Orange with PLN 50 mln Q1 net loss

WSE-listed telecom Orange Polska had a PLN 50 million Q1 net loss, according to the new MSSF15 (IFRS15) accounting standard. Within the previously used MSFF18 standard, Orange had PLN 8 million profit compared to PLN 39 million profit last year. “The evolution of business trends has been presented in accordance with the old accounting standard IAS 18. “The new accounting standard IFRS15 was adopted prospectively by Orange Polska, i.e. without adjusting the reported comparative periods according to it. In the company's opinion, this approach ensures continuity of presentation of results in relation to the recently presented strategies and already known business trends,” the company explained. Operating profit amounted to PLN 33 million under IFRS 15 (PLN 105 million under IFRS 18), compared to PLN 109 million a year earlier (according to IFRS 18). EBITDA amounted to PLN 674 million according to IFRS15 (PLN 746 million according to IFRS18) against PLN 748 million according to IFRS18. According to Orange net profit was lower due to a slight increase in net financial costs - which resulted from a very low base of these costs in the first quarter of 2017, when the appreciation of the PLN against the euro reduced the discounted UMTS license costs. “ The decline in direct margin was offset by the optimization of indirect costs. The direct margin was positively affected by the cost-of-value strategy and a lower increase in inter-operator settlement costs (due to renegotiation of wholesale rates for roaming services) In the forthcoming quarter, indirect costs decreased by 5 percent y/y, which resulted from numerous initiatives to transform activities undertaken in various areas (such as IT systems, networks, fixed assets, general expenses) Lower labor costs reflect the accession to the implementation of the new social contract,” the report reads. Consolidated sales revenues reached PLN 2.71 billion in Q1 2018 according to IFRS 15 (PLN 2.76 billion according to IFRS 18), compared to PLN 2.81 billion a year earlier (according to IFRS 18).