financial results 2018€¦ · this presentation contains information which may be deemed as...
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Financial Results
2018
0
The consolidated financial statements include the accounts of Sonatel and all its directly or indirectly
controlled subsidiaries (see page 36). Subsidiaries are incorporated using the full consolidation method
or the equity method of consolidation. Orange Sierra Leone owned at 50% is consolidated using the full
consolidation method in accordance with the shareholders’ agreement. Orange Services Group “OSG”
owned at 47% by Sonatel and its subsidiaries is accounted for in the consolidation scope using the
equity method of consolidation as of June 2018.
Transactions, balances and reciprocal incomes between integrated companies are eliminated.
The consolidated financial statements are presented in XOF. Assets, liabilities and income statements
of subsidiaries out of XOF zone are converted at the exchange rate prevailing at the closing period.
The Group’s consolidated financial statements are prepared in accordance with the West African
System of Accounting (SYSCOA), with a revised version effective since January 1, 2018
(SYSCOHADA).
consolidation scope – general information
Sonatel
2018 Financial Results 1
This presentation contains information which may be deemed as forecasted information.
Though the Company considers the statements and information rely on reasonable assumptions on the
publication date of the present release, they are by nature subject to risks and uncertainties, which may
give rise to a difference between the actual figures and those reported or induced in these statements
or information.
Sonatel cannot guarantee, or be held liable for the accuracy, thoroughness, coherence and
effectiveness of any of the statements or information presented in this release.
warning
Sonatel
2018 Financial Results 2
contents
Perspectives
Operational results
Highlights
Financial results
Appendices
Sonatel
2018 Financial Results 3
#1
Highlights Key messages
Key financial figures
Key operational figures
Environment and business
Network coverage
Highlights per country
Contribution to the economy
Corporate Social Responsibility
Commercial ads
Sonatel
2018 Financial results
A continuously
mutating environment
with structuring
evolutions in the
telecom sector
across all perimeters
Strong commercial
positions preserved
despite a slight decline in
subscribers’ base growth
due to recruitment based
on value-oriented
subscribers in Mali
Net income
preserved thanks to
the growth relays
despite an increase
in amortizations
Continued growth in
turnover and maintained
EBITDA growth in
absolute value
Continuing
transformation of
the business
model, oriented
data centric and
on mobile
financial services
4
3
5
1
2
5
Key messages
Sonatel : 2018 Financial Results
Turnover
The bar for the 1 000 billion
XOF turnover reached with
a 5% evolution supported
by data and Orange Money
268,4 Billion XOF
1 022 Billion XOF
462,6 Billion XOF
202,3 Billion XOF
EBITDA A 9.8 billion XOF
increase in terms of
absolute value but a
slight decrease in
EBITDA growth
compared to 2017 (2.2%
vs 2.8%).
1.2 basis points decrease
of the EBITDA rate at
45.3%.
Net income A 0.1 billion XOF
increase in absolute
value.
Stabilization of net
income following the
6.3% decrease
recorded in 2017.
Free cash flow 0.7 billion XOF decrease
in free cash flow (-0.3%)
due to a higher growth of
the investments
compared to EBITDA
(5.7% vs 2.2%)
+5% +2.2% stable -0.2%
Key financial figures
194,2 Billion XOF
CAPEX 10.6 billion XOF
increase in investments
(in absolute value).
The CAPEX/Turnover
ratio remains stable at
19%.
+5.7%
6 Sonatel : 2018 Financial Results
FMI subscribers (Fixed lines + Mobile +
Internet)
Evolution of the FMI base
mostly impacted by the
slowdown in recruitments
in Mali following the end of
bonuses at activation and
a refocus for base
management around value
219.1 thousand
29.7 Million
29.1 Million
10.8 Million
Mobile
subscribers (voix, sms et SVA)
2% drop in the mobile
subscribers’ base
compared to 2017 due to a
decrease in customer base
in Mali with their new
recruitment approach
centered around value.
Excluding Mali, the mobile
subscribers’ base
increased by +8.9%.
Data
subscribers (Internet Mobile)
Strengthening
contribution from data
thanks to a competitive
advantage on
connectivity notably with
the 4G in Senegal, Mali
and Bissau.
Internet
subscribers (ADSL + Fibre + Flybox
+Wimax)
Growth by +34%
compared to 2017
largely drawn by the
convergence and the
attractiveness of offers
around ADSL, the flybox
and fiber.
-1.7% -2% +17.5% +34%
Key operational figures
5.6 Million
Orange Money
subscribers
Continuously growing
activity (+1.2 Million active
subscribers, +36.1%
increase in turnover
compared to 2017) and
improvement in
profitability.
+26.1%
7 Sonatel : 2018 Financial Results
• Increase in investments within the Group
• Ongoing disbursement for license acquisitions (Sierra Leone,
Mali, Senegal)
• Sustained debt level (Senegal and Mali) related to external
treasury factors (short and medium term credit)
• Establishment of medium term financing for a coverage of
treasury needs accentuated by exceptional disbursements
(licenses, frequencies, CAPEX)
Customer experience
Revenues and charges Offers
Economy
CAPEX and financing
Regulations
• 4G+ launch in Senegal and Mali
• Launch of Orange Energy (Mali, Guinea and Senegal)
• Launch of the optical fiber in Mali
• Launch of LTE/TDD in Mali
• Accompaniment in the digital emergence in Senegal,
deployment of Act II of the Internet revolution (engagement
taken in 2017 for the decrease in mobile internet by 50% by
2019 was realized in 2018)
• Launch of international Orange Money transfer from France
to Guinea
• Development of data usage and voice bundles
• Finalization of TIGO Senegal takeover, acquisition of 4G
frequencies
• Strong commercial positions maintained (volume and value)
• Start of activities for the 3rd operator (QCELL) in Sierra
Leone
• Start of activities for the 3rd operator (TELECEL) in Mali
• 4G launch by the competitors in Mali and Sierra Leone
• Termination of activities of INTERCEL in Guinea
• Leadership conquest and confirmation of Orange in the area
of domestic transfer (Senegal)
Competition Country
• Confirmation for the COPC certification in Senegal
• NPS leadership in Senegal and improving
• 4G coverage in all the regional capitals in Senegal
• Contract with the new MSP Huawei, improvement of the
NUR indicator (Mali)
• Revenues maintained
• Significant growth in turnover drawn by the strengthening of
the contribution from mobile data and Orange Money
• Regulatory and accounting impacts
• Savings on direct costs (international outgoing, distributor
commissions, terminals) thus allowing to maintain a
sustained level in the EBITDA margin generated
• Proper management of direct costs, significant fiscal impacts
on the evolution of indirect costs
• Security context still tense in the North of Mali, re-election of
the outgoing president, establishment of a new government
• Political stalemate in Bissau, governmental instability
• Political tensions and crisis in many social sectors in Guinea
• Democratic transition in Sierra Leone, establishment of a
new administration
• Significant increase in OTTs and the SIMBOX fraud
• 4G frequency allocation in Sierra Leone
• Retroactive decrease in tariffs for national interconnection in
Senegal with a return to symmetry (9F/11F to 6F/6F per
minute)
• New interconnection tariff signed by the regulator in Mali: 11
XOF/Min in 2018 and 2 XOF/Text
• Sustainable development funds (0.5% of turnover) applicable
since mid-February 2018 in Mali
• Launch by the regulator in Senegal of the unbundling of the
local loop for other operators and ISPs to take advantage of
Sonatel’s wired network.
• LTE/TDD frequency allocation (Senegal)
• Ongoing discussions in Guinea on 4G frequencies
• Establishment of the CST tax in replacement of the
CODETTE and PST taxes with an 1% increase in taxation
(goes from 4% to 5% of turnover excluding interconnection
fees – Senegal)
• Increased fiscal pressure all in the countries of presence
• Favorable economic climate in Senegal and Mali
• Economic gloom in Bissau
• Foreign exchange challenges with the Leone and the
Guinean franc
Environment & Context
8 Sonatel : 2018 Financial Results
SENEGAL MALI GUINEA BISSAU SIERRA
LEONE
Mobile penetration 105% 106% 101% 79% 54%
2G Population coverage (%) 97.9% 94% 95% 90% 83.8%
3G Population coverage (%) 92.2% 66% 56% 69% 41%
4G Population coverage (%) 62.0% 31% N/A 34% N/A
3G Active subscribers (in million) 3.6 3.9 1.3 0.2 0.8
4G Active subscribers (in thousand) 708 229 N/A 27 N/A
Data penetration 40.7% 37.0% 18.4% 19.0% 41.0%
4G penetration rate 19.7% 5.7% N/A 3.9% N/A
Fiber (equipped households) 79 426 3 274 N/A N/A N/A
Network coverage
9 Sonatel : 2018 Financial Results
Senegal
Maintained turnover growth throughout 2018 thanks to the strengthening of
the contribution from mobile data and Orange Money (leader in domestic
transfer). Strengthening of investments on growing activities. Expansion of
the competitive scope with mobile finances and ISPs (Internet Service
Providers).
