2015 6 annual reportinovácie a technická podpora Navzájom si pomáhame dosahovať nové ciele
2015 annual report
table of contents
1 Orange Slovensko 5 customer care 8 – 17 we are creating a company with a strong vision 40 – 43 building a strong and sound relationship with our customers
2 letter from the CEO 6 employees 18 – 23 motivating each other to better results 44 – 49 our work is a team game in which we pass the ball to each other
3 slovak telecommunications market 7 corporate social responsibility 24 – 29 together, we effectively and properly try to exploit the potential of our market 50 – 57 we work to keep our business sustainable
4 Orange Slovensko on telecommunications market 8 fi nancial statement 30 – 39 we look for the new ways to get closer to customers 58 – 110 jointly we decide about our results
4 5 2015 annual report chapter VIII
Independent Auditor‘s Report
6 7 in progress
1 Orange Slovensko we are creating a company with a strong vision 2015 annual report chapter I
Orange Slovensko, a.s. Member of the Global Orange Group
Registered Office Description of the Company of Slovakia‘s population, and Orange‘s 4G Metodova 8, 821 08 Bratislava, The Slovak Republic network is now available to more than 60 % Orange Slovensko, a.s. is the leading telecom- of Slovaks. Company Identification Number (IČO) munications company and the biggest mobile 35697270 network operator in Slovakia. Orange Slovensko, a.s. was the first telecom- munications operator in Slovakia to launch Date of Entry in the Commercial Register of the Slovak Republic The company started its commercial opera- a state-of-the-art new generation fixed network 3 September 1996 tion on the Slovak market in 1997. As of 31 De- on the basis of FTTH (Fiber To The Home – op- cember 2015, Orange Slovensko, a.s. registred tics for home), which covers over 342 thousand Legal Form 2.896 million active mobile network customers households across 18 towns in Slovakia. Oran- Joint-stock Company and more than 201 thousand fixed Internet and ge also provides fixed internet and digital televi- digital television customers. As of 31 December sion through DSL which is available across most Identification of the Entry in the Commercial Register 2015, the revenue of Orange Slovensko, a.s. of Slovakia. Registered in Bratislava I District Court Commercial Register, was EUR 560.6 million. Section: Sa, Insert No.: 1142/B The quality of services of Orange Slovensko, Orange Slovensko, a.s. is a member of the glo- a.s. complies with ISO 9001:2000 certification bal Orange Group, one of the biggest mobile criteria, and the company also holds the Envi- network operators and broadband internet pro- ronmental Management Certificate pursuant to viders in Europe. As of 31 December 2015, the ISO 14001:2004. With its Orange Foundation, Orange Group had revenues of EUR 40 billion, Orange Slovensko, a.s. is a leader in the field with 263 million customers using its services. of CSR and corporate philanthropy in Slovakia.
Orange is the leading mobile broadband Internet The 100 % shareholder of Orange Slovensko, provider, using 3G and 4G networks. High-spe- a.s. is the Orange Group through Atlas Services ed mobile Internet coverage exceeded 94 % Belgium.
10 11 2015 annual report chapter I
Company Bodies
Board of Directors Company Management
Chairman Pavol Lančarič Chief executive officer Pavol Lančarič Vice Chairman Ladislav Rehák Deputy CEO and ITN Director Ivan Golian Members Ivan Golian Deputy CEO and Director of Financial Department Antoine Guilbaud Antoine Guilbaud Deputy CEO and Director of Commercial Department Zuzana Nemečková Zuzana Nemečková Director of Human Resources Department Andrea Danielová Marc Ricau Director of Customer Service Department Vladislav Kupka Director of Communications and Brand Department Miloš Lalka Supervisory Board Director of Strategies, Legal and Regulatory Affairs Department Ivan Marták Chairman Christophe Naulleau Vice Chairman Adela Irinel Savu Guedon Members Vincent Brunet Mai Céline de la Rochefordiere Ján Kodaj Rudolf Tesár
12 13 2015 annual report chapter I
Pavol Lančarič Antoine Guilbaud Chief executive officer Deputy CEO and Director of Financial Department
Born in 1963. He graduated from the Faculty taken management positions in various multina- Born in 1972. He completed his university studies network cost modelling. Since 2006, he worked as of Commerce at the University of Economics in tional companies. Since 1997, he has been wor- at the Paris Institute of Political Studies and was a manager and later Director of Control at Mobistar, Bratislava and received his PhD in 1991. Betwe- king at Orange Slovensko, a.s., where he started awarded a master‘s degree. He worked in an exe- Brussels. He has worked at Orange Slovensko, a.s. en 1990 and 1992, he was a member of the as the Sales Director. Since 1999, he has been cutive position at the Financial Department at Fran- since 2012 as Director of the Financial Department. Advisory Committee of the Prime Minister at the the CEO of Orange Slovensko, a.s., also serving ce Telecom between 1998-2000, later at Orange, Slovak Government Office. Since 1993, he has as a Board member. Paris, where his duties involved controlling and
Ivan Golian Zuzana Nemečková Deputy CEO and ITN Director Deputy CEO and Director of Commercial Department
Born in 1964. He completed university educa- where he worked for more than eight years as Born in 1970. She completed her studies at the the Communication Department at Rajo a.s. in tion at the Slovak Technical University in Bratisla- a member of the senior management, ITN Direc- Faculty of Commerce of the University of Eco- 1996. She has worked as Director of the Com- va and achieved his PhD at the Department of tor and Chief Operation Officer (CIO/CTO/COO). nomics in Bratislava. She started working as an mercial Department at Orange Slovensko, a.s. Applied Informatics and Automation at FMT STU. In 2005, he became the Deputy Chief Executive Executive Assistant in 1993 and later as Mar- since 2001. Beginning in 1993, he worked at the Department Officer. Beginning in 2006, he was the VUB Ban- keting Manager at Tchibo Slovensko spol. s r.o. of Electronics and Automation KIHO in Gent, Bel- k´s board member and also worked as the Direc- She became Director of Sales, Marketing, and gium, and about two years later he began to work tor of Information Technologies and Operations at Digital Equipment Corporation as a project ma- there. Since January 2009, he has been the ITN nager for the banking and telecommunications Director at Orange Slovensko, a.s. and he is also sector. In 1997, he joined Orange Slovensko, a.s., the Deputy CEO and a board member.
14 15 2015 annual report chapter I
Andrea Danielová Miloš Lalka Director of Human Resources Department Director of Communications and Brand Department
Born in 1967. She completed her studies at the Resources Department at Globtel GSM, later Born in 1975. He completed his studies in 1998 of Communications and Brand Department in University of Economics in Bratislava. She has Globtel, a.s., and Orange Slovensko, a.s.. Sin- at the Faculty of Management of Comenius Uni- 2012. He has worked as Director of Communica- worked in human resources since 1991. Since ce 2003, she has worked as Director of Human versity in Bratislava. He has worked at Orange tions and Brand Department at Orange Sloven- 1996, she worked as Deputy Director of Human Resources Department at Orange Slovensko, a.s. Slovensko, a.s. since 2003, starting as Adver- sko, a.s. since 2013. tising Manager. He became Deputy Director
Vladislav Kupka Director of Customer Service Department Ivan Marták Director of Strategies, Legal and Regulatory Affairs Department Born in 1974. He completed his studies at the ser a year later, and later still, worked as Deputy Faculty of Philosophy of the University of St. Cyril Manager. He worked as Back Office Manager Born in 1964. He completed the studies of jour- Telecommunications Executive Management and Methodius in Trnava. He started working in between 2001-2006, later as Manager of the nalism at the Faculty of Philosophy of the Co- Institute of Canada in Montreal in 1995. He fulfilled sales in 1994 and has worked at Orange Sloven- B2C Department, and has worked as Director menius University in Bratislava. He acquired his various managerial functions at Slovenské tele- sko, a.s. since 1996. He started as a customer of Customer Service Department at Orange Slo- technical education in the field of telecommu- komunikácie, š.p. since 1993. He has worked as centre employee, continued as Back Office advi- vensko, a.s. since July 2008. nications at the Slovak University of Technolo- Director of Strategies and Regulatory Affairs De- gy in Bratislava. He worked at the International partment at Orange Slovensko, a.s. since 2001. Telecommunication Union from 1992 and at the
16 17 2 letter from the CEO motivating each other to better results 2015 annual report chapter II
Letter from the CEO
Ladies and gentlemen, appreciated by our customers through growing dear shareholders, interest in the Orange services, and this customers and employees, is despite the growing competition in the most cost-sensitive market segments. This was re- this past year has been the 19th consecutive fl ected not only in an increase of numbers por- year that we have been striving to bring pe- ted to Orange, but also in the growth of our ople together despite the distances and bor- net customer base. A total of 52 thousand cli- ders, to give them the opportunity to share ents, representing an increase of 23 % compa- their experiences immediately, and provi- red with the previous year, decided to transfer de them with a sense of excellence thanks their phone numbers from another operator to the state-of-art technology that they to Orange, which confi rms the growing at- can easily hide and carry in their pockets. tractiveness of the Orange services. A total of I would like to share with you how we managed 689 thousand customers of mobile services to align the interests of our shareholders with decided to re-sign or extend the contract of the needs of our customers, employees and a plan or internet during 2015. Towards the end partners while following our mission. of 2015, Orange registered 2.896 million of mo- bile service customers, which is 2 % more than Despite the complicated situation on the a year ago. The number of customers for hou- Slovak telecommunications market, marked sehold services - fi xed internet and digital TV, by a continuing decline in revenues from traditi- has reached 201 thousand. onal communication services and strong com- petition, we remain true to our values. Our key commercial initiatives which brought increased customer satisfaction last year were I am very pleased that our orientation to custo- the Free Together Service and our innovative mers, long-term results, value and quality are loyalty program, Orange Benefi ts. Expansion of
20 21 2015 annual report chapter II
the opportunities for favourable communicati- of year, high-speed mobile internet coverage, Ladies and gentlemen, we have been proving, ourselves to the Slovak public in a new way on in the family confi rmed our long-term orien- i.e. 3G and 4G networks, exceeded 94.8 % of that for the long term, that we can not only to refl ect the further development of our busi- tation as of the family operator. By the launch Slovakia‘s population. The mobile data traffi c dream of unbelievable things but we can also ness and the fact that we will gradually develop of the innovative concept of Orange Benefi ts grew even faster than the number of customers. make them come true. And this all thanks to from the traditional telecommunications com- loyalty program, we again confi rmed that we Compared to 2014, Orange customers transfe- the shareholder, without the trust of whom we pany into a provider of comprehensive digital take very seriously the loyalty of our customers rred 43 % more data in the mobile data network, could not bring our customers new inspiring services. Our goal will still remain to continue and we are constantly looking for ways to thank while more than one fi fth of the total GB 12.2 products and services, thanks to the employ- connecting people with what is important for them for their loyalty, offering attractive dis- million of data was transferred within the 4G ees for their daily work commitment and con- them in life. The very best, high quality service, counts for Orange services and services of the network. Although, the continuing growth in tribution to our joint success, and last but not and in the easiest way possible. I believe that third parties. operating results due to changing market con- least thanks to our customers for having faith in we will succeed at least as well as we have, up ditions did not follow the comparable pace of us, especially. In 2016, we will begin to present to this point. Also in the past year, we have conscientiously revenue growth due to the continued rate of pri- prepared for the time when millions of custo- ce decline, the overall decline in revenues, ho- mers and devices would communicate toge- wever, slowed down, indicating a gradual stabi- ther. Therefore, we are building an ultra-fast ne- lization. Revenues of Orange Slovensko, a.s. as twork that allows people to connect with their of 31 December 2015 amounted to EUR 560.6 loved ones or look for any kind of information million. The fastest growing component of mo- easily, quickly and reliably. To continuously im- bile service revenues have traditionally been the Pavol Lančarič prove the customer experience within our ne- mobile data services. However, their growth CEO and Chairman of the Board of Directors twork, regardless where our customers are, is was not suffi cient to compensate the develop- Orange Slovensko, a.s. a guiding principle in determining the direction ment of mobile voice service revenues. Mobile and volume of investment in our networks. data services accounted for 21 % of the total We have expanded the 4G internet coverage mobile service revenues, and increased year- to more than 65 % of the Slovak population, -on-year by 12 %. More and more signifi cant we continued to expand 3G network and we share is represented by the fi xed service reve- also signifi cantly increased the available spe- nues, with the year-on-year increase of 7.7 %, eds of 4G network up to 225 Mbit/s. At the end while their share in total revenues was 6 %.
