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
1.2 | 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
1.3.4 Enterprise | 26 | ||||
1.3.4.1 Revenue - Enterprise | 26 | ||||
1.3.4.2 EBITDAaL - Enterprise | 26 | ||||
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
- France
- Revenue - France
- EBITDAaL - France
- Operating income - France
- Economic CAPEX - France
- Additional information - France
- Europe
- Revenue - Europe
- EBITDAaL - Europe
- Operating income - Europe
- Economic CAPEX - Europe
- Additional information - Europe
- Additional information - Spain
- Africa & Middle East
- Revenue - Africa & Middle East
- EBITDAaL - Africa & Middle East
- Operating income - Africa & Middle East
- Economic CAPEX - Africa & Middle East
- 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 | ||
- 1.5.7 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)% |
- See Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
- 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).
- 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 |
- 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.