As published on 12 February 2020
The full report on Consolidated full year 2019 results is available on our website: http://orange-ir.pl/results-center/results/2019.
Consolidated income statement
| (in PLN millions, except for earnings per share) | 12 months ended | ||
|---|---|---|---|
| Note | 31 December 2019 IFRS 16 basis |
31 December 2018 IAS 17 basis (see Note 2.2) |
|
| Revenue | 5 | 11,406 | 11,101 |
| External purchases | 6.1 | (6,514) | (6,449) |
| Labour expense | 6.2 | (1,488) | (1,582) |
| Other operating expense | 6.3 | (420) | (472) |
| Other operating income | 6.3 | 238 | 253 |
| Impairment of receivables and contract assets | 6.3,17 | (138) | (162) |
| Gains on disposal of assets | 7 | 270 | 192 |
| Employment termination expense | 14 | (190) | 5 |
| Depreciation and impairment of right-of-use assets | 12.1 | (300) | - |
| Depreciation, amortisation and impairment of property, plant and equipment and intangible assets, including: |
8,10,11 | (2,448) | (2,541) |
| - depreciation of property, plant and equipment financed by finance lease | - | (41) | |
| Operating income | 416 | 345 | |
| Interest income | 17 | 40 | 39 |
| Interest expense on lease liabilities | 17 | (50) | (4) |
| Other interest expense and financial charges | 17 | (240) | (257) |
| Discounting expense | 17 | (48) | (83) |
| Finance costs, net | (298) | (305) | |
| Income tax | 25.1 | (27) | (30) |
| Net income | 91 | 10 | |
| Net income attributable to owners of Orange Polska S.A. | 91 | 10 | |
| Net income attributable to non-controlling interests | - | - | |
| Earnings per share (in PLN) | 32.4 | 0.07 | 0.01 |
| Weighted average number of shares (in millions) | 26.1 | 1,312 | 1,312 |
Consolidated statement of comprehensive income
| (in PLN millions) | 12 months ended | ||
|---|---|---|---|
| Note | 31 December 2019 IFRS 16 basis |
31 December 2018 IAS 17 basis |
|
| Net income | 91 | 10 | |
| Items that will not be reclassified to profit or loss | |||
| Actuarial losses on post-employment benefits | 16 | (8) | (4) |
| Income tax relating to items not to be reclassified | 2 | 1 | |
| Items that may be reclassified subsequently to profit or loss | |||
| Losses on cash flow hedges | 22 | (27) | (13) |
| Income tax relating to items that may be reclassified | 5 | 3 | |
| Other comprehensive loss, net of tax | (28) | (13) | |
| Total comprehensive income/(loss) | 63 | (3) | |
| Total comprehensive income/(loss) attributable to owners of Orange Polska S.A. |
63 | (3) | |
| Total comprehensive income/(loss) attributable to non-controlling interests |
- | - | |
Consolidated statement of financial position
| (in PLN millions) | Note | At 31 December 2019 IFRS 16 basis |
At 31 December 2018 IAS 17 basis (see Note 2.2) |
|---|---|---|---|
| ASSETS | |||
| Goodwill | 9 | 2,263 | 2,147 |
| Other intangible assets | 10 | 4,545 | 4,871 |
| Property, plant and equipment | 11 | 10,402 | 10,738 |
| Right-of-use assets | 12.1 | 2,101 | - |
| Trade receivables | 13.1 | 455 | 552 |
| Contract assets | 13.2 | 65 | 27 |
| Contract costs | 13.3 | 99 | 56 |
| Derivatives | 22 | 44 | 48 |
| Other assets | 65 | 53 | |
| Deferred tax assets | 25.2 | 808 | 834 |
| Total non-current assets | 20,847 | 19,326 | |
| Inventories | 218 | 240 | |
| Trade receivables | 13.1 | 2,132 | 2,371 |
| Contract assets | 13.2 | 117 | 138 |
| Contract costs | 13.3 | 329 | 297 |
| Derivatives | 22 | 1 | 52 |
| Other assets | 227 | 214 | |
| Prepaid expenses | 65 | 46 | |
| Cash and cash equivalents | 21 | 404 | 611 |
| Total current assets | 3,493 | 3,969 | |
| TOTAL ASSETS | 24,340 | 23,295 |
| (in PLN millions) | Note | At 31 December 2019 IFRS 16 basis |
At 31 December 2018 IAS 17 basis (see Note 2.2) |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Share capital | 26.1 | 3,937 | 3,937 |
| Share premium | 832 | 832 | |
| Other reserves | (89) | (58) | |
| Retained earnings | 5,884 | 5,790 | |
| Equity attributable to owners of Orange Polska S.A. | 10,564 | 10,501 | |