22 23 3 slovak telecommunications market together, we effectively and properly try to exploit the potential of our market 2015 annual report chapter III
Slovak Telecommunications Market in 2015
Despite the ongoing regulation and growing mers in telecommunications market grew as well. Development of the Value of the Telecommunications Market in Slovakia competitive environment resulting in price erosion Compared to last year it increased by 3.7 % to by Service (in EUR million) in 2015, the decline of the telecommunications 10.7 million of active customers. market has stopped, even showed a slight inc- 293 314 rease. The total value of the telecommunications The dominant share of the value of the teleco- 376 101 market in 2015 compared to the previous year mmunications market has been retained by 125 130 increased not, by a whole percentage and rea- the mobile service segment with the total of Revenues of mobile telecommunication ched EUR 1,824 million. The number of custo- EUR 942 million, representing 51.6 % of the total services in 2015 decreased by 6.1 %, 1,035 and on the other hand, 952 883 the revenues from fi xed services and pay TV grew by 1.4 %. Value of the Telecommunications Market in Slovakia Source: Data disclosed and the Share of Each Operator (in EUR million) 50 52 59 by the operators 159 137 133
152 170 178 182 188 191 61 61 64 51 47 47 213 224 245 Total of - 1,851 Total of - 1,811 Total of - 1,824 2013 2014 2015 After 6 years of decrease, the telecommunications Orange Slovensko Data Services / Transfer market recorded 783
622 767 783 increase in 2015. Slovak Telekom Fixed Internet Services
Source: Data disclosed Telefonica O2 Fixed Voice Services by the operators UPC Broadband Slovakia Mobile Data Services 622 581 561 other top 13 operators Mobile Voice Services
PayP TV Services Total of - 1,851 Total of - 1,811 Total of - 1,824 2013 2014 2015 OthersO
26 27 2015 annual report chapter III
Development of the Number of Customers market value. The value of mobile voice and SMS fi xed internet customer base increased by 17 %. in the Telecommunications Market (in thousands) has been recording a decline for a long period, and was only partially compensated by an inc- Pay TV segment increased year-on-year by 4.5 %, rease of revenues from the mobile data. While re- while the number of its customers increased by venues from mobile telecommunications services 2 %. The Pay TV service is today used by almost At the end of 2015, the fourth operator who were falling slightly, over the past three years the 91 % of households that have a choice of more entered the Slovak telecommunications declining has been by 7 % in average. The pay and more programs, quality content and additio- market in October 2015 Swan Mobile registered nearly 100 TV segment as well as the fi xed internet segment nal services such as TV archive, lending, or acce- thousand customers, O2 Slovakia reaching thus a market recorded the year-on-year increase. ss to TV on multiple devices over the internet. share of 1.5 %. Slovak Telekom 100 2,845 1,868 1,684 2,896 1,884 1,809 Source: Data disclosed 2,791 1,915 1,539 by the operators Orange Slovensko The year 2015 again confi rmed the Slovaks´ The only segment in which we have been recor-
2013 2014 2015 growing appetite for the data services. The mobile ding the user decrease in a long-term period is data and fi xed internet markets showed a signi- the segment of fi xed voice services. The main fi cant rate of growth in the number of customers reason for this is the substitution of fi xed lines by Development of Number of Customers and revenue. In 2015, the sales of mobile devi- mobile voice services and voice over IP. in the Mobile Telecommunications Market (in thousands): ces, particularly tablets and smart phones signi- fi cantly contributed to this growth. Fixed internet Total number of customers of mobile services segment continued to increase the revenues, increased by 3.9 % and reached 6.383 million The largest growth of the number of Mobile Voice Services a growth by 5 % was recorded, and the increase of active customers, representing an increase customers in 2015 was recorded in the market Mobile Data Services in the number of customers showed by the same of nearly by 250 thousand customers. The pene- of mobile data service sector also due to the 5 %, making penetration of fi xed internet in Slova- tration of active SIM cards reached 118 % while
extensive LTE network 561 216 644 256 726 306 Fixed Voice Services 5438 1,063 1,109 1,601 1,020 1,206 1,690 5,657 1,011 1,273 1,724 building. 5,497 kia reach 66 %. In this segment Orange Slovensko, only 11 % of this number consists of mobile internet Fixed Internet Source: Data disclosed a.s. grew the fastest among all providers when its customers whose number increased by 12,7 %. by the operators Pay TV
Others
Total of - 9,988 Total of - 10,313 Total of - 10,697 2013 2014 2015
28 29 4 Orange Slovensko on telecommunications market we look for new ways to being closer to our customers 2015 annual report chapter IV
Activities of Orange Slovensko on Telecommunications Market in 2015
2015 was another year of innovations rewarding demonstrated their confidence in Orange again. Family Operator average of 378 minutes and sent 88 messages, our customers for their loyalty, trust, and family A total of 689 thousand customers of mobile while the average length of a call was 2.4 mi- getting together. Orange is a stable partner for services decided to re-sign or extend the con- Orange with its services is already present in over nutes. The average number of members in one more than half of Slovaks which motivates us to tract for a plan or internet during 2015. More than 60 % of families. Our day-to-day job is to connect group is 4.16, with more than half of all groups make sure we always bring such services and 52 thousand out of them, representing a 23 % families through our services and enable them is composed of a maximum possible number of offers that make life easier and integrate them with of year-on-year increase, were those customers to communicate with each other, let their mem- members, which is 5 people. Customers using what is important in their lives. We bring people who have ported their numbers from another bers be anywhere. In a quality and reliable way. the Free Together Service are the most satis- together thanks to our services to more than 60 % operator. Towards the end of 2015, Orange regis- As a family operator we do not even forget how fied customers amongst all customers of Slovak of Slovak families and this is more than a com- tered 2.896 million customers of mobile services, to simplify the lives of our customers by offering operators. mitment, in that we, as a family operator continue 2 % more than last year. The number of custo- a combination of fixed services - fixed DSL and in expanding benefits for this important group of mers of household services, which is fixed inter- optic internet with the mobile communication We Constantly Reward our customers. The proof that we are successful net and digital TV, has reached 201 thousand. services within the value packs from a single, our Customers for their Loyalty is the fact that over the past year many customers reliable provider that is Orange. Orange presented the largest digital initiative of Development of Orange Slovensko Customer˙s Number Our principal service designed for families and rewarding its customers in Slovakia last year. groups of friends is the Free Together Service. Together with partners they established the Despite the decline Year 2013 2014 2015 of Lite TV service users It allows these group customers to constantly Orange Benefits Platform that connects busi- by 36 %, the total number of customers Mobile Service Customers 2,790,758 2,844,611 2,896,496 stay in touch with their loved ones by free ca- ness men with service providers. It allows Oran- increased again. Fixed Service including digital TV and LiteTV Customers 160,836 214,891 200,657 lls and text messages to each other. Within the ge customers to draw attractive discounts and Source: Orange internal data Total of 2 951,594 3,059,502 3,097,153 Free Together Service, in addition to free calls other tailor-made benefits. Moreover, the appli- and messages in the group we brought another cation allows you to digitalize a number of loyalty novelty in the past year - free internet access to cards and thus lessen the need for our custo- home. At the end of year, this service was used mers, of a lot of unnecessary plastic. free for communication by almost 600 thou- sand Slovaks in more than 140 thousand fami- lies. Customers within the same group spent an
32 33 Výročná správa 2015 chapter IV
Network Quality is More by customers in Orange‘s sales network con- Structure of Tablets Sold Important than Ever sisted of smart phones. The tablets play more and more of an increasing role here. During the We are facing a technological revolution that past year, Orange sold 96 thousand tablets and
brings an unprecedented customer demand for again became the largest seller among the ope- Slovaks want more and connectivity, fast and high-quality internet con- rators of these devices in Slovakia. Also thanks more modern devices. Already two thirds of nection and its services. The number of custo- to Orange, the tablet is a commonplace in many sold tablets were 4G mers using mobile data services in Orange families today. compatible and more than half of consumers was year-on-year higher by 8 %, and as of 31 bought a tablet with an December 2015, they were more than 1.26 mil- In order to ensure customers the best user 56 % 8-inch screen diagonal
lion. Even faster growth rate was shown by the experience, Orange continued in speeding up of Source: Orange internal data mobile data traffic. Compared to 2014, Orange the mobile internet. In 2015, there was new LTE customers transferred 43 % more data in mobi- coverage in another 112 towns and 308 munici- 4G le data network with more than one fifth of the palities. Since Orange wants to allow its custo- total GB data 12.2 million transferred within the mers to stay connected to those they care abo- 4G network. ut, at the highest speed and quality, wherever they are, we not only invested in coverage itself, Data consumption by our customers grows but we increased the density of the network every year because we provide customers with on a regular basis and increased its capacity. more and more options for watching videos, In addition to building LTE networks, Orange listening to music and streaming content. continued to broaden the 3G network and also
Growing interest in mobile data services is significantly increased speeds available within 34 % 65 % also supported by the combination of business the 4G network, of up to 225 Mbit/s. At the end policy to offer smart phones and tablets for the of year, the high-speed mobile internet covera- 8” best price, as well as investment bringing fast ge, i.e. 3G and 4G networks, exceeded 94.8 % mobile internet from Orange to new areas. Last of Slovakia‘s population. 7” year, an 83 % share of all phones purchased
34 35 2015 annual report chapter IV
Development of the Number of Mobile Data Service Customers Household Services ternet offer with either a top speed of 250 Mbit/s, or offers for its customers with a lower-speed Orange can fully equip households with tele- demand but still with highly stable optics, within communication services, ranging from mobile the past year. and fixed internet, optical network and DSL, More and more customers are to television and calls with fixed or mobile The customers of our fixed services have the interested in mobile data services in the networks. Customers can equip their house- option to more flexibly put together their packa- largest and fastest mobile network from holds with telecommunication services from ge only from the services they need - we have Orange. Their number year-on-year one provider easily, in one place, and at more introduced a combination of optical internet only 993,000 1,174,000 1,260,000 increased by 15 %. favourable prices thanks to discounts and other with TV by which the customer uses the stable Source: Orange 2013 2014 2015 internal data benefits with a combination of mobile and fixed optic internet and TV full version (more than 60 services from Orange. Getting all your services TV stations), including the TV archive. The offer at Orange pays off. In the field of fixed services is designed for customers who do not wish to The Mobile Network Data Traffi c Development Orange brought particularly, a special optical in- use the landline or mobile TV with archive.
