Annual Report • Apr 1, 2022
Annual Report
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ORANGE BELGIUM 5493007JS0ZHJVBUWP18 2020-01-01 2020-12-31 5493007JS0ZHJVBUWP18 2021-01-01 2021-12-31 5493007JS0ZHJVBUWP18 2021-12-31 5493007JS0ZHJVBUWP18 2020-12-31 5493007JS0ZHJVBUWP18 2019-12-31 5493007JS0ZHJVBUWP18 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember 5493007JS0ZHJVBUWP18 2020-01-01 2020-12-31 ifrs-full:OtherReservesMember 5493007JS0ZHJVBUWP18 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember 5493007JS0ZHJVBUWP18 2020-01-01 2020-12-31 ifrs-full:TreasurySharesMember 5493007JS0ZHJVBUWP18 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember 5493007JS0ZHJVBUWP18 2021-01-01 2021-12-31 ifrs-full:OtherReservesMember 5493007JS0ZHJVBUWP18 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember 5493007JS0ZHJVBUWP18 2021-01-01 2021-12-31 ifrs-full:TreasurySharesMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:IssuedCapitalMember ifrs-full:PreviouslyStatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:OtherReservesMember ifrs-full:PreviouslyStatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:RetainedEarningsMember ifrs-full:PreviouslyStatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:TreasurySharesMember ifrs-full:PreviouslyStatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:PreviouslyStatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:IssuedCapitalMember ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:OtherReservesMember ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:RetainedEarningsMember ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:TreasurySharesMember ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyRequiredByIFRSsMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:IssuedCapitalMember obel:AsRestatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:OtherReservesMember obel:AsRestatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:RetainedEarningsMember obel:AsRestatedMember 5493007JS0ZHJVBUWP18 2019-12-31 ifrs-full:TreasurySharesMember obel:AsRestatedMember 5493007JS0ZHJVBUWP18 2019-12-31 obel:AsRestatedMember 5493007JS0ZHJVBUWP18 2020-12-31 ifrs-full:IssuedCapitalMember 5493007JS0ZHJVBUWP18 2020-12-31 ifrs-full:OtherReservesMember 5493007JS0ZHJVBUWP18 2020-12-31 ifrs-full:RetainedEarningsMember 5493007JS0ZHJVBUWP18 2020-12-31 ifrs-full:TreasurySharesMember 5493007JS0ZHJVBUWP18 2021-12-31 ifrs-full:IssuedCapitalMember 5493007JS0ZHJVBUWP18 2021-12-31 ifrs-full:OtherReservesMember 5493007JS0ZHJVBUWP18 2021-12-31 ifrs-full:RetainedEarningsMember 5493007JS0ZHJVBUWP18 2021-12-31 ifrs-full:TreasurySharesMember iso4217:EUR xbrli:shares iso4217:EUR xbrli:shares Orange Belgium S.A. Avenue du Bour get 3, 1140 Brussels Belgium Follow us on: corporate.orange.be www .orange.be business.orange.be Annual Report Orange Belgium 2021 Orange Belgium Orange Belgium is one of the major telecommunication operators on the Belgian market, with over 3 million customers, and in Luxembourg, via its subsidiary Orange Communications Luxembourg. As a convergent player , it provides next generation connectivity services to residential and business customers through multi-gigabits mobile, cable and optic ber networks, also relating to the Internet of Things. Its high- performance mobile network is equipped with the latest technologies and benets from continuous investments preparing for the arrival of 5G. As a r esponsible operator , Orange Belgium is also investing to reduce its ecological footprint and promote sustainable and inclusive digital practices. Orange Belgium is a subsidiary of the Orange Group, one of the main operators in Europe and Africa for mobile telephony and internet access and a world leader in telecommunication services for companies. Orange Belgium is listed on the Brussels Stock Exchange (OBEL). full-time equivalents million mobile postpaid customers million € EBITDAaL (+9.1%) Key figur es 2021 1,321 2.74 353.0 945.1 million € retail service revenues (+4.3%) Eco SIMs distributed cable customers usage of V olunteering days by employees collection of old devices via BuyBack +200% +200% 394,000 5G Labs 2 250,000 © 2021, Orange Belgium, all rights reserved. Orange is a r egistered trademark. The trademarks of commercial pr oducts mentioned in this document are r egistered and are the pr operty of their various manufacturers. The characteristics of the pr oducts and services mentioned in this document may be changed at any time without notice. Orange Belgium cannot be held liable for printing errors in this document. The products of other manufactur ers are mentioned for information. The manufacturers ar e solely liable for any and all warranties concer ning their products. Orange Belgium cannot be held liable under any cir cumstances for data transmission services, nor for the content, legality or accessibility of these services, nor for the use made of them by the customer , whether these services are pr ovided by third parties or by Orange Belgium. Ce rapport annuel est également disponible en français. Dit jaarverslag is ook verkrijgbaar in het Nederlands. Shareholders and investors r elations [email protected] Press r elations [email protected] Responsible editor Paul-Marie Dessart – Secretary General Concept & layout ChrisCom Orange Belgium S.A. Avenue du Bour get, 3, BE-1140 Brussels – Belgium T . +32 2 745 71 11 – www .orange.be RCB 599 402 – TV A BE 0456 810 810 Contents table 02 Highlights 2021 03 Letter of the Chairman 04 Our strategy 06 Market Context 08 Putting digital at the heart of our customer relations and r elying on strong brands 12 Providing next-generation connectivity 16 Proud to be a responsible operator and employer 22 Orange Luxembour g 24 Management Report 37 Financial Statements 104 Corporate Governance Statement Annual report 2021 1 May Orange Group’ s tender offer on the shares of Orange Belgium was closed after the Group r eached a 76,97% stake in its capital. July After the massive oods that hit some regions in the country , Orange Belgium launched a national campaign to collect and redistribute goods for the victims. It also directly donated mor e than 10 tons of material support and electronic har dware. October • Orange Belgium launches, as the second European country , Orange Money to facilitate national and international money transfers. • The operator opens its rst 5G Lab in Antwerp, to allow companies to test the possibilities of the technology , and reveals new use cases. December Orange Belgium signs an agreement with Nethys to acquir e 75% minus one share in the cable operator VOO. August Orange Belgium enriched its offer for conver gent customers with the launch of Orange TV Lite, a service which allows viewers to stream up to 20 television channels to their smartphones, tablets and PC’ s, including Google Chromecast’ s casting feature, without a decoder . November The ultra-popular Go Unlimited subscription is revamped into Go Extreme with a clear focus on data abundance, offering 60GB of mobile data for 40 euros. Highlights 2021 September The Belgian market is shaken up by the launch of hey!, Orange Belgium’ s 100% digital b-brand aimed at ultra-connected customers. Annual report 2021 2 Letter of the Chairman 2021 will remain as a key year in Orange Belgium’ s now 25 year -long history . The telecom industry has once again demonstrated its relevance by pr oving to be essential for society during the pandemic, as it has been a key enabler for teleworking but also allowed crowd monitoring and contact tracing, two major weapons in the ght against Covid-19. Performant telecom solutions and -technologically and nancially- robust telecom providers have pr oven to be essential for the future of society . As a Chairman, I can’t str ess enough how thankful and proud I am of our teams, but also their families, for their restless commitment and enormous contribution in challenging times. They spared no ef forts to always help and serve our customers in the best possible way , which is the core of our company cultur e, our DNA. W e’re now actively preparing for the future. Theroll-out of 5G will allow us to go even further into network performance and reliability , both of which are essential for pr oviding the best possible experience and innovative services to our customers. W e will also strengthen our position and effort on the conver gent market: itshowed to be a great success alr eady , but we will now be able to consolidate our position to become an important actor on xed connectivity services. The deal we reached with Nethys will help us in this endeavor and could radically change the telecom landscape in Belgium. W e’re also deepening the digitalization of our internal processes and of our interactions with the customers, to better anticipate and serve their needs in the future. It alr eady allowed us to launch disruptive value propositions to better segment the market, like we did with the launch of hey!. Like everything we do, all these moves are always considered in a long-term perspective with one key principle always in mind: sustainability . Sustainability not only for our environmental impact: we act in a r esponsible way and we serve in a balanced and sustainable way all our stakeholders: customers, employees, shareholders, the envir onment… W e contribute to shape, not only the market, but the society we’re in. And in 2022, we’ll just keep doing that, to really become a strategic, innovative, and responsible leader . Thankfully yours, Johan Deschuyffeleer As a Chairman, I can’t str ess enough how thankful and proud I am of our teams, but also their families, for their restless commitment and enormous contribution in challenging times. Johan Deschuyffeleer Chairman of the Board Dear team members, shareholders, partners and customers, Annual report 2021 3 2021 was an important year for Orange: many projects came to fruition, including the launch of Orange Belgium’ s new brand hey! and the signing of an agreement with Nethys to acquir e 75% minus one share of VOO. Thr oughout the year , the focus was put on four key pillars: putting digital at the center of the interactions with the customers and of the offers, providing next-generation connectivity thanks to multi- gigabit infrastructures (be it on xed or mobile), r elying on a strong brand generating value for the company and being committed to act as a responsible operator and employer . We r eached signicant milestones on all of them: the further digitalization of our processes and the launch of hey!, the further development of 5G with the opening of two 5G Labs, the consolidation of the Orange brand’ s positioning via its success on the convergent market, and the launch of several initiatives to boost the company’ s CSR commitment. 2021 has therefor e paved the way for the operator’ s new market positioning. The strategic ambition for the coming years can be summed up as follows: to become a next generation operator , a sustainable and committed actor , driven by a repositioned Orange brand, rst-class technological expertise and major growth drivers. The Orange Ahead strategic plan aims to achieve operational excellence in four strategic areas: focus on customer experience, growth, ef ciency and responsibility . Focus on the customer experience Orange’ s mission is to connect its customers to what matters most to them by delivering an unparalleled experience every day , through enriched connectivity and services that enable them to enjoy highly qualitative and reliable services. T o achieve this objective, the strategic plan puts as rst priority to be “best in class” in all its core activities. Our strategy Capitalizing on the successes of its previous plan Bold Inside, Orange Belgium has now developed a new strategy , more tting to its new status on the market and its objective to become a next generation operator: Orange Ahead, #TheFutureIsOursT oMake. Orange Belgium is reinventing its customer relationship thr ough a phygital strategy and the multiplying of its digital touchpoints with customers: a unique interactive, omnichannel experience that combines physical in-store and digital experiences. Orange customers enjoy personalized service in stores while hey! offers the best of digital and the customer is in the driver’ s seat. And thanks to their respective innovations, the two brands are bound to enrich each other , considering hey!’ s innovations like the chatbot will also benet, when relevant, to Orange’ s customers. The success of a broader digitalization of its touchpoints is already visible with the ever - increasing shar e of digital sales, and will even further grow thanks to the futur e possibility to subscribe to convergent of fers via a fully digital process. The objective is to become a next generation operator in order to of fer customers an enriched connectivity that is more ef cient in all respects, borderless and more ecological. While the Orange brand will focus on convergence, enriched content and families, hey! focuses more on mobile with a strong value pr oposition based on 4 pillars: 100% digital, low impact, generous and evolutive. On the B2B market, where conver gence is also becoming bigger and bigger , Orange Belgium supports its customers’ transformation by offering new ways of working and putting technology at the service of transformation projects, thanks to the launch of new innovative services. The company will also work on an increased integration of BKM and a gr owing collaboration with other afliates fr om the Orange Group such as Orange Cyber defense, for instance, in order to appr oach customers with a complete service offer . The realization of the RAN-sharing agreement with Proximus, which was r eally kicked-off in 2021, will also further improve the performances but also the energy-ef ciency of the network, to the benet of all customers. Growth T rue to the Orange brand DNA, Orange Belgium accelerates its growth by combining the excellence of its networks, a segmentation that responds to market and regional specicities, and r esponsible innovation. Capitalizing on the expertise of the Orange Group, the operator also intends to reinvent its business by Annual report 2021 4 offering incr eased connectivity thanks to 5G and strengthening its leadership in multi-gigabit broadband infrastructures. More br oadly , Orange Belgium is adopting a segmented approach to meet the needs of its customers across all market segments: Orange, the more pr emium brand, focuses on the top end of the market with a portfolio of offers enriched with value-added services, while hey! offers an excellent alternative for the most digital customers. While maintaining its role and ambition as a national operator , the operator is determined to work more closely with the r egions, taking into account their specic socio-demographic, cultural, territorial and political characteristics. Efficiency In order to guarantee an optimal quality of service, it is essential to set high quality standards in the way Orange Belgium operates, both in terms of its employees, its tools and its partners. First-class operational efciency will enable the company to be even more ef fective, agile and sustainable. T o further support the brand promise, Orange will use state-of-the-art technology to prevent and reduce incidents structurally over time and will increase ef ciency upstream by tighter partnerships with its suppliers. Strengthening Orange’ s efciency will also be accelerated by 1) transforming IT and networks, 2) putting Data and AI at the heart of the innovation model allowing to offer a r einvented customer experience, 3) smarter networks and better operational efciency and 4) the Orange Group’ s innovative strength. Responsibility Orange is responsibly committed to its employees, customers and society in order to build tomorrow’ s society together . There can be no economic performance without social and environmental exemplarity . T echnological progress will not be socially acceptable if it is not accessible to all; in this respect, digital inclusion is an important part of Orange’ s commitment to society , as demonstrated by the opening of an Orange Digital Center in 2022. But Orange Belgium also strives to reduce its envir onmental impact by working hard on CO 2 emissions (the company is already CO 2 neutral for its operations & mobility), energy consumption, r educing of waste,… and the promotion of sustainable practices on the market as demonstrated by the launch of SIM cards made of entir ely recycled plastic, the great success of the Buyback pr ogram for the recycling or r euse of old phones, and the launch of an Eco Rating, which will allow customers to make educated choices and opt for the most sustainable devices available. By regr ouping the transformational programs of the company , we will structurally change our business or operational model to become a “next generation operator”. This paves the way to become a national multigigabit network operator for both xed and mobile, anchoring Orange Belgium once and for all in the Belgian telecom landscape. Xavier Pichon CEO of Orange Belgium Our ambition: to become a next generation operator , a sustainable and committed champion, driven by a repositioned Orange brand, first- class technological expertise and major growth drivers. Annual report 2021 5 2021 will clearly remain as a major year in Orange Belgium’ s history . Not only was it the 25 th birthday of the creation of the company , the late Mobistar , it also saw some key launches and the concretization of structural moves which will be instrumental to the future of the company . “On a purely nancial perspective, 2021 r eally has been a great year . Orange Belgium reached extremely good operational and nancial perfor - mances, which distinguish it not only from the national competition but also clearly set up an example at the European level”, explains Xavier Pichon, CEO of Orange Belgium. The year 2021 has also been marked by two major operations which requested a lot of attention of Orange Belgium’ s teams. First, there was the offer fr om the Orange Group, which expr essed its intention to buy the Orange Belgium’ s shares it didn’t have.This move underlined the Group’ s will to be a long term actor on the Belgian market. Orange Belgium strictly respected its obligations as a target company and the operation r esulted in the Orange Group r eaching a 76.97% stake in the company’ s capital (reduced to 76.97% after the cancellation of own shares in July 21). A pivotal year The second major move was Orange Belgium reaching a binding agr eement with Nethys on the sale of a majority stake (75% less one share) in VOO. An operation, which still needs to be authorized and validated by the competi - tion authorities, “but which would change the dynamics and restor e balance on the Belgian telco market and landscape, allowing Orange Belgium to become a fully armed national com - petitor to Proximus and T elenet, by its leverage on the owning of a local xed infrastructure”, adds Xavier Pichon. However , this move is still subject to approval and will ther efore remain a major topic in 2022. The years 2021 and 2022 are also crucial to the evolution of the telco landscape in Belgium, as they are key on two major and closely r elated topics: the auctions for radio spectrum and the potential arrival of a 4 th telco operator: the rst guidelines of the spectrum auctions were unveiled at the very end of 2021 and, if they indeed foresee some r eserved spectrum for a potential new entrant, it does not guarantee the arrival of such an operator . A scenario Orange Belgium already qualied as not r elevant, considering the lack of economic space and the potential impact such an arrival could have on value creation and investments by the curr ent operators. Market context 400,000 cable customers Annual report 2021 6 On a purely financial perspective, 2021 really has been a great year . Orange Belgium reached extr emely good operational and financial performances. Growth, gr owth and growth However , Orange Belgium already anticipated a potential impact by launching hey!, a fully digital B-brand which is aimed at digital-savvy custom - ers, looking for the best possible offer for r eal data abundance. The new market segmentation, where hey! focuses mor e on individuals, while Orange Belgium holds a more “family/enriched content” focus, is the best way to face an ever more competitive market. Thanks to a clear positioning and highly compet - itive prices, Orange Belgium further succeeded in attracting convergent customers, B2B and B2C, even trusting the whole overall growth of this market and approaching the major milestone of 400,000 cable customers. On the mobile segment, the upgrade of the Go Plus offer and the launch of Go Extr eme, Xavier Pichon CEO of Orange Belgium which offers r eal data abundance (60GB) helped Orange Belgium further consolidate its market share. This all, along with an important work on the efciency of its pr ocesses and the digital - ization of its touchpoints with the customers, allowed Orange Belgium to reach a signicant growth of its EBITDAaL, to unseen levels in the recent history of the company . All in all, 2022 will also be a major year for the telecom landscape as it will (nally) see the long-awaited spectrum auctions, the roll out of 5G, the potential arrival of a 4 th operator and the conrmation of Orange Belgium’ s as a national operator with growing ambitions on the gr owth on the mobile and xed markets. Annual report 2021 7 Putting digital at the heart of our customer r elations and r elying on str ong brands The former Mobistar , now Orange Belgium, celebrated its 25 th birthday in 2021: what would you say remain fr om the original DNA of the company? Isabelle V anden Eede: The company has a long and very rich history , but one thing remained consistent: the clear willingness to do the best for our customers, be it with disruptive innovations such as the launch of prepaid in Belgium or by shaking the market with highly competitive offers. A few years ago, after noticing a slight decrease in the quality of our customer service, we re-instated it as a top priority and it now impacts every single thing we do, even for non-customer -facing operations and processes: network, IT , … the customer experience is at the center of it all. Christophe Dujardin: I think one of the strengths of this company also has been its commitment to offer tools and a level of autonomy to its customers, by the mean of its app and platform My Orange and the loyalty program Orange Thank Y ou. Something which was actually recognized by the whole industry . It offer ed, from the start, a great way for Orange Belgium to care closely for its customers, and it translated in a very high penetration of the app – the highest within all the Orange Group afliates. Mor eover , the loyalty program offers frequent opportunities for us to interact with our customers, to grant them gifts, additional data for birthdays, etc. It has also been a major step towards the digitalization of the interactions with the customers, offering them a lot of exibility and allowing us to follow closely their new habits. 2021 was the year the former Mobistar celebrated its 25th birthday . A quarter of a century marked by many successes and innovation, all to the benet of the customers. Christophe Dujardin, Chief Consumer Ofcer , and Isabelle V anden Eede, Chief Brand, Communication and CSR Ofcer , look back with us on the unique positioning of Orange Belgium toward its customers, and the way it recently evolved to better meet their needs. 