Introduction

In 2012, the Cyfrowy Polsat Group focused on consistent implementation of its strategy, both in services to retail customers and in the TV broadcasting and production segment.

The first event of key importance to our digital platform was the finalisation of the acquisition of INFO-TV-FM in January 2012. The INFO-TV-FM assets were used in June to launch a mobile pay TV product based on DVB-T technology (MOBILE TV), which was a ground-breaking project on the Polish market. With MOBILE TV, we were prepared for the completion of the digital switchover of terrestrial television in Poland by offering our existing and potential customers an additional product which fully meets their expectations.

In our other business segment, we steadily pursued a strategy of competing effectively on the advertising market and maintaining our channels’ audience shares at 20%-21% in the target group. To this end, we reorganised the operations of our sports channels, making them more attractive to our viewers and advertisers, and launched new thematic channels, thereby increasing the total number of channels offered under the Telewizja Polsat brand.

The strategic purchase of the companies behind the ipla service was the highlight of the year. ipla is the leader of the Polish online video market, both in terms of the size of its user base and the number of devices and operating systems supporting the service. Being aware of the changes taking place in the content consumption market, we believe that ipla will play a key role for our Group in the future as an effective tool for increasing the satisfaction of our customers and viewers, and as an additional source of revenue and profits.

As the first operator in Poland to launch the world’s fastest and most advanced mobile LTE-based Internet, in 2012 we offered our customers many new reception devices, including the world’s first modem enabling data transfer at speeds of up to 150 Mbps (the Huawei E3276).

The end of the year is when pay TV operators prepare to launch their best and most attractive offers. With our existing and future subscribers in mind, we expanded our channel selection with 20 new thematic channels and introduced attractive packages, once again standing out on the Polish market by offering the best value for money.

The effectiveness of our strategy and operations can be seen in the consistent improvement of our operating performance, which translated directly into the Group’s best ever financial results and an increase in the Company’s shareholder value.

RETAIL BUSINESS SEGMENT

• The number of subscribers to pay TV services increased by 14,000 year on year, to 3.57 million, representing 32% of the Polish market for pay TV.
• The number of Internet subscribers increased by 77,000 year on year, to 150,000.
• The number of mobile telephone users increased by 2,000 year on year, to 145,000.
• High definition set-top boxes are used by almost 70% of subscribers.
• The Multiroom service is used by approximately 12% of subscribers.
• The ARPU of the Family Package increased by 5.4% year on year, to PLN 46.6, while the ARPU of the Mini Package went up by 5.5%, to PLN 13.4.
• The churn rate was 8.6%.

TV BROADCASTING AND PRODUCTION SEGMENT

• The audience share of the Telewizja Polsat Group channels stood at 20.5%.
• POLSAT, our flagship channel, was at the top of the ratings with a 15.7% audience share.
• Polsat’s share of the thematic channels audience grew to 4.8%.
• According to our estimates, in 2012 we had a 23.2% share of the Polish TV advertising market, valued at approximately PLN 3.7bn.
• It is worth noting that thanks to our well-designed programme schedule and expanded distribution of thematic channels, we outperformed the market with a -3.0% drop in advertising and sponsorship revenue, while the market as a whole saw a decrease of -5.6% year on year.

EFFECT OF ACQUISITIONS ON THE GROUP’S FINANCIAL PERFORMANCE

Because in 2011 the Telewizja Polsat Group’s accounts were consolidated from April 20th, and in 2012 we included in the consolidation newly acquired companies (INFO-TV-FM Sp. z o.o., Grupa Redefine Sp. z o.o., Netshare Sp. z o.o., Frazpc.pl Sp. z o.o. and Gery.pl Sp. z o.o.), our 2012 results are not fully comparable with the 2011 figures. To ensure data comparability, we eliminated the effect of consolidation of the newly acquired companies and the Telewizja Polsat Group when comparing the 2012 and 2011 results.

REVENUE OF THE CYFROWY POLSAT GROUP

Revenue: 2012 vs 2011

Source: Consolidated financial statements for the financial year ended December 31st 2012 and in-house analyses.

Revenue structure

The Group’s revenue improved on the back of the factors presented below.

