Orange Polska S.a. · GPW:OPL
Orange Polska — FY2023 Earnings Presentation
32 slides from Orange Polska's earnings presentation, Feb 15, 2024
Slide 1: Orange Polska FY 2023 results
Orange Polska FY 2023 results .Grow 15 February 2024 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 2023 (available at https://www.orange-ir.pl/results-center
Slide 4: FY 2023 highlights
FY 2023 highlights Liudmila Climoc Chief Executive Officer 4
Slide 5: Strong 2023 performance underscores the success of .Grow strategy
Strong 2023 performance underscores the success of .Grow strategy Good commercial developments ▪ ARPO growth in all key subscription services coupled with solid customer base increase ▪ Strong demand for high value handsets ▪ New 5G spectrum provides opportunities for our business Excellent financia
Slide 6: Excellent 2023 financial results; guidance delivered
Excellent 2023 financial results; guidance delivered 2023 low-to-mid single low single digit guidance PLN 1.5-1.7bn, digit growth growth 2023 Results Revenues EBITDAaL eCAPEX in PLN 12.97 bn 3.18 bn 1.56 bn YoY +3.9% +3.3% ✓ ✓ ✓ 6
Slide 7: 2023 achievements on track with .Grow strategy
2023 achievements on track with .Grow strategy +4.8% yoy +14% yoy Core retail telco services* IT/IS revenues +10% yoy >1k 5G sites (on c-band) Wholesale revenues** available for our customers -79% CO2 reduction 20% (vs.17% in 2022) (vs. 2015) Share of digital in sales >80k teachers trained in socio-
Slide 8: Business review
Business review Liudmila Climoc Chief Executive Officer Jolanta Dudek Deputy CEO in charge of the consumer market Bożena Leśniewska Deputy CEO in charge of the business market 8
Slide 9: Our growth is fuelled by all three core business engines
Our growth is fuelled by all three core business engines Direct margin growth drives B2C EBITDAaL expansion Convergence strategy supported by growing fibre reach and value strategy +11% 2023 2022 2021 B2B Strong position in telco services complemented by wide portfolio of IT/IS competencies Wholesal
Slide 10: Core telecom services: good ARPO growth coupled with solid customer base expansion
Core telecom services: good ARPO growth coupled with solid customer base expansion PLN Convergence ARPO +3.7% PLN Fixed broadband-only ARPO +4.1% PLN Mobile-only handset ARPO +3.2% 118.9 yoy (vs. +2.5% yoy in 2022) 64.2 yoy (vs. +3.7% yoy in 2022) 29.4 yoy (vs. +2.5% yoy in 2022) Convergence custome
Slide 11: B2B revenues +8% in 2023 as we consistently execute our strategy
B2B revenues +8% in 2023 as we consistently execute our strategy Connectivity & Network* IT&IS Key growth drivers: Key growth drivers: ▪ Wide ICT competence portfolio and demand for digital ▪ Value strategy (mobile ARPO +10% in 2020-23) transformation ▪ Migration to fibre and cloud solutions (networ
Slide 12: Leveraging digital tools to boost efficiency
Leveraging digital tools to boost efficiency 20% sales through digital channels Digital as a leverage for internal efficiency Increasing share of digital sales in total ▪ Advanced data driven marketing to boost sales acts customer value ▪ Inviting customers to self serve in digital channels 20% ▪ Ex
Slide 13: 5G spectrum will improve mobile network efficiency and unlock new business opportunities
5G spectrum will improve mobile network efficiency and unlock new business opportunities Our mobile spectrum resources almost 5G New spectrum brings new benefits double Split of MHz of spectrum 5G (C band) used for technologies ▪ Supports more-for-more commercial strategy 4G / 5G (DSS) ▪ Makes easie
Slide 14: Financial review
Financial review Jacek Kunicki Chief Financial Officer 14
Slide 15: Strong financial performance in 2023 across the board
Strong financial performance in 2023 across the board in PLNm FY23 yoy 4Q’23 yoy ▪ Solid performance in all key revenue lines revenues 12,970 +3.9% 3,492 +3.3% ▪ Robust growth of equipment sales driven by value strategy EBITDAaL 3,179 +3.3% 753 +2.3% ▪ Strong growth despite c.PLN 200m inflation impa
Slide 16: 4Q revenue +3.3% yoy with strong performance in all major lines
4Q revenue +3.3% yoy Revenue evolution with strong performance yoy change in all major lines 6.6% 7.1% 5.5% 4.6% 3.8% 6.0% 5.6% 5.0% -0.3% 3.3% Total reported Core telecom services* 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 4Q revenues fuelled by: ▪ Core telecom services* (+4% yoy) Revenue evolution breakdown D
Slide 17: 4Q EBITDAaL +2.3% due to strong direct margin expansion
