First half 2021

Financial Report

This is a free translation into English of the Orange First half 2021 Financial Report issued in the French language,

which is required by article L.451-1-2 of the French Monetary and Financial Code.

The Report was filed with the Autorité des Marchés Financiers on July 29, 2021

Table of contents

1.

Interim management report for the first half of 2021

3

1.1

Overview

4

1.2

Analysis of the Group's results and capital expenditure

9

1.3

Review by operating segment

14

1.4

Cash flow and financial debt of telecom activities

30

1.5

Financial indicators not defined by IFRS

32

1.6

Additional information

37

2.

Condensed interim consolidated Financial Statements for the first half of 2021

41

Consolidated income statement

43

Consolidated statement of comprehensive income

44

Consolidated statement of financial position

45

Consolidated statements of changes in shareholders' equity

47

Analysis of changes in shareholders' equity related to components of the other comprehensive income

48

Consolidated statement of cash flows

49

Notes to the consolidated financial statements

50

3.

Statement by the person responsible

86

4.

Statutory auditors' review report on the half-year financial information

87

1. Interim management report for the first half of 2021

1.1

Overview

4

1.3.4 Enterprise

26

1.1.1 Financial data and workforce information

4

1.3.4.1 Revenue - Enterprise

26

1.3.4.2 EBITDAaL - Enterprise

26

1.1.2 Summary of results for the first half of 2021

5

1.3.4.3 Operating income - Enterprise

27

1.1.3 Significant events

6

1.3.4.4 Economic CAPEX - Enterprise

27

1.1.4 Information on trends and the main risks and uncertainties

8

1.3.4.5 Additional information - Enterprise

27

1.3.5 International Carriers & Shared Services

28

1.2

Analysis of the Group's results and capital

1.3.5.1 Revenue - International Carriers & Shared Services

28

1.3.5.2 EBITDAaL - International Carriers & Shared Services

28

expenditure

9

1.3.5.3 Operating income - International Carriers & Shared

1.2.1 Group revenue

9

Services

28

1.3.5.4 Economic CAPEX - International Carriers & Shared

1.2.1.1 Revenue

9

Services

29

1.2.1.2 Number of customers

10

1.3.6 Mobile Finance Services

29

1.2.2 Group operating results

11

1.3.6.1

Operating activities

29

1.2.2.1 Group ETDAaL

11

1.3.6.2

Assets, liabilities and cash flows

30

1.2.2.2 Group operating income

12

1.2.3 Group net income

13

1.2.4 Group comprehensive income

13

1.2.5 Group capital expenditure

13

1.2.5.1 Economic CAPEX

14

1.2.5.2 Telecommunication licenses

14

1.4 Cash flow and financial debt of telecom activities 30

1.4.1 Liquidity and cash flows from telecom activities

30

1.4.1.1

Organic cash flow from telecom activities

30

1.4.1.2

Cash flows from telecom activities

31

1.3 Review by operating segment

  1. France
    1. Revenue - France
    2. EBITDAaL - France
    3. Operating income - France
    4. Economic CAPEX - France
    5. Additional information - France
  2. Europe
    1. Revenue - Europe
    2. EBITDAaL - Europe
    3. Operating income - Europe
    4. Economic CAPEX - Europe
    5. Additional information - Europe
    6. Additional information - Spain
  3. Africa & Middle East
    1. Revenue - Africa & Middle East
    2. EBITDAaL - Africa & Middle East
    3. Operating income - Africa & Middle East
    4. Economic CAPEX - Africa & Middle East
    5. Additional information - Africa & Middle East

