Cyfrowy Polsat S A : Brief

Analyst and investor briefing Q3'22

1

• In Q3'22 Polsat Plus Group's revenue amounted to PLN 3,271m and increased YoY by
  7.9%. The level of total revenue was mainly influenced by:
• • Increase in retail revenue as a result of the successful execution of our strategy aimed at building customer value, which is reflected in high dynamics of ARPU growth from both contract B2C and B2B customers as well as prepaid customers.
  • Significantly higher revenues from the sale of equipment, mainly as a result of greater propensity of customers to choose more expensive smartphone models. In addition, in the analyzed period, revenues from the sale of equipment were supported by the recognition of revenues from the sale of photovoltaic devices by Esoleo in connection with the liquidation of part of the inventory.
  • Higher other revenue primarily due to higher revenue from the sale and rent of premises, driven mainly by the consolidation of operations of Port Praski and its subsidiaries, and the consolidation of the results of debt collection activities carried out by Vindix group over which we took control in January 2022.
• In Q3'22 Polsat Plus Group's costs amounted to PLN 2,877m and increased YoY by 10.8%. Their level was mainly influenced by the following factors:
• • Increase in content cost mainly as a result of higher costs of internal production and amortization of sports rights. A one-time event that significantly affected the level of content costs in the period under review was Telewizja Polsat's full-scale production of the Men's Volleyball World Championship in Q3'22, which was relocated from Russia to Poland and Slovenia as a function of the geopolitical situation. In parallel, we continue to invest in increasing the attractiveness of the programming offer of our TV channels in order to improve the viewer profile.
  • Increase in the cost of equipment sold mainly as a result of a higher share of more expensive models of smartphones in the sales mix, which corresponds with higher revenue from the sale of equipment.
  • Higher technical costs and cost of settlements with telecommunication operators mostly due to the recognition of significantly higher electricity costs YoY.
  • Increase in salaries and employee-relatedcosts mainly due to the consolidation of companies acquired during the last 12 months (Port Praski Group, Vindix Group) and continuing inflationary pressure.
  • Increase in other costs mainly due to the recognition in Q3'22 of higher costs of apartments sold and higher property maintenance costs, primarily associated with the consolidation of Port Praski and its subsidiaries. In addition, this cost item was impacted by higher electricity costs and the recognition of a tax on civil law transactions in connection with the acquisition of shares in Port Praski.
• Revenue from advertising and sponsorship of TV Polsat Group in Q3'22 increased by 2.9%, to PLN 275m, while the whole TV advertising and sponsorship market recorded a 1.2% decrease. As a result, our share in the TV advertising and sponsorship market increased to 29.4%.
• Adjusted EBITDA of Polsat Plus Group, excl. the gain on the disposal of a subsidiary and an associate1, of PLN 840m recorded a 7.1% decrease YoY, with adjusted EBITDA margin of 25.7%. The main factors behind the decline were significantly higher costs of purchasing electricity and higher content costs.
• EBIT of Polsat Plus Group amounted to PLN 501m.

1 EBITDA excl. gain on disposal of a subsidiary and an associate (PLN 3,690.8m in Q3'21 and PLN 113.4m in Q3'22)

Analyst and investor briefing Q3'22

2

• Finance costs, net increased by 283% YoY to the level of PLN 209m, primarily on the back of higher costs of servicing the Group's debt following the gradual increases of interest rates by the NBP.
• Net profit of the Group reached the level of PLN 231m. This is 92.7% lower than in the previous year, primarily due to the recognition of a gain on the sale of NetCo in Q3'21 in the amount of PLN 3,690.8m and increasing pressure from financial costs in 2022 (the effect of interest rate increases).
• Adjusted FCF after interest amounted to PLN 89m in Q3'22 (PLN 1,054m in the twelve- month period, posting a 26.9% decrease compared to Q4'21). The FCF result was under pressure from the repayment of the last and the highest installment for the UMTS (EUR 31m), an increase in interest costs, inflationary pressure on OPEX and higher receivables from installment plan sales related to high revenues from sales of equipment to retail customers.
• The main bank covenant - total net debt/EBITDA LTM in Q3'22 reached the level of 2.64x.
• Key performance indicators in Q3'22:
• • The contract B2C customer base amounted to 5,967K.
  • • ARPU per B2C contract customer amounted to PLN 71.3 in Q3'22, growing YoY by 3.9% compared to PLN 68.6 in Q3'21. The increase in ARPU resulted from the consistent building of the value of the existing customer base.
    • Very low churn ratio of 6.8% per annum, which reflects the high level of loyalty of our customers of bundled services, as well as the effect of our activities aimed at building high satisfaction of our customers.
    • RGU saturation of 2.24 per B2C contract customer with an upward trend.
  • Decrease of the total base of contract services for B2C customers by 153K YoY (- 1.1%):
    - Increase by 50K (+0.8%) YoY of mobile telephony RGUs thanks to the successful implementation of our strategy of cross-selling services to an individual customer.
    - The pay TV RGU base recording a decrease by 200K (-3.8%) YoY, mainly due to the price repositioning and change in the strategy of offering our video online services, a lower number of provided satellite TV services and the decision to discontinue the Mobile TV service. This decrease is partially compensated by the growing popularity of Internet TV (IPTV/OTT).
    - The number of Internet RGUs remained stable. A factor supporting our Internet RGU base is the constantly improving quality of our telecommunications networks.
  • Continuation of the multiplay strategy
    - Consistent implementation of our multiplay strategy results in a stable increase in the number of customers of bundled services by 20K YoY.
    - The total number of customers using bundled offers reached the level of 2.47m at the end of Q3'22.
    - The share of customers using multiplay packages reached 41.3%.
    - The number of RGUs owned by customers of bundled services increased to 7.40m.
    - Consistent implementation of our multiplay strategy supports a low level of churn (6.8%).
  • Growing base and strongly growing ARPU of prepaid services