| Non-controlling interests | 2 | 2 | |
| Total equity | 10,566 | 10,503 | |
| Trade payables | 15.1 | 348 | 473 |
| Lease liabilities | 12.1 | 1,633 | 112 |
| Loans from related party | 19 | 6,431 | 5,258 |
| Other financial liabilities at amortised cost | 8 | 11 | |
| Derivatives | 22 | 55 | 31 |
| Provisions | 14 | 649 | 468 |
| Contract liabilities | 13.4 | 344 | 331 |
| Employee benefits | 16 | 164 | 136 |
| Other liabilities | 15.2 | 50 | 26 |
| Total non-current liabilities | 9,682 | 6,846 | |
| Trade payables | 15.1 | 2,367 | 2,469 |
| Lease liabilities | 12.1 | 348 | 66 |
| Loans from related party | 19 | 11 | 2,074 |
| Other financial liabilities at amortised cost | 61 | 10 | |
| Derivatives | 22 | 20 | 19 |
| Provisions | 14 | 242 | 217 |
| Contract liabilities | 13.4 | 471 | 460 |
| Employee benefits | 16 | 185 | 201 |
| Income tax liabilities | 28 | 54 | |
| Other liabilities | 15.2 | 359 | 376 |
| Total current liabilities | 4,092 | 5,946 | |
| TOTAL EQUITY AND LIABILITIES | 24,340 | 23,295 |
Consolidated statement of changes in equity
| (in PLN millions) | Share capital | Share premium | Other reserves | Retained earnings | Equity attributable to owners of OPL S.A. | Noncontrolling interests | Total equity | ||
|---|---|---|---|---|---|---|---|---|---|
| Cash flow hedge reserve | Actuarial losses on postemployment benefits | Deferred tax | |||||||
| Balance at 1 January 2019 | 3,937 | 832 | (20) | (51) | 13 | 5,790 | 10,501 | 2 | 10,503 |
| Total comprehensive income for the 12 months ended 31 December 2019 | - | - | (27) | (8) | 7 | 91 | 63 | - | 63 |
| Share-based payments (see Note 26.3) | - | - | - | - | - | 3 | 3 | - | 3 |
| Transfer to inventories | - | - | (3) | - | - | - | (3) | - | (3) |
| Balance at 31 December 2019 | 3,937 | 832 | (50) | (59) | 20 | 5,884 | 10,564 | 2 | 10,566 |
| Balance at 1 January 2018 | 3,937 | 832 | (2) | (47) | 9 | 5,779 | 10,508 | 2 | 10,510 |
| Total comprehensive loss for the 12 months ended 31 December 2018 | - | - | (13) | (4) | 4 | 10 | (3) | - | (3) |
| Share-based payments (see Note 26.3) | - | - | - | - | - | 1 | 1 | - | 1 |
| Transfer to inventories | - | - | (5) | - | - | - | (5) | - | (5) |
| Balance at 31 December 2018 | 3,937 | 832 | (20) | (51) | 13 | 5,790 | 10,501 | 2 | 10,503 |
Consolidated statement of cash flows
| (in PLN millions) | 12 months ended | ||
|---|---|---|---|
| Note | 31 December 2019 IFRS 16 basis |
31 December 2018 IAS 17 basis (see Note 2.2) |
|
| OPERATING ACTIVITIES | |||
| Net income | 91 | 10 | |
| Adjustments to reconcile net income to cash from operating activities | |||
| Gains on disposal of assets | 7 | (270) | (192) |
| Depreciation, amortisation and impairment of property, plant and equipment, intangible assets and right-of-use assets |
8,10,11,12.1 | 2,748 | 2,541 |
| Finance costs, net | 298 | 305 | |
| Income tax | 25.1 | 27 | 30 |
| Change in provisions and allowances | 74 | (685) | |
| Operational foreign exchange and derivatives gains, net | (7) | (3) | |
| Change in working capital | |||
| (Increase)/decrease in inventories, gross | 29 | (25) | |
| (Increase)/decrease in trade receivables, gross | 13.1 | 367 | (225) |
| (Increase)/decrease in contract assets, gross | 13.2 | (18) | 166 |
| (Increase)/decrease in contract costs | 13.3 | (75) | 51 |
| Decrease in trade payables | (67) | (1) | |
| Increase in contract liabilities | 13.4 | 24 | 232 |
| Increase in prepaid expenses and other receivables | (96) | (34) | |
| Increase/(decrease) in other payables | 15.2 | 9 | (22) |
| Interest received | 40 | 39 | |
| Interest paid and interest rate effect paid on derivatives, net | (371) | (363) | |
| Exchange rate effect paid on derivatives, net | - | (5) | |
| Income tax paid | (27) | (7) | |
| Net cash provided by operating activities | 2,776 | 1,812 | |
| INVESTING ACTIVITIES | |||
| Payments for purchases of property, plant and equipment and intangible assets | 10,11 | (2,272) | (2,166) |