1.4.2 Financial debt and liquidity position of telecom activities

32

14

17

1.5

Financial indicators not defined by IFRS

32

17

1.5.1 Data on a comparable basis

32

18

1.5.2 EBITDAaL

34

18

1.5.3 eCAPEX

35

18

1.5.4 EBITDAaL - eCAPEX

36

19

1.5.5 Organic cash flow from telecom activities

36

19

1.5.6 Net financial debt

37

  1. 1.5.7 Ratio of net financial debt to EBITDAaL from telecom activities 37

21

21

1.6

Additional information

37

21

22

1.6.1 Litigation and unrecognized contractual commitments

37

23

1.6.2 Related party transactions

37

24

1.6.3 Subsequent events

37

24

1.6.4 Financial glossary

37

25

25

25

FIRST HALF 2021 FINANCIAL REPORT / ORANGE 3

Interim management report for the first half of 2021

1

This report contains forward-looking statements about Orange. By nature, achievement of these targets is subject to numerous risks and uncertainties that could cause actual results to differ materially from the targets announced. The most significant risks are detailed in Section 2.1. Risk factors of the 2020 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. The Group has applied IFRS 16 "Leases" since January 1, 2019. In this context, the decision of the IFRS IC (IFRS Interpretations Committee) published in December 2019 and relating to the enforceable lease term was implemented by the Group on December 31, 2020 for all leases falling within the scope of the final decision of the Interpretations Committee, with retroactive effect from January 1, 2019. Data on a historical basis and data on a comparable basis for the first half of 2020 were restated to reflect this change. The impact of the application of this decision on the Consolidated income statement and on the Consolidated statement of cash flows of the Group is not significant (see Note 2.3 to the Consolidated 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 2020 is set out in Section 1.5.1 Data on a comparable basis.

The segment information (see Note 1 to the Consolidated Financial Statements) that is presented in the following sections is understood, unless stated otherwise, 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

2021

2020

2020

% change

% change

data on a

data on a

comparable

data on a

comparable

data on a

(at June 30, in millions of euros)

basis (1)

historical basis

basis (1)

historical basis

Revenue (2)

20,867

20,553

20,769

1.5%

0.5%

EBITDAaL (1)

5,837

5,859

5,914

(0.4)%

(1.3)%

Telecom activities

5,893

5,933

5,985

(0.7)%

(1.5)%

EBITDAaL/Revenue from telecom activities

28.2%

28.9%

28.8%

(0.6 pt)

(0.6 pt)

Mobile Finance Services

(56)

(75)

(72)

24.8%

21.7%

Operating income

(1,752)

2,220

2,250

N/A

N/A

Telecom activities

(1,676)

2,309

2,337

N/A

N/A

Mobile Finance Services

(77)

(90)

(87)

14.8%

11.9%

eCAPEX (1)

3,845

3,131

3,156

22.8%

21.9%

Telecom activities

3,832

3,115

3,142

23.0%

22.0%

eCAPEX/Revenue from telecom activities

18.4%

15.2%

15.1%

3.2 pt

3.2 pt

Mobile Finance Services

13

16

14

(18.5)%

(8.9)%

EBITDAaL - eCAPEX (1)

1,992

2,727

2,758

(27.0)%

(27.8)%

Telecom activities

2,060

2,817

2,843

(26.9)%

(27.5)%

Mobile Finance Services

(69)

(91)

(86)

23.7%

19.7%

Telecommunication licenses

293

42

42

N/A

N/A

Average number of employees (full-time equivalents) (3)

132,153

134,085

134,085

(1.4)%

(1.4)%

Number of employees (active employees at end of period) (3)

138,626

142,969

142,969

(3.0)%

(3.0)%

  1. See Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
  2. Revenue from telecom activities. The Net Banking Income (NBI) of Mobile Finance Services is recognized in other operating income (see Notes 1.2 and 1.3 to the Consolidated Financial Statements).
  3. See Section 1.6.4 Financial glossary.

FIRST HALF 2021 FINANCIAL REPORT / ORANGE 4

Interim management report for the first half of 2021

1

Net income

2021

2020

data on a

(at June 30, in millions of euros)

historical basis

Operating income

(1,752)

2,250

Finance costs, net

(436)

(744)

Income taxes

(417)

(491)

Consolidated net income

(2,605)

1,015

Net income attributable to owners of the parent company

(2,769)

927

Net income attributable to non-controlling interests

165

88

Organic cash flow from telecom activities

2021

2020

data on a

(at June 30, in millions of euros)

historical basis

Organic cash flow from telecom activities (1)

840

255

(1) See Section 1.5 Financial indicators not defined by IFRS, Section 1.6.4 Financial glossary, and Note 1.7 to the consolidated financial statements.