More and More Customers Buy Fixed Internet from Orange (in thousands)
Last year, 21 % More than 85 thousand of data traffi c customers use a fi xed was implemented in DSL internet from Orange 4G network. Orange
Source: Orange Source: Orange internal data internal data
105 130 152 6,891,903,826 MB 8,759,031,002 MB 12,496,988,658 MB 2013 2014 2015
2013 2014 2015
36 37 2015 annual report chapter IV
Development of Number of Digital TV Customers the voice and data roaming from Orange, where of roaming data services enabling Orange custo- as some of the packages were activated by more mers to surf abroad from 4 cents per MB as well than 215 thousand customers, representing the as of new data packets. Like with the voice servi- 42 % year-on-year increase. In addition to incre- ces under a monthly service plan, the customers asing the number of users, the roaming traffic of get extra travel insurance abroad. During the year, we have added the offer of our customers increased as well. Roaming voice 13 new TV stations, 9 of them in HD resolution traffic increased by 18 % and data traffic by more Orange customers use their mobiles mostly while strengthening our service, providing than 100 %. The data roaming traffic increase in the Czech Republic, Austria and Germany. content upon request is the result of the innovative offers in the area Source: Orange internal data 91,157 123,267 90, 477
2013 2014 2015
Orange Customers to its customers. Moreover, the Orange roaming Can Forget about Borders package automatically offers a free bonus in a form of practical solution, the travel insurance Orange‘s long-term goal is to provide customers abroad. Thanks to this, customers can save con- with simple and valuable services wherever they siderable fees. Because of the great success of are. This also applies to roaming. Orange has this service, Orange has expanded to cover the been operating beyond the EU roaming regula- insurance for the entire family in the past year. tion for a long time and in addition to the possi- bility of the same roaming communication prices With the decrease in roaming prices and with the of those at home, Orange has also brought the favourable services, the appetite of users for mo- unlimited income calls within the EU and Switzer- bile communications without borders has grown. land under the “In Europe, as at Home” Package Last year, nearly 2 million customers actively used
38 39 5 customer care building a strong and sound relationship with our customers 2015 annual report chapter V
Customer Care
In order to retain the highest standards of co- gather all the multimedia services, Orange bene- for their questions. Most of the e-mails delivered ring the past year, customer claims were solved mmunication with our customers, and provide fi ts, options to purchase a ticket for public trans- were, despite the two-day period, usually resol- on average, in 3.2 days. Compared to the previ- them with all possible support, we strive to conti- port or parking and much more, all in one place. ved within 20 hours. We also responded to cus- ous year 2014, this is another signifi cant decline nuously improve our processes, train and supp- Its use is facilitated by the automatic logon into tomers with more than 6 thousand suggestions when the complaint sorting lasted 10 days, on ort staff in direct contact with customers and applications using 2G, 3G and 4G networks from through Facebook, whereas we delivered the average. As always, the Orange goal is to retain develop solutions that enable easy and comfor- Orange, when the customer does not need to responses through this channel on an average a high quality of service, not only in the commer- table service of customer requirements. register or login with all data, the customer auto- of inside 8 hours. In connection with these activi- cial sphere, but an added value in the form of top matically logs in. ties, we have been twice awarded by the Socially customer care, appreciative treatment and inc- Customer satisfaction is key for Orange, so the Devoted title. The award is regularly provided by rease of customers´ satisfaction as well in 2016. superior customer care is their main interest as Fast and Quality Service the Socialbakers company and evaluates the ra- well as quality service. Either it is directly at the tio of answered questions to the total number of point of sale through customer support, or in the Also in the past year, Orange has retained its questions asked by visitors to the social networ- customer zone on the internet, Orange therefore performance in the area of customer care, king sites of the individual companies via posts seeks to promote an especially friendly appro- thus keeping its satisfi ed customers. In 2015, on Facebook pages. ach, with clarity and simple solutions. From po- 905Customer Service Line received the total of ints of sale, 905 Customer Line available around more than 1.2 million calls which represents an Similarly, our year-round activities in the area 24/7, guidance via our Facebook profi le, to custo- annual decrease of customer calls by 11 %. This of customer care were refl ected in lower levels mer online and Expert zones, a customer can re- is the result of mainly good quality training and of complaints, which is a trend of recent years. ceive valuable advice for service or device set up. customer awareness in advance. Our customer The activities were also shown in the reduction service line retained a high level of satisfaction of time taken in complaint solving, whereas du- One of the better assistants is the “Orange Go” with an index of over 80 points. practical application. It allows customers to always keep track of their spending, check the In the past year, The Customer Care Department data consumption and get comfortably into the solved more than 40 thousand customer e-mail customer zone. Handy applications, additionally queries from the web form available to customers
42 43 0:2 6 employees our work is a team game in which we pass the ball to each other 2015 annual report chapter VI
Human Capital Management at Orange
Orange employees represent one of the most the level of cooperation. We strive to create ade- Special attention continues to be paid to the deve- following our previous improvements, we further valuable assets that our company has in order quate conditions to ensure that our employees are lopment of frontline employees. We have improved adjusted the working hours by the introduction of to achieve its objectives. Therefore it is our long- aware of the company‘s strategy, its main challen- the training process in order to increase the readi- special working hours during the summer months, -term strategy to provide employees with adequa- ges and they understand how each individual can ness of the newly hired employees to perform their allowing early departure from work on Fridays or by te opportunities for their professional and personal contribute to the successful achievement of com- work activities, we expanded our online forms of expansion of home offi ce. development. Our goal is to create the conditions mon goals. learning and we created the opportunity to share that Orange is an employer giving the best options, their experience and skills. Last year we also prepa- We have also introduced rewarding employees on both for internal staff as well as for potential new For employees to have the opportunity to con- red around 90 educational videos and 250 frontline the year in service anniversary day, in the form of colleagues. Therefore, we have been carrying out stantly improve at their work, we organise va- employees were awarded certifi cates for providing little surprise with the thank you note for their work several activities for the long-term to achieve this rious development and educational activities for extra customer care, exceptional performance and and loyalty. goal. Also the satisfaction survey that we conduc- them to contribute to fulfi lling the completion and excellent presentation of Orange values. ted in 2015, shows a signifi cant shift in the motiva- expansion of their knowledge and skills. To sup port Healthier at Orange tion and satisfaction of our employees. These po- employee development activities in 2015, we in- In the area of management staff, we focused on sitive results not only please us, but also challenge vested a total of EUR 895 thousand and registered developing managerial skills relating to performan- Last year we also launched the Orange Healthier us for commitment to further improving the various 45,833 completed training hours. With the num- ce management and also to creating space for Program which focuses on activities supporting factors that infl uence motivation and employee sa- ber of 1,043 trained employees this means that, on their greater co-operation and sharing of manage- health, healthy lifestyles of our employees and their tisfaction. average, each employee spent 5.5 days on a vari- ment practices and experience. leisure sports activities. With experts in these fi elds ety of educational activities supported by Orange. we implemented, for example, lectures by experts The most important topic we consider, is the area We particularly care about our employees fee- for employees and special exercises in the work- of performance management, continuous impro- The massive construction of Orange high-speed ling comfortable at work and at the same time place. During the summer months, our employees vement of internal processes, the benefi t and soci- LTE network has had an effect on investment in having enough space to spend more time with had the opportunity to participate in regular open al policy area, the area of professional and perso- education. The signifi cant part of last year’s in- their loved ones, recharging their energy, as well air exercises. As part of the nationwide initiative nal development and balance between work and vestment went in the fi eld of project management as compensating for the time and energy spent „Land of rescuers“ we also included the option private life. Particularly important for us is also the and development activities related to operation in the work place with their hobbies in their free to take the professional fi rst aid training under the management quality, internal communication and and network security. time. Based on feedback from our employees, Orange Healthier Program. This activity was open
46 47 2015 annual report chapter VI
to all our staff and their families. Nearly 250 emplo- We Digitize to Increase Effi ciency yees and those existing ones too. One of the current employees, we focused on simplifying yees and their family members were trained in this goals was to simplify the arrival of a new emplo- the complexities related to internal processes, area, certifi ed and ready to provide qualifi ed fi rst An ever-increasing society digitization plays an yee into our company - so we have summarized the duration of approval processes and unnece- aid. Thanks to the above activities, we were pla- important role in human resource management. in detail all of her/his needs so that she/he could ssary bureaucracy. The aim was, of course, to ced fourth in the competition „Healthy Company of Therefore, we have prepared a specialized pro- fully devote to her/his new job position. Throu- facilitate the processes and remove obstacles in 2015“, organized by the Union, the health insuran- gram to support the internal digital transforma- gh this initiative, newly arrived employees will the work of employees so they can work more ce company. tion of our society, mainly in three basic pillars have, as quickly as possible, all the work equi- effi ciently. Most commonly used applications - raising awareness, training and in the fi eld of pment available, they will have access to sys- thus received the digital form, we shortened In addition to this award, Orange Slovensko was technical facilities. tems, training schedules and information about the time of requirement approval and enhanced also awarded for the fourth time with the titles the processes. For new employees and also their implementation. of Top Employer Slovakia and Top Employer From this perspective, 2015 was the year in Europe in 2015, for the quality of implemented poli- which we advanced in the digitization of the cies and tools in all areas of human resources ma- education process, we have created almost nagement. a hundred educational videos for our emplo- yees, we expanded our e-learning, with more Besides all these activities, of course, we further and more digital tools we also use in the classic continue in providing a wide range of benefi ts. Our lecture learning (electronic boards, online trai- benefi t and social policies have been very high- ning, social networks and so on). We have also ly appreciated by the employees at Orange for launched a second phase of so-called Digital a long-period. Academy in which employees can train on big data. We believe that through high-quality manage- ment and effective policy setting, concepts and One of our objectives includes the improvement tools in the fi eld of human resources, we can of internal processes and workfl ow. We strive achieve the number of employees positively to make them obstacle free for staff, moreover talking about the company, associating their allowing the motivation to enable them to stay future with it and willing to make a special working focused on what is essential in their work. We effort, was the largest. have aimed these at both, newly arrived emplo-
48 49 7 corporate social responsibility we work to keep our business sustainable 2015 annual report chapter VII
Corporate Social Responsibility
Orange as a leader on the telecommunications Environmentally Friendly Network of mobile phones introduced to the market in already take advantage of an electronic invoice. market, applies corporate social responsibility Energy consumption is the largest CO2 producer 2015. This way Orange has not only fulfi lled its Their share of the customer base thus reached principles towards customers, its employees, and Orange plans to reduce its CO2 emissions target, it exceeded it, there were 8,300 more more than 66 percent. In addition to customer partners and communities. The strategy of cor- by 20 % by 2020. To achieve this objective, we mobile phones collected compared to last year. benefi ts, such as convenient and transparent porate social responsibility is to create a balance carry out various activities - from the introduction One of the most signifi cant activities of this area archiving and search invoices, we also reduce between the needs of partners, the company, of automatic computer shutdown after working is the traditional competition ´Old Mobiles to Be paper consumption and encourage the imple- its customers, shareholders and employees, as hours, to the optimization of technological pre- Rescued´. It combines eco-friendliness, charity, mentation of our commitments towards the en- well as to apply changes supporting the long- mises. Solutions that contribute to this objective and entertainment in a single, benefi cial project. vironment. -term sustainability of our business. We believe are applied also in the operation of our networks, Orange donated 50 cents for each mobile pho- that the only way of doing sustainable business number of base stations using the solar energy ne collected to selected non-profi t organisations. Considerately with Eco Tree is one that respects and balances the business for their operation is growing. Currently, we have Thus, the company donated approximately EUR In summer 2015, Orange in co-operation with goals of a company and its impact on society. four of them available in Slovakia, and we plan 30 thousand to non-profi t organisations throu- the civic association Green Gang brought the to gradually increase their number. Moreover, ghout three phases of the competition, from Fe- absolutely unique - Orange Eco Tree to Slovakia. We Eliminate our Negative we use, for example, the automatic power con- bruary through December 2015. The tree that produces energy instead of oxy- Impact on Environment sumption check in real time, which allows more gen. The tree could be the fi rst tried by the citi- effi cient operation of our base stations. Following the same objective of environmental zens of Banská Bystrica. They could re-charge Although the impact of telecommunications responsibility, we enforced the separation of pa- the energy with this unique device in the shape operators on the environment is not as signi- We Collect and Dispose per and plastic waste at our points of sale, ad- of a tree, and try out how easy it is to charge fi cant as in certain other sectors, the energy in an Eco-friendly Manner ministrative buildings, and archives in 2007. The their electronic devices using solar energy. They consumption has a signifi cant indirect impact The year 2015 at Orange was again rich in a va- year 2015 brought 70.6 tonnes of separated pa- had gotten the new location there, not only to on both the environment and our economy. riety of activities, the objective of which was to per waste, which will get recycled, in addition to recharge their mobile phones but also as a place It is therefore obvious, that in terms of sustaina- collect back 15 % of the total number of telepho- 2.025 tonnes of plastic bottles. for pleasant meetings. ble business we apply systematic changes and nes introduced to the Slovak market in a year. projects allowing a reduction in energy con- Altogether, we have managed to collect 64,877 Last year we also achieved that more than three sumption. devices from customers, accounting for 16.52 % quarters of a million of our customers using plans,
52 53 2015 annual report chapter VII
We Educate and Support schools, where expert lecturers held meetings and Autistic Centre, and more than 7,000 other com- to the organizations that ranked third. There was discussions with 536 teachers, over 4,286 chil- munity projects. also a special prize awarded. The prize of the Technologies are no longer just an everyday part dren, and 320 parents all over Slovakia last year. Personality and Civic Engagement was awarded of our business, but also of our customers´ lives. Total of EUR 93,827.50, for example, was reallo- for the second time. In 2015, the prize was awar- They bring many positives to users´ life, however We Help the Active Ones cated to the requests for support in the popular ded to Marek Roháček who has been active in they also mean new risks which were not there “Donate Christmas Grant Programme”. Also in supporting foster parenting for many years. before, Therefore it is very important that people Orange perceives its environment from various 2015, Orange customers contributed to a total can use the most advanced digital technologies angles, it cares, and gets involved where it can redistributed amount. For each plan, internet, te- Support from Our Own Resources responsibly. For many years, we were so focused be helpful – not merely from the fi nancial point of levision or other services purchased by Orange Collections of clothes, blood donation, own pro- on the education of parents, teachers as well as view. Through the Orange Foundation, Orange customers, in the period from 30 October to 6 jects and ideas - these all are the ways in which, children themselves in this area. In particular, pa- supports the helpful ideas of active people that December 2015, Orange contributed the sum of Orange staff have tried to help where it is nee- rents are the group that we target to and help assist change in lives of others. 50 cents to the “Donate Christmas Grant Progra- ded. In co-operation with the National Transfusi- them overcome the digital divide between them mme”. The total amount that Orange donated to on Centre, a total of 74 employees donated and their children, and assist them to recognize Orange Foundation programme reached EUR 31,849. blood in the past year. 24 colleagues devoted and avoid risks that technology brings. The Orange Foundation has strived to provi- their time to a good thing, by carrying out their de help where needed ever since it was esta- In 2015, the Orange Foundation Award, a unique projects supported through the Employee Grant Since 2006, we have been supporting the safe blished. Or, to provide support where it sees appreciation of its kind in Slovakia, was awar- Programme. Thanks to the grant they obtained and responsible use of communication techno- passion, optimism, and potential for the deve- ded for the sixth time. Its aim is to reward the assistance in enhancement of the environment, logies. Last year, we again helped young peo- lopment of good ideas. This is the reason why work of non-governmental organizations for their helping children or in rescuing monuments and ple, parents, and teachers navigate the world of we systematically focus on the support of the outstanding contribution. A total of nine such or- many other activities. Through the clothing co- modern technologies and raise awareness about education, community development and social ganizations got this prize, annually awarded in llections, carried out by Orange also in 2015, the their effi cient and safe use. We prepared an up- inclusion areas. the fi elds of education, community development employees donated more than 500 kg of clothes. date of the comprehensive website www.detina- and social inclusion. An independent evaluation We supported fi ve NGOs that care for people in nete.sk, which provides good advice and tips for Last year, the Orange Foundation implemented committee in each category awarded three or- need with clothing collected. parents and teachers on how to protect children 9 grant programmes with the total allocation of ganizations, not only morally but also fi nancially. from risks which can be posed in such an envi- EUR 296 thousand. It continued to support the The organizations in fi rst place were granted the Last year, Orange also responded to the so- ronment. We have also continued to spread this activities of its long-standing partners, such as amount of EUR 10,000, organizations in second -called refugee crisis. The employees could con- topic through our free workshop programme at Návrat (Return) – the civic association, Andreas place EUR 5,000, and EUR 2,000 was granted tribute to the alleviation of the fate of these peo-
54 55 2015 annual report chapter VII
The Amount of Funding Allocated Through ple in the collection by donating toiletries. Thanks collect more than EUR 300 thousand via mobile the Orange Foundation Grant Programmes in 2015. to employees of Orange, we managed to collect fundraising. The money in full, is always used to together around 105 kg of sanitary equipment. provide the assistance.
