registration document France Telecom 2009 - Orange.com

9 ANALYSIS
analysis of the financial position and earnings
OF THE GROUP’S FINANCIAL POSITION AND EARNINGS
9.1 ANALYSIS OF THE GROUP’S FINANCIAL POSITION AND EARNINGS
The following comments are based on the consolidated
fi nancial statements prepared in accordance with International
Financial Reporting Standards (IFRS, see Notes 1 and 2 to the
consolidated fi nancial statements).
The transition from data on a historical basis to data on a
comparable basis (see the Financial glossary appendix) for
2008 and 2007 is set out in Section 9.1.5.1 Transition from data
on a historical basis to data on a comparable basis.
The changes below are calculated in thousands of euros,
despite being presented in millions of euros.
Segment information
IFRS 8 Operating Segments has superseded IAS 14 Segment
Reporting. Operating segments are the components of the
Group that engage in business activities and whose operating
results, taken from internal reporting, are reviewed by the Group’s
chief operating decision-maker (the Chairman and CEO for the
France Telecom Group) in order to make his decisions about
the allocation of resources or when assessing the performance
of the operating segments. Segment information must relate
to operating segments or operating segment groupings. In
order to refl ect change in its organization, under which its
integrated operator strategy and synergies are implemented
and extracted at country level, the Group modifi ed its internal
reporting procedures on January 1, 2009, moving from analysis
by business line (Personal Communication Services, Home
Communication Services and Enterprise Communication
Services) to analysis based primarily on geography. The Group
now has seven operating segments: France, United Kingdom,
Spain, Poland, Rest of the World, Enterprise, and International
Carriers & Shared Services (IC & SS). The Rest of the World
reportable segment houses the business of two operating
segments, EME (Europe and Middle East) and AMEA (Africa,
Middle East and Asia) regions.
The Group’s operating segments are described in Section 9.1.3
Analysis by operating segment. The data relating to the Group’s
operating segments presented in the following sections is
assumed, unless stated otherwise, to be prior to the elimination
of inter-operating segment transactions.
The Group’s operating segments have their own resources,
although they may also share certain resources, mainly
networks, IT systems, research and development, and other
shared expertise. This is particularly the case for the International
Carriers & Shared Services (IC & SS) operating segment.
The use of these shared resources is taken into account
in operating segment results on the basis of the terms of
contractual agreements between legal entities, or external
benchmarks or the reallocation of costs. The supply of shared
resources is recorded in the inter-operating segment revenues
of the relevant operating segment service provider, while their
use is recorded in the expenses included in operating income
before depreciation and amortization, and before impairment of
goodwill and fi xed assets (hereinafter referred to as “EBITDA”,
see Section 9.1.5.4 Financial aggregates not defi ned under
IFRS and the Financial glossary appendix) of the recipient
operating segment. The cost of shared resources may be
affected by regulatory changes, and may therefore have an
impact on operating segment results from year to year.
Impact of the planned merger between
Orange’s and T-Mobile’s activities
in the United Kingdom
Due to the prospective joint venture between Orange and
T-Mobile in the United Kingdom (see Section 9.1.1.4 Key
events in 2009), the United Kingdom operating segment
is treated as an operation held for sale. Consequently, the
net income and expenses of the United Kingdom operating
segment are recorded in the consolidated net income after tax
of discontinued operations, and the data reported for 2007 and
2008 have been restated (see Section 9.1.2.3.4 Consolidated
net income after tax of discontinued operations, and Notes 3
and 11 to the consolidated fi nancial statements).
The United Kingdom operating segment is still presented
as an operating segment in the segment information of the
consolidated fi nancial statements.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM