Orange 6-K, filed Aug 1, 2022
Orange (FNCTF)
About this 6-K
Orange filed this 6-K on August 1, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 6-K |
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
August 01, 2022
Commission File Number 1-14712
ORANGE
(Translation of registrant’s name into English)
111 quai du Président Roosevelt
92130 Issy-les-Moulineaux, France
(Address of principal executive offices)
Indicate by check mark whether the Registrant files or will file
annual reports under cover Form 20-F or Form 40-F
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Form 20-F |
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Form 40- F |
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Indicate by check mark if the Registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
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Yes |
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No |
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Indicate by check mark if the Registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
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Yes |
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No |
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Indicate by check mark whether the Registrant, by furnishing the
information contained in this Form, is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
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Yes |
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No |
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First half 2022
Financial Report
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This is a free translation into English of the Orange First half 2022 Financial Report issued in the French language, The Report was filed with the Autorité des Marchés Financiers on July 28, 2022. |
Table of contents
1. Interim management report for the first half of 2022 4
1.2 Analysis of the Group’s results and capital expenditure 11
1.3 Review by business segment 17
1.4 Cash flow and financial debt of telecom activities 35
1.5 Financial indicators not defined by IFRS 38
2. Condensed interim consolidated Financial Statements for the first half of 2022 47
Consolidated income statement 49
Consolidated statement of comprehensive income 50
Consolidated statement of financial position 51
Consolidated statements of changes in shareholders' equity 53
Consolidated statement of cash flows 55
Notes to the consolidated financial statements 56
3. Statement by the person responsible 90
4. Statutory auditors’ review report on the half-year financial information 91
1.1.1 Financial data and workforce information 5
1.1.2 Summary of results for the first half of 2022 6
1.1.4 Information on trends and main risks and uncertainties 10
1.2 Analysis of the Group’s results and capital expenditure 11
1.2.1.2 Number of customers 12
1.2.2 Group operating results 13
1.2.2.2 Group operating income 14
1.2.4 Group comprehensive income 16
1.2.5 Group capital expenditure 16
1.2.5.2 Telecommunication licenses 17
1.3 Review by business segment 17
1.3.1.3 Operating income - France 22
1.3.1.4 Economic CAPEX - France 22
1.3.1.5 Additional information - France 23
1.3.2.3 Operating income - Europe 25
1.3.2.4 Economic CAPEX - Europe 25
1.3.2.5 Additional information - Europe 26
1.3.2.6 Additional information - Spain 26
1.3.3.1 Revenues - Africa & Middle East 28
1.3.3.2 EBITDAaL - Africa & Middle East 29
1.3.3.3 Operating income - Africa & Middle East 29
1.3.3.4 Economic CAPEX - Africa & Middle East 29
1.3.3.5 Additional information - Africa & Middle East 30
1.3.4.1 Revenues - Enterprise 30
1.3.4.2 EBITDAaL - Enterprise 31
1.3.4.3 Operating income - Enterprise 31
1.3.4.4 Economic CAPEX - Enterprise 31
1.3.4.5 Additional information - Enterprise 32
1.3.5.3 Operating income - Totem 33
1.3.5.4 Economic CAPEX - Totem 33
1.3.6 International Carriers & Shared Services 33
1.3.6.1 Revenues - International Carriers & Shared Services 33
1.3.6.2 EBITDAaL - International Carriers & Shared Services 34
1.3.6.3 Operating income - International Carriers & Shared Services 34
1.3.6.4 Economic CAPEX - International Carriers & Shared Services 34
1.3.7 Mobile Financial Services 35
1.3.7.1 Operating activities 35
1.3.7.2 Assets, liabilities and cash flows 35
1.4 Cash flow and financial debt of telecom activities 35
1.4.1 Liquidity and cash flows from telecom activities 36
1.4.1.1 Organic cash flow from telecom activities 36
1.4.1.2 Cash flows from telecom activities 36
1.4.2 Financial debt and liquidity position of telecom activities 37
1.5 Financial indicators not defined by IFRS 38
1.5.1 Data on a comparable basis 38
1.5.5 Organic cash flow from telecom activities 42
1.5.7 Ratio of net financial debt to EBITDAaL from telecom activities 43
1.6.1 Litigation and unrecognized contractual commitments 43
1.6.2 Related party transactions 43
This report contains forward-looking statements about Orange. By nature, achievement of these targets is subject to numerous risks and uncertainties that could cause the actual results to differ materially from the targets announced. The most significant risks are detailed in Section 2.1 Risk factors of the 2021 Universal Registration Document.
The following comments are based on the Consolidated Financial Statements prepared in accordance with IFRS (International Financial Reporting Standards, see Note 2 to the Consolidated Financial Statements). The Statutory Auditors conducted a limited review of these financial statements.
Data on a comparable basis, EBITDA after Leases (referred to as "EBITDAaL"), economic CAPEX (referred to as "eCAPEX" or "economic CAPEX"), the "EBITDAaL - eCAPEX" indicator, organic cash flow from telecom activities, net financial debt, and the ratio of net financial debt to EBITDAaL from telecom activities, are financial indicators not defined by IFRS. For further information on the calculation of these indicators and the reasons why the Orange group uses them and considers them useful for readers, see Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
Data on a historical basis (see Section 1.6.4 Financial glossary) relates to data for prior periods as reported in the Consolidated Financial Statements for the current period. The transition from data on a historical basis to data on a comparable basis for the first half of 2021 is set out in Section 1.5.1 Data on a comparable basis.
Announced in February 2021, Totem, Orange’s European TowerCo subsidiary, has been operational since the end of 2021 (see Section 1.1.3 Significant events). In the segment reporting presented, historical data on Totem forms an integral part of the France and Spain business segments and, very incidentally, the International Carriers & Shared Services segment, until December 31, 2021. Totem’s operational launch at the end of 2021 resulted in a change in the management’s internal reporting. The segment reporting now presented reflects the Group’s intention to present Totem as a separate business segment as from January 1, 2022 (see Note 1.1 to the Consolidated Financial Statements)
Unless stated otherwise, the segment reporting (see Note 1 to the Consolidated Financial Statements) is presented in the following sections is before eliminations for transactions with other segments.
Unless stated otherwise, data in the tables is presented in millions of euros, without a decimal point. This presentation may, in some cases, lead to negligible differences in the totals and sub-totals in the tables. Furthermore, the changes presented are calculated on the basis of data in thousands of euros.
1.1 Overview
1.1.1 Financial data and workforce information
Operating data
|
2022 |
2021 |
2021 |
% change |
% change | ||
|
(at June 30, in millions of euros) |
data on a comparable basis (1) |
data on a historical basis |
data on a comparable basis (1) |
data on a historical basis | ||
|
Revenue (2) |
21,297 |
21,272 |
20,867 |
0.1 % |
2.1 % | |
|
EBITDAaL (1) |
5,934 |
5,891 |
5,837 |
0.7 % |
1.7 % | |
|
Telecom activities |
5,989 |
5,947 |
5,893 |
0.7 % |
1.6 % | |
|
EBITDAaL/Revenue from telecom activities |
28.1 % |
28.0 % |
28.2 % |
0.2 pt |
(0.1 pt) | |
|
Mobile Financial Services |
(56) |
(56) |
(56) |
0.6 % |
0.6 % | |
|
Operating income |
2,420 |
(1,722) |
(1,752) |
N/A |
N/A | |
|
Telecom activities |
2,499 |
(1,646) |
(1,676) |
N/A |
N/A | |
|
Mobile Financial Services |
(80) |
(77) |
(77) |
(3.6)% |
(3.6)% | |
|
eCAPEX (1) |
3,413 |
3,737 |
3,845 |
(8.7)% |
(11.3)% | |
|
Telecom activities |
3,399 |
3,724 |
3,832 |
(8.7)% |
(11.3)% | |
|
eCAPEX/Revenue from telecom activities |
16.0 % |
17.5 % |
18.4 % |
(1.5 pt) |
(2.4 pt) | |
|
Mobile Financial Services |
14 |
13 |
13 |
8.2 % |
8.2 % | |
|
EBITDAaL - eCAPEX (1) |
2,521 |
2,154 |
1,992 |
17.0 % |
26.6 % | |
|
Telecom activities |
2,590 |
2,223 |
2,060 |
16.5 % |
25.7 % | |
|
Mobile Financial Services |
(70) |
(69) |
(69) |
(1.0)% |
(1.0)% | |
|
Telecommunication licenses |
244 |
295 |
293 |
(17.3)% |
(16.7)% | |
|
Average number of employees (full-time equivalents) (3) |
131,115 |
135,338 |
132,153 |
(3.1)% |
(0.8)% | |
|
Number of employees (active employees at end of period) (3) |
136,566 |
141,968 |
138,626 |
(3.8)% |
(1.5)% | |
(1) See Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
(2) Revenues from telecom activities. The net banking income (NBI) of Mobile Financial Services is recognized in other operating income (see Notes 1.3 and 1.4 to the Consolidated Financial Statements).
(3) See Section 1.6.4 Financial glossary.
Net income
|
2022 |
2021 | |
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(at June 30, in millions of euros) |
data on a historical basis | |
|
Operating Income |
2,420 |
(1,752) |
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Finance costs, net |
(373) |
(436) |
|
Income taxes |
(580) |
(417) |
|
Consolidated net income |
1,467 |
(2,605) |
|
Net income attributable to owners of the parent company |
1,218 |
(2,769) |
|
Net income attributable to non-controlling interests |
249 |
165 |
Organic cash flow from telecom activities
|
2022 |
2021 | |
|
(at June 30, in millions of euros) |
data on a historical basis | |
|
Organic cash flow from telecom activities (1) |
1,445 |
840 |
(1) See Section 1.5 Financial indicators not defined by IFRS, Section 1.6.4 Financial glossary and Note 1.8 to the Consolidated Financial Statements.
Net financial debt
|
June 30, 2022 |
Dec. 31, 2021 | |
|
(in millions of euros) |
data on a historical basis | |
|
Net financial debt (1) |
24,377 |
24,269 |
(1) See Section 1.5 Financial indicators not defined by IFRS, Section 1.6.4 Financial glossary, and Note 10.3 to the Consolidated Financial Statements.
For further information on the risks relating to the Orange group’s financial debt, see Section 2.1.3 Financial risks in the 2021 Universal Registration Document.
1.1.2 Summary of results for the first half of 2022
In an environment still marked by the Covid-19 health crisis, geopolitical uncertainty and the effects of inflation, the Group achieved solid results in the first half of 2022 both in terms of commercial momentum and in respect of its main financial indicators.
Revenues totaled 21,297 million euros in the first half of 2022, up 2.1% on a historical basis and 0.1% on a comparable basis year on year. On a comparable basis, the slight growth in revenues of 25 million euros is mainly driven by retail services (B2C+B2B, see Section 1.6.4 Financial glossary), up 300 million euros year on year (an increase of 2.0%), and, to a lesser extent, by equipment sales, which grew by 49 million euros. Wholesale services, affected by lower co-financing and the decrease in regulated call termination rates, contracted by 9% (or 360 million euros) compared with the first half of 2021. The Africa & Middle East countries again made the biggest contribution to growth, recording a 7.9% increase in revenues year on year (up by 248 million euros) on a comparable basis. Other European countries also registered slight growth of 0.8% (24 million euros), and Totem grew by 10.2% (30 million euros) on a comparable basis. In France, revenues decreased by 1.7% (153 million euros) due to lower co-financing received from third-party operators between the two periods. In Spain, the decline in revenues (down 4.3% year on year) slowed as a result of the recovery plan in progress.
Commercial activity was strong in the first half of 2022, in an environment that remained highly competitive. On a comparable basis, the Group’s convergent customer base reached 11.6 million customers at June 30, 2022, up 1.2% year on year. Mobile services had 235.7 million accesses at end-June 2022 (up 6.0% year on year on a comparable basis), including 90.1 million contracts (up 8.5% year on year). At June 30, 2022, fixed services totaled 45.9 million accesses (down 2.0% year on year on a comparable basis), including 13.2 million very high-speed broadband accesses still growing strongly (up 18.0% year on year). Fixed narrowband accesses decreased by 13.4% year on year on a comparable basis, affected by the downward trend in traditional fixed telephony. Lastly, Mobile Financial Services had 1.9 million customers in Europe and 0.8 million customers in Africa.
EBITDAaL amounted to 5,934 million euros in the first half of 2022, up by 1.7% on a historical basis and by 0.7% on a comparable basis year on year. The ratio of EBITDAaL from telecom activities to revenues was 28.1% in the first half of 2022, down 0.1 point on a historical basis and up 0.2 point on a comparable basis versus the first half of 2021. Excluding the effect of the drop in co-financing received between the two periods, EBITDAaL would have increased by 3.0% on a comparable basis. On a comparable basis, the Africa & Middle East countries were again the primary contributors to this performance, with double-digit growth of 11.6% year on year, offsetting the steep decline of 25.3% in Enterprise services, which is a priority area for the Group to address.
Operating income came in at 2,420 million euros, up by 4,172 million euros on a historical basis and 4,142 million euros on a comparable basis year on year. The first half of 2021 had been affected by the recognition of 3,702 million euros of goodwill impairment in Spain.
Consolidated net income came in at 1,467 million euros in the first half of 2022, compared with a loss of 2,605 million euros in the first half of 2021, an increase of 4,071 million euros. This increase mainly reflects the growth of 4,172 million euros in operating income.
Economic CAPEX amounted to 3,413 million euros in the first half of 2022, down by 11.3% on a historical basis and by 8.7% on a comparable basis versus the first half of 2021, mainly due to a reduction in gross investments in fixed very high-speed broadband networks (FTTH), after the extensive network roll-outs of the last few years and the catch-up effect in the first half of 2021 in the context of the Covid-19 health crisis. On a comparable basis, Orange had 60.6 million households connectable to FTTH worldwide (up 16.1% year on year) at June 30, 2022, including 31.2 million in France (up 19.5%), where the FTTH access base grew by 24.4%, to 6.5 million accesses.
Organic cash flow from telecom activities stood at 1,445 million euros in the first half of 2022, compared with 840 million euros in the first half of 2021, an increase of 605 million euros year on year, mainly reflecting the sharp decrease in economic CAPEX.
Net financial debt amounted to 24,377 million euros at June 30, 2022. It remained almost unchanged, increasing only by 108 million euros compared with December 31, 2021. The generation of organic cash flow from telecom activities covered principally the payment of the dividend balance in June and disbursements for telecommunication licenses. The ratio of net financial debt to EBITDAaL from telecom activities was 1.91x at June 30, 2022, in line with the medium-term target of approximately 2x.
For dividends, see Section 1.1.4 Information on trends and the main risks and uncertainties.
1.1.3 Significant events
Governance
On January 28, 2022, the Board of Directors appointed Christel Heydemann as Chief Executive Officer of Orange effective April 4, 2022. The Board of Directors, which met following the Shareholders’ Meeting of May 19, 2022, elected Jacques Aschenbroich Non-executive Chairman of the Board of Directors. The Board confirmed Christel Heydemann as Chief Executive Officer and Ramon Fernandez as Delegate Chief Executive Officer.
On May 24, 2022, Christel Heydemann decided to renew part of her management team with a view to accelerating the transformation and development of some key B2B and Africa & Middle markets. Aliette Mousnier-Lompré, who served as interim Chief Executive Officer (CEO) following the departure of Helmut Reisinger in January 2022, was appointed Chief Executive Officer (CEO) of Orange Business Services, and Jérôme Hénique was appointed Chief Executive Officer (CEO) of Orange Middle East and Africa (Orange MEA) effective July 1, 2022, succeeding Alioune Ndiaye, who will remain Non-executive Chairman of Orange MEA.
War in Ukraine
Against the backdrop of the war in Ukraine, the Orange group has taken strong action to ensure the safety of its teams in Ukraine, Russia and neighboring countries where the Group operates, to maintain the continuity of services for its customers, to secure its infrastructure, and to strictly enforce international sanctions. The Group has also stepped up its monitoring in terms of cybersecurity and resilience. It is committed to supporting the populations affected by the conflict, notably through various solidarity actions (free offers, donations and in-kind support).
Orange has set up a crisis unit that is primarily responsible for monitoring how events are unfolding on a regular basis and how they might affect the Group, and for coordinating all the measures taken by its various entities.
The Orange group is mainly present in Russia and Ukraine through its Orange Business Services (OBS) subsidiary. In Russia, OBS has approximately 800 employees and generated revenues of approximately 100 million euros in 2021 (0.2% of Group revenues). At December 31, 2021, the total value of assets located in Russia was approximately 50 million euros. In light of the situation, the Group has decided to continue its business for existing customers in Russia and Belarus but to avoid entering into any new commercial relationships with entities located there. OBS has four employees in Ukraine. The revenues it generates there are not significant.
Orange operates on the B2C market in four countries that border Ukraine: Poland, Slovakia, Romania and Moldova. The Group is closely monitoring developments in these countries and is actively involved in welcoming refugees.
Provided that the conflict does not spread to other geographical regions and given the limited scope of the Group’s activities in Ukraine, Russia and Belarus, the impact on the Group’s financial statements remains limited at June 30, 2022 (see Note 2.3 to the Consolidated Financial Statements).
More information about the risks to which the Group and its stakeholders are exposed can be found in Section 2.1 Risk factors of the 2021 Universal Registration Document.
Energy shock and inflation
The current high level of inflation, including rising energy costs, is weighing on the Group’s operating margins. Given (i) the persistently fierce competition in all of its markets, (ii) its pricing model, and (iii) contractual terms that do not always provide for indexation or a price revision clause, Orange may not be able to pass on to its customers all of the increased costs that it may incur.
In this challenging macroeconomic environment, marked by widespread inflation and the war in Ukraine, the Group is redoubling its efforts to meet its financial targets. Orange has several key advantages in this inflationary environment:
− the Group’s strategy has always been to offer more-for-more to its customers while taking great care to make its offers appealing and thus maintain a high level of customer satisfaction, as evidenced by Orange’s Net Promoter Score (NPS). For example, price increases associated with additional service offers took place in the first half of 2022, notably in France (see Launch of the new Livebox 6 below), Belgium, Luxembourg, Romania and Slovakia;
− the Group’s energy expenses represented only about 2% of the operating expenses included in the calculation of EBITDAaL for 2021. To reduce its exposure to the risk of fluctuating prices for energy purchases on the markets, the Group has entered into (and will continue to enter into) renewable energy power purchase agreements (Green PPA, see Exemplary social and environmental conduct below), which allow it to cover some of its energy needs at a fixed price over a given period. At the end of July 2022, the Group had significant coverage of its energy costs through PPAs and purchases already made on the markets. In Europe, 90% of the Group’s energy needs are thus covered for 2022, and around 60% for 2023. For other purchases, BuyIn, the procurement alliance between Orange and Deutsche Telekom, provides the Group with some bargaining power to secure supplies and limit price increases;
− in most of its locations, salary increases for Group entities are not indexed to inflation and are decided following a negotiation process. However, some entities are required to increase their overall salary budgets in line with inflation, as is the case in Belgium and Luxembourg. In France, Orange SA has confirmed a 3% increase in the overall salary budget in 2022. Orange is thus stepping up its efforts to improve employees’ purchasing power in a time of rising inflation, while maintaining the Group’s financial balance (see Orange, a people-oriented digital employer below);
− the Group’s lead in rolling out its network, especially for fiber optic, enables Orange to reduce its exposure to higher costs associated with this activity;
− The Group’s decision to retain control of its infrastructure, particularly through Totem, enables it to partially limit the consolidated Group’s exposure to the effects of rent indexation to inflation for this asset class (see the introduction to the Section 1 Interim management report for the first half of 2022, and the paragraph Optimization, development and enhancement of mobile infrastructure by Totem below);
− to achieve its targets, Orange also relies on Scale Up, its operational efficiency program (see Progress of the Scale Up operational efficiency program below) to offset the effects of inflation on the Group;
− finally, the strength of the Group’s balance sheet, its diversified financing and interest rate risk management policy, as well as Orange’s creditworthiness (see Note 11 to the Consolidated Financial Statements), limit the Group’s exposure to the effect of rising interest rates.
More information about the risks to which the Group and its stakeholders are exposed can be found in Section 2.1 Risk factors of the 2021 Universal Registration Document.
Optimization, development and enhancement of mobile infrastructure by Totem
In February 2021, Orange announced the creation of Totem, the Group’s European TowerCo subsidiary, which holds and manages the passive mobile infrastructure portfolio of telecommunication towers in France and Spain. The company launched its operations in late 2021.
In May 2022, Totem entered into an agreement with Société du Grand Paris to equip the future 15 South line of the Grand Paris Express subway by 2025. Totem will provide mobile 5G coverage by rolling out a mobile indoor DAS (Distributed Antenna System) network comprising around 1,000 active antennas. Totem will make all the investments required to roll out this infrastructure and will then market access to the entire deployed network to mobile telephony operators until 2035.
Since January 1, 2022, the Group has presented Totem as a separate business segment in its segment reporting (see the introduction to the Section 1 Interim management report for the first half of 2022 and Note 1.1 to the Consolidated Financial Statements).
Telecommunication networks
Fixed-access networks
Orange continued to roll out its fiber optic network at a robust pace in the first half of 2022. The Group connected 8.4 million additional homes to FTTH year on year and had 60.6 million households connectable to FTTH worldwide at June 30, 2022, up 16.1% year on year, including 31.2 million in France, 16.1 million in Spain, 10.5 million in Other European countries and 2.8 million in the Africa & Middle East countries.
At June 30, 2022, the total number of households connectable to all very high-speed broadband networks combined (i.e. FTTH and cabled networks) was 62.5 million.
Mobile-access networks
In February 2022, Orange announced the selection of industrial partners for its 5G Stand Alone (5G SA) networks in Europe. The roll-out of 5G SA solutions is major milestone that will enable the future development of value-added, on-demand and customized services for Orange customers, especially enterprises, across all sectors of the economy. The Group selected Ericsson for its 5G SA core networks in Spain, Poland, Belgium and Luxembourg, Nokia for its 5G SA core networks in France and Slovakia and for Subscriber Data Management for all countries, and Oracle Communications for 5G core network signaling and routing in all countries.
In March 2022, Orange announced the phasing out of its 2G and 3G mobile networks by 2030 in all countries where the Group operates within the European Union. The shutdown of 2G and 3G will allow Orange to optimize the management of its networks and to upgrade them towards more secure and energy-efficient technologies such as 4G and 5G. The radio frequencies currently used for 2G and 3G will be used to improve the coverage capacity of 4G and 5G networks in both urban and rural areas.
Transmission networks
In February 2022, Orange announced its participation in the SEA-ME-WE6 (Southeast Asia-Middle East-Western Europe 6) Consortium for the construction of a new "express" submarine cable that will connect France to Singapore with very low latency and very high-speed broadband. Orange will be responsible for landing the cable in France and hosting it in its secure infrastructure in Marseille.
In France, Orange and Enedis also announced in May 2022 that they had teamed up to connect the island of Groix to fiber optic by upgrading an old submarine cable dating back to 1973. This project will connect more than 3,000 homes to fiber optic.
Launch of the new Livebox 6
In April 2022, Orange France launched its new Livebox 6, which offers optimized performance with a Wi-Fi 6E tri-band router and responds to the intensification of in-home demand since 2020. The Livebox 6 is the first Internet box launched on the French market that is compatible with the new Wi-Fi 6E standard. It uses a new 6 GHz frequency band and provides fiber speeds of up to 2 Gbit/s downstream (and 800 Mb/s upstream). With a 100% recycled and recyclable plastic shell, its design is guided by the Group’s environmental strategy.
Digital transformation of B2B customers
Orange, through its subsidiary Orange Business Services, announced in April 2022 the complete migration of Siemens AG’s network to an SD-WAN (software-defined wide area network) infrastructure of 1,168 sites in 94 countries, thus securing the use of Siemens’ business apps via the Internet. With its Flexible SD-WAN solution, Orange Business Services, together with its technology partner Cisco, achieved one of the largest SD-WAN roll-outs in the world during the health crisis.
Orange, a people-oriented digital employer
In May 2022, at the end of the mandatory annual labor negotiations on salaries in France, Orange confirmed a 3% increase in its overall salary budget in 2022. Orange is thus stepping up its efforts to improve employees’ purchasing power in a time of significant rise in inflation, while maintaining the Group’s financial balance. In addition, as part of its value-sharing policy for the 2021 fiscal year, Orange paid out 11 million euros in supplemental incentive bonuses, bringing the total incentive bonuses to 177 million euros.
Exemplary social and environmental conduct
In May 2022, Orange returned to the sustainable bond market with an issue for a nominal amount of 500 million euros to finance digital and social inclusion projects as well as projects related to energy efficiency and the circular economy. The bonds have a 10-year maturity and bear an annual coupon of 2.375% (see Note 10.4 to the Consolidated Financial Statements). At June 30, 2022, including the inaugural 500 million euro issue in 2020, Orange has raised a total of one billion euros in sustainable bonds.
In March 2022, Orange and Samsung announced a series of initiatives to reduce waste and extend the lifecycle of mobile equipment in Europe. These actions include a certified refurbishment program for Samsung devices through Orange’s distribution channels and the implementation of the Eco-Rating methodology to assess the environmental impact of mobile phones. In addition, Samsung and Orange will progressively generalize the roll-out of eSIM (embedded SIM) activation to a wider range of Samsung devices to reduce the proportion of plastic-based SIM cards used across the Orange European footprint.
In October 2020, Orange France launched the "RE" program around three actions: Recycling, Recovery, and Refurbishment. A year later, it added a fourth action: Repair. In May 2022, Orange announced the extension of this program throughout Europe to increase awareness about the environmental impact of mobile phones and to bolster its commitment to the circular economy across all its activities. In France, the recovery rate was over 22% in 2021, and it is expected to reach 30% by 2025.
In May 2022, Orange inaugurated two new data centers in France. With a surface area of 16,000 m², including 5,000 m² of IT rooms, these two facilities, together with a third data center launched in 2012 in France, will by 2030 replace the 17 data centers currently in service which are hosting France’s domestic data. The new buildings will contribute to the Group’s Net Zero Carbon target by 2040 thanks to their low energy impact: a 30% reduction compared with older-generation data centers. This is largely the result of free cooling and the PPAs contracted with Boralex, Engie and Total, which allow the entire consumption of the three buildings to be covered by electricity from renewable sources.
In June 2022, Orange launched the Orange Digital Center program in France, which is devoted to digital inclusion. This program offers the public a wide choice of digital education courses. Accessible to all, it provides a catalyst for social and economic development in all French regions, including rural areas, supported by local partners, associations, local authorities and city mayors. It embodies Orange’s commitment to digital equality, which is at the heart of the Engage 2025 Strategic Plan.
Progress of the Scale Up operational efficiency program
From the defined scope of 13.8 billion euros in indirect costs at the end of 2019, the Group achieved cumulative net savings of nearly 450 million euros between early 2020 and June 30, 2022, in line with the announced pace for the Scale Up program.
These savings are mainly the result of optimizations across the Group’s businesses, with increased digitization, pooling and streamlining of internal organizations, and notably a rebalancing of support functions in favor of operational functions.
Changes in the asset portfolio
Agreement to merge the activities of Orange and MásMóvil in Spain
Following the period of exclusive negotiations that began in March 2022, Orange and MásMóvil signed an agreement in July 2022 to combine their businesses in Spain (not including Totem Spain and MásMóvil Portugal in particular). The combination will take the form of a 50-50 joint venture co-controlled by Orange and MásMóvil (Lorca JVCo) with equal governance rights in the new entity.
The transaction is based on an enterprise value of 18.6 billion euros, including 7.8 billion euros for Orange Spain and 10.9 billion euros for MásMóvil. It is supported by a 6.6 billion euro non-recourse debt package to finance, among other things, a 5.85 billion euro upstream payment to Orange and to the shareholders of MásMóvil (Lorca JVCo). The distribution of these funds to shareholders will be asymmetric as it embeds an equalization payment in favor of Orange. MásMóvil’s current debt will be maintained.
The agreement between the two companies notably includes a right to trigger an IPO under certain conditions for both parties after a predefined period, and, in such a scenario, an option for Orange to take control of the new operator and fully consolidate it in its accounts. Orange is under no obligation either to sell its interest or to exercise these options.
With revenues of more than 7.3 billion euros and EBITDAaL of more than 2.2 billion euros (estimated figures for fiscal year 2022), along with economies of scale and productivity gains, the new entity will be well-positioned to undertake a more ambitious and sustained expansion of its FTTH and 5G networks, and to further the development of new telecom infrastructures in Spain for the benefit of Spanish consumers and businesses. The joint venture will have the resources to continue to roll out its own network infrastructure, which is a real asset in the market, including a national FTTH network and a state-of-the-art mobile network with broad national coverage.
Upon completion of the transaction, the joint venture will be consolidated in the Orange group’s financial statements using the equity method (due to the loss of Orange’s exclusive control over the activities concerned).
This transaction is subject to the approval of the antitrust authorities and other competent administrative authorities. It is expected to close during the second half of 2023 at the latest (see Notes 3.2 and 15 to the Consolidated Financial Statements).
Merger of Deezer and I2PO and public listing of the new entity
July 2022 saw the merger of Deezer, the global music and audio streaming platform in which Orange held a 10.42% stake at June 30, 2022, and I2PO, a special purpose acquisition company, or SPAC. The merged entity, named Deezer, is listed on the Professional Segment (Compartiment Professionnel) of the regulated market of Euronext Paris. Ahead of the initial public offering, the transaction valued Deezer’s shares at 1.05 billion euros. Following these transactions, Orange will hold an 8.13% stake in the new entity and will no longer exercise significant influence over it. The effects of the transaction will be recognized in the Orange group’s financial statements in the second half of 2022 (see Notes 3.2 and 15 to the Consolidated Financial Statements).
Acquisition of 100% of Exelus by Enovacom (healthcare subsidiary of Orange Business Services)
In May 2022, Orange, through its subsidiary Enovacom, agreed to acquire 100% of Exelus, owner of a unique mobile telemedicine solution that provides healthcare professionals with state-of-the-art tools to remotely carry out scheduled consultations, assessments and treatment, as well as emergency telemedicine. This acquisition supports Orange Business Services’ strategy to develop solutions for healthcare professionals. It was completed on July 6, 2022.
1.1.4 Information on trends and main risks and uncertainties
The Group again confirms its financial objectives for 2022 (excluding pending external growth transactions), a milestone toward the achievement of its 2023 commitments, with:
− EBITDAaL (see Section 1.5.2 EBITDAaL) to increase by 2.5% to 3%;
− economic CAPEX (see Section 1.5.3 eCAPEX) of no greater than 7.4 billion euros;
− organic cash flow from telecom activities (see Section 1.5.5 Organic cash flow from telecom activities) of at least 2.9 billion euros; and
− a ratio of net financial debt to EBITDAaL from telecom activities (see Section 1.5.7 Ratio of net financial debt to EBITDAaL from telecom activities) unchanged at around 2x in the medium term.
Orange will make an interim dividend cash payment for 2022 of 0.30 euros on December 7, 2022. A dividend of 0.70 euros per share for the 2022 fiscal year will be proposed to the 2023 Shareholders’ Meeting.
By nature, achievement of these targets is subject to numerous risks and uncertainties that could cause the actual results to differ materially from the targets announced. The most significant risks are described in Section 2.1 Risk factors of the 2021 Universal Registration Document. At the date of publication of this report, this description remains valid and makes it possible to assess the main risks and uncertainties for the remaining six months of the 2022 fiscal year (see also Section 1.1.3 Significant events - War in Ukraine and Energy shock and inflation).
1.2 Analysis of the Group’s results and capital expenditure
1.2.1 Group revenues
1.2.1.1 Revenues
|
Revenue by segment (1) |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
France |
8,827 |
8,979 |
8,950 |
(1.7)% |
(1.4)% | |
|
Europe |
5,325 |
5,406 |
5,164 |
(1.5)% |
3.1 % | |
|
Spain |
2,265 |
2,368 |
2,368 |
(4.3)% |
(4.3)% | |
|
Other European countries |
3,065 |
3,042 |
2,800 |
0.8 % |
9.5 % | |
|
Eliminations |
(5) |
(4) |
(4) |
43.1 % |
45.0 % | |
|
Africa & Middle-East |
3,381 |
3,133 |
3,043 |
7.9 % |
11.1 % | |
|
Enterprise |
3,888 |
3,895 |
3,840 |
(0.2)% |
1.3 % | |
|
Totem |
328 |
298 |
- |
10.2 % |
- | |
|
International Carriers & Shared Services |
772 |
742 |
743 |
4.0 % |
3.9 % | |
|
Eliminations |
(1,224) |
(1,180) |
(873) |
- |
- | |
|
Group total |
21,297 |
21,272 |
20,867 |
0.1 % |
2.1 % | |
(1) Revenues from telecom activities (see Note 1.2 to the Consolidated Financial Statements). The net banking income (NBI) of Mobile Financial Services is recognized in other operating income (see Notes 1.3 and 1.4 to the Consolidated Financial Statements).
|
Revenue by offer (1) |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Retail services (B2C+B2B) (2) |
15,626 |
15,326 |
15,020 |
2.0 % |
4.0 % | |
|
Convergent services |
3,806 |
3,671 |
3,654 |
3.7 % |
4.1 % | |
|
Mobile only services |
5,454 |
5,254 |
5,189 |
3.8 % |
5.1 % | |
|
Fixed only services |
4,567 |
4,706 |
4,533 |
(2.9)% |
0.8 % | |
|
IT & integration services |
1,799 |
1,695 |
1,644 |
6.2 % |
9.4 % | |
|
Wholesale services |
3,638 |
3,999 |
3,906 |
(9.0)% |
(6.8)% | |
|
Equipment sales |
1,465 |
1,416 |
1,391 |
3.4 % |
5.3 % | |
|
Other revenues |
567 |
531 |
549 |
6.9 % |
3.3 % | |
|
Group total |
21,297 |
21,272 |
20,867 |
0.1 % |
2.1 % | |
(1) Revenues from telecom activities (see Note 1.2 to the Consolidated Financial Statements). The net banking income (NBI) of Mobile Financial Services is recognized in other operating income (see Notes 1.3 and 1.4 to the Consolidated Financial Statements).
(2) See Section 1.6.4 Financial glossary.
The revenues of the Orange group totaled 21,297 million euros in the first half of 2022, up 2.1% on a historical basis and 0.1% on a comparable basis, compared with the first half of 2021.
Change on a historical basis
On a historical basis, the increase of 2.1% or 430 million euros in Group revenues between the first half of 2021 and the first half of 2022 was due to:
− the favorable impact of changes in the scope of consolidation and other changes amounting to 283 million euros. This mainly includes the effect of the takeover of Telekom Romania Communications (TKR, renamed Orange Romania Communications) on September 30, 2021 for 267 million euros;
− the positive impact of foreign exchange fluctuations amounting to 122 million euros, mainly as a result of movements in the US dollar and the Guinean franc against the euro;
− the organic change on a comparable basis, representing a 25 million euro increase in revenues.