Revenue from retail subscriptions (all figures in PLN ‘000)

Revenue from retail subscriptions went up by PLN 139,926, or 8.8%, from PLN 1,594,872 in 2011 to PLN 1,734,798 in 2012. Consolidation of the Telewizja Polsat Group had no effect on revenue from retail subscriptions. Net of the effect of consolidation of the newly acquired companies, revenue from retail subscription grew by PLN 137,905, or 8.6%, to PLN 1,732,777 in 2012. This increase was mostly due to higher revenue from subscription fees for DTH services (attributable to improved ARPU and a higher year-on-year average number of subscribers) and improved revenue from telecommunication services.

Advertising and sponsorship revenue (all figures in PLN ‘000)

Advertising and sponsorship revenue increased by PLN 218,376, or 34.4%, from 634,204 in 2011 to PLN 852,580 in 2012. Excluding the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, advertising and sponsorship revenue fell by PLN 1,087, or 25.0%, from PLN 4,341 in 2011 to PLN 3,254 in 2012.

Revenue from cable and satellite operator fees (all figures in PLN ‘000)

Revenue from cable and satellite operator fees grew by PLN 32,571, or 53.3%, from PLN 61,089 in 2011 to PLN 93,660 in 2012. This increase resulted from the fact that in 2012 the Telewizja Polsat Group’s revenue was consolidated for the full twelve months, while in 2011 it was consolidated only for nine months (starting from April 20th 2011). Another driver of revenue growth was the expanded distribution of Telewizja Polsat channels following their launch on the ‘n’ platform in May 2011.

Revenue from sale of equipment (all figures in PLN ‘000)

Revenue from sale of equipment went up by PLN 2,224, or 13.4%, from PLN 16,546 in 2011 to PLN 18,770 in 2012. Excluding the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, revenue from sale of equipment grew by PLN 2,545, or 15.2%, from PLN 16,695 in 2011 to PLN 19,240 in 2012. The increase was attributable to a number of factors, notably: (i) sales of set-top boxes for receiving digital terrestrial television; (ii) changes in the presentation of revenue and costs of Cyfrowy Polsat Technology (CPT) relating to sale of components for the manufacture of proprietary set-top boxes and modems to third parties (currently, the revenue and costs are presented on a net basis, while sales are made on a marginfree basis), and (iii) lower revenue from sale of DTH dishes.

Other revenue (all figures in PLN ‘000)

Other revenue went up by PLN 19,193, or 32.4%, from PLN 59,214 in 2011 to PLN 78,407 in 2012. Net of the effect of consolidation of the figures of the Telewizja Polsat Group (mainly revenue from sale of broadcasting and signal transmission services and sale of licenses, sub-licenses and property rights) and the newly acquired companies, other revenue grew by PLN 6,018, or 22.6%, from PLN 26,600 in 2011 to PLN 32,618 in 2012, mainly on the back of improved revenue from sale of broadcasting and signal transmission services.

OPERATING COSTS

Costs: 2012 vs 2011

Source: Consolidated financial statements for the financial year ended December 31st 2012 and in-house analyses.

Cost structure

The changes in the Group’s operating costs were driven by the factors presented below (all figures in PLN ’000).

Programming costs

Programming costs fell by PLN 54,431, or 13.1%, from PLN 414,742 in 2011 to PLN 360,311 in 2012. Excluding the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, programming costs declined by PLN 9,430, or 2.2%, from PLN 434,480 in 2011 to PLN 425,050 in 2012. This decrease was mainly the result of better content acquisition rates negotiated by the Group, and was achieved despite the effect of exchange rate fluctuations and a higher average number of subscribers based on which licensing fees are calculated.

Costs of internal and external TV production and amortisation of sports broadcasting rights

Costs of internal and external TV production and amortisation of sports broadcasting rights increased by PLN 80,922, or 29.9%, from PLN 270,567 in 2011 to PLN 351,489 in 2012. This increase was due primarily to the fact that in 2012 the results of Telewizja Polsat were consolidated for the full twelve months.

Distribution, marketing, customer relation management and retention costs

Distribution, marketing, customer relation management and retention costs were PLN 312,723 in 2012, and remained practically unchanged from PLN 312,018 in 2011 (up by 0.2%). Net of the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, the costs amounted to PLN 312,400 in 2012, having increased by PLN 5,239, or 1.7%, from PLN 307,161 in 2011.

