Dear stakeholders,
In 2019 Orange Polska made further progress towards establishing a business model that will allow it to grow on a sustainable basis. Operating profitability increased for the second consecutive year while revenues grew for the first time in 13 years. This is compelling evidence that the strategy – based on convergence, rollout of the fibre network, developing adjacent business lines and increasing efficiency – is working and is being executed well in a challenging environment with constant structural pressure on legacy services. The Supervisory Board assessed last year’s financial performance of Orange Polska very highly.
Last year the management proved that it can successfully create and lead market developments. Orange Polska was the first on the market to introduce tariff increases in a ‘more for more’ formula. This bold decision was preceded by discussions in Supervisory Board meetings to analyse its potential consequences in the light of competition in the Polish telecom market. This move is key for the Company’s long-term value creation.
Another example of the Company’s admirable long-term perspective - and a vindication of its belief in the attractiveness of digital products - was the launch of Orange Flex. It is an investment in the Company’s future, designed and launched in house and aimed at disrupting the industry.
During the last financial year, the Supervisory Board was involved in all decisions of fundamental significance for Orange Polska. We monitored the Management Board’s governance in managing the business to ensure that these activities were lawful and compliant with legal provisions and internal standards and policies, as well as appropriate and efficient. At each meeting, the Supervisory Board discussed in detail the Company’s current financial and operational results in comparison to the budget adopted at the beginning of the year. More details of the Supervisory Board’s assessment of Orange Polska are presented over the chapter that follows.
The frequency of the Supervisory Board and its committees’ meetings keeps us in close contact with the management. In 2019, five Supervisory Board meetings and 13 meetings of the Supervisory Board’s committees took place. The overall average participation rate was 97.8%. Written votes were used on three occasions when resolutions were required between meetings.
Looking forward to 2020, in the shadow of the global coronavirus outbreak, the priorities for the management that the Supervisory Board confirmed at its March meeting must take a back seat. Crisis management becomes the absolute priority. I strongly believe that the core of Orange Polska’s business remains relatively immune to the impact of the pandemic, as mobile and fixed broadband connectivity nowadays is critical to needs of individuals and businesses. Outside of the pandemic two topics will be of particular importance. Firstly, the upcoming 5G auction. Obtaining new spectrum, which is a scarce and unique form of natural capital, will be very important for the long-term prospects of Orange Polska’s business. Secondly, a new strategy. In 2020 the management will work intensively on a new strategy covering 2021-2023. They will be guided in this process by certain strategic directions included in the new strategy of Orange Group, announced in December 2019.
I am convinced that the prudent actions of the Management Board, supported by the Supervisory Board, will enable the Company to cope well with the unprecedented challenges caused by the pandemic. I also believe in the resilience of our operations, and that this period of uncertainty will give rise to a lot of business opportunities in the longer term. that will be addressed in the new strategy.
Maciej Witucki
Chairman of the Supervisory Board
Orange Polska encourages shareholders to play an active role in the Company’s corporate governance. Shareholder consent is required for key decisions, including: the review and approval of the financial statements and Management Board Report on Activities; the review and approval of the Management Board’s recommendations on dividend payments or coverage of losses; the review and approval of the Supervisory Board Assessment of the Group’s situation; the election of the members of the Supervisory Board (and, if necessary, their dismissal); amendments to the Company’s Articles of Association; increase and reduction of the share capital; and the buy-back of shares.
At the Company’s General Meetings, each share in Orange Polska entitles its owner to one vote. In addition to their participation in General Meetings, members of the Company’s Management Board and senior executives engage in active dialogue with the Company’s shareholders. To ensure that investors receive a balanced view of the Company’s performance, Management Board members – led by the President of the Management Board and the Chief Financial Officer – also make regular presentations to institutional investors and representatives of the domestic and international financial community.
Orange Polska’s activity in the area of investor relations focuses primarily on ensuring transparent and proactive communication with capital markets through active co-operation with investors and analysts, as well as performance of disclosure obligations under the existing legal framework.