25% market share on mobile Annual report 2021 8 Will this focus on the digitalization of the relationship with the customers translate into new projects in the futur e? Christophe Dujardin: Of course! W e want to increase the possibilities of fered by My Orange and Orange Thank Y ou, by extending its scope to convergent of fers and offering more services for families and not only individuals, for instance. W e will also work on our loyalty program to further strengthen the r eal community of customers it helps us create. Does this impact the “regular” customer service, when customers simply call for help or support? Christophe Dujardin: In a way , yes it does, because we see the number of calls decreasing as customers can already nd many answers in their app or on our website. But, like Isabelle said before, our focus on customer experience and digitalization also translates in a better performing customer service, with our teams able to rely on highly performing tools to of fer the best solutions to our customers in a much more efcient way . It is clearly visible in KPI’ s such as the rst call resolution or the ratio of customers who get in touch with someone from the customer service within less than 2 minutes. The satisfaction level of our customers also reached levels which are higher than the objectives that we had set. This new paradigm also allows us to now use the customer service not only for “care” purposes, but also as a growing sales channel, something we didn’t do a few years back. One of the major milestones of 2021 was the launch of hey!, the B-brand which is precisely targeting more digital-savvy customers. How does such a major launch fit in the company’ s overall strategy? Isabelle V anden Eede: Let’ s rst put things in perspective: our entrance on the convergent market is a huge success, as we’re appr oaching the 400,000 Love customers, and we also managed to maintain and consolidate our leadership on mobile customers, with more than 25% market share. But we also identied a segment of the market which was less served by the offers available on the Belgian market: individuals looking for a simple, digital and very competitive mobile offer , with no convergence, no options, no subsidy for devices. And as these customers are able and willing to be more autonomous in the handling of their The company has a long and very rich history , but one thing remained consistent: the clear willingness to do the best for our customers. Isabelle V anden Eede Chief Brand, Communication and CSR Ofcer Annual report 2021 9 subscription, the costs we can avoid thanks to these streamlined of fers are translated in more competitive prices and real data abundance. Hey! is therefor e a perfect complement for the Orange brand. While the Orange brand focuses on convergence, enriched content and families, hey! focuses more on mobile and individuals, with a strong value pr oposition based on 4 pillars: 100% digital, low impact, generous and evolutive. Christophe Dujardin: Indeed. And her e again, the digital is key: with hey! we introduced an online chat service, which allows clients to get in touch with the customer service, but we also introduced a similar service but which is fully digitally handled, via a chatbot pumped on articial intelligence. With hey! we’re r eally creating a community of customers with whom we’ll co-create the operator of the futur e: we’re closely listening to their feedbacks in order to even better understand and anticipate their needs with new tools, experiments. Isabelle V anden Eede: This dynamic we’re creating with hey! will also have an impact on the way the Orange brand operates: hey! is pretty much our lab, and the innovations, such as the chatbot, which will come out of it will also benet, when relevant, to Orange customers. Y ou talked about enriching the offers under the Orange flagship: can you mention some milestones of 2021? Christophe Dujardin: On mobile, we’r e focusing on data abundance and a signicant milestone was the renaming of our Go Unlimited plan, which is now Go Extreme and of fers 60GB, which is much more than what the competition does today . But we also increased the data cap on other subscriptions, such as the Go Plus (from 8 to 10GB) and we will continue to adapt our portfolio by increasing the data volumes to meet the future needs of our clients. On convergence, we decided to incr ease the regular speed of internet connections, from 100 to 150Mbps and launched additional services, such as Orange TV Lite, for customers who don’t want or need a full TV package and decoder , and also Orange Money – as the rst European country outside France-, which is a very useful service to send money to relatives in other countries, and thus a great way to attract yet another niche of customers, those from the diasporas. Still on convergence, we’r e also enriching the TV experience with our brand- new set top box, which integrates an internal Chromecast and also native applications of content providers such as Amazon, Str eamz, VRT , RTBF , etc. 60GB Go Extreme of fers real data abundance Annual report 2021 10 Isabelle V anden Eede: Through all these moves, the goal always remains the same: stay customer -obsessed, identify and meet their needs. And we’ll keep doing this in 2022 and beyond. How does the brand keep its consistency while extending its scope of services? Isabelle V anden Eede: The key word here is segmentation. Thanks to an increased segmentation of our approach of the market, which is possible due to the larger market shar e we now have, we can attract new customers by reaching them with mor e specic services, features or value pr opositions. This is what we do with the launch of hey! for individuals and digital-savvy customers. This is what we do with the corridors Morocco and Congo for the diasporas. This is what we do with Orange TV Lite for customers who are not r eal cord-cutters but also don’t need a full TV package, etc. Even our communication towards the market is now segmented with a differ entiated approach from one region to another . Christophe Dujardin: Indeed, we’r e leveraging the knowledge we’ve built and are still building to approach the customers with tailor -made offers, while staying extr emely competitive on prices. W e had already made a similar move by launching the football TV package in 2020, but we’re now going much further . The launch of hey! and those new services will also help us getting even more information on the ever - changing habits of the clients. Isabelle V anden Eede: From a brand perspective, the idea is to come to the market with purely rational ar guments and propositions (price, quality of services, …) but also more emotional ones. T o show that there’ s a purpose to it all. And this is something we can achieve, through the segmentation but also via other non- commercial actions, such as our commitment on CSR, which will be further detailed in another chapter of this annual report, but that applies to our commercial practices as well, as shown by the success of the sale of refurbished devices, of our BuyBack program. W e can also rely on the general strength of the Orange brand and its international scope and recognition. Up until a few years, we remained a kind of “middle-market operator”, between the pure challenger and the leader . By now assuming our new position on the market, further build it, we are in a much str onger position. And the take over of VOO, should it be validated, will even further consolidate our position on the Belgian market. Javier Diaz Sagredo, Chief IT Of ficer of Orange Belgium, comes back to us on the major internal changes happening, which will have a significant impact on how the company operates and the customer experience. Javier , can you give us a view on the project you’re working on and its objectives? It is indeed a major project, which focuses on a full r enewal of our IT infrastructure to let it operate much more smoothly and generate significant gains in ef ficiency and inter nal savings. In a nutshell, we’re str eamlining our IT stacks to have the same system for both B2C and B2B processes. It helps us r ely on a more stable infrastructure, but also reduces our time to market and the timing between a lead generation and the actual delivery of the services. How will this affect the customer experience? The first impact will be internal, as this major switch streamlines our processes and will allow to rely on the same, fast, r eliable and strong system for both B2B and B2C. It will therefor e strengthen our CRM, help us better handling incidents but it also dramatically increases the scope of services we can of fer via our digital touchpoints, a key lever to better serve ever more digital focused customers. Fr om a customer perspective, Orange Belgium’ s support and commercial services will therefore be much mor e reactive, agile and ef ficient. W e’re leveraging the knowledge we’ve built and are still building to approach the customers with tailor -made offers, while staying extremely competitive on prices. Christophe Dujardin Chief Consumer Ofcer Annual report 2021 11 Pr oviding next-generation connectivity How would you describe the evolution of Orange Belgium’ s position on the B2B market in 2021? W er ner De Laet: In 2020, we made a major move by launching xed cable connectivity to our B2B customers, with, as a rst target, the SME segment via our Shape & Fix offers. But we gradually introduced new services such as Cloud T elephony , which allowed us to also attract the mid-market and even some bigger accounts. 2021 was also the year our acquisition of BKM started to really make a dif ference, as we were able to address B2B customers ‘needs with connectivity services on cable but also software- dened services (SD-WAN), an innovative combination which allows us to strengthen our position on the market. On the innovation side, we also launched the eSIM support for B2B customers, which is quite a major step as the demand was high and it simplies the managing of a smartphone eet for our customers. However , the pandemic forced a kind of pause to the market: with many employees being forced to work fr om home, companies often considered it was not the best timing to change from connectivity pr ovider . Reason why , also, we focused on extending the scope of services we could offer to the corporate customers by working closer with other afliates of the Orange Group, such as Orange Business services, Orange Cyberdefense or Business & Decision. What was the impact of the continuing pandemic context in 2021? W er ner De Laet: While 2020 was marked by a big and abrupt demand for connectivity services and coaching, as companies were forced to switch to teleworking overnight, we had almost no strict lockdown in 2021, and most companies were pr epared. A good news is that, thanks among others to the support of public authorities, we didn’t observe a massive wave of bankruptcies among our customers, like we feared at the beginning of the crisis, and we have no indications that this could happen in the During 2021, Orange Belgium continued to strengthen its technological leadership by launching innovative services and strongly investing in the upgrade of its network infrastructures. W er ner De Laet, Chief Enterprise, Wholesale and Innovation Ofcer , and Stefan Slavnicu, Chief T echnology Ofcer of Orange Belgium come back for us on a year rich in evolutions. Annual report 2021 12 near future. Indir ectly , we also noticed an impact of the global shortage on chips supply , which resulted in the delaying, but not the cancellation of some projects we had with B2B customers. How about 5G? W er ner De Laet: It has been an inter esting year on 5G. W e observed a major interest from the market for our Start W alking 5G programs, in which we accompany customers on the path to innovation with 5G and let them test and develop innovative and value-creating business cases, using our 5G Stand Alone network in the Port of Antwerp area. This dynamic r eached its summum with the opening, in October , of our very rst 5G Lab in Antwerp. The Lab allows any customer or stakeholder interested in 5G to come and test the technology , discover and/or co-develop use-cases. And we clearly noticed a major interest, not only fr om businesses but also from other stakeholders, such as public authorities, mostly because this is the only outdoor fully Stand Alone 5G network in Belgium, which offers all the possibilities of the technology . Considering the success of this initiative, we decided to extend the project to the W alloon region by launching a similar 5G Lab in Liège, which will open in 2022 in the famous La Grand Poste, a local hub for the digital and creative economy . Orange Belgium has also shown quite some leadership on IoT and M2M services: was 2021 a fruitful year in that perspective? W er ner De Laet: Y es, it was! First, our smart parking solution attracted several new customers, be it from the public sector , like the municipality of Braine-l’Alleud, or from the private sector such as the W aasland shoppingcenter and W estland shopping center . W e also won -again- a major telco contract with the national railway company (SNCB/NMBS), which includes regular connectivity but also a lot of IoT services, from the monitoring of the locomotives to the devices used by the train attendants to sell tickets. What are your perspectives for 2022? W er ner De Laet: W e’ll further roll out 5G and capitalize on the dynamic of our Start W alking 5G programs, which of fer a great way to propose the technology to B2B customers in a relevant and really value-cr eating manner for them. W e will also have to mitigate the end of the wholesale contract with Mobile Vikings at the end of the 1st trimester of the year , but we’re condent that the way our overall market share evolves will clearly help in this endeavor . The new federal telecom law , which imposes to offer the same contractual conditions to residential customers as to SME’ s of less than 10 workers will also have an impact, as it could make this very important segment of the market much more dynamic, with many opportunities to seize, thanks to the quality and reliability of our services. In 2022, we’ll further roll out 5G and capitalize on the dynamic of our Start W alking 5G programs, which offer a gr eat way to propose the technology to B2B customers in a relevant and really value-cr eating manner for them. W er ner De Laet Chief Enterprise, Wholesale and Innovation Ofcer +40% B2B convergent customers Annual report 2021 13 At network level, did you observe significant trends? Stefan Slavnicu: The pandemic clearly affected the increase in the traf c curve: we observed a +50% usage year on year at rst. In the meantime, it stabilized towards a 30% incr ease year on year . We observed that the traf c increase is now slowing down, as mor e people stay home and connect to their wi to work instead of on 4G when being on the move. There is a clear consumption shift. What were the main milestones of 2021, technology-wise, in the evolution of our networks? Stefan Slavnicu: An important one is the implementation of the RAN (Radio Access Network) sharing agreement with Pr oximus. W e have started a little bit more cautiously than initially planned because it is a quite complex project and we wanted to strictly r espect all the regulatory and competition-r elated conditions, but, in the end, we accelerated and already swapped mor e than 200 sites on the new Nokia radio equipment. Thanks to this swapping, we’ll have a single RAN solution for 2G, 3G, 4G and 5G and we’ll be able to rely on the Nokia technology , which we found to be the most performant but also cost-efcient. The RAN sharing itself will increase the level of coverage on all technologies, improve the overall performance of the network and reduce its energy consumption. On the cor e network we nalized in 2021 the contract and order ed the equipment for moving into 5G Stand Alone, which will be the core of the futur e, also enabling industry 4.0 services for B2B customers. In the second part of 2022 we will be ready with the future commer cial core network which will be based on Ericsson technology . What about the fixed network? Stefan Slavnicu: W e invested in upgrading our technology , to pave the way for next-generation services which will be deployed for all our xed customers, whether on owned or on third- party infrastructures. T o follow the technology evolution, we invested in state-of-the-art technology to provide the best performances to our xed customers, whether on cable or on ber networks. This is why we selected both a cable modem and a FTTH light box that are capable to provide the xed data connectivity of the future thr ough WiFi 6 technology and embedded Mesh capabilities. W e are also moving forward with our new generation of set- top boxes, that was prepar ed in 2021 and will be launched at the beginning of 2022. W e moved to an Android TV ecosystem, which is much mor e modern and allows us to integrate and provide OTT applications (those of content producers such as VRT , RTBF , Amazon Prime,…). Strategically we’re r eadjusting towards a more customer -focused approach on the network side. This means we’re looking to put in place more modern means using big data to interact directly with our customers in the near futur e. W e also invested in direct interconnections with Facebook, Google and other main content providers to ensur e the best end to end experience for the customer . We follow traf c trends, monitor new content pr oviders that become more pr ominent such as Instagram, Tik T ok to always anticipate their needs. All the technology choices of the future are done with the Group’ s support, in order not only to select the latest state-of-the-art technology , but also to keep our costs under control. Stefan Slavnicu Chief T echnology Ofcer >1.000 sites to be swapped to Nokia Annual report 2021 14 How is the Orange Group contributing in the technological plans? Stefan Slavnicu: All the technology choices of the future ar e done with the Group’ s support, in order not only to select the latest state-of-the- art technology , but also to keep our costs under control as we can leverage on their size and scope to negotiate the best possible conditions and prices. The Group allows us to of fer the best technologies to our customers at really competitive prices, while we would probably have been forced to select cheaper options in another scenario. W e can also rely on the Group’ s experience and capabilities in R&D, the fact that they have specic laboratories and teams who test and validate products, har dware solutions, software r eleases… Moreover , they have an extremely valuable experience and expertise we can leverage, as they are, for instance the European leader in the r olling out of ber networks. How do you look back on the way you handled the major challenge the floods of the 2021 summer constituted for the network? Stefan Slavnicu: The oods were indeed an extraordinary and very challenging situation. I’m very glad that, together with our operational partners, we were able to r eact quickly and, from 200 sites affected by the oods, we r educed this number to 30 in 48 hours. So we managed to nd a solution for 75% of the problem in only 48 hours, and reached less than 20 sites still affected in 72 hours. W e installed temporary mobile solutions in the most affected ar eas such as V erviers, Pepinster and Chaudfontaine to ensure the coverage and the situation quickly came back to normal. I am really thankful for the work achieved by our teams and our partners, who all showed a massive commitment and demonstrated the quality of our services and processes. Still, we will continue to invest in the redundancy and r obustness of our network to be even more performant should such events or other incidents occur in the future. Annual report 2021 15 Pr oud to be a r esponsible operator and employer Orange Belgium has set as a top priority to always act as a responsible operator , committed to respect and protect the envir onment and society it is active in, but also its employees and community . In a quite complex context, due to the pandemic among others, it managed to deliver and remain engaged toward all its stakeholders in 2021. The continuing pandemic had a massive impact on Orange Belgium’ s organization, in terms of teleworking for instance, yet you were working on some important changes in terms of human resour ces: how did you manage this specific context? Paul-Marie Dessart, General Secretary and acting Chief People officer: W e tried to seize the “opportunity” of the pandemic to totally revamp our teleworking policy , in order to allow an increased exibility to our team members. This, in addition to the start of our brand-new mobility plan, and the investments we made into hybrid working (collaborative tools and dedicated hardwar e to ease the combination of on- and off-site working) helps us achieve two goals: helping our team members reach a better balance between work and private life, but also incite them to rethink their mobility , which can have a major impact on our environmental footprint, and so help us achieve more CSR- related objectives. This pr oject was impulsed by the current r egulatory context, which pushes towards mor e sustainable and environment- friendly mobility practices, but we really saw an enthusiasm from our team members to embrace this evolution and adapt their behaviors. But we know we won’t be able to pr operly measure this evolution until we reach a “new normal” with regular commute to the pr emises from the team members. As for the teleworking policy , we’re obviously in a very peculiar context, due to Covid-19: is the current policy (50% pr esence in the office, should the sanitary context allow it) meant to be sustainable in a long-term perspective? Paul-Marie Dessart: It is. Because it was designed based, of course on the current sanitary situation, but also on our team members long-term vision and demands. W e based it on the feedbacks we were r eceiving from the team members themselves, and it offers a gr eat exibility , as we’re not talking days or weeks of presence in the of ces. It offers the possibility , for instance, for separated parents to better organize their work, considering their family obligations. This exibility is of great value for our teams as it is also meant to consolidate the link inside the teams, as we don’t think fully r emote working is benecial to the consolidation of Orange Belgium’ s community of employees. 50% office pr esence Annual report 2021 16 Orange Belgium has always been proud of the concept of community it endorsed. How did you maintain this link in times of generalized homeworking and reduced r eal-life interactions? Did you notice an impact on absenteeism? Paul-Marie Dessart: W e rst focused on the mood polls, which we did on a weekly basis in times of heavy lockdown and then with a more adapted schedule, and which allowed us to better understand the psychological situation and overall morale of our teams. W e also managed to maintain some team-building activities, in respect of the sanitary r egulations but mostly to allow teams to get together and increase employee’ s sense of belonging. As for the absenteeism, we didn’t observe a massive change in 2021, which is a good indicator that our initiatives to keep our teams engaged and connected with each other are fruitful. Isabelle V anden Eede: We multiplied the communication momentums with our employees to make sure we could r ely on legit feedback on what they were going thr ough. Also, we did our best to help them cope with the situation. For instance, we created a “Level up your talents” page and W ell-being hub on our inter nal social network to offer our employees lots of tips and tricks related to r esilience, online meetings, teleworking with children, but also the ergonomics of a Home of ce, the importance of breaks, ... Paul-Marie Dessart: W e also reinforced the community by creating a dedicated gr oup on Facebook and launching an internal campaign with various fun challenges to help our employees reconnect with their colleagues. W e also put in place two hotlines, one assured by our supplier Securex and a dedicated line for the HR department for practical but also psychological support, along with the organization of sessions of dialogue in small groups and in the pr esence of an exter nal prevention advisor to support psychosocial well- being. W e tried to seize the “opportunity” of the pandemic to totally revamp our teleworking policy , in order to allow an increased flexibility to our team members. Paul-Marie Dessart General Secretary and acting Chief People Ofcer Annual report 2021 17 W e know diversity has been a major priority for Orange Belgium: how did the company perform on that side? Paul-Marie Dessart: An important achievement is the fact that we were awar ded the GEEIS certication ((Gender Equality European & International Standard) for an additional two years, something we hold since 2011 in recognition of our practices with r egard to diversity , professional equality and inclusion. The audit highlighted the signicant efforts which were r ealized over the years and a continuous improvement, even of fering us the maximum score in several subcategories but, mor e importantly , demonstrating that our engagement was made with a long-term perspective. What gets measured gets done, and the evaluation helped us identify the challenges and set up priorities. For instance, the proportion of female directors and people managers has simply doubled in ten years. Besides gender diversity , we’re also working on several pr ojects regarding the access to the job market for people with disabilities, for instance but also people with less “social capital”, coming from deprived socio- economic backgrounds, etc via, among others, several more CSR-focused initiatives. As for CSR initiatives, can you give us a view on the Orange Group’ s overall strategy? Isabelle V anden Eede: We started fr om the observation that, as inequalities and climate change become increasingly critical, society will not accept a technological progr ess which would not be accessible to all and with a limited (if not a neutral) environmental impact. Which is why we are making, as a company , a long-term commitment to the planet and to the digital inclusion, with solid proof points. T o achieve this, the Orange Group has set a rst goal, the strategic plan Engage 2025, which is articulated in two main pillars: the environment and the digital inclusion. On the environmental side, the nal objective for Orange Group is to be Net Zer o Carbon by 2040, 10 years in advance compared to the objectives set by the rest of the sector . T o do so, by 2025, Orange Belgium committed to reduce its CO 2 emissions by 22% from 2015 to 2025. The energy consumption, its impr oved efciency and its r enewable sources, the circular 3x more collected devices in 2021 Annual report 2021 18 economy through pr ojects such as mobile and xed devices collection, and the mobility are integrated into Engage 2025. As for the digital exclusion, we observed that it may have differ ent sources. It can be due to geographical, economic, societal factors or a combination. T o have a real impact on the digital inclusion, we committed to launch and/ or maintain a wide range of initiative impacting those 3 factors. At Group level, we ar e closely monitoring the network coverage to limit and reduce the geographical exclusion factor . W e targeted to have affor dable ranges of smartphones and offers, as well as pr oviding workshops, guidance, and support to increase people’ s digital skills and autonomy , in order to give them the keys to the digital world. How do you translate these objectives at the Belgian level? Isabelle V anden Eede: On the environment side, Orange Belgium is working on the ambitious Net Zero Carbon objective and is alr eady , since 2014, certied and labelled CO 2 neutral by the independent consulting company CO 2 logic and audited by Vinçotte. This certication is only achievable by demonstrating serious evidence of CO 2 emissions reductions over the years and the compensation of the residual CO 2 emissions not eliminated yet. However , these great results won’t make us r educe our efforts or ambitions. Our priority , now , is to remain CO 2 neutral and keep our certications. T o do so, we need to constantly challenge the status quo, reevaluate our processes and keep r educing our CO 2 emissions. Orange Belgium also states it is committed to a sustainable smartphone market: how do you operationalize such an objective? Isabelle V anden Eede: A major activity is our BuyBack program, wher e we allow customers to bring back their old devices and get a voucher for the remaining value, if any , and a little bonus. This year has been particularly good in terms of collecting customers’ old phones thanks to an increased communication and a boost campaign, where customers would r eceive an additional amount when bringing an old device in our shops: thanks to these efforts, we almost tripled the amount of collected devices in 2021. In addition to its direct envir onmental impact (60% of the phones are r eused or refurbished and the remaining 40% ar e recycled), for each phone collected, we donate €2 to the Natuurpunt and Natagora associations. Thanks to this, we are taking part, in the long term, in r ecreating an ancient medieval forest in Belgium. The whole project aims at the r eforestation of 500 hectares of woodland, which is not offset (the tr ees planted are not planted to compensate for the felling of other trees). This year , Orange Belgium has contributed to the planting of 2700 trees in this project. On the environment side, Orange Belgium is working on the ambitious Net Zero Carbon objective and is already , since 2014, certified and labelled CO 2 neutral by the independent consulting company CO2logic and audited by Vinçotte. Isabelle V anden Eede Chief Brand, Communication and CSR Ofcer Annual report 2021 19 Do you also apply changes to your own processes to achieve these goals? Isabelle V anden Eede: Y es of course, we try to rethink all of our pr ocesses to evaluate whether it is possible to make them more sustainable. In November 2020, we were also the rst operator in the world to launch a SIM card made fr om 100% recycled and recyclable plastic. It is thanks to the collaboration with Thales and V eolia that we can transform plastic from old fridges into SIM car ds that meet all quality standards. In 2021, 250,000 Eco SIMs were distributed, which is quite signicant for the Belgian market. T o go further , in 2021, we decided to order exclusively Eco SIM car ds, so that in 2022, we will almost triple our volumes of Eco SIMs, and distribute 90% of our cards in recycled plastic, keeping the ambition in 2023 to distribute only recycled plastic car ds. W e also continued to work on reducing our CO 2 emissions through, among other things, our consumption of paper and other packaging materials. Where we can, we also make the transition to more sustainable materials, such as paper or cardboar d instead of some PVC products. By 2021, we have incr eased our use of recycled material by mor e than three times. In addition to recycled material, we ensur e that 100% of our paper products ar e FSC and PEFC certied, certications that guarantee sustainable paper production and for est management. These initiatives have enabled us to reduce our paper and packaging volumes by 14.4%. Paul-Marie Dessart: As already mentioned earlier , we also continued our efforts to reduce the footprint linked to our employees’ mobility . Our aim is to reduce the CO 2 e emissions linked to the employees’ mobility by 20% between 2015 and 2025. Already befor e the covid crisis, more than 1,000 of our 1,400 employees wer e already using homeworking to impr ove their work-life balance and decrease their ecological footprint. This of course became mandatory during the (semi) lockdowns, but we will keep the lessons learned during the past 2 years to be even more ambitious in terms of homeworking. Next to that, we launched a tool, internally , to compensate employees taking public transports and the bike, to incentivize a sustainable mobility in employees’ habits. W e are also working on our car policy , to propose more hybrid and electric cars, and favor fuel-efcient cars. W e also encourage our employees to take smaller cars in combination with public transport or shared bikes subscriptions. Y ou also mentioned Digital Inclusion as a major priority: were there any achievements in 2021? Isabelle V anden Eede: 2021 has been an important milestone in our digital inclusion initiatives, with signicant progr esses on the creation of a corporate fund and an Orange Digital Center which will become active in the rst half of 2022. These two initiatives are key for Orange’ s commitment to bring digital to as many people as possible. The Corporate Fund will be a structure with a philanthr opic vocation, supporting meaningful projects in terms of digital inclusion, in partnership with NGOs. It will enable us to give support to young people, job seekers, women, and elderly persons, enabling them to increase digital skills, impr ove their employability , enable their emancipation and provide a social link. The Orange Digital Center (ODC) will provide a fr ee space support for innovation, and digital skills development. It will focus on enabling an access to high added value in digital jobs, supporting entrepr eneurs in their projects. The ODC has been thought especially to bring essential digital skills and boost the employability of young people, women and more mature people. 