Orange Polska Integrated Report 01 Introduction 4 02 About our company 8 03 Our stakeholders 12 04 Our business model and value creation 16 05 Our strategy 45 06 Outputs & outcomes 56 07 Risk management framework 82 Content 08 Corporate governance 88 09 Financial statements 136 10 Adjustments and revisions 200 11 GRI table 204 Orange Polska Integrated Report - 2 3 - Orange Polska Integrated Report 01 Introduction Orange Polska Integrated Report - 4 5 - Orange Polska Integrated Report 1 Introduction INTRODUCTION Our new approach to reporting administrations, business and social part- Orange Polska is pleased to present its first in- ners. We refer to our impact on the economy, tegrated annual report. This report introduces local communities or the environment. For the a new way of communicating with our share- purposes of this report we have included full holders and other stakeholders that combines consolidated financial statements and most the financial and non-financial aspects of our material social and environmental informa- business. It presents our business model, our tion. value creation story, the economic and social context of our operations, how we implement The content and the layout of this report our strategy, how we are governed and how are based on the International Integrated we influence the environment. Reporting Council (IIRC) and Global Reporting Initiative (GRI.G4) guidelines, ISO 26 000 and We hope that by reporting in this way we can Global Compact Principle. The report also re- demonstrate to our investors as well as other flects the directions in the EU legislation on stakeholders the wider context of our busi- disclosures of non-financial and diversity in- ness activities, and explain our responsible formation. approach to doing business. We create value not only in financial terms but in other forms of value such as trust, reputation, job satisfac- tion, customer loyalty and good relations with local societies. We encourage you to read the report and share your opinion by sending us your feedback to [email protected]. Scope and boundaries The content of this report addresses key developments and material matters for the period 1 January to 31 December 2016. It provides insight into our business model, our strategic priorities, and the external and internal environment in which we operate: all factors which determine our strategy. It pro- vides both qualitative commentary and quan- titative performance measures. The report’s content is driven by materiality, and it sets out to address the most important topics for different groups of our stakeholders. The re- port also includes information on the indirect impact of Orange Polska in the value chain - building relationships with suppliers, public Orange Polska Integrated Report - 6 7 - Orange Polska Integrated Report 02 About our company Orange Polska Integrated Report - 8 9 - Orange Polska Integrated Report 2 About our company Orange Polska in 2016 in numbers 11.5 bn PLN ABOUT OUR COMPANY 49.33% 50.67% Orange Polska is Poland’s leading telecommunication provider, operating in all segments of revenues the Polish telecoms market. The Group owns the largest telecom infrastructure in Poland, rendering voice and data services in fixed and mobile networks. Orange Polska is 50.67% owned by Orange S.A., one of Europe’s leading telecom operators. Orange Polska’s success is founded on a portfolio of competitive products, a powerful, proactive sales force and outstanding customer care, supported by a robust infrastructure and highly motivated employees. Co-ordinating our efforts around a lean, agile operating 3.2 bn PLN shareholder structure model will ensure that we deliver healthy and sustainable returns to our shareholders. EBITDA Orange S.A Other shareholders Orange Polska vision: connect everyone to what Orange Polska mission: provide to Polish con- is essential in their life. sumers and businesses the best high speed con- * We aim to provide best in class connectivity and nectivity and an unmatched customer experience. 27.4% 15,880 digital services to the Polish society thanks to our Orange aims to provide to home and enterprise EBITDA margin employees at year end unique combination of high speed broadband fixed customers an unmatched daily experience by and mobile networks, our wide presence on the designing simple digital empowered services on Polish territory, our skilled and customer centric mobile and fibre allowing our customers to be employees and the values of our Orange brand. always in touch to connect what’s essential in their PLN We want to be the efficient, socially responsible life. 5.2bn 3,517 and “human inside” operator of choice for Polish capital expenditures society allowing everyone to connect to what volunteers among is