Net financial debt

June 30,

December

2021

31, 2020

data on a

(in millions of euros)

historical basis

Net financial debt (1)

25,344

23,489

  1. See Section 1.5 Financial indicators not defined by IFRS, Section 1.6.4 Financial glossary, and Note 8.3 to the consolidated financial statements. Net financial debt as defined and used by Orange does not include the activities of Mobile Finance Services, 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 of the 2020 Universal Registration Document.

1.1.2 Summary of results for the first half of 2021

The Group achieved a very good commercial performance during the first half of 2021. Revenue was up over the half-year and EBITDAaL was down slightly, largely due to lower co-financing received from third-party operators compared to the first half of 2020. The net income was strongly impacted by the recognition of an asset impairment in Spain (see below).

Revenue totaled 20,867 million euros in the first half of 2021, up 0.5% on a historical basis and 1.5% on a comparable basis compared with the first half of 2020. On a comparable basis, this growth was driven by the Africa & Middle East countries, and to a lesser extent by Business Services and the European countries, with the exception of Spain. This increase was mainly driven by equipment sales, following the sharp decline in the first half of 2020, mobile only services, and IT and integration services, driven in particular by the cloud and Enterprise cybersecurity, while wholesale services were down over the half-year, due in particular to the structural decrease in unbundling and less co-financing received from other operators in France.

Commercial activity performed extremely well in a very competitive environment and despite the continuing effects of the health crisis. This performance is the result of the Group's strategy, which is based on several growth drivers that are now fully functional and have begun to bear fruit. On a comparable basis, mobile access grew by 5.0% year-on-year, largely driven by the Africa & Middle East countries, which, as of June 30, 2021, had 38.2 million 4G customers (up 36.6% year-on-year) and 22.6 million active Orange Money customers (up 15.4% year-on-year). The Group's fixed broadband accesses also increased, with growth of 5.4% year-on-year. This change was particularly marked in the Africa & Middle East countries, which posted a record 1.9 million fixed broadband accesses as of June 30, 2021, up 29.6% year-on-year. In fiber, Orange recorded 10.3 million fiber accesses as of June 30, 2021, up 27.8% year-on- year. Lastly, as of June 30, 2021, Mobile Finance Services had a total of almost 1.6 million customers in Europe and 0.6 million customers in Africa.

EBITDAaL amounted to 5,837 million euros in the first half of 2021, down by 1.3% on a historical basis and by 0.4% on a comparable basis compared to the first half of 2020. EBITDAaL benefited from the excellent results in the Africa & Middle East countries (up 17.0%) and in the Other European countries (up 4.7%) but remained affected by the sharp decline in Spain (down 16.2%) and the slight fall in France (down 2.2%), mainly due to lower co-financing received. Regarding telecom activities, EBITDAaL amounted to 5,893 million euros, down 0.7% on a comparable basis, and the ratio of EBITDAaL from telecom activities to revenue stood at 28.2% in the first half of 2021, down 0.6 points on a comparable basis compared to the first half of 2020.

The operating profit amounted to a loss of 1,752 million euros in the first half of 2021, down by 4,002 million euros on a historical basis and 3,972 million euros on a comparable basis compared to the first half of 2020. This decrease is mainly due to the recognition of a goodwill impairment in Spain of 3,702 million euros, following the update by the Group of its strategic plan, which resulted in the review of key operating assumptions and the establishment of new business plans across all Group operating activities. The downward revision of the business plan in Spain reflects an increasingly competitive environment marked by the decline in average revenue per user and the expected lag in economic recovery due to uncertainties regarding the continuation of the health crisis (see Note 6 to the Consolidated Financial Statements).

FIRST HALF 2021 FINANCIAL REPORT / ORANGE 5

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Orange SA published this content on 02 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 August 2021 10:21:01 UTC.