Depreciation, amortisation and impairment costs

Depreciation, amortisation and impairment costs grew by PLN 68,186, or 39.0%, from PLN 174,880 in 2011 to PLN 243,066 in 2012. Net of the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, the costs were up by PLN 57,914, or 41.6%, from PLN 139,175 in 2011 to PLN 197,089 in 2012. The increase in depreciation, amortisation and impairment costs was primarily attributable to a sharp growth in the number of set-top boxes, modems, hard drives for set-top boxes and routers provided to subscribers (recognised as property, plant and equipment).

Salaries and employee-related costs

Salaries and employee-related costs grew by PLN 29,562, or 19.9%, from PLN 148,811 in 2011 to PLN 178,373 in 2012. Excluding the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, salaries and employee-related costs amounted to PLN 102,783 in 2012, having increased by PLN 3,030, or 3.0%, from PLN 99,753 in 2011, mainly due to higher average headcount in 2012.

Signal transmission costs

Signal transmission costs increased by PLN 34,995, or 30.5%, from PLN 114,736 in 2011 to PLN 149,731 in 2012. Excluding the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, signal transmission costs were up by PLN 5,036, or 5.8%, from PLN 86,736 in 2011 to PLN 91,772 in 2012, mainly owing to the adverse effect of exchange rate fluctuations and the cost of lease of additional transponder capacities from Eutelsat (from May and August 2012).

Amortisation charges on film licenses

Amortisation charges on film licenses were up by PLN 18,881, or 20.3%, from PLN 93,226 in 2011 to PLN 112,107 in 2012. This increase was due primarily to the fact that in 2012 the figures of Telewizja Polsat were consolidated for the full twelve months, while in 2011 they were consolidated from April 20th.

Charges from mobile network operators

Charges from mobile network operators grew by PLN 18,736, or 73.8%, from 25,374 in 2011 to 44,110 in 2012. The increase was mainly attributable to the growth in the number of customers using our Internet access service and higher average usage of data packages. Consolidation of the Telewizja Polsat Group and the newly acquired companies had no effect on the amount of charges from mobile network operators.

Cost of equipment sold

Cost of equipment sold increased by PLN 2,604, or 7.8%, from PLN 33,548 in 2011 to PLN 36,152 in 2012. Excluding the effect of consolidation of the Telewizja Polsat Group, the cost was up by PLN 2,975, or 8.8%, from PLN 33,694 in 2011 to PLN 36,669 in 2012. The increase was the net result of a number of factors, including in particular: (i) recognition in 2012 of the cost of sales of devices for receiving terrestrial television signals, such as laptops and tablets (no such items were recognised in the comparative period); (ii) the lower cost of sales of hard drives for set-top boxes, due to the fact that in 2012 hard drives were mainly provided to subscribers; (iii) changes in the presentation of CPT’s revenue and costs related to sale of components for the manufacture of proprietary set-top boxes and modems to third parties (currently, revenue and costs are presented on a net basis), (iv) lower sale of DTH dishes, and (v) the lower unit cost of modems sold.

Costs of debt collection, recognition of impairment losses on receivables and receivables written off

Costs of debt collection, recognition of impairment losses on receivables and receivables written off fell by PLN 46,797, or 63.0%, from PLN 74,254 in 2011 to PLN 27,457 in 2012. Net of the effect of consolidation of the Telewizja Polsat Group, the costs were down by PLN 43,795, or 61.6%, from PLN 71,110 in 2011 to PLN 27,315 in 2012. The decrease was driven mainly by the lower amount of impairment losses and receivables written off. Consolidation of the newly acquired companies had no material effect on the amount of the costs.

Other costs

Other costs grew by PLN 18,679, or 13.6%, from PLN 137,465 in 2011 to PLN 156,144 in 2012. Excluding the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, other costs fell by PLN 11,829, or 12.1%, from PLN 97,490 to PLN 85,661 in 2012. The decrease was due primarily to lower costs of legal, advisory and consulting services, property maintenance costs and costs of SMART and SIM cards provided to customers.