essential in their life. employees 7.2 bn PLN Orange brand values: market cap at year end 662,000 77 children learned to use digital Orange Studios the internet safely for local communities Friendly Honest Direct Inspiring Dynamic Mobile accesses Fixed broadband Fixed voice lines TV customers Convergent We treat everyone as We talk about what we We always try to speak Every time we try to We are passionate (SIM cards) accesses (retail) (retail) customers an individual and ded- intend to do and we do in a manner under- view the world from a about what we do and icate time for listening. what we have prom- standable to every- different perspective, what we believe. We 16.0m 2.0m 3.9m 766k 879k (+0.6% y-o-y) (-3.3% y-o-y) (-6.2% y-o-y) (+3.4% y-o-y) (+20.7% y-o-y) We look forward to ised. We have nothing one. We are clear in to choose the best want to actively change working together and to hide, we are respon- our statements. course of action. We people’s lives. Our op- 9.5m post-paid 404k VDSL sharing successes. sible for our actions. see things in full colour. timism is contagious. (+13.4% y-o-y) (+43.3% y-o-y) We are always trans- We are ready to go be- 6.5m pre-paid 88k fibre parent and honest. yond the boundaries (-13.5% y-o-y) (+418% y-o-y) and take risks. *active full-time positions Orange Polska Integrated Report - 10 11 - Orange Polska Integrated Report 03 Our stakeholders Orange Polska Integrated Report - 12 13 - Orange Polska Integrated Report 3 Our stakeholders Dialogue with stakeholders is a process which helps us to better respond to their expectations. Stakeholders have been identified based on the strength of the impact on the Company and the OUR STAKEHOLDERS interest and attitude to the Company's activities (positive, neutral, negative). Due to the role of individual stakeholders and the scale of business activity, the frequency of contacts with each group is high - everyday. Government and Investors Customers Employees Business Partners Suppliers Communities regulators Why it is important to As a listed company Our customers are Engagement of adequately The possibility Suppliers and As our industry Empowering engage we take care of our vital for the success skilled and motivated of building contactors impact on is regulated, it local economies investors and the of our business and employees plays a critical strategic alliances our ability to provide is essential for strengthens the financial community. we put them at the role in delivering excellent is important for products and deliver us to establish socioeconomic heart of everything customer service assuring the services. and maintain context in which we we do. and increasing better quality of constructive operate. long-term value our network and relationships with generation. building broader the regulator. offer portfolio for our customers. Ways we engage Providing detailed Dialogue with Employee training, One-on-one Dialogue and building Maintaining Cooperation with and transparent customers: Listening and talent development; business meetings; of long-term relations constructive communities; communication & Responding; dialogue with employees: agreements based with suppliers; dialogue with programme of financial and customer satisfaction survey; on fair rules of group assessment: regulator; partnership with operational results; satisfaction surveys dialogue with Trade Unions. cooperation. opinion surveys; consultation educational and engaging in direct including NPS. process; social institutions. audit. dialogue with dedicated reporting; investors through meetings; participation in roadshows, participating conferences and in industry meetings; conferences. dedicated IR website. What matters most Transparent A reliable and Friendly and modern work Transparent and fair Fair treatment; Licencing and Investment in to them financial information; resilient network; environment; competitive rules of cooperation transparent rules compliance; infrastructure; turnaround in good coverage; remuneration levels; of tenders and quality of services social investment in revenue, EBITDA safe services; safety standards; cooperation; and network communities. and cash flow. simple, transparent clear career path timely payment; performance; Monetisation from offers and pricing; and motivation system; favourable terms. wider access to network investment. broadband; Dividend prospects. good convergent possibility of development. offer; partnership in health excellent customer and education; service; investment in easy access to disadvantaged services. communities. Orange Polska Integrated Report - 14 15 - Orange Polska Integrated Report Our business model 04 and value creation Orange Polska Integrated Report - 16 17 - Orange Polska Integrated Report OUR BUSINESS