registration document France Telecom 2009 - Orange.com

9 ANALYSIS
analysis of the financial position and earnings
OF THE GROUP’S FINANCIAL POSITION AND EARNINGS
9.1.2.3 From Group operating income to net income
(in millions of euros)
Financial years ended December 31
2009
2008
historical basis
2007
historical basis
Operating income 7,859 9,945 10,540
Cost of net fi nancial debt (1) (2,160) (2,807) (2,576)
Foreign exchange gains (losses) (65) (54) 10
Other fi nancial income and expenses (74) (96) (81)
Finance costs, net (2,299) (2,957) (2,647)
Income tax (2,295) (2,899) (1,245)
Consolidated net income after tax of continuing operations 3,265 4,089 6,648
Consolidated net income after tax of discontinued operations 200 403 171
Consolidated net income after tax 3,465 4,492 6,819
Net income attributable to owners of the parent 2,997 4,069 6,300
Net income attributable to non-controlling interests 468 423 519
(1) See the Financial glossary appendix.
9.1.2.3.1 Finance costs, net
France Telecom’s policy is not to use derivatives for speculative
purposes (see Section 9.1.4.3.3 Exposure to market risks and
fi nancial instruments, and Note 28 to the consolidated fi nancial
statements). For more information on risks relating to the
fi nancial markets, see Section 4.3 Financial risks .
Change in the France Telecom Group’s net fi nancial debt (see
the Financial glossary appendix) is set out in Section 9.1.4.3
Financial debt and fi nancial resources.
2009 vs. 2008
Net fi nance costs (see Note 9 to the consolidated fi nancial
statements) represented an expense of 2,299 million euros
in 2009, compared with an expense of 2,957 million euros
in 2008, or a gain of 658 million euros. This improvement
stemmed from i) a big reduction in the cost of net fi nancial debt
(see the Financial glossary appendix), with a positive impact of
647 million euros, due primarily to the change in the fair value of
the price guarantee given to minority shareholders of FT España
in 2008 for 381 million euros (the price guarantee ran out in 2009)
and, to a lesser extent, ii) a reduction in the expense relating to
other fi nancial income and expenses (22 million euros), partially
offset by iii) a slight deterioration in foreign exchange results
(11 million euros).
2008 vs. 2007
Net fi nance costs represented an expense of 2,957 million
euros in 2008, compared with an expense of 2,647 million
euros in 2007, or an additional expense of 310 million euros.
This deterioration is attributable to i) the increase in the cost of
net fi nancial debt, i.e. a negative impact of 231 million euros, ii)
the deterioration in foreign exchange results (64 million euros)
and iii) the increase in the expense relating to other fi nancial
income and expenses (15 million euros).
Cost of net financial debt
(in millions of euros)
Financial years ended December 31
2009
2008
historical basis
2007
historical basis
Cost of net financial debt (1) (2,160) (2,807) (2,576)
Net fi nancial debt at end of period (1) 33,941 35,859 37,980
Average net fi nancial debt outstanding over the period 32,950 35,344 37,884
Weighted average cost of net fi nancial debt (2) 6.54% 6.66% 6.46%
(1) See the Financial glossary appendix.
(2) The average weighted cost of net fi nancial debt is the ratio of net fi nancial debt, less exceptional and non-recurring items, to the average outstanding amount, calculated on the basis
of net fi nancial debt adjusted for non-interest bearing amounts, such as accrued interest payable and liabilities in respect of commitments to buy out non-controlling interests.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM