Niefinansowy Raport Polsatu za rok 2017

All our activities are undertaken in compliance with the law valid in Poland. In particular we act in compliance with:

• Telecommunications Law
• Press Law
• Broadcasting Act

Every year, together with the yearly report, Cyfrowy Polsat Group publishes a statement concerning observance of corporate governance rules in a given year. Relevant documents for the year 2017 are available for the public on our website. In Poland the corporate governance rules are found in a document entitled Best Practice for GPW Listed Companies 2016. The purpose of these rules is to consolidate the transparency of listed companies, improve the quality of communication between the companies and the investors, strengthen the protection of shareholders rights, also in the areas which are not regulated by the law. Best Practice covers these fields in which implementation of the rules could have positive influence on market valuation of companies, thus reducing the cost of acquisition of capital.

In the case of each company from the Group, it is both the legal departments and the functional units, which carry out specific business activities, that are responsible for making sure that the operations are conducted in compliance with the law. Our activities on the telecommunications market (Internet access and mobile telephony) are supervised by the Office of Electronic Communications (UKE), while the activity on the TV market is controlled by the National Broadcasting Council (KRRiT). Representatives of our company regularly participate in the work of Polish and international industry organizations while implementing and promoting the solutions developed by these organizations. The Group has no dedicated procedures related to compliance management.

[GRI 419-1]Non-compliance with laws and regulations in the social and economic area (penalties for accounting fraud, discrimination in the workplace, etc.) None of the Group’s companies was penalized for non-compliance with laws and regulations in the social and economic area in either 2016 or 2017. Cyfrowy Polsat assures DTH (satellite) access to over 180 Polish-language TV channels, including all the channels from the extensive portfolio of Polsat TV. Every day Polsat TV provides reliable and impartial information on all major events from Poland and from around the world. The top quality of work of our journalists is confirmed by, among others, the audits performed by KRRiT (The National Broadcasting Council). The Internet access service we provide contributes to providing equal opportunities for the inhabitants of the cities and of the rural areas. Wireless LTE communication offered by Plus and Cyfrowy Polsat networks reaches both, big cities as well as villages and small towns. Our Internet access service is often the only possibility of getting the connection to the Internet, which reduces the threat of digital exclusion on nationwide scale. Cyfrowy Polsat, while bearing in mind the good of underage viewers and their protection against harmful content, offers parental control which can be activated for specific channels or shows. As regards VOD, we have adopted the “Code of best practice in the field of protection of minors” which was developed by KRRiT jointly with the IAB Polska Association of the Employers of Internet Industry. Polsat TV understands the special responsibility connected with the influence that TV, and advertising in particular, has on young viewers. That is why already in 2014, jointly with other leading broadcasters, we signed an agreement protecting children against unhealthy eating habits. We adopted clear principles of qualification of advertising spots and sponsor messages accompanying shows for children, while all advertisers in the industry have to submit declarations confirming compliance of the products they advertise with the criteria developed by the Polish Federation of Food Industry (PFPZ) and the Food and Nutrition Institute (IŻŻ). Polsat TV participated in the work related to reaching the agreement regarding the sound volume levels in TV programs and shows. As agreed, we have committed to produce and broadcast audiovisual content accounting for loudness level of ”-23 LUFS”¹⁹ which was adopted on the basis of the recommendation issued by the European Broadcasting Union. Viewers with sight and hearing deficiencies were provided access to our Super Polsat channel in which vast majority of programs have been adapted to the needs of the people with deficiencies. It is a unique medium which serves as a benchmark in the audiovisual policy also outside Poland. Polsat TV also signed the Broadcasters Agreement of 2013 which defines the principles of development of facilities for disabled. In accordance with the relevant provisions, broadcasters are obligated to implement facilities for disabled for 10% of quarterly air time, excluding commercials and telesales. In our opinion the above percentage is too low. That is why in the letters we are sending to the regulator we propose gradual extension of the time during which the facilities for the disabled are offered so that by 2023 at the latest half of the programs will be adapted to the needs of people with disabilities.

[GRI 102-12, GRI 102-13] Our representatives participate in the work of work groups of ten industry organizations of which we are members. Participation in their work is voluntary while the addressed topics are associated with, among others, development of the telecommunications market, media market regulations and intellectual property protection. We are also a member of the Polish Association of Listed Companies.

The Group has never permitted and will never give permission for any corrupt practices. Ethics in business has always had very high priority all over our organization – our Code of Ethics covers the Group’s companies. The document defines fair competition, respect for law and ethical behavior.

An internal audit unit operates in Cyfrowy Polsat Group (formally it is a division within Cyfrowy Polsat). Moreover, there is an Internal Control Office at Polkomtel while Polsat TV has the Board and Control Office. These units verify whether operations adhere to the procedures and regulations, and they also deal with the issues related to corruption and bribery in sensitive areas of the organization. Every suspicion of corrupt practices is examined meticulously and if our suspicions are confirmed, then we definitely end our cooperation with a given individual or firm. In the case of Polsat TV, prevention of corruption and bribery is an element of the duties of the legal department which is responsible for assuring that the adopted ethical norms are observed by the employees. No dedicated due diligence procedures associated with prevention of corruption exist in the Capital Group.