250,000 Eco SIMs distributed Annual report 2021 20 In our journey for a better digital inclusion, we are not lonely , and we can count on the support of an entire ecosystem. W e have been collaborating with Entra for more than 20 years, with the aim to offer a job to the people that usually struggle to access the labour market because of their disability . Since 2016, we are also proud to be an active partner and a founding member of BeCode. The aim of BeCode is to form individuals to become developer . With its expertise, BeCode is able to propose a training of 7 months to become junior web developer and then follow an internship in a company like Orange to sharpen their skills. Hundreds of web developers leave the program with valuable skills and a diploma, and some have even joined Orange Belgium in the meantime. Next to that, we supported the Demoucelle Parkinson organization thr ough our participation of the Brussels’ 20km. The HR department participated in the DuoDay initiative, which links companies and job seekers with a disability or people reevaluating their pr ofessional projects. In the coming years, the objective will be to extend this participation to other departments. Paul-Marie Dessart: This year , 10 team members also participated in the workshops from T oekomstAtelierDel’Avenir . The aim is to present, thr ough creative and playful workshops, various topics around the ICT sector , to inspire youngsters, and give them new potential perspectives when thinking about their future. W e nd it extremely important to give the opportunity to our employees to engage in the society we’re in, which is why we of fer them the possibility to take a “V olunteering Day” off for a good cause and frequently or ganize CSR-related team events. In 2021, we saw an impressive 200% increase in the usage of the V olunteering Day , which demonstrates how committed our employees are. They wer e used, among others, to help support the victims of the summer oods. Isabelle V anden Eede: Indeed, we’re very proud of the Orange Belgium’ s community , which showed great solidarity during these events. W e organized the collection of rst need materials for the victims in our shops, partnered with NGO’ s and private companies to provide pet food, nancial support, but also provided the victims with material support and electronic devices. Solidarity and engagement are crucial, really an essential part of our DNA, and we’r e extremely pr oud to see our teams are sharing this commitment in a very spontaneous and natural manner . In 2021, we saw an impressive 200% increase in the usage of the V olunteering Day , which demonstrates how committed our employees are. Paul-Marie Dessart General Secretary and acting Chief People Ofcer Annual report 2021 21 Orange Luxembourg How would you define 2021? What were the main milestones of the year for Orange Luxembourg? Corinne Loze, CEO of Orange Luxembourg: I would say that 2021 clearly was a year of growth. A gr owth which was achieved thanks to new offers, with a specic focus on the convergent market and ber to the home services. It also was a very digital year , with the launch of our new e-shop and innovative services. Our interactions with customers are becoming more and mor e digital. The video shopping is a great example: a customer is surng on our website and can get in touch, via a video call, with one of our sale executives to ask questions, get advice, etc. W e also recently introduced the live video shopping, which allows customers to connect to a live streaming of our sales people presenting some of our of fers or devices, and they can ask questions but also benet from specic, very short-timed and interesting pr omotions. What about the infrastructure, how big is 5G? Corinne Loze: W e launched our 5G services and 2020 and 2021 was mostly for us a year dedicated to improving our network. The city-centers are incr easingly well covered and we also massively invested in our network in order to impr ove the quality of the “legacy” technologies such as 2G and 4G, by fully renewing our RAN infrastructur e, as it allows us to rely on much mor e energy-efcient and highly performing hardwar e. Orange Luxembourg also always showed a major interest for the startup ecosystem: is it still the case? Corinne Loze: Y es, denitely . The startup ecosystem is particularly living and dynamic in Luxembourg and we’r e supporting several startups by allowing them to test their services or products with our customer base, but also to benet from the advices of our business teams. W e are also very proud to push forward many initiatives on virtual reality , augmented reality and new technologies. In 2021, Orange Luxembourg also started testing the Li-Fi technology , an alternative to WiFi using light to transmit data and which should prove to be more ener gy-efcient. As in 2020, Orange Luxembour g made the most out of 2021 to further grow and innovate, to the benet of its customers. I would say that 2021 clearly was a year of growth. A gr owth which was achieved thanks to new offers, with a specific focus on the convergent market and fiber to the home services. It also was a very digital year , with the launch of our new e-shop and innovative services Corinne Loze CEO of Orange Luxembourg Annual report 2021 22 W e were indeed a real pioneer in esports, and took a position very early – more than 5 years ago- by supporting many local events and by becoming the main partner of the national federation of esport. Orange Luxembourg is also very active on a specific niche, which is esports: can you give a bit of context on this positioning? Corinne Loze: W e were indeed a real pioneer , and took a position very early – more than 5 years ago- by supporting many local events and by becoming the main partner of the national federation of esport. In 2020, we also launched our very own league, focused on the football game FIF A. Our goal is to really support the ecosystem, accompany its structuration, but also to be the technological partner , enabler of the esport world in Luxembourg and help get them recognized. T o be noted, our interest for football was not limited to esport, as we also became in 2021 the sponsor of the national football teams, feminine and masculine. For 5 years supporter of esport Annual report 2021 23 Management Report Orange Belgium is one of the leading telecommunication operators on the Belgian market, with over 3 million customers, and in Luxembour g through its subsidiary Orange Luxembour g. As a convergent player , it provides next generation connectivity services to residential customers thr ough multi- gigabits mobile, cable and optic ber networks, also relating to the Internet of Things. Its high-performance mobile network is equipped with the latest technologies and benets from continuous investments preparing for the arrival of 5G. As a responsible operator , Orange Belgium is also investing to reduce its ecological footprint and pr omote sustainable and inclusive digital practices. Orange Belgium is a subsidiary of the Orange Group, one of the main operators in Europe and Africa for mobile telephony and internet access and a world leader in telecommunication services for companies. Orange Belgium is listed on the Brussels Stock Exchange (OBEL). The Management Report for the accounting year ended on 31 December 2021, consisting of pages 24 to 35, has been prepar ed in accordance with Articles 3:6 and 3:32 of the Belgian Code of Companies and Associations and was approved by the Boar d of Directors on 23 March 2022. It covers both the consolidated accounts of the Orange Belgium Group and the statutory accounts of Orange Belgium S.A. The Corporate Governance statement on pages 104 to 121 is an integral part of this Management Report. 1. Recent events First quarter of 2021 Covid-19 impact Despite the easing of Covid-19 related measur es, Orange Belgium was fully mobilised to ensure network and service continuity and to support its customers. Network and service continuity was critical in managing the Covid-19 crisis. The network was capable of handling the increased traf c without any major issues for customers. T echnical teams permanently monitored the network and r einforced it if necessary , to guarantee seamless communication at all times. The Covid-19 measures also impacted the company’ s nancial and operational performance during the quarter . The Covid measures announced by the Belgian government allowed all non-essential shops to remain open but only by appointment. This limitation in customer visits impacted the commercial performance, as well as the number of ICT projects. Additionally , due to people being more restricted in their movements, mainly roaming and SMS traf c were impacted. Go Unlimited limited edition On 8 February 2021, Orange Belgium re-launched its Go Unlimited promotion at 30 eur os. Orange Belgium selected to provide new smart parking experience to the W aasland Shopping customers As from the end of February customers of W aasland Shopping were able to enjoy a brand new experience, thanks to Orange Belgium’ s smart parking solution. Based on sensors, smart cameras and a mobile application, the smart parking solutions allowed customers to be directly guided to available parking spots through their mobile device. SNCB renewed its high-level connectivity and IoT services The Belgian railway company SNCB once again awarded a large-scale contract to Orange Belgium for an 8-year period. Orange will provide connectivity for appr oximately 13,000 employees and 11,000 connected devices ranging from smartphones and tablets for ticket collectors to train drivers, screens or ticketing machines and smart parking solutions. This involves huge monthly volumes: more than 500,000 minutes worth of voice calls, 2.2 million texts and more than 15TB of data – and rising. Annual report 2021 24 TOP EMPLOYER for the 10 th time For the 10 th time in a row , Orange Belgium was elected TOP EMPLOYER by the T op Employers Institute. It is great recognition of Orange Belgium’ s numerous efforts to provide a digital and caring working environment to its mor e than 1,400 employees. Antoine Chouc appointed new CFO As from 1 Mar ch 2021, Antoine Chouc became Chief Financial Ofcer of Orange Belgium, r eplacing Ar naud Castille after 4 fructuous years in that role. Antoine Chouc was formerly Chief of Staff to the CEO of Orange Gr oup. Decision on wholesale tariffs for access to Pr oximus’ fibre network On 9 March 2021, the BIPT published its decision r egarding the wholesale tariffs for access to the Pr oximus bre network (Bitstream Fiber GPON). The tarif fs relate to the Proximus FTTH deployment areas wher e the operator will deploy bre alone (and not thr ough Joint V enture). The decision conrmed the prices that were put forwar d earlier and that were based on the commer cial agreement between Proximus and alternative operators. Orange Belgium does not consider these tariffs attractive. Consultation on one-off charges for cable and fibr e networks On 8 October 2020, the BIPT launched a consultation on the one-off char ges related to wholesale services on cable networks. The consultation ended on 12 November 2020. The decision on the one-off char ges for access to cable networks was expected during Q2 2021. On 20 January 2021 the BIPT launched a public consultation on the one-off char ges and improved SLA repair char ges for the Proximus bitstr eam GPON offer . Decision regar ding reference of fers for wholesale access to the cable networks On 25 March 2021, the CRC (confer ence of BIPT , CSA, VRM and Medienrat) adopted the nal decisions on the refer ence offers for the cable networks for which each r egulator is competent. These decisions contained mainly qualitative, technical and operational requir ements which must be met by the cable operators in the context of the regulated wholesale access. Next to dening a series of service level agreement requir ements, the decisions require cable network operators to allow resale of wholesale input by an alternative operator and to allow alternative operators to provide services to B2B customers based on the regulated access. New spectrum allocation, renewal of existing spectrum attributions • Extension of the licence duration for 2G and 3G On 23 February 2021 the BIPT decided to extend the duration of the 900, 1800 and 2100 MHz licences for a period of 6months, i.e. from 15 Mar ch 2021 until 15 September 2021. • Attribution of new 700/900/1400/1800/2100/3500 MHz spectrum and unclear timeframe 5G auction On 22 January 2021 the Federal Government approved the draft Royal Decrees and Law pr oposal that set up the framework for the attribution of the 5G spectrum (700, 3400- 3800 and 1400 MHz) and the renewal of the 900, 1800 and 2100 MHz licences. The next phase was an impact analysis regar ding the differentiated spectrum attribution conditions, and the approval by the Coor dination Committee. Orange Belgium remained concerned that the spectrum legal framework may contain articial and discriminatory conditions to attract a 4 th full MNO. • T emporary usage rights for the 3.6GHz-3.8GHz band On 11 September 2020 several anti-5G action groups appealed the decisions before the Market Court of Brussels, asking to annul the decisions on the grounds of administrative and environmental law issues. Orange Belgium, T elenet, Proximus and Cegeka intervened in the pr ocedures to defend and preserve their r espective temporary licence. On 15 April 2021 the Market Court decided that the case introduced by the action groups is not admissible. • Exclusive spectrum rights for microwave links On 30 March 2021 the BIPT decided to grant T elenet, Proximus and Orange Belgium a range of exclusive spectrum rights in various spectrum bands (14-15 GHz, 25-26 GHz, 31-32 GHz, 37-38 GHz, 73-84 GHz) for the provision of microwave links. As part of the decision, each operator will get 1 GHz exclusive spectrum in the E-band. • Consultation on national usage rights for Citymesh On 14 January 2021, the BIPT launched a consultation on Citymesh’ s user rights in the 3.5 GHz frequency band. In essence, Citymesh requested to extend the list of Citymesh’ s municipalities to all municipalities on the Belgian territory . In general, Orange Belgium considered that spectrum allocations should go hand-in-hand with long-term visibility , together with deployment obligations in order to ensur e that operators effectively invest in networks and use spectrum in an efcient and ef fective way . RAN sharing agreement between Orange Belgium and Proximus On 25 November 2019, Orange Belgium and Proximus signed an agreement with the purpose of establishing a 50-50 joint venture on radio mobile access network sharing, covering 2G, 3G, 4G and 5G technologies. T elenet lodged a complaint with the national competition authority against this agreement. By its decision on 10 January 2020 the Competition authority provided for an additional period of 2 months during which the BIPT could further assess the agreement. The pr ovisional measures decided by the Competition Authority expir ed on 16 March 2020 and Orange Belgium and Pr oximus have resumed works for the implementation of the project. The procedur e on the merits is on-going. Annual report 2021 25 Second quarter of 2021 Covid-19 impact Despite the easing of Covid-19 related measur es, Orange Belgium was fully mobilised to ensure network and service continuity and to support its customers. Network and service continuity were critical in managing the Covid-19 crisis. The network was capable of handling the increased traf c without any major issues for our customers. T echnical teams permanently monitored the network and r einforced it if necessary to guarantee seamless communication at all times. As said in Q1’21, the Covid-19 measures also impacted the company’ s nancial and operational performance during the quarter . The Covid measures announced by the Belgian government allowed all non-essential shops to remain open subject to maintaining social distancing of 1.5m and restricting the total amount of people allowed inside shops. T o a lesser degree, the Covid-19 measur es also impacted the company’ s nancial and operational performance during the quarter . This limitation in customer visits impacted the commercial performance, as well as the number of ICT projects. Additionally , due to people being more restricted in their movements, mainly roaming and SMS traf c were impacted. Iristick, OTIV and MyPitch join the 4th season of Orange Fab Despite a challenging context, Orange Belgium moved forward with Orange Fab, its acceleration pr ogramme for start-ups. The theme of this edition: 5G and how these start-ups and Orange Belgium could co-innovate on relevant applications of this technology for consumers and businesses. After a thorough pr eselection and pitch process, the following 3 projects will be joining the 4th season of the pr ogramme, allowing them to innovate on 5G applications within the global framework of the Orange Group and its 18 Orange Fabs all over the world: • Iristick creates industrial smart glasses to support enterprises in their digital transformation. 5G’ s low latency capabilities will be a key enabler for the smart glasses industry . • OTIV’ s objective is to increase the safety and efciency of rail vehicles via autonomous driving technology . Thanks to 5G, autonomous mobility will reach its full potential by making critical communication instantaneous. • MyPitch is a data-driven football community; its technology allows players to track tness data and event data on the pitch. 5G will allow MyPitch to grab & share mor e data from players thanks to higher bandwidth. Go Plus offer r evamped Orange Belgium increased the data bundle on its Go Plus subscription to 10 GB from 8 GB, keeping the price of €20 unchanged. Roll-out of open passive “fibre-to-the-pr emise” pilots in Brussels Orange Belgium announced that it will invest in the deployment of ‘bre-to-the-pr emise’ (or “FTTP”) pilots in Brussels. Orange Belgium will start the rollout in Ever e and Ixelles, where 15,000 r esidents and businesses will have the opportunity to benet from an open and futur e-proof optical bre network enabling multi-gigabit speeds. Orange Belgium will benet from the skills and experience of the Orange Gr oup to provide a next generation open br e network which will be accessible at passive level to any interested telecom service operator to connect and rely on their own active network equipment. Orange Belgium intends to leverage synergies with local assets and partners to contribute to the Region’ s economic and digital ambitions. Consultation on one-off charges for cable On 24 June 2021, the CRC (BIPT , CSA, VRM, Medienrat) published its decision on the one time fees and monthly charge for SLA PRO for br oadband on the cable network. Thedecision was in line with the expectations. Review of the 2018 market analysis decisions The CRC initiated its review of the 2018 market analysis decisions that dene the framework for the regulation of cable, copper and bre networks in Belgium. An initial questionnair e was published. It is expected that the new decisions will be nalised during 2023. BIPT price squeeze guidelines and assessment The BIPT published an update of the communication on the price squeeze for the xed networks on 22 June 2021. Based on the updated guidelines, the BIPT concludes that there ar e currently no price squeeze situations in the market. New spectrum allocation, renewal of existing spectrum attributions • Extension of the licence duration for 2G and 3G Given the delay with the nalisation of the new spectrum framework, the BIPT published on 23 June 2021 a consultation to extend the licences for a new period of 6months as of mid-September . • Attribution of new 700/900/1400/1800/2100/3500 MHz spectrum and unclear timeframe 5G auctio n The draft Royal Decrees ar e still being reviewed by the State Council. It is unclear as to whether the draft texts will be subject to further changes. In the meantime, on 17 June 2021, the Chamber of Representatives appr oved the reserve prices for the auctions in the 2G, 3G, 4G and 5G bands. The reserve prices are the char ges that apply for the reserved spectrum for each player and are also the minimum price for the non-reserved spectrum that is auctioned. Citymesh/Cegeka expressed inter est in participating in the auction. On 18 July 2021, the BIPT launched a consultation on the set of updated draft Royal Decrees. The deadline for the consultation is 31 August 2021. The Coordination Committee is expected to make a nal decision by the end of October 2021, beginning of November 2021. The auctions are now expected during Q2 2022. • T emporary usage rights for the 3.6GHz-3.8GHz band On 11 September 2020, several action groups against 5G appealed the decisions before the Market Court of Brussels, asking to annul the decisions on the grounds of administrative and environmental law issues. Orange Belgium, T elenet, Proximus and Cegeka intervened in the pr ocedures to defend and preserve their r espective temporary licence. A judgment was pronounced on 15 April 2021. The Court decided that the claim was inadmissible. • National usage rights for Citymesh Following a January 2021 consultation, the BIPT published a decision on 4 May 2021 on the extension of Citymesh’ s user rights in the 3.5 GHz band to all Belgian municipalities (excluding the municipalities of V resse-sur -Semois, Bièvre, Annual report 2021 26 Gedinne and Bouillon, for which user rights have already been granted to Gridmax). At the end of December 2020, it became known that Cegeka had acquired contr ol over Citymesh, while it had already acquir ed Gridmax earlier in 2020. RAN sharing agreement between Orange Belgium and Proximus On 25 November 2019, Orange Belgium and Proximus signed an agreement with the purpose of establishing a 50-50 joint venture on radio mobile access network sharing, covering 2G, 3G, 4G and 5G technologies. T elenet lodged a complaint with the national competition authority against this agreement. By its decision on 10 January 2020 the Competition authority provided for an additional period of 2 months during which the BIPT could further assess the agreement. The pr ovisional measures decided by the Competition Authority expir ed on 16 March 2020 and Orange Belgium and Pr oximus have resumed works for the implementation of the project. Whereas the pr ocedure on the merits is ongoing, the Competition authority is sending several requests for information to Orange Belgium and Proximus r egarding various elements of the agreement. The outcome of the procedur e is expected in autumn. T ransposition of the EECC (European Electronic Communications Code) The transposition of the EECC, which redenes the framework for the telecom regulations, into national legislation is delayed. The draft texts, which are understood to be br oadly speaking in line with the European texts, have been r eviewed by the State Council and must now be approved by Parliament. Third quarter of 2021 Covid-19 impact Despite the easing of Covid-19 related measur es, Orange Belgium continues to be fully mobilised to ensure network and service continuity and to support its customers. Network and service continuity are critical in managing the Covid-19 crisis. The network continues to handle the increased traf c without any major issues for our customers. T echnical teams permanently monitor the network and reinfor ce it if necessary to guarantee seamless communication at all times. The Covid measures announced by the Belgian government allowed all non-essential shops to remain open subject to maintaining social distancing of 1.5m and restricting the total amount