Volume market share
2G
3G
4G
4G+
53% -1.4 pts
Position
leader
Network
Sonatel : 2018 Financial Results
Population
15.7 million
Orange Money
base
2.0 million
Inflation
2.2%
CAPEX
84.7 milliards FCFA
-1,5%/YoY
pénétration
mobile
105%
penetration
data
40,7%
penetration
Orange Money
22,7%
Base mobile
8,7 million
+390,5 K (+4,7%)
Delta base mobile
Population
15.7 million
Orange Money
base
2.0 million
Inflation
2.2%
CAPEX
84.7 billion XOF
-1.5%/YoY
mobile
penetration
105%
data
penetration
40.7%
Orange Money
penetration
22.7%
Base mobile
8.7 million
+390.5 K (+4.7%)
Delta mobile base
10
Mali
Strong commercial positions maintained in terms of both volume and value.
Significant improvement in 3G coverage. Deployment of high speed
internet via LTE solutions (4G. TDD) and fiber. Increasing fiscal pressure.
Turnover growth impacted by the change in accounting method for the
Orange Money activity.
2G
3G
4G
56% -4.5 pts
leader
Sonatel : 2018 Financial Results
Volume market share Position Network Population
19 million
Orange Money
base
2.1 million
Inflation
1.6%
CAPEX
57.2 milliards FCFA
+13.3%/YoY
penetration
mobile
106%
penetration
data
37%
penetration
Orange Money
19.9%
Base mobile
10.5 million
-2.1 million (-16.5%) Delta base mobile
Population
19 million
Orange Money
base
2.1 million
Inflation
1.6%
CAPEX
57.2 billion XOF
+13.3%/YoY
mobile
penetration
106%
data
penetration
37%
Orange Money
penetration
19.9%
Base mobile
10.5 million
-2.1 million (-16.5%)
Delta mobile base
4G
11
Guinea
Consolidation of the strong commercial positions. Development of the
Orange Money activity. Major stakes around the availability of resources
(frequencies, numbering) and the finalization of negotiation on licenses
(concession, 4G). Welcomed growth in financial results.
2G
3G
63% +1.1 pts
leader
Sonatel : 2018 Financial Results
Volume market share Position Network Population
11,9 million
base
Orange Money
1,2 million
Inflation
8,5%
CAPEX
33,5 milliards FCFA
+22,6%/YoY
penetration
mobile
101%
penetration
data
32,9%
penetration
Orange Money
16%
Base mobile
7,3 million
+485,2 K (+7,2%) Delta base mobile
Population
11.9 million
Orange Money
base
1.2 million
Inflation
8.5%
CAPEX
33.5 billion XOF
+22.6%/YoY
mobile
penetration
101%
data
penetration
32.9%
Orange Money
penetration
16%
Base mobile
7.3 million
+485.2 K (+7.2%)
Delta parc mobile
3G
12
Bissau
Consolidation of the strong commercial positions in terms of volume and
value. Pursued development of 4G coverage and Orange Money
penetration. Participation of Orange to Guinea-Bissau major project to
connect to the ACE submarine cable. Financial results impacted by the
weak economy.
2G
3G
4G
56% +0.4 pts
leader
Sonatel : 2018 Financial Results
Volume market share Position Network Population
1,5 million
base
Orange Money
2 200
Inflation
2%
CAPEX
5,2 milliards FCFA
+12,8%/YoY
penetration
mobile
79%
penetration
data
19%
penetration
Orange Money
3,3%
Base mobile
682,7 mille
+36,1 K (+5,6%) Delta base mobile
Population
1.5 million
Orange Money
base
2 200
Inflation
2%
CAPEX
5.2 billion XOF
+12.8%/YoY
mobile
penetration
79%
data
penetration
19%
Orange Money
penetration
3.3%
Base mobile
682.7 thousand
+36.1 K (+5.6%)
Delta mobile base
4G
13
Sierra Leone
The dynamic of conquest maintained in the region with the
opening of new sites. Discussions with the regulator (taxes …).
Acquisition of 4G license
2G
3G
45% +4.5 pts
Challenger
second
Sonatel : 2018 Financial Results
Volume market share Position Network Population
7,8 million
base
Orange Money
0,4 million
Inflation
6,3%
CAPEX
13,6 milliards FCFA
-11,1%/YoY
penetration
mobile
54%
penetration
data
41%
penetration
Orange Money
18,9%
Base mobile
2 million
+469,9 K (+40,1%) Delta base mobile
Population
7,8 million
Orange Money
base
0,4 million
Inflation
6,3%
CAPEX
13,6 billion XOF
-11,1%/YoY
mobile
penetration
54%
data
penetration
41%
Orange Money
penetration
18.9%
Base mobile
2 million
+469,9 K (+40.1%)
Delta mobile base
4G
14
thanks to a wide commercial distribution
network and dynamic partners
of turnover generated to the profit of
local businesses in the countries of
presence
of contribution to the balance of payments
from foreign telecom operators
paid out as duties, taxes, royalties, social
contributions, custom duties and dividends
in the countries of presence
Contribution to the economy
Exports
Contribution to the
private sector
Job
creation
Contribution to the
budgetary revenues + 500
Billion XOF
+ 242 Billion XOF
+ 160 000 Indirect jobs + 4 500
Direct jobs
130 Billion XOF
15 Sonatel : 2018 Financial Results
Fight against plastic
pollution: Inauguration of
Récuplast booths by the
Minister for the
Environment
Environmental education
for 150 children of Sonatel
employees during their stay
in Saly with the expert Pr.
Adams Tidjani
Pursuit of the “Sonatel Clean
Cities” concept or “And defar
sunu gox” in the localities of
Matam, Dabia and Grand
Yoff
Sonatel employees with their
families planted close to 200
000 propagules with their
partner Nebeday and with the
support of Sonatel’s sports and
cultural association
Recruitment for the second
cohort of learners (100 in class
and 200 via online courses) for a
training in jobs in digital
technology.
Let’s Meet up #3 held on
October 18 at Sonatel’s
headquarter under the theme:
“APIs, business accelerators”.
The “POESAM” prizes for
Senegal were presented to the
laureates.
Awareness-building for children
between the ages of 12 and 16
years old on digital literacy by
initiating them to computer
coding in a simple and
entertaining manner.
“Super coders” workshops for the
children of Sonatel employees at
Sonatel Academy, workshops
animated by the learners from the
1st cohort
Hosting at Sonatel of a
workshop with the signatories
of the Diversity charter: E-
Health and environmental
actions
2018 Corporate Social responsibility
16
24th edition of the “Month of
Solidarity”, the Orange Mali
foundation invested 131
million XOF in partnership
with the Ministry of Solidarity
and Humanitarian Action.
June 2018, Orange Bissau
assists deprived children. Food
donations were distributed to 6
orphanages in 2018.
With the equipment provided to
our Digital Schools,
schoolchildren from around the
African continent can participate
to the Wiki challenge contest
hosted in Guinea.