9,000 5,500
26,500 We helped through mobile fundraising also in More information on Orange corporate social 2015. Either with our long-term partners - Friends responsibility and Orange Foundation activities
93,827 of UNICEF Children, Magna Children In Need can be found in the 2015 Corporate Social Re-
29,755 and Good Angel - or within the DMS system and sponsibility Report at www.orange.sk but also at through lump-sum donations in 22 collections www.nadaciaorange.sk. which we implemented in 2015. We managed to
50,000
81,500
Donate Christmas
Chance for your Region
e-Schools for the Future
Grant Programme for Optimists
Employee Grant Programme (for Orange employees)
Grant Programme for Salesmen of Orange
Scholarships for the Disadvantaged
56 57 8 fi n a n c i a l statement jointly we decide about our results 2015 annual report chapter VIII
Table of Contents
Independent Auditor’s Report ...... 62
Separate Statement of Financial Position ...... 64
Separate Statement of Comprehensive Income ...... 66
Separate Statement of Changes in Equity ...... 67
Separate Statement of Cash Flows ...... 68
Notes to the Separate Financial Statements ...... 70
Orange Slovensko, a.s.
INDEPENDENT AUDITOR’S REPORT AND SEPARATE FINANCIAL STATEMENTS (prepared in accordance with International Financial Reporting Standards as adopted by the EU) Year ended 31 December 2015
Company identifi cation number: 35 69 72 70 Tax identifi cation number: SK2020310578
60 61 2015 annual report chapter VIII
Independent Auditor‘s Report
62 63 2015 annual report chapter VIII
Separate statement of fi nancial position as at 31 December 2015
In thousands of EUR Note 31 December 2015 31 December 2014 In thousands of EUR Note 31 December 2015 31 December 2014
ASSETS EQUITY AND LIABILITIES
Non-current assets Equity 12 Property, plant and equipment 4 338,701 331,211 Share capital 39,222 39,222 Intangible assets 5 179,992 195,302 Reserves 15,260 15,260 Investments in unconsolidated subsidiaries 6 106 106 Retained earnings 155,565 260,129 Non-current receivables 6,889 3,242 Profi t for the year 88,249 103,062 Other non-current assets 84 84 Total 298,296 417,673 Total 525,772 529,945 Non-current liabilities Current assets Provisions 14 29,624 28,432 Inventories 8 20,493 11,778 Long-term debt/loan 13 110,000 – Trade and other receivables 9 57,944 61,415 Deferred tax liabilities 7 4,358 7,978 Other assets 5,205 3,721 Non-current payables 14 18,616 21,233 Current income tax receivable 3,766 5,370 Total 162,598 57,643 Cash and cash equivalents 11 5,509 7,575 Current liabilities Total 92,917 89,859 Current fi nancial liabilities 10 36,582 6,450 Total assets 618,689 619,804 Trade payables and other liabilities 15 101,000 117,542 Provisions 14 1 1 Deferred income 16 20,212 20,495 Total 157,795 144,488
Total equity and liabilities 618,689 619,804
64 65 2015 annual report chapter VIII
Separate statement of comprehensive income Separate statement of changes in equity for the year ended 31 December 2015 for the year ended 31 December 2015
In thousands of EUR Note 2015 2014 In thousands of EUR Note Share capital Reserves Retained earnings Total
Revenues 17 560,623 580,156 Balance as at 1 January 2014 39,222 15,260 340,129 394,611
External purchases 18 (289,392) (287,988) Total comprehensive income for the year Other operating expenses 19 (16,586) (19,361) Profi t for the year – – 103,062 103,062 Other operating income 19 7,962 7,083 Transactions with shareholders Wages and contributions 20 (45,779) (47,637) Dividends paid – – (80,000) (80,000) Amortisation and depreciation expenses (95,814) (91,388) Balance as at 31 December 2014 39,222 15,260 363,191 417,673 Operating profi t 121 014 140 865 Balance as at 1 January 2015 39,222 15,260 363,191 417,673 Interest income 128 208 Application of new accounting 4 – – 2,374 2,374 Interest expenses (1,602) (911) policy on capitalization of SIM cards Balance as at 1 January 2015 Other fi nance expenses (212) (9) 39,222 15,260 365,565 420,047 adjusted Other fi nance income 37 2 Total comprehensive income for the year Profi t before tax 119 365 140 155 Profi t for the year 12 – – 88,249 88,249 Income tax 21 (31,116) (37,093) Transactions with shareholders Profi t for the year 88,249 103,062 Dividends paid – – (210,000) (210,000)
Other comprehensive income – – Balance as at 31 December 2015 39,222 15,260 243,814 298,296
Total comprehensive income for the year 88,249 103,062
Total comprehensive income attributable to: Owners of the Company 88,249 103,062
66 67 2015 annual report chapter VIII
Separate statement of cash fl ow for the year ended 31 December 2015
In thousands of EUR Note 2015 2014 In thousands of EUR Note 2015 2014
Profi t for the year 88,249 103,062 INVESTING ACTIVITY
Taxes 31,116 37,093 Purchase of property, plant and equipment (85,903) (131,923) Financial income – (88) Proceeds from sale of non-current assets 1,147 499 Interest expenses 1,601 501 Decrease /(Increase) in fi nancial assets – 6,102 Interest income (127) – Net cash outfl ow from investing activities (84,756) (125,322) Depreciation and amortisation of tangible and intangible assets 95,814 91,388 Increase in provisions 927 – FINANCING ACTIVITY Decrease in value adjustment to receivables (2,246) – Increase in value adjustment to inventories 316 – Changes in current fi nancial liabilities 10 30,132 6,450 Gain on sale of property, plant and equipment (865) – Increase in long-term loan net of arrangement fees 13 109,286 – Other – 1,875 Dividends paid 12 (210,000) (80,000)
Profi t from operating activities before changes in working capital 214,785 233,831 Net cash outfl ow from fi nancing activities (70,582) (73,550) (Increase)/Decrease in trade and other receivables 1,351 (8,110) Net increase /(decrease) in cash and cash equivalents (2,066) 787 (including accruals/deferrals of assets) Decrease/(Increase) in inventory (9,031) 4,769 Cash and cash equivalents at the beginning of the year 7,575 6,788 Increase/(Decrease) in trade liabilities (20,155) 2,568 (including accruals/deferrals of liabilities) Cash and cash equivalents at the end of the year 11 5,509 7,575
Cash generated from operations 186,950 233,058 Interest received 588 Interest paid (551) (501) Taxes paid (33,132) (32,986)
Cash fl ows from operating activities 153,272 199,659
68 69 2015 annual report chapter VIII
Notes to the separate fi nancial statements for the year ended 31 December 2015
1. General information Members of the Company’s Bodies
Body Function Name Orange Slovensko, a.s. (hereinafter also reffered the establishment and operation of public mobile to as the “Company”) is a joint stock company telecommunication networks at assigned fre- Chairman and Chief Executive Offi cer Pavol Lančarič Chairman (untill 29 May 2015) Brigitte Bourgoin established on 29 July 1996 and incorporated quencies as well as the operation of fi bre-optic Deputy Chairman Ladislav Rehák on 3 September 1996 with its registered offi ce cable networks. The Company is not an unlimited Member (since 30 May 2015) Zuzana Nemečková at Metodova 8, 821 08 Bratislava, Slovak Repub- guarantor in any other entity. Board of Directors Member (since 30 May 2015) Marc Ricau Member and ITN Director/CEO deputy Ivan Golian lic. In August 2008, Atlas Services Belgium, S.A. Member and CFO/CEO deputy Antoine Guilbaud acquired all the shares held by Wirefree Services Approval of the 2014 Financial Statements Member (untill 29 May 2015) Pierre Hamon Nederland B.V., which had been the major share- On 13 May 2015, the General Meeting appro- Member (untill 29 May 2015) Dominique Garnier Member (since 30 May 2015) Christophe Naulleau holder since November 2005, when it acqui- ved the Company’s 2014 fi nancial statements Member (since 13 August 2015) Adela Irinel Savu Guedon red all the shares held by minority shareholders (Notary Deed No. N 281/2015, Nz 16255/2015, Member Ján Kodaj and became the 100 % shareholder of Orange NCR1s 16639/2015). Member (since 18 June 2015) Rudolf Tesár Supervisory Board Member Thuy Mai Pavret de La Rochefordiere Slovensko, a.s. The Company’s principal activity is Member (untill 29 May 2015) Bertrand du Bourcher Member (untill 29 May 2015) Zuzana Nemečková Member (since 30 May 2015 untill 12 August 2015) Kais Ben Hamida Member (untill 18 June 2015) Martin Schwantzer Chief Executive Offi cer Pavol Lančarič Human Resources Director Andrea Danielová ITN Director/CEO deputy Ivan Golian Chief Financial Offi cer/CEO deputy Antoine Guilbaud Executives Customer Services Director Vladislav Kupka Communication and Brand Director Miloš Lalka Strategy and Regulatory Affairs Director Ivan Marták Commercial Director Zuzana Nemečková
70 71 2015 annual report chapter VIII
Employees (b) Standards, interpretations, and amendments Amendments to IFRS 10 “Consolidated Finan- 31 December 2015 31 December 2014 to the existing standards and interpretations cial Statements”, IFRS 12 “Disclosure of Inte-
Number of employees as at 1,087 1,133 adopted by the EU but not yet effective rests in Other Entities” and IAS 28 “Investments Of which: managers 113 118 At the date of authorisation of these fi nancial in Associates and Joint Ventures” - Investment Average number of employees 1,077 1,137 statements, the following standards, revisions, Entities: Applying the Consolidation Exception and interpretations adopted by the EU had been (effective for annual periods beginning on or af- 2. Adoption of new and revised standards issued but were not yet effective: ter 1 January 2016)
In the current year, International Accounting Stan- IFRS (IFRS 1, IFRS 3, IFRS 13 and IAS 40) pri- IFRS 9 “Financial Instruments” and subsequent Amendments to IFRS 11 “Joint Arrangements” dards Board (IASB) and the International Finan- marily with a view to removing inconsistenci- amendments (effective for annual periods be- – Accounting for Acquisitions of Interests cial Reporting Interpretations Committee (IFRIC) es and clarifying wording, adopted by the EU ginning on or after 1 January 2018) in Joint Operations (effective for annual periods of the IASB have not issued any new or revised on 18 December 2014 (effective for annual pe- beginning on or after 1 January 2016) standards or interpretations that could be rele- riods beginning on or after 1 January 2015) IFRS 14 “Regulatory Deferral Accounts” vant to the Company’s operations for accounting (effective for annual periods beginning Amendments to IAS 1 “Presentation of Fi- periods beginning on 1 January 2015. Amendments to IAS 19 “Employee Benefi ts” - on or after 1 January 2016) nancial Statements” - Disclosure Initiative Defi ned Benefi t Plans: Employee Contributions (effective for annual periods beginning (a) Standards and interpretations adopted by EU (effective for annual periods beginning on or after IFRS 15 “Revenue from Contracts with Cus- on or after 1 January 2016) effective in 2015 but not relevant to the Compa- 1 July 2014) tomers” (effective for annual periods beginning ny’s operation on or after 1 January 2018) Amendments to IAS 16 “Property, Plant The following standards, amendments, and interpre- Amendments to various standards “Improve- and Equipment” and IAS 38 “Intangible Assets” tations adopted by the EU are mandatory for accoun- ments to IFRSs (cycle 2010-2012)” resulting from Amendments to IFRS 10 “Consolidated - Clarifi cation of Acceptable Methods of Depre- ting periods beginning on or after 1 January 2015 but the annual improvement project of IFRS (IFRS 2, Financial Statements” and IAS 28 “Investments ciation and Amortisation (effective for annual are not relevant to the Company’s operation: IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS in Associates and Joint Ventures” - Sale periods beginning on or after 1 January 2016) 38) primarily with a view to removing inconsisten- or Contribution of Assets between an Inves- Amendments to various standards “Impro- cies and clarifying wording (amendments are to tor and its Associate or Joint Venture (effective Amendments to IAS 16 “Property, Plant vements to IFRSs (cycle 2011 – 2013)” resul- be applied for annual periods beginning on or af- for annual periods beginning on or after and Equipment” and IAS 41 “Agriculture” - Ag- ting from the annual improvement project of ter 1 July 2014) 1 January 2016) riculture: Bearer Plants (effective for annual pe- riods beginning on or after 1 January 2016)
72 73 2015 annual report chapter VIII
