Acquisition of 100% shares of INFO-TV-FM Sp. z o.o.
On 28 October 2011 Cyfrowy Polsat entered into an agreement with Narodowy Fundusz Inwestycyjny Magna Polonia S.A. and Evotec Management Limited (entity under common control) for the acquisition of 100% shares of INFO-TV-FM Sp. z o.o. (‘INFO-TV-FM’).
INFO-TV-FM is the only wholesale provider of mobile media services, which includes distribution of radio and television broadcasts in DVB-T.
The ownership of shares of INFO-TV-FM Sp. z o.o. was transferred to the Group on 30 January 2012 following fulfillment of the conditions precedent.
The conditions precedent included separation of some INFO-TV-FM assets and activities, signing of the guarantee agreement by INFO-TV-OPERATOR Sp. z o.o. (‘INFO Operator’) (spin-off company) for the benefit of the Company and entering into a guarantee agreement by INFO-TV-FM and INFO Operator.
The Group uses the purchase accounting method for entities acquired under common control.
a) Consideration transferred
| 31 December 2012 | |
|---|---|
| Cash consideration | 14,329 |
| Settlement through purchase of Magna NFI bonds | 14,984 |
| total | 29,313 |
The fair value of the settlement through purchase of Magna NFI bonds includes the nominal value of the bonds and interest.
b) Reconciliation of transactional cash flow
| 31 December 2012 | |
|---|---|
| Cash transferred on acquisition | (14,329) |
| Cash and cash equivalents received | 1 |
| Cash outflow in the year ended 31 December 2012 | 14,328 |
c) Fair value of net assets as at the acquisition date
The table below presents fair values of identified assets and liabilities of the acquired business, as at the acquisition date.
| fair value as at 30 January 2012 | |
|---|---|
| Property, plant and equipment | 1,552 |
| Other intangible assets | 16,930 |
| Tax and social security receivables | 133 |
| Cash and cash equivalents | 1 |
| Income tax liabilities | (7) |
| Fair value of net assets acquired | 18,609 |
The revenue and loss included in the consolidated income statement for the reporting period since 30 January 2012 contributed by INFO-TV-FM amounted to PLN 2,641 and PLN 9,905, respectively. Had INFO-TV-FM been purchased on 1 January 2012 the revenue and loss included in the interim condensed consolidated income statement would not differ significantly.
d) Goodwill
| 30 January 2012 roku | |
|---|---|
| Purchase price of 100% shares | 29,313 |
| Fair value of net assets acquired | (18,609) |
| Goodwill | 10,704 |
The acquisition agreement was concluded in order to continue execution of the Group’s strategy aiming at wide distribution of content using all modern technologies.
The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations. The goodwill is allocated to the ‘Retail‘ segment.
Acquisition of ipla
On 12 March 2012 the Company concluded agreements with Bithell Holdings Ltd. (Seller), entity under common control, relating to acquisition of shares in entities running ipla platform. Ipla is the leader in online video distribution in Poland. Agreements comprise acquisition of shares in the following entities:
1. 100% shares in Redefine Sp. z o.o., seated in Warsaw (‘Redefine’),
2. 100% shares in Gery.pl Sp. z o.o., seated in Warsaw (in liquidation),
3. 100% shares in Frazpc.pl Sp. z o.o., seated in Warsaw,
4. 100% shares in Netshare Sp. z o.o., seated in Warsaw.
The Seller is controlled by Mr. Zygmunt Solorz-Żak, ultimate controlling party of the Company.
The joint price for the shares, resulting from the above mentioned transactions amounted to PLN 42,856.
As at the date of signing the share purchase agreement, Redefine Sp. z o.o. held 100% of shares in POSZKOLE.pl Sp. z o.o. and 100 % of shares in STAT24 Sp. z o.o.
The acquisition date is 2 April 2012, when the title to the shares of the acquired companies was transferred to Cyfrowy Polsat.
The Group uses the purchase accounting method for entities acquired under common control.
a) Consideration transferred
| 31 December 2012 | |
|---|---|
| Cash consideration | 42,856 |
| total | 42,856 |
b) Reconciliation of transactional cash flow
| Cash transferred on acquisition | (42,856) |
| Cash and cash equivalents received | 161 |
| Cash outflow in the year ended 31 December 2012 | (42,695) |
c) Fair value of net assets and goodwill as at the acquisition date
The table below presents fair values of identified assets and liabilities of the acquired companies, as at the acquisition date, and goodwill accounted for an acquisition.
Fair values of assets and liabilities acquired as at 2 April 2012:
| fair value as at the acquisition date (2 April 2012) | |
|---|---|
| Net assets: | |
| Ipla brand (see note 19) | 7,800 |
| Other property, plant and equipment | 1,286 |
| Other intangible assets | 1,046 |
| Other non-current assets | 162 |
| Current programming assets | 330 |
| Inventories | 20 |
| Trade and other receivables | 4,387 |
| Other current assets | 14 |
| Cash and cash equivalents | 161 |
| Loans and borrowings | (96,818) |
| Deferred tax liability | (1,482) |
| Trade and other payables | (19,094) |
| Total net assets | (102,188) |
| Consideration transferred: | |
| Cash consideration | 42,856 |
| Goodwill | 145,044 |
The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations. Goodwill was allocated to the “Retail” operating segment.
The revenue and net loss included in the consolidated income statement for the reporting period since 2 April 2012 contributed by the entities running Ipla platform amounted to PLN 19,887 and PLN 9,840, respectively. Had they been acquired on 1 January 2012 the revenue and loss included in the consolidated income statement would have amounted to PLN 25,337 and PLN 21,824, respectively.
Registration of Telewizja Polsat Holdings Sp. z o.o.
On 7 may 2012, Telewizja Polsat Holdings Sp. z o.o. was registered by the court. As at 31 December 2012 Telewizja Polsat
Sp. z o.o. held 100% shares in the share capital of Telewizja Polsat Holdings Sp. z o.o.