of people allowed inside shops. #SamenSolidair #T ousSolidaires launched The heavy oods greatly disrupted the lives of many Belgian citizens and, as a responsible operator , Orange Belgium maintained (and restor ed where needed) the connectivity in the impacted areas and also helped the af fected families. Orange Belgium decided to turn 100 shops into collection points where the public could leave essential items to help the people who lost their homes. Furthermore, the customers impacted by the heavy rain fall received 5 GB mobile data. Orange TV Lite launched Orange TV Lite enables customers to combine a streaming account and common TV broadcasting, without having to pay a full subscription. Orange TV Lite enables viewers to watch a selection of up to 20 television channels. There will be 2 of fers: one with Dutch-speaking channels and the other with French- speaking channels. Orange TV Lite comes with a set of extra features. Programmes can be r ecorded and watched later . TV can be streamed on a wide variety of devices and the app can be installed on ve devices in total, making Orange TV Lite family friendly . Orange TV Lite is available only in a ‘Love ‘or ‘Home’ package at a cost of €8.5 /month. hey!, the new , 100% digital brand is launched On 24 September 2021, Orange Belgium launched its new and innovative b-brand geared towar ds digital-savvy customers. hey! is a 100% digital brand which takes a participative approach specially designed to meet the needs of ultra-connected customers leading completely digitally oriented lives. This next generation value proposition is based on 4 pillars: 100% digital, Generous, Low impact, Evolutive. Orange Money launched in Belgium Thanks to a totally free mobile application, customers can now have a mobile wallet and instantly send money to Orange Money users in Belgium or Africa. Moreover , this service is open to all customers, regar dless of their telecom operator . This service is a rst-ever in Europe other than France, and further expands Orange Belgium’ s wide range of services and is a great addition to the special of fers already available to the Belgian diaspora. First 5G Lab opened in Antwerp Orange Belgium ofcially opened its rst Orange 5G Lab in Antwerp, inviting companies to discover , test and develop new innovative use cases on 5G Stand Alone network technology . The new Orange 5G Lab will consolidate the knowledge and expertise gathered fr om Orange Belgium on 5G Industry 4.0 as well as the initial co-innovation use cases delivered in the Port of Antwerp to help develop and test new and inspiring Industry 4.0 use cases. During the process Orange Belgium is permanently expanding its ecosystem of partners, customers and also start-ups. The Lab will join Orange’ s international network of seven other Labs across Eur ope, fostering collaboration and innovation on an unprecedented level. B2B Wholesale Market On 31 March 2021, the BIPT launched a public consultation on Proximus’ wholesale leased lines r eference offer (BROTSoLL). The consultation ended on 11 May 2021 and a nal decision was taken on 21 September 2021. New spectrum allocation, renewal of existing spectrum attributions • Extension of the licence duration for 2G and 3G Given the delay with the nalisation of the new spectrum framework, on 23 June 2021, the BIPT published a consultation to extend the licences for a new period of 6 months as of mid-September . On 7 September 2021, the BIPT published the decision on the extension for another period of six months of the 2G and 3G licences, now until mid-March 2022. • Attribution of new 700/900/1400/1800/2100/3500 MHz spectrum and unclear timeframe 5G auction BIPT also launched a public consultation on all the frequencies to be allocated in the coming months (5G frequencies, and 900/1800/2100 licences). This consultation implies that any new decision on frequency allocations is postponed until November 2021. One of the key elements subject to discussion is the possibility of reserving a quantity of spectrum for a potential 4 th player . The auctions are expected during Q2 2022. Annual report 2021 27 • T emporary usage rights for the 3.6GHz-3.8GHz band Given the delays on the new spectrum allocation, the BIPT granted temporary user rights for the 3.6GHz-3.8GHz band on 15 July 2020 to ve operators: Orange Belgium, Proximus, T elenet, the Flemish ICT -player Cegeka and B2B telecom operator Entropia (who r elinquished its right on 29 July 2020). After a number of changes, today the 3 MNOs have access to 50 MHz spectrum based on temporary licences in this band. RAN sharing agreement between Orange Belgium and Proximus On 25 November 2019, Orange Belgium and Proximus signed an agreement with the purpose of establishing a 50-50 joint venture on radio mobile access network sharing, covering 2G, 3G, 4G and 5G technologies. T elenet lodged a complaint with the national competition authority against this agreement. By its decision on 10 January 2020 the Competition authority provided for an additional period of 2 months during which the BIPT could further assess the agreement. The pr ovisional measures decided by the Competition Authority expir ed on 16 March 2020 and Orange Belgium and Pr oximus have resumed works for the implementation of the pr oject. Whereas the pr ocedure on the merits is ongoing, the Competition authority is sending several requests for information to Orange Belgium and Proximus r egarding various elements of the agreement. The outcome of the procedur e is expected by the end of the year . T ransposition of the EECC (European Electronic Communications Code) The transposition of the EECC, which redenes the framework for the telecom regulations, into national legislation is delayed until Q4 2021. The draft texts, which are understood to be broadly speaking in line with the Eur opean texts, have been reviewed by the State Council and must now be appr oved by Parliament. Consultation on draft communication on towerco The BIPT launched a consultation closing on 8 October 2021, on the interpretation of the law on rights and obligations of “towercos” r egarding antenna site sharing. Social tariffs in the telecom sector The federal government has initiated plans to review the modalities (technical, nancial, operational) of the social tariff discounts for certain user groups. A public consultation will be launched before end of the year . Fourth quarter of 2021 Covid-19 impact Despite the easing of Covid-19 related measur es, Orange Belgium continues to be fully mobilised to ensure network and service continuity and to support its customers. Network and service continuity are critical in managing the Covid-19 crisis. The network continues to handle the increased traf c without any major issues for our customers. T echnical teams permanently monitor the network and reinfor ce it if necessary to guarantee seamless communication at all times. The Covid measures announced by the Belgian government allowed all non-essential shops to remain open subject to maintaining social distancing of 1.5m and restricting the total amount of people allowed inside shops. Go Unlimited became Go Extreme and of fers 60 GB per month As from 22 November 2021, Orange Belgium’ s most abundant mobile subscription becomes Go Extreme of fering double data, up from 30 to 60 GB per month, at no additional cost. Orange Belgium announced an agreement with Nethys to acquire 75% minus one shar e in VOO S.A. Following the period of exclusive negotiations that began on 22 November 2021 and the approval of Enodia’ s Board of Directors, Orange Belgium and Nethys signed an agr eement for the acquisition by Orange Belgium of 75% less one share of VOO S.A., on 24 December 2021. The transaction is based on an enterprise value of €1.8 billion for 100% of the capital and corresponds to an EBITDA multiple of 9.5x. This acquisition repr esents a major step forward in Orange Belgium’ s national convergent strategy and will increase investment and competition in the telecommunications sector for the benet of customers and the competitiveness of the W alloon and Brussels regions. The closing of the transaction is subject to customary conditions precedent, including the appr oval of the European Commission expected in 2022. Until such approvals and closing of the transaction are obtained, the two companies will continue to operate independently . hey! will offer 25% data boost every quarter in the first year hey!, the new brand launched by Orange Belgium in September , is planning to give new customers extra data every three months in their rst year . The amount of data will increase 25% each quarter as fr om February 2022. Increased fixed br oadband and TV prices Orange Belgium raised prices for new and existing customers as from January 2022. 2 nd 5G Lab to be opened in Liege in first half of 2022 After the inauguration of its rst 5G Lab in Antwerp in October 2021, Orange Belgium forged a partnership with the iconic Grand Poste of Liège, veritable hub dedicated to creative companies and innovation. The objective of the 5G Lab in Liège is to demystify this new technology and demonstrate its possibilities and applications. The lab will also be used to develop and test out innovative and concrete new 5G applications in collaboration with customers, prospects and partners. New spectrum allocation, renewal of existing spectrum attributions • Extension of the licence duration for 2G and 3G The decision on the extension until mid-September 2021 was published on 23 February 2021. Given the delay with the nalisation of the new spectrum framework, on 23 June 2021, the BIPT published a consultation to extend the licences for a new period of 6 months as of mid-September . On 7 September 2021, the BIPT published the decision on the extension for another period of six months of the 2G and 3G licences, now until mid-March 2022. On 19 January 2022, the BIPT has launched a consultation on extending by another 6 months the licences that would then expire on 15 September 2022. Annual report 2021 28 • Attribution of new 700/900/1400/1800/2100/3500 MHz spectrum and timeframe 5G auction On 21 October 2021, the Council of Ministers approved the Royal Decrees that govern the 5G and spectrum renewal auctions. The Royal Decrees wer e published on 23 December 2021, and contain spectrum set-asides for a new entrant operator . The auctions will be conducted using a modular approach, allowing a potential 4th operator to pur chase only part of the spectrum in order to tar get only the enterprise market. On 14 January 2022, the BIPT published the call for candidates for the auction on the allocation of new 5G spectrum and the renewal of the existing 2G and 3G spectrum. The auction is scheduled for June 2022. 5G Security On 2 December 2020, the BIPT launched a public consultation on the preliminary draft law and the draft Royal Decr ee concerning the security of 5G networks, in particular regarding the constraints that apply regar ding certain types of suppliers. The consultation ended on 30 December 2020. On 7 May 2021, (until 5 June 2021) the BIPT launched a public consultation on a draft Royal Decree which aims to intr oduce additional supplier security measures for the pr ovision of 5G services for full MVNOs. Additional draft Royal Decrees wer e prepar ed aiming to introduce positioning requir ements for the 5G networks and apply constraints to certain types of private 5G networks. Public consultations concerning the new draft Royal Decrees wer e launched and ended on 17 December 2021. RAN sharing agreement between Orange Belgium and Proximus On 25 November 2019, Orange Belgium and Proximus signed an agreement with the purpose of establishing a 50-50 joint venture on radio mobile access network sharing, covering 2G, 3G, 4G and 5G technologies. T elenet lodged a complaint with the national competition authority against this agreement. By its decision on 10 January 2020 the Competition authority provided for an additional period of 2 months during which the BIPT could further assess the agreement. The pr ovisional measures decided by the Competition Authority expir ed on 16 March 2020 and Orange Belgium and Pr oximus have resumed works for the implementation of the pr oject. Whereas the pr ocedure on the merits is ongoing, the Competition authority has sent several requests for information to Orange Belgium and Proximus r egarding various elements of the agreement. The outcome of the complaint is expected in 2022. T ransposition of the EECC (European Electronic Communications Code) On 21 December 2021 the law transposing the EECC was published in the Belgian State Gazette. It entered into for ce on 10 January 2022. Consultation on draft communication on towerco On 30 November 2021, the BIPT published a “Communication” on the interpretation of the law concerning rights and obligations of “towercos” r egarding antenna site sharing. Social tariffs in the telecom sector The federal government has initiated plans to review the modalities (technical, nancial, operational) of the social tariff discounts for certain user groups. Over the month of December 2021, a public consultation on the draft Decree to r eview the social tariffs was organised by the BIPT . Among the new proposals are an extension of the range of beneciaries, the automation of the allocation of the social tariffs (which ar e a reduction on the retail tarif f), and the review of the nominal values of the amounts of social tarif f discounts. The social tariffs would apply for xed internet and xed telephony mainly , with an additional social tariff for a bespoke (more limited) gr oup of mobile users. Annual report 2021 29 2. Comments on the consolidated accounts prepar ed according to IFRS standar ds The scope of consolidation includes the following companies: Orange Belgium S.A. (100%), the parent company , and Orange Belgium’ s subsidiaries: the Luxembourgian company Orange Communications Luxembourg S.A. (100%), IRISnet S.C.R.L. (28.16%), Smart Services Network S.A. (100%), W alcom Business Solutions S.A. (100%), A3COM S.A. (100%), A & S Partners S.A. (100%), Upsize N.V . (100%), BKM N.V . (100%), CC@PS BV (100%) and MWingz S.R.L. (50%). Orange Belgium S.A. (the company’ s ultimate majority shareholder is Orange S.A.) is one of the main actors on the telecommunications market in Belgium and Luxembourg. Orange Belgium is listed on the Brussels Stock Exchange (OBEL). Orange Communications Luxembourg S.A. , a company organised and existing under the laws of Luxembour g, was acquired as of 2 July 2007 by Orange Belgium S.A. The purchase concerned 90% of the shares of Orange Communications Luxembourg S.A. The r emaining 10% of shares wer e acquired on 12 November 2008. The company has consolidated the results of Orange Communications Luxembourg S.A. for 100%, as of 2 July 2007. IRISnet S.C.R.L. is a company constituted in July 2012 in collaboration with the Brussels authorities in order to take over the activities performed by the temporary association Irisnet, and is responsible for the operation of the Irisnet 2 optical bre network and for the pr ovision of xed telephony , data transmission services (internet, e-mail) and other network related services (video-confer encing, video surveillance, etc.). The take-over of the activities took place on 1 November 2012. In this new legal structure, Orange Belgium S.A. contributed in cash for 3,450,000 euros equivalent to 345,000 shares out of the 1,225,000 shar es issued by the company . Due to the deal structure, IRISnet S.C.R.L. is accounted for in the accounts using the equity method. Smart Services Network S.A. (SSN) is a Belgian company that distributes telecommunication and energy services including those of Orange Belgium and Luminus. SSN’ s route to market is based on the principle of multi-level marketing. SSN’ s network consists of more than 1,000 independent consultants. Smart Services Network S.A., a company organised and existing under the laws of Belgium, was cr eated as of 30 September 2014. Orange Belgium S.A. contributed in cash for 999,900 euros equivalent to 9,999 shar es out of the 10,000 shares issued by the company . Atlas Services Belgium S.A. contributed in cash for 100 euros equivalent to 1 shar e. In 2016, Orange Belgium S.A. contributed in cash in the capital increase of Smart Services Network S.A. for 700,000 eur os, equivalent to 7,000 shares. W alcom Business Solutions S.A. , a company organised and existing under the laws of Belgium, was created as of 13 July 2017. W alcom Business Solutions S.A. specialises in the sales of telecommunication products and services for the professional market. Orange Belgium S.A. contributed in cash for 60,885 euros equivalent to 99 shar es of the 100 shares issued by W alcom Business Solutions S.A. Walcom S.A., liquidated during the accounting year 2020, contributed in cash for 615 euros equivalent to 1 shar e. The results of W alcom Business Solutions S.A are fully consolidated by the company since 13 July 2017. A3Com S.A. was already an exclusive Orange Belgium agent, specialised in telecommunications product sales and services for residential customers thr ough a network of 12 Orange shops located in the Brussels region. A3Com S.A., a company organised and existing under the laws of Belgium, was acquired as of 30 September 2017 by Orange Belgium S.A. The purchase concerned 100% of the 630 shares of A3Com S.A. The results of A3Com S.A. ar e fully consolidated by the company since 1 October 2017. A&S Partners S.A. also an existing Orange Belgium agent, provides telecommunications services to B2B customers within the Brussels region via a dedicated sales team of 35 professionals under the name of AS Mobility . A&S Partners S.A., a company organised and existing under the laws of Belgium, was acquired as of 30 September 2017 by Orange Belgium S.A. The purchase concerned 100% of the 620 shares of A&S Partners S.A. The r esults of A&S Partners S.A. are fully consolidated by the company since 1 October 2017. Upsize N.V . is a holding company that was acquired on 31 July 2019 for an enterprise value of €52.4 million. The purchase concerned 100% of the 60,000 shares of Upsize N.V . The results of Upsize N.V . are fully consolidated by the company since 1 August 2019. BKM N.V . is a nationwide ICT integrator and a pioneer in cloud UCC solutions. Upsize N.V . owns 100% of the 2,329 shares of BKM N.V . BKM N.V . has a solid track-r ecord in the SME and CMA markets in Belgium. BKM N.V . has 220 specialist staff who work in four areas of expertise: Unied Communications & Collaboration (UCC) solutions; IT & security solutions; Document & Visual solutions; and Connectivity solutions. CC@PS BV provides document and visual solutions to SME customers via a team of 13 professionals, mainly in W est Flanders. BKM N.V . owns 100% of the 750 shares of CC@PSBV . MWingz S.R.L. is a joint operation between Orange Belgium S.A. and Proximus S.A., each owning 50% of the company that will manage the unilateral and shared mobile radio access network of both shareholders. In 2019 both companies decided to build a shared mobile radio access network with the objective to meet customers’ increasing demand for mobile network quality and deeper indoor coverage. The agreement will also allow a faster and mor e comprehensive 5G roll-out in Belgium. While sharing the common part of their mobile radio access networks, both companies will continue to have full control over their own cor e network and spectrum assets ensuring differ entiated services. MWingz S.R.L. is a company organised and cr eated under the laws of Belgium and was created as of 6 December 2019. Orange Belgium S.A. contributed in cash for 1 euro equivalent to 1 share out of the 2 shar es issued by the Company . Proximus S.A. contributed in cash for 1 eur o equivalent to 1 share. In April 2020, Orange Belgium did participate in the capital increase of MWingz S.R.L. for 1,599,999 million eur os. Orange Belgium holds 50% of the shares of MWingz S.R.L. This company started the operational activities as from 1 April 2020. Annual report 2021 30 2.1 Consolidated statement of comprehensive income In €m FY 2020 FY 2021 change Mobile customers (excl. MVNOs) 4 906 5 232 6.6% Revenues 1 314.9 1 363.5 3.7% Retail service revenues 905.9 945.1 4.3% Equipment sales 132.2 141.1 6.7% Wholesale revenues 246.2 241.9 -1.7% Other revenues 30.5 35.3 15.6% EBITDAaL 323.5 353.0 9.1% % of Revenues 24.6% 25.9% Net profit (loss) for the period 54.0 39.7 -26.4% Earnings per share (€) 0.90 0.66 -26.5% eCapex 1 -177.7 -204.1 14.8% % of Revenues 13.5% 15.0% Operating cash ow 2 145.8 148.9 2.2% Organic cash ow 122.4 104.8 -14.4% Net nancial debt 144.9 69.5 -52.0% Net nancial debt / Reported EBITDAaL 0.5 0.2 1. eCapex excluding licence fees. In Q1 and Q3 2021 Orange Belgium paid 10.9 million euros on licence fees each quarter . 2. Operating cash ow dened as EBITDAaL – eCapex excluding licence fees. In €m FY 2020 FY 2021 change Direct costs -549.0 -570.9 4.0% Labour costs -146.9 -148.6 1.1% Indirect costs including RouA and nance lease costs -295.5 -290.9 -1.5% of which RouA and finance lease costs -52.5 -54.1 -991.4 -1 010.5 1.9% Depreciation and other expenses Depreciation and amortization incr eased from €250.2 million in 2020 to €279.2 million in 2021. Impairment of goodwill Impairment of goodwill amounted to €14.9 million in 2021. Goodwill is tested for impairment each year . For BKM N.V ., as the recoverable value did not exceed the carrying amount, an impairment of €14.9 million was recor ded at year end. Other goodwill has remained unchanged. EBIT EBIT decreased fr om €69.4 million in 2020 to €55.7 million in 2021. Financial result Net nancial expenses decreased fr om €5.3 million in 2020 to €3.2 million in 2021. T axes Full-year tax expense increased fr om €10.1 million in 2020 to €12.8 million in 2021. Net profit and earnings per share The full-year net prot for year 2021 was €39.7 million. Earnings per share totalled €0.66 in 2021, compared to €0.90 for the previous r estated year . Revenues Group r evenues reached €1,363.5 million in 2021, up by 3.7% in comparison to last year . Retail service revenues amounted to €945.1 million, up by 4.3%, supported by convergent service revenues (+15.5%) and xed r evenues (+19.2%). Additionally , equipment sales increased, while wholesale revenues decr eased mainly explained by lower SMS trafc. Result of operating activities before depr eciation and other expenses EBITDAaL increased by 9.1% to €353.0 million due to higher retail services r evenues and continuous cost efciencies. The margin impr oved 129bp as it reached 25.9%. T otal operational expenses for the full year increased by 1.9% to €1,010.5 million. The following provides an overview of the differ ent expenses: • Direct costs incr eased by 4.0% to €570.9 million mainly due to more equipment costs and cable costs, partially of fset by lower wholesale costs and other direct costs. • Labour costs grew by 1.1% to €148.6 million partially due to an increased activity rate and higher salary indexation. • Indirect costs decr eased by 1.5% to €290.9 million mainly driven by cost management. Annual report 2021 31 in €m FY 2020 FY 2021 EBITDAaL 323.5 353.0 eCapex 1 -177.7 -204.1 Operating cash flow 2 145.8 148.9 in €m FY 2020 FY 2021 Net profit (loss) befor e the period 54.0 39.7 Adjustments to reconcile net pr ot (loss) to cash generated from operations 337.0 397.9 Changes in working capital requir ements -9.3 -21.2 Other net cash out -37.2 -48.6 Net cash provided by operating activities 344.4 367.9 eCapex -177.7 -225.9 Increase (decr ease) in xed assets payables 4.1 14.7 Repayment of lease liabilities -48.4 -51.8 Organic cash flow 122.4 104.8 1. eCapex excluding licence fees. In Q1 and Q3 2021 Orange Belgium paid 10.9 million euros on licence fees each quarter . 2. Operating cash ow dened as EBITDAaL – eCapex excluding licence fees. 2.2 Consolidated statement of financial position Assets Goodwill is tested for impairment each year . For BKM N.V ., as the recoverable value did not exceed the carrying amount, an impairment of 14.9 million euros was r ecorded at year end. Other goodwill remained unchanged. No other impairment losses were r ecorded in 2021. The carrying year -end value is €89.5million. Intangible assets mainly relate to mobile licences and spectrum fees. The net carrying value at year -end was €247.4 million compared to €250.0 million at the pr evious year -end. Property , plant and equipment mainly comprises network facilities and equipment. The net book value at year -end was €662.8 million compared with €707.6 million at 2020 year -end. Rights-of-use of leased assets relates to the application of IFRS 16, decreased fr om €303.8 million to 299.2 million euros as at 31 December 2021. Inventories decreased by €2.7million to €24.0 million, mainly due to out of stocks for some refer ences related to the electronic component crisis. T rade receivables decreased from €207.5 million at the end of 2020 to €188.1 million as at 31 December 2021. This decrease r esults mainly from less open Roaming invoices at year end. Other current assets and pr epaid expenses decreased by €1.5 million to €12.7 million in 2021, driven mainly by lower prepaid expenses. Other assets related to contracts with customers totalled €61.7 million, a decrease of €1.5 million compar ed to 2020. This variation is due to a slight decrease in the number of subsidized contracts outstanding at year -end. Cash and cash equivalents decreased by €7.1 million to €53.7 million at the end of 2021. More details on cash ows can be found in the cash ow statement. T otal equity and liabilities T otal equity increased by €10.3million to €624.2 million. The change in retained earnings (€8.7 million) results mainly fr om the net prot for the period (€39.7million) and the payment of the 2020 dividend (€30.0 million). Non-current liabilities incr eased from €350.7 million at the end of 2020 to €464.9 million at the end of 2021. Orange Belgium S.A. and its parent company , Atlas Services Belgium S.A. signed an agreement on 10 Mar ch 2021 regarding the renancing of the existing Orange Belgium Revolving Cr edit Facility for 120 million euros with a maturity of 5 years. Current liabilities decr eased to €570.6 million at the end of 2021 from €787.3million at the end of 2020. This decr ease is mainly the result of the transfer of the Cr edit Facility Agreement (€200 million) in 2020. Bearing in mind the fact that the remaining period until the maturity date as at 31 December 2020 would be less than 12 months, Orange Belgium S.A. presented this nancial liability as curr ent in the consolidated statement of nancial position as per 31 December 2020. Orange Belgium signed a new RCF on 10 March 2021. Dividends The Board of Dir ectors will not propose a dividend or dividend authorisation for the nancial year 2021 at the Annual General Meeting considering the upcoming spectrum auctions and the balance sheet impact of the acquisition of VOO. 2.3 Liquidity and capital resour ces Cash flows Orange Belgium uses Operating cash ow and Organic cash ow as the main performance metrics for analysing cash generation. The table below shows the reconciliation to net debt. Operating cash flow is dened as EBITDAaL less eCapex (excluding licence fees). Operating cash ow increased by €3.1 million mainly due to higher EBITDAaL (€29.5 million compared to 2020), partially of fset by an increase in investments of €26.4 million. Organic cash flow measures the net cash pr ovided by operating activities, less eCapex and repayment of lease liabilities. Organic cash ow decr eased from €122.4 million to €104.8 million, mainly explained by the increase in investments in 2021 (eCapex). Annual report 2021 32 3. Orange Belgium S.A.’ s statutory accounts 2021 The statutory income statement and balance sheet are presented on pages 98 to 102. As for the exhaustive annual accounts of Orange Belgium S.A., please refer to the Central Balance Sheet Ofce website (http://www .nbb.be/en). Key changes in statutory income statement and balance sheet are essentially identical to those discussed in section 2 of this Management Report. 