registration document France Telecom 2009 - Orange.com

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9 ANALYSIS analysis of the financial position and earnings OF THE GROUP’S FINANCIAL POSITION AND EARNINGS ■ partially offset by a 0.5% or 15 million euro increase in other external purchases (see the Financial glossary appendix). The ratio of other external purchases to revenues increased by 0.2 points between 2008 and 2009, reaching 7.7% in 2009. 2008 vs. 2007 External purchases totaled 19,893 million euros in 2008, or 41.7% of revenues. Between 2007 and 2008, the ratio of external purchases to revenues increased by 1 point on a historical basis and 1.2 points on a comparable basis. On a historical basis, the 4.9% or 930 million euro increase in external purchases between 2007 and 2008 takes into account factors that reduced external purchases, namely i) the impact of changes in the scope of consolidation and other changes, which represented 218 million euros, ii) partially offset by the impact of foreign exchange fl uctuations, for 57 million euros. On a comparable basis, external purchases increased by 5.8% or 1,090 million euros between 2007 and 2008. The increase was attributable to: ■ a 10.6% or 664 million euro increase in commercial expenses and content purchases. In addition to the impact stemming from the increase in business, the ratio of commercial expenses and content purchases to revenues increased by 1.1 points year-on-year to 14.6% in 2008, mainly in France, due largely to the impact of i) the upscaling of handsets and other products sold, combined with special efforts to promote and develop mobile broadband handsets, ii) increased efforts to promote customer loyalty and win new customers in a fi ercely competitive environment, and iii) a signifi cant growth in content purchases; ■ a 4.0% or 252 million euro increase in service fees and inter-operator costs, mainly refl ecting the increase in mobile telephony activity and international traffi c. The ratio of service fees and inter-operator costs to revenues increased by 0.2 points year-on-year to reach 13.8% in 2008, the development of abundance offers having been only partially offset by lower call termination prices; ■ a 3.8% or 101 million euro increase in other network expenses and IT expenses, relating mainly to the fi xed-line telephony business in France. Year-on-year, the increase in operational subcontracting fees covering technical maintenance stemmed primarily from the rapid growth of multi-service ADSL broadband offers. However, the ratio of other network expenses and IT expenses to revenues was stable at 5.7% between 2007 and 2008; and ■ a 2.1% or 73 million euro increase in other external purchasing, resulting from the increase in property expenses and subcontracting fees on call centers year-on-year. The ratio of other external purchases to revenues fell by 0.1 points to reach 7.6% between 2007 and 2008. Other operating income and expenses 2009 vs. 2008 In 2009, other operating expenses (net of other operating income, see the Financial glossary appendix and Note 5 to the consolidated fi nancial statements) totaled 1,728 million euros, or 3.8% of revenues. Between 2008 and 2009, other operating expenses (net of other operating income) increased by 14.7% on a historical basis and by 18.1% on a comparable basis. On a historical basis, other operating expenses (net of other operating income) increased by 222 million euros. Between both periods, this increase takes into account factors that reduced other operating expenses (net of other operating income), namely i) the impact of foreign exchange fl uctuations, which represented 35 million euros, and ii) the impact of changes in the scope of consolidation and other changes, for 7 million euros. On a comparable basis, other operating expenses (net of other operating income) increased by 264 million euros between 2008 and 2009, due to the increase in other operating expenses and, to a lesser extent, the decline in other operating income. The increase in operating expenses from one year to the next was attributable mainly to i) an increase in taxes, relating mainly to the introduction in France of a tax on services provided by electronic communications operators (an audiovisual tax of 0.9% of taxable revenues), and ii) an increase in other charges, due in particular to a 63 million euro fi ne made by the French competition authority against Orange Caraïbe (see Note 32 to the consolidated fi nancial statements). 2008 vs. 2007 In 2008, other operating expenses (net of other operating income) totaled 1,506 million euros, or 3.2% of revenues. Other operating expenses (net of other operating income) fell by 1.7% on a historical basis and by 4.2% on a comparable basis between 2007 and 2008. On a historical basis, the 27 million euro reduction in other operating expenses (net of other operating income) between 2007 and 2008 takes into account factors that increased other operating expenses (net of other operating income), including i) the impact of changes in the scope of consolidation and other changes, which represented 29 million euros, and ii) the impact of foreign exchange fl uctuations year-on-year, for 11 million euros. On a comparable basis, the 67 million euro reduction in other operating expenses (net of other operating income) between 2007 and 2008 was attributable to a 146 million euro reduction in other operating expenses, the positive impact of which was held back by a 79 million euro decline in other operating income. The year-on-year reduction in other operating expenses related primarily to the reduction in the French business tax and legal provisions. 208 2009 REGISTRATION DOCUMENT / FRANCE TELECOM