Sonatel : 2018 Financial Results
2018 Commercial ads
The KeurguiBox pack is:
• A 3G/4G WIFI modem and a dedicated SIM
card
• A 30 Go welcome pass with the « Satisfied or
your money back guaranteed » under 15 days
model
• An initial credit of 2 500 XOF with the option
to call a fixed line
• An on-demand or subscription-based billing
system :
35 000 F CFA
17 Sonatel : 2018 Financial Results
#2
Operational results Customer base
Mobile customers
ARPU
Mobile data
Orange Money
Sonatel
2018 Financial Results
Customer base : fixed line, mobile and
Internet Subscribers
base 2016 2017 2018 17/16 18/17
Fixed line 277 859 285 294 302 243 2.7% 5.9%
Mobile 27 319 568 29 736 083 29 146 650 8.8% -2%
Internet 143 620 144 753* 219 144 0.8% 51%
TOTAL 27 741 047 30 166 130 29 668 037 8.7% -1.7%
278 2016
285 2017
302 2018
Fined line Subscribers (in thousand)
27.3 2016
29.7 2017
29.1 2018
144 2016
145 2017
219 2018
Mobile Subscribers (in million)
Internet Subscribers (in thousand)
o Mobile : 2% decrease in base due to the important drop in base in Mali (-16.5%) due to recruitment being
refocused on value, but attenuated by the increase in base in the other countries of presence
Mobile : good performance with a +5.9% increase compared to 2017 and supported by connectivity via
flybox an fiber
o High speed Internet : 51% growth compared to 2017, mostly drawn from the convergence and the
attractiveness of offers around ADSL, flybox and fiber notably in Senegal; and, the phased migration of
subscribers (Mali, Guinea) from WIMAX to 3G (flybox), combined with a good recruitment dynamic in
Bissau for the flybox.
19 Sonatel : 2018 Financial Results * Excluding WIMAX and flybox subscribers
Mobile subscribers base
Subscribers
base 2016 2017 2018 17/16 18/17
Senegal 7 900 150 8 344 083 8 734 542 5.6% 4.7%
Mali 11 262 654 12 539 918 10 468 834 11.3% -16.5%
Guinea 6 032 667 6 783 073 7 268 259 12.4% 7.2%
Bissau 600 384 646 573 682 701 7.7% 5.6%
Sierra Leone 1 523 713 1 422 436 1 992 314 -6.6% 40.1%
TOTAL 27 319 568 29 736 083 29 146 650 8.8% -2%
o Senegal : Back to a subscribers’ base from prior to the identifications thanks a better control of the churn, an increase in acquisitions and a good commercial dynamic
around 4G, thus explaining the 4.7% growth.
o Mali : 16.5% decrease in base as a result of the end of the massive recruitments to the profit of acquiring value-oriented subscribers.
o Guinea : Maintained recruitment pace thanks to the opening of new sites combined with 3G coverage in all 304 sub-prefectures and sustained commercial animations
despite customer identification constraints.
o Bissau : Evolution of the base (+5.6%) thanks the dynamism in the new offers in mobile data and Orange Money usages.
o Sierra Leone : The subscribers’ base increased by +40.1% thanks to a coverage extension, a new dynamic of conquest leaning on the expansion of network of agencies
and on innovative offers (bundles)
30%
36%
25%
2% 7%
Senegal Mali Guinea
Bissau Sierra Leone
20 Sonatel : 2018 Financial Results
ARPU
Average monthly
ARPU Segment 2016 2017 2018 17/16 18/17
Senegal
XOF
Fixed line 95 084 94 838 73 579 -0.3% -22%
Mobile prepaid 2 661 2 794 3 063 5% 9.6%
Mali
XOF
Mobile prepaid
1 912 1 618 1 930 -15.4% 19.3%
Guinea
GNF
Mobile prepaid
26 006 26 448 26 452 1.7% 0.0%
Bissau
XOF
Mobile prepaid
2 842 2 832 2 701 -0.4% -4.6%
Sierra Leone
SLL
Mobile prepaid
18 230 19 542 18 729 7.2% -4.2%
21
o Senegal : Appreciation in Senegal related to the important increase in mobile top ups thanks to the revenues generated by mobile data, the strengthening of the
contribution from Orange Money usages, value-added services and thanks to the sale of terminals, despite a decrease in international incoming revenues.
o Mali : Progression in ARPU mostly pulled by stable revenues in the face of a significant decrease in base (preservation of the value-oriented and top up oriented base)
o Guinea : Stable ARPU following a growth in base and revenues in the same proportions, translating a good management of the number of offers.
o Bissau : Decrease in ARPU mostly related to a higher increase in subscribers’ base than in revenues, the level of gratuity associated with the explosion in offers and
the decrease in international incoming traffic.
o Sierra Leone : Decrease in ARPU due to a more significant growth in base than in revenues.
Sonatel : 2018 Financial Results
Mobile Data
Turnover Mobile data
ARPU Weight on group turnover
Contribution to
turnover growth
Active mobile data
subscribers
Customer base
delta
Active 4G
subscribers
192 Billion XOF
+41.3%
1 483 XOF
+20.3%
18.7% +4.8 pts
114% +1.9 pts
10.8 Million
+17.5%
1.6 Million
+17.5%
1 328 thousand
+88.2%
22 Sonatel : 2018 Financial Results
Orange Money
Turnover Value of transactions Weight on group turnover Contribution to
turnover growth
62.8 Billion XOF
+36.1%
8 000 Billion XOF
+53.8%
6.1% +1.4 pts
33.9% +5.8 pts
Subscribers
13.1 Million
+11.6%
Active
subscribers
5.6 Million
+26.1%
Volume of transactions
800,6 Million
+70.6%
Value of transactions / GDP
24.5% +4.1 pts
23 Sonatel : 2018 Financial Results
#3
Financial results Financial results
Turnover
Margins
CAPEX
Sonatel
2018 Financial Results
Financial results
Solid financial performances despite the slowing impact from unfavorable fiscal and regulatory measures. Stabilization of
free cash flow compared to 2017 (pro forma).
* Nominal 2017 Pro forma following the SYSCOHADA reform 25
In billion XOF 2016 2017 2017 PF* 2018 17/16 18/17 18/17
PF*
Turnover 905 972.9 972.9 1022 7.5% 5% 5%
EBITDA 440.5 452.8 451.9 462.6 2.8% 2.2% 2.4%
EBITDA margin 48.7% 46.5% 46.4% 45.3% -2.1 pts -1.3 pts -1.1 pts
Operating results 323.2 307.8 306.9 312.3 -4.8% 3.3% 3.6%
Operating margin 35.7% 31.6% 31.5% 30.6% -4.1 pts -1 pt -0.9 pt
Net income 215.9 202.2 201.5 202.3 -6.3% 0.0% 0.4%
Net margin 23.9% 20.8% 20.7% 19.8% -3.1 pts -1.0 pt -0.9 pt
CAPEX 153.9 183.7 183.7 194.2 19.4% 5.7% 5.7%
CAPEX rate 17% 18.9% 18.9% 19% 1.9 pts 0.1 pt 0.1 pt
Free Cash Flow 286.6 269 268.2 268.3 -6.1% -0.2% -0.04%
Sonatel : 2018 Financial Results
Turnover
Maintained presence in Senegal and the strengthening in Guinea of the main consolidated financial indicators of the Group. Mali’s
contribution slowing due to the change in accounting method in the calculation of turnover and Orange Money.
49.1 billion XOF turnover growth, mainly thanks to Senegal and Guinea. The growth is supported by mobile data and Orange Money, ADSL
and integration, despite the decrease in international incoming and fixed voice.
Weight in
activity Growth
Fixed line
Mobile
Mobile data
VAS
Orange Money
International Wholesale
Others
3%
41%
36%
-20%
1%
5%
7.1%
19%
6%
13.%
49%
4%
42%
34%
18%
2% 4%
Senegal Mali Guinea
Bissau Sierra Leone
Contribution to turnover per
country
Contribution to turnover by activity
1.5% 11%
26
Group
Turnover
Sonatel : 2018 Financial Results
Margins
Average 1 basis point decrease in margins as a result of fiscal and regulatory impacts as well as the strengthening of
low margin revenue lines (mobile data, Orange Money and value-added services).
27
35.7% 31.6%
30.6%
2018 2017 2016
23.9%
20.8% 19.8%
2018 2017 2016
48.7% 46.5% 45.3%
2018 2017 2016
Net margin Operating margin EBITDA margin
Sonatel : 2018 Financial Results
Investments
2018 investments for the Sonatel Group totaled 194.3 billion XOF with a 5.7% growth (+10 billion XOF) with a CAPEX/Turnover
ratio stable at 19%. 2018 CAPEX focused mainly on network, particularly in Mali, Senegal and Guinea with the aim to improve the
quality of service and extend our strategic advantage on fixed and mobile very high speed connectivity. CAPEX in areas outside
of network increased by 30.9% thanks to IT (8.8%), services platforms (48.8%) and other assets (50.8%).