4. Events after the reporting period On 22 March 2022, the BIPT declar ed that ve applications were submitted and r etained for the auction for the 900 MHz, 1800 MHz and 2100 MHz radio frequency bands, which ar e mainly used for 2G, 3G and 4G applications, and that there ar e equally ve candidates retained for the 3400-3800 MHz band, which is a core band for the 5G technology . For the other 5G-related bands, the BIPT announced that 5 applicants may obtain spectrum in the 700 MHz band, and that 3 candidates applied and were r etained for the 1400 MHz band. The identity of the operators is not disclosed as the procedur e is anonymous until the nal outcome of the auction, announced for June 2022. Also on 22 March 2022, the IT -group NRB announced it is one of the candidates for the spectrum which it would use for B2B applications only . None of the above mentioned events were adjusting events and no other adjusting events arose between the balance sheet date and the date at which the nancial statements have been authorised for issue. 5. Outlook Orange Belgium expects low-single digit revenue gr owth in 2022 considering further uptake on its postpaid and convergent customer base. For 2022, the Company expects EBITDAaL between €350m and €370m. This range takes into account: • Covid-19 impact • Loss of Mobile Vikings as from April 2022 • Energy costs incr ease • Labour cost indexation In addition, total eCapex is expected to be between €210m and €230m. The outlook 2022 does not take into account the integration of VOO. 6. Legal disputes The following section summarizes Orange Belgium’ s legal disputes. T elecom masts Since 1997, certain municipalities and four provinces have adopted local taxes, on an annual basis, on pylons, masts or antennas erected within their boundaries. Orange Belgium continues to le scal objections against each tax assessment notice received concerning these taxes. These taxes are currently being contested in Civil Courts (Courts of First Instance - T ax Chamber and Courts of Appeal). Net debt Net debt at year -end was €69.5 million, compared to €144.9 million at the end of 2020. It includes an Orange S.A. revolving credit facility and cr edit lines from banks. €m, period ended 31.12.2020 31.12.2021 Cash & cash equivalents Cash -32.0 -24.0 Cash equivalents -28.8 -29.8 -60.8 -53.7 Financial liabilities Intercompany short-term borr owing 200.4 0.0 Third parties short-term borr owing 1.9 1.5 Intercompany long-term borr owing 3.4 121.8 205.8 123.3 Net debt (Financial liabilities minus cash and cash equivalents) 144.9 69.5 Net debt/Reported EBITDAaL 0.5 0.2 As at 31 December 2021, gearing remained very conservative with a net debt/ reported EBITDAaL ratio of 0.2x. Annual report 2021 33 The mobile operators have concluded beginning of 2021 an agreement for the period 2021-2022 with the W alloon government. Orange Belgium engages itself to pay an amount of 1.78 million euros over 2 years and to invest an incr emental amount of 3.6 million euros in telecom infrastructur e in the W alloon region in the period 2021-2022. An amount of 491.833,48€ was paid in December 2021 to the W alloon region. This is the rst tranche of 0,9 million€ fr om which the taxes received fr om local authorities for 2021 have been deducted. Access to Coditel Brabant (T elenet) ’ s cable network After Orange Belgium paid the provision for the cable wholesale access set-up fees, Coditel Brabant (T elenet) failed to provide such access within the r egulatory 6-month period. This, in combination to the lack of progr ess on the development of an effective wholesale service, pr ompted Orange Belgium to initiate legal action against Coditel/T elenet for breach of its r egulatory obligations end of December 2016. As the implementation of a technical solution was still ongoing beginning 2018, the proceedings wer e put on hold. The case was reactivated and T elenet submitted briefs on 6 March 2020. Hearings took place in October 2021 and on 8 December 2021 the court decided that T elenet committed a fault because it did not respect the r egulation on granting Orange access to its network. An expert is appointed to calculate the damages. Access to T elenet’ s cable network – own channel Based on the decisions on regulated access to the cable networks Orange Belgium is entitled to offer “own channels” to its retail TV customers, i.e. channels that ar e not commercially of fered by the cable operators. While VOO provided such own channel (Eleven Sports 3) on its network, T elenet refused to offer such access at r easonable conditions. Beginning 2018, Orange Belgium initiated proceedings against T elenet for breach of its regulatory obligations befor e the Commercial Court of Antwerp. On 30 May 2018 the Commercial Court of Antwerp dismissed Orange Belgium’ s claim. Orange Belgium appealed this judgment. On 11 April 2019 the Court of appeal found T elenet in breach of its regulatory obligations as well as guilty of abusing its dominant position. The Court order ed T elenet to provide reasonable conditions within one month subject to penalty payment of €2500/day afterwards. T elenet appealed the decision of the Court of Appeal at the Supreme Court which dismissed the appeal of T elenet on 7 October 2021. The Supreme Court conrmed the ndings of the Court of Appeal regar ding T elenet abusing its position on the market and putting forward unr easonable conditions for regulated services. As a consequence, the judgment of 11 April 2021 of the Court of Appeal of Antwerp is nal. Orange Belgium issued a claim of €250,000 (total amount of the penalty) against T elenet for noncompliance with the decision of the Court of Appeal. This claim was attacked by T elenet with the attachment judge who decided on 22 October 2020 that the claim of OBE was unfounded. Orange Belgium appealed the judgment on 7 December 2020 at the Court of Appeal in Antwerp. The introduction hearing took place on 6 January 2021 on which a calendar for exchanging submissions was xed. The pleadings are set for 23 Mar ch 2022. Access to T elenet’ s cable network – own inter net profile Under the regulation of the access to the cable networks alternative operators have the right to commercialise internet proles that ar e not commercialised by the regulated cable operator (“own internet proles”), i.e. an internet prole with differ ent upload/download speeds and/or volumes than the internet speeds and/or volumes offered by the cable operator to its own retail clients. T elenet refused to grant such own prole until May 2018. Orange Belgium sent a formal notice to T elenet in January 2019 requesting a compensation for the damages incurred. Facing the r efusal of T elenet to pay damages, Orange Belgium introduced a damage claim before the Enterprise Court. On 14 February 2020 the Enterprise Court found T elenet in breach with its regulatory obligations and granted a part of the claimed damages. Orange Belgium decided to appeal the judgment. The Court of Appeal conrmed on 22 December 2021 the decision of the Enterprise Court concerning the error of T elenet. L ycamobile On 19 February 2016, L ycamobile Belgium Limited and L ycamobile BVBA initiated legal proceedings against Orange Belgium (previously Mobistar) befor e the Brussels Commercial Court claiming damages for the alleged belated commercial launch of L ycamobile’ s 4G services. The case was heard on 10 Mar ch 2017. By judgment of 12 May 2017, the Brussels Commercial Court dismissed the claim and or dered L ycamobile to pay Orange Belgium €18,000 as compensation for procedural costs. The judgment was served on 3 July 2017 and L ycamobile paid the full amount. On 11 August 2017, L ycamobile led an appeal before the Brussels Court of Appeal. An introductory hearing took place on 21 September 2017 and a calendar for the ling of trial briefs was set. Parties have exchanged trial briefs. The case has been handled at the hearing of 1 October 2021. By judgment of 29 October 2021, the Brussels Court of Appeal conrmed the rst judgment and sentenced L ycamobile to pay the procedural costs to Orange Belgium. Unless L ycamobile would initiate proceedings before the Supr eme Court, this le should be nally settled by this judgment. Euphony Benelux NV in bankruptcy On 2 April 2015, Orange Belgium was summoned by the receivers of Euphony Benelux NV to a hearing on 17 April 2015 at the Brussels Commercial Court. The bankruptcy receivers claim that Orange Belgium should pay a pr ovisional amount of one (1) euro for over due commissions as well as an eviction fee. In this context, the bankruptcy receivers claim that Orange Belgium should submit all relevant documents to allow the bankruptcy receivers to calculate the amounts claimed. On 17 April 2018, the Court dismissed the claim relating to the eviction fee and appointed an expert for the claim relating to the overdue commissions. Orange Belgium has led an appeal at the Brussels Court of Appeals. An introductory hearing took place and the Court of Appeals has set a calendar for the ling of trial briefs. Parties have exchanged trial briefs. No pleading date has been set. Annual report 2021 34 RAN sharing The provisional measur es imposed by the Belgian Competition Authority expired on 16 Mar ch 2020 and Orange Belgium and Proximus have r esumed works for the implementation of the project. On 1 April 2020 both companies transferr ed the relevant people to the newly cr eated joint operation “MWingz”. In parallel, a procedur e on the merits has been initiated by the Belgian Competition Authority . The procedure is ongoing at the moment. T ransitpoints – interconnection links T elenet included in its regulated refer ence offer of 2014 a charge of €5k per GB internet interconnect traf c capacity . The charges wer e not mentioned in any nal regulatory price decision. This charge was not applied during 2014, 2015, 2016, 2017. Only as of 2018 T elenet started charging this amount, for each transitpoint and each interconnect capacity increase. Orange Belgium systematically disputed the amounts charged for the transitpoints. The May 2020 wholesale charges decision imposes only a charge of ~170€/month per 100 GB. Orange Belgium continued to refuse to pay any char ges based on the old amounts. T elenet started a legal procedure befor e the enterprise court of Mechelen. The pleadings will take place on 25 March 2022. 7. Justification of the application of the going concern accounting principles In view of Orange Belgium Group’ s nancial results in the course of the nancial year ending 31 December 2021, the company is not subject to the application of article 3:6 §1 (6°) of the Belgian Code of Companies and Associations relating to pr ovision of evidence of the application of the going concern accounting rules. 8. Other disclosures r equired in accor dance with art. 3:6 and 3:32 of the Belgian Code of Companies and Associations Art 3:6 §1.4 – Research and development: activities ar e carried out in this respect and especially in the eld of the cable. Orange Belgium recently developed a patent and benets from scal deductions due to its R&D activities. Art 3:6 §1.7 – T reasury shares: refer ence should be made to note 9 of the IFRS nancial statements. Art 3:6 §1.7 – Use of nancial instruments: refer ence should be made to note 8 of the IFRS nancial statements. Art 3:6 §4/ Art 3:32 §2 – Non-nancial information disclosure. In accordance with Art 3:6 §4 and Art 3:32 §2, Orange Belgium S.A. is exempted from the obligation to pr epare and disclose the non-nancial information since it is also a subsidiary of Orange S.A. who prepar es a consolidated Board of Directors’ annual r eport in accordance with the applicable EU directive. Annual report 2021 35 Annual report 2021 36 38 Consolidated financial statements 38 Consolidated statement of comprehensive income 39 Consolidated statement of nancial position 40 Consolidated cash ow statement 41 Consolidated statement of changes in equity 42 Segment information In this document, unless otherwise indicated, the terms “the company” and “Orange Belgium S.A.” refer to Orange Belgium Société Anonyme (formerly Mobistar), and the terms “Orange Belgium”, “the Group” and “the Orange Belgium Group” r efer to the Orange Belgium company together with its consolidated subsidiaries. Consolidated financial statements 46 Notes to the consolidated financial statements 46 Note 1: Description of business and basis of preparation 56 Note 2: Sales, trade receivables, other curr ent and non-current assets and impact of the health crisis linked to the Covid-19 pandemic 58 Note 3: Expenses, prepaid and inventory 63 Note 4: Goodwill 67 Note 5: Other intangible assets and property , plant and equipment 70 Note 6: T axes and levies 72 Note 7: Interests in associates and joint ventur es 72 Note 8: Financial assets, liabilities and nancial result 76 Note 9: Shareholders’ equity 77 Note 10: Commitments and contingencies 77 Note 11: (Non)-current pr ovisions 78 Note 12: Related parties 79 Note 13: Liabilities related to contracts with customers and other assets related to contracts with customers 81 Note 14: Lease agreements 82 Note 15: Signicant accounting policies 94 Note 16: Subsequent events 95 Note 17: Glossary Annual report 2021 37 38 Annual report 202 1 1. Consolida ted financial statements 1.1 Consolidated statement of comprehensive income in thousand EUR Ref. 31.12.2021 31.12.2020 2 Retail service revenues 945 145 905 939 2 Convergent service revenues 254 975 220 759 2 Mobile only services revenues 578 828 585 164 2 Fixed only service revenues 71 078 59 633 2 IT & Integration Service 40 264 40 383 2 Equipment sales 141 130 132 244 2 Wholesale revenues 241 940 246 174 2 Other revenues 35 257 30 511 2 Revenues 1 363 472 1 314 868 3 Purchase of material - 185 409 - 167 684 3 Other direct costs - 376 851 - 374 644 3 Impairme n t loss on trade and other receivables, including contra ct as s ets - 8 672 - 6 630 3 Direct costs - 570 932 - 548 958 3 Labour costs - 148 615 - 146 949 3 Commercial expenses - 33 789 - 42 867 3 Other IT & Network expenses - 97 359 - 95 337 3 Property expenses - 8 508 - 14 493 3 General expenses - 63 587 - 61 523 3 Other indirect income 28 848 26 393 3 Other indirect costs - 60 177 - 52 882 3/14 Depreciation of right- of - u s e of leased a ssets - 54 085 - 52 502 3 Indirect costs - 288 656 - 293 211 3 Other restructuring costs () - 4 035 - 5 644 5 Depreciation and amortization of other intangible assets and pro pe rty, plant and e quipment - 279 206 - 250 240 4 Impairme n t of goodwill - 14 937 0 5 Impairme n t of fixed assets - 1 638 - 689 7 Share of profits (losses) of associates 276 179 Operating Profit ( EB IT ) 55 729 69 357 8 Financial result - 3 232 - 5 287 8 Financial costs - 3 232 - 5 287 8 Financial income 0 0 Profit (loss) befo r e taxat ion ( PBT) 52 497 64 069 6 Tax expense - 12 774 - 10 089 Net profit (loss) for the period ( ) 39 723 53 980 Profit (loss) attributable to equity holders of the parent 39 723 53 980 Consolidated Statement of Comprehensive Income Net profit (loss) for the period 39 723 53 980 Other comprehensive income (cash flow hedging net of tax) - 260 31 Total comprehensive income for the period 39 463 54 011 Part of the total co mprehen sive income att ributable to equity h o lders of the parent 39 463 54 011 Basic earnings per share (in EUR) 0.66 0.90 Weighted average number of ordinary shares (excl. treasury shar es ) 59 944 757 59 905 867 Diluted earnings per share (in EUR) 0.66 0.90 Diluted weighted average number of ordinary shares (excl. treasu ry s h ar es) 59 944 757 59 905 867 * Restructuring costs consist of contract termination costs , red u ndancy charge s and acquis ition & integration co s ts . ** Since there are no discontinued operations, the net profit or los s of th e p er iod co rresponds to the res u lt of continued op erations. 39 Annual report 2021 1.2 Consolidated statement of financial position in thousand EUR Ref. 31.12.2021 31.12.2020 ASSETS 4 Goodwill 89 474 104 411 5 Other intangible assets 247 439 249 978 5 Property, plant and equipment 662 770 707 591 14 Rights- of -use of le a sed assets 299 164 303 803 7 Interests in associates and joint ve n tures 5 760 5 485 8 Non-current financial assets 2 219 2 253 2 Other non-current assets 701 627 6 Deferred tax assets 1 800 3 143 Total non-current assets 1 309 327 1 377 291 3 Inventories 24 024 26 685 2 Trade receivables 188 127 207 483 13 Other Assets related to contracts with customers 61 653 63 184 Current financial assets 417 361 8 Current derivatives assets 243 301 2 Other current assets 7 724 7 374 6 Operating taxes and levies receivables 9 167 1 362 6 Current tax assets 283 328 3 Prepaid expenses 4 975 6 809 8 Cash and cash equivalents 53 735 60 816 Total current assets 350 347 374 703 Total Assets 1 659 672 1 751 994 EQUITY AND LIABILITIES 9 Share capital 131 721 131 721 Legal reserve 13 172 13 172 Retained earnings (excl. legal reserve) 479 263 470 551 9 Treasury shares 0 - 1 519 Equity attributab le to the o w ners of the parent 624 156 613 925 Total eq ui ty 624 156 613 925 8 Non-current financial liabilities 121 809 3 496 14 Non-current lease liabilities 255 251 259 622 Non-current employee benefits 73 12 5/11 Non-current provisions for dismantling 80 656 77 094 11 Other non-current liabilities 2 580 2 344 6 Deferred tax liabilities 4 558 8 171 Total non-current liabilitie s 464 927 350 738 5 Current fixed assets payable 71 654 56 995 3/8 Trade payables 258 822 296 525 8 Current financial liabilities 1 461 202 141 14 Current lease liabilities 44 669 44 429 8 Current derivatives liabilities 243 480 3 Current employee benefits 34 110 33 698 5 Current provisions for dismantling 9 065 5 498 3 Current restructuring provisions 1 127 1 239 3 Other current liabilities 7 082 3 806 6 Operating taxes and levies payables 75 491 77 191 6 Current tax payables 10 653 4 790 13 Liabilities related to contracts with customers 56 022 58 968 Deferred income 191 1 570 Total current liabilities 570 590 787 330 Total Equity and L iab ili ties 1 659 672 1 751 994 40 Annual report 202 1 1.3 Consolidate d ca sh flow state ment in thousand EUR Ref. 31.12.2021 31.12.2020 Operating Activ i ties Consolidated net profit 39 723 53 980 Adjustments to reconcile net profit (loss) to cash generated fr om op erations 3 Operating taxes and levies 25 783 17 028 5 Depreciation and amortization of other intangible assets and pro pe rty, plant and e quipment 279 206 250 240 3/14 Depreciation of right- of - u s e assets 54 085 52 502 4 Impairme n t of goodwill 14 937 0 5 Impairme n t of non-current assets 1 638 689 Gains (losses) on disposal - 1 725 - 2 742 Changes in other provisions - 1 045 - 2 349 7 Share of profits (losses) of associates and joint ventures - 276 - 179 6 Income tax expense 12 774 10 089 8 Finance costs, net 3 232 5 287 Operational net foreign exchange and derivatives - 27 - 51 Share-based compensation 686 - 152 2 Impairme n t loss on trade and other receivables, including contra ct as s ets 8 672 6 630 Changes in working capital requirements 3 Decrease (increase) in inventories, gross 3 003 5 165 Decrease (increase) in trade receivables, gross 10 727 10 595 3 Increase (decrease) in trade payables - 37 718 - 18 526 13 Change in oth er assets related to contracts with customers 1 538 1 463 13 Change in liabilities related to contracts with customers - 2 946 - 6 777 Changes in other assets and liabilities 4 196 - 1 232 Other net cash out Operating taxes and levies paid - 35 288 - 19 359 Interest paid and interest rates effects on derivatives, net - 3 816 - 5 263 6 Income tax paid - 9 508 - 12 604 Net cash provided b y o perating acti vit ies 367 852 344 434 Investing Activit ies Purchases of property, plant and equipment and intangib le ass et s 5 Purchases of property, plant and equipment and intangible assets - 225 881 - 177 734 Increase (decrease) in fixed assets payables 14 659 4 139 Organic cash flow ( ) 104 797 122 420 4 Cash paid for investments securities and acquired businesses, net of cash acquired - 150 - 1 706 Decrease (increase) in securities and other financial assets 54 - 98 Net cash used in investing activities - 211 318 - 175 399 Financing Activities 8 Long-term debt redemptions and repayments - 81 897 - 42 174 14 Repayment of lease liabilities - 51 834 - 48 419 8 Increase (decrease) of bank overdrafts and short-ter m borr o wings 10 - 6 472 Purchase of treasury shares 112 - 1 322 9 Dividends paid to owners of the parent company - 30 007 - 30 007 Net cash used in financing activities - 163 616 - 128 394 Net change in cash and cash equivalents - 7 082 40 641 8 Cash and cash equivalents - opening balance 60 816 20 175 o/w cash 32 030 18 290 o/w cash equivalents 28 786 1 885 Cash change in cash and cash equivalents - 7 082 40 641 8 Cash and cash equivalents - closing balance 53 735 60 816 o/w cash 23 957 32 030 o/w cash equivalents 29 778 28 786 * Net cash flow from operations less acquisitions of tangible and intan gible assets plus proceeds from di s posals of tangible and intan gible a s set s minus repayment of lease liabilities. 41 Annual report 2021 2.1 Consolidate d state me nt of ch anges i n equity in thousand EUR Ref. Share capital Legal reserve Retained earnings Treasury shares Total equity Balance at 31 December 2020 131 721 13 172 470 551 - 1 519 613 925 Net profit for the period 0 0 39 723 0 39 723 Other comprehensive income 0 0 - 260 0 - 260 Total co m prehensive income for the period 0 0 39 463 0 39 463 9 Treasury Shares 0 0 - 1 519 1 519 0 Employee - Share-b a sed compensation 0 0 776 0 776 9 Declared dividends 0 0 - 30 007 0 - 30 007 Balance as at 31 December 202 1 131 721 13 172 479 263 0 624 156 in thousand EUR Ref. Share capital Legal reserve Retained earnings Treasury shares Total equity Balance at 31 December 2019 (), as previously reported 131 721 13 172 447 399 - 197 592 095 4 PPA adjustment Upsize N.V. 0 0 - 575 0 - 575 Restated b alance as of 31 December 20 1 9 131 721 13 172 446 824 - 197 591 520 Net profit for the p e riod 0 0 53 980 0 53 980 Other comprehensive income 0 0 31 0 31 Total co m prehensive income for the period 0 0 54 011 0 54 011 9 Treasury Shares 0 0 0 - 1 322 - 1 322 Employee - Share-b a sed compensation 0 0 - 277 0 - 277 9 Declared dividends 0 0 - 30 007 0 - 30 007 Balance as at 31 December 202 0 131 721 13 172 470 551 - 1 519 613 925 * The 31 December 2019 consolidated statement of financial position has been restated, reflecting the impact of the purcha s e pric e a llocation (“P PA”) for the Upsize N.V. acquisition, which was not yet available at year-end 2019. Reference should be made to note 4. 