THE YEAR 2009 – Bogusława Matuszewska, Member of the Management Board, Sales Director Polkomtel S.A – for significant contribution in enhancing Polkomtel’s position as the leader on the Polish telecommunication market; – SUCCESSFUL MAN OF THE YEAR 2009 – Dariusz Matuszak, Corporate Communications Director Polkomtel S.A. – for accurate communication strategy and its crucial impact on the image of the Company; – OFFER OF THE YEAR 2009 – iPlus – for new coherent offer enabling a high-speed mobile Internet access; – SPONSOR OF THE YEAR 2009 – for priceless contribution to the achievements of Polish volleyball and for consistent support of Polish culture. 97 IMPACTOR AWARD 2009 – during the 12th edition of Impactor, the Polish marketing contest having the longest standing, Plus was awarded for the Volleyball Project and the advertising campaign featuring TurboDymoMan. The special award – Impactor of the Decade went to Dariusz Matuszak, Corporate Communication Director Polkomtel S.A. in recognition of the architect and executor of the unique project of sponsoring Polish volleyball GOLDEN STATUETTE – Golden Emblem and Golden Statuette were presented to Plus network in the category Trusted Brands 2009 Mobile Operator. In accordance with the results of the survey European Trusted Brands 2009 – the largest study of consumer attitudes and opinions in Europe – Plus is the most trusted brand. FINANCIER OF THE YEAR – Plus was granted a distinction Financier of the Year for the best sponsorship project in the history of Polish sport. The award and distinction are presented by the Gazeta Finansowa Editorial Board. 98 AWARDS AND DISTINCTIONS IN 2009 ANNUAL REPORT POLKOMTEL S.A. 2009 99 ANNUAL REPORT POLKOMTEL S.A . ul. Postępu 3 02-676 Warszawa tel. +48 22 426 1000 faks +48 22 426 0103 Dział Obsługi Klienta: tel. +48 601 102 601 Sprzedaż i informacja: tel. 801 400 601 www.plus.pl 100 POLKOMTEL S.A. 2009