| Investment grants received | 15.2 | 136 | 5 |
| Investment grants paid to property, plant and equipment and intangible assets suppliers |
15.2 | (153) | (64) |
| Exchange rate effect received on derivatives economically hedging capital expenditures, net |
5 | 5 | |
| Proceeds from sale of property, plant and equipment and intangible assets | 500 | 156 | |
| Cash paid for subsidiaries, net of cash acquired | 4 | (132) | (2) |
| Payments on other financial instruments, net | (3) | - | |
| Net cash used in investing activities | (1,919) | (2,066) | |
| FINANCING ACTIVITIES | |||
| Repayment of long-term loans from related party | 20 | (17) | - |
| Repayment of lease liabilities | 20 | (279) | (42) |
| Increase/(decrease) in revolving credit line and other debt | 20 | (826) | 261 |
| Exchange rate effect received on derivatives hedging debt, net | 20 | 58 | - |
| Net cash provided by/(used in) financing activities | (1,064) | 219 | |
| Net change in cash and cash equivalents | (207) | (35) | |
| Cash and cash equivalents at the beginning of the period | 21 | 611 | 646 |
| Cash and cash equivalents at the end of the period | 21 | 404 | 611 |
Segment information and performance measures
The Group reports a single operating segment as decisions about resources to be allocated and assessment of performance are made on a consolidated basis. Starting from 2019, following the adoption of IFRS 16 “Leases” (see Note 2.2), the Group redefined the performance measures used. Group performance is currently evaluated by the Management Board based on revenue, EBITDAaL, net income, organic cash flows, capital expenditures, net financial debt and net financial debt to EBITDAaL ratio based on cumulative EBITDAaL for the last four quarters. Comparative amounts were adjusted accordingly.
Since the calculation of EBITDAaL, organic cash flows, capital expenditures and net financial debt is not defined by IFRS, these performance measures may not be comparable to similar indicators used by other entities. The methodology adopted by the Group is presented below.
Starting from 2019, EBITDAaL is the key measure of operating profitability used by the Management Board. The Group decided to replace EBITDA with EBITDAaL (EBITDA after leases) as EBITDA is no longer a relevant measure of operating profitability after the adoption of IFRS 16 because it excludes expenses related to leases.
EBITDAaL corresponds to operating income before depreciation, amortisation and impairment of property, plant and equipment and intangible assets decreased by interest expense on lease liabilities and adjusted for the impact of deconsolidation of subsidiaries, costs related to acquisition and integration of new businesses, employment termination programs, restructuring costs, significant claims, litigation and other risks as well as other significant non-recurring items. Calculation of EBITDAaL for the 12 months ended 31 December 2019 is presented in the table below.
Organic cash flows are the key measure of cash flow generation used by the Management Board. Starting from 2019, organic cash flows include repayment of capital of lease liabilities. Organic cash flows correspond to net cash provided by operating activities decreased by payments for purchases of property, plant and equipment and intangible assets and repayment of lease liabilities, increased by impact of net exchange rate effect received/paid on derivatives economically hedging capital expenditures and lease liabilities and proceeds from sale of property, plant and equipment and intangible assets and adjusted for the payments for acquisition of telecommunications licences, payments for costs related to acquisition and integration of new businesses not included in purchase price and payments relating to significant claims, litigation and other risks. Calculation of organic cash flows for the 12 months ended 31 December 2019 and 2018 is presented in the table below.