Orange Polska’s Investor Relations together with Company’s representatives regularly meet with investors and analysts in Poland and abroad and participate in the majority of regional and telecom industry investor conferences.
Orange Polska Group’s financial results are quarterly presented during conferences, which are available also via a live webcast. In 2019, the Company held four results presentations and about 160 meetings with investors and analysts in Poland and a number of other countries.
Orange Polska’s activity and performance are monitored by analysts representing both Polish and international financial institutions on a current basis. In 2019, a dozen or so financial institutions published their reports and recommendations concerning the Company. The up-to-date list of analysts is available on our website:
On March 11, 2019, the CFO of Orange Polska answered retail investors’ questions during an investor chat held by the Association of Individual Investors (SII). Several dozen individual investors asked their questions during the chat.
The key purpose of all efforts of the Investor Relations towards investors is to enable a reliable assessment of the Company’s financial standing, its market position and the effectiveness of its business model, taking into account the strategic development priorities in the context of the telecom market and the Polish and international macroeconomic environment. Our activity in investor relations area is appreciated by the market.
In 2019, Orange Polska published its third integrated annual report. It covers both financial and non-financial aspects of the Company’s business. The report presents the Company’s business model, value creation story, the economic and social context of its operations, strategy implementation, governance model, corporate governance, risk management and environmental impact. The content and layout of the report are based on the International Integrated Reporting Council (IIRC) guidelines, Global Reporting Initiative (GRI) Standards, ISO 26000 and Global Compact principles.
Orange Polska received an honourable mention in the 13th edition of the Social Reports Competition in the integrated report category for the 2018 report. The award was given for “a mature and comprehensive content, particularly the business model description and consistent high quality for years.” The Social Reports Competition is organised by the Responsible Business Forum and Deloitte. Its partners include the Ministry of Finance, the Ministry of Investment and Economic Development, the Polish Association of Listed Companies, the Polish Consumer Federation and the Warsaw Stock Exchange.
Orange Polska provides the investment community with a dedicated investor relations website www.orange-ir.pl.
Corporate Governance in Orange Polska is designed to provide responsible Company management and supervision in order to achieve the Company’s strategic goals and enhance its value. We have created a credible corporate governance framework which consists of mechanisms that help achieve growth. Those mechanisms consist of structures, processes and controls which enable the Company to operate more efficiently and mitigate risk. The ability of the Company to create value is ensured by having capable governing bodies with a proper division of duties and optimal representation of experience, skills and education. The sustainability of the Company is secured by the ability to allocate the created value in a fair and sustainable manner, as necessary to the Company’s long-term success.
The Management Board provides the leadership necessary to steer the Company to its strategic goals. It introduces policies and rules for maintaining the internal cohesiveness of the organisation. All members of the Management Board act as executives, while the members of the Supervisory Board play an oversight role. These two roles are separable and strictly assigned to these governing bodies. The Supervisory Board consists of shareholders’ representatives, elected by the General Meeting. In order to exercise its obligations the Supervisory Board may at any time examine any documents of the Company, may demand from the Management Board and employees any reports and explanations and may check the financial standing of the Company. When necessary the Supervisory Board may oblige the Management Board to commission advisory services to draw up an expert opinion for its use if a matter requires specialised knowledge or qualifications.
In order to ensure quality decision-making, the Supervisory Board uses its committees as advisory bodies. The members of each committee are experts in their field of expertise who provide the Supervisory Board with advice on issues requiring more detailed analysis. The Audit Committee provides the Supervisory Board with wide expertise on finance, accounting and audit. The Remuneration Committee deals with general remuneration policy and recommends appointments of Management Board members. The Strategy Committee is responsible for delivering recommendations on strategic plans and planning processes set up by the Management Board.
