.Grow financial ambition: growth of results and return to dividend payments
Our previous strategy reversed multi-year negative trends, delivering a financial turnaround, and improved the structure of our balance sheet. With .Grow we have entered a path of faster and more sustainable growth, based on solid foundations.
While expanding revenues, we were planning to benefit from high operating leverage that would accelerate EBITDAaL and cash flow growth. Generation of sustainable returns is the key to .Grow and this is what makes it stand out from past performance. In our previous strategy, the turnaround was generated by huge savings on indirect costs, while direct margin continued to fall. In .Grow, the key driver for EBITDAaL growth has been revenue expansion fuelled by commercial activity. It makes this growth fundamentally healthier.
Revenue growth driven by core business
Chart: Total revenues
Core revenues key growth drivers
Presenting the strategy, we aimed at expanding EBITDAaL at a low-to-mid single-digit pace. This growth was expected to be predominantly driven by the expanding direct margin, as high operating leverage would allow us to benefit from higher revenues. Growth through commercial development would make our fundamentals much more solid and sustainable for the long term. Our cost transformation continues. Indeed, the same digitization trends that are enabling our growth leverage also help us drive down costs further still. At the same time, using AI and process automation, we are improving our customer services: a win-win. We have expected that inflationary pressure will offset some of this margin expansion, but enough will find its way to operating profit to be able to grow our EBITDAaL margin.
Chart: Both revenue expansion and cost savings will now contribute to EBITDAaL growth
Our smart investment strategy was intended to focus on growth, especially fibre and 5G, and on efficiency. Our Capex structure was planned to gradually evolve from the one driven by fibre to higher share of mobile. It embarks on a landmark modernisation of our mobile network. It is critical in order to ensure that we cope with the explosion of data, which is already taking place and will only accelerate in the future. It will be done on the occasion of the 5G rollout. While we continue to expand our fibre footprint, it does not require significant direct Capex engagement, as it is mainly being realised through partnerships. Despite these significant investments, we have aimed to keep eCapex at a steady annual level of PLN 1.7–1.9 billion on average over the period. This is how our business growth will translate into increasing cash flow generation.
Evolving capex structure but steady average annual level
As part of our .Grow strategy, we decided to resume sustainable shareholder remuneration and announced our dividend policy. In 2022, we paid a dividend of PLN 0.25 per share from the Company’s 2021 profits. It was the first dividend payment since 2016. In 2023, the dividend, paid out of 2022 profits, was raised by 40% to PLN 0.35 per share. In line with our dividend policy, this has become a new sustainable floor for the future. On 19 April 2024, the Annual General Meeting of Orange Polska adopted a resolution to pay a cash dividend of PLN 0.48 per share in 2024 from 2023 profits. This means that the dividend will grow by more than 90% over the period of two years.
Chart: Dividend per share (in PLN)