analysis of the financial position and earnings 9 ANALYSIS OF THE GROUP’S FINANCIAL POSITION AND EARNINGS Labour expenses In 2009, labour expenses (see the Financial glossary appendix and Note 5 to the consolidated fi nancial statements) included a 569 million euro expense representing a provision covering the implementation of the “Part-Time Seniors” plan in France following the signing in November 2009 of an agreement concerning the employment of older personnel (see Section 9.1.1.4 Key events in 2009 and Notes 5, 24 and 31 to the consolidated fi nancial statements). LABOUR EXPENSES (2) (in millions of euros) 2009 Financial years ended December 31 2008 2008 basis (1) basis comparable historical Chg. (%) Chg. (%) basis (1) basis comparable historical 2007 historical basis Wages and employee benefi t expenses (8,744) (8,006) (8,136) 9.2% 7.5% (8,278) Employee profi t-sharing (300) (318) (319) (5.6)% (5.9)% (359) Share-based compensation (50) (81) (81) (37.9)% (38.2)% (277) GROUP TOTAL (9,094) (8,405) (8,536) 8.2% 6.5% (8,914) As a % of revenues 19.8% 18.0% 17.9% 19.1% (1) Unaudited data. See Section 9.1.5.1 Transition from data on a historical basis to data on a comparable basis. (2) See the Financial glossary appendix and Note 5 to the consolidated fi nancial statements. Z WAGES AND EMPLOYEE BENEFIT EXPENSES As for labour expenses, the staff numbers given below do not include Orange in the United Kingdom. The number of Group employees (active employees at end of period, see the Financial glossary appendix), including Orange in the United Kingdom, totaled 180,580 as of December 31, 2009, compared with 186,049 as of December 31, 2008 and 187,331 as of December 31, 2007. WAGES AND EMPLOYEE BENEFIT EXPENSES & NUMBER OF EMPLOYEES 2009 Financial years ended December 31 2008 2008 basis (1) basis comparable historical Chg. (%) Chg. (%) basis (1) basis comparable historical 2007 historical basis Wages and employee benefit (2) (3) expenses France Telecom S.A. (6,024) (5,307) (5,300) 13.5% 13.7% (5,329) Subsidiaries in France (527) (515) (521) 2.3% 1.3% (634) International subsidiaries (2,193) (2,184) (2,315) 0.4% (5.3)% (2,315) GROUP TOTAL (8,744) (8,006) (8,136) 9.2% 7.5% (8,278) Average number of employees (full-time equivalents) (2) France Telecom S.A. 90,492 93,395 93,333 (3.1)% (3.0)% 95,858 Subsidiaries in France 7,596 7,604 7,676 (0.1)% (1.0)% 8,677 International subsidiaries 69,060 70,614 70,709 (2.2)% (2.3)% 68,371 GROUP TOTAL 167,148 171,613 171,718 (2.6)% (2.7)% 172,906 Number of employees (active employees at end of period) (2) France Telecom S.A. 92,570 94,359 94,359 (1.9)% (1.9)% 97,355 Subsidiaries in France 7,583 7,763 7,895 (2.3)% (4.0)% 8,817 International subsidiaries 68,052 71,230 70,872 (4.5)% (4.0)% 68,487 GROUP TOTAL 168,205 173,352 173,126 (3.0)% (2.8)% 174,659 (1) Unaudited data. See Section 9.1.5.1 Transition from data on a historical basis to data on a comparable basis. (2) See the Financial glossary appendix. (3) In millions of euros. 9 2009 REGISTRATION DOCUMENT / FRANCE TELECOM 209
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egistration document France Telecom
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table of contents 8 9 10 11 12 13 1
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nota This Registration Document ser
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3 CONSOLIDATED selected financial i
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4 risk factors In addition to the o
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4 OPERATIONAL risk factors RISKS In
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4 OPERATIONAL risk factors RISKS Fi
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4 LEGAL risk factors RISKS frequent
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4 FINANCIAL risk factors RISKS Cred
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4 FINANCIAL risk factors RISKS Equi
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5 INVESTMENTS information about the
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6 THE overview of the group’s bus
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6 THE overview of the group’s bus
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6 FRANCE overview of the group’s
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6 OVERVIEW overview of the group’
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11 innovation, research and develop
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14 ORGANIZATION administrative and
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14 STRUCTURE administrative and man
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14 INTERNAL administrative and mana
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14 REPORT administrative and manage
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15 RULES compensation and benefits
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15 TOTAL compensation and benefits
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15 COMPENSATION compensation and be
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17 WORKFORCE employees TRENDS The i
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17 WORKFORCE employees TRENDS Priva
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17 ORGANIZATION employees OF WORKIN
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17 employees COMPENSATION Z COMPENS
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17 employees COMPENSATION Option pl
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17 LABOUR employees RELATIONS Stock
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employees 17 TRAINING The preventio
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17 employees OUTSOURCING The amount
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18 DISTRIBUTION major shareholders
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20 NON financial information concer
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20 NOTES financial information conc
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20 DIVIDEND financial information c
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21 SHARE additional information CAP
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21 MEMORANDUM additional informatio
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26 DRAFT 2010 shareholders’ meeti
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26 REPORT 2010 shareholders’ meet
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26 STATUTORY 2010 shareholders’ m
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egistration document appendices TEC
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580 2009 REGISTRATION DOCUMENT / FR
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France Telecom Group
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