Amendments to IAS 27 “Separate Financial impact on the Company’s fi nancial state- te parent company and the ultimate controlling and liabilities denominated in foreign currencies Statements” - Equity Method in Separate Fi- ments in the period of initial application except party, prepares consolidated fi nancial state- that are stated at fair value are translated into euro nancial Statements (effective for annual peri- for the standard IFRS 15 which will signifi cantly ments in accordance with IFRS as adopted at the foreign exchange rates valid on the dates ods beginning on or after 1 January 2016) impact Company’s revenue from goods sold in by the EU for a group of companies, which also on which the fair value is determined. a package with services within the contract with includes Orange Slovensko, a.s. and its subsidiary The Company anticipates that adopting these customers. The future implication of the standard Orange CorpSec, spol. s r.o. (e) Property, Plant, and Equipment standards and amendments to the existing stan- is being evaluated and will be applied in accor- Owned Assets dards and interpretations will have no material dance with the requirements in 2018. The consolidated fi nancial statements of Orange Items of property, plant and equipment are SA are available at its registered offi ce at 6 Place stated at cost, less accumulated depreciation 3. Signifi cant accounting policies d’Alleray, 75015 Paris, France. and impairment losses, if applicable. Cost con- sists of the price at which the asset was acquired (a) Statement of Compliance with IFRS as adopted by the EU. The Company (c) Basis of Preparation plus the costs related to the acquisition (installa- The separate fi nancial statements have been elected to use the exemption from consolidation The fi nancial statements are presented in euros, tion and commissioning, transport, assembling prepared in accordance with IFRS as adopted in accordance with the 7th Directive of the EU rounded to the nearest thousand. They are pre- cost, etc). The cost of self-constructed assets by the EU and on the going concern assumption. as well as with IAS 27.10 and not to present con- pared on the historical cost basis. The principal includes the cost of materials, direct labour, IFRS as adopted by the EU do not currently differ solidated fi nancial statements (with its 100 % accounting policies are included in the para- the initial estimate (where relevant) of the costs from IFRS as issued by the IASB, except for cer- owned subsidiary Orange CorpSec, spol. s r.o. ), graphs below. of dismantling and removing the items and res- tain standards and interpretations that have not which is also incorporated into the Act on toring the site on which they are located, and an been endorsed by the EU as described above. Accounting No. 431/2002 Coll. on Accounting, (d) Foreign Currency appropriate proportion of production overheads. as amended. These fi nancial statements are Foreign Currency Transactions Items of property, plant, and equipment are (b) Legal Framework for Preparing intended for general use and information; they Transactions denominated in foreign currencies accounted for on a component-by-component the Financial Statements are not intended for the purpose of any speci- are translated into euro using the exchange rate basis at a level that allows for the depreciation These fi nancial statements are the Company’s fi c user or for the consideration of any specifi c of the day prior to the transaction date. Mone- of each component over its expected useful life separate fi nancial statements prepared under Act transaction. Accordingly, users should not rely tary assets and liabilities denominated in foreign and allows the proper accounting of asset dispo- on Accounting No. 431/2002 Coll. on Account- exclusively on these fi nancial statements when currencies are translated at the exchange rate sal and withdrawal. ing, as amended. The fi nancial statements were making decisions. valid on the balance sheet date. The exchange prepared for the reporting period from 1 Janu- rate differences upon translation are charged Subsequent Expenditure ary 2015 to 31 December 2015 in accordance Orange SA (France), the Company’s ultima- to the result for the period. Non-monetary assets The Company recognises in the carrying amount
74 75 2015 annual report chapter VIII
of an item of property, plant, and equipment 1 January 2015 SIM cards are capitalized The useful lives of property, plant and equipment The license fees and the spectrum fees are ca- the additional costs or cost of replacing part of such as property, plant and equipment and are de- are reassessed annually by Orange SA, which pitalized as intangible assets and amortized an item when that cost is incurred if it is proba- preciated over its useful life. The cumulative results in changes to the useful lives of certain over the license period. The administrative fees are ble that the future economic benefi ts embodied effect of the restatement has been recorded only assets. These changes are recorded as changes expensed. with the item will fl ow to the Company and the cost to the beginning of the last period presented as at in the accounting estimates on a prospective basis. of the item can be measured reliably. All other costs 1 January 2015. The retrospective appli- Capitalisation of Spectrum fees are recognised as an expense when incurred. cation has not been presented as it would At the Company level, the revision of an individual Spectrum fees are the unavoidable payments not be practicable. asset’s useful life is performed when indicators computed on the principle of allocated band- Capitalization of SIM cards of an earlier end of life exist. width and fix tariff for the whole period to which As at 1 January 2015 the Company changed its Depreciation a license is granted. Payment is done on a quar- accounting policy and capitalizes the SIM cards, Depreciation is charged to the income statement (f) Intangible Assets terly basis during the whole license period. previously expensed when used, as a low va- on a straight-line basis over the estimated use- Intangible assets acquired separately lue tangible assets within external purchases. ful life of each category of an item of property, by the Company are stated at cost less accu- The Company discounts the value of future The Company changed the policy and conclu- plant, and equipment. Land is not depreciated. mulated amortisation and impairment losses spectrum fees to their present value and recogni- ded that SIM cards meet the defi nition of an Depreciation starts when the assets are ready if applicable. Intangible assets mainly comprise zes them as other intangible assets. Related futu- asset as it is controlled by the Company, used for their intended use. The estimated useful software and licences for operating the telecom- re spectrum fees payables are presented as both for a period longer than 1 year and is genera- lives for the current and comparative periods munication network. current and non-current liability. ting future economic benefi ts. Therefore since are as follows: Telecommunication licenses Subsequent Expenditures 2015 2014 Upon the granting of the telecommunication Subsequent expenditures on capitalised in- Radio Access Network 5 to 28 years 5 to 28 years licenses (GSM, UMTS, LTE) Orange Slovensko, tangible assets are capitalised only when they Transmission 6 to 30 years 6 to 30 years a.s. is obliged to pay to the Telecommunication increase the future economic benefits embodied Switching 5 to 10 years 5 to 10 years Data Network 5 years 5 years Office one off license fee and two types of re- in the specific assets to which they relate. All other Dedicated Platforms 5 years 5 years current fees: expenditures are expensed as incurred. Other Network 5 to 10 years 5 to 10 years IT Non-Network Hardware & Infrastructure 2 to 5 years 2 to 5 years Buildings 10 to 30 years 10 to 30 years Administrative variable fees Amortisation Other Non-Network Equipment 2 to 10 years 3 to 10 years Intangible assets are amortised from the date they Local Loop 10 to 30 years 10 to 30 years Spectrum fixed fees become available for use, using the straight-line
76 77 2015 annual report chapter VIII
method over the following estimated useful lives: in use. In assessing value in use, the estimated in acquiring the inventories and bringing them figures showing that the probability of contrac- future cash flows are discounted to their present to their existing location and condition. tual penalties collection is low (less than 50 % on 2015 2014 value using a pre-tax discount rate that reflects average) and the probability is assessed on the Software 3 to 10 years 3 to 10 years current market assessments of the time value (j) Trade Receivables basis of an individual contract level. Based on Licences 10 to 16 years 10 to 16 years of money and the risks specific to the asset. The trade receivables are mainly short-term the individual contract level approach the Com- The useful lives of intangible assets are reas- For an asset that does not generate largely with no stated interest rate and are measured pany considers contractual penalties as contin- sessed annually by Orange SA, which results independent cash inflows, the recoverable at fair value, subsequent to initial recognition gent asset. in changes to the useful lives of certain as- amount is determined for the cash generating they are stated at their amortized costs using sets. These changes are recorded as changes unit to which the asset belongs. the effective interest rate method, less provisions The application of new accounting policy has in accounting estimates on a prospective basis. for any impairment of the receivables. no impact on the reported Statement of Income (h) Investments in Subsidiaries and retained earnings as the receivables from At the Company level, the revision of an individu- Investments in subsidiaries represent investments Those receivables which include deferred contractual penalties were offset by a 100 % al asset’s useful life is performed when indicators in wholly-owned subsidiaries: Orange CorpSec, payment terms over 12 up to 24 months impairment provision in the past. of an earlier end of life exist. spol. s r.o. with the seat on Metodova 8, 821 08 for the benefit of customers who purcha- Bratislava, Slovakia and Nadácia Orange (“the sed handsets are discounted and classified (k) Cash and Cash Equivalents (g) Impairment of Assets Foundation”), having the seat on Metodova 8, as according to their remaining maturities. Cash and cash equivalents consist of balan- The carrying amounts of the Company’s assets 821 08 Bratislava. The Company’s investments A provision for impairment of trade receivables ces with banks, and highly-liquid investments are reviewed at each balance sheet date to de- have been accounted for at cost. is established when there is objective eviden- with insignificant risk of changes in value. termine whether there is any indication of impa- ce that the Company will not be able to collect irment. If such indication exists, the asset’s reco- (i) Inventories all amounts due according to the original terms (l) Financial Assets verable amount is estimated. An impairment loss Inventories are stated at the lower of cost and of the receivables (see Note 9). Financial assets are classified into the following is recognised whenever the carrying amount the net realisable value. The net realisable value is specified categories: financial assets as ‘at fair of an asset or its cash-generating unit exceeds the estimated selling price in the ordinary course Contractual penalties value through profit or loss’ (FVTPL), ‘held-to- its recoverable amount. Impairment losses are of business, less the estimated costs necessary From 1 January 2015, the Company changed -maturity investments’, ‘available-for-sale’ (AFS) recognised in the income statement. for completing the sale and selling expenses. its accounting policy on contractual penalties financial assets and ‘loans and receivables’. The and started to recognize them at the moment classification depends on the nature and pur- The recoverable amount of other assets is The cost is based on the weighted average of collection (previously at subscription). This de- pose of the financial assets and is determined the greater of their net selling price and the value principle and includes expenditures incurred cision has been made based on the historical at the time of the initial recognition. As at 31 De-
78 79 2015 annual report chapter VIII