Investment In Million XOF
2017 2018 Variation
2018/2017
Network 156 171 158 176 1.3%
Others 27 573 36 115 30.9%
TOTAL 183 744 194 291 5.7%
CAPEX rate 18.9% 19% 0.1 pt
85
57
33
5 14
Senegal Mali Guinea
Bissau Sierra Leone
Investment breakdown per country In Billion XOF
28 Sonatel : 2018 Financial Results
Investment breakdown per activity
#4
Perspectives 2019 Perspectives
Sonatel
2018 Financial results
2019 Perspectives
• 2018 has been marked by a favorable economic environment in the XOF zone diluted by impacting
fiscal and regulatory measures
• Despite growing competition in our main markets (Senegal and Mali), the Group has been able to
maintained its strong commercial positions in terms of both volume and value thanks to a good
recruitment dynamic and control over the churn
• The Group will pursue with the development of very high speed internet through all the fixed line and
mobile technologies as well as the enrichment of its mobile financial services offer; and, will take part in
the digital transformation and in the strengthening of our contribution for an emerging digital economy in
our countries of presence.
• Securing core revenues through the acceleration in the penetration of special offers and the expansion
of corridors on the wholesale segment, a strong target on value and costs optimization should allow the
Group to enhance its trajectories of profitability.
• The Group reaffirms its ambition to offer to its customers an incomparable experience, through a
recognized technical and commercial QoS for quality (NPS leader).
30 Sonatel : 2018 Financial Results
#5
Appendices 2018 Financial statements
Statement of conformity
2018 dividend draft resolution
Sonatel
2018 Financial results 31
32
33
2018 Consolidated financial statements
1. Note to readers
2. Consolidation scope
3. Consolidated financial statements
4. Notes on consolidated accounts
5. Accounting methods and principles
34 Sonatel : 2018 Financial Results
• The consolidated financial statements include the accounts of Sonatel and all its directly or indirectly controlled
subsidiaries. Subsidiaries are incorporated using the full consolidation method. Orange Sierra Leone owned at 50% is
consolidated using the full consolidation method in accordance with the shareholders’ agreement.
• Orange Services Group is accounted for in the consolidation scope using the equity method of consolidation.
• Transactions, balances and reciprocal incomes between integrated companies are eliminated.
• The consolidated financial statements are presented in XOF. Assets, liabilities and income statements of subsidiaries
out of XOF zone are converted at the exchange rate prevailing at the closing period.
• The Group’s consolidated financial statements are prepared in accordance with the Revised West African System of
Accounting (SYSCOA).
• With the implementation of the reformed SYSCOHADA as of January 1st 2018, the accounts closed on December
2017 have been re-accounted for in compliance with the new reform and thus allow for comparability between the two
accounting years. On the presentation of the financial statements of December 31, 2018, 2017 is represented on 2
columns: R = Nominal 2017, P = 2017 Pro forma, in other words re-accounted for according to the SYSCOHADA
reform.
Note to the reader – consolidation scope
35 Sonatel : 2018 Financial Results
36
Note to the reader – consolidation scope
Entry in 2018
Sonatel : 2018 Financial Results
Assets (in million XOF)
37
ASSETS GROSS AMORT/PROV NET 12/31/18 NET 12/31/17 P NET 12/31/17 R
FIXED ASSETS
FIXED CHARES 0 0 0 898
INTANGIBLE ASSETS 501 831 214 258 287 573 296 394 297 606
GOODWILL 73 983 11 919 62 063 72 781 72 781
OTHER INTANGIBLE ASSETS 427 848 202 339 225 509 223 612 224 825
TANGIBLE ASSETS 1 844 087 1 137 289 706 798 652 255 652 255
ADVANCES AND INSTALLMENTS 0 0 0 0 0
FINANCIAL ASSETS 164 282 930 163 352 155 950 155 950
DEFERRED TAXES 18 741 0 18 741 19 393 19 393
EQUITY AFFILIATES 3 995 0 3 995 0 0
PARTIPATION AND LINKED DEBTS 5 686 583 5 103 9 416 9 416
LOANS AND OTHER FINANCIAL ASSETS 135 860 348 135 513 127 141 127 141
TOTAL (I) 2 510 200 1 352 478 1 157 722 1 104 599 1 106 709
CURRENT ASSETS
INVENTORY 14 345 1 188 13 157 14 238 14 236
RECEIVABLES AND ASSIMILATED FUNCTIONS 315 602 30 548 285 054 275 081 243 380
RECEIVABLES 160 039 30 303 129 735 121 237 120 951
OTHER RECEIVABLES 155 564 245 155 319 153 844 122 428
TOTAL (II) 329 948 31 736 298 212 289 319 257 616
ASSETS - CASH FLOW TOTAL (III) 317 439 0 317 439 231 339 231 339
TOTAL FIXED ASSETS 3 157 587 1 384 214 1 773 373 1 625 257 1 595 664
Sonatel : 2018 Financial Results
Liabilities (in million XOF)
38
LIABILITIES NET 12/31/18 NET 12/31/17 P NET 12/31/17 R
EQUITY
EQUITY 50 000 50 000 50 000
ADDITIONAL PAID IN CAPITAL AND CONSOLIDATED RESERVES 403 276 407 353 407 353
CONVERSION VARIANCE 819 -3 688 -3 688
NET RESULT (part of the consolidated company) 172 467 171 801 172 454
OTHER EQUITY 0 0 0
PART OF THE CONSOLIDATED COMPANY 626 561 625 466 626 119
PART OF MINORITY 90 865 89 752 89 822
EQUITY OF TOTAL CONSOLIDATED TOTAL (A) 717 426 715 218 715 941
FINANCIAL DEBTS AND ASSIMILATED RESSOURCES
DEFERRED TAXES 649 661 661
LOANS AND FINANCIAL DEBTS 190 053 158 329 158 329
FINANCIAL PROVISIONS FOR CONTINGENIES AND CHARGES 72 293 61 020 59 694
TOTAL (B) 262 995 220 010 218 685
TOTAL STABLE EQUITY I = (A + B) 980 421 935 229 934 626
CURRENT LIABILITIES
ACCOUNTS PAYABLES AND RELATED ACCOUNTS 264 233 273 017 273 017
OTHER DEBTS 304 730 270 056 241 065
TOTAL (II) 568 963 543 072 514 082
LIABILITIES - CASH FLOW TOTAL(III) 223 989 146 956 146 956
TOTAL LIABILITIES 1 773 373 1 625 257 1 595 664
Sonatel : 2018 Financial Results
Income statement (in million XOF)
39
CONSOLIDATED INCOME STATEMENT 12/31/2018 12/31/2017 12/31/2017 R TURNOVER 1 021 956 972 905 972 905 STOCKED PRODUCTION - - - IMMOBILIZED PRODUCTION 2 040 4 687 4 687 OTHER OPERATING REVENUE 37 175 21 602 16 800
I - PRODUCTION FOR THE YEAR 1 061 170 999 194 994 393 CONSUMED PURCHASES 63 338 61 746 61 237 EXTERNAL SERVICES AND OTHER CONSUMPTIONS 416 938 390 339 390 869
II - CONSUPTION FOR THE YEAR 480 276 452 085 452 106 VALUE-ADDED OF THE ACTIVITIES 580 895 547 109 542 287
STAFF COSTS 108 417 94 069 93 625 GROSS OPERATING PROFIT 472 477 453 040 448 662
DEPRECIATION AND PROVISIONS 168 955 161 192 160 593 REVERSALS PRODUCTS 8 764 15 088 19 718
OPERATING PROFIT 312 286 306 936 307 787 FINANCIAL REVENUES 11 236 10 312 10 312 FINANCIAL EXPENSES 24 753 18 962 18 971
ORDINARY ACTIVITIES RESULT 298 769 298 285 299 128 O.O.A. RESULTS - 3 380 - 1 662 - 1 662
RESULTS BEFORE TAX 295 390 296 624 297 467 TAXES DUE ON RESULTS 95 567 93 502 93 622 DEFERRED TAX 2 474 - 1 659 - 1 659
NET RESULT OF INTEGRATED COMPANIES 202 297 201 463 202 186 SHARE IN NET INCOME OF EQUITY AFFILIATES - 46 - -