Analyst and investor briefing Q3'22

3

• • The rapid acceleration in the number of provided prepaid mobile telephony services is related to the support action in the form of distribution of free starters to refugees from Ukraine. We also note the growing popularity of packages we offer on the Polsat Box Go platform.
  • Increase in ARPU (+9.1% YoY) thanks to changes in our mobile and TV offering (price repositioning of the Polsat Box Go streaming service). We also observe a growing willingness of our mobile telephony customers to choose bundled solutions instead of offers based on the pay-as-you-go model.
• High base and growing ARPU of B2B customers
• • Polsat Plus Group serves 69.1K B2B customers, successfully upholding the size of this base.
  • The successively expanded offer of communication and ICT services enabled us to increase ARPU from our B2B customers to a high level of PLN 1.425K monthly (+4.2% YoY).

Analyst and investor briefing Q3'22

Financial results of Polsat Plus Group

in mPLN		Q3'22			YoY
			change
Revenue, incl.:		3,271		8%
-	Retail revenue		1,753		3%
-	Wholesale revenue		841		2%
-	Sale of equipment		473		32%
-					48%
Other revenue		204
Operating costs, incl.:		2,877		11%

4

Market	Difference
consensus2
3,183	2.8%
n/a	n/a
n/a	n/a
n/a	n/a
n/a	n/a
n/a	n/a

• Technical costs and cost of settlements with telecommunication operators
• Depreciation, amortization, impairment and liquidation
• Cost of equipment sold
• Content costs
• Distribution, marketing, customer relation management and retention costs

• Salaries and employee-related costs
• Cost of debt collection services and bad debt allowance and receivables written off

8234%

452-2%

36523%

53024%

257-9%

24215%

26 -16%

n/a	n/a
n/a	n/a
n/a	n/a
n/a	n/a
n/a	n/a
n/a	n/a
n/a	n/a

- Other costs	182	90%
Adjusted EBITDA3		840		-7%
Adjusted EBITDA margin4		25.7%		-4.1pp
EBITDA		953		-79%
EBITDA margin		29.1%		-122.5pp
EBIT		501		-88%
Net profit		231		-93%

n/a	n/a
820	2.3%
25.8%	-0.1pp
n/a	n/a
n/a	n/a
354	41.4%
198	16.6%

2 Based on estimates prepared by: BM mBanku, DM BOŚ, Haitong, ERSTE, Ipopema, Trigon, Pekao, Santander, Wood&Co

3,4 EBITDA excl. gain on disposal of a subsidiary and an associate (PLN 3,690.8m in Q3'21 and PLN 113.4m in Q3'22)

Analyst and investor briefing Q3'22

5

B2C and B2B services segment

		Q3
	2022	2021	YoY change
B2C AND B2B SERVICES SEGMENT1
Total number of B2C RGUs(2) (EOP) [thous.], incl.:	13,341	13,494	-1.1%
Pay TV	5,106	5,306	-3.8%
Mobile telephony	6,232	6,182	0.8%
Internet	2,003	2,006	-0.1%
Number of B2C customers (EOP) [thous.]	5,967	6,069	-1.7%
ARPU per B2C(3) customer [PLN]	71.3	68.6	3.9%
Churn in B2C(4) subsegment	6.8%	6.9%	-0.1 pp
RGU saturation per one B2C customer	2.24	2.22	0.9%
PREPAID SERVICES
Total number of RGUs (EOP) [thous.], incl.:	2,832	2,773	2.1%
Pay TV	161	145	11.0%
Mobile telephony	2,636	2,584	2.0%
Internet	35	44	-20.5%
ARPU per prepaid RGU(5) [PLN]	17.9	16.4	9.1%
CONTRACT SERVICES FOR B2B CUSTOMERS
Total number of B2B customers (EOP) [thous.]	69.1	68.8	0.4%
ARPU per B2B(3) customer [PLN]	1,425	1,367	4.2%

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

• Contract services for B2C customers:
• • The total number of B2C customers to whom we provided contract services at the end of Q3'22 was 5,967K (-1.7% YoY). The main reason behind the decrease of the contract customer base was the continued process of merging contracts under one common contract for the household within our base, which is reflected in the growing RGU saturation per customer ratio (increase by 0.9% YoY to 2.24 RGU per customer) and the declining popularity of the satellite technology.
  • The churn rate for our B2C customers amounted to only 6.8% in the twelve-month period ended September 30, 2022. Low churn is primarily the effect of a high level of loyalty of our customers of bundled services, which results from the successful implementation of our multiplay strategy, as well as our actions aimed at fostering high customer satisfaction.
  • In line with the assumptions of our long-term strategy, we aim to maximize revenue per contract customer through cross-selling, i.e., selling additional products and