cember 2015, the Company holds only trade re- obligation. If the effect is material, provisions are from foreign carriers for international roaming delivered and accepted by customers and ceivables categorised as ‘loans and receivables’ determined by discounting the expected future calls are included in revenues in the period in when services are provided in accordance (2014: only trade receivables categorised as ‘lo- cash flows at a pre-tax rate that reflects current which the call occurs. with the contract terms. ans and receivables’). market assessments of the time value of mo- ney and, where appropriate, the risks specific to Certain prepaid usage services are billed Revenue and related expenses associated (m) Financial Liabilities the liability. The Company records a provision for in advance, resulting in deferred income. Rela- with the wholesale of wireless handsets to dis- Financial liabilities, including borrowings, are asset retirement, a provision for retirement benefit ted revenues are recognised based on the usa- tributors are recognised when the products are initially measured at fair value, net of transac- cost and a provision for litigations (see Note 14). ge or the expiry of the prepaid vouchers. delivered and accepted; as such, sales tran- tion costs, and are subsequently measured sactions are separate and distinct from the sale at amortised costs using the effective interest (p) Trade and Other Payables The Company enters into multiple element ar- of wireless services to customers. rate method, with interest recognised on an ef- Trade and other payables are stated at cost. rangements, which include the sale of handsets, fective yield basis. The Company’s financial lia- activation fees and service contracts to custo- (r) Expenses bilities relates to overdraft on the current account (q) Revenues mers through Orange-branded shops. These Operating Lease Payments held by parent company Orange SA and long The Company provides mobile and non-mobi- transactions include the sale of a mobile handset, For operating leases, lease payments are ex- term loan received from the parent company. le communication services to individuals and the up-front charge of non-refundable activation pensed on a straight-line basis over the lease commercial and non-commercial organisations. fees to connect the customer to the service, and period. (n) Borrowing Cost The Company generates revenue primarily by subsequently monthly fees and airtime fees char- All borrowing costs are recognised in profit providing digital wireless services for voice ged during the contract period. The Company con- (s) Taxation or loss in the period in which they are incurred. and data as well as value-added services, text siders each element delivered as a separately iden- Income tax expenses for the year comprise cur- As the Company does not have any loans dedi- and multimedia messaging. To a lesser extent, tifiable components for the purpose of accounting rent and deferred tax and special levy. cated to investment activities, there are no bor- Orange Slovensko a.s. generates revenue from of the transaction, as the handset or mobile servi- rowing costs eligible for capitalisation. the sale of wireless handsets, including laptops ce contract can be sold separately. The Company Current Income Tax and tablet computers. allocates the consideration of the package based Current tax is the expected tax payable (o) Provisions on the relative fair value of the elements and re- on the taxable profit for the year, using tax rates A provision is recognised when the Company The Company recognises mobile usage and cognize the first element delivered, i.e. the handset enacted or substantially enacted at the balance has a legal or constructive obligation as a result roaming service revenues based upon the up to the price paid by the customer for the handset. sheet date, and any adjustment to tax payable in of a past event, and it is probable that an outflow traffic processed or contracted fee schedules respect of previous years. Taxable profit differs of economic benefits will be required to settle the when the service is rendered. Revenues due Other service revenues are recognised when from profit as reported in the separate income sta-
80 81 2015 annual report chapter VIII
tement because it excludes items of income or ex- lities, using the tax rates enacted or substantial- 4. Property, plant, and equipment pense that are taxable or deductible in other years ly enacted at the balance sheet date including Fixtures Under Land and Plant and Motor and it further excludes items that are never taxable the special levy. A deferred tax asset is recogni- In thousands of EUR and ARO *) Con- Total Buildings Equipment Vehicles Fittings struction or deductible. sed only to the extent that it is probable that fu- ture taxable profits will be available against which Cost
Special levy the asset can be utilised. Deferred tax assets are As at 1 January 2014 4,224 752,620 8,154 31,926 18,756 28,450 844,130 Special contribution made by a regulated entity reduced to the extent that it is no longer pro- Additions – – – – 1,585 60,554 62,139 Disposals – (25,001) (1,842) (4,121) – – (30,964) from activities in regulated industries. The base bable that the related tax benefits will be realised. Transfer 10 53,260 544 2,682 – (56,496) – for the levy is the economic result reported As at 31 December 2014 4,234 780,879 6,856 30,487 20,341 32,508 875,305 for the accounting period. The monthly levy rate (t) Employee Benefits is 0.363 % from the operating profit. Long-Term Service Benefits As at 1 January 2015 4,234 780,879 6,856 30,487 20,341 32,508 875,305 Additions – – – – 2,957 72,708 75,665 The Company’s net obligation in respect of long- Disposals – (49,971) (3,271) (1,043) – – (54,285) Deferred Tax -term service benefits is the amount of future Transfer 404 62,127 1,867 3,363 – (67,761) –
Deferred tax is provided using the balance sheet benefits that employees have earned in return As at 31 December 2015 4,638 793,035 5,452 32,807 23,298 37,455 896,685 liability method, providing for temporary diffe- for their service in prior periods. The obligation is Accumulated depreciation rences between the carrying amounts of assets calculated using actuarial methods and discoun- As at 1 January 2014 633 481,220 4,930 18,095 4,454 – 509,332 and liabilities for financial reporting purposes ted to its present value using a risk free interest Charge for the year 284 58,087 1,373 4,804 1,043 – 65,591 and the amounts used for taxation purposes. rate. The Company’s employee benefits contain Disposals – (24,986) (1,721) (4,122) – – (30,829) The amount of deferred tax provided is based only retirement benefit. As at 31 December 2014 917 514,321 4,582 18,777 5,497 – 544,094 on the expected manner of realisation or settle- As at 1 January 2015 917 514,321 4,582 18,777 5,497 – 544,094 ment of the carrying amount of assets and liabi- Charge for the year 294 60,484 972 4,958 1,185 – 67,893 Disposals – (49,885) (3,075) (1,043) – – (54,003)
As at 31 December 2015 1,211 524,920 2,479 22,692 6,682 – 557,984
*) Asset Retirement Obligation (ARO) described in Note 14
82 83 2015 annual report chapter VIII
Fixtures Under Land and Plant and Motor In thousands of EUR and ARO *) Con- Total 5. Intangible assets Buildings Equipment Vehicles Fittings struction Other Under Carrying amount In thousands of EUR Software Telecom. Licences Intangible Total Construction Assets As at 1 January 2014 3,591 271,400 3,224 13,831 14,302 28,450 334,798 Cost As at 31 December 2014 3,317 266,558 2,274 11,710 14,844 32,508 331,211 As at 1 January 2014 135,440 117,982 16,816 6,580 276,818 As at 1 January 2015 3,317 266,558 2,274 11,710 14,844 32,508 331,211 Additions – 67,295 1,066 19,247 87,608
As at 31 December 2015 3,427 268,115 2,973 10,115 16,616 37,455 338,701 Disposals (489) – (1,358) – (1,847) Transfer 19,048 – – (19,048) – *) Asset Retirement Obligation (ARO) described in Note 14 As at 31 December 2014 153,999 185,277 16,524 6,779 362,579 As at 31 December 2015, none of the properties Network) LTE equipment & releases and Mobile were pledged to secure bank loans. RAN Infrastructure, increase in IP routers equip- As at 1 January 2015 153,999 185,277 16,524 6,779 362,579 ment & releases and Microwave transmission. Additions – – – 15,253 15,253 Disposals (36,125) (727) (266) – (37,118) In previous periods SIM cards were expensed Transfer 13,518 – 669 (14,187) – when used. In 2015, the Company adjusted its During 2015, the Company had a disposal in As at 31 December 2015 131,392 184,550 16,927 7,845 340,714 accounting policy for presentation of SIM cards gross value of EUR 54,285 thousand (book value and started to capitalise costs of SIM cards with of EUR 282 thousand) relating mainly to old fully Accumulated amortisation retroactive effect but without restatement of previ- depreciated IT servers and Mobile RAN equipment. As at 1 January 2014 87,347 53,150 1,472 – 141,969 ous years, only 2015 opening balance was correc- Charge for the year 17,015 7,198 1,584 – 25,797 Disposals (489) – – – (489) ted (in amount of EUR 2,374 thousand). SIM card Property and equipment, excluding motor ve- meets the defi nition of an asset: it is controlled hicles, is insured to a limit of EUR 745,147 thou- As at 31 December 2014 103,873 60,348 3,056 – 167,277
by the Company, will generate future economic sand (2014: EUR 741,597 thousand). Each motor As at 1 January 2015 103,873 60,348 3,056 – 167,277 benefi ts for the Company, its useful life exceeds vehicle is insured to a limit of EUR 5,000 thou- Charge for the year 18,789 9,925 1,848 – 30,562 Disposals (36,852) – (266) – (37,118) one year and the cost can be estimated reliably. sand (2014: EUR 5,000 thousand) for damage on health and expenses related to death As at 31 December 2015 85,810 70,273 4,638 – 160,721 In 2015, transfers from assets under construction and EUR 2,000 thousand (2014: EUR 2,000 to property, plant, and equipment mainly com- thousand) for damage caused by destroyed, prised investments to upgrade of the existing seized or lost items. network, particularly Mobile RAN (Radio Access
84 85 2015 annual report chapter VIII
Other 6. Investments in subsidiaries -owned subsidiary Orange CorpSec, spol. s r.o. Under In thousands of EUR Software Telecom. Licences Intangible Total Construction Assets The subsidiary was registered in the Commerci- Investments in subsidiaries at a cost of EUR 100 al Register on 1 February 2005. The table below Carrying amount thousand represent an investment in the wholly- summarises the subsidiary’s fi nancial information: As at 1 January 2014 48,093 64,832 15,344 6,580 134,849 Profi t/loss for In thousands of EUR Assets Liabilities Equity Revenues As at 31 December 2014 50,126 124,929 13,468 6,779 195,302 the Period
As at 1 January 2015 50,126 124,929 13,468 6,779 195,302 As at 31 December 2015 644 215 449 1,080 262 As at 31 December 2014 327 141 186 1,080 54 As at 31 December 2015 45,582 114,277 12,289 7,845 179,993
In 2015, the addition mainly comprises the pur- During 2015, the Company had a disposal In 2010, the Company recognised an investment which is considered immaterial for the purpose chase of a customer domain, messaging service in gross value of EUR 37 118 thousand (book in Nadácia Orange (hereinafter also referred to as of these fi nancial statements. platforms and service delivery domain. value of EUR 0 thousand) relating mainly to old the “Foundation”) at a cost of EUR 6 thousand, fully depreciated IT servers and Mobile RAN equipment. 7. Deferred tax assets and liabilities
Movement in the deferred tax account is as follows:
In thousands of EUR 31 December 2015 31 December 2014
At beginning of period – net deferred tax liability 7,978 7380 Income statement (3,620) 598
At end of period – net deferred tax liability 4,358 7,978
86 87 2015 annual report chapter VIII
Deferred tax assets and deferred tax liabilities are attributable to the items detailed in the table below: 9. Trade and other receivables
31 December 2015 31 December 2014 In thousands of EUR In thousands of EUR 31 December 2015 31 December 2014 Assets Liabilities Net Assets Liabilities Net Accounts receivable 94,676 100,457 Property, plant, and equipment – 19,648 (19,648) – 18,472 (18,472) Allowance for doubtful debts and receivables (36,732) (39,042) Inventories 377 – 377 245 – 245 Receivables 1,672 – 1,672 1,964 – 1,964 57,944 61,415 Accruals 4,351 – 4,351 154 – 154 Provisions 8,890 – 8,890 8,131 – 8,131 As at 31 December 2015, no trade receivables Statistical method for the retail market is ba- Net deferred tax 15,290 19,648 (4,358) 10,494 18,472 (7,978) were pledged to secure bank loans. The trade sed on historical losses and leads to a sepa- Deferred tax assets and liabilities were offset sets against current tax liabilities and the defe- receivables are decreased by the allowance rate impairment rate for each ageing balance on the grounds that the Company has the lega- rred taxes relate to the same taxation authority. for receivables expected to be irrecoverable. category. lly-enforceable right to offset their current tax as- Allowances for doubtful debts are currently de- Individual method based on an examination termined according to two methods: of specifi c overdue items for the wholesale 8. Inventories market (roaming, interconnect).