Prevention of corruption

[GRI 205-3] In 2016 Cyfrowy Polsat Capital Group noted a total of 5 incidents having the nature of corrupt practices. In 2017 we noted 2 such incidents in the company. All of them occurred in Polkomtel.

  Whenever a case of corrupt practices is confirmed, apart from terminating the employment of the guilty person we introduce procedures in our companies to remind other employees of the valid principles and internal regulations. All the cases of violation of the rules by our partners in the years 2016-2017 were discovered while auditing one area (the sales channel). We have tightened the processes, modified the procedures as well as implemented and improved the systems which support this area of activity. We conduct numerous preventive and educational activities. No incidents having the nature of corruption were discovered in Polsat TV and Cyfrowy Polsat in the years 2016-2017.

Principles of free competition

[GRI 206-1] One incident, leading to a financial penalty for permitting a competition-restricting practice occurred in Cyfrowy Polsat. The company considered the decision to be grossly unfair. Our view was shared by the Court of Appeals who, in an appeals procedure, repealed UOKiK’s decision. UOKiK Chairman filed against the decision of the Court of Appeals. Three incidents having the nature of anti-competitive behavior and monopolistic practices were noted in Polkomtel in 2017. Two administrative proceedings are in progress. In one case the Court of Appeals issued a legally valid ruling repealing UOKiK Chairman’s decision. No cases of anti-competitive behavior or monopolistic practices occurred in Polsat TV.

In each of the companies who are members of Cyfrowy Polsat Capital Group the employee afairs are regulated by the valid Work Regulations. We try to make sure that the policies that we use inside the organization reflect the valid standards. This rule also applies to our Work Regulations. In 2017 we implemented the “Human Resources Policy” which is consistent across the entire Group. The main purpose of the policy is to build an attractive working environement for the existing and potential employees. The document has been based on the solutions that have been working finely in Polkomtel, Cyfrowy Polsat and Polsat TV, and it has been used to align the understanding of the principles of staff management with the values adopted by the Group.

Human Resources Policy regulates the process of hiring of new staff, their adaptation, the offered terms of employment and organizational culture, competence development, freedom of association. We offer fair remuneration to our employees, depending on the type of their duties, scope of responsibilities and complexity of their tasks. The boundary levels of remuneration at individual employment levels/position are defined by the Remuneration Regulations, while the minimum remuneration level offered by the Group complies with the regulations of Polish law. A common system of HR and payroll support exists across the whole Group, thanks to which the procedures, processes and data are consistent in the whole organization.

The following indicators have been adopted to assess performance:

• GRI 102-8 Information on employees and other workers
• GRI 102-41 Collective bargaining agreements
• GRI 405-1 Diversity of governance bodies and employees
• GRI 403-2 Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities
• GRI 403-3 Workers with high incidence or high risk of diseases related to their occupation
• GRI 403-4 Health and safety topics covered in formal agreements with trade unions
• GRI 404-1 Average hours of training per year per employee
• GRI 404-3 Percentage of employees receiving regular performance and career development reviews

Selected benefits available for Cyfrowy Polsat Group employees: [GRI 401-2]

• Prepaid medical care package
• Prepaid sports pass
• Promotions for employees
• Insurance
• Special offers for theater tickets

In Poland respect for human rights is effectively enforced by Polish law. Forced labor or employment of minors are not the practices to which our business is exposed. Cyfrowy Polsat Group has implemented the Diversity and human rights respect policy. We support the Universal Declaration of Human Rights and the Declaration of the International Labor Organization. The fundamental principles and rights stipulated by these declarations have been incorportated into the “Code of Ethics and Human Resources Policy of Cyfrowy Polsat Group”. By virtue of other regulations and codes (e.g. the Work Regulations or the Regulations of the Anti-Mobbing Committee), the Group’s companies are obligated to protect their employees againts any act of physical, verbal or psychological harrassment; abuse, humiliation or threats coming from either the co-workers or the superiors with respect to the below listed dimensions of diversity: sex, age, sexual orientation, completence, experience, potential degree of disability, nationality, ethnic and social origin, color of skin, communication language, parental status, religion, denominiation or lack of any denomination, political views or any other dimensions of diversity which are defined by valid law.

An Internal Anti-Mobbing Commission has been appointed in Cyfrowy Polsat and Polkomtel as an element of the Anti-Mobbing Policy. The Commission is responsible for reviewing the complaints related to occurrence of mobbing. To familiarize our employees with the topic as well as to make them aware of potential threats and the rights they have, regulary mandatory training is carried out for the employees with regard to this topic via our e-learning platform. In the case of Polsat TV, acts having the nature of mobbing are covered by the Anti-Mobbing Procedure which is an internal document of that company. No dedicated procedures aimed at assuring respect for human rights have been adopted in Cyfrowy Polsat Captial Group.

[GRI 406-1] In 2016 we did not receive any notification of discriminatory treatment or mobbing. In 2017 there was one investigation as a result of which the Anti-Mobbing Committee ruled that no behavior or conduct existed which could confirm that any mobbing practices occured.