NET RESULT OF THE INTEGRATED COMPANY 202 251 201 463 202 186 PART OF MINORITY 29 784 29 662 29 732
PART OF THE CONSOLIDATED COMPANY 172 467 171 801 172 454
Sonatel : 2018 Financial Results
Sonatel : Résultats Financiers 2018
TAFIRE I (in million XOF)
40
AMOUNT AMOUNT (million XOF) (million XOF) GOP 470 137 (SA) FINANCIAL FEES 16 976 (TT) OPERATING EXPENSE TRANSFER 2 340 (SC) EXCHANGE RATE LOSS 5 880 (UA) FINANCIAL INCOME 5 531 (SL) EXPENSES OUTSIDE ORDINARY ACTIVITIES 320 (UE) FINANCIAL EXPENSES TRANSFER 1 (SQ) PARTICIPATION 0 (UC) EXCHANGE RATE PROFIT 5 329 (SR) INCOME TAX 95 567 (UL) O.O.A PRODUCTS 1 875 (UN) O.O.A EXPENSE TRANSFER 0
Total (I) 118 743 Total (II) 485 214
CAFG: Total(II) - Total(I) 366 471 FINANCING FROM CASH FLOW Dividends distributed during the fiscal year 195 404 AF = GCF – Dividends distributed during the fiscal year 171 067
WORKING CAPITAL NEED CHANGES (N.W.C)
Change N.W.C = Inventory Changes + Debt Changes + Notes Payable Changes
Inventory Changes Uses Resources
N - (N-1) (increase +) (decrease -)
(BC) Goods 0 0
(BD) RAW MATERIAL AND OTHER SUPPLIES 0 1 103
(BE) IN PROGRESS 0 0
(BF) MANUFACTURED PRODUCTS 0 0
(A) INVENTORY GLOBAL NET CHANGES 0 1 103
TAFIRE I – next (in million XOF)
41
CHANGE IN RECEIVABLES Uses Resources (increase +) (decrease -) SUPPLIERS, ADVANCES PAID 5 718 0 CUSTOMERS 0 55 479 OTHER RECEIVABLES 60 352 0 CONVERSION GAP - ASSETS 0 1 583
TOTAL 66 070 57 063 (B)GLOBAL NET CHANGE IN RECEIVABLES 9 008 0
DEBT CHANGE Uses Resources (increase +) (decrease -)
CUSTOMERS, ADVANCES PAID 0 589 TRADE SUPPLIERS 63 445 0 TAX LIABILITIES 0 32 526 SOCIAL LIABILITIES 3 108 0 OTHER LIABILITIES 0 66 739 CONVERSION GAP – LIABILITIES 36 0 PROVISIONS FOR CONTINGENCIES 171 0 TOTAL 66 761 99 854
(C)GLOBAL NET CHANGE IN DEBT 0 33 094 VARIATION DU BFE= A + B- C 0 25 188 OPERATING CASH SURPLUS OCS = GOP – N.W.C CHANGE – IMMOBILIZED PRODUCTION 2018 2017 GOP 470 137 448 662 - CHANGES IN NWC (NETWORKING CAPITAL) 25 188 16 943
- IMMOBILIZED PRODUCTION -2 040 -4 687 GOP 493 286 460 919
Sonatel : 2018 Financial Results
TAFIRE II (in million XOF)
42
2018 2017 Uses Resources U - ; R +
I-INVESTMENTS AND DISINVESTMENTS Fixed charges (increase during period) 0 0 Internal growth Acquisition/Transfers of intangible assets 22 042 0 -187 002 Acquisition/Transfers of tangible assets 195 562 7 784 -176 612 External growth Acquisition/Transfers of financial assets 24 835 21 430 -4 416 TOTAL INVESTMENTS 213 225 0 -368 031 II-CHANGE IN OPERATING WORKING CAPITAL NEED 0 25 188 16 943 A-ECONOMIC USES TO BE FINANCED FF+GG 188 037 0 -351 087 III-USES/RESOURCES (B.F.; O.O.A) 8 365 0 35 414 IV-RESTRAINED FINANCIAL USES 12 510 -25 388 Refund (based on payment schedule) of loans and financial debts B-TOTAL USES TO BE FINANCED 208 912 0 -341 061 V-INTERNAL FINANCING Dividends (uses) / CGF (resources) 195 404 366 471 159 534 VI-EQUITY FINANCING Increase in capital by new contribution 2 322 7 700 Investments from grants 0 0 Equity withdrawals 0 0
Sonatel : 2018 Financial Results
2018 2017 Uses Resources U - ; R + VII-FINANCING BY NEW LOANS Loans 0 44 403 206 198 Other financing debts 0 0 -1 C-NET FINANCING RESOURCES 0 217 792 373 430 D-EXCESS OR SHORTAGE OF RESOURCES FUNDING (C-B) 0 9 067 32 369 VIII-CASH VARIATION Net cash At the end of the period + or - 93 450 0 -84 383 At the beginning of the period + or - 84 383 0 -52 014 Cash change (+ if uses; - if resource) 9 067 0 -32 369
CONTROL (Based on N and N-1 balance sheet volumes) Uses Resources
12/31/201
8 12/31/201
8 Working Capital change: WC (N) – WC (N-1) 5 990 0 Working Capital Need change: WCN (N) – WCN (N-1) 0 15 057 Cash change (T): T(N) – T(N-1) 9 067 0 TOTAL 15 057 15 057
TAFIRE II – next (in million XOF)
43
Statement of changes in equity (in million XOF)
44
Balance Social equity Other Count Final
Before Issuance of share to Balance after
Distribution Cash In-kind Incorporated Decrease Increase Decrease Conversion Account Distribution
distribution distribution reserves variance Transfer
Equity 50 000 -2 385 2 385 50 000 Issuance, merger, contribution premium 3 320 69 3 388
Re-evaluation variance -3 689 4 507 819
Legal reserve 22 709 106 222 23 036 Statutory and contractual reserves 0 0
Other reserve 462 063 -4 486 1 338 1 747 460 662
Carried over balance -20 648 0 -3 -2 079 -22 730 Previous year result not yet allocated 0 0
Result for the year 202 186 202 251 -195 404 -6 782 202 251
Investment grant 0 0
Regulated provisions 0 0
TOTAL 715 941 0 0 0 0 202 251 -199 890 -876 0 717 426
Table of changes, consolidated debts and off balance sheet consolidated
commitments (in million XOF)
45
Balance Incurred Incorpo- Net Other Balance Collateral beginning debts Payments rated conversion movements end of of secured of year to equity variance year debts (1) (2) (3) (4) (5) (6) (7) Convertible bond debts Other bonds debts
Loans and debt credit institutions 156 492 43 185 14 775 51 184 954 Various financial loans and debts 1 837 3 329 57 -10 0 5 099 TOTAL 158 329 46 514 14 832 0 41 0 190 053
OFF BALANCE SHEET CONSOLIDATED COMMITMENTS Engagements Given Received (1) (1) Secured commitments With real collaterals 743 Other secured commitments 6 047 5 082 Mutual commitments In terms of leasing Definite orders
Sonatel : 2018 Financial Results
Turnover breakdown table (in million XOF)
46
2018 2017
Turnover % of turnover Turnover % of turnover
A)Sales allocation by activity
Fixed lines 28 854 2.82% 30 202 3.1%
Mobile lines including data 733 481 71.77% 670 788 68.95%
Orange Money 62 793 6.14% 46 149 4.74%
Fixed internet line 43 560 4.26% 39 979 4.11%
National interconnection 29 943 2.93% 34 427 3.54%
International interconnection 97 357 9.53% 124 580 12.80%
Other wholesale (LL, Roaming,
Operators) 10 762 1.05% 13 124 1.35%
Data and integration 11 593 1.13% 11 219 1.15%
Other income 3 613 0.35% 2 437 0.25%
Total 1 021 956 100% 972 905 100%
B)Sales allocation by geographic
areas
Africa (ECOWAS) 723 106 70.76% 693 550 71.29%
Africa (outside ECOWAS) 214 448 20.98% 162 101 16.66%
Asia 2 051 0.2% 2 025 0.21%
America 1 092 0.11% 1 779 0.18%
Europe 81 258 7.95% 113 450 11.66%
TOTAL 1 021 956 100% 972 905 100%
Workforce per category
47
2018 2017 Workforce Payroll Workforce Payroll
Staff under payroll 3 133 101 194 3 035 87 715 Manager and senior executives 1 587 61 870 1 473 50 201 Middle managers 1 046 28 044 1 022 26 982 Foremen 381 9 105 476 9 577 Employees and workers 119 2 175 64 955 Temporary staff 1 483 7 223 1 309 5 910
TOTALS 4 616 108 418 4 344 93 625
Sonatel : 2018 Financial Results
48
Notes on the consolidated accounts (in million XOF unless otherwise specified)
1- Immobilized charges 2018 2017
0 898
They correspond to the acquisition cost of fixed assets. With the SYSCOHADA reform, the balance was transferred to the transitional
account 475100, then spread accross expense accounts by origin.