42 Annual report 202 1 1.5 Segment in fo rmation Consolidated statement of comprehensive income for the year en d ed 31 Dece mb e r 202 1 in thousand EUR 31.12.2021 Orange Belgium Orange Luxembourg Interco elimination Orange Belgium Group Retail service revenues 899 717 45 428 945 145 Convergent service revenu es 254 975 254 975 Mobile only service revenu es 541 156 37 672 578 828 Fixed only service revenu es 63 322 7 756 71 078 IT & Integration service revenu es 40 264 40 264 Equipment sales 127 219 13 911 141 130 Wholesale revenues 232 852 14 999 - 5 911 241 940 Other revenues 47 717 1 952 - 14 412 35 257 Total revenues 1 307 505 76 290 - 20 323 1 363 472 Direct costs - 553 503 - 37 753 20 324 - 570 932 Labour costs - 140 598 - 8 017 - 148 615 Indirect costs, of which - 271 393 - 17 262 - 288 656 Operational taxes and fees - 22 932 - 2 851 - 25 783 Depreciation of right- of - u s e of leased a ssets - 49 680 - 4 405 - 54 085 Other restructuring costs - 3 877 - 158 - 4 035 Depreciation, amortization of other intangible assets and propert y, p lant and e quipm ent - 271 124 - 8 082 - 279 206 Impairme n t of goodwill - 14 937 - 14 937 Impairme n t of fixed assets - 1 638 - 1 638 Share of profits (losses) of associates 276 276 Operating Profit ( EB IT ) 50 711 5 018 55 729 Net financial income (expense) - 3 106 - 126 - 3 232 Profit (loss) befo r e taxat ion ( PBT) 47 605 4 892 52 497 Tax expense - 11 351 - 1 423 - 12 774 Net profit (loss) of the period 36 254 3 469 39 723 Reconciliation from EBITDAaL to net profit (loss) fo r the period for the yea r en de d 31 Dece m ber 202 1 in thousand EUR 31.12.2021 Orange Belgium Orange Luxembourg Interco elimination Orange Belgium Group EBITDAaL 339 751 13 258 353 009 Share of profits (losses) of associates 276 276 Impairme n t of goodwill - 14 937 - 14 937 Impairme n t of fixed assets - 1 638 - 1 638 Depreciation, amortization of other intangible assets and propert y, p lant and e quipm ent - 271 124 - 8 082 - 279 206 Other restructuring costs - 3 877 - 158 - 4 035 Finance lease costs 2 260 2 260 Operating profit ( EB IT ) 50 711 5 018 55 729 Financial result - 3 106 - 126 - 3 232 Profit (loss) befo r e taxat ion ( PBT) 47 605 4 892 52 497 Tax expense - 11 351 - 1 423 - 12 774 Net profit (loss) for the period 36 254 3 469 39 723 43 Annual report 2021 Consolidated statement of comprehensive income for the year ended 31 December 20 20 in thousand EUR 31.12.2020 Orange Belgium Orange Luxembourg Interco elimination Orange Belgium Group Retail service revenues 861 208 44 731 905 939 Convergent service revenu es 220 759 220 759 Mobile only service revenu es 549 670 35 494 585 164 Fixed only service revenu es 50 396 9 237 59 633 IT & Integration service revenu es 40 383 40 383 Equipment sales 118 158 14 086 132 244 Wholesale revenues 238 983 10 810 - 3 619 246 174 Other revenues 44 103 1 235 - 14 827 30 511 Total revenues 1 262 452 70 862 - 18 446 1 314 868 Direct costs - 532 166 - 35 238 18 446 - 548 958 Labour costs - 138 955 - 7 994 - 146 949 Indirect costs, of which - 276 966 - 16 245 - 293 211 Operational taxes and fees - 14 468 - 2 560 - 17 028 Depreciation of right- of - u s e of leased a ssets - 47 924 - 4 578 - 52 502 Other restructuring costs - 5 248 - 396 - 5 644 Depreciation, amortization of other intangible assets and propert y, p lant and e quipm ent - 242 408 - 7 832 - 250 240 Impairme n t of fixed assets - 689 - 689 Share of profits (losses) of associa t es 179 179 Operating Profit ( EB IT ) 66 199 3 157 69 356 Net financial income (expense) - 5 634 347 - 5 287 Profit (loss) befo r e taxat ion ( PBT) 60 565 3 504 64 069 Tax expense - 10 565 476 - 10 089 Net profit (loss) for the period 50 000 3 980 53 980 Reconciliation from EBITDAaL to net profit (loss) for the period fo r t he yea r end e d 31 December 20 20 in thousand EUR 31.12.2020 Orange Belgium Orange Luxembourg Interco elimination Orange Belgium Group EBITDAaL 312 114 11 385 323 499 Share of profits (losses) of associates 179 179 Impairme n t of fixed assets - 689 - 689 Depreciation, amortization of other intangible assets and propert y, p lant and equipment - 242 408 - 7 832 - 250 240 Other restructuring costs - 5 248 - 396 - 5 644 Finance lease costs 2 251 2 251 Operating profit ( EB IT ) 66 199 3 157 69 356 Financial result - 5 634 347 - 5 287 Profit (loss) befo r e taxatio n (PBT) 60 565 3 504 64 069 Tax expense - 10 565 476 - 10 089 Net profit (loss) for the period 50 000 3 980 53 980 44 Annual report 202 1 Consolidated statement of financial position for the year ended 31 December 202 1 in thousand EUR 31.12.2021 Orange Belgium Orange Luxembourg Interco elimination Orange Belgium Group Goodwill 38 610 50 864 89 474 Other intangible assets 240 217 7 222 247 439 Property, plant and equipment 643 980 18 790 662 770 Rights- of -use of le a sed assets 286 564 12 600 299 164 Interests in associates and joint ventures 5 760 5 760 Non-current assets included in the calculation of the net finan cia l de bt 2 219 2 219 Other 479 2 022 2 501 Total non-current assets 1 217 829 91 498 1 309 327 Inventories 22 849 1 175 24 024 Trade receivables 155 128 36 008 - 3 009 188 127 Prepaid expenses 1 591 3 384 4 975 Current assets included in the calculation of the net financial debt 43 398 10 580 53 978 Other 83 063 3 197 - 7 016 79 244 Total current assets 306 028 54 344 - 10 025 350 347 Total assets 1 523 856 145 842 - 10 025 1 659 672 Total eq ui ty 624 156 624 156 Non-current employee benefits 73 73 Non-current liabilities included in the calculation of th e n et f inancial debt 121 809 121 809 Non-current lease liabilities 244 542 10 709 255 251 Other 82 271 5 523 87 794 Total non-current liabilitie s 448 695 16 232 464 927 Current fixed assets payable 69 956 1 698 71 654 Trade payables 228 890 32 941 - 3 009 258 822 Current employee benefits 32 457 1 653 34 110 Deferred income 191 191 Current lease liabilities 42 779 1 890 44 669 Current liabilities included in the calculation of th e n et f inancial d ebt 1 686 7 034 - 7 016 1 704 Others 155 321 4 119 159 440 Total current liabilities 531 280 49 335 - 10 025 570 590 Total eq ui ties and liabilit ies 979 974 65 567 614 131 1 659 672 45 Annual report 2021 Consolidated statement of financial position for the year ended 31 December 20 20 in thousand EUR 31.12.2020 Orange Belgium Orange Luxembourg Interco elimination Orange Belgium Group Goodwill 53 547 50 864 104 411 Other intangible assets 241 981 7 997 249 978 Property, plant and equipment 689 335 18 256 707 591 Rights- of -use of le a sed assets 293 560 10 243 303 803 Interests in associates and joint ventures 5 485 5 485 Non-current assets included in the calculation of the net finan cia l de bt 2 253 2 253 Other 480 3 290 3 770 Total non-current assets 1 286 641 90 650 1 377 291 Inventories 24 793 1 892 26 685 Trade receivables 170 473 40 058 - 3 048 207 483 Prepaid expenses 2 418 4 391 6 809 Current assets included in the calculation of the net finan cia l debt 50 604 10 513 61 117 Other 76 554 3 162 - 7 107 72 609 Total current assets 324 842 60 016 - 10 155 374 703 Total assets 1 611 483 150 666 - 10 155 1 751 994 Total eq ui ty 613 925 613 925 Non-current employee benefits 12 12 Non-current liabilities included in the calculation of the net fin ancial debt 3 496 3 496 Non-current lease liabilities 251 800 7 822 259 622 Other 82 070 5 539 87 609 Total non-current liabilitie s 337 378 13 361 350 739 Current fixed assets payable 52 421 4 574 56 995 Trade payables 260 160 39 413 - 3 048 296 525 Current employee benefits 32 210 1 488 33 698 Deferred income 1 570 1 570 Current financial liabilities 42 009 2 420 44 429 Current liabilities included in the calculation of the net fin ancial d ebt 202 623 7 105 - 7 107 202 621 Other 145 918 5 574 151 492 Total current liabilities 736 911 60 574 - 10 155 787 330 Total eq ui ty and liabilit ies 1 074 289 73 935 603 770 1 751 994 46 Annual report 202 1 2. Notes to the consol idated financial statements Note 1: Description of business and basis of preparation of the consolidated financial statements 1. Description of busine ss Orange Belgium S .A. (the c ompany’ s ultimate majority shar eholder is Orange S .A.) is one of the main acto rs on the telecom municat i o ns market in Belgi um and Luxe mbourg. Orange Be lgium i s listed o n the Bru ssels Stock E xchange ( OBEL). A s a conver gent actor, the co mpany pro v i d e s mobile tel e com municati on, interne t a nd TV ser vices to re siden ti a l clients, a s well a s innovati ve mobile a nd fixed line ser v i ces to bu sinesse s and large c orpora tes. Oran ge Belgium a lso acts as a whole sale opera to r, providin g its par tners with access t o its infrastruct ure and s er vice c ap a cities. Ora nge Bel gium’s h igh -perfor mance mo bile network suppor ts 2G, 3G , 4G and 4 G+ techn ology an d is the s u bject of o n -g oing inve s t ments. Orange Commu nications Luxembo urg S.A . , incor porated under the laws of Luxembo urg, was acquired as of 2 Jul y 2 0 07 by Orange B elgium S.A. The purchase c oncerne d 90% o f the share s of Orange Commu nications Lux emb ourg S.A. The re m ai ning 10% of shares were acquire d on 12 November 2 008. The results of Orange C ommunica tions Luxe mbourg S.A. are f ully consol idated by the com p an y since 2 J uly 2007 . Smart Services Network S .A. (SSN) i s a Belgia n com pany that d i stribute s telecom munication an d ener gy services including those o f Orange Be lgium a nd Luminu s. SSN’s ro ute to mark et is ba s e d on the p r inciple of multi - level mar keting . SSN’s net work consis ts of more than 1,0 00 indepen dent cons ultants. Smart S ervices N etwork S. A., incor po r ated un der the la ws of Bel gium, wa s created a s of 30 Se ptember 2014. Oran ge Be l g ium S.A. co nt r ibuted i n cash for 999,900 e uros equ ivalent to 9,999 sh ares out of the 10,0 00 share s issue d by the co mpany. At las Service s Belgium S.A. contr ibuted in ca sh for 10 0 euros equivalent to 1 shar e. This on e share ha s been s old by Atlas Servic es Belgiu m S.A. to Orange Be lgium S.A. during t h e acco unting year 2020. In 2016, Orange B elgium S. A. contri b u ted in c ash to t he capital increase of Smart Ser vices Ne twork S.A . for 700, 000 eur os, equivalen t to 7,00 0 shares. IRISnet S.C.R.L. is a comp any consti tuted in Ju ly 2012 in c ollaborat ion with th e Brussel s author ities in ord er to take o ver the activitie s perfor med by the t emporary assoc i at ion Irisnet, and is res ponsible for the o peration o f the Iris net 2 op ti ca l fibr e network and for t he prov ision of fixe d telephon y, data t ran smissi on services (internet, e-ma il) and other network -related s er vices (v i d eo- conferenc ing, v i d eo surve i l lance, etc.) . The take -over of th e activ i t i e s took pl a ce on 1 N ovember 2 012. In th is new le gal structure , Oran ge Belgiu m S.A. co ntributed in cash f or 3,450,00 0 euros e quivalent to 345,000 share s out of the 1,225,000 shares i ssued b y the com p an y. Walco m Busine ss Solutio ns S.A., incor porate d under the laws of Be lgium, wa s created as of 1 3 July 201 7. Walco m Busine ss Solution s S.A. spec ialises i n the sale s of telec ommuni cation pro ducts and service s for the pro fessiona l market. Orange Be lgium S.A. co nt r ibuted i n cash for 60,885 eur os e q u iv a lent t o 99 share s of the 10 0 shares issued by Walcom B usiness Solutions S.A. Walco m S.A. contr ibuted in ca sh for 61 5 euro s equiva lent to 1 share. The re sults of Walcom B usiness Solutions S .A. are ful ly consol idated by the com p an y since 13 J uly 2017. As a res ult of the d issoluti on and li q u idation of Walcom S.A. dur ing the account i n g year 202 0 all shar es are hel d now b y Orange Be lgium S.A. A3Com S.A. was a lready an exclusive Orange B elgiu m agent, s pecialise d in telecom municat i o ns pro d uc t sales an d services for resident ial customer s through a network of 1 2 Oran ge shop s located i n the Brus s e ls region. A3 Com S.A. , incorpora ted under the laws of B elgiu m, was acqu ired as of 30 Septe mber 2 017 by Oran ge Belg ium S.A. T he purcha se concer ned 100 % of the 630 shares of A3Com S.A. The re sults of A3Com S.A. are fully conso l i dated b y the com pany since 1 October 2017. 47 Annual report 2021 A&S P artners S.A ., also an existing Or ange Bel gium agent, p r ovide s t elecom munications service s to B2B cus tomers w ithin the Brussel s re gion v i a a dedica ted sale s team of 3 5 professi onals under the name of AS M obility. A& S Partner s S .A., incor porated under t he laws o f Belgium, was acqu i r ed as of 30 Septe mber 2017 by Oran ge Belgium S.A. The purchase c oncerne d 100% o f the 620 shar es of A& S Partners S.A. The re sults o f A&S P artners S.A. are ful ly consolida ted by the c om p an y since 1 October 2017. Upsize N.V. is a h olding co mpany t hat was ac qui r ed on 31 Ju ly 2019 f or an en t er p r ise value of €52.4 millio n. Upsize N .V. is 10 0% shareho lder of B KM N.V. T he results of Upsi ze N.V. ar e fully con solidated b y the com pany sinc e 1 Augu st 2019. BKM N.V. is a nation wide ICT in t e grator a nd a pion eer in cl oud UCC solut i ons. It ha s a solid track -record in the SME a nd CMA marke ts in Belgium . BKM N.V . has 2 20 special ist staff w h o work in four area s of ex pertise: Uni fi e d Com munica tions & Collab oration (U CC) solut ions; IT & security s olutions; Document & Visual solution s; an d C onnecti vity solution s. BKM N.V . is 100 % shareho lder of CC@ PS B.V. CC@PS B .V. prov ides doc ument an d visual sol utions t o low SME c ustomer s via a tea m of 13 p r ofession als, ma i n ly in Wes t Flan d ers. MWingz S.R.L. i s a joint o peration be tween Ora nge B elgium S.A. an d Proxim us S.A., ea ch own i n g 50% of the compa ny that w ill manage the unilat eral an d shared m obile radio ac ces s n e twork of both sh areholder s. In 2019 both c ompanies d ecided t o build a shared mobile ra dio acce ss network with the objective t o meet cu s tomer s ’ increasing demand fo r mobile n etwork q u ality an d deeper indoor co verage. The agreeme nt will a lso allow a faster an d more co mprehen sive 5G ro ll -out in Belgium. W hile shar ing the common part of their mob il e radio acc ess net works, b o th compan ies wil l con tinue to ha ve full co nt r ol over their ow n core net work and spec trum as sets ensur ing differe ntiated services. M Wingz S.R .L. is inc orporate d under the laws of B elgium an d was crea ted as of 6 Dec ember 2019. Oran ge Be l g ium S.A. c ontrib uted in cas h for 1 euro e quivalent t o 1 share out of th e 2 shares issued by the Compan y. Prox i m us S.A. c ontribute d in cash f or 1 eur o equivalent to 1 shar e. In Apri l 2 020, Oran ge Belg ium partic ipated in t h e capital increase o f MWing z S.R.L. for 1,599,999 millio n euros. Ora nge Belgium h olds 50% of the share s of MWingz S .R.L. Thi s compan y starte d operational activ i t i e s as fro m 1 Apri l 2020. On 29 Ju ne 2016, Orange Be lgium S.A . subscr ibed in t he capita l of B elgian Mob ile ID S .A. (for 6.28 % or 1 ,745,853.9 2 euros), with f our banks a nd the tw o other mo bile telec om oper ato r s of the c o un try, to co ll a borate o n the es t a blishmen t of a mo bile identifica tion sys tem for both private and pro fessiona l users. W ith this m obile solu tion, Belg ian Mo bile ID S. A. wants to make it easier f or anyone with a m obile phone and a ba nk accou nt or an eID to digi t al ly log in, c onfirm transaction s and even sign documen ts. In A pril 2018, Orange Be lgium S.A. further contribute d in cash to the capi t a l increase of B elgian M obile ID S. A. for 1,846,2 94.43 euro s (or 10% of the t otal shares) . In Apri l 2 019, Oran ge Be l g ium S.A. le d the ser i e s B fu nding of Commu niThings S.A. thr ough a €1.3 m inve stment (for a stake o f 10.45%). Orange B elgium S. A. inve s t ed direc t l y into one of its Orange- Fab scale- ups, Com muniThin gs, and em b ar ks on a commerc ial partner s hip to market state- of -the-art s mart parki ng solut i o ns. Oran ge Belgiu m S.A., F i na nce.Br ussels S.A. an d Essex Innova t i on inves t e d in tota l €3 millio n. In line w ith Ora nge’s support of I oT so l u tions o ver its IoT networks, t he invest ment will be combine d with a long- term par tnershi p to com mercialise C ommuni Things’ smart park ing soluti ons acro ss Belgiu m. In ad dition, the investme nt will s er v e C ommun i T hings’ glo bal expan sion eff o rts a s it spear heads the r oll-out o f its platf orm over Io T network s . In 2020, Orange Be lgium part i c ipated in an add i t ional capi t a l increase of Com muniThin gs throug h a 0.35 m i l lion eur os investmen t. In April 20 21, Orange B elgium participa ted again in the capital increas e of Co mmuniThi ngs throug h a 0.35 million eur os invest ment. Orange B elgium S.A. hold s, directl y o r indirec tly (e.g. thro ugh other subsidiar ies), less t han 20% o f the v oting pow er of Belgian Mobi l e ID S.A. an d Com muniThings S.A. and as such, it is p re sumed that Oran ge Belgiu m S.A. doe s not have significa nt influence . Moreo v er, generat ing sur p l us value is not the ma in pu rpose of t he investmen t in Bel gian Mob ile ID S.A. and Co mmuniThing s S.A. Followi ng the p eri od of exc lusive ne gotiation s that began on 22 Nove mber 202 1 and the appro v al of the bo ard of direct ors of Enodia, Orange Be lgium a nd Nethy s h a ve signe d on 24 Dec ember 2021 an agr eemen t for the a cquisition by Orang e Belgiu m of 75% le ss one shar e of VOO S.A . The tran sactio n is based on an enter p r ise value o f 1.8 bi llion euro s for 100% of the ca pital. Th is acquisit ion repres ents a major step for ward i n Orange Belgium's national c onvergen t strategy and will i ncrease in vestment and compet ition in the teleco mmunicati ons sector fo r the b en efit of custo mers and the com p e titivene ss of the Wal loon an d B russe l s region s . VOO is a teleco m operat or that own s the cable networ k in the Wall oon region and part of the Bru ssels reg ion. VOO offers a portfoli o of fixe d a nd mo b i le teleph ony, broad b a nd Int ernet and tele vision ser vices. Wi th the ac quisition of VOO, Ora nge Bel gium will ha v e a very hi gh-speed ne twork i n Wallonia a nd p art of Bru ssels, thu s reinforcing the de ployment o f its conver gent stra tegy at national l e vel. 48 Annual report 202 1 The inve stment p l a n, con s i sting of ca b l e modern isatio n and fibre optic (FT TH) rollou ts , and the pooling o f the two companie s' skills w ill make it possible t o ensure a nd streng then th e quality of VOO's network in t he long ter m, ser v i ng cus t o mers and th e compet itiveness of the Wa lloon an d Brussels re gions. Oran ge's indu strial projec t, the co mplementar y natur e of its a ssets and teams an d the exce llent work ing cond itions wi t h in the two com panies will offer at t rac tive pro spects for the emplo yees of V OO and Orange B elgium. Orange Be lgium i s c ommitted to develo ping WBC C, VOO' s call cen t re, a nd inte nds to s tr engthen Be TV. Nethys will retain a minorit y stake in V OO and govern ance right s to guaran tee the i mplementa tion of t he industria l and soc ial project. Orange is offering Ne thys the possi b i l i ty of conver t i ng its stake in VOO into Ora ng e Belgiu m share s to secure the develo pment of V OO and Orange Be lgium thr ough fur ther integrat ion betwe en the t wo compa nies. The en terprise v al ue of 1.8 billion eur os for 10 0% of the ca pital c orrespond s to an EBI TDA multiple of 9 .5x. This t ra nsacti on will generate signific ant synerg ies, mainly re lated to the trans fer of VO O's MVN O busine ss to Oran ge Belgiu m's netw ork. Post syner gi e s, the EBI TDA mu ltiple amou nts to 6. 5x. Oran ge Belgium, which curre ntly ha s a very l o w debt leverage, will finance this transac tion throu gh an in t ra- Group loan . The cl osing of th e transact ion is su bj e ct to cu stomary condition s preceden t, includ ing the ap proval of t h e Euro pean Com missio n which i s expecte d in 2022. U ntil such approval s and clo s ing of the t ran sactio n are o b ta ined, the two com panies w ill continue to operate indepen dently. 2. Scope of consolidation The pare nt com p an y and the subsid i ar ies liste d below are included in the sco pe of c onsolidatio n as at 31. 12.2021 : Orange Belgium S .A. Paren t c ompany, i ncorporat ed under Be lgian l aw Limite d c ompan y with pub licly tra d e d shares Avenue du Bourge t 3 B - 1140 Br ussels Belgiu m Compan y identifica tion num ber: BE 04 56 810 810 Orange Commu nications Luxembo urg S.A. 100% o f the shar es held by Or ange Bel gium S. A. 8, rue de s Méro vingiens L - 807 0 Bertrang e Luxemb ourg Compan y identifica tion num ber: LU 19749504 IRISnet S.C.R.L. 28.16% of the s hare s held by Orange B elgium S.A. Accoun ted for b y equity me thod Avenue d e s Arts 21 B - 1000 Br ussels Be lgium Compan y identifica tion num ber: BE 08 47 220 467 Smart Services Network S .A. 100% o f the shar es held by Orange B elgium S. A. Avenue du Bourge t 3 B - 1140 Br ussels Belgiu m Compan y identifica tion num ber: BE 05 63 470 72 3 Walco m Busine ss Solutio ns S.A. 100% o f the shar es held by Orange B elgium S. A. Avenue du Bourge t 3 B - 1140 Br ussels Belgiu m Compan y identifica tion num ber: BE 06 78 686 036 49 Annual report 2021 A3Com S.A. 100% o f the shar es held by Orange B elgium S. A. Rue A méricaine 6 1- 65 1050 Ixel les Belgiu m Compan y identifica tion num ber: BE 04 71 336 856 A&S P artners S.A . 100% o f the shar es held by Orange B elgium S. A. Rue A méricaine 6 1- 65 1050 Ixel les Belgiu m Compan y identifica tion num ber: BE 08 85 920 79 4 Upsize N.V. 100% o f the shar es held by Orange B elgium S.A. Herkenro desingel 37 A B - 3500 Ha sselt Belgiu m Compan y identifica tion num ber: BE 08 27 982 892 BKM N.V. 100% o f the shar es held by Upsize N.V . Herkenro desingel 37 A B - 3500 Ha sselt Belgiu m Compan y identifica tion num ber: BE 04 53 298 222 CC@PS B .V. 100% o f the shar es held by B KM N.V . Ommega ng Zuid 20 B – 8840 W estrozebeke Belgiu m Compan y identifica tion num ber: BE 08 67 295 50 9 MWING Z S.R. L . 50% of the share s held by Orange Be lgium S.A . Simon B olivarlaa n 34 B - 1000 Br ussel Belgiu m Compan y identifica tion num ber: BE 07 38 987 37 2 There ar e no sign ificant res trictions on the as sets and li a bilities of the su bsidiaries, associate s and jo int venture s includ e d in the scope o f consol idation. Subsi d iar ies are fu lly cons olidated fr om the date of acqu isition, being t he date o n which t he Group obtains con trol, an d continue to be co nsolidate d until the date suc h contro l cea ses. Date of authorisation for issue of the financial statements On 23 Mar ch 2022 , the B oard of Dir ectors of Orange Belgium S.A. reviewe d t he 2021 con solidated financia l statement s and author is e d them f or issue. The 202 1 cons olidated financ ial state ments will be ap proved on 4 May 2022 by the G eneral A ssembly of Shareh olders w h ich still has the power to a mend the conso l i d a ted financial state ments after issue. 50 Annual report 202 1 3. Basis of preparati on The con solidate d financial statemen ts are pres ented in t housand eur os exce pt when o t h erwise i ndicated. The Grou p ' s funct i o nal and pre s e ntation cur renc y i s the Euro . Each en t i ty within t h e Grou p ap plies thi s functional c urrenc y for its financ ial sta t e ments. All amo unts have been roun ded to t he nearest thousand, unles s o therwise i ndicated. Statement of compliance The con solidate d financial statemen ts of Orang e Belg i u m S.A. an d all its s ubsidiaries have b e en pre pared i n accordance with t he Internat ional Fina ncial Rep orting Sta ndards (I FRS), as ad opted by the Europea n Union, and with t he legal a nd re gula t or y require ments a p p licable in B elgium. The pr inciples ap plied to pre pare fina ncial da t a re lating to the 2021 financ ial year ar e base d on: all the st a ndards a nd interpre tations e ndorse d by the European Un ion co mpulsory as of 1 Januar y 2021; the reco gnition a nd measure ment a l ter native s a llowed by the IFRS: Stand ard Alternat ive used IAS 1 Accreti on expens e on oper ating liab ilities (emplo yee benef i t s, environ mental l ia bilities) Classi fi ca tion a s f inancial ex pense s IAS 2 Inventorie s Measure ment of i nventorie s determ i ne d by the weighted average u nit co s t method IAS 7 Interes t paid an d received d ividends Classi fi ca tion a s ne t operat ing cash f lows IAS 16 Propert y , Plant an d Equip ment Measure ment at am ortize d historical c ost IAS 38 Intang i b l e Asset s Measure ment at am ortize d historical c ost In the absence of any accou nting s ta ndard o r interp retation, manageme nt use s its judgme nt to define and apply an account ing policy t hat will re s u lt in relev ant and re liable in fo r mation, such that the financia l stat e ments: fairly pre sent the Group’s financial position, fi n ancial performance and ca sh flows; reflect t he econom ic substance of tra nsaction s; are neu t ra l; are pre p ar ed on a pruden t basis; an d are com plete in al l material re spects. Change s to accoun ting po li c ies are de scribed b elow and in note 15 “Signif i ca nt acc ounting poli c ies”. Changes in accounting policy and disclosures The acco unting p olicies a nd metho ds of comp utation adopted in the prep aration of the conso lidated fina ncial s t a tements have remaine d unchang ed com p are d to t hose follo wed in t he preparat ion of the consolida ted financ ial state ments for the year en ded 3 1 December 2020. EBITDAa L and eCa pex rema ined the key perfor mance in dicator s . These operating performanc e indica tors are u sed by the Grou p: to manag e and as sess its operating a nd seg ment resul ts ; and to im pl e ment its i n vestmen t and res ource alloca tion s t r at e gy. The Gr oup’s mana gement believes t ha t the pre sentati on of these indicat ors is relev ant as it p ro vides rea ders with the s ame manage ment ind icators a s those use d interna lly. EBIT DAaL corr espond s to opera ting inco me before deprecia t i on and a mo r tization of fixe d a ssets, eff ects result i n g from busines s combina tions, recl assifica t i on of cu mulative tran slatio n adjust ment from l iqui d ated en t i t ie s, impair ment of g oodwill an d fixed assets, s hare of p r ofits (lo sses) of a ssociates a nd join t venture s , a nd after interests on debt s related to finance d a ssets and on lease l ia bilities, ad justed f or: significa nt litigat ion; specific l abour ex penses; fixed as sets, inves tment s , a nd busines ses portf olio revie w; restruct uring pr og ra mme c osts; acquisit ion and in tegration c osts; and, where appro p r iate, ot her specific element s . 