EBITDA AND EBITDA MARGIN (all figures in pln ‘000)

EBITDA improved by PLN 297,065, or 40.4%, from PLN 735,180 in 2011 to PLN 1,032,245 in 2012. EBITDA margin increased from PLN 31.1% in 2011 to 37.2% in 2012. Net of the effect of a oneoff decrease in costs paid by Telewizja Polsat to organisations for collective administration of copyrights, EBITDA amounted to PLN 1,006,852, with the EBITDA margin at 36.2%, in 2012.

Excluding the effect of consolidation of the Telewizja Polsat Group and the newly acquired companies, EBITDA grew by PLN 164,454, or 34.1%, from PLN 481,967 in 2011 to PLN 646,421 in 2012, while EBITDA margin was up from 29.3% in 2011 to 36.1% in 2012.

NET PROFIT (all figures in pln ‘000)

Net profit grew by PLN 438,108, or 273.5%, from PLN 160,190 in 2011 to PLN 598,298 in 2012.

CAPITAL EXPENDITURE (all figures in in pln ‘000)

Our capital expenditure amounted to PLN 91,177 in 2012 and PLN 65,674 in 2011. The capital expenditure to revenue ratio was 3.3% in 2012 and 2.8% in 2011. In 2012, capital expenditure related chiefly to the settlement of liabilities under purchases of property, plant and equipment and intangible assets recognised as at December 31st 2011, as well as purchases of broadcasting equipment, technical equipment, equipment used to manufacture set-top boxes, computer hardware, equipment for IT systems and IT system upgrades, modernisation projects and payments to the National Broadcasting Council (KRRiT) for the licence to broadcast the Polsat Sport News channel.

Cash flows

Cash flows from operating activities (all figures in PLN ‘000)

Net cash from operating activities reached PLN 781,367 in 2012, mainly on the back of net profit of PLN 598,298, adjusted for a number of factors, the most important being: (i) amortisation, depreciation and impairment losses, interest expense and income tax; (ii) amortisation of film licences and sport broadcasting rights; (iii) payments for film licences and sport broadcasting rights; (iv) higher net value of reception equipment under operating lease; (v) net foreign exchange gains; (vi) increases in receivables and other assets, and (vii) change in liabilities, provisions and deferred income.

In 2011, cash flows from operating activities totalled PLN 347,046, driven mainly by net profit of PLN 160,190, adjusted for a number of factors, including in particular: (i) amortisation, depreciation and impairment losses, interest expense and income tax; (ii) higher value of reception equipment under operating lease; (iii) payments for film licences and sport broadcasting rights; (iv) net foreign exchange losses; (v) amortisation of film licences and sport broadcasting rights; (vi) increase in receivables and other assets, and (vii) change in liabilities, provisions and deferred income.

Cash flows from investing activities (all figures in PLN ‘000)

In 2012, net cash used in investing activities totalled PLN 133,431. The amount was chiefly attributable to acquisition of property, plant and equipment, intangible assets and shares in subsidiaries (net of cash acquired). In 2011, cash used in investing activities amounted to PLN 2,426,751, and included spending on the acquisition of a 100% equity interest in Telewizja Polsat, as well as other expenses, including expenses on acquisition of property, plant and equipment and intangible assets.

Cash flows from financing activities (all figures in PLN ‘000)

In 2012, net cash used in financing activities stood at PLN 653,347, mostly attributable to voluntary prepayment and scheduled repayments of principal under a credit facility, and repayment of a credit facility taken over upon the acquisition of companies of the Redefine Group, in the aggregate amount of PLN 453,324, as well as payment of commission fees and interest on credit facilities, loans, bonds and finance leases, totalling PLN 195,934. In 2011, net cash from financing activities of PLN 2,327,429 consisted mainly of PLN 2,800,000 proceeds under a term loan facility and a bridge loan facility, and PLN 1,372,245 under notes in issue. The figure was partially offset by repayment of credit facilities in the amount of PLN 1,538,844, payment of interest on credit facilities, loans and finance leases of PLN 289,899, as well as repayment of an overdraft facility of PLN 18,041.

BALANCE SHEET

The table below presents key changes in the balance sheet structure in 2012.

All figures discussed below are presented in PLN `000.

Our balance-sheet total stood at PLN 5,561,345 and PLN 5,348,548 as at December 31st 2012 and December 31st 2011, respectively. Net of the effect of consolidation of the companies acquired in 2012 (INFO-TV-FM Sp. z o.o., the Redefine Group, Netshare Sp. z o.o., Frazpc.pl Sp. z o.o. and Gery.pl Sp. z o.o., referred to as the ‘newly acquired companies‘), our balance-sheet total was PLN 5,574,015 as at December 31st 2012.