2 - Intagible assets
Gross Amort. Net 2018 Net 2017
Software licenses, Patents, Trademarks 424 756 -202 917 221 839 221 747
Business intangibles 3 092 578 3 670 3 077
Goodwill 73 983 -11 919 62 063 72 781
501 831 -214 258 287 573 297 606
This item is constituted of licenses to operate telecom networks for the mobile and the fixed lines, software licenses, patents and
trademarks, as well as assets for Sonatel Mobiles, Sonatel Business Solutions and Orange Guinea.
The increase is due to the acquisition of licenses and software by Sonatel, Sonatel Mobiles and Orange Mali.
The 73 983 million in goodwill corresponds to the difference between the acquisition cost of Orange Sierra Leone and our shares in
ownership in the mentioned subsidiary. In gross value, it decreased by 6 389 million, corresponding to the discount on the acquisition
price received from Bharti.
Sonatel : 2018 Financial Results
49
Notes on the consolidated accounts (in million XOF unless otherwise specified)
3 - Tangible assets
Gross Amort Net 2018 Net 2017
- Land and enhancement work 8 045 -19 8 026 6 506
- Buildings and facilities 90 462 -72 853 17 609 18 974
- Operating equipment: switching, transmission lines and networks, energy 1 630 299 -978 560 651 739 605 881
- Office furniture and equipment 87 211 -66 985 20 226 13 091
- Vehicles 28 070 -18 871 9 199 7 803 1 844 087 -1 137 289 706 798 652 255
The increase in tangible assets from 2017 to 2018 is related to the strengthening of the investment programs thus resulting in the
advancement of the following items (netted):
- Land and development work: +1 520 million,
- Buildings and installations: -1 365 million,
- Transmission: +46 702 million,
- Switching: +2 417 million,
- Data networks: -1 367 million,
- Energy: +5 016 million,
- Lines and networks: -17 million,
- Others: -6 893 million,
- Vehicles: +1 396 million,
- Office furniture and equipment: +7 135 million.
Sonatel : 2018 Financial Results
4 - Advances and installments on Fixed Assets 2018 2017
Advance payments are paid amounts to suppliers at the start of work. 0 0
5 - Financial Assets Gross Prov. Net 2018 Net 2017
- Non-consolidated securities 5 686 -583 5 103 9 416
- Investment in equity affiliates 3 995 0 3 995
- Staff loans 127 377 -347 127 031 123 404
- GOS loan 2 0 2 0
- Bonds 16 0 16 688
- Deposits and guarantees paid 8 466 -1 8 465 3 048
- Deferred taxes - Assets 18 741 0 18 741 19 393
164 282 -930 163 352 155 950
Change in non-consolidated securities (see detail for 6th point - non consolidated securities) is due to integration of GOS (Orange Services
Group) in the consolidation scope.
The item Staff loans correspond to loans granted to employees.
The decrease in bonds is explained by coupons reimbursement on government bonds in Senegal.
Deposits and guarantees increased by 5 417 million due to the security deposits transferred to Huawei by Orange Mali for the project to outsource
network maintenance; and security deposits transferred by Orange Guinea to Total (supply in fuel) and IPT Powertech Guinea SA (ESCO project)
for the amount of 2 742 million.
Deferred taxes – assets are a result of the temporary differences between the accounting and tax results. 50
Notes on the consolidated accounts (in million XOF unless otherwise specified)
51
Notes on the consolidated accounts (in million XOF unless otherwise specified)
6 - Non-Consolidated securities Gross Prov. Net 2018 Net 2017
SCGB SA 3 0 3 0
AMC (OSL) 1 0 1 0
Canal Horizons 5 0 5 5
Rascom 794 0 794 794
Ico 533 -533 0 0
Technopole 8 0 8 8
Jeune Afrique 100 -50 50 50
Orange Services Group 0 0 0 4 420
Guilab 3 785 0 3 785 3 681
Teranga Capital 446 0 446 446
GIM UEMOA 12 0 12 12 5 686 -583 5 103 9 416
7 - Net inventory Gross Prov 2018 2017
14 345 -1 188 13 157 14 236
Gross inventory essentially consists:
- fuel: 8 million
- lines and networks supplies : 3 322 million
- terminals for subscribers: 4 866 million
- phone cards: 2 651 million
- peritelephony: 1 106 million
- internet keys: 226 million
- office furniture: 132 million
- in-route inventory: 2 040 million The decrease is explained partly by the disposal of terminals (-1 584 million), phone cards (-763 million), and peritelephony (-200 million), and the
other hand by the storage of lines and network supplies (+840 million) and of in-route inventory (+840 million).
Inventories considered dead (disqualified), dormant (unused for a year) and defective are depreciated at a 100%.
52
Notes on the consolidated accounts (in million XOF unless otherwise specified)
8 - Net Accounts Receivable Gross Prov 2018 2017
- Receivables residential customers 53 643 -27 156 26 487 34 562
- Receivables Clients State 10 958 0 10 958 13 196
- Receivabless Clients Operators 67 500 -3 148 64 352 43 542
- Services to be billed 27 938 0 27 938 29 652
160 039 -30 303 129 735 120 951
The decrease in residential clients receivables is a result of an improvement in collection.
Receivables state (Government of Senegal) is still decreasing with the government plans to decrease its phone bill.
The increase in receivables operators results from a collection problem with the operators TIGO, EXPRESSO and HAYO in
Senegal.
Services to be billed take into account billing for December or the fourth quarter for 2018 for mobile and fixed lines, internet,
business solutions, hubbing, roaming, as well as national and international interconnection.
Doubtful debts are 100% provisioned based on seniority:
- fixed line residential clients for over 6 months,
- mobile clients for over 90 days,
- operators (Africa, Latin America and Asia) for over 12 years and on a case-by-case basis for other countries.
Receivables are considered as bad debts and written off after 5 years apart for operators subject to the discretion of the portfolio
managers.
Sonatel : 2018 Financial Results
53
Notes on the consolidated accounts (in million XOF unless otherwise specified)
9 - Other Net Receivables Gross Prov 2018 2017
- Advances and payments to suppliers 10 701 0 10 701 5 472
- Advance and payments to staff 600 -53 547 685
- State taxes and taxes receivable 86 416 0 86 416 75 297
- Current accounts of the group's companies 1 658 0 1 658 5 966
- Other debtors 53 662 -192 53 470 32 379
- Regulatory account - Asset (conversion differences) 2 528 0 2 528 2 629 155 564 -245 155 319 122 428
The increase in advances and payments to suppliers is attributable to credit notes accounted for from international operators by Sonatel
Mobiles (2 963 million), Orange Guinea (1 363 million), suppliers advances for OSL (8 931 million), plus an advance of 1 168 paid by Sonatel
to Main One for the project for the submarine cable.
The considerable increase in taxes is largely due to IS and IRVM advances paid in the different countries of presence and to tax credits.
The payment by Orange SA of an old receivable on Sonatel justifies the decrease in the balance in the Group’s companies current
accounts.
The increase by 21 091 million in other debtors is explained by the acquisition of shares to be distributed to the staff in Senegal (+1 865
million), the increase in CSM receivables (+1 417 million) due to rejected settlements that were to the profit of Sonatel, because of issues
related to bank details (resolution in-progress), the transitional account associated with the SYSCOHADA reform (1 706 million), operators
netting in OSL (8 945 million) as well as ATD.
NB: Foreign currency receivables are valued at closing price.
Sonatel : 2018 Financial Results
54
Notes on the consolidated accounts (in million XOF unless otherwise specified)
10 - Net Cash Assets 2018 2017
- Banks 218 856 157 578
- UV Orange Money in circulation (electronic money) 88 780 66 286
- Cash register 1 216 534
- Treasury 5 465 3 386
- Investment assets 3 123 3 556 317 439 231 339
There is a increase of 61 091 million in bank balances.
UV Orange Money in circulation is growing thanks to the development of e-money issuance and distribution to satisfy demand.