Social and community-related actions are carried out on our behalf by POLSAT Foundation whose mission includes saving the health and lives of children. The framework and the principles of the Foundation’s activities are defined in the Incorporation Deed of POLSAT Foundation. The document is available on the Foundation’s website – www.fundacjapolsat.pl. No dedicated policy governing social responsibility issues exists in Cyfrowy Polsat Group.

Due dilligent and compliant with the statute performance of POLSAT Foundation’s activities is supervised by the Foundation’s Board. Since November 2016 the Board has had 8 members. The Board’s members include the following:

• Małgorzata Nawrocka
• Katarzyna Ostap-Tomann
• Nina Terentiew-Kraśko
• Józef Birka
• Mirosław Błaszczyk
• Paweł Januszewicz
• Aleksander Myszka
• Tobias Solorz

The Foundation’s activities are supervised by the Minister of Health.

The following indicators have been adopted to assess performance:

• GRI 203-1 Infrastructure investments and services supported
• GRI 203-2 Significant indirect economic impacts

Our definition of corporate social responsibility: Cyfrowy Polsat Group sees and understands the impact that the services it provides have on local communities. The following are the pillars of our corporate social responsibility activities:

• Safety and security
• Aid for children
• Promotion of sports

For that reason our Capital Group cooperates with the rescue services, i.e. WOPR lifeguard service, as well as TOPR and GOPR mountain rescue service, offers donations and supports the activities of POLSAT Foundation, supports amateur and professional sports events while also promoting physical activity among the society. Key figures:

• POLSAT Foundation provided aid to over 31.5 thousand children.
• The Foundation provided support to over 1 200 hospitals and medical centers.
• More than PLN 224 million was donated for the Foundation’s statutory goals.
• PLN 17.5 million has been obtained for the Foundation from the St. Nicholas Day’s commercial block in Polsat TV.
• Over PLN 16.7 million was the amount obtained by POLSAT Foundation from the donation of 1% of the income tax.
• Two toll-free emergency numbers were activated by Plus network – 601 100 100 (for emergiencies occuring at the seaside and on the lakes) and 601 100 300 (for emergencies in the mountains).
• Around 20 thousand interventions related to incidents occuring at the seaside or on the lakes were recorded during the 14 years of operation of the Integrated Rescue System.
• Over 70% of all the rescue operations in the mountains as well as on the water takes place following a call to one of Plus’s emergency numbers.

All our activities are undertaken while observing the legal order valid in Poland. Our Group operates in compliance with the following laws:

• Environmental Protection Act dated 27 April 2001,
• Waste Management Act dated 14 December 2012,
• Waste Electrical and Electronic Equipment Act dated 29 July 2005,
• Packaging Waste Management Act dated 13 June 2013,
• Waste Batteries and Accumulators Act dated 24 April 2009.

Environmental goals have existed in Polkomtel since 2014. Their observance has become an important element of the Company’s strategy. The Company’s ecological targets include:

• introduction on the market of only the products which meet the relevant norms and regulations,
• achieving the levels of salvaging and recycling of electrical and electronic equipment, batteries and accumulators as well as packaged products which are not lower than the levels required by the law,
• sale of electricity generated from renewable sources of energy, gas burning or cogeneration in the amounts not lower than required by the law,
• rational and thrifty management of electrical energy,
• restriction of the negative environmental impact of other essential factors affecting the natural environment.

Cyfrowy Polsat in turn has 10 eco-principles, developed jointly with the employees, which demonstrate the pro-environmental attitudes and actions that are promoted by the company. In addition, our InterPhone Service set-top box factory holds the following certificates: ISO 9001:2009 and ISO 14001:2005 in the field of design and manufacturing of electronic equipment as well as PN-N-18001:2004 standard in the field of design and manufacturing of electronic equipment, while Polkomtel conforms with ISO 9001:2008 and ISO 14001:2004 standards.

The following indicators have been adopted to assess performance:

• GRI 301-1 Materials used by weight and volume
• GRI 302-1 Energy consumption within the organization
• GRI 306-1 Water discharge by quality and destination
• GRI 306-2 Waste by type and disposal method
• GRI 302-4 Reduction of energy consumption

• We strive to make sure that every set-top box manufactured in Cyfrowy Polsat Group’s factory is packed only in recycled packaging. In addition, while caring for organizational efficiency, costs and protection of natural environment we take care that the trucks and vans transporting the equipment and other materials to the sales network are loaded in an optimum manner, which enables reduction of emission of carbon dioxide into the atmosphere.
• The documents which are intended for reprocessing at Cyfrowy Polsat are destroyed in a special heavy duty shredder. The output is successively shipped as waste paper for recycling to the company with whom Cyfrowy Polsat has a relevant contract.
• We conduct continuous collection of waste paper and segregation of waste (e.g. waste toner cartridges). We support good habits which, taking into account the size of the company and the number of people employed, bring tangible changes. We use two-sided printing and copying, switch off the lights when leaving a room, we use the stand-by mode on computers while they are on, we disconnect chargers once battery charging ends, we rationally use water and are conscientious when using air-conditioning.