Change on a comparable basis
On a comparable basis, the 0.1% or 25 million euro increase in Group revenues between the first half of 2021 and the first half of 2022 was primarily due to:
− the 199 million euro rise (up 3.8%) in Mobile-only services in connection with (i) the strong growth in mobile services (prepaid and contract) in most Africa & Middle East countries, driven largely by the growth in data services and, secondarily, by the increase in mobile-only contracts in France and Poland, (ii) partially offset by the decline in mobile-only services in Spain due to the continued polarization of services and an overall shift in the market to low-cost offers. With the lifting of restrictions related to the Covid-19 health crisis, revenues from customer roaming rose in all countries;
− the 135 million euro increase (up 3.7%) in Convergent services, which grew in all European countries except Spain, where these revenues were almost flat;
− the 104 million euro increase (up 6.2%) in IT & Integration Services, mainly for Enterprise services (primarily cybersecurity, cloud, digital and data services), and to a lesser extent in Poland;
− the 49 million euro rise (up 3.4%) in Equipment sales, (i) mainly driven by sales of mobile equipment for Enterprise services (due to the major NEO contract awarded by the French National Gendarmerie and National Police), and, secondarily, in France (demand for higher-value mobile handsets) and in Other European countries, (ii) partially offset by the decrease in equipment sales to businesses in Spain (a counter-effect of the catch-up in sales in the first half of 2021 after the Covid-19 health crisis); and
− the 37 million euro increase (up 6.9%) in Other revenues, both in Poland (growth in energy resale activity) and in services to International Carriers & Shared Services (growth in Sofrecom’s consulting services and Orange Marine’s installation activities).
These favorable changes were partially offset by:
− the 360 million euro decrease (down 9.0%) in Wholesale services, mainly in France, and to a lesser extent in Europe (mainly Poland and Spain). In France, the decrease in wholesale services was mainly due to (i) the decrease in co-financing of FTTH lines received from other operators, (ii) the decrease in revenues from unbundling on the copper network, and (iii) secondarily, the decrease in mobile and fixed-line interconnection (decrease in mobile and fixed-line call terminations), (iv) partially offset by the growth in FTTH lines leased to third-party operators and by the construction of fiber optic networks (Public Initiative Networks, or PIN). In Europe, the decrease in wholesale services was mainly due to (i) regulatory cuts in mobile and fixed-line call termination rates, and (ii) a decrease in international transit activity, particularly in Spain and Poland. With the lifting of restrictions related to the Covid-19 health crisis, revenues from visitor roaming rose in all countries; and
− the 138 million euro contraction (down 2.9%) in Fixed-only services, mainly due to:
- the downward trend in fixed-only narrowband services (traditional telephony) in France, and, to a lesser extent, in the Africa & Middle East countries and in Poland; and
- the decrease in fixed-only services for Enterprise services, related to (i) the decrease in voice services (with the downward trend in traditional fixed telephony), and (ii) the decrease in data services (mainly reflecting the general trend toward the transformation of service technologies, especially internationally, and, secondarily, the decrease in satellite broadcasting services);
- partially offset by the growth of fixed-only broadband services in France and the Africa & Middle East countries, due to the increase in fiber optic services.
The review of the change in revenues by business segment is detailed in Section 1.3 Review by business segment.
1.2.1.2 Number of customers
|
Number of customers |
2022 |
2021 |
2021 |
% change |
% change | ||
|
(at June 30, in thousands, at the end of the period) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |||
|
Convergent services | |||||||
|
Number of convergent customers |
11,552 |
11,418 |
11,185 |
1.2 % |
3.3 % | ||
|
Mobile services | |||||||
|
Number of mobile accesses (1) (3) (4) |
235,746 |
222,485 |
221,569 |
6.0 % |
6.4 % | ||
|
o/w: |
Convergent customers mobile accesses |
21,056 |
20,595 |
20,160 |
2.2 % |
4.4 % | |
|
Mobile-only accesses |
214,690 |
201,890 |
201,409 |
6.3 % |
6.6 % | ||
|
o/w: |
Contract customers mobile accesses |
90,138 |
83,046 |
82,130 |
8.5 % |
9.8 % | |
|
Prepaid customers mobile accesses |
145,607 |
139,439 |
139,439 |
4.4 % |
4.4 % | ||
|
Fixed services | |||||||
|
Number of fixed accesses (4) |
45,916 |
46,831 |
44,932 |
(2.0)% |
2.2 % | ||
|
Fixed Retail accesses |
31,072 |
31,377 |
29,478 |
(1.0)% |
5.4 % | ||
|
o/w: |
Fixed Broadband accesses |
24,002 |
23,214 |
22,257 |
3.4 % |
7.8 % | |
|
o/w: |
Very high-speed broadband fixed accesses |
13,224 |
11,203 |
10,742 |
18.0 % |
23.1 % | |
|
o/w: |
Convergent customers fixed accesses |
11,552 |
11,418 |
11,185 |
1.2 % |
3.3 % | |
|
Fixed-only accesses |
12,450 |
11,796 |
11,072 |
5.5 % |
12.5 % | ||
|
Fixed Narrowband accesses |
7,070 |
8,163 |
7,222 |
(13.4)% |
(2.1)% | ||
|
Fixed Wholesale accesses |
14,845 |
15,453 |
15,453 |
(3.9)% |
(3.9)% | ||
|
Group Total (2) (3) |
281,662 |
269,316 |
266,501 |
4.6 % |
5.7 % | ||
(1) Excluding customers of mobile virtual network operators (MVNOs).
(2) Number of mobile and fixed service accesses.
(3) At January 1, 2022, an additional fleet of machine-to-machine (M2M) SIM cards had been added to the mobile access base of the Enterprise business segment (and therefore of the Orange group). The operating data for the first half of 2021 has been restated to reflect this change: the retroactive integration of this base represented approximately 3.33 million M2M mobile accesses at June 30, 2021.
(4) On January 1, 2022, an internal transfer (between technologies) was carried out in Egypt, from the mobile access base to the fixed broadband access base. The operating data for the first half of 2021 has been restated to take account of this change: the retroactive transfer of this base represents approximately 162,000 accesses at June 30, 2021.
1.2.2 Group operating results
1.2.2.1 Group EBITDAaL
This section presents the transition from Group revenues to EBITDAaL by type of expense, after presentation adjustments, as presented in Section 1.5.2 EBITDAaL and in Note 1 to the Consolidated Financial Statements.
|
2022 |
2021 |
2021 |
% change |
% change | ||
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Revenue |
21,297 |
21,272 |
20,867 |
0.1 % |
2.1 % | |
|
External purchases (1) (2) |
(9,039) |
(9,005) |
(8,733) |
0.4 % |
3.5 % | |
|
Commercial expenses, equipment and content costs (1) (2) |
(3,672) |
(3,568) |
(3,483) |
2.9 % |
5.4 % | |
|
Service fees and inter-operator costs (1) |
(2,104) |
(2,307) |
(2,198) |
(8.8)% |
(4.3)% | |
|
Other network expenses and IT expenses (1) |
(1,784) |
(1,756) |
(1,766) |
1.6 % |
1.0 % | |
|
Other external purchases (1) (2) |
(1,479) |
(1,374) |
(1,286) |
7.6 % |
15.0 % | |
|
Other operating income and expenses (1) (2) |
145 |
69 |
96 |
109.6 % |
51.5 % | |
|
Labor expenses (1) (2) |
(4,361) |
(4,411) |
(4,373) |
(1.1)% |
(0.3)% | |
|
Operating taxes and levies (1) (2) |
(1,235) |
(1,199) |
(1,188) |
3.0 % |
3.9 % | |
|
Depreciation and amortization of financed assets |
(47) |
(41) |
(41) |
14.5 % |
14.5 % | |
|
Depreciation and amortization of right-of-use assets |
(762) |
(734) |
(731) |
3.9 % |
4.3 % | |
|
Impairment of right-of-use assets (2) |
(1) |
- |
- |
- |
- | |
|
Interest on debts related to financed assets (3) |
(1) |
(1) |
(1) |
10.6 % |
10.6 % | |
|
Interest on lease liabilities (3) |
(61) |
(59) |
(58) |
4.4 % |
6.4 % | |
|
EBITDAaL (3) |
5,934 |
5,891 |
5,837 |
0.7 % |
1.7 % | |
(1) See Section 1.6.4 Financial glossary.
(2) Adjusted data (see Section 1.5 Financial indicators not defined by IFRS and Note 1 to the Consolidated Financial Statements).
(3) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are eliminated from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
In the first half of 2022, Orange group EBITDAaL stood at 5,934 million euros (including 5,989 million euros from telecom activities and a loss of 56 million euros from Mobile Financial Services activities), up 1.7% on a historical basis and 0.7% on a comparable basis versus the first half of 2021. The ratio of EBITDAaL from telecom activities to revenues was 28.1% in the first half of 2022, down 0.1 point on a historical basis and up 0.2 point on a comparable basis versus the first half of 2021.
Change on a historical basis
On a historical basis, the 1.7% increase (97 million euros) in Group EBITDAaL between the first half of 2021 and the first half of 2022 is due to:
− the positive impact of foreign exchange fluctuations, which came to 46 million euros, mainly as a result of movements in the US dollar and the Guinean franc against the euro;
− the positive impact of changes in the scope of consolidation and other changes for 9 million euros; and
− the organic change on a comparable basis, representing a 42 million euro increase in EBITDAaL.
Change on a comparable basis
On a comparable basis, the 0.7% increase (42 million euros) in Group EBITDAaL between the first half of 2021 and the first half of 2022 was mainly due to:
− the 8.8% decrease (203 million euros) in service fees and inter-operator costs(*), mainly due to the widespread decrease in interconnection charges (especially in Poland, Romania, Spain and France, and to a lesser extent for Enterprise services and in Côte d’Ivoire) related to (i) regulatory cuts in call termination rates in several countries, notably in Europe and in the Africa & Middle East countries, and (ii) the overall contraction in fixed and mobile wholesale services;
− the 76 million euro increase in adjusted other operating income (net of adjusted other operating expenses(*)), mainly due to (i) the decrease in allowances and losses on trade receivables - telecom activities (mainly in France and Europe and for services to International Carriers & Shared Services), related mainly to the reassessment of the risk of non-recovery of trade receivables at June 30, 2022 (see Notes 4 and 5.2 to the Consolidated Financial Statements), and (ii) the increase in adjusted other operating income in Poland, related to the creation of the FiberCo in Poland at the end of August 2021 (rebilling of construction, monitoring and leasing costs);
___________________________________
(*) See Section 1.6.4 Financial glossary.
− the 1.1% decrease (50 million euros) in adjusted labor expenses(*), resulting mainly from (i) the effect of a 3.1% decrease in the average number of employees (full-time equivalent(*)), representing a reduction of 4,223 full-time equivalent employees (mainly in France, and to a lesser extent in Poland and Spain), (ii) partially offset by the effect of salary policies in France and internationally (see Section 1.1.3 Significant events); and
− the 0.1% rise (25 million euros) in revenues;
These favorable changes were partially offset by:
− the 7.6% increase (105 million euros) in adjusted other external purchases(*), mainly due to (i) the rise in overheads (after two years of decreases), mainly due to the resumption of travel and consulting and assistance missions (with the lifting of restrictions related to the Covid-19 health crisis) and higher energy costs for vehicles (see Section 1.1.3 Significant events), and (ii) the rising cost of energy purchases for resale in Poland and the cost of building networks for resale to third parties in France (Public Initiative Networks, or PIN);
− the 2.9% rise (104 million euros) in adjusted commercial expenses, equipment and content costs(*), mainly relating to (i) the rising cost of handsets and other equipment sold for Enterprise services (due to the major NEO contract awarded by the French Gendarmerie Nationale and Police Nationale), in the Africa & Middle East countries (in line with the overall growth of the activity and with Orange Money), and to a lesser extent in Poland, and (ii) secondarily, to the rise in content costs, mainly in Spain;
− the 3.0% increase (36 million euros) in adjusted operating taxes and levies payables(*), mainly in the Africa & Middle East countries (in line with the activity’s growth);
− the 3.9% increase (29 million euros) in the depreciation of right-of-use assets, mainly in France, due to the increase in leased lines on third-party networks (FTTH);
− and the 1.6% increase (28 million euros) in other network expenses and IT expenses(*), notably due to higher energy costs for fixed and mobile networks, mainly in Europe, in the Africa & Middle East countries and for Totem (see Section 1.1.3 Significant events), partly offset by lower energy taxes in France.
1.2.2.2 Group operating income
This section presents the transition from EBITDAaL to Group operating income by type of expense, after presentation adjustments, as presented in Section 1.5.2 EBITDAaL and in Note 1 to the Consolidated Financial Statements.
|
2022 |
2021 |
2021 | |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis | |
|
EBITDAaL |
5,934 |
5,891 |
5,837 |
|
Significant litigations |
(2) |
(89) |
(89) |
|
Specific labor expenses |
35 |
(41) |
(41) |
|
Fixed assets, investments and businesses portfolio review |
36 |
27 |
12 |
|
Restructuring program costs |
(41) |
(306) |
(305) |
|
Acquisition and integration costs |
(21) |
(20) |
(20) |
|
Depreciation and amortization of fixed assets |
(3,585) |
(3,531) |
(3,499) |
|
Reclassification of translation adjustment from liquidated entities |
3 |
0 |
(0) |
|
Impairment of goodwill |
- |
(3,702) |
(3,702) |
|
Impairment of fixed assets |
(2) |
(4) |
(4) |
|
Share of profits (losses) of associates and joint ventures |
1 |
(6) |
1 |
|
Elimination of interest on debts related to financed assets (1) |
1 |
1 |
1 |
|
Elimination of interest on lease liabilities (1) |
61 |
59 |
58 |
|
Operating Income |
2,420 |
(1,722) |
(1,752) |
(1) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are eliminated from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
In the first half of 2022, Orange group operating income amounted to 2,420 million euros (including 2,499 million euros from telecom activities and a loss of 80 million euros from Mobile Financial Services activities), up 4,172 million euros on a historical basis and 4,142 million euros on a comparable basis versus the first half of 2021.
Change on a historical basis
On a historical basis, the 4,172 million euro increase in Group operating income between the first half of 2021 and the first half of 2022 was due to:
− (i) the positive effect of foreign exchange fluctuations which stood at 37 million euros, mainly as a result of movements in the US dollar and the Guinean franc against the euro, (ii) partially offset by the negative effect of changes in the scope of consolidation and other changes for 7 million euros; and
− the organic change on a comparable basis, representing a 4,142 million euro increase in operating income.
___________________________________
(*) See Section 1.6.4 Financial glossary.
Change on a comparable basis
On a comparable basis, the 4,142 million euro increase in Group operating income between the first half of 2021 and the first half of 2022 was due to:
− primarily, the counter-effect of goodwill impairment in 2021 of 3,702 million euros in Spain (see Note 7 to the Consolidated Financial Statements). This impairment loss in Spain was primarily a reflection of the continued deterioration in the competitive environment despite the market consolidation transactions (marked by an erosion in average revenues per user) and uncertainty over the prolonged Covid-19 health crisis (a longer-than-expected timeframe for economic recovery);
− and, secondarily:
- the 266 million euro decrease in restructuring program costs, primarily reflecting the counter-effect of the recognition in the first half of 2021 of restructuring program costs in Spain (employee departure plans) and costs for services to International Carriers & Shared Services (in particular for the optimization of the real estate portfolio);
- the counter-effect of the recognition in the first half of 2021 of an 89 million euro net expense on significant litigation, which corresponded to the reassessment of risk on various disputes;
- The 77 million euro reduction in specific labor expenses linked mainly to French part-time for seniors plans (Temps Partiel Séniors or TPS - measures related to collective bargaining agreements on the employment of senior citizens in France). In the first half of 2022, expenses related to French part-time for seniors plans include an actuarial gain of 84 million euros - linked to the steepening discount rate curve in the current macroeconomic environment - compared with an actuarial loss of one million euros in the first half of 2021 (see Note 6 to the Consolidated Financial Statements); and
- the 42 million euro increase in EBITDAaL;
− partially offset by a 55 million euro increase in depreciation and amortization (mainly in France), linked in particular to the material investments made in recent years, especially in connection with the roll-out of fixed (FTTH) and mobile networks.
1.2.3 Group net income
|
2022 |
2021 | |
|
(at June 30, in millions of euros) |
data on a historical basis | |
|
Operating Income |
2,420 |
(1,752) |
|
Cost of gross financial debt (except financed assets) |
(297) |
(461) |
|
Interest on debts related to financed assets (1) |
(1) |
(1) |
|
Gains (losses) on assets contributing to net financial debt |
(9) |
(5) |
|
Foreign exchange gain (loss) |
(40) |
57 |
|
Interests on lease liabilities (1) |
(61) |
(58) |
|
Other net financial expenses |
36 |
32 |
|
Finance costs, net |
(373) |
(436) |
|
Income taxes |
(580) |
(417) |
|
Consolidated net income |
1,467 |
(2,605) |
|
Net income attributable to owners of the parent company |
1,218 |
(2,769) |
|
Net income attributable to non-controlling interests |
249 |
165 |
(1) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are eliminated from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
The consolidated net income of the Orange group amounted to 1,467 million euros in the first half of 2022, compared with a loss of 2,605 million euros in the first half of 2021, i.e. an increase of 4,071 million euros. This increase mainly reflects (i) the 4,172 million euro increase in operating income and (ii) secondarily, an improvement of 63 million euros in net finance costs, (iii) partially offset by the 163 million euro rise in income taxes.
The 63 million euro improvement in net finance costs (see Note 10 to the Consolidated Financial Statements) between the two periods was mainly due to:
− the reduction in the cost of gross financial debt (except financed assets) due to (i) the change in the fair value of derivatives entered into to take advantage of the current favorable market conditions for future issues, (ii) the change in the interest rate effect of derivatives hedging debt denominated in Polish zloty, and (iii) to a lesser extent, the decrease in bond interest after hedging;
− partially offset by the deterioration in foreign exchange gains (losses), mainly linked to the effect of derivative instruments (cross currency swaps) entered into by the Group to hedge its economic exposure to subordinated notes issued in pounds sterling, for which the revaluation for foreign exchange risk is not recognized (see Notes 10.2 and 13.4 to the Consolidated Financial Statements).
The 163 million euro increase in income taxes (see Note 9 to the Consolidated Financial Statements) between the two periods is mainly attributable to:
− the increase in the current tax expense due to the counter-effect of the recognition in the first half of 2021 of current tax income of 372 million euros which related to the re-estimation of a tax expense recognized prior to the periods presented;
− partially offset by the decrease in the deferred tax expense, mainly due to the counter-effect of the recognition in the first half of 2021 of (i) an expense of 188 million euros for deferred tax liabilities recognized in the United Kingdom on the Orange brand following the change in the tax rate, and (ii) a write-down of 140 million euros on deferred tax assets in Spain.
After taking into account non-controlling interests (see Note 13.6 to the Consolidated Financial Statements), the net income attributable to owners of the parent company amounted to 1,218 million euros in the first half of 2022, compared with a loss of 2,769 million euros in the first half of 2021, i.e. an increase of 3,988 million euros.
1.2.4 Group comprehensive income
The transition from Group consolidated net income to Group consolidated comprehensive income is detailed in the Consolidated statement of comprehensive income.
1.2.5 Group capital expenditure
|
Investments in property, plant and equipment and intangible assets (1) |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
eCAPEX |
3,413 |
3,737 |
3,845 |
(8.7)% |
(11.3)% |
|
Elimination of the price of disposal of fixed assets (2) |
124 |
62 |
48 |
100.1 % |
158.8 % |
|
Telecommunication licenses |
244 |
295 |
293 |
(17.3)% |
(16.7)% |
|
Financed assets (3) |
69 |
23 |
23 |
204.7 % |
204.7 % |
|
Group total |
3,850 |
4,117 |
4,208 |
(6.5)% |
(8.5)% |
(1) See Note 1.5 to the Consolidated Financial Statements.
(2) Elimination of the price of disposal of fixed assets included in economic CAPEX (eCAPEX).
(3) Financed assets include set-up boxes in France, which are financed by an intermediary bank and meet the standard criterion for the definition of property, plant and equipment according to IAS 16.
Year on year, the decrease in the Group’s investments in property, plant and equipment and intangible assets in the first half of 2022 resulted from (i) the reduction of investments in property, plant and equipment and intangible assets excluding telecommunication licenses, and (ii) secondarily, the decrease in expenses related to telecommunication licenses, (iii) partially offset by the increase in expenses related to financed assets.
Group financial investments (see Section 1.6.4 Financial glossary) are detailed in the Consolidated statement of cash flows and in Section 1.4.1 Liquidity and cash flows from telecom activities.
1.2.5.1 Economic CAPEX
In the first half of 2022, the Orange group’s economic CAPEX stood at 3,413 million euros (including 3,399 million euros from telecom activities and 14 million euros from Mobile Financial Services), down 11.3% on a historical basis and 8.7% on a comparable basis versus the first half of 2021. The ratio of economic CAPEX to revenues from telecom activities was 16.0% in the first half of 2022, down 2.4 points on a historical basis and 1.5 points on a comparable basis versus the first half of 2021.
Economic CAPEX decreased for the second consecutive half-year.
Change on a historical basis
On a historical basis, the 11.3% decrease (433 million euros) in Group economic CAPEX between the first half of 2021 and the first half of 2022 was due to:
− (i) the negative impact of changes in the scope of consolidation and other changes amounting to 123 million euros, which mainly includes an effect of 133 million euros due to the loss of exclusive control of Orange Concessions following the disposal of 50% of the capital on November 3, 2021, (ii) partially offset by the positive effect of foreign exchange fluctuations of 14 million euros; and
− the organic change on a comparable basis, representing a 324 million euro decrease in economic CAPEX.
Change on a comparable basis
On a comparable basis, the 324 million euro (-8.7%) decrease in Group economic CAPEX between the first half of 2021 and the first half of 2022 was mainly due to:
− the steep drop in gross investment in very high-speed fixed broadband networks (FTTH), mainly in France, and to a lesser extent in Europe (Poland, Spain), following the major roll-outs of recent years. At June 30, 2022, the Group had 60.6 million households connectable to FTTH worldwide (up 16.1% year on year), including 31.2 million in France, 16.1 million in Spain, 10.5 million in Other European countries and 2.8 million in the Africa & Middle East countries. At June 30, 2022, the total number of households connectable to all very high-speed broadband networks combined (i.e. FTTH and cabled networks) was 62.5 million;
− the reduction in capital expenditure on fixed and mobile legacy networks in France, and to a lesser extent in Poland, in connection with the gradual migration of customers to very high-speed fixed and mobile broadband networks (FTTH and 4G/5G);
− the increase in fixed asset disposals, mainly in France (asset rotation, mainly due to the marketing of fiber optics) and in Poland (real estate disposals carried out as part of the real estate optimization program); and
− the decrease in economic CAPEX relating to leased handsets, Liveboxes and equipment installed at customers’ premises, in France and Europe;
− partially offset by (i) the lower co-financing received in France (in the case of fiber optic roll-outs, the Group’s capital expenditure benefits from co-financing received from third-party operators and from grants that reduce economic CAPEX), and (ii) the increase in investments in very high-speed broadband mobile networks (4G/5G), mainly in the Africa & Middle East countries, Spain and France.
1.2.5.2 Telecommunication licenses
In the first half of 2022, telecommunication licenses amounted to 244 million euros and mainly related to (i) Egypt for 203 million euros, with the acquisition of a 4G license (for a 15 MHz spectrum block in the 2,600 MHz frequency band), and, secondarily, (ii) Slovakia for 16 million euros (acquisition of a 5G license), and (iii) Belgium for 11 million euros. For the auctions of 2G, 3G, 4G and 5G licenses which took place in Belgium in the first half of 2022, see Note 14.2 to the Consolidated Financial Statements.
In the first half of 2021, telecommunication licenses amounted to 293 million euros on a historical basis and mainly related to (i) France for 207 million euros (with the renewal of 2G licenses in the 900 MHz and 1,800 MHz frequency bands), Spain for 64 million euros (mainly for 5G licenses), Belgium for 11 million euros and Guinea for 10 million euros.
In addition, telecommunication licenses may, in some cases, give rise to annual fees recognized as operating taxes and levies payables in the Consolidated income statement.
1.3 Review by business segment
The following table presents, for the Orange group, the main operating data (financial data and workforce information) by segment for the first half-years of 2022 and 2021 on a comparable basis and 2021 on a historical basis.
For more details on segment reporting, see Note 1 to the Consolidated Financial Statements.
|
Period ended June 30 |
France |
Europe |
Africa & Middle East | |||
|
(in millions of euros) |
Spain |
Other European countries |
Europe eliminations |
Total Europe | ||
|
2022 | ||||||
|
Revenue |
8,827 |
2,265 |
3,065 |
(5) |
5,325 |
3,381 |
|
EBITDAaL |
3,035 |
524 |
799 |
- |
1,323 |
1,214 |
|
Operating Income |
1,436 |
(19) |
278 |
- |
260 |
739 |
|
eCAPEX |
1,673 |
465 |
369 |
- |
835 |
609 |
|
Telecommunication licenses |
8 |
6 |
27 |
- |
33 |
203 |
|
Average number of employees |
47,009 |
6,169 |
21,653 |
- |
27,822 |
14,380 |
|
2021 - Data on a comparable basis | ||||||
|
Revenue |
8,979 |
2,368 |
3,042 |
(4) |
5,406 |
3,133 |
|
EBITDAaL |
3,063 |
562 |
753 |
- |
1,315 |
1,088 |
|
Operating Income |
1,480 |
(3,809) |
173 |
- |
(3,636) |
604 |
|
eCAPEX |
2,004 |
447 |
422 |
- |
869 |
540 |
|
Telecommunication licenses |
207 |
64 |
11 |
- |
75 |
13 |
|
Average number of employees |
49,813 |
6,729 |
22,829 |
- |
29,558 |
14,575 |
|
2021 - Data on a historical basis | ||||||
|
Revenue |
8,950 |
2,368 |
2,800 |
(4) |
5,164 |
3,043 |
|
EBITDAaL |
3,181 |
610 |
749 |
- |
1,359 |
1,051 |
|
Operating Income |
1,548 |
(3,773) |
189 |
- |
(3,584) |
579 |
|
eCAPEX |
2,171 |
457 |
413 |
- |
870 |
525 |
|
Telecommunication licenses |
207 |
64 |
11 |
- |
75 |
11 |
|
Average number of employees |
49,927 |
6,749 |
19,251 |
- |
26,000 |
14,575 |
(1) For the first half of 2021, historical data relating to Totem is presented in the France and Spain business segments and, to a very limited extent, in the International Carriers & Shared Services segment (see the introduction of the Section 1 Interim management report for the first half of 2022 and Note 1.1 to the Consolidated Financial Statements).
|
Entreprise |
Totem (1) |
International Carriers & Shared Services |
Telecom activities eliminations |
Total Telecom activities |
Mobile Financial Services |
Group eliminations |
Group total | |
|
3,888 |
328 |
772 |
(1,220) |
21,301 |
- |
(4) |
21,297 | |
|
364 |
180 |
(128) |
- |
5,989 |
(56) |
0 |
5,934 | |
|
152 |
120 |
(207) |
- |
2,499 |
(80) |
0 |
2,420 | |
|
144 |
44 |
94 |
- |
3,399 |
14 |
- |
3,413 | |
|
- |
- |
- |
- |
244 |
- |
- |
244 | |
|
28,681 |
152 |
12,155 |
- |
130,199 |
916 |
- |
131,115 | |
|
3,895 |
298 |
742 |
(1,177) |
21,276 |
- |
(4) |
21,272 | |
|
488 |
177 |
(184) |
- |
5,947 |
(56) |
1 |
5,891 | |
|
300 |
121 |
(514) |
- |
(1,646) |
(77) |
1 |
(1,722) | |
|
159 |
41 |
110 |
- |
3,724 |
13 |
- |
3,737 | |
|
- |
- |
- |
- |
295 |
- |
- |
295 | |
|
27,953 |
60 |
12,437 |
- |
134,397 |
942 |
- |
135,338 | |
|
3,840 |
- |
743 |
(869) |
20,870 |
- |
(4) |
20,867 | |
|
484 |
- |
(182) |
- |
5,893 |
(56) |
1 |
5,837 | |
|
295 |
- |
(514) |
- |
(1,676) |
(77) |
1 |
(1,752) | |
|
157 |
- |
110 |
- |
3,832 |
13 |
- |
3,845 | |
|
- |
- |
- |
- |
293 |
- |
- |
293 | |
|
27,990 |
- |
12,719 |
- |
131,211 |
942 |
- |
132,153 | |
1.3.1 France
|
France |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
8,827 |
8,979 |
8,950 |
(1.7)% |
(1.4)% |
|
EBITDAaL |
3,035 |
3,063 |
3,181 |
(0.9)% |
(4.6)% |
|
EBITDAaL/Revenue |
34.4 % |
34.1 % |
35.5 % |
0.3 pt |
(1.2 pt) |
|
Operating income |
1,436 |
1,480 |
1,548 |
(3.0)% |
(7.3)% |
|
eCAPEX |
1,673 |
2,004 |
2,171 |
(16.5)% |
(22.9)% |
|
eCAPEX/Revenue |
19.0 % |
22.3 % |
24.3 % |
(3.4 pt) |
(5.3 pt) |
|
Telecommunication licenses (1) |
8 |
207 |
207 |
(96.3)% |
(96.3)% |
|
Average number of employees |
47,009 |
49,813 |
49,927 |
(5.6)% |
(5.8)% |
(1) See Section 1.2.5.2 Telecommunication licenses.
1.3.1.1 Revenues - France
|
France |
2022 |
2021 |
2021 |
% change |
% change | ||
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |||
|
Revenue |
8,827 |
8,979 |
8,950 |
(1.7)% |
(1.4)% | ||
|
Retail services (B2C+B2B) |
5,466 |
5,383 |
5,383 |
1.6 % |
1.6 % | ||
|
Convergent services |
2,406 |
2,317 |
2,317 |
3.8 % |
3.8 % | ||
|
Mobile-only services |
1,154 |
1,122 |
1,122 |
2.8 % |
2.8 % | ||
|
Fixed-only services |
1,907 |
1,944 |
1,944 |
(1.9)% |
(1.9)% | ||
|
Fixed-only broadband services |
1,473 |
1,418 |
1,415 |
3.8 % |
4.1 % | ||
|
Fixed-only narrowband services |
434 |
525 |
529 |
(17.4)% |
(18.0)% | ||
|
Wholesale services |
2,455 |
2,710 |
2,720 |
(9.4)% |
(9.7)% | ||
|
Equipment sales |
552 |
538 |
523 |
2.7 % |
5.7 % | ||
|
Other revenues |
353 |
349 |
325 |
1.1 % |
8.6 % | ||
Change on a historical basis
On a historical basis, the 124 million euro decrease in revenues in France year on year was due to (i) the favorable effect of changes in the scope of consolidation and other changes for 29 million euros, and (ii) the organic change on a comparable basis, representing a 153 million euro decrease in revenues.
Change on a comparable basis
On a comparable basis, the 153 million euro decrease in revenues in France year on year, down 1.7%, is mainly attributable to (i) the contraction in services to carriers and, to a lesser extent, the decline in conventional telephone services (narrowband), (ii) partially offset by the rise in equipment sales, growth of convergent services and the increase in fixed-only broadband services, and, secondarily, by the growth of mobile-only services and equipment sales.
Specifically, the 153 million euro decrease in revenues in France between the two periods was mainly attributable to:
− the 255 million euro contraction in Wholesale services, due mainly to (i) the reduction in co-financing of FTTH lines received from other operators, (ii) the decrease in revenues from unbundling on the copper network, and (iii) secondarily, the decrease in mobile and fixed-line interconnection revenues (reduced mobile and fixed-line call terminations), (iv) partially offset by the growth of FTTH lines leased to third-party operators and by the construction of fiber optic networks (Public Initiative Networks or PIN);
− the decrease in revenues from Fixed-only narrowband services due to the downward trend in traditional telephony (down 17.4%, or 91 million euros) and the migration of customers toward fixed broadband (FTTH) and convergent services.
This decrease was partially offset by:
− the 89 million euro increase in Convergent services, which continued to expand, with year-on-year growth of 0.9% in the convergent customer base. This growth in volume is also accompanied by growth in value. Half-year convergent ARPO (see Section 1.6.4 Financial glossary) increased by 2.3% between June 30, 2021 and June 30, 2022, boosted by (i) a favorable mix effect, with higher-value convergent services, particularly in fiber, and (ii) a return to growth in non-bundled roaming revenues with the recovery in travel and tourism. Furthermore, the number of mobile telephones in households continued to grow, with 10 million convergent mobile customers at June 30, 2022 (growth of 1.5% year on year), equivalent to 1.7 mobile accesses per convergent customer;
− the growth of Fixed-only broadband services revenues (up 54 million euros, or 3.8%), due to (i) the 2.6% year-on-year increase in the fixed-only broadband access base, and (ii) the 0.9% increase in half-year fixed-only broadband ARPO (see Section 1.6.4 Financial glossary) between the two periods;
− the 31 million euro increase in the revenues of Mobile-only services, driven by (i) the 0.7% increase in half-year mobile-only ARPO (see Section 1.6.4 Financial glossary) and (ii) the 1.4% increase in the mobile-only access base; and
− the 14 million euro increase in revenues from Equipment sales, linked to demand for higher-value mobile handsets.
1.3.1.2 EBITDAaL - France
Change on a historical basis
On a historical basis, the 146 million euro decrease in EBITDAaL in France year on year was due to (i) the negative effect of changes in the scope of consolidation and other changes of 118 million euros, which mainly corresponds to the effect of the creation of Totem (see Section 1.1.3 Significant events) for 125 million euros, and (ii) the organic change on a comparable basis, representing a 28 million euro decrease in EBITDAaL.
Change on a comparable basis
On a comparable basis, the 28 million euro decrease in EBITDAaL in France between the first half of 2021 and the first half of 2022 was mainly due to:
− (i) the 153 million euro decrease in revenues, and (ii) the 40 million euro increase in the depreciation of right-of-use assets, primarily reflecting the increase in leased lines on third-party networks (FTTH);
− partially offset by (i) the 85 million euro decrease in labor expenses, mainly relating to the reduction in the average number of employees (full-time equivalent) between the two periods, and (ii) the decrease in other network expenses and IT expenses, primarily due to the reduction in copper network operating and maintenance expenses, (iii) the decrease in commercial expenses and equipment costs, (iv) the decrease in write-downs and losses on trade receivables, and (v) the decrease in service fees and inter-operator costs, mainly attributable to lower interconnection costs (decrease in voice traffic in wholesale mobile services).
1.3.1.3 Operating income - France
Change on a historical basis
On a historical basis, the 113 million euro decrease in operating income in France year on year was due to (i) the negative effect of changes in the scope of consolidation and other changes of 68 million euros, mainly corresponding to the impact of the creation of Totem (see Section 1.1.3 Significant events) for 81 million euros, and (ii) the organic change on a comparable basis, representing a 45 million euro decrease in operating income.
Change on a comparable basis
On a comparable basis, the 45 million euro decrease in operating income in France between the first half of 2021 and the first half of 2022 was mainly due to:
− (i) the 39 million euro increase in depreciation and amortization, reflecting the growth in fiber leases on third-party networks, (ii) the 28 million euro decrease in EBITDAaL, and (iii) the recognition in the first half of 2022 of a 13 million euro expense for restructuring program costs;
− partially offset by the counter-effect of the recognition in the first half of 2021 of a net expense on significant litigation of 31 million euros.
1.3.1.4 Economic CAPEX - France
Change on a historical basis
On a historical basis, the 498 million euro decrease in economic CAPEX in France year on year was due to (i) the negative effect of changes in the scope of consolidation and other changes of 167 million euros, mainly resulting from the loss of exclusive control of Orange Concessions on November 3, 2021 for 133 million euros, and the effect of the creation of Totem (see Section 1.1.3 Significant events) for 27 million euros, and (ii) the organic change on a comparable basis, representing a decrease of 331 million euros in economic CAPEX.
Change on a comparable basis
On a comparable basis, the decrease of 331 million euros in economic CAPEX in France between the first half of 2021 and the first half of 2022 was mainly due to (i) the sharp drop in investment in very high-speed fixed broadband networks (FTTH), after the considerable investments made in recent years, (ii) the decrease in other capital expenditure, particularly in legacy fixed and mobile networks, and (iii) the increase in disposals of fixed assets (asset rotation due to the marketing of fiber optics), (iv) partially offset by the lower co-financing received.
