Orange Polska S.a. · GPW:OPL
Orange Polska — FY 2022 Earnings Presentation
35 slides from Orange Polska's earnings presentation, Feb 16, 2023
Slide 1: Orange Polska FY 2022 results
Orange Polska FY 2022 results .Grow 16 February 2023 Orange People 1
Slide 2: Forward looking statement
Forward looking statement This presentation contains 'forward-looking statements' including, but not limited to, statements regarding anticipated future events and financial performance with respect to our operations. Forward-looking statements can be identified by the fact that they do not relate s
Slide 3: Reconciliation of operating performance measure to financial statements
Reconciliation of operating performance measure to financial statements Disclosures on performance measures have been presented in the Note 3 to IFRS Consolidated Financial Statements of the Orange Polska Group for the year ended 31 December 2022 (available at https://www.orange-ir.pl/results-center
Slide 4: FY 2022 highlights
FY 2022 highlights Julien Ducarroz Chief Executive Officer 4
Slide 5: Strong 2022 performance in a very challenging environment
Strong 2022 performance in a very challenging environment Good commercial performance ▪ Solid customer net additions and ARPO growth in all key subscription services ▪ Value strategy intensified Excellent financial results ▪ c.4% EBITDAaL growth despite PLN 220m higher energy costs (energy crisis ad
Slide 6: Strong 2022 financial results; guidance delivered
Strong 2022 financial results; guidance delivered 2022 low single digit flat/low single digit guidance PLN 1.7-1.9bn, growth growth 2022 Results Revenues EBITDAaL eCAPEX in PLN 12.49 bn 3.08 bn 1.72 bn YoY +4.7% +3.9% -1.0% ✓ ✓ ✓ 6
Slide 7: 2022 achievements on track with .Grow strategy
2022 achievements on track with .Grow strategy +6.3% +23% Core retail telco services* ICT revenues +24% 22% Wholesale revenues** fuelling Customers use 5G handsets direct margin +20% -14% CO2 reduction Digital sales yoy growth Support for Ukraine ~50% Customers use digital tools to interact with Ora
Slide 8: Business review
Business review Julien Ducarroz Chief Executive Officer Jolanta Dudek Deputy CEO in charge of the consumer market Bożena Leśniewska Deputy CEO in charge of the business market Maciej Nowohoński MB member in charge of wholesale market and real estate sales 8
Slide 9: Our growth is fuelled by all three core business engines
Our growth is fuelled by all three core business engines B2C Direct margin growth drives EBITDAaL expansion Convergence strategy supported by growing fibre reach and value strategy +7% 2022 B2B 2021 Strong position in telco services complemented by wide portfolio of ICT competencies 2020 EBITDAal Gr
Slide 10: Consistent strong customer base growth underscores the demand for fibre in Poland
Consistent strong customer base growth underscores the demand for fibre in Poland Fibre retail customer base expansion 2022 highlights: +62% ▪ Good growth of fibre customer base (+24% yoy) due to high demand and an expanding fibre reach 1,171 945 725 Fibre footprint on track vs. .Grow ambitions: +20
Slide 11: Solid commercial performance in convergence and mobile
Solid commercial performance in convergence and mobile PLN Convergence ARPO +3% in 2022 114.7 ▪ 2022 highlights: solid growth driven by fibre reach +10% expansion and value strategy (ARPO) ▪ On track vs. .Grow 2024 ambitions: 2021-22 customer 1.55 1.62 base growth by 10% (vs. >20% target) and ARPO r
Slide 12: New opening in wholesale maximises monetisation of our assets
New opening in wholesale maximises monetisation of our assets The largest infrastructure in Poland… Operational results demonstrate strong execution… +62% 3.2x 205k km 3.7m vs 2020 vs 2020 fibre network data transmission wholesale fibre own fibre HHC capacity sold customer lines 1.3x 2.6x 143k km 1.
Slide 13: B2B revenues up 9% in 2022 as a result of consistent strategy execution
B2B revenues up 9% in 2022 as a result of consistent strategy execution across all business lines Strong mobile revenue growth driven by value ICT products continue to benefit from digital strategy transformation of Polish enterprises +15% +46% Security IT Infrastructure Network & Communication B2B
Slide 14: Leveraging digital tools to become more effective
Leveraging digital tools to become more effective Development of advanced data driven Shift to selfcare customer management marketing to improve customer value (partnership with Google Cloud) ▪ >2m less calls to advisors from 2020 mainly thanks to Max (voice and chatbot with AI) ▪ 100% of Central Da
Slide 15: Our responsibility: for the planet and the society
Our responsibility: for the planet and the society #OrangeGoesGreen Support for Ukraine 2025 CO2 emissions reduction ▪ Hosting c. 800 refugees in OPL properties goal secured (Scope 1+2, vs 2015) ▪ >1 million activations of dedicated connectivity packages (special pre-paid offers for refugees with fr
Slide 16: Financial review
Financial review Jacek Kunicki Chief Financial Officer 16
Slide 17: Strong financial performance in 2022
Strong financial performance in 2022 in PLNm FY22 yoy 4Q’22 yoy ▪ Solid performance in all major revenue lines revenues 12,488 +4.7% 3,379 +6.6% ▪ Acceleration in 2H mainly due to fading MTR/FTR cuts impact EBITDAaL 3,078 +3.9% 736 +4.1% ▪ FY strong growth (in line with .Grow target) despite PLN 220
Slide 18: 4Q revenue +6.6% yoy with strong performance in all major lines