4Q EBITDAaL +2.3% due EBITDAaL evolution to strong direct margin (yoy change in %) expansion 4.1% 5.5% 3.1% 2.3% ▪ 4Q direct margin up 3% yoy: 2.3% ▪ Enabled by solid contribution of all business lines 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 ▪ 4Q indirect costs up 4% yoy: ▪ Inflation and minimum wage EBITDAaL
Slide 18: FY net income +13%
FY net income +13% due to rising EBITDAaL, lower D&A and less Net income evolution in 2023 finance costs (yoy change in PLNm) +13% +81 -47 +27 +46 -114 ▪ -28% yoy net financial costs 818 mainly benefitted from FX gains +101 724 ▪ +25% yoy gain on disposal of assets as we sold more of our unused prop
Slide 19: Lean 2023 eCapex reflects delay of 5G auction and high property proceeds
Lean 2023 eCapex reflects delay of 5G auction and high proceeds from property Investment areas (in PLNm) disposal 202 Fibre net of disposed rollout to FiberCo 172 530 473 Mobile network ▪ Mobile capex reflects delay of the Fixed & core network spectrum auction 514 549 ▪ IT Systems and Infrastructure
Slide 20: Organic cash flow +43% yoy in 2023 driving strong balance sheet structure
Organic cash flow +43% Cash flow evolution breakdown in FY 2023 yoy in 2023 driving strong in PLNm balance sheet structure yoy change +51 +462 -268 +77 +29 +351 OCF generation driven by: 3,219 +234 ▪ 3% EBITDAaL growth -1,999 ▪ Optimised working capital from +198 -479 1,173 handsets sold on instalme
Slide 21: .Grow strategy: we are in line with the plan
.Grow strategy: we are in line with the plan Mid-term guidance (2021 to 2024)* 2021-23 performance Revenues low single digit growth CAGR +4.1% CAGR EBITDAaL low-to-mid single growth CAGR +4.4% CAGR 1.7 to 1.9 yearly average over the 1.67bn eCapex (PLN bn) period (avg 2021-23) 7.6% in 2023 ROCE incre
Slide 22: 2024 outlook
2024 outlook Liudmila Climoc Chief Executive Officer 22
Slide 23: Key priorities for 2024
Key priorities for 2024 Persistent execution of value New domains in IT/IS strategy in key retail areas (Big Data, Gen AI) Fibre monetisation 5G network rollout CO2 emissions reduction Continued cost transformation inc. Scope 3 (value chain) Continued focus on digital inclusion Boosting sales throug
Slide 24: 2024 guidance in line to achieve all .Grow financial ambitions
2024 guidance in line to achieve all .Grow financial ambitions Revenues EBITDAaL eCAPEX 2021-23 PLN 1.67bn performance +4.1% CAGR +4.4% CAGR (annual average) 2024 outlook low single digit growth low single digit growth PLN 1.7-1.9bn 24
Slide 25: Shareholders' remuneration in line with .Grow dividend policy
Shareholders’ remuneration in line with .Grow dividend policy Cash dividend Dividend per share (PLN) +92% PLN 0.48 +0.10 +0.13 per share to be paid in 2024 from 2023 profits* 0.25 0.35 0.48 PLN 0.48 as a floor payable in 2025 2022 2023 2024* 25 * Management recommendation, subject to approval of Gen
Slide 26: Q&A
Q&A 26
Slide 27: Appendix
Appendix 27
Slide 28: We successfully combine growth with social responsibility
We successfully combine growth with social responsibility Environment Social Governance CO2 emissions reduction goal met 2 years We make new technologies a supporter of Responsible management and in advance (-65% in 2025 vs 2015) social development supervisions to achieve strategic goals ▪ CO2 emiss
Slide 29: Details of bottom line evolution in 2023 and 4Q 2023
Details of bottom line evolution in 2023 and 4Q 2023 in PLNm 2023 2022 Change 4Q’23 4Q’22 Change EBITDAaL 3,179 3,078 +101 753 736 +17 Gains on disposal of assets 134 107 +27 9 22 -13 D&A of PPE and intangible assets* -2,000 -2,046 +46 -517 -520 +3 Add-back interest expense on lease liabilities 138
Slide 30: Details of organic cash flow evolution in 2023 and 4Q 2023
Details of organic cash flow evolution in 2023 and 4Q 2023 in PLNm 2023 2022 Change 4Q’23 4Q’22 Change Net cash flow from operating activities 3,219 3,168 +51 731 803 -72 before change in working capital Change in working capital* 234 -228 +462 96 -289 +385 Net cash flow from operating activities 3,
Slide 31: 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 Fibre customer base (retail + wholesale)/ Total households connectable to our fibre network (own
Slide 32: Glossary (2/2)
Glossary (2/2) Fixed broadband-only Revenues from fixed broadband offers (excluding B2C convergent offers and equipment sales) including services TV and VoIP services FTE Full time equivalent FTR Fixed termination rate HHC (Households connectable) in fibre Households where broadband access service b