1.3.1.5 Additional information - France
|
France |
2022 |
2021 |
2021 |
% change |
% change | ||
|
(at June 30, in thousands, at the end of the period) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |||
|
Convergent services | |||||||
|
Number of convergent customers |
5,909 |
5,858 |
5,858 |
0.9 % |
0.9 % | ||
|
6-month convergent ARPO (in euros) (2) |
70.6 |
69.0 |
69.0 |
2.3 % |
2.3 % | ||
|
Mobile services | |||||||
|
Number of mobile accesses (1) |
21,873 |
21,556 |
21,556 |
1.5 % |
1.5 % | ||
|
o/w: |
Convergent customers mobile accesses |
9,990 |
9,842 |
9,842 |
1.5 % |
1.5 % | |
|
Mobile-only accesses |
11,883 |
11,714 |
11,714 |
1.4 % |
1.4 % | ||
|
o/w: |
Contract customers mobile accesses |
20,279 |
19,802 |
19,802 |
2.4 % |
2.4 % | |
|
Prepaid customers mobile accesses |
1,593 |
1,754 |
1,754 |
(9.2)% |
(9.2)% | ||
|
6-month mobile-only ARPO (in euros) (2) |
17.0 |
16.9 |
16.9 |
0.7 % |
0.7 % | ||
|
Fixed services | |||||||
|
Number of fixed accesses |
28,871 |
29,835 |
29,835 |
(3.2)% |
(3.2)% | ||
|
Fixed Retail accesses |
15,333 |
15,692 |
15,692 |
(2.3)% |
(2.3)% | ||
|
o/w: |
Fixed Broadband accesses |
12,332 |
12,118 |
12,118 |
1.8 % |
1.8 % | |
|
o/w: |
Very high-speed broadband fixed accesses |
6,537 |
5,253 |
5,253 |
24.4 % |
24.4 % | |
|
o/w: |
Convergent customers fixed accesses |
5,909 |
5,858 |
5,858 |
0.9 % |
0.9 % | |
|
Fixed-only accesses |
6,424 |
6,261 |
6,261 |
2.6 % |
2.6 % | ||
|
6-month fixed-only broadband ARPO (in euro) (2) |
36.1 |
35.8 |
35.8 |
0.9 % |
0.9 % | ||
|
o/w: |
Fixed Narrowband accesses |
3,001 |
3,574 |
3,574 |
(16.0)% |
(16.0)% | |
|
o/w: |
PSTN accesses |
2,967 |
3,539 |
3,539 |
(16.1)% |
(16.1)% | |
|
Other fixed accesses |
33 |
35 |
35 |
(5.6)% |
(5.6)% | ||
|
Fixed Wholesale accesses |
13,538 |
14,143 |
14,143 |
(4.3)% |
(4.3)% | ||
|
o/w: |
FTTH accesses |
5,788 |
4,523 |
4,523 |
28.0 % |
28.0 % | |
|
Copper accesses |
7,750 |
9,621 |
9,621 |
(19.4)% |
(19.4)% | ||
(1) Excluding customers of mobile virtual network operators (MVNOs).
(2) See Section 1.6.4 Financial glossary.
1.3.2 Europe
|
Europe |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
5,325 |
5,406 |
5,164 |
(1.5)% |
3.1 % |
|
EBITDAaL |
1,323 |
1,315 |
1,359 |
0.6 % |
(2.6)% |
|
EBITDAaL/Revenue |
24.8 % |
24.3 % |
26.3 % |
0.5 pt |
(1.5 pt) |
|
Operating income |
260 |
(3,636) |
(3,584) |
N/A |
N/A |
|
eCAPEX |
835 |
869 |
870 |
(4.0)% |
(4.1)% |
|
eCAPEX/Revenue |
15.7 % |
16.1 % |
16.8 % |
(0.4 pt) |
(1.2 pt) |
|
Telecommunication licenses (1) |
33 |
75 |
75 |
(55.3)% |
(55.3)% |
|
Average number of employees |
27,822 |
29,558 |
26,000 |
(5.9)% |
7.0 % |
(1) See Section 1.2.5.2 Telecommunication licenses.
1.3.2.1 Revenues - Europe
|
Europe |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Revenue |
5,325 |
5,406 |
5,164 |
(1.5)% |
3.1 % | |
|
Retail services (B2C+B2B) |
3,642 |
3,620 |
3,451 |
0.6 % |
5.5 % | |
|
Convergent services |
1,400 |
1,354 |
1,337 |
3.4 % |
4.7 % | |
|
Mobile-only services |
1,414 |
1,439 |
1,434 |
(1.7)% |
(1.4)% | |
|
Fixed-only services |
614 |
641 |
522 |
(4.3)% |
17.7 % | |
|
IT & integration services |
214 |
186 |
158 |
15.4 % |
35.7 % | |
|
Wholesale services |
877 |
989 |
926 |
(11.4)% |
(5.3)% | |
|
Equipment sales |
719 |
726 |
718 |
(1.0)% |
0.2 % | |
|
Other revenues |
87 |
70 |
70 |
23.7 % |
24.6 % | |
|
Europe |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
5,325 |
5,406 |
5,164 |
(1.5)% |
3.1 % |
|
Spain |
2,265 |
2,368 |
2,368 |
(4.3)% |
(4.3)% |
|
Poland |
1,292 |
1,268 |
1,294 |
1.9 % |
(0.2)% |
|
Belgium & Luxembourg |
677 |
656 |
656 |
3.3 % |
3.3 % |
|
Central Europe (1) |
1,099 |
1,124 |
856 |
(2.2)% |
28.4 % |
|
Eliminations |
(9) |
(10) |
(10) |
- |
- |
(1) Central Europe: entities in Moldova, Romania and Slovakia.
Change on a historical basis
On a historical basis, the 161 million euro increase from countries in Europe revenues between the first half of 2021 and the first half of 2022 was due to:
− the favorable impact of changes in the scope of consolidation and other changes of 267 million euros, corresponding to the effect of the takeover of Telekom Romania Communications (TKR, renamed Orange Romania Communications) on September 30, 2021;
− offset by (i) the negative effect of foreign exchange fluctuations of 26 million euros, mainly as a result of movements in the Polish zloty against the euro, and (ii) the organic change on a comparable basis, representing a decrease of 80 million euros in revenues.
Change on a comparable basis
On a comparable basis, the 80 million euro decrease (-1.5%) from countries in Europe revenues between the first half of 2021 and the first half of 2022 was mainly due to:
− the decrease in wholesale services in all European countries, the contraction in retail services (B2C+B2B) in Spain and Romania and, secondarily, the slowdown in Equipment sales in Spain (see Section 1.3.2.6 Additional information - Spain);
− partially offset by (i) the growth in retail services (B2C+B2B) in all Other European countries, and (iii) to a lesser extent, the development of IT & Integration Services in Poland.
Specifically, the 80 million euro decrease in revenues from countries in Europe between the two periods was mainly the result of:
− the 112 million euro decrease in revenues from Wholesale services in all countries, primarily due to the decrease in fixed wholesale services, notably as a result of lower interconnection rates and reduced international transit;
− the 27 million euro decrease in Fixed-only services, mainly in Romania, and to a lesser extent in Spain and Poland, mainly due to the continued migration of these services to convergent or low-cost services;
− the 25 million euro decrease in revenues from Mobile-only services, mainly in Spain (see Section 1.3.2.6 Additional information - Spain), and to a lesser extent, in Slovakia and Moldova. The mobile-only access base grew by 5.3% year on year, driven by the growth of this base in Poland (up 12.8%), Belgium & Luxembourg (up 5.4%), Spain (up 4.3%) and Romania (up 4.3%).
This decrease was partially offset by:
− a 46 million euro increase in revenues from Convergent services, primarily in Poland (up 9.1% year on year), in Belgium (up 13.0% year on year) and in Slovakia (up 45.5% year on year). The convergent customer base grew in all countries and totaled 5.6 million customers at June 30, 2022;
− and, to a lesser extent, the 29 million euro rise in revenues from IT & Integration Services, mainly in Poland.
1.3.2.2 EBITDAaL - Europe
Change on a historical basis
On a historical basis, the 35 million euro decrease in EBITDAaL from countries in Europe between the first half of 2021 and the first half of 2022 was due to (i) the negative effect of changes in the scope of consolidation and other changes totaling 38 million euros, primarily including 48 million euros for the effect of the creation of Totem (see Section 1.1.3 Significant events) and (ii) 6 million euros for the unfavorable impact of foreign exchange fluctuations, (iii) partially offset by the organic change on a comparable basis, representing an 8 million euro increase in EBITDAaL.
Change on a comparable basis
On a comparable basis, the 8 million euro increase in EBITDAaL from countries in Europe between the first half of 2021 and the first half of 2022 was mainly attributable to:
− (i) the decrease in service fees and inter-operator costs, due to lower interconnection costs (in relation to regulatory cuts in call termination rates and the decrease in international transit activity), and (ii) the increase in other operating income, related to the creation of the FiberCo in Poland at the end of August 2021 (rebilling of construction, monitoring and leasing costs);
− largely offset by (i) the 80 million euro decrease in revenues and (ii) the increase in other network expenses (operating expenses and network maintenance expenses), due in particular to the increase in traffic and energy access costs for the fixed and mobile networks in all countries, (iii) the rise in the cost of purchasing energy for resale in Poland, and (iv) the increase in commercial expenses, equipment and content costs, mainly due to the increase in content costs in Spain.
1.3.2.3 Operating income - Europe
Change on a historical basis
On a historical basis, the 3,844 million euro increase in operating income from countries in Europe between the first half of 2021 and the first half of 2022 was due to:
− the negative effect of changes in the scope of consolidation and other changes of 51 million euros, due to the creation of Totem (see Section 1.1.3 Significant events) for 37 million euros and the takeover of Telekom Romania Communications (TKR, renamed Orange Romania Communications) for 14 million euros;
− the unfavorable impact of foreign exchange fluctuations for 1 million euros; and
− the organic change on a comparable basis, representing a 3,896 million euro increase in operating income.
Change on a comparable basis
On a comparable basis, the 3,896 million euro increase in operating income from countries in Europe between the first half of 2021 and the first half of 2022 was due to:
− primarily, the counter-effect of goodwill impairment in 2021 of 3,702 million euros in Spain (see Note 7 to the Consolidated Financial Statements). This impairment loss in Spain was primarily a reflection of the continued deterioration in the competitive environment despite the market consolidation transactions (marked by an erosion in average revenues per user) and uncertainty over the prolonged Covid-19 health crisis (a longer-than-expected timeframe for economic recovery);
− and, secondarily, (i) the counter-effect of the recognition, in the first half of 2021, of a 145 million euro expense for the costs of restructuring programs in Spain (employee departure plans, see Note 5.3 to the Consolidated Financial Statements), and (ii) the 41 million euro decrease in depreciation and amortization.
1.3.2.4 Economic CAPEX - Europe
Change on a historical basis
On a historical basis, the 35 million euro decrease in economic CAPEX from countries in Europe between the first half of 2021 and the first half of 2022 includes (i) the negative effect of foreign exchange fluctuations for 4 million euros, (ii) the favorable impact of changes in scope of consolidation and other changes for 3 million euros, and (iii) the organic change on a comparable basis, representing a 35 million euro decrease in economic CAPEX.
Change on a comparable basis
On a comparable basis, the 35 million euro decrease in economic CAPEX from countries in Europe between the first half of 2021 and the first half of 2022 was mainly attributable to (i) the decrease in investments in networks, primarily in Poland (decrease in investments in very high-speed fixed broadband networks (FTTH), and to a lesser extent in Slovakia, (ii) partially offset by the increase in economic CAPEX in Romania and Spain (see Section 1.3.2.6 Additional information - Spain).
1.3.2.5 Additional information - Europe
|
Europe |
2022 |
2021 |
2021 |
% change |
% change | ||
|
(at June 30, in thousands, at the end of the period) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |||
|
Convergent services | |||||||
|
Number of convergent customers |
5,643 |
5,561 |
5,327 |
1.5 % |
5.9 % | ||
|
Mobile services | |||||||
|
Number of mobile accesses (1) |
54,820 |
52,314 |
51,398 |
4.8 % |
6.7 % | ||
|
o/w: |
Convergent customers mobile accesses |
11,066 |
10,753 |
10,317 |
2.9 % |
7.3 % | |
|
Mobile-only accesses |
43,753 |
41,562 |
41,081 |
5.3 % |
6.5 % | ||
|
o/w: |
Contract customers mobile accesses |
41,861 |
39,682 |
38,765 |
5.5 % |
8.0 % | |
|
Prepaid customers mobile accesses |
12,959 |
12,633 |
12,633 |
2.6 % |
2.6 % | ||
|
Fixed services | |||||||
|
Number of fixed accesses |
12,527 |
12,797 |
10,898 |
(2.1)% |
15.0 % | ||
|
Fixed Retail accesses |
11,220 |
11,487 |
9,588 |
(2.3)% |
17.0 % | ||
|
o/w: |
Fixed Broadband accesses |
8,913 |
8,831 |
7,873 |
0.9 % |
13.2 % | |
|
o/w: |
Very high-speed broadband fixed accesses |
5,924 |
5,467 |
5,006 |
8.4 % |
18.3 % | |
|
o/w: |
Convergent customers fixed accesses |
5,643 |
5,561 |
5,327 |
1.5 % |
5.9 % | |
|
Fixed-only accesses |
3,270 |
3,270 |
2,546 |
(0.0)% |
28.4 % | ||
|
o/w: |
Fixed Narrowband accesses |
2,308 |
2,656 |
1,715 |
(13.1)% |
34.6 % | |
|
Fixed Wholesale accesses |
1,307 |
1,310 |
1,310 |
(0.2)% |
(0.2)% | ||
(1) Excluding customers of mobile virtual network operators (MVNOs).
1.3.2.6 Additional information - Spain
|
Spain |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
2,265 |
2,368 |
2,368 |
(4.3)% |
(4.3)% |
|
EBITDAaL |
524 |
562 |
610 |
(6.7)% |
(14.0)% |
|
EBITDAaL/Revenue |
23.1 % |
23.7 % |
25.8 % |
(0.6 pt) |
(2.6 pt) |
|
Operating income |
(19) |
(3,809) |
(3,773) |
99.5 % |
99.5 % |
|
eCAPEX |
465 |
447 |
457 |
4.1 % |
1.8 % |
|
eCAPEX/Revenue |
20.5 % |
18.9 % |
19.3 % |
1.7 pt |
1.2 pt |
|
Telecommunication licenses (1) |
6 |
64 |
64 |
(90.0)% |
(90.0)% |
|
Average number of employees |
6,169 |
6,729 |
6,749 |
(8.3)% |
(8.6)% |
(1) See Section 1.2.5.2 Telecommunication licenses.
Revenues - Spain
|
Spain |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Revenue |
2,265 |
2,368 |
2,368 |
(4.3)% |
(4.3)% | |
|
Retail services (B2C+B2B) |
1,565 |
1,614 |
1,614 |
(3.1)% |
(3.1)% | |
|
Convergent services |
931 |
933 |
933 |
(0.2)% |
(0.2)% | |
|
Mobile-only services |
399 |
443 |
450 |
(10.0)% |
(11.4)% | |
|
Fixed-only services |
217 |
224 |
225 |
(3.2)% |
(3.6)% | |
|
IT & integration services |
18 |
13 |
6 |
34.1 % |
214.6 % | |
|
Wholesale services |
406 |
443 |
443 |
(8.2)% |
(8.2)% | |
|
Equipment sales |
293 |
310 |
310 |
(5.4)% |
(5.4)% | |
|
Other revenues |
0 |
0 |
0 |
(5.6)% |
(5.6)% | |
Change on a historical basis and on a comparable basis
On both a historical basis and a comparable basis, the 103 million euro decrease in revenues in Spain between the two periods, representing a 4.3% decrease, is mainly attributable to:
− the 44 million euro contraction in revenues from Mobile-only services, mainly due to the ongoing migration of the market toward low-cost services, resulting in a decrease of 5.4% in the half-year mobile-only ARPO year on year. The contract customer base (excluding M2M) was down 3.1% year on year as a result of the major competitive pressure and discontinuation of activities under the Amena brand;
− the 37 million euro decrease in revenues from Wholesale services, particularly in the fixed segment, and related primarily to the decrease in interconnection and international transit rates; and
− the 17 million euro decrease in revenues from Equipment sales in the Enterprise segment, related to the counter-effect of the catch-up in equipment sales in the first half of 2021 after the Covid-19 health crisis.
EBITDAaL - Spain
Change on a historical basis
On a historical basis, the 86 million euro decrease in EBITDAaL in Spain between the first half of 2021 and the first half of 2022 was due to (i) the negative effect of changes in scope of consolidation and other changes of 48 million euros due to the creation of Totem (see Section 1.1.3 Significant events), and (ii) the organic change on a comparable basis, representing a 38 million euro decrease in EBITDAaL.
Change on a comparable basis
On a comparable basis, the 38 million euro decrease in EBITDAaL in Spain between the first half of 2021 and the first half of 2022 was due to:
− (i) the 103 million euro decrease in revenues, and (ii) secondarily, the increase in operating and network maintenance expenses, related in particular to the increase in energy access costs for fixed and mobile networks;
− partially offset by (i) the decrease in service fees and inter-operator costs, primarily related to the decrease in interconnection and international transit rates, (ii) the decrease in commercial expenses and equipment costs, primarily due to fewer equipment sales, and (iii) the decrease in the depreciation of right-of-use assets.
Operating income - Spain
Change on a historical basis
On a historical basis, the 3,754 million euro increase in operating income in Spain between the first half of 2021 and the first half of 2022 includes (i) the negative effect of changes in the scope of consolidation and other changes of 36 million euros due to the creation of Totem (see Section 1.1.3 Significant events), and (ii) the organic change on a comparable basis, representing a 3,791 million euro increase in operating income.
Change on a comparable basis
On a comparable basis, the 3,791 million euro increase in operating income in Spain between the first half of 2021 and the first half of 2022 was due to:
− primarily, the counter-effect of goodwill impairment of 3,702 million euros in Spain in the first half of 2021 (see Note 7 to the Consolidated Financial Statements). This impairment loss in Spain was primarily a reflection of the continued deterioration in the competitive environment despite the market consolidation transactions (marked by an erosion in average revenues per user) and uncertainty over the prolonged Covid-19 health crisis (a longer-than-expected timeframe for economic recovery);
− and, secondarily, the counter-effect of the recognition, in the first half of 2021, of a 145 million euro expense for the costs of restructuring programs (employee departure plans, see Note 5.3 to the Consolidated Financial Statements);
− partially offset by the 38 million euro decrease in EBITDAaL.
Economic CAPEX - Spain
Change on a historical basis
On a historical basis, the 8 million euro increase in economic CAPEX in Spain between the first half of 2021 and the first half of 2022 includes (i) the negative effect of changes in the scope of consolidation and other changes of 10 million euros, and (ii) the organic change on a comparable basis, representing an 18 million euro increase in economic CAPEX.
Change on a comparable basis
On a comparable basis, the 18 million euro increase in economic CAPEX in Spain between the first half of 2021 and the first half of 2022 was mainly due to the increase in investments in mobile networks, partially offset by the decrease in investments in fixed networks and, to a lesser extent, by the decrease in economic CAPEX related to rented handsets, Livebox and equipments installed at customers’ premises, due to the contraction in activity.
1.3.3 Africa & Middle East
|
Africa & Middle East |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
3,381 |
3,133 |
3,043 |
7.9 % |
11.1 % |
|
EBITDAaL |
1,214 |
1,088 |
1,051 |
11.6 % |
15.5 % |
|
EBITDAaL/Revenue |
35.9 % |
34.7 % |
34.5 % |
1.2 pt |
1.4 pt |
|
Operating income |
739 |
604 |
579 |
22.4 % |
27.7 % |
|
eCAPEX |
609 |
540 |
525 |
12.7 % |
16.1 % |
|
eCAPEX/Revenue |
18.0 % |
17.2 % |
17.2 % |
0.8 pt |
0.8 pt |
|
Telecommunication licenses (1) |
203 |
13 |
11 |
N/A |
N/A |
|
Average number of employees |
14,380 |
14,575 |
14,575 |
(1.3)% |
(1.3)% |
(1) See Section 1.2.5.2 Telecommunication licenses.
The Africa & Middle East countries continued to suffer political or economic instability and sometimes tax or regulatory pressures that could affect the business and results of Group subsidiaries and shareholdings, and may continue to affect them in the future. In some cases, these situations may result in the Group recognizing asset impairment (see Note 7 to the Consolidated Financial Statements). For further information on the risk factors, see Section 2.1 Risk factors of the 2021 Universal Registration Document.
1.3.3.1 Revenues - Africa & Middle East
|
Africa & Middle East |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Revenue |
3,381 |
3,133 |
3,043 |
7.9 % |
11.1 % | |
|
Retail services (B2C+B2B) |
2,984 |
2,741 |
2,660 |
8.9 % |
12.2 % | |
|
Mobile-only services |
2,578 |
2,389 |
2,329 |
7.9 % |
10.7 % | |
|
Fixed-only services |
384 |
341 |
318 |
12.9 % |
20.9 % | |
|
IT & integration services |
21 |
11 |
13 |
96.5 % |
57.2 % | |
|
Wholesale services |
324 |
318 |
310 |
1.9 % |
4.4 % | |
|
Equipment sales |
55 |
55 |
54 |
(0.8)% |
1.6 % | |
|
Other revenues |
18 |
19 |
18 |
(1.4)% |
(0.1)% | |
|
Africa & Middle East |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
3,381 |
3,133 |
3,043 |
7.9 % |
11.1 % |
|
Sonatel sub-group (1) |
1,087 |
1,024 |
978 |
6.1 % |
11.1 % |
|
Côte d’Ivoire sub-group (2) |
732 |
714 |
710 |
2.4 % |
3.1 % |
|
Egypt |
503 |
450 |
449 |
11.8 % |
12.0 % |
|
Morocco |
338 |
318 |
314 |
6.4 % |
7.8 % |
|
Jordan |
221 |
210 |
190 |
5.4 % |
16.1 % |
|
Cameroon |
205 |
185 |
185 |
10.6 % |
10.6 % |
|
Congo (DRC) |
191 |
144 |
131 |
32.4 % |
45.9 % |
|
Other countries (3) |
138 |
116 |
113 |
19.8 % |
22.2 % |
|
Eliminations |
(35) |
(29) |
(28) |
- |
- |
(1) Sonatel sub-group: entities in Senegal, Mali, Guinea, Guinea-Bissau and Sierra Leone.
(2) Côte d’Ivoire sub-group: entities in Côte d’Ivoire, Burkina Faso and Liberia.
(3) Other countries: mainly entities in Botswana, Central African Republic (CAR) and Madagascar.
Change on a historical basis
On a historical basis, the 338 million euro increase in revenues in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was due to (i) the positive impact of foreign exchange fluctuations of 90 million euros, mainly considering the Guinean franc (47 million euros), and the Jordanian dinar (19 million euros) against the euro, and (ii) the organic change on a comparable basis, representing a 248 million euro increase in revenues.
Change on a comparable basis
On a comparable basis, the 248 million euro increase (up 7.9%) in revenues in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was mainly due to business growth in all countries in the region (with the exception of Côte d’Ivoire), with 11 countries posting double-digit growth.
More specifically, the 248 million euro growth in revenues in the Africa & Middle East countries between the two periods is primarily attributable to:
− the 189 million euro increase in revenues from Mobile-only services, largely due to (i) the increase in data services, up 22.2% year on year, driven in particular by the momentum in the 4G customer base, which grew 28.3% year on year to 48.9 million customers at June 30, 2022, and (ii) the increase in voice services, up 5.0% year on year, driven by a robust performance in the Democratic Republic of the Congo (DRC) and in Guinea. Furthermore, the mobile access base continues to grow and posted an increase of 5.4% year on year; and
− the increase in revenues from Fixed-only services, driven by the growth in fixed-only broadband services, which increased 24.6% year on year. The fixed-only broadband access base totaled 2.5 million customers at June 30, 2022, up 23.6% year on year.
1.3.3.2 EBITDAaL - Africa & Middle East
Change on a historical basis
On a historical basis, the 163 million euro increase in EBITDAaL in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was due to (i) the positive effect of foreign exchange fluctuations of 37 million euros, and (ii) the organic change on a comparable basis, representing a 126 million euro increase in EBITDAaL.
Change on a comparable basis
On a comparable basis, the 126 million euro increase in EBITDAaL in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was mainly due to:
− the 248 million euro increase in revenues and, to a lesser extent, the decrease in other operating expenses;
− partially offset by (i) the increase in commercial expenses and equipment costs, due primarily to the increase in distribution fees in connection with business growth (telecom commissions and Orange Money), (ii) the rise in operating taxes and levies payables, particularly due to the region’s business growth, (iii) the increase in other network expenses and IT expenses, due to the continued network roll-outs in all countries and the increase in energy access costs for fixed and mobile networks, (iv) the increase in labor expenses, largely related to the Sonatel sub-group, and (v) the increase in overheads, due to the resumption of consulting assignments following the end of the restrictions related to the Covid-19 health crisis.
1.3.3.3 Operating income - Africa & Middle East
Change on a historical basis
On a historical basis, the 160 million euro increase in operating income in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was due to (i) the positive effect of foreign exchange fluctuations of 25 million euros, and (ii) the organic change on a comparable basis, representing a 135 million euro increase in operating income.
Change on a comparable basis
On a comparable basis, the 135 million euro increase in operating income in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was mainly due to:
− (i) the 126 million euro increase in EBITDAaL, and (ii) the counter-effect of the recognition, in the first half of 2021, of a 34 million euro expense for restructuring program costs;
− partially offset by the 19 million euro increase in depreciation and amortization.
1.3.3.4 Economic CAPEX - Africa & Middle East
Change on a historical basis
On a historical basis, the 84 million euro increase in economic CAPEX in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was due to (i) the positive effect of foreign exchange fluctuations of 16 million euros, and (ii) the organic change on a comparable basis, representing a 69 million euro increase in economic CAPEX.
Change on a comparable basis
On a comparable basis, the 69 million euro increase in economic CAPEX in the Africa & Middle East countries between the first half of 2021 and the first half of 2022 was mainly due to increased investments in the mobile and fixed networks in the region in order to support business growth and usage trends.
1.3.3.5 Additional information - Africa & Middle East
|
Africa & Middle East |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in thousands, at the end of the period) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Mobile services | ||||||
|
Number of mobile accesses (1) (2) |
139,212 |
132,030 |
132,030 |
5.4 % |
5.4 % | |
|
o/w: |
Contract customers mobile accesses |
8,156 |
6,979 |
6,979 |
16.9 % |
16.9 % |
|
Prepaid customers mobile accesses |
131,055 |
125,052 |
125,052 |
4.8 % |
4.8 % | |
|
Fixed services | ||||||
|
Number of fixed accesses (2) |
3,319 |
2,874 |
2,874 |
15.5 % |
15.5 % | |
|
Fixed Retail accesses |
3,319 |
2,874 |
2,874 |
15.5 % |
15.5 % | |
|
o/w: |
Fixed Broadband accesses |
2,509 |
2,029 |
2,029 |
23.6 % |
23.6 % |
|
Fixed Narrowband accesses |
810 |
845 |
845 |
(4.1)% |
(4.1)% | |
(1) Excluding customers of mobile virtual network operators (MVNOs).
(2) At January 1, 2022, an internal transfer (between technologies) took place in Egypt, from the mobile access base to the fixed broadband access base. The operating data for the first half of 2021 has been restated to take account of this change: the retroactive transfer of this base represents approximately 162,000 accesses at June 30, 2021.
1.3.4 Enterprise
|
Enterprise |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
3,888 |
3,895 |
3,840 |
(0.2)% |
1.3 % |
|
EBITDAaL |
364 |
488 |
484 |
(25.3)% |
(24.7)% |
|
EBITDAaL/Revenue |
9.4 % |
12.5 % |
12.6 % |
(3.1 pt) |
(3.2 pt) |
|
Operating income |
152 |
300 |
295 |
(49.3)% |
(48.5)% |
|
eCAPEX |
144 |
159 |
157 |
(9.6)% |
(8.1)% |
|
eCAPEX/Revenue |
3.7 % |
4.1 % |
4.1 % |
(0.4 pt) |
(0.4 pt) |
|
Average number of employees |
28,681 |
27,953 |
27,990 |
2.6 % |
2.5 % |
1.3.4.1 Revenues - Enterprise
|
Enterprise |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Revenue |
3,888 |
3,895 |
3,840 |
(0.2)% |
1.3 % | |
|
Fixed-only services |
1,738 |
1,864 |
1,834 |
(6.8)% |
(5.2)% | |
|
Voice services (1) |
514 |
573 |
569 |
(10.3)% |
(9.7)% | |
|
Data services (2) |
1,224 |
1,291 |
1,265 |
(5.2)% |
(3.2)% | |
|
IT & integration services |
1,663 |
1,590 |
1,565 |
4.6 % |
6.2 % | |
|
Services and mobile equipment (3) |
487 |
440 |
440 |
10.6 % |
10.6 % | |
|
Mobile-only services |
325 |
318 |
318 |
2.2 % |
2.2 % | |
|
Wholesale services |
20 |
21 |
21 |
(4.3)% |
(4.3)% | |
|
Equipment sales |
141 |
101 |
101 |
40.4 % |
40.4 % | |
(1) Voice services include (i) legacy voice offers (PSTN access), (ii) Voice over Internet Protocol (VoIP) products, (iii) audio-conference services, (iv) incoming traffic for call centers, and (v) network equipment sales related to the operation of voice services.
(2) Data services include (i) legacy data solutions still offered by Orange Business Services (Frame Relay, Transrel, leased lines, narrowband), (ii) services having reached a certain maturity, such as IP-VPN, and broadband infrastructure products such as satellite and fiber optic access, (iii) satellite TV broadcast services, (iv) Business Everywhere roaming services, and (v) network equipment sales related to the operation of data services.
(3) Mobile services and equipment include (i) mobile-only services, (ii) wholesale services corresponding to incoming mobile B2B traffic invoiced to other carriers, and (iii) mobile equipment sales.
Change on a historical basis
On a historical basis, the 49 million euro increase in Enterprise revenues between the first half of 2021 and the first half of 2022 was due to:
− the favorable effect of foreign exchange fluctuations of 58 million euros, mainly as a result of movements in the US dollar against the euro;
− partially offset by (i) the negative impact of changes in the scope of consolidation and other changes of 3 million euros, and (ii) the organic change on a comparable basis, representing a 6 million euro decrease in revenues.
Change on a comparable basis
On a comparable basis, the 6 million euro decrease (down 0.2%) in Enterprise revenues between the first half of 2021 and the first half of 2022 was mainly due to the decrease in fixed-only (voice and data) services, partially offset by the increase in IT & Integration Services and, to a lesser extent, in mobile services and equipment.
More specifically, the revenues from Fixed-only services were down 126 million euros, impacted both by the decrease in data services and the decrease in voice services:
− the contraction in Data services (down 67 million euros year on year), was due to (i) the general transformation trend in service technologies, particularly internationally, and (ii) to a lesser extent, the decrease in revenues from satellite TV broadcast services (Globecast) due to the international sanctions related to the war in Ukraine (see Section 1.1.3 Significant events) and the lasting impact of the Covid-19 health crisis in Asia;
− Voice services (down 59 million euros year on year) continue to be affected by the downward trend in traditional fixed telephony, both in France and internationally.
These unfavorable changes were partially offset by:
− the 73 million euro increase in revenues from IT & Integration Services, driven by the growing requirements of businesses in the field of cybersecurity services (up 13% year on year), cloud services (up 15%) and digital & data services (up 8% year on year); and
− the 47 million euro increase in revenues from Mobile services and equipment, primarily due to Orange Business Services and Crosscall winning in the first half of 2021 the NEO tender launched by the Ministry of the Interior to equip the National Gendarmerie and the National Police in France.
1.3.4.2 EBITDAaL - Enterprise
Change on a historical basis
On a historical basis, the 120 million euro decrease in Enterprise EBITDAaL between the first half of 2021 and the first half of 2022 includes (i) the favorable impact of foreign exchange fluctuations of 16 million euros, primarily as a result of movements in the US dollar against the euro, (ii) the negative effect of changes in the scope of consolidation and other changes of 12 million euros, and (iii) the organic change on a comparable basis, representing a 123 million euro decrease in EBITDAaL.
Change on a comparable basis
On a comparable basis, the 123 million euro decrease in Enterprise EBITDAaL between the first half of 2021 and the first half of 2022 was mainly due to:
− (i) the increase in commercial expenses and equipment costs, in connection with the growth in mobile equipment sales (NEO contract), (ii) the rise in labor expenses, due in particular to the higher average number of employees (full-time equivalents) linked to the growth of IT & Integration Services, (iii) the increase in overheads, related to the resumption of business travel and assignments with the end of the Covid-19 health crisis, (iv) the increase in network expenses and IT expenses, related to the increase in traffic and in energy access costs for fixed and mobile networks, and (v) the increase in other operating expenses (net of other operating income);
− partially offset by the reduction in service fees and inter-operator costs, largely interconnection expenses, related to the decrease in voice traffic.
1.3.4.3 Operating income - Enterprise
Change on a historical basis
On a historical basis, the 143 million euro decrease in Enterprise operating income between the first half of 2021 and the first half of 2022 includes (i) the favorable effect of foreign exchange fluctuations of 14 million euros, mainly as a result of movements in the US dollar against the euro, (ii) the negative impact of changes in the scope of consolidation and other changes of 9 million euros, and (iii) the organic change on a comparable basis, representing a 148 million euro decrease in operating income.
Change on a comparable basis
On a comparable basis, the 148 million euro decrease in Enterprise operating income between the first half of 2021 and the first half of 2022 was primarily due to the 123 million euro decrease in EBITDAaL and the increase in depreciation and amortization, including as a result of handset retirements.
1.3.4.4 Economic CAPEX - Enterprise
Change on a historical basis
On a historical basis, the 13 million euro decrease in Enterprise economic CAPEX between the first half of 2021 and the first half of 2022 includes (i) the positive impact of foreign exchange fluctuations of 2 million euros, and (ii) the organic change on a comparable basis, representing a 15 million euro decrease in economic CAPEX.
Change on a comparable basis
On a comparable basis, the 15 million euro decrease in Enterprise economic CAPEX between the first half of 2021 and the first half of 2022 was mainly due to a lower number of projects under construction and the postponement of investment projects due to the semiconductor shortage.
1.3.4.5 Additional information - Enterprise
|
Entreprise |
2022 |
2021 |
2021 |
% change |
% change | |
|
(at June 30, in thousands, at the end of the period) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | ||
|
Mobile services | ||||||
|
Number of mobile accesses in France (1) |
19,842 |
16,584 |
16,584 |
19.6 % |
19.6 % | |
|
Fixed services | ||||||
|
Number of fixed accesses in France |
1,199 |
1,325 |
1,325 |
(9.5)% |
(9.5)% | |
|
Fixed Retail accesses |
1,199 |
1,325 |
1,325 |
(9.5)% |
(9.5)% | |
|
o/w: |
Fixed Broadband accesses |
248 |
236 |
236 |
4.9 % |
4.9 % |
|
Fixed Narrowband accesses |
951 |
1,088 |
1,088 |
(12.6)% |
(12.6)% | |
|
IP-VPN accesses worldwide (2) |
348 |
352 |
352 |
(1.3)% |
(1.3)% | |
|
o/w: |
IP-VPN accesses in France (2) |
300 |
304 |
304 |
(1.2)% |
(1.2)% |
(1) Contract customers. Excluding customers of mobile virtual network operators (MVNOs).