The increase in balance in Treasury results from an outsourcing of the collection for roaming to the clearing house.
The decrease in investment assets is explained by the evolution of the equity portfolio mechanism.
Sonatel : 2018 Financial Results
55
Notes on the consolidated accounts (in million XOF unless otherwise specified)
11 - Equity 2018 2017
- Capital 50 000 50 000
- Unavailable reserves 23 037 22 710
- Other reserves 412 178 413 579
- Regulated reserves 48 484 48 484
- Share premium, issuance and fusion 3 387 3 319
- Conversion gap 819 -3 688
- Retained earnings -22 730 -20 648
- Profit attributable to parent company 172 467 172 454
- Quote minority 29 784 29 732 717 426 715 941
Unavailable reserves correspond to the legal reserve capped at 20% of the social capital of each company.
Other reserves are free reserves amounted annually during profit allocations.
Regulated reserves only account for the provision for the renewal of tools and equipment.
The exchange differences are due to the impacts in conversion of the opening capital of Orange Guinea (Guinean Franc) and of Orange
Sierra Leone (Leone).
The balance for retained earnings corresponds to the net losses of Orange Finances Mobiles Senegal and Orange Sierra Leone.
Overall, change in equity from 2017 to 2018 results from the allocations of profits in reserves and a non-Group dividends distribution for
the amount of 195 404 million.
Sonatel : 2018 Financial Results
56
Notes on the consolidated accounts (in million XOF unless otherwise specified)
12 - Financial liabilities and Assimimilate Ressources 2018 2017
- Deferred taxes - liabilities 649 661
Deferred taxes – liabilities are generated by the tax adjustment of the gains to be reinvested from the disposal of
buildings.
13 - Loans and Financial Debts 2018 2017
- Bank loans 185 506 152 043
- Security deposits 1 912 1 837
- Accrued interest 2 634 4 449 190 053 158 329
The increase in bank loans is due to subscription to new funding in Mali (+45 billion), in Sierra Leone (Orange shares)
and to the reimbursements paid by Sonatel for 14 745 million.
Security deposits consist of payments made by clients as an advance on consumption for taken subscriptions.
Sonatel : 2018 Financial Results
14 - Provisions of risks and charges 2018 2017
- provisions for disputes 9 989 3 270
- provisions for risks 3 635 4 232
- pension provisions 20 915 18 517
- provisions for other charges 37 754 33 674 72 293 59 694
Provisions for risks and charges increased due to:
- provisions for fiscal risk at Sonatel;
- change in calculation method for retirement provisions following the SYSCOHADA reform that calls for the evaluation of the
retirement commitments using the actuarial method. An actuarial firm accompanied the entities of the Sonatel Group in the
before mentioned process;
- provisions for the spread of the acquisition costs for the complementary shares distributed to the staff.
15 - Accounts payable 2018 2017
Trade suppliers 199 630 199 801
Invesment suppliers 64 603 73 216 264 233 273 017
Trade payables globally decreased with reliability works notably in Senegal with the switch to unconfirmed long-outstanding
balances.
NB: The contract term for supplier credit is on average 60 days upon receiving the invoice.
57
Notes on the consolidated accounts (in million XOF unless otherwise specified)
Sonatel : 2018 Financial Results
58
Notes on the consolidated accounts (in million XOF unless otherwise specified)
16 - Other liabilities 2018 2017
- Social and tax liabilities 161 589 131 560
- Current accounts 3 127 1 460
- Customers - advances received 7 886 7 269
- Other payables 131 880 100 500
- Regulatory account liabilities (conversion differences) 249 277 304 730 241 065
The decrease in social liabilities by 3 073 million is mainly due to full payment of December performance bonus, contrary to
previous years during which only advances were paid.
Tax liabilities comes up to 149 720 million.
The increase in the current accounts is attributable mainly to the Orange SA account balance in Sierra Leone.
Payables Clients increased by 1 649 million as credits granted to operators decreased following the implementation of net rates.
The increase in other liabilities results from Orange Money's payables with the emission of electronic money and the operators
netting in OSL.
17 - Treasury Liabilities 2018 2017
Banks 223 989 146 956
The increase in bank credit balance 77 032 million results from a recourse to spot credit.
Sonatel : 2018 Financial Results
59
Notes on the consolidated accounts (in million XOF unless otherwise specified)
18 - Turnover
Turnover is comprised of: 2017 2018 Var.
- Fixed line 28 854 30 202 -4,5%
- Mobile (data included) 733 481 670 788 9,3%
- Orange Money 62 793 46 149 36,1%
- Internet fixed lines 43 560 39 979 9,0%
- National Interconnection 29 943 34 427 -13,0%
- International interconnection 97 357 124 580 -21,9%
- Other wholesale (LL, Roaming, Operators) 10 762 13 124 -18,0%
- Data and Integration 11 593 11 219 3,3%
- Other revenues 3 613 2 434 48,4% 1 021 956 972 902 5,0%
The consolidated turnover increased by 5% as a result of:
- 4.5% decrease in the fixed line due to a continuous drop of its activities;
- 9.3% growth with the mobile thanks to a sustained strong commercial position, the development of usages (data, VAS);
- powerful growth of Orange Money by 36.1%; veritable growth relays, growth in Orange Money compensate for the loss in Voice and Text;
- 9% progression of the internet fixed line through the development of Internet offers;
- 13% decrease in national interconnection pushed by the retroactive decrease in tariffs in Senegal and Mali;
- stronger decrease in international interconnection (21,9%) linked to the decrease in international incoming traffic with the augmentation
of OTT;
- 18% decrease in other wholesale products driven by operator’s Roaming in Senegal and Sierra Leone, and leased lines in Senegal;
- 3.3% hike for integration;
- increase in other revenues +48.4%.
Sonatel : 2018 Financial Results
60
Notes on the consolidated accounts (in million XOF unless otherwise specified)
19 - Consumptions
Consumptions for the year are: 2018 2017 Var.
- Purchases 61 094 59 122 3%
- Transport 2 244 2 114 6%
- External services 345 745 335 081 3%
- Taxes 46 093 39 746 16%
- Other expenses 25 099 16 042 56% 480 276 452 106 6%
The increase in purchases is attributable mainly to the increase in consumption fuel and electricity in the technical sites in Guinea, Mali and Senegal to a lesser
extent. The purchase of terminals increased in Senegal to accompany the development of fiber, as well as the vulgarization of data usage; same goes for the
modems (livebox, flybox). The purchase of phone cards decreased notably in Senegal, Mali and Guinea with the development of e-charge. The development of the
integration offer also brought an increase in the purchase of lines and network supplies.
The small increase in transport costs is due to travel expenses.
The variation in external services is a decrease in relative terms (+11% in 2017 and +3% in 2018). The significant activities that explain the increase in external
services are:
- an increase in the outsourcing and maintenance of the networks following the externalization of some activities: ANO royalties in Mali, ANO and GNOC royalties in
Guinea and the deployment of fiber in Senegal,
- an increase in commercial fees, notably those related to Orange Money (service fees on transactions, distributor service fees indexed on turnover),
- a decrease in international revenues with the decline in international incoming traffic and volume as a result of the OTT,
- a decrease in expenses for leased satellites with the optimization of bandwidth,
- repayments for VAS to SMS+ partners and other service platforms increased following the development of value added services and the growth of data,
- an increase in guarding and security charges, notably in Mali with an on-site management of security with the transfer of ANO to Huawei,
- an increase in honorary paid to computer experts,
- an increase in other charges indexed on turnover notably management fees paid to Orange, brand fees.
The increase in taxes is explained by a boost in the following charges indexed on turnover: TARTOP in Mali, TARTEL in Guinea and CST in Senegal (1% rate
increase) despite the gain realized in Senegal on the deductibility of V.A.T for OFMS.
The increase in other expenses is due to a depreciation of "para official" clients and receivables on the CSU operator in Senegal.
61
Notes on the consolidated accounts (in million XOF unless otherwise specified)
20 - Other charges 2018 2017 Var.
- Staff costs 108 417 93 625 16%
- Depreciation, amortization and provisions 168 955 160 593 5%
- Financial expenses 24 753 18 971 30%
- Expenses excluding Ordinary Activity of Corporation tax 13 084 19 168 -32%
315 210 292 357 8%
The increase in staff expenses comes mainly from Senegal and is due to a three-year increase in salaries, retirement and
pre-retirement benefits. Correlatively, career-end special bonus equivalent to the complementary shares for career-end
increased, as well as performance bonuses and provisions for vacations calculated on payroll.
