registration document France Telecom 2009 - Orange.com

analysis of the financial position and earnings
9
ANALYSIS OF FRANCE TELECOM S.A.’S FINANCIAL POSITION AND EARNINGS (FRENCH GAAP)
(in millions of euros)
Year ended December 31
2009 2008
Change
2009-2008
Interest expenses (excluding TDIRAs) (1,883) (2,652) 769
Net fi nancial debt at end of period (1) 28,257 26,442 1,815
Average net fi nancial debt outstanding over the period (2) 26,905 27,822 (917)
Weighted average cost of net fi nancial debt 6.42% 6.01% 0.41 pt
(1) See Section 9.2.3.5.
(2) Average outstanding net fi nancial debt adjusted for the amounts that do not give rise to interest, such as accrued interest payable and allowing the calculation of the weighted average
cost of net fi nancial debt.
Interest expenses for perpetual bonds redeemable for France
Telecom shares (TDIRAs) totaled (132) million euros in 2009,
compared with (187) million euros in 2008. The reduction in
the interest bill was attributable to the buyback of 1,420 million
euros in TDIRAs in 2009.
The net foreign exchange loss in 2009 was (58) million euros,
compared with (858) million euros in 2008. This stemmed
mainly from i) a 155 million euro increase in foreign exchange
gains net of foreign exchange losses between 2008 and 2009,
and ii) reversals of foreign exchange loss provisions totaling
256 million euros, as opposed to new provisions totaling (390)
million euros in 2008.
Other finance income and costs and accretion effects,
which totaled 71 million euros in 2009, mainly comprised i)
reversals of interest rate risk provisions totaling (10) million
euros, compared with new provisions totaling (223) million
euros in 2008, and ii) other fi nance income totaling 134 million
euros in 2009, compared with (160) million euros in 2008.
With respect to exposure to market risks and financial
instruments, France Telecom’s policy is not to use derivatives
for speculative purposes. Details of all market risks and
fi nancial instruments are provided in Note 6.5 to the separate
fi nancial statements, Exposure to Market Risks and Financial
Instruments.
9.2.2.3 Exceptional Income and Expense
(in millions of euros)
Year ended December 31
2009 2008
Gains on asset disposals and retirements (15,578) (1)
Change in provisions and other exceptional items 13,549 (276)
Exceptional items (2,029) (277)
The (15,578) million euros gain on asset disposals and
retirements mainly comprises the sale of ASB shares to Orange
S.A. for a total of (15,597) million euros.
The 13,549 million euro change in provisions and other
exceptional items mainly comprises i) the reversal of provisions
on ASB shares for a total of 15,334 million euros following
their sale to Orange S.A., partially offset by ii) net provisions for
risks and charges of (700 ) million euros, including the provision
relating to the “Part-Time Seniors” plan for a total of (563) million
euros and iii) a 964 million euro charge relative to the ruling
handed down by the European Court of First Instance .
9.2.2.4 Net Income
After the inclusion of (234) million euros in employee profi t
sharing in 2009, compared with (267) million euros in 2008, and
income tax (see Notes 4.10 and 4.11 to the separate fi nancial
statements), which represented net proceeds of 1,274 million
euros in 2009 (compared with 1,517 million euros in 2008),
France Telecom S.A.’s net income was (1,416) million euros in
2009, compared with 3,234 million euros in 2008.
There was no re-incorporation of overheads within the meaning
of Article 223 quinquies of the French General Tax Code in
2009. Non-deductible vehicle leasing costs, carried as socalled
“sumptuary” expenses in tax declaration 2057-A, were
re-incorporated.
9.2.3 Balance Sheet
The data below relates to changes in balance sheet line items in
France Telecom S.A.’s separate fi nancial statements.
9.2.3.1 Non-Current Assets
Net non-current assets decreased by 29,996 million euros to
a total of 88,421 million euros between 2008 and 2009. The
change resulted mainly from a 29,939 million euro reduction in
non-current fi nancial assets.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM
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