At January 1, 2022, a supplementary fleet of M2M mobile SIM cards was included in the mobile access base of the Enterprise business segment (and therefore of the Orange group). The operating data for fiscal year 2021 has been restated for this change: the retroactive integration of this base represented approximately 3.33 million M2M mobile accesses at June 30, 2021.
(2) Accesses of customers outside the Orange group, excluding the carrier market.
1.3.5 Totem
|
Totem |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
328 |
298 |
- |
10.2 % |
- |
|
EBITDAaL |
180 |
177 |
- |
1.8 % |
- |
|
EBITDAaL/Revenue |
54.8 % |
59.3 % |
- |
(4.5 pt) |
- |
|
Operating income |
120 |
121 |
- |
(0.6)% |
- |
|
eCAPEX |
44 |
41 |
- |
7.0 % |
- |
|
eCAPEX/Revenue |
13.4 % |
13.8 % |
- |
(0.4 pt) |
- |
|
Average number of employees |
152 |
60 |
- |
154.9 % |
- |
Launched in February 2021, Totem, Orange’s European TowerCo responsible for pooling passive mobile infrastructure (mobile towers) to enhance their value and streamline their management, has been operational since the end of 2021 (see Section 1.1.3 Significant events).
By strengthening its position as a manager and operator of passive mobile infrastructure, the Group intends to make Totem a European leader in the TowerCos market and to keep this strategic asset as part of a long-term industry vision, while benefiting from new growth drivers. At end-June 2022, Totem’s passive mobile infrastructure portfolio included more than 27,000 sites in France and Spain, the two largest countries in which Orange operates.
Through Totem, Orange aims to achieve value creation thanks to improved operating efficiency, optimized investments and an increased occupancy rate. In this context, there are plans for Totem’s expansion in the European market beyond France and Spain.
In the segment reporting presented, historical data on Totem forms an integral part of the France and Spain business segments and, very incidentally, the International Carriers & Shared Services segment, until December 31, 2021. As a result of Totem entering its operational phase at end-2021, the internal reporting monitored by management and the segment reporting presented from that point on takes into account the Group’s desire to present Totem as a separate business segment as from January 1, 2022 (see Note 1.1 to the Consolidated Financial Statements).
1.3.5.1 Revenues - Totem
|
Totem |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
328 |
298 |
- |
10.2 % |
- |
|
Wholesale services |
328 |
298 |
- |
10.2 % |
- |
|
Other revenues |
- |
- |
- |
- |
- |
Change on a comparable basis
On a comparable basis, the 30 million euro increase (10.2%) in Totem’s revenues between the first half of 2021 and the first half of 2022 was due to (i) the increase in pass-through revenues and, more specifically, energy, design and construction works, which grew strongly year on year, and (ii) the 3.1% increase in hosting revenues year on year. In the first half of 2022, 16.1% of hosting revenues were generated from external customers, up 0.6 percentage points compared with the first half of 2021.
At June 30, 2022, Totem had 26,934 sites with 36,450 active occupants, representing an occupancy rate of 1.35 occupants per site.
1.3.5.2 EBITDAaL - Totem
Change on a comparable basis
On a comparable basis, the 3 million euro increase in Totem’s EBITDAaL between the first half of 2021 and the first half of 2022 was mainly due to:
− the 30 million euro increase in revenues;
− largely offset by (i) the increase in network expenses and IT expenses, specifically due to the increase in energy access costs for mobile networks, (ii) the rise in rents, primarily related to the rise in average rents, as well as (iii) the increase in labor expense, mainly due to the increase in the average number of employees (full-time equivalents), primarily related to the establishment of the new organization.
1.3.5.3 Operating income - Totem
Change on a comparable basis
On a comparable basis, the 1 million euro reduction in Totem’s operating income between the first half of 2021 and the first half of 2022 was primarily due to the increase in depreciation and amortization.
1.3.5.4 Economic CAPEX - Totem
Change on a comparable basis
On a comparable basis, the 3 million euro increase in Totem’s economic CAPEX between the first half of 2021 and the second half of 2022 was primarily due to the increase in studies and works as well as to the increase in investments in information systems.
1.3.6 International Carriers & Shared Services
|
International Carriers & Shared Services |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
772 |
742 |
743 |
4.0 % |
3.9 % |
|
EBITDAaL |
(128) |
(184) |
(182) |
30.4 % |
29.9 % |
|
EBITDAaL/Revenue |
(16.5)% |
(24.7)% |
(24.5)% |
8.2 pt |
8.0 pt |
|
Operating income |
(207) |
(514) |
(514) |
59.7 % |
59.7 % |
|
eCAPEX |
94 |
110 |
110 |
(14.5)% |
(14.5)% |
|
eCAPEX/Revenue |
12.2 % |
14.8 % |
14.8 % |
(2.6 pt) |
(2.6 pt) |
|
Average number of employees |
12,155 |
12,437 |
12,719 |
(2.3)% |
(4.4)% |
1.3.6.1 Revenues - International Carriers & Shared Services
|
International Carriers & Shared Services |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Revenue |
772 |
742 |
743 |
4.0 % |
3.9 % |
|
Wholesale services |
539 |
524 |
522 |
2.8 % |
3.1 % |
|
Other revenues |
234 |
218 |
221 |
7.1 % |
5.8 % |
Change on a historical basis
On a historical basis, the 29 million euro increase in International Carriers & Shared Services revenues between the first half of 2021 and the first half of 2022 included (i) the unfavorable impact of changes in the scope of consolidation and other changes of 3 million euros, (ii) the positive effect of foreign exchange fluctuations of 2 million euros, and (iii) the organic change on a comparable basis, representing a 30 million euro increase in revenues.
Change on a comparable basis
On a comparable basis, the 30 million euro increase (up 4.0%) in International Carriers & Shared Services revenues between the first half of 2021 and the first half of 2022, was due to:
− the 15 million euro increase in Other revenues, driven by (i) the growth in Orange Marine’s cable installation and sale activities, (ii) the rise in Orange Studio’s revenues as moviegoers started returning to theaters after the Covid-19 health crisis, and (iii) the increase in Sofrecom’s revenues from consulting services, notably in North Africa; and
− the 14 million euro increase in Wholesale services, related to the growth trend in messaging services.
1.3.6.2 EBITDAaL - International Carriers & Shared Services
Change on a historical basis
On a historical basis, the 55 million euro improvement in International Carriers & Shared Services EBITDAaL between the first half of 2021 and the first half of 2022 includes (i) the unfavorable impact of foreign exchange fluctuations of 2 million euros and (ii) the organic change on a comparable basis, representing a 56 million euro increase in EBITDAaL.
Change on a comparable basis
On a comparable basis, the 56 million euro improvement in International Carriers & Shared Services EBITDAaL between the first half of 2021 and the first half of 2022 was primarily due to:
− (i) the 30 million euro increase in revenues, (ii) the decrease in labor expenses, related in particular to the decrease in the average number of employees (full-time equivalents) in particular for the central functions, (iii) the decrease in the depreciation of right-of-use assets and (iv) the decrease in other operating expenses (net of other operating income);
− partially offset by the increase in overheads, due to the resumption of business travel after a two-year decline in the context of the Covid-19 health crisis.
1.3.6.3 Operating income - International Carriers & Shared Services
Change on a historical basis
On a historical basis, the 306 million euro improvement in International Carriers & Shared Services operating income between the first half of 2021 and the first half of 2022 includes (i) the unfavorable impact of foreign exchange fluctuations of 2 million euros, (ii) the positive effect of changes in the scope of consolidation and other changes of 1 million euros, and (iii) the organic change on a comparable basis, representing an increase of 307 million euros in operating income.
Change on a comparable basis
On a comparable basis, the 307 million euro improvement in International Carriers & Shared Services operating income between the first half of 2021 and the first half of 2022 was primarily due to:
− the counter-effect of the recognition, in the first half of 2021, of a 114 million euro expense for the cost of restructuring programs, primarily for the optimization of the real estate portfolio;
− the recognition in the first half of 2022, under expenses related to French part-time for seniors plans (measures related to collective bargaining agreements on the employment of senior citizens in France), an actuarial gain of 84 million euros related to the strong upward trend in the discount rate curve in the current macroeconomic context, compared with an actuarial loss of 1 million euros in the first half of 2021 (see Note 6 to the Consolidated Financial Statements);
− the counter-effect of the recognition in the first half of 2021 of a 58 million euro expense for significant litigation, corresponding to the reassessment of risk on various disputes; and
− the 56 million euro increase in EBITDAaL.
1.3.6.4 Economic CAPEX - International Carriers & Shared Services
Change on a historical basis
On a historical basis, the 16 million euro decrease in International Carriers & Shared Services economic CAPEX between the first half of 2021 and the first half of 2022 was due to the organic change on a comparable basis, representing a 16 million euro decrease in economic CAPEX.
Change on a comparable basis
On a comparable basis, the 16 million euro decrease in International Carriers & Shared Services economic CAPEX between the first half of 2021 and the second half of 2022 was due primarily to (i) the decrease in Orange Marine investments, related to the counter-effect of expenditure in the first half of 2021 on the maintenance and repair of two vessels, (ii) partially offset by a growth in real estate works and a lower level of asset disposals in the first half of 2022 compared with the first half of 2021.
1.3.7 Mobile Financial Services
|
Mobile Financial Services |
2022 |
2021 |
2021 |
% change |
% change |
|
(at June 30, in millions of euros) |
data on a comparable basis |
data on a historical basis |
data on a comparable basis |
data on a historical basis | |
|
Net banking income (NBI) (1) |
56 |
53 |
53 |
5.1 % |
5.1 % |
|
Cost of bank credit risk (2) |
(22) |
(14) |
(14) |
50.4 % |
50.4 % |
|
Operating Income |
(80) |
(77) |
(77) |
(3.6)% |
(3.6)% |
|
eCAPEX |
14 |
13 |
13 |
8.2 % |
8.2 % |
|
Average number of employees |
916 |
942 |
942 |
(2.7)% |
(2.7)% |
(1) Net banking income (NBI) recognized as other operating income (see Notes 1.3 and 1.4 to the Consolidated Financial Statements).
(2) Cost of bank credit risk recognized in other operating expenses (see Notes 1.3 and 1.4 to the Consolidated Financial Statements).
In the first half of 2022, the Mobile Financial Services activities continued to grow, particularly:
− in Europe, with the continued development of value-added services and the continuous improvement of service quality. At June 30, 2022, Orange Bank had nearly 1.9 million customers in France and Spain (this number includes customers of all products and services sold by Orange Bank for individuals, professionals and businesses: accounts, loans and mobile insurance); and
− in Africa, with the launch of the new microcredit service and the continued acquisition of new customers in Côte d’Ivoire. At June 30, 2022, Orange Bank Africa had 845,000 customers.
1.3.7.1 Operating activities
The segment reporting for Mobile Financial Services (operating income, investments in property, plant and equipment and intangible assets) is presented in Notes 1.3, 1.4 and 1.5 to the Consolidated Financial Statements.
Operating income - Mobile Financial Services
Change on a historical basis
On a historical basis, the 3 million euro decrease in Mobile Financial Services operating income between the first half of 2021 and the first half of 2022 was due to the organic change on a comparable basis, representing a 3 million euro decrease in operating income.
Change on a comparable basis
On a comparable basis, the 3 million euro decrease in operating income between the first half of 2021 and the first half of 2022 was mainly due to:
− the 7 million euro increase in the cost of bank credit risk (see Notes 1.3, 1.4, 5.2 and 12.2 to the Consolidated Financial Statements) related primarily to the development of the credit business in Spain;
− partially offset by the 3 million euro increase in net banking income (NBI, see Notes 1.3 and 1.4 to the Consolidated Financial Statements), driven by the increase in bank account and credit products in France and Spain and the development of banking activities in Côte d’Ivoire.
Economic CAPEX - Mobile Financial Services
Change on a historical basis and on a comparable basis
On a historical basis and on a comparable basis, the 1 million euro increase in Mobile Financial Services economic CAPEX between the first half of 2021 and the first half of 2022 was due to the development of new services in Côte d’Ivoire.
1.3.7.2 Assets, liabilities and cash flows
The segment reporting for Mobile Financial Services (assets, liabilities and cash flows) is presented in Notes 1.6, 1.7 and 1.8 to the Consolidated Financial Statements, and Mobile Financial Services activities (financial assets and liabilities) are described in Note 12 to the Consolidated Financial Statements.
For more information on the risks related to Mobile Financial Services activities, see Section 2.1.3 Financial risks in the 2021 Universal Registration Document.
1.4 Cash flow and financial debt of telecom activities
To ensure the transparency of the financial statements and separate out the performance of telecom activities and Mobile Financial Services activities, the analysis and financial commentary are split to reflect these two business areas. Thus, Section 1.4 Cash flow and financial debt of telecom activities covers telecom activities, and Section 1.3.7 Mobile Financial Services is dedicated to the Group's banking activities.
1.4.1 Liquidity and cash flows from telecom activities
1.4.1.1 Organic cash flow from telecom activities
Organic cash flow from telecom activities is not a financial indicator defined by IFRS. For further information on the calculation of organic cash flow from telecom activities and the reasons why the Orange group uses this indicator, see Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
Organic cash flow from telecom activities stood at 1,445 million euros in the first half of 2022, compared with 840 million euros in the first half of 2021 (see Note 1.8 to the Consolidated Financial Statements).
|
Organic cash flow from telecom activities |
2022 |
2021 |
|
(at June 30, in millions of euros) |
data on a historical basis | |
|
EBITDAaL from telecom activities |
5,989 |
5,893 |
|
eCAPEX of telecom activities |
(3,399) |
(3,832) |
|
EBITDAaL - eCAPEX of telecom activities |
2,590 |
2,060 |
|
Increase (decrease) in eCAPEX trade payables (1) |
(179) |
(284) |
|
Decrease (increase) in working capital requirement (2) |
37 |
382 |
|
Interest paid and interest rate effects on derivatives, net (net of dividends received) (3) |
(441) |
(582) |
|
Income tax paid |
(580) |
(500) |
|
Other operating items (4) |
18 |
(236) |
|
Organic cash flow from telecom activities |
1,445 |
840 |
(1) Including advances on grants.
(2) See Section 1.6.4 Financial glossary.
(3) Excluding (i) interest paid on lease liabilities of 60 million euros in the first half of 2022 and 59 million euros in the first half of 2021, and (ii) interest paid on debts related to financed assets for 1 million euros in the first half of 2022 and in the first half of 2021 (see Note 1.8 to the Consolidated Financial Statements).
(4) Including (i) disbursements related to French part-time for seniors plans (relating to employment agreements for seniors in France) and restructuring and integration costs, (ii) repayments of lease liabilities and payables related to financed assets, (iii) the change in receivables and payables related to operating taxes and levies payables, and (iv) the elimination of non-monetary effects.
Between the first half of 2021 and the first half of 2022, the 605 million euro increase in organic cash flow from telecom activities was mainly due to:
− the 434 million euro decrease in the economic CAPEX of telecom activities on a historical basis, due mainly to the slowdown in the roll-out of fiber optic primarily in France (see Section 1.2.5.1 Economic CAPEX);
− the 255 million euro improvement in other operating items, mainly due to the decrease in disbursements for lease liabilities and payables related to financed assets;
− the 141 million euro decrease in interest paid and interest rate effects on net derivatives (net of dividends received), resulting, inter alia, from the decrease in bond coupons with the issuance of new bonds with lower interest rates than those of the maturing bonds;
− the 104 million euro favorable change in economic CAPEX trade payables of telecom activities between the two periods, in relation, inter alia, to the counter-effect of the recognition, in the first half of 2021, of substantial outflows related to the sharp increase in investments in late 2020 in order to make up for the delay caused by the Covid-19 health crisis; and
− the 97 million euro increase in the EBITDAaL of telecom activities on a historical basis (see Section 1.2.2.1 Group EBITDAaL);
− partially offset by (i) the 345 million euro unfavorable change in working capital requirement between the two periods, which was due in particular to the counter-effect of the normalization, in the first half of 2021, of the timing difference in the inflow of trade receivables affected at end-2020 by the Covid-19 health crisis and (ii) to a lesser extent, the 80 million euro increase in income taxes paid.
1.4.1.2 Cash flows from telecom activities
Cash flows from telecom activities are presented in Note 1.8 to the Consolidated Financial Statements.
|
Simplified statement of cash flows from telecom activities (1) |
2022 |
2021 |
|
(at June 30, in millions of euros) |
data on a historical basis | |
|
Net cash provided by operating activities |
5,789 |
5,523 |
|
Net cash used in investing activities |
(4,622) |
(3,317) |
|
Net cash used in financing activities |
(1,517) |
(3,594) |
|
Cash change in cash and cash equivalents |
(349) |
(1,386) |
|
Cash and cash equivalents in the opening balance |
8,188 |
7,891 |
|
Cash change in cash and cash equivalents |
(349) |
(1,386) |
|
Non-cash change in cash and cash equivalents |
32 |
19 |
|
Cash and cash equivalents in the closing balance |
7,871 |
6,523 |
(1) See Note 1.8 to the Consolidated Financial Statements.
Net cash provided by operating activities (telecom activities)
Between the first half of 2021 and the first half of 2022, the 266 million euro increase in net cash flows from the operating activities of telecom activities was mainly due to:
− the 473 million euro increase in operating income from telecom activities on a historical basis, excluding the 3,702 million euro goodwill impairment in Spain in the first half of 2021 (with no effect on cash flows, see Note 7 to the Consolidated Financial Statements); and
− the 141 million euros decrease in interest paid and interest rate effects on net derivatives (net of dividends received) (see Section 1.4.1.1 Organic cash flow from telecom activities);
− partially offset by the 345 million euro change in working capital requirement between the two periods (see Section 1.4.1.1 Organic cash flow from telecom activities).
Net cash flows related to investing activities (telecom activities)
Between the first half of 2021 and the first half of 2022, the 1,305 million euro increase in net cash flows relating to the investing activities of telecom activities was primarily due to:
− the change in investments and other financial assets between the two periods, with a 694 million euro increase in investments at fair value in the first half of 2022, compared with a 900 million euro decrease in the first half of 2021;
− partially offset by the 365 million euro decrease in purchases and sales of property, plant and equipment and intangible assets, (net of the change in fixed asset trade payables), mainly due to the slowdown in the roll-out of fiber optic, primarily in France (see Section 1.2.5.1 Economic CAPEX).
Net cash used in financing activities (telecom activities)
Between the first half of 2021 and the first half of 2022, the 2,077 million euro decrease in net cash related to the financing activities of telecom activities was primarily due to:
− the 2,741 million euro decrease in medium- and long-term debt redemptions (see Note 10.4 to the Consolidated Financial Statements);
− the net change in cash collateral received, with a 922 million euro increase in the first half of 2022, compared with a 568 million euro increase in the first half of 2021, due to the change in the fair value of derivatives;
− the counter-effect of the acquisition of a 23.94% stake in Orange Belgium for 316 million euros as part of the conditional voluntary public tender offer completed in the first half of 2021;
− the counter-effect of the recognition, in the first half of 2021, of redemptions of subordinated notes (net of issues and other fees) for 311 million euros;
− the 267 million euro decrease in dividends paid by Orange SA, due to the payment in the first half of 2022 of the balance of a dividend of 0.40 euros per share for fiscal year 2021 (see Note 13.3 to the Consolidated Financial Statements). In the first half of 2021, the dividend balance paid out for fiscal year 2020 was 0.30 euros per share, supplemented by an exceptional dividend of 0.20 euros per share paid out to shareholders;
− partially offset by (i) the change in bank overdrafts and short-term borrowings of 1,519 million euros, and (ii) the 540 million euro decrease in medium- and long-term debt issuance (see Note 10.4 to the Consolidated Financial Statements).
1.4.2 Financial debt and liquidity position of telecom activities
Net financial debt (see Note 10.3 to the Consolidated Financial Statements) and the ratio of net financial debt to EBITDAaL from telecom activities are financial indicators that are not defined by IFRS. For further information on the calculation of these indicators and the reasons why the Orange group uses them, see Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary. Net financial debt as defined and used by Orange does not include Mobile Financial Services activities, for which this concept is not relevant.
For further information on the risks relating to the Orange group’s financial debt, see Section 2.1.3 Financial risks in the 2021 Universal Registration Document.
|
June 30, 2022 |
Dec. 31, 2021 | |
|
data on a historical basis | ||
|
Net financial debt (1) (2) |
24,377 |
24,269 |
|
Ratio of net financial debt/EBITDAaL from telecom activities (1) |
1.91 |
1.91 |
(1) See Section 1.5 Financial indicators not defined by IFRS.
(2) In millions of euros.
Between December 31, 2021, and June 30, 2022, net financial debt rose by 108 million euros.
|
Change in net financier debt |
Decrease/ (Increase) |
|
(at June 30, in millions of euros) | |
|
Net financial debt at December 31, 2021 |
(24,269) |
|
Organic cash flow from telecom activities (1) |
1,445 |
|
Telecommunication licenses paid |
(302) |
|
Significant litigation paid (and received) |
(13) |
|
Net impact of changes in the scope of consolidation |
(33) |
|
Subordinated notes issuances (purchases) and other related fees (2) |
- |
|
Coupons on subordinated notes (2) |
(121) |
|
Dividends paid to owners of the parent company (3) |
(1,063) |
|
Dividends paid to non-controlling interests |
(177) |
|
Other financial items |
157 |
|
Decrease (increase) in net financial debt |
(108) |
|
Net financial debt at June 30, 2022 |
(24,377) |
(1) See Section 1.4.1.1 Organic cash flow from telecom activities and Note 1.8 to the Consolidated Financial Statements.
(2) See Note 13.4 to the Consolidated Financial Statements.
(3) The Shareholders’ Meeting of May 19, 2022 resolved to pay shareholders a dividend of 0.70 euros per share for fiscal year 2021. Taking into account the interim dividend of 0.30 euros per share, paid on December 15, 2021, for a total of 797 million euros, the 0.40 euros per share dividend balance was paid out on June 9, 2022, for an amount of 1,063 million euros (see Note 13.3 to the Consolidated Financial Statements).
As of June 30, 2022, the liquidity position of telecom activities amounted to 16,973 million euros (see Note 11.1 to the Consolidated Financial Statements). The changes in the financial assets, liabilities and financial results of telecom activities are detailed in Note 10 to the Consolidated Financial Statements.
1.5 Financial indicators not defined by IFRS
In this document, in addition to the financial indicators reported in accordance with IFRS (International Financial Reporting Standards), Orange publishes financial indicators that are not defined by IFRS. As described below, these figures are presented as additional information and are not meant to be substitutes for or to be confused with financial indicators as defined by IFRS.
1.5.1 Data on a comparable basis
In order to allow investors to track the annual changes in the Group’s operations, data on a comparable basis is presented for the previous period. The transition from data on a historical basis to data on a comparable basis involves retaining the results for the fiscal year ended and restating the previous fiscal year in order to present financial data with comparable methods, scope of consolidation and exchange rates over comparable periods. Orange provides the details of the effect of changes in method, scope of consolidation and exchange rates on its key operating indicators in order to isolate the intrinsic business effect. The method used is to apply to the data of the corresponding period of the preceding fiscal year, the methods and the scope of consolidation for the period ended, as well as the average exchange rates used in the Consolidated income statement for the period ended.
Orange’s management believes that the presentation of these indicators on a comparable basis is relevant because these are indicators used internally by the Group for monitoring its operating activities. Changes in data on a comparable basis better reflect organic business changes.
Data on a comparable basis is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups. It is provided as additional information only and should not be considered a substitute for an analysis of the Group’s data on a historical basis for the past fiscal year or previous periods.
Group
The table below presents, for the Orange group, the transition from data on a historical basis to data on a comparable basis for the first half of 2021, for the main operating data.
|
First half year 2021 / Group |
Revenue |
EBITDAaL |
Operating income |
eCAPEX |
Average number of employees | |
|
(at June 30, 2021, in millions of euros) | ||||||
|
Data on a historical basis |
20,867 |
5,837 |
(1,752) |
3,845 |
132,153 | |
|
Foreign exchange fluctuations (1) |
122 |
46 |
37 |
14 |
- | |
|
US dollar (USD) |
71 |
25 |
23 |
5 |
- | |
|
Guinea franc (GNF) |
47 |
24 |
20 |
8 |
- | |
|
Jordanian dinar (JOD) |
19 |
7 |
3 |
4 |
- | |
|
Polish zloty (PLN) |
(26) |
(6) |
(1) |
(4) |
- | |
|
Other |
11 |
(4) |
(8) |
1 |
- | |
|
Changes in the scope of consolidation and other changes |
283 |
9 |
(7) |
(123) |
3,186 | |
|
Acquisition/Takeover of Telekom Romania Communications (TKR) |
267 |
10 |
(14) |
13 |
3,580 | |
|
Operational launch of Totem |
20 |
4 |
4 |
4 |
- | |
|
Disposal/Loss of control of Orange Concessions |
(13) |
(1) |
12 |
(133) |
(73) | |
|
Share of profit/loss of Orange Concessions |
- |
- |
(8) |
- |
- | |
|
Other |
9 |
(4) |
(1) |
(7) |
(321) | |
|
Data on a comparable basis |
21,272 |
5,891 |
(1,722) |
3,737 |
135,338 | |
(1) Foreign exchange fluctuations between the average exchange rates for the first half of 2021 and the average exchange rates for the first half of 2022.
The changes included in the transition from data on a historical basis to data on a comparable basis for fiscal year 2021 include:
− foreign exchange fluctuations between the average exchange rates for the first half of 2021 and the average exchange rates for the first half of 2022; and
− changes in the scope of consolidation (see Section 1.1.3 Significant events and Note 3.2 to the Consolidated Financial Statements) and other changes, primarily including:
- the takeover of Telekom Romania Communications (TKR, renamed Orange Romania Communications, Europe segment), through the acquisition of 54% of the capital, on September 30, 2021, effective as of January 1, 2021 on a comparable basis,
- the loss of control of Orange Concessions (France segment), through the disposal of 50% of the capital, on November 3, 2021 and its equity accounting, effective as of January 1, 2021 on a comparable basis, and
- the operational launch of Totem at end-2021 (new segment, see the introduction of the Section 1 Interim management report for the first half of 2022 and Note 1.1 to the Consolidated Financial Statements), effective as of January 1, 2021 on a comparable basis.
Segments
The table below presents, for each Orange group segment, the transition from data on a historical basis to data on a comparable basis for the first half of 2021, for the main operating data.
|
First half year 2021 / Segments |
Revenue |
EBITDAaL |
Operating income |
eCAPEX |
Average number of employees | |
|
(at June 30, 2021, in millions of euros) | ||||||
|
France | ||||||
|
Data on a historical basis |
8,950 |
3,181 |
1,548 |
2,171 |
49,927 | |
|
Foreign exchange fluctuations (1) |
(0) |
(0) |
(0) |
- |
- | |
|
Changes in the scope of consolidation and other changes (2) |
29 |
(118) |
(68) |
(167) |
(113) | |
|
Operational launch of Totem |
12 |
(125) |
(81) |
(27) |
(40) | |
|
Disposal/Loss of control of Orange Concessions |
(13) |
(1) |
12 |
(133) |
(73) | |
|
Share of profit/loss of Orange Concessions |
- |
- |
(7) |
- |
- | |
|
Other changes (2) |
30 |
8 |
8 |
(7) |
(0) | |
|
Data on a comparable basis |
8,979 |
3,063 |
1,480 |
2,004 |
49,813 | |
|
Europe | ||||||
|
Data on a historical basis |
5,164 |
1,359 |
(3,584) |
870 |
26,000 | |
|
Foreign exchange fluctuations (1) |
(26) |
(6) |
(1) |
(4) |
- | |
|
Changes in the scope of consolidation and other changes (2) |
267 |
(38) |
(51) |
3 |
3,558 | |
|
Acquisition/Takeover of Telekom Romania Communications (TKR) |
267 |
10 |
(14) |
13 |
3,580 | |
|
Operational launch of Totem |
- |
(48) |
(37) |
(10) |
(20) | |
|
Other changes (2) |
0 |
0 |
(0) |
0 |
(2) | |
|
Data on a comparable basis |
5,406 |
1,315 |
(3,636) |
869 |
29,558 | |
|
Africa & Middle East | ||||||
|
Data on a historical basis |
3,043 |
1,051 |
579 |
525 |
14,575 | |
|
Foreign exchange fluctuations (1) |
90 |
37 |
25 |
16 |
- | |
|
Changes in the scope of consolidation and other changes (2) |
- |
- |
(0) |
- |
- | |
|
Data on a comparable basis |
3,133 |
1,088 |
604 |
540 |
14,575 | |
|
Entreprise | ||||||
|
Data on a historical basis |
3,840 |
484 |
295 |
157 |
27,990 | |
|
Foreign exchange fluctuations (1) |
58 |
16 |
14 |
2 |
- | |
|
Changes in the scope of consolidation and other changes (2) |
(3) |
(12) |
(9) |
(0) |
(37) | |
|
Data on a comparable basis |
3,895 |
488 |
300 |
159 |
27,953 | |
|
Totem | ||||||
|
Data on a historical basis |
- |
- |
- |
- |
- | |
|
Foreign exchange fluctuations (1) |
- |
- |
- |
- |
- | |
|
Changes in the scope of consolidation and other changes (2) |
298 |
177 |
121 |
41 |
60 | |
|
Operational launch of Totem |
298 |
177 |
121 |
41 |
60 | |
|
Other changes (2) |
(0) |
(0) |
(0) |
0 |
(0) | |
|
Data on a comparable basis |
298 |
177 |
121 |
41 |
60 | |
|
International Carriers & Shared Services | ||||||
|
Data on a historical basis |
743 |
(182) |
(514) |
110 |
12,719 | |
|
Foreign exchange fluctuations (1) |
2 |
(2) |
(2) |
0 |
- | |
|
Changes in the scope of consolidation and other changes (2) |
(3) |
0 |
1 |
- |
(282) | |
|
Operational launch of Totem |
- |
1 |
1 |
- |
- | |
|
Other changes (2) |
(3) |
(1) |
0 |
- |
(282) | |
|
Data on a comparable basis |
742 |
(184) |
(514) |
110 |
12,437 | |
|
Mobile Financial Services | ||||||
|
Data on a historical basis |
- |
(56) |
(77) |
13 |
942 | |
|
Foreign exchange fluctuations (1) |
- |
- |
- |
- |
- | |
|
Changes in the scope of consolidation and other changes (2) |
- |
- |
- |
- |
- | |
|
Data on a comparable basis |
- |
(56) |
(77) |
13 |
942 | |
(1) Foreign exchange fluctuations between the average exchange rates for the first half of 2021 and the average exchange rates for the first half of 2022.
(2) Including the effect of internal reorganizations between segments, which have no effect at Group level.
1.5.2 EBITDAaL
EBITDAaL (or "EBITDA after Leases") relates to operating income (i) before depreciation and amortization, effects resulting from business combinations, reclassification of cumulative translation adjustment from liquidated entities, impairment of goodwill and fixed assets, share of profits (losses) of associates and joint ventures, (ii) after interest on lease liabilities and interest on debts related to financed assets, and (iii) adjusted for significant litigation, specific labor expenses, the fixed asset, investment and businesses portfolio review, restructuring program costs, acquisition and integration costs and, where appropriate, other specific items that are systematically specified in relation to income or expenses (see Note 1 to the Consolidated Financial Statements).
The reconciliation between EBITDAaL and consolidated net income is shown below.
|
2022 |
2021 | |||||
|
data on a historical basis | ||||||
|
(at June 30, in millions of euros) |
Adjusted data |
Presentation adjustments (1) |
Consolidated income statement |
Adjusted data |
Presentation adjustments (1) |
Consolidated income statement |
|
Revenue |
21,297 |
- |
21,297 |
20,867 |
- |
20,867 |
|
External purchases |
(9,039) |
(11) |
(9,050) |
(8,733) |
(4) |
(8,736) |
|
Other operating income |
366 |
0 |
366 |
322 |
- |
322 |
|
Other operating expenses |
(222) |
(9) |
(231) |
(227) |
(68) |
(295) |
|
Labor expenses |
(4,361) |
33 |
(4,329) |
(4,373) |
(48) |
(4,421) |
|
Operating taxes and levies |
(1,235) |
0 |
(1,235) |
(1,188) |
(31) |
(1,219) |
|
Gains (losses) on disposal of fixed assets, investments and activities |
- |
36 |
36 |
- |
12 |
12 |
|
Restructuring costs |
- |
(47) |
(47) |
- |
(245) |
(245) |
|
Depreciation and amortization of financed assets |
(47) |
- |
(47) |
(41) |
- |
(41) |
|
Depreciation and amortization of right-of-use assets |
(762) |
- |
(762) |
(731) |
- |
(731) |
|
Impairment of right-of-use assets |
(1) |
6 |
5 |
- |
(60) |
(60) |
|
Interest on debts related to financed assets (2) |
(1) |
1 |
- |
(1) |
1 |
- |
|
Interest on lease liabilities (2) |
(61) |
61 |
- |
(58) |
58 |
- |
|
EBITDAaL |
5,934 |
70 |
- |
5,837 |
(385) |
- |
|
Significant litigations |
(2) |
2 |
- |
(89) |
89 |
- |
|
Specific labor expenses |
35 |
(35) |
- |
(41) |
41 |
- |
|
Fixed assets, investments and businesses portfolio review |
36 |
(36) |
- |
12 |
(12) |
- |
|
Restructuring program costs |
(41) |
41 |
- |
(305) |
305 |
- |
|
Acquisition and integration costs |
(21) |
21 |
- |
(20) |
20 |
- |
|
Depreciation and amortization of fixed assets |
(3,585) |
- |
(3,585) |
(3,499) |
- |
(3,499) |
|
Reclassification of translation adjustment from liquidated entities |
3 |
- |
3 |
(0) |
- |
(0) |
|
Impairment of goodwill |
- |
- |
- |
(3,702) |
- |
(3,702) |
|
Impairment of fixed assets |
(2) |
- |
(2) |
(4) |
- |
(4) |
|
Share of profits (losses) of associates and joint ventures |
1 |
- |
1 |
1 |
- |
1 |
|
Elimination of interest on debts related to financed assets (2) |
1 |
(1) |
- |
1 |
(1) |
- |
|
Elimination of interest on lease liabilities (2) |
61 |
(61) |
- |
58 |
(58) |
- |
|
Operating Income |
2,420 |
- |
2,420 |
(1,752) |
- |
(1,752) |
|
Finance costs, net |
- |
- |
(373) |
- |
- |
(436) |
|
Income taxes |
- |
- |
(580) |
- |
- |
(417) |
|
Consolidated net income |
- |
- |
1,467 |
- |
- |
(2,605) |
|
Net income attributable to owners of the parent company |
- |
- |
1,218 |
- |
- |
(2,769) |
|
Net income attributable to non-controlling interests |
- |
- |
249 |
- |
- |
165 |
(1) The presentation adjustments allow reassignment of specific line items identified in the segment reporting (see Note 1 to the Consolidated Financial Statements) to the lines for operating income and expenses presented in the Consolidated income statement.
(2) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are eliminated from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
Orange’s management believes that presenting the EBITDAaL indicator is relevant because it is the key operational performance indicator used internally by the Group to (i) manage and assess its operating results and segment results, and (ii) implement its investment and resource allocation strategy. EBITDAaL, or similar management indicators used by Orange’s competitors, are indicators that are often disclosed and widely used by analysts, investors and other players in the telecommunication industry.