Non-current assets totalled PLN 4,476,148 and PLN 4,278,148, and represented 80.5% and 80.0% of total assets, as at December 31st 2012 and December 31st 2011, respectively. Excluding the effect of consolidation of the newly acquired companies, our noncurrent assets stood at PLN 4,360,557 and accounted for 78.2% of total assets as at December 31st 2012.

The value of reception equipment grew by PLN 11,450, or 2.8%, to PLN 420,060 as at December 31st 2012, from PLN 408,610 as at December 31st 2011, driven by an increase in the number of pay TV reception sets and Internet sets made available to our subscribers. Consolidation of the newly acquired companies had no effect on the balance of reception equipment.

Other property, plant and equipment increased by PLN 13,130, or 5.0%, to PLN 276,407 as at December 31st 2012, from PLN 263,277 as at December 31st 2011. Excluding the effect of consolidation of the newly acquired companies, other property, plant and equipment went up by PLN 8,232, or 3.1%, to PLN 271,509 as at December 31st 2012. The growth is attributable to the net effect of a few factors, primarily including an increase in tangible assets under construction, purchase of equipment used to manufacture set-top boxes, expenditure on buildings and structures, and depreciation charges for the period.

Goodwill grew by PLN 155,748, or 6.5%, from PLN 2,412,285 as at December 31st 2011 to PLN 2,568,033 as at December 31st 2012. This growth resulted from the initial measurement of goodwill from the acquisition of INFO-TV-FM, Redefine Group companies, Netshare Sp. z o.o., Frazpc.pl Sp. z o.o. and Gery Sp. z o.o.

As at December 31st 2012, the value of the brand was PLN 847,800, up by PLN 7,800 from PLN 840,000 as at December 31st 2011. The increase is attributable to the recognition of the ipla brand’s value.

Other intangible assets grew by PLN 27,186, or 50.2%, from PLN 54,194 as at December 31st 2011 to PLN 81,380 as at December 31st 2012. Net of the effect of consolidation of the newly acquired companies, other intangible assets went up by PLN 10,487, or 19.4%, to PLN 64,681 as at December 31st 2012, chiefly owing to the upgrade of systems and development work.

The value of non-current and current programming assets went down by PLN 28,930, or 10.8%, from PLN 268,570 as at December 31st 2011 to PLN 239,640 as at December 31st 2012. This decrease was the net effect of a number of factors, including in particular the purchase of film licenses and sport broadcasting rights, as well as amortisation. Consolidation of the newly acquired companies had no material effect on this item.

Investment property stood at PLN 8,357 as at December 31st 2012, almost unchanged (down by 1.0%) when compared with December 31st 2011. The item refers to the Telewizja Polsat Group and comprises land and buildings for lease.

Non-current commissions to distributors amortised over time amounted to PLN 35,125 as at December 31st 2012, practically unchanged from PLN 35,028 as at December 31st 2011. Current commissions to distributors amortised over time decreased by PLN 2,265, or 3.8%, from PLN 59,361 as at December 31st 2011 to PLN 57,096 as at December 31st 2012. Consolidation of the newly acquired companies had no effect on this item.

Other non-current assets totalled PLN 109,642 as at December 31st 2012, up by PLN 40,195, or 57.9%, from PLN 69,447 as at December 31st 2011. Net of the effect of consolidation of the newly acquired companies, other non-current assets went up by PLN 112,102, or 161.6%, to PLN 181,649 as at December 31st 2012. This increase is chiefly attributable to growth of non-current prepayments and accrued income (primarily related to placement of the second and third orders for data transmission services with Mobyland).

Current assets totalled PLN 1,085,197 and PLN 1,070,400, and represented 19.5% and 20.0% of total assets, respectively, as at December 31st 2012 and December 31st 2011, respectively.

Excluding the effect of consolidation of the newly acquired companies, our current assets stood at PLN 1,213,458 and accounted for 21.8% of total assets as at December 31st 2012.