yoy growth no longer affected by negative 4Q revenue +6.6% yoy Revenue evolution reg. impact (comparable MTR/FTR) with strong performance yoy change 8.2% in all major lines 7.2% 7.1% 6.9% 6.6% 5.0% 6.0% 2.9% 3.4% Total reported 0.4% Core telecom services* 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 ▪ Core telecom
Slide 19: 4Q EBITDAaL +4.1% yoy fuelled by strong direct margin expansion
4Q EBITDAaL +4.1% yoy EBITDAaL evolution fuelled by strong direct (yoy change in %) margin expansion 8.1% 5.6% 3.9% 4.1% ▪ 4Q direct margin up 3% yoy: 1.8% ▪ Enabled by concerted contribution from retail telecom services, ICT and wholesale 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 ▪ 4Q indirect costs growth lim
Slide 20: FY net income 2.6x yoy driven by strong operating income
FY net income 2.6x yoy Net income evolution in 2022 (on comparable basis*) (yoy change in PLNm) driven by strong operating income 1,672 724 +114 +55 1,400 -23* -18* +209 ▪ 8% yoy lower depreciation 272 +115 reflects extension of economic useful life for certain assets and lower mobile capex in the p
Slide 21: eCapex focus redirected from fibre to mobile
eCapex focus redirected from fibre (financed by FiberCo JV) to mobile Investment areas (in PLNm) Fibre net of disposed rollout to FiberCo 202 Mobile network 346 196 530 ▪ Much higher mobile capex Fixed & core network reflects start of RAN renewal 524 project IT Systems and Infrastructure 514 ▪ >40%
Slide 22: Organic Cash Flow reflects strong operating performance
Organic Cash Flow reflects strong operating performance Cash flow evolution breakdown in FY 2022 in PLNm yoy change +194 -355 +175 +7 -66 -45 OCF generation driven by: ▪ 4% EBITDAaL growth 3,168 -228 ▪ Much higher working capital requirement resulting mainly -1,731 from record high equipment +121 -5
Slide 23: Strong balance sheet structure due to EBITDAaL growth and solid cash generation
Strong balance sheet Net debt evolution structure due to in PLNm EBITDAaL growth and solid cash generation 4,076 +107 4,000 -41 -822 +352 +328 ▪ 92% of debt at fixed interest rate by mid-2024 ▪ 2.4 years average debt duration ▪ Financial leverage lower Dec 2021 Organic Dividend Prolongation of Proce
Slide 24: .Grow strategy: we are in line with the plan despite difficult environment
.Grow strategy: we are in line with the plan despite difficult environment Mid-term guidance (2021 to 2024)* 2021-22 performance Revenues low single digit growth CAGR +4.2% CAGR EBITDAaL low-to-mid single growth CAGR +4.9% CAGR 1.7 to 1.9 yearly average over the 1.73bn eCapex (PLN bn) period (avg 20
Slide 25: 2023 outlook
2023 outlook Julien Ducarroz Chief Executive Officer 25
Slide 26: Key priorities for 2023
Key priorities for 2023 Persistent execution of value Further growth of ICT strategy in key retail areas (cybersecurity, cloud, big data) Growing monetisation of 5G spectrum acquisition and infrastructure via wholesale rollout CO2 emissions reduction inc. Scope 3 (value chain) Continued cost transfo
Slide 27: .Grow financial ambitions confirmed by 2021-22 performance & 2023 outlook
.Grow financial ambitions confirmed by 2021-22 performance & 2023 outlook Revenues EBITDAaL eCAPEX Strategy mid-point performance +4.2% CAGR +4.9% CAGR PLN 1.73bn 2021-22 (annual average) 2023 outlook low single digit growth flat/low single digit growth PLN 1.5-1.7bn All .Grow PLN 1.7-1.9bn low-to-m
Slide 28: Shareholders' remuneration: PLN 0.35
Shareholders’ remuneration .Grow dividend policy: Cash dividend PLN 0.35 as new sustainable floor for the PLN 0.35 future Future changes to be considered yearly, including: per share to be paid in 2023 from 2022 profits* ▪ Projections of underlying financial results ▪ Long-term financial leverage fo
Slide 29: Q&A
Q&A 29
Slide 30: Appendix
Appendix 30
Slide 31: Details of bottom line evolution in 2022 and 4Q 2022
Details of bottom line evolution in 2022 and 4Q 2022 in PLNm 2022 2021 Change 4Q’22 4Q’21 Change EBITDAaL 3,078 2,963 +115 736 707 +29 Gains on disposal of assets 107 52 +55 22 28 -6 Gain on the loss of control of Światłowód Inwestycje - 1,543 -1,543 - - - D&A of PPE and intangible assets* -2,046 -2
Slide 32: Details of organic cash flow evolution in 2022 and 4Q 2022
Details of organic cash flow evolution in 2022 and 4Q 2022 in PLNm 2022 2021 Change 4Q’22 4Q’21 Change Net cash flow from operating activities 3,168 2,974 +194 803 722 +81 before change in working capital Change in working capital -228 127 -355 -289 -175 -114 Net cash flow from operating activities
Slide 33: We successfully combine growth with social responsibility
We successfully combine growth with social responsibility Environment Social Governance We have clear climate/environmental We make new technologies a supporter Our corporate governance is goals and tangible results of economic and social development designed to provide responsible ▪ Climate goals:
Slide 34: Glossary (1/2)
Glossary (1/2) 4G/LTE Fourth generation of mobile technology, sometimes called LTE (Long Term Evolution) 5G Fifth generation of mobile technology, which is the successor to the 4G mobile network standard ARPO Average Revenue per Offer AUPU Average Usage per user CAGR Compound annual growth rate The
Slide 35: Glossary (2/2)
Glossary (2/2) fixed broadband access network based on FTTH (Fibre To The Home ) /DLA (Drop Line Agnostic) Fibre technology which provides the end user with speed of above 100Mbps Fixed broadband-only Revenues from fixed broadband offers (excluding B2C convergent offers and equipment sales) includin