EBITDAaL is not a financial indicator defined by IFRS standards and may not be comparable to similarly titled indicators used by other groups. It is provided as additional information only and should not be considered a substitute for operating income or net cash provided by operating activities.
1.5.3 eCAPEX
eCAPEX (or "economic CAPEX") relates to both (i) investments in property, plant and equipment and intangible assets, excluding telecommunication licenses and financed assets, less the price of disposal of fixed assets, and (ii) purchases of property, plant and equipment and intangible assets excluding telecommunication licenses and changes in fixed asset trade payables, less the price of disposal of fixed assets.
The table below shows the transition from (i) investments in property, plant and equipment and intangible assets as presented in Note 1.5 to the Consolidated Financial Statements, and (ii) purchases of property, plant and equipment and intangible assets, excluding changes in fixed asset trade payables, as presented in the Consolidated statement of cash flows, to (iii) eCAPEX.
|
2022 |
2021 | |
|
(at June 30, in millions of euros) |
data on a historical basis | |
|
Investments in property, plant and equipment and intangible assets |
3,850 |
4,208 |
|
Financed assets |
(69) |
(23) |
|
Purchases of property, plant and equipment and intangible assets (1) |
3,781 |
4,186 |
|
Price of disposal of fixed assets |
(124) |
(48) |
|
Telecommunication licenses |
(244) |
(293) |
|
eCAPEX |
3,413 |
3,845 |
(1) See Consolidated statement of cash flows. Excluding changes in fixed asset trade payables. Financed assets have no effect on cash flows when they are purchased.
Orange’s management believes that the presentation of eCAPEX is relevant because this indicator (i) does not include investments in telecommunication licenses (the purchase of these licenses is not part of the daily monitoring of operating investments) and financed assets (no effect on cash flows when they are purchased), and (ii) allows, in a context of asset rotation primarily linked to the fiber-optic economic model, to measure more accurately the actual amount of investments by excluding the price of disposal of fixed assets. It is the indicator used internally by the Group in allocating resources, in order to measure the operating efficiency of the use of investments for each of its business segments.
eCAPEX is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups. It is provided as additional information only and should not be considered a substitute for purchases of or investments in property, plant and equipment and intangible assets.
1.5.4 EBITDAaL - eCAPEX
The "EBITDAaL - eCAPEX" indicator corresponds to EBITDAaL (see Section 1.5.2 EBITDAaL) less eCAPEX (see Section 1.5.3 eCAPEX).
Orange’s management believes that presenting the "EBITDAaL - eCAPEX" indicator is relevant because it is the key operational performance indicator used internally by the Group to (i) manage and assess its operating and segment results, and (ii) implement its investment and resource allocation strategy.
The "EBITDAaL - eCAPEX" indicator is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups. It is provided as additional information only and should not be considered a substitute for analysis of net cash provided by operating activities and net cash used in the Group’s investing activities.
1.5.5 Organic cash flow from telecom activities
Organic cash flow from telecom activities refers to net cash provided by operating activities, less (i) repayments of lease liabilities and of debts relating to financed assets, and (ii) purchases and sales of property, plant and equipment and intangible assets, net of the change in fixed asset payables, (iii) excluding telecommunication licenses paid and the effect of significant litigation paid out (and received).
The following table presents, for telecom activities, the transition from net cash provided by operating activities to organic cash flow from telecom activities as presented in Note 1.8 to the Consolidated Financial Statements.
|
Organic cash flow from telecom activities |
2022 |
2021 |
|
(at June 30, in millions of euros) |
data on a historical basis | |
|
Net cash provided by operating activities (telecom activities) |
5,789 |
5,523 |
|
Purchases and sales of property, plant and equipment and intangible assets |
(3,880) |
(4,245) |
|
Repayment of lease liabilities |
(734) |
(880) |
|
Repayment of debt related to financed assets |
(44) |
(41) |
|
Elimination of telecommunication licenses paid |
302 |
129 |
|
Elimination of significant litigation paid (and received) |
13 |
354 |
|
Organic cash flow from telecom activities |
1,445 |
840 |
Orange’s management believes that the presentation of organic cash flow from telecom activities is relevant for measuring the Group’s capacity to free up cash through its telecom activities taken as a whole, excluding the main items that are not under its control and which may vary significantly from one year to the next, which is particularly the case with disbursements (and receipts) for significant litigation and disbursements relating to purchases of telecommunication licenses. It is a more comprehensive indicator than "EBITDAaL - eCAPEX" (used internally to manage and assess operating and segment results and to implement its investment and resource allocation strategy), since it includes, inter alia, the effects of financial expenses, income taxes and the change in working capital requirements. For this reason, this indicator has been chosen by Orange as a key operating performance indicator for telecom activities for its Engage 2025 Strategic Plan. This indicator is commonly used by companies in the telecommunication sector.
Organic cash flow from telecom activities is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups. It is not a substitute for cash flows generated by operating activities or used in investing activities.
1.5.6 Net financial debt
Net financial debt as defined and used by Orange does not include Mobile Financial Services activities, for which this concept is not relevant. It consists of (i) financial liabilities excluding operating payables (translated into euros at the year-end closing rate) including derivative instruments (assets and liabilities), (ii) less cash collateral paid, cash, cash equivalents and investments at fair value. Furthermore, financial instruments designated as cash flow hedges, included in net financial debt, are set up to hedge in particular items that are not included therein, such as future cash flows. As a consequence, the portion of these unmatured hedging instruments recorded in other comprehensive income is added to the gross financial debt to offset this temporary difference.
The breakdown of net financial debt is shown in Note 10.3 to the Consolidated Financial Statements.
Net financial debt is an indicator of financial position used by the Group. Net financial debt is a frequently disclosed indicator. It is widely used by analysts, investors, rating agencies and most groups in all business sectors in Europe.
Net financial debt is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups. It is provided as additional information only and should not be considered a substitute for an analysis of all the Group’s assets and liabilities.
1.5.7 Ratio of net financial debt to EBITDAaL from telecom activities
The ratio of net financial debt to EBITDAaL from telecom activities is calculated based on the ratio of the Group’s net financial debt (see Section 1.5.6 Net financial debt) to EBITDAaL from telecom activities (see Section 1.5.2 EBITDAaL) over the previous 12 months. As net financial debt (as defined and used by Orange) does not take into account Mobile Financial Services activities, for which this concept is not relevant, net financial debt is divided by EBITDAaL from telecom activities. In addition, when changes in the scope of consolidation significantly affect the Group’s net financial debt at the end of the period, the calculation of the ratio of net financial debt to EBITDAaL from telecom activities is adjusted to take into account the EBITDAaL from the entities concerned over the previous 12 months.
|
June 30, 2022 |
Dec. 31, 2021 | |
|
(in millions of euros) |
data on a historical basis | |
|
Net financial debt (a) |
24,377 |
24,269 |
|
EBITDAaL from telecom activities (b) |
12,792 |
12,696 |
|
Ratio of net financial debt/EBITDAaL from telecom activities (a/b) |
1.91 |
1.91 |
The ratio of net financial debt to EBITDAaL from telecom activities is used by Orange to measure the Group’s ability to repay its debt, and more broadly to measure its financial strength. This ratio is commonly used by companies in the telecommunication sector.
The ratio of net financial debt to EBITDAaL from telecom activities is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups.
1.6 Additional information
1.6.1 Litigation and unrecognized contractual commitments
The main events that took place in the first half of 2022 affecting litigation and unrecognized contractual commitments are described in Note 14 to the Consolidated Financial Statements.
1.6.2 Related party transactions
In the first half of 2022, the amounts of related party transactions did not present significant changes compared with December 31, 2021 (see Note 8.3 to the Consolidated Financial Statements).
1.6.3 Subsequent events
The main events occurring after June 30, 2022 are described in Note 15 to the Consolidated Financial Statements.
1.6.4 Financial glossary
Average number of employees (full-time equivalents): average number of active employees over the reporting period, prorated for their work time, including both permanent contracts and fixed-term contracts.
Change in working capital requirement: the change in working capital requirement consists of:
− the Change in working capital requirement for operations, which is made up of (i) the changes in gross inventories, (ii) the change in gross trade receivables, (iii) the change in trade payables for other goods and services, and (iv) the change in customer contract assets and liabilities; and
− the Change in working capital requirement excluding operations, which includes the change in other assets and liabilities (excluding receivables and payables related to operating taxes and levies payables).
Commercial expenses, equipment and content costs: see External purchases.
Convergent ARPO: average revenues per customer from convergent services (Average Revenues Per Offer, ARPO) for the period are calculated by dividing (i) the revenues from consumer convergent services billed to customers (excluding the effect of spreading the equipment subsidy pursuant to IFRS 15) over the period in question, by (ii) the weighted average number of customers of consumer convergent services over the same period. The weighted average number of customers is the average of monthly averages over the period in question. The monthly average is the arithmetic average of the number of customers at the beginning and end of the month. Convergent ARPO is expressed in monthly revenues per convergent services customer.
Convergent services: see Revenues.
Data on a comparable basis: data with comparable methods, scope of consolidation and exchange rates are presented for the preceding period (see Section 1.5.1 Data on a comparable basis). The transition from data on a historical basis to data on a comparable basis involves retaining the results for the fiscal year ended and restating the previous fiscal year in order to present financial data with comparable methods, scope of consolidation and exchange rates over comparable periods. The method used is to apply to the data of the corresponding period of the preceding fiscal year, the methods and the scope of consolidation for the period ended, as well as the average exchange rates used in the Consolidated income statement for the period ended. Changes in data on a comparable basis reflect organic business changes. Data on a comparable basis is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups (see Section 1.5 Financial indicators not defined by IFRS).
Data on a historical basis: data for past periods as reported in the Consolidated Financial Statements of the current financial period.
EBITDAaL or "EBITDA after Leases": operating income (i) before depreciation and amortization, effects resulting from business combinations, reclassification of the cumulative translation adjustment from liquidated entities, impairment of goodwill and fixed assets and the share of profits (losses) of associates and joint ventures, (ii) after interest on lease liabilities and interest on debts related to financed assets, and (iii) adjusted for significant litigation, specific labor expenses, the review of fixed assets, investments and business portfolio, restructuring program costs, acquisition and integration costs and, where appropriate, other specific items that are systematically specified in relation to income or expenses (see Note 1 to the Consolidated Financial Statements). EBITDAaL is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups (see Section 1.5 Financial indicators not defined by IFRS).
EBITDAaL - eCAPEX: EBITDAaL (see definition of this term) less eCAPEX (see definition of this term). The "EBITDAaL - eCAPEX" indicator is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups (see Section 1.5 Financial indicators not defined by IFRS).
eCAPEX or "economic CAPEX": investments in property, plant and equipment and intangible assets excluding telecommunication licenses and financed assets, less the price of disposal of fixed assets (see Note 1.5 to the Consolidated Financial Statements). eCAPEX is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies (see Section 1.5 Financial indicators not defined by IFRS).
Economic CAPEX: see eCAPEX.
Equipment sales: see Revenues.
External data: data after elimination of internal flows between the scopes of consolidation taken into consideration.
External purchases: external purchases include the following operating expenses, excluding leases falling within the scope of application of IFRS 16 (see Note 5.1 to the Consolidated Financial Statements):
− Commercial, equipment expenses and content rights: cost of handsets and other equipment sold, retail fees and commissions, advertising, promotional, sponsoring and rebranding expenses, and content costs;
− Service fees and inter-operator costs: network expenses and interconnection costs;
− Other network expenses and IT expenses: outsourcing expenses for operations and technical maintenance, IT expenses; and
− Other external purchases: overheads, real estate fees, purchases of other services and service fees, purchases of equipment and other supplies held in inventory, call center outsourcing expenses and other external services, net of capitalized costs of goods and services.
Financial investments: acquisitions of equity securities (net of cash acquired) and changes in ownership interest with no gain of control in subsidiaries.
Fixed-only broadband ARPO: average revenues per fixed-only services customer (Average Revenues Per Offer - ARPO) for the period is calculated by dividing (i) the revenues from retail fixed-only broadband services (excluding the effect of the spreading of the equipment subsidy pursuant to IFRS 15) over the relevant period, by (ii) the weighted average number of fixed-only broadband customers in the same period. The weighted average number of customers is the average of monthly averages over the period in question. The monthly average is the arithmetic average of the number of customers at the beginning and end of the month. Fixed-only broadband ARPO is expressed in monthly revenues per fixed-only customer.
Fixed-only services: see Revenues.
Investments in property, plant and equipment and intangible assets: see eCAPEX.
IT & Integration Services: see Revenues.
Labor expenses: wages and employee benefit expenses (net of capitalized costs), employee profit-sharing expenses, and expenses relating to share-based compensation.
Mobile-only ARPO: average revenues per customer of mobile-only services (Average Revenues Per Order - ARPO) for the period is calculated by dividing (i) the revenues from retail mobile-only services (excluding machine-to-machine and the effect of spreading the equipment subsidy pursuant to IFRS 15) over the relevant period, by (ii) the weighted average number of customers of mobile-only services (excluding machine-to-machine) in the same period. The weighted average number of customers is the average of monthly averages over the period in question. The monthly average is the arithmetic average of the number of customers at the beginning and end of the month. Mobile-only ARPO is expressed in monthly revenues per mobile-only customer.
Mobile-only services: see Revenues.
Net financial debt: net financial debt as defined and used by Orange does not incorporate Mobile Financial Services activities, for which this concept is not relevant. It consists of (i) financial liabilities excluding operating payables (translated into euros at the year-end closing rate) including derivative instruments (assets and liabilities), (ii) less cash collateral paid, cash, cash equivalents and investments at fair value. Furthermore, financial instruments designated as cash flow hedges, included in net financial debt, are set up to hedge in particular items that are not included therein, such as future cash flows. As a consequence, the portion of these components related to unmatured hedging instruments recorded in other comprehensive income is added to gross financial debt to offset this temporary difference (see Note 10.3 to the Consolidated Financial Statements). Net financial debt is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other group (see Section 1.5 Financial indicators not defined by IFRS).
Number of employees (active employees at end of period): number of employees working on the last day of the reporting period, including both permanent contracts and fixed-term contracts.
Operating taxes and levies payables: taxes and levies including the CET (contribution économique territoriale - territorial economic contribution) and the IFER (imposition forfaitaire sur les entreprises de réseaux - flat-rate tax on network enterprises) in France, spectrum fees and levies on telecommunication services.
Organic cash flow from telecom activities: within the scope of the telecom activities, net cash provided by operating activities, less (i) repayments of lease liabilities and of debts relating to financed assets, and (ii) purchases and sales of property, plant and equipment and intangible assets, net of the change in fixed asset payables, (iii) excluding the effect of telecommunication licenses paid and significant litigation paid out or received (see Note 1.8 to the Consolidated Financial Statements). Organic cash flow from telecom activities is not a financial indicator defined by IFRS and may not be comparable to similarly titled indicators used by other groups (see Section 1.5 Financial indicators not defined by IFRS).
Other external purchases: see External purchases.
Other network expenses and IT expenses: see External purchases.
Other operating expenses: see Other operating income and expenses.
Other operating income and expenses: other operating income net of other operating expenses. Other operating income and expenses includes:
− Other operating income: primarily income related to collection of trade receivables, net banking income (NBI, net balance of bank operating income and expenses), site leasing and franchises, tax credits and subsidies, income from universal service, brand royalties and management fees invoiced to certain unconsolidated entities, rebilling of network sharing costs, income from litigation, and income relating to line damage; and
− Other operating expenses: primarily for litigation, allowances and losses on trade receivables of telecom activities, litigation expenses, universal service charges, acquisition and integration costs, operating foreign exchange gains/losses and the cost of bank credit risk (see Note 5.2 to the Consolidated Financial Statements).
Other operating income: see Other operating income and expenses.
Other revenues: see Revenues.
Retail services (B2C+B2B) revenues: aggregation of convergent services, mobile-only services, fixed-only services and IT & Integration Services (see definitions). Retail Services (B2C+B2B) revenues include all revenues of a given scope excluding revenues from wholesale services, equipment sales and other revenues (see definitions).
Retail services (B2C+B2B): see Retail services (B2C+B2B) revenues.
Revenues: revenues (see Note 1.2 to the Consolidated Financial Statements) include:
− Convergent services: revenues from retail convergent offers to B2C customers, excluding equipment sales (see definition). A convergent service is defined as the combination of, at least, fixed broadband access (xDSL, FTTx, cable, fixed 4G) and a mobile voice contract;
− Mobile-only services: revenues from retail mobile plans (mainly outgoing calls: voice, SMS and data), excluding convergent services and equipment sales (see definitions);
− Fixed-only services: revenues from retail fixed services, excluding convergent services and equipment sales (see definitions). It includes (i) fixed narrowband services (traditional fixed telephony), (ii) fixed broadband services, and (iii) business solutions and networks (with the exception of France, for which essential business solutions and networks are supported by the Enterprise segment). For the Enterprise segment, fixed-only service revenues include network equipment sales related to the operation of voice and data services.
− IT & Integration Services: revenues including unified communication and collaboration services (Local Area Network and telephony, consulting, integration, project management services), hosting and infrastructure services (including cloud computing), app services (customer relations management and other app services), security services, video-conference services, services related to machine-to-machine activities (excluding connectivity), as well as equipment sales related to the above products and services;
− Wholesale services: revenues including (i) mobile services to carriers, which include, in particular, incoming mobile traffic, visitor roaming, network sharing, national roaming and virtual mobile network operators (MVNOs), and (ii) fixed services to other carriers, which include, in particular, national interconnection, services to international carriers, high-speed and very high-speed broadband access services (fiber access, unbundling of telephone lines, xDSL access sales), and telephone lines sold wholesale;
− Equipment sales: sales of fixed and mobile equipment, with the exception of (i) equipment sales related to the provision of IT & Integration Services, (ii) sales of network equipment related to operation of voice and data services in the Enterprise segment, and (iii) equipment sales to external distributors and brokers; and
− Other revenues: revenues including equipment sales to dealers and brokers, revenues from portals, on-line advertising revenues and the Group’s transversal activities, and other revenues.
Service fees and inter-operator costs: see External purchases.
Statutory data: data before elimination of internal flows between the scopes of consolidation taken into consideration.
Wages and employee benefit expenses: see Labor expenses.
Wholesale services: see Revenues.
2. Condensed interim consolidated Financial Statements for the first half of 2022
Significant events for the first half 2022
Creation of a new operating segment Totem |
War in Ukraine |
Agreement signed with MásMóvil |
||
Since January 1st, 2022, Totem, Orange Group’s European company, now owns and manages the passive mobile infrastructure portfolio for telecommunication towers in France and Spain. The Group has chosen to present Totem as a separate operating segment. |
The Group's assessment and estimates take into account the consequences of the armed offensive launched by Russia against Ukraine on February 24, 2022. |
Following the period of exclusive negotiations initiated on March 8th, 2022, Orange and MásMóvil have signed a binding agreement on July 23rd to combine their activities in Spain. This business combination would take the form of a joint venture controlled at 50% respectively by each party. The Orange Group would then lose exclusive control over its activities in Spain, and the joint venture would be consolidated using the equity method in the consolidated financial statements of the Orange Group. As of June 30, 2022, the Group considers that the criteria of the IFRS 5 standard relating to discontinued operations have not been met. |
||
Note 1.1 |
Note 2.3 |
Note 3.2 |
Financial statements
Consolidated income statement 49
Consolidated statement of comprehensive income 50
Consolidated statement of financial position 51
Consolidated statements of changes in shareholders' equity 53
Consolidated statement of cash flows 55
Notes to the consolidated financial statements 56
Notes to the consolidated financial statements
1.1 Changes in segment information 56
1.3 Segment revenue to consolidated net income as of June 30, 2022 59
1.4 Segment revenue to consolidated net income as of June 30, 2021 61
1.7 Segment equity and liabilities 67
Note 2 Basis of preparation of the consolidated financial statements 72
2.1 Basis of preparation of the financial statements 72
2.2 Use of estimates and judgement 73
2.4 New standards and interpretations applied from January 1, 2021 73
2.5 New standards and interpretations applied from January 1, 2022 74
Note 3 Gains and losses on disposal and main changes in scope of consolidation 74
3.1 Gains (losses) on disposal of fixed assets, investments and activities 74
3.2 Main changes in scope of consolidation and ongoing transactions 75
Note 5 Purchases and other expenses 77
5.2 Other operating expenses 77
5.4 Working capital management - payables 77
Note 8 Interests in associates and joint ventures 78
8.1 Change in associates and joint ventures 78
8.2 Main figures of associates and joint ventures 79
8.3 Related party transactions 80
Note 10 Financial assets, liabilities and financial results (telecom activities) 81
10.1 Financial assets and liabilities of telecom activities 81
10.2 Income and expenses related to financial assets and liabilities 81
10.4 Main bonds and bank loans repayments and issuances 82
11.1 Risk management policy 83
11.2 Orange's credit ratings 83
11.4 Fair value levels of financial assets and liabilities 83
Note 12 Mobile Financial Services activities 83
12.1 Financial assets and liabilities of Mobile Financial Services 83
12.2 Information on credit risk management related to Orange Bank activities 85
12.3 Information on interest rate risk management related to Orange Bank activities 86
13.1 Changes in share capital 86
13.5 Cumulative translation adjustments 87
13.6 Non-controlling interests 87
Note 14 Litigation and unrecognized contractual commitments 88
14.2 Unrecognized contractual commitments 88
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated income statement
|
(in millions of euros, except for per share data) |
Note |
June 30, 2022 |
June 30, 2021 |
|
Revenue |
1.2 |
21,297 |
20,867 |
|
External purchases |
5.1 |
(9,050) |
(8,736) |
|
Other operating income |
366 |
322 | |
|
Other operating expenses |
5.2 |
(231) |
(295) |
|
Labor expenses |
6 |
(4,329) |
(4,421) |
|
Operating taxes and levies |
(1,235) |
(1,219) | |
|
Gains (losses) on disposal of fixed assets, investments and activities |
3.1 |
36 |
12 |
|
Restructuring costs |
5.3 |
(47) |
(245) |
|
Depreciation and amortization of fixed assets |
(3,585) |
(3,499) | |
|
Depreciation and amortization of financed assets |
(47) |
(41) | |
|
Depreciation and amortization of right-of-use assets |
(762) |
(731) | |
|
Reclassification of translation adjustment from liquidated entities |
3 |
(0) | |
|
Impairment of goodwill |
7 |
- |
(3,702) |
|
Impairment of fixed assets |
(2) |
(4) | |
|
Impairment of right-of-use assets |
5 |
(60) | |
|
Share of profits (losses) of associates and joint ventures |
8 |
1 |
1 |
|
Operating income |
2,420 |
(1,752) | |
|
Cost of gross financial debt excluding financed assets |
(297) |
(461) | |
|
Interests on debts related to financed assets |
(1) |
(1) | |
|
Gains (losses) on assets contributing to net financial debt |
(9) |
(5) | |
|
Foreign exchange gain (loss) |
(40) |
57 | |
|
Interests on lease liabilities |
(61) |
(58) | |
|
Other net financial expenses |
36 |
32 | |
|
Finance costs, net |
10 |
(373) |
(436) |
|
Income taxes |
9 |
(580) |
(417) |
|
Consolidated net income |
1,467 |
(2,605) | |
|
Net income attributable to owners of the parent company |
1,218 |
(2,769) | |
|
Non-controlling interests |
249 |
165 | |
|
Earnings per share (in euros) attributable to parent company | |||||
|
Net income | |||||
|
- |
basic |
0.42 |
(1.09) | ||
|
- |
diluted |
0.42 |
(1.09) | ||
Consolidated statement of comprehensive income
|
(in millions of euros) |
Note |
June 30, 2022 |
June 30, 2021(1) |
|
Consolidated net income |
1,467 |
(2,605) | |
|
Remeasurements of the net defined benefit liability |
6 |
170 |
61 |
|
Assets at fair value |
(33) |
(9) | |
|
Income tax relating to items that will not be reclassified |
(44) |
(16) | |
|
Share of other comprehensive income in associates and joint ventures that will not be reclassified |
- |
- | |
|
Items that will not be reclassified to profit or loss (a) |
93 |
37 | |
|
Assets at fair value |
1 |
(0) | |
|
Cash flow hedges |
10.2 |
438 |
193 |
|
Translation adjustment gains and losses |
13.5 |
(37) |
102 |
|
Income tax relating to items that are or may be reclassified |
(107) |
(55) | |
|
Share of other comprehensive income in associates and joint ventures that are or may be reclassified |
39 |
- | |
|
Items that are or may be reclassified subsequently to profit or loss (b) |
333 |
239 | |
|
Other consolidated comprehensive income (a) + (b) |
426 |
276 | |
|
Consolidated comprehensive income |
1,893 |
(2,329) | |
|
Comprehensive income attributable to the owners of the parent company |
1,591 |
(2,510) | |
|
Comprehensive income attributable to non-controlling interests |
302 |
181 | |
|
(1) The first semester 2021 figures have been restated of the IFRS IC agenda decision on calculation of some retirement indemnities plans (see Note 2.4). | |||
Consolidated statement of financial position
|
(in millions of euros) |
Note |
June 30, 2022 |
December 31, 2021 |
|
Assets | |||
|
Goodwill |
24,211 |
24,192 | |
|
Other intangible assets |
14,644 |
14,940 | |
|
Property, plant and equipment |
30,663 |
30,484 | |
|
Right-of-use assets |
8,186 |
7,702 | |
|
Interests in associates and joint ventures |
8 |
1,484 |
1,440 |
|
Non-current financial assets related to Mobile Financial Services activities |
12.1 |
725 |
900 |
|
Non-current financial assets |
10.1 |
968 |
950 |
|
Non-current derivatives assets |
10.1 |
1,655 |
683 |
|
Other non-current assets |
267 |
254 | |
|
Deferred tax assets |
519 |
692 | |
|
Total non-current assets |
83,321 |
82,236 | |
|
Inventories |
994 |
952 | |
|
Trade receivables |
4 |
5,965 |
6,029 |
|
Other customer contract assets |
1,438 |
1,460 | |
|
Current financial assets related to Mobile Financial Services activities |
12.1 |
2,548 |
2,381 |
|
Current financial assets |
10.1 |
3,008 |
2,313 |
|
Current derivatives assets |
10.1 |
14 |
7 |
|
Other current assets |
1,938 |
1,875 | |
|
Operating taxes and levies receivables |
1,150 |
1,163 | |
|
Current taxes assets |
149 |
181 | |
|
Prepaid expenses |
1,059 |
851 | |
|
Cash and cash equivalents |
10.1 |
8,259 |
8,621 |
|
Total current assets |
26,521 |
25,834 | |
|
Total assets |
109,843 |
108,071 | |
|
(in millions of euros) |
Note |
June 30, 2022 |
December 31, 2021 |
|
Equity and liabilities | |||
|
Share capital |
13.1 |
10,640 |
10,640 |
|
Share premiums and statutory reserve |
16,859 |
16,859 | |
|
Subordinated notes |
13.4 |
5,497 |
5,497 |
|
Retained earnings |
(243) |
(656) | |
|
Equity attributable to the owners of the parent company |
32,753 |
32,341 | |
|
Non-controlling interests |
13.6 |
3,054 |
3,020 |
|
Total equity |
13 |
35,807 |
35,361 |
|
Non-current financial liabilities |
10.1 |
33,191 |
31,922 |
|
Non-current derivatives liabilities |
10.1 |
231 |
220 |
|
Non-current lease liabilities |
7,126 |
6,696 | |
|
Non-current fixed assets payables |
1,402 |
1,370 | |
|
Non-current financial liabilities related to Mobile Financial Services activities |
12.1 |
0 |
0 |
|
Non-current employee benefits |
2,438 |
2,798 | |
|
Non-current dismantling provisions |
736 |
876 | |
|
Non-current restructuring provisions |
49 |
61 | |
|
Other non-current liabilities |
287 |
306 | |
|
Deferred tax liabilities |
1,183 |
1,185 | |
|
Total non-current liabilities |
46,643 |
45,434 | |
|
Current financial liabilities |
10.1 |
3,178 |
3,421 |
|
Current derivatives liabilities |
10.1 |
10 |
124 |
|
Current lease liabilities |
1,449 |
1,369 | |
|
Current fixed assets payables |
2,888 |
3,111 | |
|
Trade payables |
6,895 |
6,738 | |
|
Customer contract liabilities |
2,554 |
2,512 | |
|
Current financial liabilities related to Mobile Financial Services activities |
12.1 |
3,199 |
3,161 |
|
Current employee benefits |
2,303 |
2,316 | |
|
Current dismantling provisions |
15 |
21 | |
|
Current restructuring provisions |
107 |
124 | |
|
Other current liabilities |
2,512 |
2,338 | |
|
Operating taxes and levies payables |
1,734 |
1,436 | |
|
Current taxes payables |
374 |
425 | |
|
Deferred income |
174 |
180 | |
|
Total current liabilities |
27,393 |
27,276 | |
|
Total equity and liabilities |
109,843 |
108,071 | |
Consolidated statements of changes in shareholders' equity
|
(in millions of euros) |
Note |
Attributable to owners of the parent company |
Attributable to non-controlling interests |
Total equity | ||||||||||
|
Number of issued shares |
Share capital |
Share premiums and statutory reserve |
Subor-dinated notes |
Reserves |
Other compre- hensive income |
Total |
Reserves |
Other compre- hensive income |
Total | |||||
|
Balance as of December 31, 2020 |
2,660,056,599 |
10,640 |
16,859 |
5,803 |
1,966 |
(711) |
34,557 |
2,484 |
159 |
2,643 |
37,200 | |||
|
Consolidated comprehensive income(1) |
- |
- |
- |
- |
(2,769) |
259 |
(2,510) |
165 |
17 |
181 |
(2,329) | |||
|
Share-based compensation |
- |
- |
- |
- |
4 |
- |
4 |
1 |
- |
1 |
5 | |||
|
Purchase of treasury shares |
- |
- |
- |
- |
(3) |
- |
(3) |
- |
- |
- |
(3) | |||
|
Dividends |
- |
- |
- |
- |
(1,330) |
- |
(1,330) |
(216) |
- |
(216) |
(1,545) | |||
|
Issues and purchases of subordinated notes |
- |
- |
- |
(306) |
(6) |
- |
(311) |
- |
- |
- |
(311) | |||
|
Subordinated notes remuneration |
- |
- |
- |
- |
(163) |
- |
(163) |
- |
- |
- |
(163) | |||
|
Changes in ownership interests with no gain/loss of control |
- |
- |
- |
- |
(188) |
- |
(188) |
(142) |
- |
(142) |
(330) | |||
|
Other movements |
- |
- |
- |
- |
2 |
- |
2 |
1 |
- |
1 |
3 | |||
|
Balance as of June 30, 2021(1) |
2,660,056,599 |
10,640 |
16,859 |
5,497 |
(2,487) |
(452) |
30,057 |
2,292 |
176 |
2,469 |
32,527 | |||
|
Consolidated comprehensive income |
- |
- |
- |
- |
3,002 |
195 |
3,197 |
380 |
19 |
399 |
3,596 | |||
|
Share-based compensation |
- |
- |
- |
- |
161 |
- |
161 |
5 |
- |
5 |
166 | |||
|
Purchase of treasury shares |
- |
- |
- |
- |
(176) |
- |
(176) |
- |
- |
- |
(176) | |||
|
Dividends |
- |
- |
- |
- |
(797) |
- |
(797) |
(2) |
- |
(2) |
(799) | |||
|
Subordinated notes remuneration |
- |
- |
- |
- |
(75) |
- |
(75) |
- |
- |
- |
(75) | |||
|
Changes in ownership interests with no gain/loss of control |
- |
- |
- |
- |
3 |
- |
3 |
(71) |
- |
(71) |
(68) | |||
|
Changes in ownership interests with gain/loss of control |
- |
- |
- |
- |
- |
- |
- |
249 |
- |
249 |
249 | |||
|
Other movements |
- |
- |
- |
- |
(30) |
- |
(30) |
(29) |
- |
(29) |
(59) | |||
|
Balance as of December 31, 2021 |
2,660,056,599 |
10,640 |
16,859 |
5,497 |
(399) |
(257) |
32,341 |
2,825 |
195 |
3,020 |
35,361 | |||
|
Consolidated comprehensive income |
- |
- |
- |
- |
1,218 |
373 |
1,591 |
249 |
54 |
302 |
1,893 | |||
|
Share-based compensation |
- |
- |
- |
- |
5 |
- |
5 |
1 |
- |
1 |
6 | |||
|
Purchase of treasury shares |
13.2 |
- |
- |
- |
- |
0 |
- |
0 |
- |
- |
- |
0 | ||
|
Dividends |
13.3 |
- |
- |
- |
- |
(1,063) |
- |
(1,063) |
(277) |
- |
(277) |
(1,340) | ||
|
Subordinated notes remuneration |
13.4 |
- |
- |
- |
- |
(121) |
- |
(121) |
- |
- |
- |
(121) | ||
|
Changes in ownership interests with no gain/loss of control |
- |
- |
- |
- |
(2) |
- |
(2) |
3 |
- |
3 |
1 | |||
|
Changes in ownership interests with gain/loss of control |
- |
- |
- |
- |
(0) |
- |
(0) |
(1) |
- |
(1) |
(1) | |||
|
Other movements |
- |
- |
- |
- |
3 |
- |
3 |
5 |
- |
5 |
8 | |||
|
Balance as of June 30, 2022 |
2,660,056,599 |
10,640 |
16,859 |
5,497 |
(358) |
116 |
32,753 |
2,805 |
249 |
3,054 |
35,807 | |||
|
(1) The first semester 2021 figures have been restated of the IFRS IC agenda decision on calculation of some retirement indemnities plans (see Note 2.4). | ||||||||||||||
Analysis of changes in shareholders' equity related to components of the other comprehensive income
|
(in millions of euros) |
Attributable to owners of the parent company |
Attributable to non-controlling interests |
Total other compre- hensive income | |||||||||||||
|
Assets at fair value |
Hedging instruments |
Translation adjustment |
Actuarial gains and losses (2) |
Deferred tax(2) |
Other compre- hensive income of associates and joint ventures(3) |
Total |
Assets at fair value |
Hedging instruments |
Translation adjustment |
Actuarial gains and losses(2) |
Deferred tax(2) |
Other compre- hensive income of associates and joint ventures(3) |
Total | |||
|
Balance as of December 31, 2020 |
68 |
(98) |
(256) |
(579) |
195 |
(40) |
(711) |
(3) |
(2) |
171 |
(8) |
0 |
- |
159 |
(552) | |
|
Variation |
(10) |
197 |
82 |
62 |
(72) |
- |
259 |
1 |
(3) |
19 |
(1) |
1 |
- |
17 |
276 | |
|
Balance as of June 30, 2021 |
58 |
99 |
(173) |
(517) |
123 |
(40) |
(452) |
(2) |
(6) |
190 |
(8) |
1 |
- |
176 |
(276) | |
|
Variation |
20 |
121 |
77 |
1 |
(25) |
1 |
195 |
(1) |
3 |
22 |
(3) |
(0) |
- |
19 |
213 | |
|
Balance as of December 31, 2021 |
78 |
220 |
(96) |
(516) |
97 |
(39) |
(257) |
(3) |
(3) |
212 |
(11) |
1 |
- |
195 |
(62) | |
|
Variation(1) |
(32) |
406 |
(56) |
171 |
(145) |
28 |
373 |
(0) |
32 |
20 |
(2) |
(6) |
10 |
54 |
426 | |
|
Balance as of June 30, 2022 |
46 |
626 |
(152) |
(344) |
(48) |
(11) |
116 |
(3) |
29 |
232 |
(13) |
(5) |
10 |
249 |
365 | |
|
(1) At June 30, 2022, the variation of 426 million euros in other comprehensive income includes primarly : - 367 million euros related to hedging instruments in US dollar and pound sterling held by Orange SA ; - 170 million euros in actuarial gains related to the increase in discount rates used to value pension plans. | ||||||||||||||||
|
(2) The first semester 2021 figures have been restated of the IFRS IC agenda decision on calculation of some retirement indemnities plans (see Note 2.4). | ||||||||||||||||
|
(3) Other comprehensive income of associates and joint ventures at June 30, 2022, amounts to 38 million euros and includes : - 50 million euros related to hedging instruments, of which 38 million euros attribuable to owners of the parent company; - (12) million euros related to deferred tax, of which (10) million euros attribuable to owners of the parent company. | ||||||||||||||||
Consolidated statement of cash flows
|
(in millions of euros) |
Note |
June 30, 2022 |
June 30, 2021 | |
|
Operating activities | ||||
|
Consolidated net income |
1,467 |
(2,605) | ||
|
Non-monetary items and reclassified items for presentation |
6,215 |
9,817 | ||
|
Operating taxes and levies |
1,235 |
1,219 | ||
|
Gains (losses) on disposal of fixed assets, investments and activities |
3.1 |
(36) |
(12) | |
|
Other gains and losses |
(13) |
(16) | ||
|
Depreciation and amortization of fixed assets |
3,585 |
3,499 | ||
|
Depreciation and amortization of financed assets |
47 |
41 | ||
|
Depreciation and amortization of right-of-use assets |
762 |
731 | ||
|
Changes in provisions |
(335) |
(275) | ||
|
Reclassification of cumulative translation adjustment from liquidated entities |
(3) |
0 | ||
|
Impairment of goodwill |
7 |
- |
3,702 | |
|
Impairment of fixed assets |
2 |
4 | ||
|
Impairment of right-of-use assets |
(5) |
60 | ||
|
Share of profits (losses) of associates and joint ventures |
(1) |
(1) | ||
|
Operational net foreign exchange and derivatives |
17 |
7 | ||
|
Finance costs, net |
373 |
436 | ||
|
Income taxes |
9 |
580 |
417 | |
|
Share-based compensation |
6 |
5 | ||
|
Changes in working capital and operating banking activities(1) |
(5) |
276 | ||
|
Decrease (increase) in inventories, gross |
(40) |
9 | ||
|
Decrease (increase) in trade receivables, gross |
99 |
136 | ||
|
Increase (decrease) in trade payables |
90 |
22 | ||
|
Changes in other customer contract assets and liabilities |
75 |
164 | ||
|
Changes in other assets and liabilities (2) |
(229) |
(54) | ||
|
Other net cash out |
(2,040) |
(2,129) | ||
|
Operating taxes and levies paid |
(958) |
(985) | ||
|
Dividends received |
2 |
7 | ||
|
Interest paid and interest rates effects on derivatives, net(3) |
(504) |
(651) | ||
|
Income taxes paid |
(581) |
(500) | ||
|
Net cash provided by operating activities (a) |
5,636 |
5,360 | ||
|
Investing activities | ||||
|
Purchases and sales of property, plant and equipment and intangible assets(4) |
(3,892) |
(4,258) | ||
|
Purchases of property, plant and equipment and intangible assets (5) |
(3,781) |
(4,186) | ||
|
Increase (decrease) in fixed assets payables |
(237) |
(227) | ||
|
Investing donations received in advance |
- |
20 | ||
|
Sales of property, plant and equipment and intangible assets |
126 |
135 | ||
|
Cash paid for investment securities, net of cash acquired |
(12) |
0 | ||
|
Investments in associates and joint ventures |
(8) |
(2) | ||
|
Purchases of investment securities measured at fair value |
(17) |
(42) | ||
|
Sales of investment securities, net of cash transferred |
0 |
0 | ||
|
Sales of investment securities at fair value |
2 |
90 | ||
|
Decrease (increase) in securities and other financial assets |
(593) |
954 | ||
|
Investments at fair value, excluding cash equivalents |
(694) |
899 | ||
|
Others |
101 |
55 | ||
|
Net cash used in investing activities (b) |
(4,519) |
(3,258) | ||
|
(in millions of euros) |
Note |
June 30, 2022 |
June 30, 2021 | |
|
Financing activities | ||||
|
Medium and long-term debt issuances |
10.4 |
985 |
1,526 | |
|
Medium and long-term debt redemptions and repayments(6) |
(331) |
(3,072) | ||
|
Lease liabilities repayments |
(737) |
(882) | ||
|
Increase (decrease) of bank overdrafts and short-term borrowings |
(884) |
655 | ||
|
Decrease (increase) of cash collateral deposits |
899 |
574 | ||
|
Exchange rates effects on derivatives, net |
(103) |
50 | ||
|
Subordinated notes issuances (purchases) and other related fees |
13.4 |
- |
(311) | |
|
Coupon on subordinated notes |
13.4 |
(121) |
(163) | |
|
Sales (purchases) of treasury shares |
20 |
(3) | ||
|
Capital increase (decrease) - non-controlling interests |
0 |
3 | ||
|
Changes in ownership interests with no gain / loss of control |
1 |
(333) | ||
|
Dividends paid to owners of the parent company |
13.3 |
(1,063) |
(1,330) | |
|
Dividends paid to non-controlling interests |
13.6 |
(177) |
(190) | |
|
Net cash used in financing activities (c) |
(1,510) |
(3,477) | ||
|
Net change in cash and cash equivalents (a) + (b) + (c) |
(394) |
(1,375) | ||
|
Net change in cash and cash equivalents | ||||
|
Cash and cash equivalents in the opening balance |
8,621 |
8,145 | ||
|
Cash change in cash and cash equivalents |
(394) |
(1,375) | ||
|
Non-cash change in cash and cash equivalents |
32 |
21 | ||
|
o/w effect of exchange rates changes and other non-monetary effects |
32 |
21 | ||
|
Cash and cash equivalents in the closing balance |
8,259 |
6,791 | ||
|
(1) Operating banking activities mainly include transactions with customers and credit institutions. They are presented in changes in other assets and liabilities. | ||||
|
(2) Excluding operating tax receivables and payables. | ||||
|
(3) Including interests paid on lease liabilities in the amount of (60) million euros as of June 30, 2022 and (59) million euros as of June 30, 2021. | ||||
|
(4) Including telecommunication licenses paid for (302) million euros as of June 30, 2022 and (129) million euros as of June 30, 2021. | ||||
|
(5) Investments in financed assets amounting to 69 million euros as of June 30, 2022 and 23 million euros as of June 30, 2021 have no effect on the statement of cash flows at the time of acquisition. | ||||
|
(6) Including payments related to liabilities on financed assets for (44) million euros as of June 30, 2022 and (41) million euros as of June 30, 2021. | ||||
Notes to the consolidated financial statements
Note 1 Segment information
1.1 Changes in segment information
In February 2021, Orange announced the creation of Totem, a European TowerCo that operates a tower portfolio consisting of approximately 27,000 sites in France and Spain at June 30, 2022. The entry of the TowerCo into the operational phase led to an evolution of the internal reporting followed by the management and the segment information presented take into account the Group's wishes to present Totem as a distinct segment. This evolution also modified the composition of France and Spain Cash-Generating Units (CGUs). Accordingly, goodwill (1,624 million euros) initially allocated to France and Spain CGUs have been partially reallocated to Totem's CGU based on expected future cash flows of the transferred activity.