In thousands of EUR 31 December 2015 31 December 2014 Ageing of past due but not impaired trade and other receivables Raw materials and consumables 1,027 967 Merchandise 20,896 11,925 In thousands of EUR 31 December 2015 31 December 2014 Provision for slow moving merchandise (1,430) (1,114) Total receivable 57,944 61,415 20,493 11,778 Of which: non due 49,378 45,976 past due impaired 6,486 7,981 past due not impaired 2,080 7,458 Previously-recognised provisions for slow-mo- pledged to secure bank loans. Less than 180 days 2,080 7,458 Between 180 days and 360 days – – ving merchandise were released for assets that More than 360 days – – were sold or donated. Changes in provisions for slow moving merchan- dise are recognised under Note 18 line” Purcha- As at 31 December 2015, no inventories were sed goods and services”.
88 89 2015 annual report chapter VIII
Movements in the allowance for doubtful debts basis and is calculated as EONIA plus the fi xed as at 31 December 2015 (1.044 % as at 31 De- rate of interest. The interest rate was 0.773 % cember 2014). In thousands of EUR 31 December 2015 31 December 2014 Balance at beginning of the year 39,042 40,232 11. Cash and cash equivalents Net charge against bad debt provision (2,310) (1,190)
Balance at the end of the year 36,732 39,042 In thousands of EUR 31 December 2015 31 December 2014
Cash on hand and cash equivalents 108 125 Bank balances and deposits 5,401 7,450 Aging of impaired trade and other receivables Cash and cash equivalents in the balance sheet 5,509 7,575 In thousands of EUR 31 December 2015 31 December 2014
Total impaired of which: 36,732 39,042 The Company’s cash balance includes current current account held by Orange SA, except for
Less than 180 days 1,261 1,390 bank accounts and overnight balances with certain level held for operational reasons. Between 180 days and 360 days 1,858 2,108 banks. The Company transfers free cash to its More than 360 days 33,614 35,544
12. Equity 10. Current fi nancial liabilities Share capital Reserves The Current fi nancial liabilities account balan- a fi ne-tuning of the liquidity at the Group level. As at 31 December 2015, the authorised Reserves of EUR 15,260 thousand (2014: ce of EUR 36,582 thousand (2014: EUR 6,450 share capital comprised 1,181,755 ordinary EUR 15,260 thousand) relate to the Legal thousand) represents the cumulative cash-pool Cash balances are not subject to any fore- shares (2014: 1,181,755), with a nominal value Reserve Fund, which is not available for distribu- overdraft of the Company with Orange SA, held ign exchange risk as they are denominated of EUR 33.19 each, 1 ordinary share (2014: 1) tion and should be used to cover future losses in BNP Paribas France. On 15 March 2006, in the local currency. Maximum borrowing with a nominal value of EUR 13.78, and 1 arising from business activities, if any. the Company signed a Centralised Treasury head room is EUR 66 million. The balances bear ordinary share (2014: 1) with a nominal value Management Agreement with France Telecom an interest rate calculated as EONIA (EONIA: of EUR 0.66. Holders of these shares are entitled Dividends S.A (the successor company Orange SA) with Euro Overnight Index Average). Interest is to dividends as declared from time to time and As at the preparation date of these fi nancial sta- the aim of centralisation and optimisation of affi - accounted for on a monthly basis and capitalised are entitled to one vote per share at the general tements the Board of Directors made no decisi- liated companies’ cash surplus under the best on the Company’s current account. In the event meetings of the Company. on regarding the amount of dividends to be paid technical and fi nancial conditions and ensuring of an overdraft, the interest is paid on a monthly from the 2015 profi t.
90 91 2015 annual report chapter VIII
In May 2015, the shareholders approved at their annual general meeting. An amount 14. Provisions and non-current payables a dividend payment of EUR 210 million related of EUR 150 million was paid in June 2015 and to undistributed profi ts from previous years EUR 60 million was paid in December 2015. Provisions
Provision for Asset In thousands of EUR Other Total 13. Loans and borrowings Retirement
Balance at 31 December 2014 22,522 5,910 28,432 On 30 June 2015 the Company signed a Credit 2015 in amount of EUR 714 thousand (0.34 % Provisions made during the year 3,225 325 3,550 Facility Agreement with Atlas Services Bel- from the Total Maximum amount of the Facility) Provisions used during the year – (299) (299) Provisions reversed during the year – (2,058) (2,058) gium S.A.. The credit facility is drawn down and quarterly is paying a commitment fee Balance at 31 December 2015 25,747 3,878 29,625 in two tranches: Tranche A in the amount of (0.34 %) of the undrawn amount of the Facility. EUR 110 000 thousand was drawn down as Interest is paid on a quarterly basis and is calcu- In thousands of EUR 31 December 2015 31 December 2014 at 30 June 2015. Tranche B in the amount of lated as EURIBOR plus 0.89 % margin. The inte- Non-current 29,624 28,431 EUR 100,000 thousand will be available in period rest rate was 0.759 % as at 31 December 2015. Current 11 from 15 June 2016 to 15 July 2016. 29,625 28,432 The loan is unsecured and the Company may The fi nal maturity date for Tranche A is 30 June use the funds for the general corporate opera- 2019 and for Tranche B is 30 June 2020. tion purposes. A provision for asset retirement obligation was Other provisions represent a provision for retire- The Company paid arrangement fees in June recorded in the amount of EUR 25,747 thou- ment benefi t costs and provision for litigations. sand, using the following assumptions based on an expert’s study: average costs of site demoli- Non-current payables tion of EUR 8 thousand, an average site usage Non-current payables represent long-term lia- of 15 years, discount rate of 1.18 %, dismantling bility resulted from the capitalised unavoidable cost index of 3.00 % and number of sites of 2,374 future spectrum fees payable to Telecommuni- (2014: EUR 22,522 thousand, 15 years, 1.99 %, cation Offi ce. The liabilities were initially discoun- 3.00 %, and of 2,344 sites, respectively). The ted to the fair value at discount rate that ranges Company records the carrying amount of EUR from 1.99 % to 2.25 %. The liability is amortised 16,616 thousand (2014: EUR 14,844 thousand) in using the effective interest rate method. the asset side of the balance sheet (Note 4). Fair value of the liability using the discount rate
92 93 2015 annual report chapter VIII
of 1.18 % is by EUR 2 million higher compared to Payables within and after maturity 31 December 2014 its carrying amount at the balance sheet date. within maturity within 360 days more than 360 In thousands of EUR Total period overdue days overdue 15. Trade payables and other liabilities Trade payables 48,893 9,692 – 58,585 Accrued liabilities 42,825 ––42,825 Tax liabilities (VAT) 4,182 ––4,182 In thousands of EUR 31 December 2015 31 December 2014 Liabilities to employees 11,249 ––11,249 Trade payables 54,394 58,585 Other current liabilities 701 ––701 Accrued liabilities 31,290 42,825 Total 107,850 9,692 – 117,542 Tax liabilities (VAT) 3,346 4,182 Liabilities to employees 11,359 11,249 The payables in category “within 360 days overdue” were paid during January 2015. Other current liabilities 611 701
Total 101,000 117,542 Liabilities to employees include social fund liabilities:
In thousands of EUR 2015 2014 Accounts payables are classifi ed as current li- and the prevailing credit period on purchases abilities if the payment is due within one year is from one to two months. As at 1 January 137 131 Additions 324 336 or less. Trade payables are non-interest bearing Utilisation 318 330
As at 31 December 143 137 Payables within and after maturity 31 December 2015
within maturity within 360 days more than 360 In thousands of EUR Total period overdue days overdue 16. Deferred income Trade payables 50,566 3,828 – 54,394 In thousands of EUR 31 December 2015 31 December 2014 Accrued liabilities 31,290 ––31,290 Tax liabilities (VAT) 3,346 ––3,346 Prepaid phone cards (Prima cards) 6,948 6,211 Liabilities to employees 11,359 ––11,359 Post paid customers 12,990 13,945 Other current liabilities 611 ––611 Other 274 339
Total 97,172 3,828 – 101,000 Total 20,212 20,495
The payables in category “within 360 days overdue” were paid during January 2016.
94 95 2015 annual report chapter VIII
17. Revenues 19. Other operating expenses/(income), net
Revenues are presented in the table below: Other operating expenses are presented in the table below:
In thousands of EUR 2015 2014 In thousands of EUR 2015 2014
Mobile voice services 280,110 315,747 Brand royalty and management fees 13,759 14,440 Mobile non-voice services 164,312 157,069 Bad debt provision 270 1,054 Sale of equipment 50,316 36,958 FX differences net 154 159 Other revenues 65,885 70,381 Other operating expenses 2,403 3,708
Total Revenues 560,623 580,156 Total other operating expenses 16,586 19,361
Other operating income is presented in the table below: 18. External purchases In thousands of EUR 2015 2014
External purchases are presented in the table below: Property fees 1,065 1,175 Late payment interest on trade receivables 2,574 2,541 In thousands of EUR 2015 2014 Results on disposal of property, plant and equipment 775 348 Other operating income 3,548 3,019 Cost of equipment sold 100,768 88,591 Total other operating income 7,962 7,083 Purchased goods and services 75,568 78,215 Service fees and interoperator costs 81,649 85,180 Costs associated with non-current assets 12,767 13,030 Other 18,640 22,972 20. Wages and contributions Total external purchases 289,392 287,988 In thousands of EUR 2015 2014
Wages and salaries 25,482 26,781 Bonuses and untaken holiday payroll provision 6,445 6,147 Social contribution 11,507 11,998 Other 2,345 2,711
Total wages and contributions 45,779 47,637
96 97 2015 annual report chapter VIII
21. Income tax Capital Risk Management The Company reviews the capital structure regu- The Company manages its capital to ensure that larly. Based on the review and the General Mee- Reconciliation of the effective tax rate is shown in the table below: it will be able to continue as a going concern while ting’s approval, the Company balances its overall maximising the return to shareholders and bene- capital structure through the payment of divi- In thousands of EUR 2015 2014 fi ts to other stakeholders through the optimisation dends, the issue of new debt, or the redemption Income tax payable of the debt and equity balance. of existing debt. from operating activities 34,736 36,495 Deferred income tax from operating activities (3,620) 598 The capital structure of the Company consists The Company monitors capital on the basis change in tax rate – – of cash and cash equivalents, cash pooling (Note of the gearing ratio. This ratio is calculated as net
Total income tax 31,116 37,093 11), long term debt/loan (Note 13) and equity attri- debt divided by total capital. Net debt is calcula- butable to equity holders of the parent, compris- ted as total loans (as shown in the separate balan- The Slovak Corporate Tax is 22 % effective from 1 January, 2014. ing issued capital, reserves and retained earnings ce sheet) less cash and cash equivalents. as disclosed in Note 12. In thousands of EUR 2015 2014
Profi t before tax 119,365 140,155 The gearing ratios as at 31 December 2015 and 2014 were as follows: Income tax at the rate of 22 % 26,260 30,834 Income tax in respect of prior year 1,275 136 In thousands of EUR 31 December 2015 31 December 2014 Special levy 4.36 % applied since September 2012 4,883 5,580 Impact of adjusting items: Cash and cash equivalents (5,509) (7,575) permanent differences and other differences (1,302) 543 Long term loan 110,000 – Financial (assets)/liabilities 36,582 6,450 Total income tax 31,116 37,093 Net debt 141,073 (1,125)
Equity 298,296 417,673 22. Financial instruments Net debt to equity 47 % 0 %
Risk Management Policies gramme focuses on the unpredictability of fi nan- Increase in Net debt to equity ratio mainly re- by the shareholders or parent company, as these The Company’s activities expose it to a varie- cial markets and the economic environment and lates to drawing of a new Long term loan (see are considered all to be available capital funds ty of fi nancial risks, including mainly credit risk. seeks to minimise potential adverse effects Note 13). In measuring the capital structure allocated to the Company. The Company’s overall risk management pro- on its fi nancial performance. management disregards the loans provided
98 99 2015 annual report chapter VIII
Main Categories of Financial Instruments Interest Rate Risk Fair values versus carrying amounts The Group’s Treasury department exercises The fair value of trade and other receivables, cash In thousands of EUR Note 31 December 2015 31 December 2014 the policy of cash pooling of the Company’s avai- and cash equivalents, fi nance lease receivables, Financial assets lable funds to maximise economic returns and to trade and other payables, except for long term pa- Cash and cash equivalents 11 5,509 7,575 manage the cash optimisation and centralisation yables (refer to Note 14) loans and interest bearing Trade and other receivables 9 57,944 61,415 under the best fi nancial conditions for most of the borrowings with variable interest rate is approxi- Financial liabilities affi liated companies (see Note 10). Such instru- mated by their carrying amounts as at 31 Decem-
Current fi nancial liabilities 10 36,582 6,450 ments are not exposed to the risk of interest rate ber 2015 as well as at 31 December 2014. Long term loan 13 110,000 – fl uctuation. Owing to the character of the fi nancial Trade payables and other liabilities 15 101,000 117,543 liabilities/assets, the Company does not assume Basis for determining fair values any risk relating to interest rate movements. The fair value of trade and other receivables, cash Financial Risk Management and cash equivalents, fi nance lease receivables, The Company’s activities expose it to fi nan- Foreign Exchange Risk Management has entered in to loan contracts which trade and other payables, including long term pa- cial risks in foreign currency exchange rates The Company’s exposure is to changes are exposed to fl oating interest rates in the normal yables (refer to Note 14) loans and interest bearing and interest rates. The Company does not use in USD, which represents a minor risk in respect course of business. Management policy is to enter borrowings is estimated as the present value of the any offi cial statistical methods for measuring of the US dollar’s position to the total amount in the variable interest rates borrowings contracts future cash fl ows discounted at market rate of inte- market risk exposures; however, management’s of liabilities/assets, and therefore no sensitivity only. Management does not see the need to hedge rest at the reporting date. assessments of the Company’s exposure to tho- analysis was performed. the interest rates related to these contracts. se risks are described below: Credit Risk An increase or decrease of interest rate Financial instruments that could potentially expose The carrying amounts of the Company’s foreign currency denominated assets and liabilities at the (EURIBOR, LIBOR) by 100 basis points, consi- the Company to concentration of counterparty reporting date are as follows: dering all other factors remain unchanged, would risk consist primarily of trade receivables and cash cause a decrease or an increase of profi tability by and cash equivalents. Liabilities Assets In thousands of EUR 2015 2014 2015 2014 EUR 1,465 thousand (2014: EUR 65 thousand). The Company considers that it has limited concen- Currency USD 1,224 2,193 378 473 The sensitivities were estimated based on year tration in credit risk with respect to trade accounts end balances and the actual results might differ receivables due to its large and diverse customer from these estimates. base (residential, professional and large business
100 101 2015 annual report chapter VIII
customers) operating in numerous industries nitors risks with rolling 12-month forecasts of the 2015 and located in many regions. In addition, the maxi- Company’s liquidity reserve (comprising loan faci- Year end Less mum value of the counterparty risk on these fi nan- lity and cash and cash equivalents) on the basis of effective 1 - 3 3 months 1 - 5 5+ In thousands of EUR Note than Total interest months to 1 year years years 1 month cial assets is equal to their recognized net book expected cash fl ows. rate value. An analysis of net trade receivables past Non-current payables 14 – 131 392 1,044 8,493 8,557 18,617 due is provided in Note 9. The Group’s Treasury department exercises Non-interest liabilities 15 – 28,044 72,940 16 – – 101,000 Financial guarantee the policy of cash pooling the Company’s availa- ––– –––– contracts In addition, should a customer fail to pay any ble funds to maximise economic returns and to Long term loan 13 – – – – 110,000 – 110,000 Interest and commitment due payment for services, the Company will limit manage the cash optimisation and centralisa- 0,759 % – 297 732 2,087 – 3,116 fee from Long term loan the customer’s outgoing calls and, thereafter, tion under the best fi nancial conditions for most Variable interest rate 10 0,773 % 36,582 – – – – 36,582 instruments the provision of services will be disconnected. of the affi liated companies (see Note 10).