51 Annual report 2021 The mea surement indicat or allows for the effec ts of certain specific fa ctors to be isolated , irrespec tive of t heir recurre nce and t he type o f income an d expens e, when t hey are link ed to: -signific ant litig ation: Signif i can t litiga t i on expen ses corres pond to r isk reas sessment s re garding variou s litigation s. Ass ociated pr ocedures are based on third-par ty deci sions (regu latory auth ority, cour t, etc.) and occurring over a different period to the activit ies at the source of the litigation. By their very nature , cost s are diffic ult to pr edict in term s of their so urce, a mount a nd peri od; -fixed as sets, i nvestments and busi nesses po rtfoli o review: The Gr oup con s t antly review s its fix ed asset s , investmen ts and b usinesses po r tfolio: a s part of this revie w, deci s i ons to d i s pose of or to se ll a sset s ar e imple mented, wh i ch by their very nat ure have an impact o n the peri od during which the y occur. -restru cturing p rogramme s costs: The ad j u stmen t o f Group ac tivities i n line wi t h c hange s in the bus iness enviro nment may also incur other types of transfor mat ion costs. They include restructur ing cos ts. These actions may have a n egativ e effect on the perio d during which they are ann ounced and im pl e mented. For illu st ra tive purp oses, and not li mited to, t his coul d include s o me of the transform ation plans approved by the interna l gover nance bo dies; -acquisitio n and integ ration costs : The Gr oup also incurs cos ts which are direc t l y linked to the ac q u isition an d integra tion of ent ities. The s e are prim arily leg a l and advisory fees, reg istration fees and ear n-outs; -wher e a pp licable , other sp ecific elements th at are syst emati ca lly specified in relatio n to in come a nd/or expe nses. EBITDAa L is not a financia l aggrega te as defi ned by I FRS and i s not com p ar able t o similarly titled in di c ator s u sed by other g rou ps. It is pr ovided a s a dditional in formation only and should n ot be con sidered as a subst i t ut e for opera ting inco me or ca sh flow provided by operat ing act i v ities. eCape x relate to acqu isitions of p r operty, plant and equipme nt and in tangible a ssets excl uding te l ec ommu nications licences an d finance d a ssets m inus the price of d i sposal of fi x ed a ssets. They are use d internally as an in dicator to al locate re source s . eCapex are not a financia l a ggrega te define d by IFRS an d may n ot be com parable to similarl y -title d indicator s used by other c ompanies. The Gr oup uses organic ca sh flow fr om telec om activi ti e s as an operating perfor mance meas ure for tel ecom activ ities as a w hol e. Organic cash flo w from telec om acti vities corr espond s to net ca sh provi d e d by opera ting ac tivities min us (i) lease liabili ties repaymen ts and d e bts rela t e d to financ ed ass ets repay ments, (ii) p urc hase s and sale s of proper ty, plan t and equi pment an d intangi ble assets net of the c hange in fi x ed a ss e ts paya bl e s, (iii) ex cluding e ff e ct of te lecommun ications licence s paid an d exclud i n g effect of significa nt litigat i o ns paid (a nd receiv ed). Orga nic cash-flow fr om telec om act i v i t ies is n ot a financial aggregate defined by IFRS and ma y n ot be com parable to simila rly- t i t led indicat ors use d by other companie s. New standards and interpretations applicable for the annual period beginning or after 1 Januar y 2021 Despite t he ir l imited impact on G r oup o p er ations, the follow ing ne w a mendmen ts to IFRS have also b ee n consi dered in the preparat ion of th e annual c onsolidate d financ i a l statemen ts: Amen dm e nts to IFR S 9, IA S 39, IFR S 7, IFRS 4 and I FRS 16 I nteres t R ate Be nchmark Re form – Pha se 2 Amen dm e nts to IFR S 4 Insuran ce Con tracts – Exte nsion of the Tem porary Exem ption fro m Appl ying IFRS 9 to 1 Januar y 2023 (a pplicable f or annua l periods b eginning on or af ter 1 Januar y 2021) Amen dm e nt to I FRS 16 Lea ses: Covid- 19 -Relate d Rent Con cession s beyond 30 J un e 2021 (appl i ca ble for annual per iods beginni ng on or af ter 1 A pril 2021) 52 Annual report 202 1 Standards and interpretations published, but not yet applicable fo r the annual p er i o d b e gi n ning on 1 Januar y 2021 . New or a mended standard s and inter pretation s issued up to the da te of issuance o f the Gr oup’s fina ncial statem ents, but not yet effect i ve for 2021 financia l stateme nts, are li st e d belo w. The Gr oup has ele cted no t to ado pt any stan dards or interpre t a tion s in advance o f their ef fective da tes. None of tho se new or amended s tand ar ds and i n terpretat ions are ex pected t o have a ma terial impact on the Group’s con solidated financial statement s . Amen dm e nts to IA S 16 Pro perty, Plant and Equ ipment: Pr oceeds b e fore Int ended Use (ap pli c able for annu al periods beginni ng on or af ter 1 Januar y 2022) Amen dm e nts to IA S 37 Prov isions, Co ntingent Li a bilities an d Contin gent Asse ts: Oner ous Contrac ts — Cost of Ful filling a Contrac t (applica ble for annua l perio ds beginni ng on or after 1 Janu ary 20 22) Amen dm e nts to IFR S 3 Bu si n ess Com bination s : Re ference to the C onceptua l Framew ork (a pplicab le for an nual peri ods beginni ng on or af ter 1 Januar y 2022) Annual Improveme nts to IFR S Standar ds 2018 – 202 0 (ap p l i ca ble for a nnual per iods be ginning on or after 1 January 2 022) IFRS 17 In surance Contract s (a pplicab le for annu al period s beginning on or af ter 1 Januar y 2023) Amen dm e nts to IA S 1 Presen tation of Financial Statement s: Classi fi ca tion of L iabilitie s a s Curren t or Non-current (ap plicable for annu al period s beginni ng on or af ter 1 Januar y 2023, bu t not yet en dorsed in the EU) Amen dm e nts to IA S 1 Presen tation of Financial Statement s an d IFRS Prac tice Sta tement 2 : Di sclosure o f Accoun ting Policie s (a pplicab le for annu al period s beginni ng on or after 1 Januar y 2023, b ut not ye t endor s e d in the E U) Amen dm e nts to IA S 8 Accou nting po licies, Cha nges in Acc ounting E stima t es and Err ors: Defin i t ion of Acc ountin g Estimat es (appl i ca ble for an nual peri ods beginn ing on or af ter 1 Jan uary 2023, but not yet endor sed in the EU) Amen dm e nts to IA S 12 Inco me Taxes: De ferre d T ax rela ted to Asse ts and Lia bilities ar ising fro m a Single Transact ion (applica ble for annu al per i o ds beginni ng on or after 1 J anuary 2023, but not y e t endor sed in the E U) Basis of preparation In order to avo i d differences in the infor mation published by the Ora nge Belgi um Grou p and its majority sharehol d er O r ange S. A., the Oran ge Belgi um Grou p a pplies a re porting f ormat and report ing stan dards that are similar to the ones use d by Orang e S.A. 4. Uses of estima t es an d j udgme nts The pre paration o f the Gro up's financia l stateme nts in co mpliance with IFRS re quires manageme nt to make certa i n judgmen ts , estima tes and as sumption s that affec t the am ounts repor ted in the financial statement s and acc ompan y i ng notes. Judgments in applying accounting policies In the process of applying the Grou p's accoun ting pol i cie s, mana gement h as not ma de any s i gnificant ju dgments an d assum ptions concer ning the future an d other ke y sou rces of esti mating un certaint y a t the ba l an ce shee t date, tha t h ave a significa nt risk of ca using a material ad justmen t to the car rying amo unts of a ssets an d liabilitie s within the next financ ial year, except for: Signifi cant judgm ents wit h regard to the appli cati on of IFRS 15 – R evenu e from con t racts wit h custome rs Signif i can t judgme nt is requ ired in t he following areas : a) Deter minatio n of the t ransaction price – mor e specifically the handset p rice in bu ndled offe rs: The iss ue of the ha ndset sa les price at Orange Belgiu m S.A. is only applic able for b undled o ff er s (equipm ent + s er vice). For a ll other offer s, the performance obligat ion is direc tly rel ated to the s pecific sa le price. Orange Be lgium S. A. exclude d the evaluation meth od based on market p ri ces (IFR S 15.77) f or the d eterminatio n of the s ales price of equi p ment in subsidise d offers an d more specifica lly the s tandalone selling p rice . The s t andalone s elling pr i ce c ould indeed – accor ding to IFR S 15- be con sidered a s “the marke t p r ice”. Ho wever, f or Orange B elgium S. A. the standalone selling pr ices are i mpossib l e to i dentify as Extremel y varying: at any given time, the same standalone e quipmen t can be sold at dif ferent price s . The sales stra tegy of o u r shops, t he type o f distribu tion channe l, … are exa mples of circums tances that vary the s a le price fr om one sho p t o another at a certain time. Volatil i t y : Orange observes that the prices of cer tain hand sets equ ipment do vary qu ickly, even within o ne month. 53 Annual report 2021 Therefore, Orange Belgiu m S.A. dec ided that the expecte d cost p l u s a margi n approa ch meth od is the m ost pertinent calc ulation for the p r ice per specific e q u ipmen t , a s also u sed to de termine the price of the offer s. The start ing point for calcula ting t he u pfront amoun t of equip ment at Orange Be l g ium S.A . is the c ost of the e quipment however this is no t simply e q ual t o the purc hase price , other e lements ha ve to be t aken into co nsidera tion and are part of the “mar gin”. The s e e leme nts are main ly log istic cost s , custom s tariffs, taxe s or s u pplier’s re bates. b) Determi nation of t he d u r ation of th e cont ract in ord er t o allocate the tra n s actio n price to the different perfo rmance obligatio ns: The de finition o f the durat io n of a con tract is on ly rele vant for the subsi d i s e d bundle d offers, t he only co ntracts f or which a revenue relocat ion between the per fo r mance obligat i o ns i s neces sary. The p er i o d of which both par ties’ right s and obliga tions are enforcea ble never ex ceeds the nomi nal period i n the con tract. This is beca use, exclu ding modifi cations i n the c ontract, enforcea bility of r ights and obligation s is a mat ter of l a w. Henc e, the e nforceab le period ca nnot exte nd beyon d the nom inal perio d. On the o ther han d , enforcea bility of ri ghts and obligati ons shall take into c onsiderat ion busine ss pract ices accor ding to whi ch one of the p arties di smisses the other p ar ty of its obligation. F or Oran ge, this is typically th e case wh en the Gr oup au tho r ises or encourag es early re newals. Early rene wals are r enewal s before the end of t he contrac t (contra ct duratio n mainly 24 month s). Curren tly, Orange Be lgium’ s customer strateg y is to give our client s the oppor tunity to re new the ir contract with no p en alty after a durat ion of 22 months. The enforcea ble peri od has bee n set at 22 month s , a s a con sequence, those con tracts are c losed a fter 22 m onths with out further action t o be take n. c) Identifi cation of p erform ance oblig ations: A contra ct as per IFRS15 i s made of r ights an d obliga tions betwee n the parties. The r ights take the form of prom is e s for Ora n ge Belgiu m to trans fer goo d s and/or ser vices to a customer . A contra ct general ly explic i t ly states t he promi ses to be tran sferred to a cust omer. Ho wever the y may not be limited t o the goo ds and ser vices tha t are explici tly stated in that co nt r act, some may al so be imp li e d by bu siness p rac tices wh ich create valid customer expect ations. Access s ervices a nd mobile e quipmen t qualif y a s promise d services and goo ds. The fo llowing ser vices are however c onsider ed immateri al: hotline right for non-invo i ce d inco ming call s access to customer care non-in voiced reser ved num bers Sim-car ds do not have a s t an d-alone value and ha ve as suc h no impa ct on the determina tion of the perfor mance ob ligation. In addi tion, Ora ng e B elgium mi ght offer s ome ad ditional ser vices or g oods, in l i ne with s p ec ific co mmercial p rac tices. W e ide ntif y all right s granted to the custo mer in t he terms of the con tract and i d entify tho se that are material for the c ustomer in t he context of the co nt rac t. Distinc t goods an d ser v ice s There ar e two cr it er ia to de t er mine w h ether g oods an d / or services are dis tinct: The cu stomer ca n benefit fr om the go ods or ser vices on its own or together with res ources that are rea dily availa ble. The en tity’s pro mise to tra nsfer the g ood or service is separately identifiab le from other prom is e s in the c ontract. It i s clear that the mobile equip ment (han dset) is distinct from the access service. Th ose tw o ele ments therefore quali fy as dist i nc t perform ance ob ligations within the c ontract. The acce ss service, which is made o f voice, da t a and sms also inc ludes d i stinct per fo r mance obligat i o ns. Ho wever, gi v e n that those promises are over the same per iod of ti me (right) an d paid to gether (ob ligation), t here is n o need to c onsider t ha t they are distinct . 54 Annual report 202 1 Signifi cant judgm ents wit h regard to the appli cati on of IFRS 16 – Leases Signif i can t judgme nt is requ ired in the determinat ion of no n- ca ncellab le lease ter m and the assess ment of the exercise or not of terminat ion, exten sion and purchase option s . Critical estimates and assumptions Estimat es made at each re porting da te reflect condition s that existe d at those dates (e.g. market pr i ce s, int erest rates an d foreig n exchan ge rates). Although t he se e s t i m ates are based on manage ment's be st kno w le dge of cur rent even ts and act ions tha t O ra nge Belgiu m may un dertake, ac tual resu l t s may d if f er from th os e estimate s. Impair ment of no n-financi al assets The imp airment test for t he goodwil l in relation to Ora nge Com municat i o ns Luxem bourg S. A. and U psize N.V . is based on value in use calcu lation s based on a discount ed cash flow mode l. The cas h flows are derive d fr om the f i n ancial pr ojections for the next five years an d do no t include re st r ucturi ng activities that the Gr oup i s n ot yet co mmitted t o or signi ficant f uture in v e stments that will enhance the asse t base of t he cash gen erating u nit bein g tested. The rec ov er able am ount is most sen s i tive to the discount ra t e used for the disc ounted ca sh flow m odel as we ll as th e expected future ca sh -in flows an d the grow th rate use d for extra polation purpose s. The key assump tions used to determ ine the rec overa ble amoun t for the different ca sh generat ing unit s are further ex p lain ed in Note 4. Fixed a ssets – Us eful life as sessm en t Asses sing asset s’ useful lif e accordin g to the c hange in the techn ological, re gulatory or econom ic envir onment (grea t er bandw id th technolo gies, ra d i o technol ogy migra tion…). Re ference sh ould be made to N ote 5. Provisio n for dis mantling network si tes The Gr oup has re cognised a provisio n for dis mantling net work si tes obliga tions as for the ren t e d build i ng situate d a t Avenue du Bourget a nd the various an tennas si tes. In deter minin g the am ount of the provision, a ssum ptions and e stimate s ar e require d in relation to discoun t rates an d the ex pected cos t to di s m antle an d re move al l plants fro m the si tes (see N ote 5). Operatio n al t axes: pylo n Since 1997, municipa lities a nd pro vinces le vy loca l ta xes on an annu al basis on ma s t s , pylons , an d antenn as. The se taxes do not qualif y a s income t axes an d ar e recor ded as o peratio nal taxes, henc e nega tively im p ac ting the profit bef ore tax. When a tax bill is rec eived, the relate d cost is rec orde d . I n the eve nt no tax bill is rece ived, the c ost will be based u pon t he tax bill of the pre vious y ear and the pylon t ax l iability ex pires if the com pany doe s not rece ive a tax b i ll within t hree year s. As all tax bills are di sputed, intere sts are ca lculate d on the le gal tax rate. When the case i s c losed at procedure level, b a sis and interes t s are rever s e d. This me thod is s till used in Flanders and for t he Brusse ls Region a nd was al so ap p l i ca ble for the Walloo n region u n til 2013. S ince 2014, this tax, introduce d by a decree of t he Wallo on region, b ecame a re gional tax. On 22 De cember 2016, the t hree mob ile opera tors and the Walloo n governme nt concl uded an agr eement in princi pl e on the issue of tax i n g mobile i n frastructur e and t o settle the disput e on the Walloon reg ional taxes for 2014. Orange B elgium co mmitte d to pay an amo unt of 16.1 million eur os over 4 years (i. e. 2016-2019) and to in vest an i ncremen t al amount o f 20 mi l l ion euro s i n telecom infrastruc ture in th e Walloon region in the perio d 2016-2019. I n turn, the Wallo on Regio n undertake s to no l onger levy taxes on telecom infrastruc t ure and t o impleme nt a legi sl a tive, regulator y , an d adm i n istrative framework designed to fac ilit a te the deplo y m ent of t h is infrastru cture. In a ddition, th e Wall oon Regi on would d iscourage m unicipal ities and p r ovinces from levyin g taxes on telecom infrastructure . The o perator s were entit l e d to dedu ct such lo cal taxes levied in 2 016-2019 by Walloon munici palities or province s fr om the 2019 sett lement and invest ment amoun ts. The la s t instalmen t of the am ount d ue by Orang e Belgium on the b a sis of the 2 016-2019 pr otocol agree ment (4.5 million eur os) has not yet been p aid. Thi s is due t o the fact t ha t Ora ng e B elgium re ceived local tax b ills fro m Walloon m unicipal ities falling under this agree ment an d is theref ore current ly in neg otiation w ith the Wa lloon go vernment to confir m the exact ma gnitude a s well t o whom t he last in stalment s hould be p a id. All i nformati on was pro vided to the Wallo on Region on time. The Wall oon region h as no t yet re sponded. 55 Annual report 2021 The m obile operat ors have c oncluded a protoc ol agre ement w i t h the Wa lloon govern ment for the peri od 2021 - 2022. Th i s agree ment stipu l a tes that t he mobile operator s will pa y a contrib ution to a g overnmen tal bud get fund t o be set u p by the Walloon govern ment to support the digitaliza tion of t he Walloon r egion, and more s pecifically lo c al initia tives of Wa lloon mun icipali tie s or province s. Amoun t of the o perator’s c ontribut ion: 5 .0 milli on euros (35,7 3% to be paid by Orange Be lgium). The mobile o p er ators will als o do addit ional net work inves tments f or a total amount of 11 . 0 million eur os (35,7 3% for Oran ge Bel gium). Th is agreeme nt will en s ure a financ ially sta ble environ ment by r educing t he prolifera tion o f local taxe s. From t he first tranche of 0.9 million e uros paya ble for 2021, an a mount of 0. 5 million e uros has been effe ctively pa id in De cember 2021 to the Wallo on region . Orange B elgium did indeed rec eive tax bills from a cou p le of local a uthoritie s falling un der the agree ment for an a mount of 0.4 mil l i on euros and did no t pay the re maining b alance tha nks to a n offsettin g mechan ism prov ided for b y t he agree ment. Given t he uncer t ai nties surr oundin g the lawfu l n ess an d amount of the py l o n taxe s , a nd consi dering inter a lia th at this tax is not fully p a yable at th e beginni ng of eac h fiscal yea r and actu ally not pa id, Oran ge Belgiu m continue s to accou nt for th is as a ri sk in accor d an ce with I AS 37 (Pro vision s & c ontin gent liabil i t ies). Howe ver, the fu ll year ri s k is estima ted an d rec ogn i zed both a s a liability and charge at the beginning of each yea r. Inter es t charge s rel ated t o the non-paymen t of th i s t ax continue being re corded monthl y . The pr ovision for pylon tax is reasse ssed every quarte r (see also note 3 a nd 6) usin g prudent best estimate assumptio ns based on the evol ution of t h e regiona l tax frame work, o f the differ ent court case s and of the ne w tax bills re ceived. T he mana gement r e vises these es timates if the under lying circu mstance s evolve or in light of new inf ormation or experie n ce. Co nsequen t l y, estimate s made at 31 Dec ember 2021, ma y subse q ue ntly be ch anged . 56 Annual report 202 1 Note 2: S al es, trade r ecei v able s, ot her current and non -cu rr ent ass et s and impact of th e health crisis link ed to the Covid- 19 pandem ic in thousand EUR 31.12.2021 31.12.2020 Belgium 1 307 505 1 262 452 Retail service revenues 899 717 861 208 Convergent service revenu es 254 975 220 759 Mobile only service revenu es 541 156 549 670 Fixed only service revenu es 63 322 50 396 IT & Integration service revenu es 40 264 40 383 Equipment sales 127 219 118 158 Wholesale revenues 232 852 238 983 Other revenues 47 717 44 103 Luxembourg 76 290 70 862 Retail service revenues 45 428 44 731 Convergent service revenu es 0 0 Mobile only service revenu es 37 672 35 494 Fixed only service revenu es 7 756 9 237 IT & Integration service revenu es 0 0 Equipment sales 13 911 14 086 Wholesale revenues 14 999 10 810 Other revenues 1 952 1 235 Inter-segment eliminations - 20 323 - 18 446 Total 1 363 472 1 314 868 Orange B elgium’ s total con solidated t urn over a mounted to 1,363.5 million e uros in 202 1, comp ared to 1 ,314.9 mil lion euros in 2020, a significant increa s e of 3.7% y ear - on -yea r. The tota l retail ser vice re v en ues (i.e. mobile-only s er vices, fix ed-only ser vices, con vergent services an d IT & Inte gration s er v ice s) increase d 4.3% year- on -y ear: from 9 05.9 million euros in 2020 t o 945.1 m i l lion eur os in 2021. This is the resu lt of Oran ge Belg i u m maintai ning soli d commerc ial performa nce over t he year s upported by the rece nt enhan cements t o the G o portfoli o and the continu ous gro w t h of our c onvergenc e offers. I n addit ion, Oran ge Belgiu m continue s to differen tiate it self in the market wh il e extend i n g the range of value proposi tions to sat isfy cus t o mers' con stantly cha nging ne eds. This incr ease has mainly been driven by higher c onver gent service re venues ( 15.5%) a nd higher fixe d only ser v ice revenues as a result o f higher ca ble reven ues due to an increas ing custo mer base. Equipment sa les increa sed 6.7% y ear- on - y e ar and the increase in other re venues c an be exp lained b y more han dset sales through a gents. Fur thermore, the full year 2021 was nega tively impacte d by lower wholes ale revenue s due to decrea se in SMS traffic an d interconn e cti on. Mobi l e postpaid c ustomer b ase con ti n ues its steady gro wth, up 3.9% rea ching 2. 74 million subscrib ers. How ev er , the total mob il e only ser vice reven ues dec l i ned by 1.1 % year- on - year to €578.8 m illion euro s in 2021 , mainly d ue to the co ntinu ous declin e of the prepaid market. Consol idated f i xed only ser vice re v enu es amou nts to 71.1 million euros (co mpared to 59.6 million euro s in 2020) i llustrating the continu ous co mm erc ial succ ess of th e Shape & Fix of fers and t he c onsoli dation of Upsize. 57 Annual report 2021 The Cor onaviru s (Covid-19) pandemic is stil l a f fecting hu man hea l t h, as we l l as the c ompany’s b usiness an d financ ial situa t i on during y ear 2021. Ora nge Bel gium ide ntified the following major po ints of a tt e ntion in this respect: ▪ Human health a nd safety: Ora nge Bel gium con tinued to cl osely m onitoring de velopmen ts in term s of this pandemic a nd puts the hea lth and sa fety of it s staff at the forefr ont. Oran ge Belgium took a ll the nece s sar y measure s to pro t ec t its staff in addi tion to the hea lth ins tructions given by na tional aut horities , while ens uring the co ndition s re quire d f or busine ss con t i nuity. Ora n ge Belgiu m c ontinue d with telew orking for its emp loyees whene ver the activity can b e carried out remot ely an d the neces sary equipm ent is ava ilable. The long-term e ffects of the con tainment measures taken by t he public a uthoritie s and rela yed by Orange B elgium are uncerta in, and i n particular the p s y chologica l impact on its e mpl oyees of the i s olation tha t it is like ly to cause. ▪ Business contin u ity : Orange Belgiu m must, as a provider of essent i a l busine ss service s, ensure the contin uity of it s e lectronic commun ication s services an d in par ti c ular of i ts critic al activitie s. In accordance with go v er nment d irectives, Orange Be lgium has set up a busine ss contin uity plan, which m ainly cover s network and infor mation s ystems s u pervisio n and opera tion tea ms, securi ty teams, tec hnical su pport, s ta ff in data centre s an d inter v en tion team s. In additio n, the sig nificant in crease in t ra ffic on Orange B elgium’ s network s poses a ri sk of co ngestion t hat could lead to a deteriorat ion or e v en interru ption of services. T o avoid s uc h degrad ation or even interr uption s , Orange Belgium ha s increa s e d the capacit y of its netw orks. ▪ Finan cia l perform ance: In 2 021, the measures re lated t o Covid-19 were eased with a p ositive impa ct on the c ommerc ial and financ i al results o f Orange Be lgium. I nternationa l travellin g increase d again, r esulting i n higher revenues from b o th visitor s and customer s roa ming com p ar ed to 202 0. In-store re striction s were al so loosene d, which al so tran sl a ted into an increa se in handset re venue s . As in year 2 020, Oran ge Be l g ium did n ot experien ce any eff ect due to Co vid-19 on bad de b t . Trade receivables in thousand EUR 31.12.2021 31.12.2020 Trade receivables - Gross value 222 266 239 516 Allowance for doubtful debtors - 34 139 - 32 033 Total t r ad e r eceiv a bles 188 127 207 483 Ageing Balance in thousand EUR 31.12.2021 31.12.2020 Not past due 128 435 129 073 Less than 180 days 30 152 42 660 Between 180 days and 360 days 9 162 10 002 More than 360 days 20 378 25 748 Total t r ad e r eceiv a bles 188 127 207 483 Change in Provi s ion for Trade receivables in thousand EUR 2021 2020 Allowances on trade receivables - Opening balance - 32 033 - 32 480 Net addition with impact on income statement - 8 672 - 6 630 Losses on trade receivables 6 566 7 077 Allowances on trade receivables - Closing balance - 34 139 - 32 033 For ter ms and con dition s rela ting to re lated parties re ceivables, r efer to No t e 12. Trade rece ivable s are non-in terest bear ing and are general ly paid via direct de bits (56% of service re venue s are collected by direct debit). Trade rece ivables w hi c h are no t paid via direct deb its bear ma inly a pa yment term of 30 da ys end o f month. The Gr oup is not dependent on any major cu stomers, none re p res enting more than 10% of the compa ny’s cons olidated reve nue s. The cu stomer risk is sprea d over more than 4 million cus tomers. Total Tra de receiva bles amo unted t o 188.1 m illion eur os at the en d of 2021, compare d with 20 7.5 mil l i on euros at the end of 2 020. The decr ease in trade rece ivables – gr oss value ca n mainly be e xplained by more o pen roam ing disc ounts at y ear-en d and b y paymen t related t o open 2 020 invoice s . Allowa nce for d oubtful de btors – clo s i ng balance a t year end 2021 – in crease d to 34.1 m illion eur os. This c an be ful ly attribut ed to the intro duction of the sta t i stical me t h od in Oran ge Luxem bourg on t he rev i se d ageing c ustomer balance a s a result o f the imple mentation of a new b illing syst em . Impair ment of tra de receiva bles is ba sed on t hree method s : 58 Annual report 202 1 A collec tive stati stical metho d: this i s based on h istorical l o sses and l ea ds to a separate i mpairme nt rate f or each agin g balance categor y. This ana lysis is perf orme d o ver a hom ogenou s group of r eceivable s with si milar credi t c haracteri stics because t hey belon g to a c ustomer ca tegory (m ass-market, small office s and hom e office s ); A stand -alone met hod: the a ssessme nt of im p air ment pro bability an d its am ount are b ased on a set of re levant qualit ative factor s (ageing of l a te pay ment, other balances with t he counter party, rat i n g from i ndependen t agencie s, …). Thi s metho d is used for carrier s an d opera tors (natio nal and in ternati onal), local, regional and nati onal authori ties; and A pro v i sioning me thod b as ed on an ticipated loss: IFR S 9 require s recog nition of ex pected lo sses on rec eivab les imme di a tely upon re cognition of the finan cial instr uments. In a dditi on to the pre -ex isting pro visioning system, t he Group applie s a simplifi ed approach of an t ic ipated im pairment at the ti me the asse t is recogn ised. The percenta ge applied depen d s on the maximum revenue n on-rec overability r ate. The co s t s relate d to bad de bts increa sed to 8.7 million eur o s i n 2021 (c ompare d to 6.6 m illion euros in 202 0). The inc ome stateme nt (see al so Note 3 – Ex pen s es , prepaid a nd invent ory ) was i mpacte d by the intr oduction o f the statis ti ca l meth od in Orange L uxem b our g on the revise d a geing cu stomer ba lance a s a re sult of t he imple mentation of a new b illing sy stem. Since 2 017, Orang e Belgiu m S.A. en tered into a factoring pr ogram me with Bel fius Com mercial F i n ance. T he eligi bl e trad e receiva bl e s were related to the top 4 00 B2B A irtime d ebtors (fact ored rece ivables ar ound 1.7 millio n euros as at 31 Dec ember 2021). Other asse ts in thousand EUR 31.12.2021 31.12.2020 Advances and downpayments 1 992 97 Security deposits paid 701 627 Other 5 732 7 277 Total other assets 8 425 8 001 o/w other non-curren t assets 701 627 o/w other current assets 7 724 7 374 The no n- c urrent a ssets rema in stable. The increa s e in other c urrent a ss e ts is a c ombined e ffect of a decrease mainly rela ted to IRISnet an d an i ncrea s e in prepa yments t o a specific supplier ( Siligence S AS). Note 3: E x penses, prepaid and inventory Direct costs in thousand EUR 31.12.2021 31.12.2020 Purchase of material - 185 409 - 167 684 Other direct costs - 376 851 - 374 644 Impairme n t loss on trade and other receivables, including contra ct as s ets - 8 672 - 6 630 Total d irect c osts - 570 932 - 548 958 The direc t cost s i n 2021 increa s e d by 4.0% year- on -year t o 570.9 mi llion euro s f r om 54 9.0 million euros a year earl i er . Purcha se of material The co s t s relate d to the p urcha se of material i ncreased by 10.6% y ear- on -year to 185. 