1.2 Segment revenue
|
(in millions of euros) |
France(1) |
Europe | |||
|
Spain(1) |
Other European countries(2) |
Eliminations Europe |
Total | ||
|
June 30, 2022 | |||||
|
Revenue |
8,827 |
2,265 |
3,065 |
(5) |
5,325 |
|
Convergence services |
2,406 |
931 |
469 |
- |
1,400 |
|
Mobile-only services |
1,154 |
399 |
1,015 |
- |
1,414 |
|
Fixed-only services |
1,907(5) |
217 |
397 |
- |
614 |
|
IT & integration services |
- |
18 |
196 |
- |
214 |
|
Wholesale |
2,455 |
406 |
476 |
(5) |
877 |
|
Equipment sales |
552 |
293 |
426 |
- |
719 |
|
Other revenue |
353 |
0 |
87 |
- |
87 |
|
External |
8,485 |
2,240 |
3,015 |
- |
5,255 |
|
Inter-operating segments |
342 |
25 |
51 |
(5) |
70 |
|
June 30, 2021 | |||||
|
Revenue |
8,950 |
2,368 |
2,800 |
(4) |
5,164 |
|
Convergence services |
2,317 |
933 |
404 |
- |
1,337 |
|
Mobile-only services |
1,122 |
450 |
984 |
- |
1,434 |
|
Fixed-only services |
1,944(5) |
225 |
296 |
- |
522 |
|
IT & integration services |
- |
6 |
152 |
- |
158 |
|
Wholesale |
2,720 |
443 |
486 |
(4) |
926 |
|
Equipment sales |
523 |
310 |
408 |
- |
718 |
|
Other revenue |
325 |
0 |
69 |
0 |
70 |
|
External |
8,658 |
2,350 |
2,764 |
- |
5,114 |
|
Inter-operating segments |
292 |
18 |
36 |
(4) |
50 |
|
(1) At the end of June 2021, Totem's figures are included in France, Spain and International Carriers & Shared Services segments (see Note 1.1). | |||||
|
(2) Other European countries segment includes the contribution of Telekom Romania Communications acquired on September 30, 2021. | |||||
|
(3) Including, at the end of June 2022, revenue of 2,552 million euros in France, 8 million euros in Spain, 838 million euros in other European countries and 491 million euros in other countries. Including, at the end of June 2021, revenue of 2,547 million euros in France, 7 million euros in Spain, 813 million euros in other European countries and 473 million euros in other countries. | |||||
|
(4) Including revenue of 690 million euros at June 30, 2022 and 668 million euros at June 30, 2021 in France. | |||||
|
(5) Including, at the end of June 2022, fixed only broadband revenue of 1,473 million euros and fixed only narrowband revenue of 434 million euros. Including, at the end of June 2021, fixed only broadband revenue of 1,415 million euros and fixed only narrowband revenue of 529 million euros. | |||||
|
(6) Including, at the end of June 2022, revenue of 514 million euros from voice services and revenue of 1,224 million euros from data services. Including, at the end of June 2021, revenue of 569 million euros from voice services and revenue of 1,265 million euros from data services. | |||||
|
Africa & Middle-East |
Enterprise(3) |
Totem(1) |
International Carriers & Shared Services(1)(4) |
Eliminations telecom activities |
Total telecom activities |
Mobile Financial Services |
Eliminations telecom activities / mobile financial services |
Orange consolidated financial statements | |
|
3,381 |
3,888 |
328 |
772 |
(1,220) |
21,301 |
- |
(4) |
21,297 | |
|
- |
- |
- |
- |
- |
3,806 |
- |
- |
3,806 | |
|
2,578 |
325 |
- |
- |
(18) |
5,454 |
- |
(0) |
5,454 | |
|
384 |
1,738(6) |
- |
- |
(75) |
4,568 |
- |
(1) |
4,567 | |
|
21 |
1,663 |
- |
- |
(96) |
1,802 |
- |
(2) |
1,799 | |
|
324 |
20 |
328 |
539 |
(904) |
3,638 |
- |
- |
3,638 | |
|
55 |
141 |
- |
- |
(3) |
1,465 |
- |
(0) |
1,465 | |
|
18 |
- |
- |
234 |
(124) |
568 |
- |
(1) |
567 | |
|
3,298 |
3,692 |
56 |
511 |
- |
21,297 |
- |
- |
21,297 | |
|
83 |
196 |
272 |
261 |
(1,220) |
4 |
- |
(4) |
- | |
|
3,043 |
3,840 |
n/a |
743 |
(869) |
20,870 |
- |
(4) |
20,867 | |
|
- |
- |
n/a |
- |
- |
3,654 |
- |
- |
3,654 | |
|
2,329 |
318 |
n/a |
- |
(14) |
5,189 |
- |
(0) |
5,189 | |
|
318 |
1,834(6) |
n/a |
- |
(84) |
4,533 |
- |
(0) |
4,533 | |
|
13 |
1,565 |
n/a |
- |
(90) |
1,646 |
- |
(2) |
1,644 | |
|
310 |
21 |
n/a |
522 |
(594) |
3,906 |
- |
- |
3,906 | |
|
54 |
101 |
n/a |
- |
(4) |
1,392 |
- |
(0) |
1,391 | |
|
18 |
- |
n/a |
221 |
(84) |
551 |
- |
(1) |
549 | |
|
2,963 |
3,639 |
n/a |
493 |
- |
20,867 |
- |
- |
20,867 | |
|
80 |
201 |
n/a |
250 |
(869) |
4 |
- |
(4) |
- | |
1.3 Segment revenue to consolidated net income as of June 30, 2022
|
(in millions of euros) |
France |
Europe |
Africa & Middle-East | |||
|
Spain |
Other European countries(2) |
Elimina- tions Europe |
Total | |||
|
Revenue |
8,827 |
2,265 |
3,065 |
(5) |
5,325 |
3,381 |
|
External purchases |
(3,537) |
(1,407) |
(1,762) |
5 |
(3,164) |
(1,335) |
|
Other operating income |
618 |
47 |
141 |
(0) |
188 |
21 |
|
Other operating expenses |
(250) |
(77) |
(106) |
0 |
(183) |
(113) |
|
Labor expenses |
(1,775) |
(128) |
(369) |
- |
(497) |
(290) |
|
Operating taxes and levies |
(664) |
(82) |
(59) |
- |
(141) |
(324) |
|
Gains (losses) on disposal of fixed assets, investments and activities |
- |
- |
- |
- |
- |
- |
|
Restructuring costs |
- |
- |
- |
- |
- |
- |
|
Depreciation and amortization of financed assets |
(47) |
- |
- |
- |
- |
- |
|
Depreciation and amortization of right-of-use assets |
(130) |
(86) |
(101) |
- |
(187) |
(95) |
|
Impairment of right-of-use assets |
- |
- |
- |
- |
- |
- |
|
Interests on debts related to financed assets(4) |
(1) |
- |
- |
- |
- |
- |
|
Interests on lease liabilities(4) |
(5) |
(8) |
(10) |
- |
(18) |
(31) |
|
EBITDAaL |
3,035 |
524 |
799 |
- |
1,323 |
1,214 |
|
Significant litigations |
0 |
- |
- |
- |
- |
- |
|
Specific labour expenses |
(39) |
- |
- |
- |
- |
- |
|
Fixed assets, investments and businesses portfolio review |
(0) |
- |
20 |
- |
20 |
2 |
|
Restructuring programs costs |
(13) |
(8) |
(3) |
- |
(11) |
(4) |
|
Acquisition and integration costs |
- |
- |
(13) |
- |
(13) |
- |
|
Depreciation and amortization of fixed assets |
(1,551) |
(543) |
(533) |
- |
(1,076) |
(509) |
|
Reclassification of translation adjustment from liquidated entities |
- |
- |
- |
- |
- |
- |
|
Impairment of goodwill |
- |
- |
- |
- |
- |
- |
|
Impairment of fixed assets |
0 |
- |
(0) |
- |
(0) |
(2) |
|
Share of profits (losses) of associates and joint ventures |
(3) |
- |
(1) |
- |
(1) |
7 |
|
Elimination of interests on debts related to financed assets(4) |
1 |
- |
- |
- |
- |
- |
|
Elimination of interests on lease liabilities(4) |
5 |
8 |
10 |
- |
18 |
31 |
|
Operating Income |
1,436 |
(19) |
278 |
- |
260 |
739 |
|
Cost of gross financial debt except financed assets | ||||||
|
Interests on debts related to financed assets(4) | ||||||
|
Gains (losses) on assets contributing to net financial debt | ||||||
|
Foreign exchange gain (loss) | ||||||
|
Interests on lease liabilities(4) | ||||||
|
Other net financial expenses | ||||||
|
Finance costs, net | ||||||
|
Income Tax | ||||||
|
Consolidated net income | ||||||
|
(1) Since January 1, 2022, Totem's figures are presented in a distinct operating segment (see Note 1.1). | ||||||
|
(2) Other European countries segment includes contribution of Telekom Romania Communications acquired on September 30, 2021. | ||||||
|
(3) Mobile Financial Services' net banking income is recognized in other operating income and amounts to 56 million euros at the end of June 2022. The cost of risk is included in other operating expenses and amounts to (22) million euros at the end of June 2022. | ||||||
|
(4) Presentation adjustments allow the reallocation of the lines of specific items identified in the segment information to the operating revenue and expense lines presented in the consolidated income statement. Interests on debts related to financed assets and interests on lease liabilities are included in segment EBITDAaL. They are excluded from segment operating income and included in net finance costs presented in the consolidated income statement. | ||||||
|
Enterprise |
Totem(1) |
International Carriers & Shared Services |
Elimination telecom activities |
Total telecom activities |
Mobile Financial Services (3) |
Elimina- tions telecom activities / mobile financial services |
Total |
Presenta- tion adjust- ments (4) |
Orange consoli- dated financial statements | |
|
3,888 |
328 |
772 |
(1,220) |
21,301 |
- |
(4) |
21,297 |
- |
21,297 | |
|
(2,041) |
(59) |
(1,019) |
2,172 |
(8,984) |
(64) |
9 |
(9,039) |
(11) |
(9,050) | |
|
90 |
- |
1,020 |
(1,629) |
309 |
65 |
(8) |
366 |
0 |
366 | |
|
(337) |
(0) |
(5) |
677 |
(211) |
(14) |
4 |
(222) |
(9) |
(231) | |
|
(1,109) |
(6) |
(644) |
- |
(4,321) |
(40) |
- |
(4,361) |
33 |
(4,329) | |
|
(48) |
(4) |
(53) |
- |
(1,234) |
(1) |
- |
(1,235) |
0 |
(1,235) | |
|
- |
- |
- |
- |
- |
- |
- |
- |
36 |
36 | |
|
- |
- |
- |
- |
- |
- |
- |
- |
(47) |
(47) | |
|
- |
- |
- |
- |
(47) |
- |
- |
(47) |
- |
(47) | |
|
(75) |
(78) |
(195) |
- |
(761) |
(2) |
- |
(762) |
- |
(762) | |
|
(1) |
- |
- |
- |
(1) |
- |
- |
(1) |
6 |
5 | |
|
- |
- |
- |
- |
(1) |
- |
- |
(1) |
1 |
n/a | |
|
(2) |
(2) |
(3) |
- |
(61) |
(0) |
- |
(61) |
61 |
n/a | |
|
364 |
180 |
(128) |
- |
5,989 |
(56) |
0 |
5,934 |
70 |
n/a | |
|
- |
- |
(2) |
- |
(2) |
- |
- |
(2) |
2 |
n/a | |
|
(4) |
- |
79 |
- |
36 |
(0) |
- |
35 |
(35) |
n/a | |
|
3 |
- |
12 |
- |
36 |
- |
- |
36 |
(36) |
n/a | |
|
(11) |
- |
(2) |
- |
(41) |
- |
- |
(41) |
41 |
n/a | |
|
(0) |
(0) |
(7) |
- |
(21) |
(1) |
- |
(21) |
21 |
n/a | |
|
(205) |
(61) |
(161) |
- |
(3,563) |
(23) |
- |
(3,585) |
- |
(3,585) | |
|
3 |
- |
- |
- |
3 |
- |
- |
3 |
- |
3 | |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
- | |
|
0 |
(0) |
(0) |
- |
(2) |
- |
- |
(2) |
- |
(2) | |
|
0 |
- |
(2) |
- |
1 |
- |
- |
1 |
- |
1 | |
|
- |
- |
- |
- |
1 |
- |
- |
1 |
(1) |
n/a | |
|
2 |
2 |
3 |
- |
61 |
0 |
- |
61 |
(61) |
n/a | |
|
152 |
120 |
(207) |
- |
2,499 |
(80) |
0 |
2,420 |
0 |
2,420 | |
|
(297) | ||||||||||
|
(1) | ||||||||||
|
(9) | ||||||||||
|
(40) | ||||||||||
|
(61) | ||||||||||
|
36 | ||||||||||
|
(373) | ||||||||||
|
(580) | ||||||||||
|
1,467 | ||||||||||
1.4 Segment revenue to consolidated net income as of June 30, 2021
|
(in millions of euros) |
France(1) |
Europe |
Africa & Middle-East | |||
|
Spain(1) |
Other European countries |
Elimina- tions Europe |
Total | |||
|
Revenue |
8,950 |
2,368 |
2,800 |
(4) |
5,164 |
3,043 |
|
External purchases |
(3,440) |
(1,381) |
(1,563) |
4 |
(2,940) |
(1,212) |
|
Other operating income |
633 |
59 |
78 |
(0) |
137 |
26 |
|
Other operating expenses |
(245) |
(84) |
(81) |
0 |
(165) |
(129) |
|
Labor expenses |
(1,867) |
(135) |
(330) |
- |
(465) |
(265) |
|
Operating taxes and levies |
(661) |
(82) |
(52) |
- |
(134) |
(295) |
|
Gains (losses) on disposal of fixed assets, investments and activities |
- |
- |
- |
- |
- |
- |
|
Restructuring costs |
- |
- |
- |
- |
- |
- |
|
Depreciation and amortization of financed assets |
(41) |
- |
- |
- |
- |
- |
|
Depreciation and amortization of right-of-use assets |
(142) |
(127) |
(97) |
- |
(224) |
(83) |
|
Impairment of right-of-use assets |
- |
- |
- |
- |
- |
- |
|
Interests on debts related to financed assets(3) |
(1) |
- |
- |
- |
- |
- |
|
Interests on lease liabilities(3) |
(4) |
(7) |
(8) |
- |
(15) |
(33) |
|
EBITDAaL |
3,181 |
610 |
749 |
- |
1,359 |
1,051 |
|
Significant litigations |
(31) |
- |
- |
- |
- |
- |
|
Specific labour expenses |
(33) |
- |
(0) |
- |
(0) |
- |
|
Fixed assets, investments and businesses portfolio review |
(0) |
- |
(4) |
- |
(4) |
1 |
|
Restructuring programs costs |
(3) |
(145) |
(3) |
- |
(148) |
(32) |
|
Acquisition and integration costs |
(1) |
- |
(5) |
- |
(5) |
- |
|
Depreciation and amortization of fixed assets |
(1,569) |
(542) |
(556) |
- |
(1,098) |
(479) |
|
Reclassification of translation adjustment from liquidated entities |
- |
- |
0 |
- |
0 |
- |
|
Impairment of goodwill |
- |
(3,702) |
- |
- |
(3,702) |
- |
|
Impairment of fixed assets |
(1) |
- |
(2) |
- |
(2) |
0 |
|
Share of profits (losses) of associates and joint ventures |
(0) |
- |
0 |
- |
0 |
5 |
|
Elimination of interests on debts related to financed assets(3) |
1 |
- |
- |
- |
- |
- |
|
Elimination of interests on lease liabilities(3) |
4 |
7 |
8 |
- |
15 |
33 |
|
Operating Income |
1,548 |
(3,773) |
189 |
- |
(3,584) |
579 |
|
Cost of gross financial debt except financed assets | ||||||
|
Interests on debts related to financed assets(3) | ||||||
|
Gains (losses) on assets contributing to net financial debt | ||||||
|
Foreign exchange gain (loss) | ||||||
|
Interests on lease liabilities(3) | ||||||
|
Other net financial expenses | ||||||
|
Finance costs, net | ||||||
|
Income taxes | ||||||
|
Consolidated net income | ||||||
|
(1) At the end of June 2021, Totem's figures are included in France, Spain and International Carriers & Shared Services segments (see Note 1.1). | ||||||
|
(2) Mobile Financial Services' net banking income is recognized in other operating income and amounts to 53 million euros in 2021. The cost of risk is included in other operating expenses and amounts to (14) million euros in 2021. | ||||||
|
(3) Presentation adjustments allow the reallocation of the lines of specific items identified in the segment information to the operating revenue and expense lines presented in the consolidated income statement. Interests on debts related to financed assets and interests on lease liabilities are included in segment EBITDAaL. They are excluded from segment operating income and included in net finance costs presented in the consolidated income statement. | ||||||
|
Enterprise |
Interna- tional Carriers & Shared Services(1) |
Elimination telecom activities |
Total telecom activities |
Mobile Financial Services(2) |
Elimina- tions telecom activities / mobile financial services |
Total |
Presenta- tion adjust- ments(3) |
Orange consoli- dated financial statements | |
|
3,840 |
743 |
(869) |
20,870 |
- |
(4) |
20,867 |
- |
20,867 | |
|
(1,943) |
(992) |
1,846 |
(8,681) |
(56) |
5 |
(8,733) |
(4) |
(8,736) | |
|
83 |
1,021 |
(1,632) |
268 |
56 |
(2) |
322 |
- |
322 | |
|
(312) |
(19) |
655 |
(216) |
(13) |
2 |
(227) |
(68) |
(295) | |
|
(1,068) |
(668) |
- |
(4,333) |
(41) |
- |
(4,373) |
(48) |
(4,421) | |
|
(46) |
(52) |
- |
(1,187) |
(1) |
- |
(1,188) |
(31) |
(1,219) | |
|
- |
- |
- |
- |
- |
- |
- |
12 |
12 | |
|
- |
- |
- |
- |
- |
- |
- |
(245) |
(245) | |
|
- |
- |
- |
(41) |
- |
- |
(41) |
- |
(41) | |
|
(68) |
(212) |
- |
(729) |
(2) |
- |
(731) |
- |
(731) | |
|
- |
- |
- |
- |
- |
- |
- |
(60) |
(60) | |
|
- |
- |
- |
(1) |
- |
- |
(1) |
1 |
n/a | |
|
(3) |
(4) |
- |
(57) |
(0) |
- |
(58) |
58 |
n/a | |
|
484 |
(182) |
- |
5,893 |
(56) |
1 |
5,837 |
(385) |
n/a | |
|
- |
(58) |
- |
(89) |
- |
- |
(89) |
89 |
n/a | |
|
(3) |
(6) |
- |
(42) |
0 |
- |
(41) |
41 |
n/a | |
|
1 |
14 |
- |
12 |
- |
- |
12 |
(12) |
n/a | |
|
(6) |
(114) |
- |
(304) |
(1) |
- |
(305) |
305 |
n/a | |
|
(1) |
(11) |
- |
(17) |
(3) |
- |
(20) |
20 |
n/a | |
|
(183) |
(153) |
- |
(3,482) |
(17) |
- |
(3,499) |
- |
(3,499) | |
|
(0) |
- |
- |
(0) |
- |
- |
(0) |
- |
(0) | |
|
- |
- |
- |
(3,702) |
- |
- |
(3,702) |
- |
(3,702) | |
|
0 |
(2) |
- |
(4) |
- |
- |
(4) |
- |
(4) | |
|
0 |
(4) |
- |
1 |
- |
- |
1 |
- |
1 | |
|
- |
- |
- |
1 |
- |
- |
1 |
(1) |
n/a | |
|
3 |
4 |
- |
57 |
0 |
- |
58 |
(58) |
n/a | |
|
295 |
(514) |
- |
(1,676) |
(77) |
1 |
(1,752) |
0 |
(1,752) | |
|
(461) | |||||||||
|
(1) | |||||||||
|
(5) | |||||||||
|
57 | |||||||||
|
(58) | |||||||||
|
32 | |||||||||
|
(436) | |||||||||
|
(417) | |||||||||
|
(2,605) | |||||||||
1.5 Segment investments
|
(in millions of euros) |
France(1) |
Europe | |||
|
Spain(1) |
Other European countries(2) |
Elimina- tions Europe |
Total | ||
|
June 30, 2022 | |||||
|
eCapex |
1,673 |
465 |
369 |
- |
835 |
|
Elimination of proceeds from sales of property, plant and equipment and intangible assets |
59 |
- |
36 |
- |
36 |
|
Telecommunications licenses |
8 |
6 |
27 |
- |
33 |
|
Financed assets |
69 |
- |
- |
- |
- |
|
Total investments (5) |
1,809 |
472 |
432 |
- |
904 |
|
June 30, 2021 | |||||
|
eCapex |
2,171 |
457 |
413 |
- |
870 |
|
Elimination of proceeds from sales of property, plant and equipment and intangible assets |
19 |
- |
0 |
- |
0 |
|
Telecommunications licenses |
207 |
64 |
11 |
- |
75 |
|
Financed assets |
23 |
- |
- |
- |
- |
|
Total investments (6) |
2,420 |
521 |
424 |
- |
945 |
|
(1) At the end of June 2021, Totem's figures are included in France, Spain and International Carriers & Shared Services segments (see Note 1.1). | |||||
|
(2) Other European countries segment includes contribution of Telekom Romania Communications acquired on September 30, 2021. | |||||
|
(3) Including investments in intangible assets and property, plant and equipment in France for 100 million euros at the end of June 2022 and 104 million euros at the end of June 2021. | |||||
|
(4) Including investments in intangible assets and property, plant and equipment in France for 110 million euros at the end of June 2022 and 124 million euros at the end of June 2021. | |||||
|
(5) Including 991 million euros for other intangible assets and 2,858 million euros for tangible assets. | |||||
|
(6) Including 1,244 million euros for other intangible assets and 2,964 million euros for tangible assets. | |||||
|
Africa & Middle-East |
Enterpri- se(3) |
Totem(1) |
International Carriers & Shared Services(1)(4) |
Eliminations telecom activities and unallocated items |
Total telecom activities |
Mobile Financial Services |
Eliminations telecom activities/ mobile financial services |
Orange consolidated financial statements | |
|
609 |
144 |
44 |
94 |
- |
3,399 |
14 |
- |
3,413 | |
|
3 |
8 |
- |
19 |
- |
124 |
- |
- |
124 | |
|
203 |
- |
- |
- |
- |
244 |
- |
- |
244 | |
|
- |
- |
- |
- |
- |
69 |
- |
- |
69 | |
|
815 |
151 |
44 |
113 |
- |
3,836 |
14 |
- |
3,850 | |
|
525 |
157 |
n/a |
110 |
- |
3,832 |
13 |
- |
3,845 | |
|
6 |
4 |
n/a |
19 |
0 |
48 |
- |
- |
48 | |
|
11 |
- |
n/a |
- |
- |
293 |
- |
- |
293 | |
|
- |
- |
n/a |
- |
- |
23 |
- |
- |
23 | |
|
541 |
161 |
n/a |
130 |
- |
4,196 |
13 |
- |
4,208 | |
1.6 Segment assets
|
(in millions of euros) |
France(1) |
Europe | |||
|
Spain(1) |
Other European countries |
Elimina- tions Europe |
Total | ||
|
June 30, 2022 | |||||
|
Goodwill |
13,176 |
2,734 |
2,928 |
- |
5,662 |
|
Other intangible assets |
4,424 |
2,107 |
1,658 |
- |
3,765 |
|
Property, plant and equipment |
16,435 |
3,684 |
3,825 |
0 |
7,509 |
|
Right-of-use assets |
1,837 |
996 |
1,057 |
- |
2,054 |
|
Interests in associates and joint ventures |
1,073 |
- |
317 |
- |
317 |
|
Non-current assets included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
8 |
12 |
51 |
- |
64 |
|
Total non-current assets |
36,953 |
9,534 |
9,837 |
- |
19,371 |
|
Inventories |
440 |
59 |
176 |
- |
235 |
|
Trade receivables |
1,969 |
612 |
1,122 |
2 |
1,736 |
|
Other customer contract assets |
350 |
169 |
408 |
- |
577 |
|
Prepaid expenses |
43 |
430 |
96 |
- |
526 |
|
Current assets included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
709 |
92 |
165 |
- |
257 |
|
Total current assets |
3,511 |
1,363 |
1,966 |
2 |
3,331 |
|
Total assets |
40,464 |
10,896 |
11,803 |
2 |
22,702 |
|
December 31, 2021 | |||||
|
Goodwill |
14,364 |
3,170 |
2,910 |
- |
6,079 |
|
Other intangible assets |
4,543 |
2,259 |
1,727 |
- |
3,985 |
|
Property, plant and equipment |
16,975 |
3,834 |
3,967 |
- |
7,801 |
|
Right-of-use assets |
2,014 |
1,093 |
1,104 |
- |
2,197 |
|
Interests in associates and joint ventures |
1,061 |
- |
303 |
- |
303 |
|
Non-current assets included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
9 |
16 |
15 |
- |
31 |
|
Total non-current assets |
38,966 |
10,372 |
10,025 |
- |
20,396 |
|
Inventories |
438 |
61 |
176 |
- |
237 |
|
Trade receivables |
2,125 |
643 |
1,147 |
1 |
1,791 |
|
Other customer contract assets |
379 |
176 |
407 |
- |
583 |
|
Prepaid expenses |
35 |
417 |
69 |
- |
486 |
|
Current assets included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
737 |
72 |
183 |
- |
255 |
|
Total current assets |
3,713 |
1,368 |
1,982 |
1 |
3,351 |
|
Total assets |
42,679 |
11,740 |
12,007 |
1 |
23,747 |
|
(1) At the end of June 2021, Totem's figures are included in France, Spain and International Carriers & Shared Services segments (see Note 1.1). | |||||
|
(2) Including intangible and tangible assets for 537 million euros in France in 2022 and 564 million euros in 2021. | |||||
|
(3) Including intangible and tangible assets for 1,614 million euros in France in 2022 and 1,687 million euros in 2021. Intangible assets also include the Orange brand for 3,133 million euros. | |||||
|
Africa & Middle-East |
Enterprise |
Totem(1) |
International Carriers & Shared Services(1) |
Eliminations telecom activities and unallocated items |
Total telecom activities |
Mobile Financial Services |
Eliminations telecom activities / mobile financial services |
Orange consolidated financial statements | |
|
1,473 |
2,230 |
1,624 |
18 |
- |
24,182 |
28 |
- |
24,211 | |
|
2,049 |
596(2) |
4 |
3,730(3) |
- |
14,568 |
76 |
- |
14,644 | |
|
4,310 |
423(2) |
925 |
1,051(3) |
- |
30,654 |
9 |
- |
30,663 | |
|
905 |
451 |
676 |
2,244 |
- |
8,166 |
20 |
- |
8,186 | |
|
78 |
2 |
- |
13 |
0 |
1,484 |
- |
- |
1,484 | |
|
- |
- |
- |
- |
1,584 |
1,584 |
- |
- |
1,584 | |
|
32 |
62 |
4 |
40 |
1,537 |
1,747 |
831 (4) |
(27) |
2,550 | |
|
8,847 |
3,764 |
3,234 |
7,096 |
3,121 |
82,385 |
963 |
(27) |
83,321 | |
|
105 |
101 |
- |
112 |
0 |
994 |
0 |
- |
994 | |
|
901 |
1,131 |
165 |
1,133 |
(1,059) |
5,978 |
87 |
(100) |
5,965 | |
|
14 |
498 |
- |
- |
- |
1,438 |
- |
- |
1,438 | |
|
321 |
84 |
16 |
73 |
(26) |
1,037 |
22 |
(0) |
1,059 | |
|
- |
- |
- |
- |
10,835 |
10,835 |
- |
- |
10,835 | |
|
1,590 |
224 |
3 |
518 |
(19) |
3,282 |
2,976 (5) |
(28) |
6,231 | |
|
2,931 |
2,038 |
184 |
1,836 |
9,732 |
23,563 |
3,086 |
(128) |
26,521 | |
|
11,777 |
5,802 |
3,418 |
8,932 |
12,853 |
105,949 |
4,049 |
(155) |
109,843 | |
|
1,465 |
2,237 |
n/a |
18 |
- |
24,163 |
28 |
- |
24,192 | |
|
1,974 |
622(2) |
n/a |
3,728(3) |
- |
14,852 |
88 |
- |
14,940 | |
|
4,113 |
466(2) |
n/a |
1,125(3) |
(0) |
30,479 |
5 |
- |
30,484 | |
|
918 |
478 |
n/a |
2,074 |
- |
7,681 |
21 |
- |
7,702 | |
|
67 |
2 |
n/a |
6 |
(0) |
1,440 |
- |
- |
1,440 | |
|
- |
- |
n/a |
- |
709 |
709 |
- |
- |
709 | |
|
32 |
43 |
n/a |
39 |
1,725 |
1,878 |
919 (4) |
(27) |
2,769 | |
|
8,569 |
3,848 |
n/a |
6,990 |
2,433 |
81,202 |
1,062 |
(27) |
82,236 | |
|
93 |
70 |
n/a |
114 |
(0) |
951 |
0 |
- |
952 | |
|
833 |
1,162 |
n/a |
904 |
(774) |
6,040 |
91 |
(103) |
6,029 | |
|
13 |
485 |
n/a |
- |
- |
1,460 |
- |
- |
1,460 | |
|
200 |
95 |
n/a |
53 |
(30) |
839 |
14 |
(1) |
851 | |
|
- |
- |
n/a |
- |
10,462 |
10,462 |
- |
- |
10,462 | |
|
1,484 |
214 |
n/a |
389 |
163 |
3,241 |
2,848 (5) |
(9) |
6,080 | |
|
2,623 |
2,026 |
n/a |
1,460 |
9,821 |
22,994 |
2,953 |
(113) |
25,834 | |
|
11,192 |
5,873 |
n/a |
8,450 |
12,255 |
104,196 |
4,015 |
(140) |
108,071 | |
|
(4) Including 725 million euros of non-current financial assets related to Mobile Financial Services in 2022 and 900 million euros in 2021 (see Note 12.1). | |||||||||
|
(5) Including 2,552 million euros of current financial assets related to Mobile Financial Services in 2022 (of which 524 million euros related to trade receivables sold by Orange Spain) and 2,385 million euros in 2021 (of which 433 million euros related to trade receivables sold by Orange Spain) - (see Note 12.1). | |||||||||
1.7 Segment equity and liabilities
|
(in millions of euros) |
France(1) |
Europe | |||
|
Spain(1) |
Other European countries |
Elimina- tions Europe |
Total | ||
|
June 30, 2022 | |||||
|
Equity |
- |
- |
- |
- |
- |
|
Non-current lease liabilities |
1,608 |
930 |
899 |
- |
1,829 |
|
Non-current fixed assets payables |
644 |
435 |
163 |
- |
598 |
|
Non-current employee benefits |
1,433 |
4 |
21 |
- |
25 |
|
Non-current liabilities included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
401 |
7 |
268 |
- |
275 |
|
Total non-current liabilities |
4,085 |
1,376 |
1,351 |
- |
2,727 |
|
Current lease liabilities |
223 |
177 |
196 |
- |
373 |
|
Current fixed assets payables |
1,360 |
490 |
310 |
- |
800 |
|
Trade payables |
2,811 |
811 |
931 |
2 |
1,745 |
|
Customer contracts liabilities |
956 |
231 |
506 |
- |
737 |
|
Current employee benefits |
1,183 |
40 |
116 |
- |
156 |
|
Deferred income |
- |
75 |
20 |
- |
95 |
|
Current liabilities included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
1,123 |
167 |
473 |
- |
640 |
|
Total current liabilities |
7,656 |
1,991 |
2,551 |
2 |
4,545 |
|
Total equity and liabilities |
11,742 |
3,367 |
3,902 |
2 |
7,272 |
|
December 31, 2021 | |||||
|
Equity |
- |
- |
- |
- |
- |
|
Non-current lease liabilities |
1,668 |
1,015 |
941 |
- |
1,956 |
|
Non-current fixed assets payables |
639 |
462 |
165 |
- |
627 |
|
Non-current employee benefits |
1,643 |
5 |
21 |
- |
26 |
|
Non-current liabilities included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
578 |
57 |
327 |
- |
385 |
|
Total non-current liabilities |
4,528 |
1,539 |
1,454 |
- |
2,993 |
|
Current lease liabilities |
312 |
193 |
198 |
- |
391 |
|
Current fixed assets payables |
1,402 |
551 |
450 |
- |
1,001 |
|
Trade payables |
2,804 |
782 |
992 |
1 |
1,774 |
|
Customer contracts liabilities |
942 |
182 |
518 |
- |
700 |
|
Current employee benefits |
1,210 |
43 |
111 |
- |
154 |
|
Deferred income |
- |
84 |
20 |
- |
104 |
|
Current liabilities included in the calculation of net financial debt |
- |
- |
- |
- |
- |
|
Other |
795 |
218 |
266 |
- |
485 |
|
Total current liabilities |
7,465 |
2,053 |
2,555 |
1 |
4,609 |
|
Total equity and liabilities |
11,993 |
3,592 |
4,009 |
1 |
7,602 |
|
(1) At the end of June 2021, Totem's figures are included in France, Spain and International Carriers & Shared Services segments (see Note 1.1). | |||||
|
(2) Including non-current financial liabilities of 28 million euros in 2022 and 86 million euros in 2021. | |||||
|
(3) Including in 2022, 3,199 million euros of current financial liabilities related to Mobile Financial Services activities and, in 2021 3,161 million euros (see Note 12.1). | |||||
|
Africa & Middle-East |
Enterprise |
Totem(1) |
International Carriers & Shared Services(1) |
Eliminations telecom activities and unallocated items |
Total telecom activities |
Mobile Financial Services |
Eliminations telecom activities / mobile financial services |
Orange consolidated financial statements | |
|
- |
- |
- |
- |
36,327 |
36,327 |
(519) |
- |
35,807 | |
|
846 |
335 |
499 |
1,983 |
- |
7,101 |
26 |
- |
7,126 | |
|
161 |
- |
- |
- |
- |
1,402 |
- |
- |
1,402 | |
|
84 |
257 |
2 |
626 |
(0) |
2,427 |
11 |
- |
2,438 | |
|
- |
- |
- |
- |
33,351 |
33,351 |
- |
- |
33,351 | |
|
75 |
20 |
136 |
43 |
1,301 |
2,250 |
102(2) |
(27) |
2,325 | |
|
1,166 |
612 |
637 |
2,653 |
34,652 |
46,531 |
139 |
(27) |
46,643 | |
|
135 |
125 |
143 |
447 |
- |
1,445 |
4 |
- |
1,449 | |
|
571 |
45 |
6 |
103 |
(0) |
2,885 |
4 |
- |
2,888 | |
|
1,371 |
796 |
152 |
985 |
(1,059) |
6,801 |
194 |
(100) |
6,895 | |
|
123 |
573 |
10 |
180 |
(24) |
2,554 |
- |
(0) |
2,554 | |
|
101 |
447 |
3 |
387 |
0 |
2,276 |
27 |
- |
2,303 | |
|
36 |
33 |
- |
8 |
(1) |
171 |
4 |
- |
174 | |
|
- |
- |
- |
- |
3,193 |
3,193 |
- |
(4) |
3,189 | |
|
1,989 |
259 |
19 |
561 |
(823) |
3,768 |
4,197(3) |
(24) |
7,941 | |
|
4,326 |
2,278 |
332 |
2,670 |
1,285 |
23,091 |
4,429 |
(128) |
27,393 | |
|
5,491 |
2,890 |
969 |
5,323 |
72,263 |
105,949 |
4,049 |
(155) |
109,843 | |
|
- |
- |
n/a |
- |
35,806 |
35,806 |
(445) |
- |
35,361 | |
|
805 |
378 |
n/a |
1,863 |
- |
6,669 |
27 |
- |
6,696 | |
|
104 |
- |
n/a |
- |
- |
1,370 |
- |
- |
1,370 | |
|
80 |
277 |
n/a |
760 |
(0) |
2,787 |
11 |
- |
2,798 | |
|
- |
- |
n/a |
- |
32,083 |
32,083 |
- |
- |
32,083 | |
|
74 |
20 |
n/a |
52 |
1,312 |
2,421 |
93(2) |
(27) |
2,487 | |
|
1,063 |
676 |
n/a |
2,675 |
33,395 |
45,330 |
131 |
(27) |
45,434 | |
|
181 |
106 |
n/a |
375 |
- |
1,364 |
4 |
- |
1,369 | |
|
543 |
58 |
n/a |
107 |
(0) |
3,110 |
1 |
- |
3,111 | |
|
1,139 |
771 |
n/a |
969 |
(774) |
6,684 |
157 |
(103) |
6,738 | |
|
130 |
599 |
n/a |
170 |
(28) |
2,513 |
- |
(1) |
2,512 | |
|
82 |
446 |
n/a |
395 |
(0) |
2,289 |
27 |
- |
2,316 | |
|
31 |
35 |
n/a |
9 |
(2) |
176 |
3 |
(0) |
180 | |
|
- |
- |
n/a |
- |
3,549 |
3,549 |
- |
(4) |
3,545 | |
|
1,833 |
278 |
n/a |
570 |
(587) |
3,374 |
4,136(3) |
(5) |
7,505 | |
|
3,939 |
2,294 |
n/a |
2,595 |
2,158 |
23,060 |
4,329 |
(113) |
27,276 | |
|
5,002 |
2,970 |
n/a |
5,270 |
71,360 |
104,196 |
4,015 |
(140) |
108,071 | |
1.8 Simplified statement of cash flows on telecommunication and mobile financial services activities
|
(in millions of euros) |
June 30, 2022 | |||
|
Telecom activities |
Mobile Financial Services |
Eliminations telecom activities / mobile financial services |
Orange consoli- dated financial statement | |
|
Operating activities | ||||
|
Consolidated net income |
1,546 |
(80) |
(0) |
1,467 |
|
Non-monetary items and reclassified items for presentation |