Total 64,757 73,629 1,792 120,580 8,557 269,315 Liquidity Risk The following tables detail the Company’s Liquidity risk is the risk that the Company will not remaining contractual maturity for its non-deriva- 2014 be able to meet its fi nancial obligations as they tive fi nancial liabilities without provisions in which Year end Less fall due. The Company’s approach to managing the maturity is unknown. The tables have been effective 1 - 3 3 months 1 - 5 5+ In thousands of EUR Note than Total interest months to 1 year years years 1 month liquidity is to ensure that it will always have suffi ci- drawn up based on the undiscounted cash fl ows rate ent liquidity to meet its liabilities when due, under of fi nancial liabilities based on the earliest date Non-current payables 14 – 55 164 437 8,845 11,732 21,233 both normal and stressed conditions, without on which the Company can be required to pay. Non-interest liabilities 15 – 60,811 56,732 – – – 117,543 Financial guarantee incurring unacceptable losses or risking damage The table includes the principal and interest cash ––– –––– contracts to the Company’s reputation. Management mo- fl ows if applicable. Variable interest rate 10 1,044 % 6,450 – – – – 6,450 instruments
Total 67,316 56,896 437 8 845 11,732 145,226
102 103 2015 annual report chapter VIII
The following tables detail the Company’s ex- will be earned on those assets. The inclusion 23. Related party transactions pected maturity for its non-derivative fi nanci- of information on non-derivative fi nancial assets al assets. The tables have been drawn up ba- is necessary in order to understand the Com- The immediate parent company and the ultima- respectively. Transactions with related parties sed on the undiscounted contractual maturities pany’s liquidity risk management as the liquidity te controlling party of the Company are Atlas have been conducted under standard business of the fi nancial assets including interest that is managed on a net asset and liability basis. Services Belgium, S.A., (from August 2008, conditions. Receivables, liabilities, purchases up to July: Wirefree Services Nederland B.V.) and sales with related parties are summarised in 2015 and Orange SA (incorporated in France), the following tables:
Year end Less 1 – 3 3 months 1 – 5 5+ In thousands of EUR 31 December 2015 31 December 2014 In thousands of EUR effective than months to 1 year years years interest rate 1 month Liabilities - current and unbilled supplies
Non-current receivables – – – 6,889 – Atlas Service Belgium (parent company) 110,007 – Non-interest liabilities – 44,808 4,095 9,041 – Orange SA (ultimate control.party) 1,706 1,138 Cash and cash equivalents 0,30 % 5,509 – – – – Orange SA - cash pool account 36,582 6,450 Variable interest rate instruments ––– ––– Orange Brand Services 2,044 2,181 Mobistar 983 573 Total 50,317 4,095 9,041 6,889 – Orange CorpSec (subsidiary) 90 198 Orange Polska 119 133 Other 297 365 2014 151,828 11,038 Year end Less 1 – 3 3 months 1 – 5 5+ Trade accounts receivable - current In thousands of EUR effective than months to 1 year years years interest rate 1 month Orange SA (ultimate control.party) 1,437 1,435 Non-currnet receivables – – – 3,242 – Equant 2,334 2,281 Non-interest liabilities – 54,792 2,257 4,290 – Atlas Service Belgium (parent company) 643 – Cash and cash equivalents 0,17 %7 575–––– Orange Moldova 125 223 Variable interest rate instruments ––– ––– Orange Polska 119 149 Orange Romania 79 91 Total 62,367 2,257 4,290 3,242 – Other 44 53
4,781 4,232
104 105 2015 annual report chapter VIII
In thousands of EUR 2015 2014 24. Information on income and emoluments of members of the statutory bodies, supervisory bodies and other bodies of the accounting entity Purchases
Orange SA (ultimate control.party) 11,844 10,742 The income and emoluments of the Company’s members of the statutory body, supervisory body Atlas Service Belgium (mother company) 759 – Orange Brand Services 8,120 8,668 and other bodies are summarised in the following table: Orange CorpSec (subsidiary) 1,078 1,074 Orange Romania 448 150 In thousands of EUR 2015 2014 Mobistar 673 351 Statutory body 48 48 Orange Polska 198 569 Supervisory body 42 87 Other 424 565 Total 90 135 23,544 22,119
Sales Orange SA (ultimate control.party) 3,322 6,204 25. Operating leasing Equant 2,388 2,122 Orange Polska 407 395 Orange Romania 386 430 Leases as the Lessee gical premises, and land and rooftops for base Orange Moldova 295 103 The Company is committed under operating stations. The future aggregate minimum lease Other 293 245 leases to terms ranging from 1 to 15 years, which payments under non-cancellable operating 7,091 9,499 relate primarily to offi ce, retail space, technolo- leases are as follows:
In thousands of EUR 31 December 2015 31 December 2014 The following related party transactions are appli- Intra-group international telecom services – mo- cable for the Company: bile and other telecom services with other group Less than one year 2,791 4,184 Between one and fi ve years 8,670 9,317 companies; and After fi ve years 542 822 Management fees, brand fees – transactions Total 12,003 14,323 mainly with Orange Brand Services and Orange Shared products – mobile and other telecom SA (ultimate parent company); services with other group companies. Total expenses for rent represent EUR 11 million and rooftops for base stations and other equipment. (2014: EUR 11 million) and primarily represent offi - The Company maintains evidence of assets under ce, retail space, technological premises and land lease contracts.
106 107 2015 annual report chapter VIII
26. Commitments and contingencies other factors that are believed to be reasonable and (h), are determined based on the Compa- under the circumstances, the results of which ny’s best estimate of the useful lives of long- Litigation the remaining commitments relate to investments form the basis of making judgments about -term assets and are reviewed annually. The Company is not involved in any legal pro- in other long-life assets. The Company also the carrying values of assets and liabilities that ceedings outside of the normal course of bu- has OPEX commitments in the total amount of are not readily apparent from other sources. Estimated Asset Retirement Obligation siness except for litigations for which provision EUR 31,257 thousand (2014: EUR 45,549 thou- Actual results may differ from these estimates. The Company is obligated to dismantle techni- was created (see Notes 14, 27). Management sand) mainly related to the purchase of hand- cal equipment and restore technical sites when does not believe that the resolution of the Com- sets in amount of EUR 8,628 thousand (2014: The estimates and underlying assumptions terminates its operation. The provision is based pany’s legal proceedings will have a material ad- EUR 24,492 thousand) and network maintenan- are reviewed on an ongoing basis. Revisi- on dismantling costs (on a per-site basis) incu- verse effect on its fi nancial position, the result ce in amount of EUR 12,160 thousand (2014: ons to accounting estimates are recognised rred by the Company to meet its environmen- of the operations, or cash fl ows. EUR 15,990 thousand). in the period in which the estimate is revised, tal commitments over the asset dismantling if the revision affects only that period, or in and site restorations planning. The provision Commitments Legal Commitments the period of the revision and future periods if is assessed on the basis of the identifi ed costs The Company has CAPEX commitments The Company has not given any guarantees the revision affects both current and future for the current fi nancial year, extrapolated for in a total amount of EUR 18,773 thousand (2014: to third parties in 2015 (2014: EUR 0 thousand). periods. future years by using the best estimate for EUR 13,552 thousand), of which EUR 10,209 the commitment settlement. It is discounted at thousand (2014: EUR 4,017 thousand) relate Contingent assets The Company makes estimates and as- a risk-free rate. This estimate is revised annually to investment in 2G/3G network and EUR 2,973 The Company considers contract penalties sumptions concerning the future. The resulting and the provision is consequently adjusted thousand (2014: EUR 3,170 thousand) relate as contingent assets as the probability of their accounting estimates will, by defi nition, seldom against the relevant asset where appropriate. to investments in 4G network assets, and collections is very low (below 50 %). equal the related actual results. The estimates and assumptions that have a signifi cant risk Sensitivity of ARO reserves 27. Critical accounting estimates, judgements, and key sources of causing a material adjustment to the carrying A change in discount rate by 1 bps and change of estimate uncertainty amounts of assets and liabilities within the next in dismantling costs by 10 % against initial as- fi nancial year are discussed below: sumption as at 31 December 2015 would have The preparation of the fi nancial statements cation of policies and the reported amounts of increased / (decreased) the Estimated ARO in conformity with IFRS as adopted by the EU assets and liabilities, income and expenses. Estimated Useful Lives of Property, Plant, by the amounts shown below: requires management to make judgments, es- The estimates and the associated assumptions and Equipment and Intangible Assets timates and assumptions that affect the appli- are based on historical experience and various Useful lives, which are described in Note 3 (g)
108 109 2015 annual report chapter VIII
31 December 2015 31 December 2014 In thousands of EUR Increase Decrease Increase Decrease
Discount rate +/- 1bps (3,530) 4,135 (3,066) 2,252 Dismantling costs +/- 10 % 2,574 (2,574) 3,587 (2,252)
The sensitivities were estimated based on year end balances and the actual results might differ from these estimates.
28. Subsequent events
No other events with a material impact on the true and fair presentation of facts as presented in these financial statements occurred after 31 December 2015 up to the preparation date of these financial sta- tements.
29. Authorisation of financial statements
The financial statements were authorised for issue by management on 6 May 2016.
Pavol Lančarič Antoine Guilbaud Chief Executive Offi cer Chief Financial Offi cer
110 111
Orange Slovensko, a.s. Metodova 8 821 08 Bratislava Slovak Republic