The aim of the corporate governance model described above is to properly distribute responsibilities within the Company and establish the roles of the key governing bodies, which in turn enhance the decision making process. Its structural elements, and the relationships between them, guarantee the transparency of key management decisions. Orange Polska is fully accountable to its stakeholders and is committed to communicating its progress towards its business goals and the fulfilment of its responsibilities. We do this to increase confidence about our Company among investors, customers, employees and the general public. We have paid the utmost attention to constructing a corporate governance system which promotes ethical, responsible and transparent practices. By introducing these rules we are demonstrating the Company’s commitment to the highest standards of governance and ensuring that these standards will continue to stand up to scrutiny by internal and external stakeholders.
Ethics in Orange Polska arise from the very basic need to maintain ethical standards in daily business activity. The standards and values implemented within the Company guide people in their mutual relations (both personal and business) helping them to support the Company’s business objectives and build the best possible relationships with the wider environment in which we operate. Ethical standards are included in the Orange Polska Code of Ethics, which provides our employees with a roadmap for the ethical behaviour expected by our shareholders, customers and business partners. The Orange Polska Code of Ethics shares the same standards as other companies within the Orange Group.
The Orange Polska Ethics Committee is an advisory body which acts as the guardian of ethical standards in the Company. It analyses any accusation of non-ethical behaviour that might arise from day to day, and educates employees to strengthen their understanding of ethical principles in the workplace. It also increases employees’ knowledge and awareness of everyday ethical fundamentals via e-training that identifies possible situations employees might encounter, and gives them examples of proper ethical behaviour.
Orange Polska employees can easily contact the Committee if they suspect a breach of ethics, either electronically (using the anonymous contact form on our intranet site) or by mail. It is also possible to send a letter or email directly to the Chairman of the Audit Committee. All inquiries are conducted in a strictly confidential manner.
Having proper ethical standards as a core element of our culture underpins Orange Polska’s good relations with our business partners and the market as a whole.
Since November 1998, shares of Orange Polska S.A. (formerly Telekomunikacja Polska S.A.) have been listed on the primary market of the Warsaw Stock Exchange (WSE) within the continuous listing system.
The Company’s shares are included in the following indices:
- WIG20 and WIG30 large-cap indices;
- WIG broad-market index;
- WIG-telecommunication industry index; and
- WIG ESG Index of socially responsible companies.
In 2019, Orange Polska S.A. was once again included in a prestigious group of listed, socially responsible companies. The new portfolio of the WIG ESG Index announced by the Warsaw Stock Exchange comprises 59 companies. Orange Polska S.A. has been present in the index portfolio since its first edition. The WIG ESG Index has been increasingly popular among companies and investors, who have noticed a link between consideration for social and environmental impact and financial performance.
In addition, Orange Polska S.A. has been included in the global FTSE Russell’s ESG Ratings, a global index that measures Company’s performance across environmental, social and governance (ESG) areas.
2019 brought losses in the indices on the Warsaw Stock Exchange (WSE). Orange Polska shares were up 49%, while the large-cap index, WIG20, lost 6% in the period. The share price increase was driven particularly by more favourable outlook for the telecom sector in Poland, which was noticed by investors following mobile price increases (initiated by Orange Polska), which had happened for the first time in many years.
Orange Polska S.A., as an issuer of securities listed on the Warsaw Stock Exchange, is obliged to follow the “comply or explain” rule stipulated in the “Best Practice for WSE Listed Companies 2016”.
In 2019, the Company complied with this corporate governance best practice. However, referring to the Recommendation IV.R.2 of the Best Practice guidelines, the Company provides a live broadcast of the General Meeting but it provides neither real-time bilateral communication nor the possibility to exercise the right to vote for shareholders taking part in a Meeting from a location other than the General Meeting, due to the legal risks involved in providing such electronic means of communication. The full text of our Statement on the Company’s compliance with the corporate governance recommendations and principles contained in Best Practice for GPW Listed Companies 2016 is available at www.orange-ir.pl/corporate-governance/best-practices.
We are convinced that diversity of a company’s governing bodies is beneficial to the company’s development. That is why we make sure that our Supervisory Board and the Management Board consists of people who are diverse in terms of age, sex, education and professional experience. Because they come from different environments and have a diversity of knowledge and skills, they can look from different perspectives at the management of the Company and its efficient functioning in its markets.