6,249 |
(35) |
0 |
6,215 |
|
Changes in working capital and operating banking activities | ||||
|
Decrease (increase) in inventories, gross |
(41) |
0 |
- |
(40) |
|
Decrease (increase) in trade receivables, gross |
98 |
4 |
(3) |
99 |
|
Increase (decrease) in trade payables |
50 |
37 |
3 |
90 |
|
Changes in other customer contract assets and liabilities |
75 |
- |
1 |
75 |
|
Changes in other assets and liabilities |
(146) |
(83) |
- |
(229) |
|
Other net cash out | ||||
|
Operating taxes and levies paid |
(962) |
4 |
- |
(958) |
|
Dividends received |
2 |
- |
- |
2 |
|
Interest paid and interest rates effects on derivatives, net |
(504)(1) |
0 |
(0) |
(504) |
|
Income taxes paid |
(580) |
(1) |
- |
(581) |
|
Net cash provided by operating activities (a) |
5,789(2) |
(153) |
- |
5,636 |
|
Investing activities | ||||
|
Purchases (sales) of property, plant and equipment and intangible assets(3) |
(3,880) |
(11) |
- |
(3,892) |
|
Purchases of property, plant and equipment and intangible assets(4) |
(3,767) |
(14) |
- |
(3,781) |
|
Increase (decrease) in fixed assets payables |
(239) |
3 |
- |
(237) |
|
Investing donations received in advance |
- |
- |
- |
- |
|
Sales of property, plant and equipment and intangible assets |
126 |
- |
- |
126 |
|
Cash paid for investment securities, net of cash acquired |
(12) |
- |
- |
(12) |
|
Investments in associates and joint ventures |
(8) |
- |
- |
(8) |
|
Purchases of investment securities measured at fair value |
(17) |
- |
- |
(17) |
|
Sales of investment securities, net of cash transferred |
0 |
- |
- |
0 |
|
Sales of investment securities at fair value |
2 |
- |
- |
2 |
|
Decrease (increase) in securities and other financial assets |
(707) |
114 |
(0) |
(593) |
|
Net cash used in investing activities (b) |
(4,622) |
103 |
(0) |
(4,519) |
|
Financing activities | ||||
|
Cash flows from financing activities | ||||
|
Medium and long-term debt issuances |
985 |
0 |
(0) |
985 |
|
Medium and long-term debt redemptions and repayments(5) |
(331) |
- |
- |
(331) |
|
Increase (decrease) of bank overdrafts and short-term borrowings |
(892) |
8 |
0 |
(884) |
|
Decrease (increase) of cash collateral deposits |
922 |
(23) |
- |
899 |
|
Exchange rates effects on derivatives, net |
(103) |
- |
- |
(103) |
|
Other cash flows | ||||
|
Lease liabilities repayments |
(734) |
(2) |
- |
(737) |
|
Subordinated notes issuances (purchases) and other related fees |
- |
- |
- |
- |
|
Coupon on subordinated notes |
(121) |
- |
- |
(121) |
|
Sales (purchases) of treasury shares |
20 |
- |
- |
20 |
|
Capital increase (decrease) - non-controlling interests |
0 |
0 |
- |
0 |
|
Capital increase (decrease) - Telecom activities / Mobile Financial Services |
(23) |
23 |
- |
- |
|
Changes in ownership interests with no gain / loss of control |
1 |
- |
- |
1 |
|
Dividends paid to owners of the parent company |
(1,063) |
- |
- |
(1,063) |
|
Dividends paid to non-controlling interests |
(177) |
- |
- |
(177) |
|
Net cash used in financing activities (c) |
(1,517) |
6 |
0 |
(1,510) |
|
(in millions of euros) |
June 30, 2022 | |||
|
Telecom activities |
Mobile Financial Services |
Eliminations telecom activities / mobile financial services |
Orange consoli- dated financial statement | |
|
Cash and cash equivalents in the opening balance |
8,188 |
433 |
- |
8,621 |
|
Cash change in cash and cash equivalents (a) + (b) + (c) |
(349) |
(45) |
- |
(394) |
|
Effect of exchange rates changes on cash and cash equivalents and other non-monetary effects |
32 |
- |
- |
32 |
|
Cash and cash equivalents in the closing balance |
7,871 |
388 |
- |
8,259 |
|
(in millions of euros) |
June 30, 2021 | |||
|
Telecom activities |
Mobile Financial Services |
Eliminations telecom activities / mobile financial services |
Orange consoli- dated financial statement | |
|
Operating activities | ||||
|
Consolidated net income |
(2,528) |
(77) |
(0) |
(2,605) |
|
Non-monetary items and reclassified items for presentation |
9,795 |
22 |
1 |
9,817 |
|
Changes in working capital and operating banking activities | ||||
|
Decrease (increase) in inventories, gross |
9 |
(0) |
- |
9 |
|
Decrease (increase) in trade receivables, gross |
118 |
(13) |
30 |
136 |
|
Increase (decrease) in trade payables |
41 |
11 |
(30) |
22 |
|
Changes in other customer contract assets and liabilities |
163 |
- |
0 |
164 |
|
Changes in other assets and liabilities |
50 |
(103) |
- |
(54) |
|
Other net cash out | ||||
|
Operating taxes and levies paid |
(983) |
(2) |
- |
(985) |
|
Dividends received |
7 |
- |
- |
7 |
|
Interest paid and interest rates effects on derivatives, net |
(649)(1) |
(2) |
(1) |
(651) |
|
Income taxes paid |
(500) |
(0) |
- |
(500) |
|
Net cash provided by operating activities (a) |
5,523(2) |
(164) |
- |
5,360 |
|
Investing activities | ||||
|
Purchases (sales) of property, plant and equipment and intangible assets(3) |
(4,245) |
(13) |
- |
(4,258) |
|
Purchases of property, plant and equipment and intangible assets(4) |
(4,173) |
(13) |
- |
(4,186) |
|
Increase (decrease) in fixed assets payables |
(227) |
- |
- |
(227) |
|
Investing donations received in advance |
20 |
- |
- |
20 |
|
Sales of property, plant and equipment and intangible assets |
135 |
- |
- |
135 |
|
Cash paid for investment securities, net of cash acquired |
0 |
(0) |
(0) |
0 |
|
Investments in associates and joint ventures |
(2) |
- |
- |
(2) |
|
Purchases of investment securities measured at fair value |
(41) |
(1) |
- |
(42) |
|
Sales of investment securities, net of cash transferred |
0 |
- |
- |
0 |
|
Sales of investment securities at fair value |
90 |
(0) |
0 |
90 |
|
Decrease (increase) in securities and other financial assets |
881 |
68 |
5 |
954 |
|
Net cash used in investing activities (b) |
(3,317) |
54 |
5 |
(3,258) |
|
Financing activities | ||||
|
Cash flows from financing activities | ||||
|
Medium and long-term debt issuances |
1,526 |
- |
- |
1,526 |
|
Medium and long-term debt redemptions and repayments(5) |
(3,072) |
- |
- |
(3,072) |
|
Increase (decrease) of bank overdrafts and short-term borrowings |
626 |
34 |
(5) |
655 |
|
Decrease (increase) of cash collateral deposits |
568 |
7 |
- |
574 |
|
Exchange rates effects on derivatives, net |
50 |
- |
- |
50 |
|
Other cash flows | ||||
|
Lease liabilities repayments |
(880) |
(2) |
- |
(882) |
|
Subordinated notes issuances (purchases) and other related fees |
(311) |
- |
- |
(311) |
|
Coupon on subordinated notes |
(163) |
- |
- |
(163) |
|
Sales (purchases) of treasury shares |
(3) |
- |
- |
(3) |
|
Capital increase (decrease) - non-controlling interests |
0 |
3 |
- |
3 |
|
Capital increase (decrease) - Telecom activities / Mobile Financial Services(6) |
(81) |
81 |
- |
- |
|
Changes in ownership interests with no gain / loss of control |
(333) |
- |
- |
(333) |
|
Dividends paid to owners of the parent company |
(1,330) |
- |
- |
(1,330) |
|
Dividends paid to non-controlling interests |
(190) |
- |
- |
(190) |
|
Net cash used in financing activities (c) |
(3,594) |
122 |
(5) |
(3,477) |
|
(in millions of euros) |
June 30, 2021 | |||
|
Telecom activities |
Mobile Financial Services |
Eliminations telecom activities / mobile financial services |
Orange consoli- dated financial statement | |
|
Cash and cash equivalents in the opening balance |
7,891 |
254 |
- |
8,145 |
|
Cash change in cash and cash equivalents (a) + (b) + (c) |
(1,386) |
12 |
- |
(1,375) |
|
Effect of exchange rates changes on cash and cash equivalents and other non-monetary effects |
19 |
2 |
- |
21 |
|
Cash and cash equivalents in the closing balance |
6,523 |
268 |
- |
6,791 |
|
(1) Including (60) million euros as of June 30, 2022 and (59) million euros as of June 30, 2021 of interests paid on lease liabilities. | ||||
|
(2) Including significant litigations (paid) and received for (13) million euros as of June 30, 2022 and (354) million euros as of June 30, 2021. | ||||
|
(3) Including telecommunication licenses paid for (302) million euros as of June 30, 2022 and (129) million euros as of June 30, 2021. | ||||
|
(4) Investments in financed assets amounting to 69 million euros as of June 30, 2022 and 23 million euros as of June 30, 2021 have no effect on the statement of cash flows at the time of acquisition. | ||||
|
(5) Including repayments of debts relating to financed assets for (44) million euros as of June 30, 2022 and (41) million euros as of June 30, 2021. | ||||
|
(6) Including Orange Bank's share capital invested by Orange for 70 million euros as of June 30, 2021. | ||||
The table below shows the reconciliation between net cash provided by operating activities (telecom activities), as shown in the simplified statement of cash flows, and organic cash flow from telecom activities.
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 |
|
Net cash provided by operating activities (telecom activities) |
5,789 |
5,523 |
|
Purchases (sales) of property, plant and equipment and intangible assets |
(3,880) |
(4,245) |
|
Repayments of lease liabilities |
(734) |
(880) |
|
Repayments of debts relating to financed assets |
(44) |
(41) |
|
Elimination of telecommunication licenses paid |
302 |
129 |
|
Elimination of significant litigation paid / (received) |
13 |
354 |
|
Organic cash flow from telecom activities |
1,445 |
840 |
Note 2 Basis of preparation of the consolidated financial statements
This note describes the changes in accounting policies since the publication of the 2021 consolidated financial statements and applied by Orange ("the Group") in the preparation of its interim financial statements for the half-year ended June 30, 2022.
2.1 Basis of preparation of the financial statements
The condensed consolidated financial statements and notes for the first half of 2022 were prepared under the responsibility of the Board of Directors on July 27, 2022.
In accordance with European Regulation no. 1606/2002 dated July 19, 2002, the interim financial statements were prepared in accordance with IAS 34 "Interim Financial Reporting", as endorsed by the European Union (EU) and published by the IASB.
The interim financial statements were prepared using the same accounting policies as the financial statements for the year ended December 31, 2021, apart from the specific requirements of IAS 34 and effects of new standards as described in Note 2.4.
The Group’s consolidated financial statements are presented in millions of euros, rounded to the nearest million. This may in certain circumstances lead to non-material differences between the sum of the figures and the subtotals that appear in the tables.
For the reported periods, the accounting standards and interpretations endorsed by the EU are similar to the compulsory standards and interpretations published by the IASB (International Accounting Standards Board), with the exception of standards and interpretations currently being endorsed, a study of the impacts and practical consequences of applying these amendments is under way. Consequently, the Group's financial statements are prepared in accordance with IFRS standards and interpretations, as published by the IASB.
In the absence of any accounting standard or interpretation, applicable to a specific transaction or event, the Group's management uses its judgment to define and apply an accounting policy that will result in relevant and reliable information, such that the financial statements:
− fairly present the Group’s financial position, financial performance and cash flows;
− reflect the economic substance of transactions;
− are neutral;
− are prepared on a prudent basis; and
− are complete in all material respects.
2.2 Use of estimates and judgement
Orange’s management uses its judgment to define the appropriate accounting treatment of certain transactions and makes estimates insofar as many items included in the financial statements cannot be measured with precision or current accounting standards and interpretations do not specifically deal with the related accounting issues. Management revises these estimates if the underlying circumstances evolve or if there is new information or additional experience.
2.3 War in Ukraine
Judgment and estimates made by the Group also include special events. In the context of the war in Ukraine, the Group paid particular attention to:
− Any impacts on impairment tests, whether on the evolution of market data (discount rate, change in inflation) or the possible impact on the cash flows used;
− Consequences of changes in market data on the valuation of certain Group assets and liabilities;
− Price volatility or the risk of supply difficulties, particularly of electricity, in certain countries.
Provided that the conflict does not evolve into other geographical areas, and given that the Group has a limited presence in Ukraine as well as Russia and Belarus, the direct impacts on the Group's accounts remain limited.
2.4 New standards and interpretations applied from January 1, 2021
2.4.1 Decision of the IFRS IC concerning IAS 19 "Employee benefits" on the calculation of obligations relating to certain defined benefits pension plan
The IFRS Interpretations Committee (IC) was asked to comment on the calculation of defined benefit pension plans for which the granting of rights is conditional on the employee's presence in the Group at the time of retirement (with loss of all rights in the event of early retirement) and for which the rights depend on seniority, while being capped at a certain number of years of service. For plans reviewed by the IFRS IC, the cap may be reached at a date prior to retirement.
In France, the interpretation of IAS 19 had led to the practice of measuring and recognizing the commitment on a straight-line basis over the employee's career with the Group. The commitment calculated in this way corresponds to the pro rata rights acquired by the employee at the time of retirement.
The decision of the IFRS IC, published on May 24, 2021, concludes, in this case, that no rights are acquired in the event of departure before retirement age and that the rights are capped after a certain number of years of seniority ("X"), and the commitment would only be recognized for the last X years of the employee's career within the company.
This decision had been implemented by the Group at December 31, 2021 for plans falling within the scope of the Interpretation Committee's decision. The effect of this implementation was mainly limited to retirement benefit plans in France. Due to the publication date of this decision, the Group did not disclose the effects of this decision in the consolidated interim financial statements for the first half of 2021.
As the application of this decision constitutes a change in accounting policy, the effects of the implementation had been calculated retrospectively and had affected the opening equity. The effect of the implementation of this decision on the income statement was not material for the periods presented.
− Effects on the consolidated statement of financial position:
|
(in millions of euros) |
June 30, 2021 |
Effects of IFRS IC decision |
June 30, 2021 restated |
|
Assets | |||
|
Deferred tax assets |
739 |
(54) |
685 |
|
Total non-current assets |
79,234 |
(54) |
79,180 |
|
Total assets |
102,867 |
(54) |
102,812 |
|
Liabilities | |||
|
Equity attributable to owners of the parent company |
29,902 |
156 |
30,057 |
|
o/w reserves |
(2,601) |
114 |
(2,487) |
|
o/w other comprehensive income |
(494) |
42 |
(452) |
|
o/w deferred tax |
138 |
(15) |
123 |
|
o/w actuarial gains and losses |
(574) |
57 |
(517) |
|
Equity attributable to non-controlling interests |
2,469 |
- |
2,469 |
|
Total Equity |
32,370 |
156 |
32,527 |
|
Non-current employee benefits |
1,926 |
(211) |
1,715 |
|
Total non-current liabilities |
43,930 |
(211) |
43,720 |
|
Total equity and liabilities |
102,867 |
(54) |
102,812 |
2.5 New standards and interpretations applied from January 1, 2022
Only amendments to standards that may be applicable to the Group and for which the effective application date is January 1, 2022 are presented below.
2.5.1 Amendment to IAS 16: Proceeds before intended use
The amendment clarifies that an entity is not permitted to recognize any revenue from the sale of items produced as a deduction from the cost of the fixed asset while preparing the asset for its intended use. The proceeds from selling such items are recognized in profit or loss. This amendment does not have any significant effect on the Group's financial statements. The amendment is applied by the Group since January 1, 2022.
2.5.2 Amendment to IAS 37: Onerous contracts - cost of fulfilling a contract
The clarifications provided by the amendment concern the incremental costs of fulfilling an onerous contract to be taken into account in the provision, namely the costs of direct labor and materials and the allocation of other costs directly related to the contract, for example the depreciation expense relating to a fixed asset used in fulfilling the contract. The amendment is applied by the Group since January 1, 2022 and no significant effect has been identified.
Note 3 Gains and losses on disposal and main changes in scope of consolidation
3.1 Gains (losses) on disposal of fixed assets, investments and activities
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 |
|
Gains (losses) on disposal of fixed assets(1) |
41 |
15 |
|
Gains (losses) on disposal of investments and activities |
(5) |
(3) |
|
Gain (losses) on disposal of fixed assets, investments and activities |
36 |
12 |
(1) Including in 2022, 124 million euros of transfer price and (83) million euros of net book value of assets sold. Including in 2021, 48 million euros of transfer price and (33) million euros of net book value of assets sold.
3.2 Main changes in scope of consolidation and ongoing transactions
Main changes in the scope of consolidation
Work on the purchase price allocation of Telekom Romania Communications
On September 30, 2021, Orange Romania completed the acquisition of a 54% majority stake in Telekom Romania Communications and of a MVNO (Mobile Virtual Network Operator) contract previously concluded between Telekom Romania Communications and Telekom Romania Mobile, for an amount of 296 million euros.
In accordance with IFRS 3 - Business Combinations, the Group has one year from the acquisition date to assess the fair value of acquired identifiable assets and assumed liabilities. This work is currently being finalized and the impact will be accounted for in the second half of 2022.
Following the acquisition of Telekom Romania Communications, the entity has been renamed Orange Romania Communications.
Ongoing transactions as of June 30, 2022
Signing of an agreement between Orange and MásMóvil to combine their activities in Spain
Following the period of exclusive negotiations initiated on March 8, 2022, Orange and MásMóvil have signed a binding agreement on July 23 to combine their activities in Spain (excluding Totem Spain and MásMóvil Portugal). This combination will take the form of a 50-50 joint venture, co-controlled by Orange and MásMóvil.
Upon completion of the transaction, the joint venture would be consolidated in the Orange Group’s accounts using the equity method (due to the loss of Orange’s exclusive control over the concerned activities).
The agreement includes a right to trigger an IPO (Initial Public Offering) under certain conditions for both parties after a defined period and, in such a scenario, with an option for Orange to take control of the combined entity. Orange will neither be forced to sell its stake nor exercise its option.
The transaction is subject to approval from the competent administrative, regulatory and competition authorities and to the related and/or contractual conditions precedent.
Given the progress of the transaction and the need to obtain the green light from the competent administrative, regulatory and competition authorities, the Group considers that the criteria of IFRS 5 relating to discontinued operations have not been met as of June 30, 2022.
I2PO and Deezer have reached a definitive agreement for a business combination and publicly list the global music streaming platform
On April 19, 2022, I2PO (a SPAC - Special Purpose Acquisition Company), listed on the stock exchange since July 2021, and Deezer (a global music and audio streaming platform) in which the Orange Group holds a 10.42% stake, announced that they had entered into a definitive agreement for a business combination.
The effective completion of the merger took place on July 4, 2022. The effects of the transaction will therefore be recognized in the Orange Group's accounts in the second half of 2022.
The merged entity, renamed Deezer, is listed on the professional segment of the regulated market of Euronext Paris. Before the IPO the transaction valued the Deezer shares at 1.05 billion euros.
Prior to the transaction, the Group held a 10.42% stake in Deezer and exercised significant influence over the entity through its presence on the Board of Directors.
On July 4, 2022, Deezer's shareholders brought their shares to the SPAC in exchange for newly issued shares of the latter and at the same time a capital increase was carried out.
Following these transactions, Orange will hold 8.13% of the new entity and no longer exercises significant influence. In accordance with IAS 28 and IFRS 9 standards, the transaction will result in the full disposal of the equity-accounted shares of Deezer and the acquisition at fair value of 9,561,723 shares of the new entity.
The Deezer shares had been fully impaired in the Group's accounts and the fair value of the I2PO shares was determined on the basis of the price proposed for the initial public offering on July 5, 2022, i.e. 8.50 euros per share.
The contribution will therefore lead the Orange Group to recognize a gain on disposal in the income statement of approximately 76 million euros in the second half of 2022. The shares of the new entity will be recognized in the balance sheet as securities at fair value through equity.
Note 4 Trade receivables
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 |
|
Net book value of trade receivables - in the opening balance |
6,029 |
5,620 |
|
Business related variations |
(59) |
(53) |
|
Changes in the scope of consolidation |
- |
389 |
|
Translation adjustment |
(8) |
36 |
|
Reclassifications and other items |
3 |
36 |
|
Net book value of trade receivables - in the closing balance |
5,965 |
6,029 |
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 |
|
Net trade receivables, depreciated according to their age |
1,118 |
1,204 |
|
Net trade receivables, depreciated according to other criteria |
312 |
422 |
|
Net trade receivables past due |
1,430 |
1,627 |
|
Net trade receivables not past due (1) |
4,535 |
4,402 |
|
Net trade receivables |
5,965 |
6,029 |
|
o/w short-term trade receivables |
5,728 |
5,793 |
|
o/w long-term trade receivables (2) |
236 |
236 |
(1) Not past due receivables are presented net of the balance of expected losses on trade receivables, which amounted to (31) million euros as of June 30, 2022 and (54) million euros as of December 31, 2021.
(2) Includes receivables from sales of handsets with payment on installments that are payable in more than 12 months and receivables from equipment financial lease offers for business.
The Group assessed the risk of non-recovery of trade receivables as of June 30, 2022 and recognized impairment and losses on trade receivables in the income statement for an amount of (74) million euros over the period in the income statement ((115) million euros as of June 30, 2021).
For Mobile Financial Services, the assessment of bank credit risk is described in Note 12.2.
Unchanged from December 31, 2021, Orange still considers that the concentration of counterparty risk related to customer accounts is limited due to the large number of customers, their diversity (residential, professional and large companies), their belonging to various sectors of the economy and their geographical dispersion in France and abroad.
The table below provides an analysis of the change in impairment of telecom activities trade receivables in the statement of financial position:
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 |
|
Allowances on trade receivables - in the opening balance |
(1,012) |
(983) |
|
Net addition with impact on income statement |
(74) |
(212) |
|
Losses on trade receivables |
115 |
283 |
|
Changes in the scope of consolidation |
- |
(91) |
|
Translation adjustment |
1 |
(7) |
|
Reclassifications and other items |
(6) |
(1) |
|
Allowances on trade receivables - in the closing balance |
(977) |
(1,012) |
Sales of non-recourse operating receivables programs
Orange has set up non-recourse programs to sell its receivables due in installments in several countries. These are no longer recorded on the balance sheet. The receivables sold mainly concern Spain (of which a part has been sold to Orange Bank - see Note 12.1), Romania, Poland and France and amounted to approximately 513 million euros during the first semester 2022 and approximately 740 million euros as of December 31, 2021.
Note 5 Purchases and other expenses
5.1 External purchases
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 | |
|
Commercial, equipment expenses and content rights |
(3,681) |
(3,483) | |
|
o/w costs of terminals and other equipment sold |
(1,844) |
(1,810) | |
|
o/w advertising, promotional, sponsoring and rebranding costs |
(398) |
(367) | |
|
Service fees and inter-operator costs |
(2,104) |
(2,198) | |
|
o/w interconnexion costs |
(1,346) |
(1,500) | |
|
Other network expenses, IT expenses |
(1,784) |
(1,766) | |
|
Other external purchases |
(1,481) |
(1,289) | |
|
o/w building cost for resale |
(572) |
(483) | |
|
o/w overhead |
(566) |
(461) | |
|
o/w rental expenses |
(116) |
(113) | |
|
Total external purchases |
(9,050) |
(8,736) | |
5.2 Other operating expenses
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 |
|
Allowances and losses on trade receivables - telecom activities |
(74) |
(115) |
|
Litigation |
(41) |
(84) |
|
Cost of bank credit risk |
(23) |
(16) |
|
Operating foreign exchange gains (losses) |
(12) |
(2) |
|
Acquisition and integration costs |
(7) |
(10) |
|
Other expenses |
(73) |
(68) |
|
Total other operating expenses |
(231) |
(295) |
Impairment and losses on trade receivables from telecom activities are detailed in Note 4.
The cost of credit risk exclusively applies to Mobile Financial Services and includes impairment charges and reversals on fixed-income securities, loans and receivables to customers as well as impairment charges and reversals relating to guarantee commitments given, losses on receivables and recovery of amortized debts (see Note 12.2).
Payments related to some litigation are directly recorded in other operating expenses. The Group's significant litigations are described in Note 14.1.
5.3 Restructuring costs
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 |
|
Departure plans |
(11) |
(193)(1) |
|
Lease property restructuring |
0 |
(5) |
|
Distribution channels |
(11) |
(1) |
|
Other |
(25) |
(46) |
|
Total restructuring costs |
(47) |
(245) |
(1) Mainly voluntary departure plans of Orange Spain (around 400 people).
5.4 Working capital management - payables
Extension of supplier payment deadlines
Supplier payment terms are mutually agreed between the suppliers and Orange in accordance with the rules in force. For several years, some key suppliers and Orange have agreed to a flexible payment schedule which, for certain invoices can be extended up to six months.
Trade payables and fixed assets payables that were subject to an extension of payment terms and have an impact on the change in working capital at the end of the period, amount to approximately 410 million euros as at June 30, 2022. The amount as at December 31, 2021 was approximately 460 million euros.
Note 6 Labor expenses
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 | |
|
Wages and employee benefit expenses |
(4,241) |
(4,333) | |
|
o/w French part-time for seniors plans(1) |
62 |
(9) | |
|
Other |
(87) |
(88) | |
|
Total labor expenses |
(4,329) |
(4,421) | |
(1) At June 30, 2022, French part-time for seniors plans include an actuarial gain of 84 million euros arising from the increase of curve discount rate in the current macroeconomic context (actuarial loss of (1) million euros at June 30, 2021).
Note 7 Impairment losses
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 |
|
Spain |
- |
(3,702) |
|
Total of impairment of goodwill |
- |
(3,702) |
Impairment tests are carried out annually and when there is an indication that assets may be impaired.