Inventories stood at PLN 161,974 as at December 31st 2012, having dropped by PLN 16,153, or 9.1%, from PLN 178,127 as at December 31st 2011. Excluding the effect of consolidation of the newly acquired companies, inventories were PLN 161,934 as at December 31st 2012. The drop was a net effect of a number of factors, including primarily: (i) decreases in the value of DTH set-top boxes and hard drives for set-top boxes, and (ii) recognition of inventories of end equipment for receiving digital terrestrial television signals. Receivables under notes and bonds stood at PLN 0 as at December 31st 2012, compared with PLN 14,854 as at December 31st 2011. The value as at the end of 2011 represented unsecured interest-bearing notes with total nominal value of PLN 14,000, issued by NFI Magna Polonia S.A.

Trade and other receivables went up by PLN 55,117, or 17.2%, from PLN 320,542 as at December 31st 2011 to PLN 375,659 as at December 31st 2012. Excluding the effect of consolidation of the newly acquired companies, trade and other receivables increased by PLN 56,392, to PLN 376,934 as at the end of December 2012. The increase followed mainly from an increase in trade receivables from non-related entities, which was partially offset, primarily by a decline in receivables from the government.

Cash and cash equivalents went down by PLN 7,180, or 2.6%, from PLN 277,534 as at December 31st 2011 to PLN 270,354 as at December 31st 2012. Net of the effect of consolidation of the newly acquired companies, cash increased by PLN 119,802, or 43.2%, to PLN 397,336 as at December 31st 2012. The increase, chiefly attributable to a higher amount of net cash from operating activities, was partially offset, primarily by repayment of principal (including a prepayment of PLN 200,000) and interest under the SFA loan facility, payment of interest under Senior Notes, and capital expenditure.

Other current assets totalled PLN 71,968 as at December 31st 2012, close to their value of PLN 72,467 as at December 31st 2011. Consolidation of the newly acquired companies had no material effect on this item.

Equity grew by PLN 572,360, or 30.2%, from PLN 1,896,043 as at December 31st 2011 to PLN 2,468,403 as at December 31st 2012. Net of the effect of consolidation of the newly acquired companies, equity went up by PLN 592,103, or 31.2%, to PLN 2,448,146 as at December 31st 2012. The key driver of the equity increase was the 2012 profit.

Liabilities (current and non-current) under loans and borrowings decreased by PLN 337,574, or 28.0%, from PLN 1,205,185 as at December 31st 2011 to PLN 867,611 as at December 31st 2012. This change is mainly attributable to a prepayment of PLN 200,000 and scheduled repayments under a term loan facility. Consolidation of the newly acquired companies had no effect on liabilities under loans and borrowings.

Liabilities (current and non-current) under notes and bonds declined by PLN 108,842, or 7.1%, from PLN 1,522,577 as at December 31st 2011 to PLN 1,413,735 as at December 31st 2012, which was mainly due to a decrease in the EUR/PLN exchange rate used to measure the carrying amount of notes. Consolidation of the newly acquired companies had no effect on liabilities under notes and bonds.

Non-current and current deferred income totalled PLN 206,419 as at December 31st 2012, practically unchanged from PLN 207,013 as at December 31st 2011. Consolidation of the newly acquired companies had no material effect on this item.

Other non-current liabilities and provisions went up by PLN 5,193, or 41.5%, from PLN 12,497 as at December 31st 2011 to PLN 17,690 as at December 31st 2012, chiefly as a result of recognising long-term security deposits for delivered equipment and an increase in liabilities under financial instruments. The effect of consolidation of the newly acquired companies on other non-current liabilities and provisions was immaterial.

Trade and other payables went up by PLN 97,139, or 25.9%, from PLN 374,955 as at December 31st 2011 to PLN 472,094 as at December 31st 2012. Net of the effect of consolidation of the newly acquired companies, trade and other payables increased by PLN 91,550, or 24.4%, to PLN 466,505 as at December 31st 2012, mainly owing to an increase in trade payables and purchase of property, plant and equipment and intangible assets. The increase was partially offset, primarily by a decline in current provisions.

Security deposits for delivered equipment grew by PLN 515, or 4.0%, from PLN 12,744 as at December 31st 2011 to PLN 13,259 as at December 31st 2012, which was mainly driven by an increase in security deposits received from distributors. Consolidation of the newly acquired companies had no effect on security deposits received for delivered equipment.