Capital expenditures are the key measure of resources allocation used by the Management Board and represent acquisitions of property, plant and equipment and intangible assets. Starting from 2019, this measure excludes capital expenditures financed by leases and acquisition of telecommunications licences.
Net financial debt and net financial debt to EBITDAaL ratio are the key measures of indebtedness and liquidity used by the Management Board. The calculation of net financial debt is presented in Note 18.
Additionally, to give a better representation of underlying performance, revenue from the Group’s activities for the comparative period is adjusted for the impact of deconsolidation of subsidiaries.
Basic financial data of the operating segment is presented below:
| (in PLN millions) | 12 months ended | |
|---|---|---|
| 31 December 2019 | 31 December 2018 | |
| Revenue | 11,406 | 11,087(1) |
| EBITDAaL(2) | 3,006 | Not applicable |
| Adjusted EBITDA(2) | Not applicable | 2,881 |
| Net income | 91 | 10 |
| Organic cash flows | 737 | 411(3) |
| Capital expenditures | 2,140 | 2,114(4) |
(1) Includes PLN (14) million of adjustment for the impact of deconsolidation of subsidiaries for the 12 months ended 31 December 2018.
(2) Starting from 2019, EBITDAaL is the key measure of operating profitability used by the Management Board. Calculation of EBITDAaL in comparative period is not applicable for the purpose of segment reporting due to the modified retrospective adoption of IFRS 16 by the Group (see Note 2.2).
(3) Includes PLN (42) million of repayment of capital of finance lease liabilities in the 12 months ended 31 December 2018.
(4) Excludes PLN 136 million of capital expenditures financed by finance leases in the 12 months ended 31 December 2018.
| 31 December 2019 | 31 December 2018 | |
|---|---|---|
| Net financial debt (in PLN millions, see Note 18) | 6,087 | 6,672 |
| Net financial debt/EBITDAaL ratio | 2.0 | Not applicable |
| Net financial debt(1)/adjusted EBITDA ratio | Not applicable | 2.4 |
(1) Including finance lease liabilities recognised under IAS 17 (see Note 18).
Calculation of performance measures of the operating segment is presented below:
| (in PLN millions) | 12 months ended | |
|---|---|---|
| 31 December 2019 | ||
| Operating income | 416 | |
| Add-back of depreciation, amortisation and impairment of property, plant and equipment and intangible assets | 2,448 | |
| Interest expense on lease liabilities | (50) | |
| Adjustment for the impact of employment termination programs | 181 | |
| Adjustment for the costs related to acquisition and integration of new subsidiaries (see Note 4) | 10 | |
| Adjustment for the impact of deconsolidation of subsidiaries | 1 | |
| EBITDAaL | 3,006 | |
| (in PLN millions) | 12 months ended | |
|---|---|---|
| 31 December 2018 | ||
| Operating income | 345 | |
| Add-back of depreciation, amortisation and impairment of property, plant and equipment and intangible assets | 2,541 | |
| Adjustment for the impact of employment termination programs | (5) | |
| Adjusted EBITDA | 2,881 | |
| (in PLN millions) | 12 months ended | |
|---|---|---|
| 31 December 2019 | 31 December 2018 | |
| Net cash provided by operating activities (1) | 2,776 | 1,812 |
| Payments for purchases of property, plant and equipment and intangible assets | (2,272) | (2,166) |
| Exchange rate effect received on derivatives economically hedging capital expenditures, net | 5 | 5 |
| Proceeds from sale of property, plant and equipment and intangible assets | 500 | 156 |
| Repayment of lease liabilities (1) | (279) | (42) |
| Adjustment for payment for costs related to acquisition and integration of new subsidiaries | 7 | - |
| Adjustment for payment of European Commission fine | - | 646 |
| Organic cash flows | 737 | 411 |
(1) Amounts for 2019 and 2018 are not comparable due to the modified retrospective adoption of IFRS 16 by the Group (see Note 2.2).