Changes in the economic and financial climate, appreciation of the telecommunications operators’ resilience to deteriorating local economic conditions, change in the market capitalization of telecommunications companies and changes in business performance serve as indicators of potential impairment.
Compared to the elements described as at December 31, 2021, the Group has also taken into account the effects of the war in Ukraine (see Note 2.3) as part of its review of impairment indicators at June 30, 2022.
As the preparation of multi-year plans will be performed during the second half of 2022, the half-year reassessments resulting from the identification of impairment indicators are based on a preliminary review of projected cash flows and changes in financial parameters used at the end of the previous year.
At June 30, 2022
At June 30, 2022, the review of impairment indicators has not led the Group to recognize any impairment loss.
At June 30, 2021
In Spain, the (3 702) million euros impairment of goodwill mainly reflected the competitive environment that continued to deteriorate despite ongoing market consolidation (erosion in average revenue per user) and uncertainties linked to the prolongation of the health crisis (delay in the expected economic recovery horizon).
The net carrying value of assets tested was brought down to the value in use of long-term assets and working capital as at June 30, 2021 (7.7 billion euros).
Note 8 Interests in associates and joint ventures
8.1 Change in associates and joint ventures
The table below shows the value of the main interests in associates and joint ventures:
|
Company (in millions of euros) |
Main activity |
Main co-shareholder |
% interest |
June 30, 2022 |
December 31, 2021 |
|
Entities jointly controlled | |||||
|
Orange Concessions and its subsidiaries |
Operation / maintenance related to Public Initiative Networks |
Consortium HIN (50%) |
50% |
1,060 |
1,049 |
|
Swiatlowod Inwestycje Sp. z o.o. (FiberCo in Poland) |
Construction / operation in Poland |
APG Group (50%) |
50% |
311 |
298 |
|
Mauritius Telecom |
Telecommunications operator in Mauritius |
Mauritius government (34%) |
40% |
71 |
65 |
|
Other |
18 |
10 | |||
|
Entities under significant influence | |||||
|
Orange Tunisie |
Telecommunications operator in Tunisia |
Investec (51%) |
49% |
7 |
2 |
|
Savoie connectée |
Fiber infrastructure operator |
Covage (70%) |
30% |
7 |
7 |
|
IRISnet |
Telecommunications operator in Belgium |
MRBC (54%) |
22% |
6 |
6 |
|
Odyssey Music Group (Deezer) |
Streaming platform |
AI European Holdings SARL (43%) |
10% |
- |
- |
|
Other |
3 |
3 | |||
|
Total associates and joint ventures |
1,484 |
1,440 | |||
The change in interests in associates and joint ventures is as follows:
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 |
|
Interests in associates and joint ventures - in the opening balance |
1,440 |
98 |
|
Dividends |
(0) |
(3) |
|
Share of profits (losses) |
1 |
3 |
|
Change in components of other comprehensive income(1) |
39 |
3 |
|
Changes in the scope of consolidation(2) |
(3) |
1,345 |
|
Translation adjustment |
(3) |
(4) |
|
Reclassifications and other items |
10 |
(3) |
|
Interests in associates and joint ventures - in the closing balance |
1,484 |
1,440 |
(1) The change in components of other comprehensive income mainly includes the hedging instruments set up by Orange Concessions and Swiatlowod Inwestycje Sp. z o.o. (FiberCo in Poland).
(2) Changes in the scope of consolidation were mainly related to Orange Concessions and Swiatlowod Inwestycje Sp. z o.o. (FiberCo in Poland) in 2021.
8.2 Main figures of associates and joint ventures
The main figures relating to Orange Concessions and Swiatlowod Inwestycje Sp. z o.o. (FiberCo in Poland) are as follows (financial statements figures presented at 100%):
|
(in millions of euros) |
June 30, 2022 | ||
|
Orange Concessions |
Swiatlowod Inwestycje Sp. z o.o. | ||
|
Assets(1) | |||
|
Non-current assets |
3,194 |
279 | |
|
Current assets |
360 |
169 | |
|
Total assets |
3,554 |
447 | |
|
Liabilities | |||
|
Shareholder's equity |
2,023 |
291 | |
|
Non-current liabilities |
1,089 |
110 | |
|
Current liabilities |
441 |
46 | |
|
Total equity and liabilities |
3,554 |
447 | |
|
Income statement | |||
|
Revenue |
343 |
13 | |
|
Operating income |
7 |
(1) | |
|
Finance costs, net |
(11) |
(2) | |
|
Income tax |
(0) |
1 | |
|
Net income |
(6) |
(2) | |
(1) The assets are recognized by Orange Concessions in accordance with the provisions of IFRIC 12 "Service Concession Arrangements."
8.3 Related party transactions
The main transactions between the Group and related parties essentially consist of transactions with companies consolidated using the equity method, of which Orange Concessions and Swiatlowod Inwestycje Sp. z o.o., (FiberCo in Poland). In addition, the amounts of the transactions with related parties have not changed significantly since December 31, 2021.
Note 9 Income taxes
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 |
|
Total Income tax |
(580) |
(417) |
|
Current tax |
(555) |
(182) |
|
Deferred tax |
(25) |
(236) |
The increase of the current tax expense at June 30, 2022 is notably explained by a tax income of 372 million euros recorded at June 30, 2021 resulting from the reassessment of an income tax charge booked in periods prior to those presented.
The decrease of the deferred tax expense at June 30, 2022 is mainly explained by the following effects:
− the expense of (188) million euros booked at June 30, 2021 on the deferred tax liabilities recognized on Orange brand in the United Kingdom due to the increase of the UK corporate income tax rate to 25% from 2023;
− and the depreciation of (140) million euros of the deferred tax assets in Spain booked at June 30, 2021.
Deferred tax assets recoverability
At each period end, the Group reviews the recoverable amount of the deferred tax assets. The recoverability of the deferred tax assets is assessed in the light of the latest business plans used for impairment testing (see Note 7) that may be restated to take into account specific tax issues.
At June 30, 2022, the analysis conducted on the basis of the business plans did not lead to the recognition of any material effect in the accounts.
At June 30, 2021, in relation with the revised projections of future cash flows in Spain, a (140) million euros deferred tax charge had been recognized to reflect the negative impact of the business plans on the recoverable value of deferred tax assets.
Developments in tax disputes and audits
Tax disputes and audits within the Group have not been subject to any significant developments over the period.
Note 10 Financial assets, liabilities and financial results (telecom activities)
10.1 Financial assets and liabilities of telecom activities
To improve the readability of financial statements and to be able to distinguish the performance of telecom activities from the performance of Mobile Financial Services, the notes related to financial assets and liabilities as well as the financial income or expenses are split to respect these two business areas.
Thus, Note 10 presents the financial assets, liabilities and related gains and losses specific to telecom activities and Note 12 concerns the activities of Mobile Financial Services with regard to its assets and liabilities, with net financial income being not material.
The following table reconciles the contributive balances of assets and liabilities for each of these two areas to the consolidated balance sheet (intra-group transactions between telecom activities and Mobile Financial Services activities are not eliminated) with the consolidated statement of financial position as of June 30, 2022.
|
(in millions of euros) |
Orange consolidated financial statements |
o/w telecom activities |
Note |
o/w Mobile Financial Services |
Note |
o/w eliminations telecom activities / mobile financial services |
|
Non-current financial assets related to Mobile Financial Services activities |
725 |
- |
725 |
12.1.1 |
- | |
|
Non-current financial assets |
968 |
995 |
10.5 |
- |
(27) (1) | |
|
Non-current derivatives assets |
1,655 |
1,555 |
10.3 |
100 |
- | |
|
Current financial assets related to Mobile Financial Services activities |
2,548 |
- |
2,552 |
12.1.1 |
(4) | |
|
Current financial assets |
3,008 |
3,008 |
10.5 |
- |
(1) | |
|
Current derivatives assets |
14 |
14 |
10.3 |
- |
- | |
|
Cash and cash equivalents |
8,259 |
7,872 |
10.3 |
387 |
- | |
|
Non-current financial liabilities related to Mobile Financial Services activities |
0 |
- |
28 |
12.1.2 |
(27) (1) | |
|
Non-current financial liabilities |
33,191 |
33,191 |
10.3 |
- |
- | |
|
Non-current derivatives liabilities |
231 |
160 |
10.3 |
70 |
- | |
|
Current financial liabilities related to Mobile Financial Services activities |
3,199 |
- |
3,199 |
12.1.2 |
(1) | |
|
Current financial liabilities |
3,178 |
3,182 |
10.3 |
- |
(4) | |
|
Current derivatives liabilities |
10 |
10 |
10.3 |
- |
- |
(1) Loan granted by Orange SA to Orange Bank.
10.2 Income and expenses related to financial assets and liabilities
The cost of net financial debt consists of income and expenses relating to the components of net financial debt during the period.
The net foreign exchange financial loss includes the impact of revaluation of the economic hedges of foreign exchange risk on notional amounts of subordinated notes denominated in pounds sterling and recognized in equity at their historical value (see Note 13.4).
As of June 30, 2022, the consolidated statement of comprehensive income includes a gain in cash flow hedges amounting to 488 million euros (of which 438 million euros related to fully consolidated entities), against 193 million euros in the first semester of 2021. These effects mainly reflect the hedges, via cross currency swaps, of future coupons on Group debts denominated in foreign currencies. The gain on the first half of 2022 is mainly due to the appreciation of the US dollar against the euro and by the reduction of the long-term interest rate spread. The gain of the first half of 2021 was mainly due to the appreciation of the pound sterling and the US dollar against the euro.
10.3 Net financial debt
Net financial debt as defined and used by Orange does not include Mobile Financial Services activities for which the concept is not relevant and is described in the following table:
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 |
|
TDIRA(1) |
636 |
636 |
|
Bonds |
29,913 |
29,010 |
|
Bank loans and from development organizations and multilateral lending institutions |
3,303 |
3,206 |
|
Debt relating to financed assets |
268 |
245 |
|
Cash collateral received |
1,303 |
389 |
|
NEU Commercial Paper (2) |
664 |
1,457 |
|
Bank overdrafts |
209 |
342 |
|
Other financial liabilities |
76 |
64 |
|
Current and non-current financial liabilities (excluding derivatives) included in the calculation of net financial debt |
36,373 |
35,348 |
|
Current and non-current derivatives (liabilities) (3) |
171 |
285 |
|
Current and non-current derivatives (assets) (3) |
(1,569) |
(689) |
|
Other comprehensive income components related to unmatured hedging instruments |
252 |
(192) |
|
Gross financial debt after derivatives (a) |
35,227 |
34,751 |
|
Cash collateral paid (4) |
(20) |
(27) |
|
Investments at fair value (5) |
(2,958) |
(2,266) |
|
Cash equivalents |
(5,523) |
(5,479) |
|
Cash |
(2,349) |
(2,709) |
|
Assets included in the calculation of net financial debt (b) |
(10,849) |
(10,481) |
|
Net financial debt (a) + (b) |
24,377 |
24,269 |
(1) Perpetual securities redeemable in shares.
(2) Negotiable European Commercial Papers (formerly called "commercial papers").
(3) As of June 30, 2022, the foreign exchange effect of the cross currency swaps hedging foreign exchange risk on gross debt notional is an unrealized gain of 974 million euros.
(4) Only cash collateral paid, included in non-current financial assets of the consolidated statement of financial position, are deducted from gross financial debt.
(5) Only investments at fair value, included in current financial assets of the consolidated statement of financial position, are deducted from gross financial debt.
10.4 Main bonds and bank loans repayments and issuances
During the first semester of 2022, Orange SA did not make any significant repayments of bonds or bank loans.
Orange SA issued a sustainable bond on May 18, 2022 of 500 million euros maturing on May 18, 2032, with a coupon of 2,375%.
Médi Telecom issued two bonds on June, 3rd 2022:
− 300 million Moroccan dirhams (i.e 28 million euros at the ECB daily reference rate) with a coupon of 2.6%;
− 1,200 million Moroccan dirhams (i.e. 114 million euros at the ECB daily reference rate) with a one-year variable coupon BDT (Moroccan treasury bonds) rate increased by 55 bps.
10.5 Financial assets
The financial assets break down as follows:
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 | ||
|
Non-current |
Current |
Total |
Total | |
|
Financial assets at fair value through other comprehensive income that will not be reclassified to profit or loss |
412 |
- |
412 |
431 |
|
Investments securities |
412 |
- |
412 |
431 |
|
Financial assets at fair value through profit or loss |
251 |
2,957 |
3,208 |
2,496 |
|
Investments at fair value (1) |
- |
2,958 |
2,958 |
2,266 |
|
Investments securities |
231 |
- |
231 |
203 |
|
Cash collateral paid |
20 |
- |
20 |
27 |
|
Financial assets at amortized cost |
332 |
50 |
382 |
363 |
|
Receivables related to investments (2) |
85 |
39 |
123 |
105 |
|
Other |
248 |
11 |
259 |
258 |
|
Total financial assets |
995 |
3,008 |
4,003 |
3,290 |
(1) NEU Commercial papers and bond securities only.
(2) Including loan granted by Orange SA to Orange Bank (27 million euros).
Note 11 Information on market risk and fair value of financial assets and liabilities (telecom activities)
11.1 Risk management policy
During the first semester of 2022, in line with the 2021 financial year, the risk management Group policy related to the financial instruments has not been challenged by the health crisis. The armed conflict that began on February 24, 2022 and its consequences on the financial market also did not challenge the risk management Group policy related to the financial instruments. Thus, the Group has kept its hedging policy to minimize its exposure to interest rate and operating and financial foreign exchange risks. Cash flow hedge relationships have not been challenged by the crisis. Furthermore, Orange has continued to diversify its sources of funding that allow the Group to present the following liquidity position at June 30, 2022:
Liquidity position
(in millions of euros)
|
Available undrawn amount of credit facilities | ||
|
Investments at fair value | ||
|
Cash | ||
|
Cash equivalents | ||
For specific management of counterparty risk related to customer accounts, see Note 4.
11.2 Orange's credit ratings
Orange's credit ratings have not changed since December 31, 2021.
At June 30, 2022, Orange's debt ratings are set forth below:
|
Standard & Poor's |
Moody's |
Fitch Ratings | |
|
Long-term debt |
BBB+ |
Baa1 |
BBB+ |
|
Outlook |
Stable |
Stable |
Stable |
|
Short-term debt |
A2 |
P2 |
F2 |
11.3 Financial ratios
The financial ratios described at December 31, 2021 remain complied with.
11.4 Fair value levels of financial assets and liabilities
During the first half of 2022, no significant event has occurred regarding the fair value of financial assets and liabilities.
Note 12 Mobile Financial Services activities
12.1 Financial assets and liabilities of Mobile Financial Services
The financial statements of Mobile Financial Services activities were put into the format of Orange Group's consolidated financial statements and therefore differ from a presentation that complies with the banking format.
In order to improve the readiness of financial statements and to be able to distinguish the performance of telecom activities from the performance of Mobile Financial Services, the notes related to financial assets and liabilities as well as financial income or expenses are split to respect these two business areas.
Thus, Note 10 presents the financial assets, liabilities and related gains and losses specific to telecom activities and Note 12 concerns the activities of Mobile Financial Services with regard to its assets and liabilities, with net financial income being not material.
The following table reconciles the contributive balances of assets and liabilities for each of these two areas (intra-group transactions between telecom activities and Mobile Financial Services activities are not eliminated) with the consolidated statement of financial position at June 30, 2022.
|
(in millions of euros) |
Orange consolidated financial statements |
o/w telecom activities |
Note |
o/w Mobile Financial Services |
Note |
o/w eliminations telecom activities / mobile financial services |
|
Non-current financial assets related to Mobile Financial Services activities |
725 |
- |
725 |
12.1.1 |
- | |
|
Non-current financial assets |
968 |
995 |
10.5 |
- |
(27) (1) | |
|
Non-current derivatives assets |
1,655 |
1,555 |
10.3 |
100 |
- | |
|
Current financial assets related to Mobile Financial Services activities |
2,548 |
- |
2,552 |
12.1.1 |
(4) | |
|
Current financial assets |
3,008 |
3,008 |
10.5 |
- |
(1) | |
|
Current derivatives assets |
14 |
14 |
10.3 |
- |
- | |
|
Cash and cash equivalents |
8,259 |
7,872 |
10.3 |
387 |
- | |
|
Non-current financial liabilities related to Mobile Financial Services activities |
0 |
- |
28 |
12.1.2 |
(27) (1) | |
|
Non-current financial liabilities |
33,191 |
33,191 |
10.3 |
- |
- | |
|
Non-current derivatives liabilities |
231 |
160 |
10.3 |
70 |
- | |
|
Current financial liabilities related to Mobile Financial Services activities |
3,199 |
- |
3,199 |
12.1.2 |
(1) | |
|
Current financial liabilities |
3,178 |
3,182 |
10.3 |
- |
(4) | |
|
Current derivatives liabilities |
10 |
10 |
10.3 |
- |
- |
(1) Loan granted by Orange SA to Orange Bank.
The Mobile Financial Services segment includes Orange Bank and other entities. As the contribution of other entities to the statement of financial position of the Mobile Financial Services segment and a fortiori of the Group is not material, only Orange Bank data is presented in detail below.
12.1.1 Financial assets related to Orange Bank transactions (excluding derivatives)
The financial assets related to Orange Bank transactions break down as follows:
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 | ||
|
Non-current |
Current |
Total |
Total | |
|
Financial assets at fair value through other comprehensive income that will not be reclassified to profit or loss |
3 |
- |
3 |
3 |
|
Investments securities |
3 |
- |
3 |
3 |
|
Financial assets at fair value through other comprehensive income that may be reclassified to profit or loss |
322 |
5 |
327 |
441 |
|
Debt securities |
322 |
5 |
327 |
441 |
|
Financial assets at fair value through profit or loss |
17 |
- |
17 |
73 |
|
Investments at fair value |
- |
- |
- |
- |
|
Cash collateral paid |
8 |
- |
8 |
59 |
|
Other |
9 |
- |
9 |
14 |
|
Financial assets at amortized cost |
383 |
2,523 |
2,906 |
2,752 |
|
Fixed-income securities |
383 |
2 |
385 |
387 |
|
Loans and receivables to customers |
- |
2,363 |
2,363 |
2,297 |
|
Loans and receivables to credit institutions |
- |
133 |
133 |
66 |
|
Other |
- |
26 |
26 |
1 |
|
Total financial assets related to Orange Bank activities |
725 |
2,528 |
3,253 |
3,268 |
Debt securities measured at fair value through other comprehensive income that may be reclassified subsequently to profit or loss
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 |
|
Debt securities measured at fair value through other comprehensive income that may be reclassified to profit or loss - in the opening balance |
441 |
540 |
|
Acquisitions |
385 |
732 |
|
Repayments and disposals |
(495) |
(839) |
|
Changes in fair value |
(1) |
- |
|
Other items |
(3) |
7 |
|
Debt securities measured at fair value through other comprehensive income that may be reclassified to profit or loss - in the closing balance |
327 |
441 |
Orange Bank's loans and receivables
Loans and receivables of Orange Bank are composed of loans and receivables to customers and credit institutions.
In the context of adapting Orange Bank's accounts into the Group's financial statements, the following have been considered as loans and advances to customers: clearing accounts and other amounts due, as well as amounts related to securities transactions on behalf of customers.
At June 30, 2022, loans and receivables of Orange Bank to customers are mainly composed of overdrafts (844 million euros), housing loans (for 994 million euros) and the purchase of receivables between Orange Bank Spain and Orange Spain (524 million euros).
Orange Bank's loans and receivables from credit institutions are mainly composed of current assets corresponding to overnight deposits and loans.
12.1.2 Financial liabilities related to Orange Bank transactions (excluding derivatives)
Debts related to Orange Bank operations are composed of payables and debts with customers for 1,774 million euros, with credit institutions for 1,028 million euros as well as by certificates of deposits for 364 million euros.
At June 30, 2022, debts related to Orange Bank operations with customers are mainly composed of special savings accounts for 1,056 million euros and current accounts for 718 million euros.
Debts related to Orange Bank operations with financial institutions are mainly composed of term borrowings and advances.
12.2 Information on credit risk management related to Orange Bank activities
The health crisis and the war in Ukraine have generated an inflationary environment. In this context Orange Bank has maintained a cautious provisioning policy, given the uncertainty of the economy.
At June 30, 2022, Orange Bank has not observed any deterioration in its loan portfolio with the default rate remaining below 4% (part of loans 90 days past due). The uncertainties linked to the war in Ukraine and inflation in France and Spain are taken into consideration through provisions for 11 million euros.
The cost of risk of Orange Bank is 21 million euros (1.7 % of average outstanding), including 5 million euros in France (0,6 % of average outstanding).
In Spain, Orange Bank recognizes provisions linked to its receivables assignment program with Orange Spain based on the increase of the default rate of the receivables over the period. In this regard, at June 30, 2022, Orange Bank recognized a 15 million euros net depreciation (6 % of average outstanding), compared to 20 million euros (7 % of average outstanding) at December 31, 2021. The increase in the cost of risk in Spain compared to 2021 is explained by the increase in the volume of outstandings over the period.
12.3 Information on interest rate risk management related to Orange Bank activities
In the current interest rate environment, and given the structure of Orange Bank’s balance sheet, the net interest margin (NIM or the difference between interest income and expense) should be positively impacted in the long term by a rise in rates and by a steepening in the yield curve.
In addition, Orange Bank has partially immunized the instability of the net interest margin through the implementation of fixed rate borrower / variable rate payer swaps to hedge long term loans.
Note 13 Equity
At June 30, 2022, Orange SA's share capital amounted to 10,640,226,396 euros, divided into 2,660,056,599 ordinary shares with a par value of 4 euros each.
The shares held in registered form for at least two years by the same shareholder are granted with a double voting right. At June 30, 2022, the public sector owns 22.95% of Orange SA's share capital and 29.26% of the voting rights, and the employees of the Group own either within the employee shareholding plan or in registered form 7.65% of Orange SA's share capital and 11.48% of the voting rights.
13.1 Changes in share capital
No new shares were issued during the first half of 2022.
13.2 Treasury shares
As authorized by the Shareholders' Meeting of May 19, 2022, the Board of Directors implemented a new share Buyback Program (the 2022 Buyback Program) and canceled the 2021 Buyback Program, with immediate effect. This authorization is valid for a period of 18 months from the aforementioned Shareholders' Meeting. The 2022 Buyback Program is described in the Orange Universal Registration Document filed with the French Financial Markets Authority (Autorité des marchés financiers - AMF) on March 31, 2022.
At June 30, 2022, the Company held 1,289,818 of its own shares (of which 1,000 shares in connection with the liquidity contract and 1,288,818 shares in connection with the LTIP (Long Term Incentive Plan) 2020-2022 and 2021-2023 free share award plans).
During the first semester 2022, Orange delivered 720,682 treasury shares to the beneficiaries of the LTIP 2019-2021 free share award plans.
At December 31, 2021, the Company held 2,009,500 treasury shares (exclusively under the 2019-2021, 2020-2022 and 2021-2023 free share award plans).
13.3 Dividends
The Shareholders' Meeting held on May 19, 2022 approved the payment of a dividend of 0.70 euro per share in respect of the 2021 fiscal year. Given the payment of the interim dividend of 0.30 euro per share on December 15, 2021 for a total amount of 797 million euros, the balance of the dividend amounting to 0.40 euro per share was paid on June 9, 2022 for an amount of 1,063 million euros.
13.4 Subordinated notes
Nominal value of subordinated notes
During the first semester 2022, Orange did not issue, repurchase or redeem any subordinated notes.
The amount presented in the "subordinated notes" column of the consolidated statements of changes in shareholders' equity of 5,497 million euros corresponds to the nominal amount recorded at historical value (the bonds denominated in pounds sterling have not been revalued since their issue in 2014).
Subordinated notes remuneration
During the six months ended June 30, 2022, the remuneration of subordinated notes is as follows:
|
June 30, 2022 |
June 30, 2021 | |||||||||
|
Initial issue date |
Residual nominal value (in millions of currency) |
Residual nominal value (in millions of euros) |
Initial currency |
Rate |
(in millions of currency) |
(in millions of euros) |
(in millions of currency) |
(in millions of euros) | ||
|
2/7/2014 |
1,000 |
1,000 |
EUR |
5.25 % |
(53) |
(53) |
(53) |
(53) | ||
|
2/7/2014 |
- |
- |
GBP |
5.88 % |
- |
- |
(32) |
(36) | ||
|
10/1/2014 |
- |
- |
EUR |
4.00 % |
- |
- |
(3) |
(3) | ||
|
10/1/2014 |
1,250 |
1,250 |
EUR |
5.00 % |
- |
- |
- |
- | ||
|
10/1/2014 |
426 |
547 |
GBP |
5.75 % |
(24) |
(29) |
(33) |
(38) | ||
|
4/15/2019 |
1,000 |
1,000 |
EUR |
2.38 % |
(24) |
(24) |
(24) |
(24) | ||
|
9/19/2019 |
500 |
500 |
EUR |
1.75 % |
(9) |
(9) |
(9) |
(9) | ||
|
10/15/2020 |
700 |
700 |
EUR |
1.75 % |
- |
- |
- |
- | ||
|
5/11/2021 |
500 |
500 |
EUR |
1.38 % |
(7) |
(7) |
- |
- | ||
|
Subordinated notes remuneration classified in equity |
(121) |
(163) | ||||||||
The remuneration of holders is recorded in equity five working days before the annual payment date, unless Orange exercises its right to defer the payment.
The tax impact relating to the remuneration of subordinated notes for 34 million euros is recorded in profit or loss in the period.
The tax effects from the conversion of subordinated notes whose par value is denominated in pounds sterling amounts to (3) million euros over the period. This effect is presented in "other movements" in the consolidated statements of change in shareholders' equity.
13.5 Cumulative translation adjustments
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 |
|
Gain (loss) recognized in other comprehensive income during the period |
(33) |
103 |
|
Reclassification to net income for the period |
(4) |
(1) |
|
Total cumulative translation adjustments |
(37) |
102 |
The change in cumulative translation adjustments recognized in other comprehensive income mainly includes:
− in the first half of 2022, the (37) million euros decrease is due to the depreciation of several currencies, including the Egyptian pound and the Polish zloty;
− in the first half of 2021, the 102 million euros increase was due to the appreciation of several currencies, including the Egyptian pound, the Polish zloty and the Jordanian dinar.
13.6 Non-controlling interests
|
(in millions of euros) |
June 30, 2022 |
June 30, 2021 | |
|
Dividends paid to non-controlling interests |
277(1) |
216 | |
|
o/w sub-group Sonatel |
185 |
166 | |
|
o/w Orange Polska |
35 |
- | |
|
o/w Médi Telecom |
33 |
- | |
|
o/w Jordan Telecom |
17 |
11 | |
|
o/w sub-group Orange Côte d'Ivoire |
- |
29 | |
|
o/w group Orange Belgium |
- |
7 | |
(1) Of which 177 million euros in dividends paid out at June 30, 2022.
|
(in millions of euros) |
June 30, 2022 |
December 31, 2021 | |
|
Credit part of equity attributable to non-controlling interests (a) |
3,064 |
3,030 | |
|
o/w group Orange Polska |
1,226 |
1,170 | |
|
o/w sub-group Sonatel |
783 |
826 | |
|
o/w sub-group Orange Côte d'Ivoire |
287 |
257 | |
|
o/w sub-group Romania(1) |
253 |
267 | |
|
o/w Jordan Telecom |
179 |
171 | |
|
o/w Médi Telecom |
128 |
148 | |
|
o/w group Orange Belgium |
142 |
138 | |
|
Debit part of equity attributable to non-controlling interests (b) |
(10) |
(10) | |
|
Total equity attributable to non-controlling interests (a) + (b) |
3,054 |
3,020 | |
(1) Including the contribution of the Orange Romania Communications entity (see Note 3.2)
Note 14 Litigation and unrecognized contractual commitments
14.1 Litigation
At June 30, 2022, the provisions for risks recorded by the Group for all disputes in which the Group is involved (with the exception of liabilities relating to disputes between Orange and the tax or social administrations in relation to operational or income taxes or social contributions, which are recognized in the corresponding items of the balance sheet) amounted to 394 million euros compared with 405 million euros at December 31, 2021. Orange believes that any disclosure of the amount of provisions on a case-by-case basis for ongoing disputes could seriously harm the Group's position.
This note describes the new proceedings and developments in existing litigation having occurred since the publication of the consolidated financial statements for the year ended December 31, 2021.
− In the course of the ongoing proceedings in the "Enterprise" market segment opposing SFR, Céleste and Adista to Orange, Orange and Céleste have entered into a memorandum of understanding to end this dispute. This dispute is now closed. The proceedings with Adista are still ongoing.
− In their dispute over the reimbursement of overpayments for interconnection services provided by Orange, Orange and Verizon have entered into a memorandum of understanding that, among other things, ends this dispute. Verizon withdrew its claim before the Paris Court of Appeal on April 8, 2022. This dispute is now closed.
− In connection with the claim for damages by the Polish operators P4 for 316 million zlotys (i.e., 70 million euros), Polkomtel and Orange Polska had each appealed to the Supreme Court against the decision of the Court of Appeal, which had overturned the judgment of the Court of First Instance rejecting P4's claim. By decision dated January 25, 2022, the Supreme Court rejected Polkomtel's claim. The procedure is ongoing.
− In the dispute between Orange Romania and the Romanian Competition Council, the latter has appealed to the Supreme Court following the reversal of its decison by the Court of Appeal on June 24, 2021. The procedure is ongoing.
− In the dispute between Orange Mali, Sotelma SA and the Remacotem association, the Remacotem association carried out a seizure of receivables which Orange Mali contested. The enforcement judge cancelled the seizure. This cancellation was confirmed on May 6, 2022 by the Bamako Court of Appeal, which granted the operators a 6-month grace period. At the same time, the proceedings before the Malian Supreme Court are continuing.
− The Evaluation and Compensation Committee set up as part of the France Telecom employee-related crisis trial has completed the analysis and processing of all the claims received. The re-examination of certain claims considered to be outside the Committee’s mandate has been entrusted by Orange to experts of the Company assisted by two members of the Evaluation and Compensation Committee.
Apart from the proceedings mentioned above, there are no other administrative, legal or arbitration proceedings (whether pending, suspended or threatened) of which Orange is aware, either new or having evolved since the publication of the consolidated financial statements for the year ended December 31, 2021, which have had over the period, or which may have, a material impact on the Group’s financial position or profitability.
14.2 Unrecognized contractual commitments
During the first half of 2022, with the exception of the commitment mentioned below, no major event has impacted the unrecognized contractual commitments described in the 2021 consolidated financial statements.
Following the auctions of 2G, 3G, 4G and 5G licenses that took place in the first half of the year in Belgium, Orange Belgium is now committed to pay 294°million euros, that are 322°million euros less the 28 million euros paid out as a deposit allowing to participate in the auction.
Note 15 Subsequent events
Orange SA: distribution of an interim dividend
At its meeting held on July 27, 2022, the Board of Directors resolved to distribute an interim dividend of 0.30 euro per share in respect of 2022. This interim dividend will be paid in cash on December 7, 2022. The estimated payment amounts to 797 million euros based on the number of ordinary shares outstanding as of June 30, 2022.
Merger of Deezer into SPAC I2PO and initial public offering
On July 4, 2022, Deezer, in which the Group held 10.42%, was merged into I2PO, the SPAC (Special Purpose Acquisition Company), and was listed on the stock exchange on July 5, 2022 (see Note 3.2).
Signing of an agreement between Orange and MásMóvil to combine their activities in Spain
Following the period of exclusive negotiations initiated on March 8, 2022, Orange and MásMóvil have signed a binding agreement on July 23 relating to the combination of their activities in Spain.
The transaction is based on an enterprise value of 18.6 billion euros, of which 7.8 billion euros for Orange Spain and 10.9 billion euros for MásMóvil. The transaction is supported by a 6.6 billion euros of non-recourse debt package that will finance, among other things, a 5.85 billion euros payment up-streamed to the Orange Group and MásMóvil shareholders (Lorca JVCo). This distribution to the shareholders will be asymmetric as it also embeds an equalization payment in favor of Orange to reflect the different levels of indebtedness of the two standalone businesses. MásMóvil’s existing debt will remain in place.
The transaction is subject to approval from the European commission and other relevant administrative authorities and is expected to close during the second half of 2023 at the latest.
This business combination will take the form of a 50-50 joint venture, co-controlled by Orange and MásMóvil (Lorca JVCo), with equal governance rights in the combined entity.
The agreement between parties includes a right to trigger an IPO (Initial Public Offering) under certain conditions for both parties after a defined period and, in such a scenario, an option for Orange to take control of the combined entity. Orange will neither be forced to sell its stake or exercise its option.
This joint venture between MásMóvil and Orange will create a sustainable player with the financial capacity and scale to continue investing to foster the future of infrastructure competition in Spain for the benefit of consumers and businesses.
A joint venture between the two complementary businesses would lead to significant efficiency gains, allowing the combined company to accelerate investments in FTTH and 5G that will benefit Spanish consumers and businesses.
Expected response from the European Directorate-General for Competition (DG COMP) regarding the takeover of the Belgian operator VOO
On December 24, 2021, Orange Belgium announced the signing of an agreement to acquire 75% minus one share in VOO SA.
Completion of the transaction is subject to customary conditions precedent, in particular the approval of the European Commission, whose response following the preliminary review (phase 1) is expected on July 28, 2022.
If the Group was not to offer the commitments required by DG COMP to obtain an authorization in phase 1, the authority would then open an in-depth examination procedure, known as phase 2, of which the conclusions are expected by the end of 2022.
3. Statement by the person responsible
I certify that based on my knowledge, the first half 2022 condensed consolidated financial statements have been prepared in accordance with the applicable accounting standards and fairly present the assets and liabilities, financial condition, and results of operations of the company and of its consolidated subsidiaries, and that the half-yearly management report fairly presents the material events which occurred during the first six months of the financial year, their impact on the interim financial statements, the main related parties transactions, as well as a description of the main risk factors and uncertainties for the remaining six months of the financial year.
Paris, July 28, 2022
Delegate Chief Executive Officer
Executive Director Finance, Performance and Development
Ramon Fernandez
4. Statutory auditors’ review report on the half-year financial information
This is a free translation into English of the statutory auditors’ review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group’s half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
Orange S.A.
Registered office: 111, quai du Président Roosevelt - 92130 Issy-les-Moulineaux
Share capital: €.10 640 226 396
For the period from January 1, 2022 to June 30, 2022
To the Shareholders,
In compliance with the assignment entrusted to us by your general assembly and in accordance with the requirements of article L. 451-1-2 III of the French Monetary and Financial Code ("Code monétaire et financier"), we hereby report to you on:
− the review of the accompanying condensed half-yearly consolidated financial statements of Orange S.A., for the period from January 1 to June 30, 2022,
− the verification of the information presented in the half-yearly management report.
These condensed half-yearly consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.
I- Conclusion on the financial statements
We conducted our review in accordance with professional standards applicable in France.
A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 - standard of the IFRSs as adopted by the European Union applicable to interim financial information.
II- Specific verification
We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.
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Paris La Défense, on the July 28, 2022 |
Paris La Défense, on the July 28, 2022 |
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KPMG Audit Département de KPMG S.A. French original signed by, |
Deloitte & Associés |
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Jacques Pierre |
Christophe Patrier |
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ORANGE |
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Date: August 01, 2022 |
By: |
/S/ Patrice Lambert - de Diesbach |
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Name: |
Patrice Lambert - de Diesbach |
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Title: |
Senior VP, Head of Investor Relations |