Depreciation increased in all countries of presence. This can be explained by a sustained level in investments in these last
years to support growth in data and meet the requirements for quality of service in the different countries.
The increase in provisions is due to a change in the evaluation method for the retirement provision with the SYSCOHADA
reform (actuarial method), the provision for fiscal risk in Senegal, and attenuated by the provision for the loyalty bonus (impact
of the regulation effect on "PE" shares in 2017.
Financial expenses increased by 5 782 million due to the bank loan taken in Mali, loans granted by Orange SA to OSL and
the recourse of Sonatel to spot credits.
O.O.A expenses went down by 6 084 million after the strong increase recorded in 2017.
Sonatel : 2018 Financial Results
62
Notes on the consolidated accounts (in million XOF unless otherwise specified)
21 - Other income 2018 2017 Var.
- Other operating income 37 175 16 800 121%
- Reversals of provisions and expense transfers 8 764 19 718 -56%
- Immobilized production 2 040 4 687 -56%
- Financial income 11 236 10 312 9%
- Products out of Ordinary Activity 9 659 17 507 -45%
68 874 69 024 0%
The increase in other operating income is due to numerous adjustments completed during the year, and effects from
the decrease in 2017.
Reversals of provisions corresponds to the annulment of redundant provisions from 2017. The can be explained by
their significant level in 2017.
The decrease in immobilized production is a result of charges related to information technology project no longer being
systematically immobilized .
Financial income comes from financial investments.
Revenue outside the Ordinary activity decreased with the decline in income from sales of fixed assets.
Sonatel : 2018 Financial Results
63
Notes on the consolidated accounts (in million XOF unless otherwise specified)
22 - Off-balance sheet commitments
In 2018, the Group received and distributed off balance sheet commitments as follows:
a) - Guarantees received 2018 2017
- Guarantees from providers 5 082 2 843
- Staff pledged shares 743 843
5 826 3 686
b) - Guarantees given 2018 2017
- Blocked term accounts for AFD Dakar 94 0 300
- Customs credit deposits 1 400 700
- Market bid deposits 4 647 1 007
- Irrevocable lease term deposit 0 795
- Certificate of financial standing 0 5 400 6 047 8 202
23 - Events after balance sheet date
NRT
Sonatel : 2018 Financial Results
• Consolidation principles
Subsidiaries under exclusive control are consolidated
using the full consolidation method.
Cf. page 5: consolidation scope
• Financial statements presentation
Financial statements are prepared in accordance
with the SYSCOA method: balance sheet, income
statement, cash flow statement (TAFIRE), notes,
appendices.
• Basis of preparation of financial statements
Financial statements are prepared on a historical
cost basis and presented according to the principles
and methods accepted in the countries of presence.
They comply with the West African Accounting
System (SYSCOA) in place since January 1st, 1998.
Intangible assets
They are amortized over a five-year period.
Disassociated software (invoiced separately
from the computer equipment) are capitalized
and amortized on a estimated useful life of 3
years.
Exchange differences to distribute are
evaluated in accordance with foreign currency
operations principles.
64
Accounting methods and principles
Sonatel : 2018 Financial Results
• Tangible assets
They are evaluated at their acquisition cost which
consists of the purchasing price and approach expenses
and amortized under the straight line approach over the
below specified estimated periods:
Fixed assets in progress are recorded at their acquisition
cost and re-classed as tangible once in service.
Other current assets
They consist of home loans and personnel vehicles,
government loans to the staff to acquire shares of
the group (10%), security and guarantee deposits
paid on water and electricity subscriptions as well
as prepaid rents and equity.
The assets are recorded and evaluated at their
historical cost.
On securities, depreciation provisions are taken into
account when the closing value is inferior to the
historical cost.
Closing value is either the stock price of the listed
securities; or net asset value for the unlisted
securities.
65
Accounting methods and principles
Sonatel : 2018 Financial Results
• Inventories
Inventories are evaluated at the weighted
average cost of purchase.
Retained value for local purchases
corresponds to the non-revisable historical
cost cited as annex in the market contract.
Purchasing cost of imported products
corresponds to market plus customs duties
and transit fees.
Depreciation provisions are applied at a
100% on defective, dormant (inventory that
registered no activity for a year) and dead
(declassified or unused inventory for 3 years)
inventories.
Receivables
Accounting services to Local customers
Services to local customers are invoiced in XOF
on the issue date of the bill and recorded in the 41
accounts. Unbilled services by the closing date are
recorded in the 418 accounts (Accrued income).
Sold top-up cards that are unused are recorded as
deferred revenue.
Doubtful debts from residential clients are
depreciated at a 100% when:
left unpaid for more than 6 months for the fixed
line;
left unpaid for more than 90 days on the mobile
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Accounting methods and principles
Sonatel : 2018 Financial Results
Accounting for revenue from International
traffic
• Traffic balances are recorded on a monthly, bi-
monthly or quarterly basis depending on the
account balance for the month, two-month
period or quarter, as a credit or debit line once
accepted by the concerned foreign
correspondent.
A provision is calculated year-end for all traffic
balances not yet accepted. They are recorded in
418300 accounts (Accrued income) when the
balance is in favor of Sonatel and as Accrued
liabilities otherwise in the Accrued expenses
payable account (408400).
Exchange rate gains and losses are recorded in the
balance sheet in accounts 478 and 479 “conversion
variance”.
Receivables from the foreign correspondent are
depreciated on a case-by-case basis depending on the
creditworthiness of the correspondent.
Foreign currency transactions
Foreign currency operations are converted at the
exchange rate prevailing on the date they are recorded.
Foreign exchange differences are recorded as currency
gains or losses on the settlement date.
Foreign currency accounts are converted at the
exchange rate prevailing on closing date. Potential
currency gains are recorded as exchange rate gains or
losses rather than as revenues. Unrealized exchange
rate losses give rise to a provision for risks.
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Accounting methods and principles
Sonatel : 2018 Financial Results
Income statement
Unrealized exchange rate losses on operations
over a year old are recorded as liabilities in the
“Provision for exchange rate losses” account
and the counterpart is reported to the assets in
account 478 “Exchange rate differences”.
Unrealized exchange rate losses on less than a
year-old operations are recorded in 679 with a
credit to account 499.
Losses in the cash accounts are reported in the
income to offset the Cash account.
• Investment grants
They are transferred to the Accruals and
deferred liabilities. The offset is recorded on the
income statement.
Provisions for risks liabilities and charges
Disputes
All potential risks associated with litigations with third
parties are provisioned according the information
provided by group’s legal services. Unjustified provisions
are accounted for in the income statement.
Retirement benefits
Due employee benefits at the time of retirement or in
the case of a contractual framework are subject to a
provision for expenses. With the SUSCOHADA reform
effective since January 1st, 2018, the provision was
evaluated according to the actuarial method.
Deferred taxes
Deferred taxes are recorded to offset to the temporary
effect of revenues and expenses due to tax
considerations. The liability method is applied.
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Accounting methods and principles
Sonatel : 2018 Financial Results
Accounting methods and principles
• Electronic money
Orange Money is a mobile payment offering marketed by e-money institutions “EMI” certified by
BCEAO or the central bank of Guinea
It consists of issuing and distributing electronic money or units of value that can be used for
commercial transactions.
Currency in circulation is recorded in the 514xxx cash account and offset as debts posted to the
472xxx accounts by category (vendors, biller, merchants and end-consumer).
Issued money not distributed stay in the “EMI” main cash account.
Paid commissions are posted as expenses and offset as revenues.
69 Sonatel : 2018 Financial Results
Sonatel : 2018 Financial Results
2018 Dividend draft resolution
DRAFT RESOLUTION :
FISCAL YEAR 2018 INCOME ASSIGNMENT
• The Shareholders’ Assembly approves the proposal of the Board of
Directors and will allocate the entire profit of SONATEL SA for the year
ended December 31st, 2018 to dividends.
• In addition, the Shareholders’ Assembly decides to take XOF
59,727,203,951 from free reserves for dividends pay-out.
• Consequently, the Ordinary Shareholders’ Assembly sets the gross dividend
due on each share at XOF 1,667.
• After deduction of the IRVM withholding tax of 10%, XOF 1,500 net dividend
will be paid per share from May 14th, 2019.
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