4 million e uros. The costs re lated to the purchas e of equi pment (hig h end han dsets) incr eased i n line wit h the h igher eq uipment sales (6.7%) a nd als o the avera ge unit price per handset was higher than i n 2 020. Purcha se of ot her equi p m ent increa sed al s o by 1.6 million euros compare d to 2 020. 59 Annual report 2021 Other direct cos ts The o t her direct co sts main ly consis ting of interc onne ction costs , commiss ions, con tent and co nnectiv i t y cost s in cr ea se d sl ig h tly b y 0 . 6% year - on - year. Interco nnectio n costs Intercon nect ex pense decre ased by 12.5 millio n euros to 201.0 m illion euro s . Roa ming co st increase d by 7.2 m illion eur os due t o more tra ffic done by our tra v e lling cu stomer. SM S inter connect cos ts decrea s e d by 15.5 million eur os due to less tra ffic (13%) . Voice interc onnec t c osts decrea sed b y 4 .3 mil l i on euros due to ne w regulat ion that h as been a pplicable since July 2021 (decrea se in Mo bile and Fixe d Termina tion Rat e). Commissi ons Commi ssion expe nses decrea sed by 1. 7 millio n euros in 2021 t o 31.1 mi l l i o n euro s , due to lo wer com missions paid to retai l partner s, in line with lower sales. Conte nt costs Orange B elgium’ s television content strategy is prima rily based o n develo p i ng partn erships with rights holder s a nd serv i ce publisher s. Orange B elgium is mainly focu sed on i t s r ole of a ggrega t in g and di stributing co ntent to offer im proved ser vi c es t o i t s cu stomer s. The c osts regar ding telev ision con t e nt amoun t to 31.1 million eur os in 202 1 compare d to 28.1 million eur os in 202 0. This incr ease is in line with the uptake of Orang e Belgiu m’s digita l TV offer ( Love) in 20 20, intro ducing f or i n stance Ora nge TV Lite. Connectiv ity Connec tivity co sts increase d by 15.4 million eur os in 2021 to 98.4 million eur os. Thi s is the re sult of the increase in wholesale access fees related to the co nvergen t Love offer and the continu ous grow th of our cu stomer base. Impairment loss on trade and other receivables, including contract as sets The co s t s relate d to bad de bts amo unt to 8.7 million euro s in 2021 c ompare d to 6.6 million eur os in 2020 , and wer e mainly impacte d by the i n troductio n of the s tatistical method in Orange Lux e mbourg on the re vised age i n g custom er balance a s a resu lt of the i mplementa tion of a new billin g system ( see als o Note 2 – Sales, trade rec eivable s , other curre nt and non-current a ssets). Prepaid expenses in thousand EUR 31.12.2021 31.12.2020 Prepaid supplies and services 3 513 5 434 Prepaid spectrum fees 1 462 1 375 Total P r ep ai d expenses 4 975 6 809 The pre paid su p p lies and s er vices d ecrease d by 1.8 milli on euros c ompared to 2020 m ainly re l at ed to 5G payments at Orange Luxemb ourg. Inventories in thousand EUR 31.12.2021 31.12.2020 Gross inventories 25 676 28 679 Depreciation - 1 652 - 1 994 Total Inventories 24 024 26 685 Inventories - Cost recognised as an expense during the period - 182 856 - 166 094 The decr ease in Gross in ventories is mainly ex plained b y the out of stocks fo r some refer ence s re lated t o the worl dwide ele ct r onic compone nt cris i s. The reser ve for o bsolete an d slow-mo ving items ( 1.7 million e uros) sl ightly decrea sed in 20 21 co mpared to 2020. 60 Annual report 202 1 Trade payables and other current liabilities in thousand EUR 31.12.2021 31.12.2020 Trade payab l es 258 822 293 525 Salaries and termination pay 2 527 3 265 Performance and profit sharing bonus, pensions 9 435 10 549 Social security contributions 6 099 3 212 Holiday pay 15 698 16 353 Other 352 319 Current employee benefits 34 110 33 698 Current restructuring provisions 1 127 1 239 Other current liabilities 7 082 3 806 Current tax payables 10 653 4 790 Deferred income 191 1 570 Trade payables are non-intere st beari ng and are gener ally settle d on 30 to 60 - d ay term s. The tra d e payab l e s decrea s e d by 37.7 million e uros co mpared to 2 020, mai nly rela t e d to low er outstan di n g paya bles at year end for a number of supplier s due to lat e paymen t runs. Curren t employee benefit s in crease d by 0.4 million eu ros in 20 21 a nd is ma inly due to t h e timing of payme nt of so cial secur ity (1. 4 million e uros) and the recla ssification of withhol di n g tax r eceivable (1 .1 million e uros), off set by lower provision s for holida y pay (0.6 mil lion euro s ), profit s haring bonu s (0.6 m illion eur os ) and salar ies and ter mination pay ( 0.7 million euros). Total a mount of trade pa yables in th e reverse fac toring programme with BN P Pariba s a mounte d to 26.9 million eur os as at 31 December 2021 c ompared to 17.1 m illion eur os as at 31 Decem ber 2020. R everse factoring i s when a financ ial i nstitutio n (BNP Pariba s – factoring for Ora ng e Belgiu m S.A.) i n terpos es itself bet ween Ora nge Belg ium and i ts suppliers a nd co mmits to pay the compan y’s invo i ce s to the s uppliers at an accel erated r ate in excha nge for a discount. This is a l ower - cost form of financi ng that accelera t e s accoun ts rece i v able recei pts for su ppliers, w hile increas ing the pa yment t er ms for Oran ge Bel gium S.A. As a c onsequence of the la w of 18 D ecember 2 015, mi nimum re turns are g uarantee d by the em ployer a s follow s: for the contributi ons paid as from 1 Jan uary 20 16, a new variable m inimum ret urn ba s e d on OL O rates, w i th a mini mum of 1.75% a nd a maxi mum of 3. 75%. In view of t he low rate s of the O LO in the l ast years, the return h as been initially s et to 1.75%; for the contributi ons paid un til end Dece mber 2 015, the p rev iously a pplicable legal retur ns (3.25% and 3.75% r espec tively on the em ployer an d employee contribu tions) co ntinue to a pply until ret irement date of the participa nts. In view of the min imum re turns guarante es, those plans qu alify as D efined Ben efit plan s . In order to make s ure tha t the define d contri b u tion pens i o n plan in f orce guar antees t he partici p an ts the m inimum re turn req u ired by law at the dat e of depart ure, Oran ge Belgiu m orde red a com pl e te actuarial c omputat ion under t he Proje cted Uni t Cre dit (PU C) meth od . The actu ary perfor med pro j ec tions acc ording t o a pre-define d metho dology and with cer t a in assum ptions. Thi s report indicate s that the acc umulated re s er v e s are suffic ient to co ver any def icit and thi s for all scenarios. A s a consequ ence, a s o f 31 December 2021, no provi sion has b een recogn ised. A s Orange Be lgium S.A. has n o uncon d i tional ri ght to a refun d or a red uction in future ca sh c ontribution s no asse t h as been rec ognise d either. 61 Annual report 2021 Please fi nd belo w a reconci liation of the openin g to th e closing balance o f the ne t defined be nefit asse t for Oran ge Belgiu m S.A .: Movem ent in n et defined b enefit (ass et) liabil ity in thousand EUR Defined benefit obligation Fair value of plan assets Effect of asset ceiling Net defined (asset) liability Balance at 1 January 2021 174 024 - 176 713 - 2 689 0 Included in profit or loss Current service cost 1 189 Past Service credit Interest cost (income) 1 555 - 1 604 Total Included in OCI Actuarial loss (gain) Return on plan assets excluding interest income 7 111 Effect of chan ges in finan cia l assumptions and experience adjustments - 8 409 Total Other Contributions paid by the employer 4 647 - 4 647 Benefits paid - 2 587 2 693 Total Balance at 31 December 2021 170 419 - 173 160 - 2 741 0 in thousand EUR Defined benefit obligation Fair value of plan assets Effect of asset ceiling Net defined (asset) liability Balance at 1 January 2020 169 081 - 172 548 - 3 467 0 Included in profit or loss Current service cost 964 Past Service credit Interest cost (income) 1 681 - 1 744 Total Included in OCI Actuarial loss (gain) Return on plan assets excluding interest income - 2 194 Effect of chan ges in finan cia l assumptions and experience adjustments 1 954 Total Other Contributions paid by the employer 4 748 - 4 748 Benefits paid - 4 404 4 521 Total Balance at 31 December 2020 174 024 - 176 713 - 2 689 0 The con t r ibution s paid dur ing 2021 f or those p lans a mounted to 3.6 mil l i on euros p a id by the e mplo yer and 1 .0 million e uros p a id by the e mployee s. The plan assets a s a t 31 De cember 202 1 consis ted of 137.3 million euro s individ ual insu rance reserv es, which benef i t from a we ighted a verage guaran teed in terest r ate of 3.4 2% and 5. 0 million e uros re s er ves in c ollective fin ancing fun d s. The curr ent restr ucturing pr ovisions re mained stable at 1 .1 million e uros in 202 1. The chan ge in o t her curren t liabilitie s is mainl y due to t he increase i n “other account s payable” : 1.6 millio n euros mainly r e lated to higher outstandin g Brand fee s and 1.7 million eur os rela ted to a s ubsidy recei ved fro m BOSA. The cur rent tax p ayables are r elate d t o the tax calculati on of the curr ent year and increa sed in 202 1 (see a lso Note 6 – Operat i o nal taxes and levie s ). 62 Annual report 202 1 Labour costs (excludi ng term i nation bene fits) Labour costs incr eased by 1.1% to 14 8.6 mil l i on euros i n 2 021, com pared t o 146.9 mi l lion eur os a year a go. Th is slight in crea s e is in line with the inf lation rate ( 2. 44 %) a nd lowere d by a slowdown i n recruitme nt. Indirect c o sts in thousand EUR 31.12.2021 31.12.2020 Commercial expenses - 33 789 - 42 867 Other IT and network expenses - 97 359 - 95 337 Property expenses - 8 508 - 14 493 General expenses - 63 587 - 61 523 Other indirect income 28 848 26 393 Other indirect costs - 60 177 - 52 882 Depreciation of right- of - u s e of leased a ssets - 54 085 - 52 502 Total indirect cos ts - 288 656 - 293 211 of which operational taxes and fees - 25 783 - 17 028 The ind irect cos ts decrease d 1.6% y ear- on -ye ar to 288.7 million eur os in 20 21 com p ar ed to 293 .2 million euros in 2 020. The co mmercial ex pense s decrease d by 9.1 million euro s in 2021 due to a rec lassifica tion of telesale s costs t o CRM cos ts for 2.6 million e uros (inc l u ded in gen eral expe nses) com bined with fewer me dia cam paigns. Other I T and ne twork expe ns e s increa sed by 2. 1% y ear- on - y e ar, mai nly due to h igher ma intenance costs in I T and more network costs (lea sed lines). Propert y ex pen ses decrea sed 41.3% year- on -year and are mainly rel ated to l ower expen ses for network sites (related to M w i ngz). For the financial year 2021, the deprec iation o f right- of -use of le as e d asse ts amoun ted up to 54 .1 mil l i on euro, mainly re l a ted to the reorg anisatio n of netw ork sites an d the rela t e d contrac ts. Mainly d ue to high er su b co ntractin g services (re lated to CRM-activi ti e s), the to tal general expense s increas ed by 2.1 million eur os compar ed to 2020 . Other in direct inc ome increa sed by 2 . 5 million eur os year- on -year, mainly due to more re - i nvoicing o f operationa l and sta ff costs from M wingz. Change s in other i ndirect c osts can mainly be ex p lain ed by the Br and an d C orpora t e fees to Orange Gr oup an d by the reasse ssment o f the prov i s ion for p ylon taxes, u sing best es timate ass umptions b a sed on the evolu tion of t he re gional tax framew ork, of the differen t c ourt ca s e s and o f the ne w tax bills re ceived b y Orange Be lgium S.A. Other restructuring costs In 2021 Orange Be lgium b ooked red undancy co sts fo r 4.0 mil l i on euros. No costs relate d to acqu isition & i ntegratio n were recorded in 2021. In 2020 Orange Be lgium b ooked red undancy co sts fo r 4.6 mil l i on euros. Acquisiti on & integra tion cos ts amoun ted to 1.1 million euros in 2 020. 63 Annual report 2021 Note 4: Goodwill Goodwill in thousand EUR 31.12.2021 31.12.2020 Acquisition Value Accumulated impairment losses Net carrying amount Acquisition Value Accumulated impairment losses Net carrying amount Orange Communications Luxembourg S.A. 68 729 - 17 865 50 864 68 729 - 17 865 50 864 Others goodwill 53 547 - 14 937 38 610 53 547 0 53 547 Total good will 122 276 - 32 802 89 474 122 276 - 17 865 104 411 Orange Communic at i o n s L ux embour g S.A. The acq uisition of Orange Communica tions Luxem bourg S .A. was complete d in two p hases. 90% of the shares were a cquire d on 2 July 200 7. The remaining 10% wer e acquire d on 12 November 2 008. The r eporte d goodwi l l is fully all ocated to the seg ment “Luxe mbourg”. Impair ment test o n this go odwill is per f ormed at l e ast at t he end of ea ch financ ial year to a sses s whether i ts carrying a mount d oe s or doe s not exceed its rec ov er able a mount. The key operating assump tions used to deter mine the value in u se are co mmon acr oss the Gr oup’s bu siness s eg ments. Th ese assum ptions incl ude: key reven ue assu mptions, which reflec t market level, pen etration r ate of the offering s and marke t share, positioning of the compet ition’s off erings and their p ot e ntial im p ac t on mark et price l e vels an d their tran sposition t o the G r oup’s of f erings bases, regulator y authori ty decisio ns on pric ing of ser vices to cu stomer s a nd on acce ss and pr icing of inter - operator s er v ice s, technolo gy migra tion of ne tworks, c ompetitio n author ities’ deci sions in term s of conce ntration or regu l a tion o f ad jacent s ectors such a s cable; key co st assump tions, on th e level of marketing expe ns e s require d to rene w product lines and keep up with com petition, the ability t o adjust c osts to po tential chan ges in re venues or the effec ts of nat ural attrition and commi t te d emplo y ee depar t ure plans; key as s u mption s on the le vel of cap it a l expend iture, which may be aff ected b y the roll-out o f new tec hnologie s , by deci sions of regulator y authori ties relat ing to licence s an d spectru m allocati on, mobile network c overage , shar ing of net wo rk eleme nts or obligati ons to ope n up net works to c ompetit ors. For Oran ge Com municat i o ns Luxem bourg S. A. cash flo ws have b een estima ted on a five - y ear busine ss plan (20 22 to 2026) approve d by the St ra tegic C ommittee. The mana gement of Orange C ommunicat ions Lux embour g foresee s a progre ssive increa se of adju sted EBITD A over th e perio d as the resu lt of (i) a continuou s and s u stained t op line gr owth com ing bot h from an i ncr ea se in marke t size and mark et shar e, and (i i) the conti nuation o f its e n hance d t ra nsforma tion pr o gra mme with a tigh t control o f operatin g expense s . More prec isely, t he manage ment am bition s a turnaro und over th is 5-year peri od with a 3. 90% (co mpared t o 6.23% las t year) and 6.98 % (compare d to 14.87 % last year) com p o unded a nnual growth ra te (CA G R ) of reven ues and adjusted EBI TDA respec tively, while capital ex p en ses are exp ected to d ecr ease by 0. 48 % (c ompare d to 0.67% last year) . Consid ering a per petuity gro wth rate of 1.00% (identi cal to 2020) a nd a WACC of 6.25% (co mpared to 6.50% last year), t hose assum ptions wou ld result in a positi ve amoun t . Sensitivity of recoverable amounts A sen s i tivity ana lysis on tho se parame ters wa s perfor med, usin g a grow th r ate var ying from 0% to 2 % and a disco unt rate varyi ng from 5. 25% to 7.25 %. Becau se of the corr elation between o perating cash flow and inve stment ca pacity, se nsitivity of n et ca s h f low is used. Ca sh flow for the ter minal year r epresen ti n g a signi ficant por tion of the recovera ble amo unt, a cha nge of p lu s or minu s 10% of th is cash flow is presen t e d in case sensitiv ity. 64 Annual report 202 1 31 Decem ber 202 1: Headro om com p ar ed to th e carrying value tes ted : 12 1.9 million e uros Effect on the hea droom a s a result of a varia t i on of: ▪ 10% (in crease/de crease) i n ca sh flow of termina l year : +/ - 15.1 million eur o s ▪ 1% increa se in gr owth rate to perpet uity: + 37.3 mil lion euros ▪ 1% decrea se in gr owth rate to perpet uity: - 25.3 million euro s ▪ 1% increa se in di scount ra te: - 30.5 million euro s ▪ 1% decrea se in d iscount ra te: + 44.8 mi llion euro s Other goodwill This corre sponds to: Mobistar Affiliate S.A. The acq uisition of M obis t ar Affiliate S .A. was complet ed in two p hases: ini tial purcha se of 20% shares i n April 1999 and purc hase of the r emaining 80% share s in Ma y 2 001. The go odwill res ulting fr om the ac quisition a mounts t o 10.6 m illion eur os. The rep orted goo dwill is fu lly alloca t e d to the segmen t “Belgiu m” (see Seg ment infor mation). Mobistar Enterprise Services S.A. The g oodwill of Mo bistar Ent erprise Ser vices S. A. re sulting on the acqu isition o n 1 April 20 10 and a djusted on Mar ch 31 2 011 amoun ts to 793 t housan d eur os. The rep orted goo dwill is fu lly alloca t e d to the segmen t “Belgiu m” (see Seg ment in fo r mation). A&S Partners S.A. A&S Part ners S.A. was acq uired as of 30 Sep tember 2017 by Orange B elgium S.A f or a tota l consider ation of 5.0 mill i on euros. The pur chase con cerned 100 % of the shares. A t otal amoun t of 4.8 m i l lion eur os has bee n allocate d to goo dwill for t he segment “Belgiu m” (see Seg ment infor mation) . Upsize N.V. Upsize N.V. is a holding co mpany tha t was ac q u ired on 31 July 2 019. Up s i ze N.V. inc ludes B KM N.V. an d CC@PS B V and i s a nationw ide ICT in tegrator an d a pione er in clou d UCC s ol u tions. It ha s a soli d t r ack-recor d i n the SME an d CMA markets in Belgiu m and work s in four ar eas of ex pertise: Unified Commun i ca tions & Co llabora tion (UCC) solution s ; I T & secur ity solu t i ons ; Docume nt & Visu al solution s; and Co nnectivi ty solutio ns. The purchase co ncerned 10 0% of t he 60,000 shares of Upsize N.V . An amoun t of 51.6 million eur os had be en alloca t e d prelimi nary to go odwill for the segme nt “Bel gi u m” sub ject to f inalisation of the purchas e price al location wh ich was n ot yet fin alised as at 31 Dec ember 20 19. Orange B elgium a ccounte d f or the Up size N.V. ac quisition using th e acqui sition met hod, whereb y the to tal purcha se price is allocate d to the ac quired ide ntifiab l e ne t asse ts base d on asse ssments of their res pective fa ir value s , an d the exce ss of the purchas e price o v er the fa i r v alues of these iden tifiable ne t assets was alloca ted to g oodwill. The purcha se price all ocation wa s not yet fina l i sed as at 31 Dece mber 2019 as Upsi ze’s inta ngible as s e ts had b ee n mea sured prov isionally i n the IFR S openin g balanc e, pendin g confir mation of an independe nt valuat i o n. The as s e ssmen t of the fa ir v a lue of the intang ible asse ts acquire d by Oran ge Belgiu m as par t o f Orange B elgium’ s acquis i t ion of Up s i ze N.V. (In cluding i t s subsid i ar i e s BKM N .V. and C C@PS BV) on 31 J uly 2019 (Ac quisitio n Date) has be en final ised and rec orded in the bo oks since 30 June 20 20. The reco gnition of the fair value of the intangi bl e assets (19. 0 milli on euros) fully related to the acq uired cu stomer re lati on ships (18.0 m illion eur os ) and the V oxx-Tele po software platfor m ( 1. 0 million e uros). To gether w ith the de ferred tax im p a ct of t he above mention ed adjus tment (4.7 million e uros), goo dwill wa s reduced by 14.3 m illion eur os. The re cognition of the fa ir v a lue of th e intangi ble assets of Upsi z e N .V. re s u lt e d in add itional amortization ex pense of 0.6 mill i o n euros rec ognise d for the per iod bet ween the ac quisition da te, 31 Jul y 2019, an d 31 Dece mber 2019, for which the c omparati v e financia l informat ion has be en restat ed. 65 Annual report 2021 A su mm ar y of th e purchase price an d the iden tifiable assets acquired and liabil i t ies assu med for the Upsize N.V. acq uisition a t the acquisit ion date i s presente d below: in thousand EUR IFRS Opening Balance Fair value adjustments Fair value of identifiable net assets Assets Intangible assets 749 19 01 7 19 76 6 Property, plant and Equipment 508 508 Other financial assets 59 59 Rights- of -use l e ased assets 5 072 5 072 Inventories 4 938 4 938 Trade receivables 6 299 6 299 Other receivables 590 590 Cash and cash equivalents 1 238 1 238 Total Assets acquired 19 45 3 19 01 7 38 47 0 Liabilities Deferred taxes - 4 754 - 4 754 Provisions - 132 - 132 Financial liabilities - 16 495 - 16 495 Lease liabilities - 4 680 - 4 680 Other payables - 4 068 - 4.068 Trade payables - 5 568 - 5 568 Current employee benefits - 3 693 - 3 693 Total liab i lities assumed - 34 6 3 6 - 4 754 - 39 390 Fair value of identifiable net assets acquired - 15 1 8 3 14 26 3 - 920 Total consideration transferred 36 45 0 Final goodwill arising from the acquisition 37 37 0 The g oodwill is a ttributa b le mainly to the synergie s expecte d to be ach ieved fr om integra ting the c ompany i nto the Gro up’s existin g busine s s . As a res ult, the f i na l goodw ill arising fr om the ac q u isition i s fully all ocated to t h e segme nt “Bel gium” ( see Segme nt informa tion). With regar d to th e total cons ideration t ran sferred for the ac quisition of Upsize N .V., the followin g should be note d : Orange B elgium S.A. has a greed to pa y the selling sh areholders i n two y ear s ’ time an a dditional con sideratio n of 10.0 million eur os which i s linked t o targets se t in relatio n to the ac quiree’s re venue gro wth, EB ITDA mar gin as we ll as a max imum c hurn perc entage in key a nd opera t i onal peo ple working for the ac quiree. In this respe ct, Orange Belgium S.A. inc luded 1,35 0 thousan d euros a s continge nt con s i deration w hich repre sented its f air value at the date o f acqui s i tion. This a mount ha s been s ettled in cas h during the acco unting ye ar 2020. No further considera tions have been or are e xpecte d to be pai d to the selling s ha reholders. Since U psize N.V. is con s i d er ed to be g enerating largely i ndepen d en t cash i nflows and the integra tion in Or ange Bel gium S.A. is not ful l y complete d , impairme nt test o n this goo dwill is perf ormed at least at the end of ea ch financ ial year t o assess wh ether it s carrying amount d oes or do e s not excee d it s recoverab le amoun t . The key operating assump tions used to deter mine the value in u se are co mmon acr oss the Gr oup’s bu siness s eg ments. Th ese assum ptions incl ude: key reven ue assu mptions, which reflec t market level, pen etration r ate of the offeri n gs and m ar ket sh are, position ing of th e compet ition’s off erings and their p ot e ntial im p ac t on mark et price l e vels an d their tran sposition t o the Gr oup’s off erings ba ses; key co st assump tions, on th e level of marketing expe ns e s require d to rene w product l ine s and kee p up with co mpetition , the ability t o adjust c osts to po tential chan ges in re venues or the effec ts of nat ural attrition and co mmitted e mployee de parture plans; key as s u mption s on the le vel of cap it a l expend iture, which may be aff ected b y the ro ll -o ut of new technolo gies. 66 Annual report 202 1 The cas h flows ha ve been e stimated on a five-ye ar busine ss plan (20 22 to 20 26) appr oved by the Strateg ic Commi tt e e. The manage ment of U psize N.V . foresee s a progre ssive incr ease of a d j usted EBI TDA over the perio d a s the resul t o f (i) a con tinuous and sus t a ined t op line grow th coming both fro m an in crease in m arket s i ze and mark et share, and (ii) th e continuat ion of its enhance d transf ormation programme with a t ig h t contro l o f operat i n g expense s. More p r ecisely, the mana ge men t a mbitions a turnarou nd over this 5-year p eriod wi th a compoun ded annua l grow t h ra te (CA GR) of re v en ues of 6 .0% for BKM and 1.5% for CCAPS a nd an EB ITDA gr owth rate i n the ter minal val ue of 6.5% for BKM and 13.6 % for CCAP S, wh ile capita l ex penses are expecte d to amou nt to 0.5 million eur os each year for BKM . Consid ering a per petuity gro wth rate of 1.5% a nd a WAC C of 7.2 % those as sumption s resulted in an i mpairment of 14.9 million euros. The 2- y ear health cr isis ha d a major i mpact on B KM opera t i ons. It has s e verel y slowed down the s al e and d eploymen t of projec ts. The expe cted gro wth has n ot been ach ieved due the im pact by ma ndatory “w ork fro m home” poli c ies p ostponing office ICT investme nt. De s p i t e close co st moni to r ing, mar gins h ave been also set un d er pressure . The ma nagemen t p r eviou sly targete d a 2024 12% EBITDA on revenue , now l owered to 6.5% affec ting the terminal value with impairm ent con s e quence s . Sensitivity of recoverable amounts A sen s i tivity ana lysis on tho se parame ters wa s p er forme d, using a growth ra te varying from 0.5 % to 2.5 % and a discount ra t e varying from 6.2% to 8.2 %. Becau se of the corr elation between o perating cash flow and inve stment ca pacity, se nsitivity of n et ca s h flow is u sed. Cas h fl ow for the ter minal year re presen ti n g a signi ficant por tion of the recovera ble amo unt, a cha nge of p lu s or minu s 10% of th is cash flo w is presen t e d in case sensitiv ity. 31 Decem ber 202 1: Headro om com p ar ed to th e carrying value tes ted: 0 milli on euros ( t he impair ment has re sulted in th e carrying a mount e qualing the reco verable a mount a s ca lculate d ) Effect on the hea droom a s a result of a varia t i on of: ▪ 10% (in crease/de crease) i n ca sh flow of termina l year : +/ - 3.1 million e uros ▪ 1% increa se in gr owth rate to perpetui ty: + 6.9 millio n euros ▪ 1% decrea se in gr owth rate to per p et uity: - 4.8 million euro s ▪ 1% increa se in di scount ra te: - 5.8 million euro s ▪ 1% decrea se in d iscount ra te: + 8.3 m i llion euro s Annual i mp airmen t te st segm en t “ Belgiu m” Impair ment test o n the go odwill alloc ated to t he segment “B elgium” is perf ormed at lea st at the e nd of eac h financ ial year to assess w hether i t s carryin g amoun t does not exc eed its rec overab l e a mount. E stimating the fair v alue less co sts to sel l will take into acco unt Oran ge Belgiu m’s share p r ice as quoted o n the stock exchan ge. Concerni ng the goodwill of the segme nt “Bel gi u m”, when c onsider ing the r el a tionshi p between the mark et capitaliza tion and t he net asse ts of the Group as a t 31 Decem ber 202 1, the marke t capitali zation wa s higher th an the ne t book va lue. For the purpo se of this im pai r ment t e st, we only consi dered the net assets o f O r ange Bel gium an d the Bel gian subs idiaries an d corrected the market capital iz a tion of Orange Be lgium S.A. with the ca lcula t e d VIU value of Orang e Comm unication s Luxembour g S.A. 67 Annual report 2021 Note 5: O th er int angible assets and property, plant and equipment Depreciati on a nd amorti zat ion The de p rec iation and amor tization char ge (inc luding im pai r ment of fixed assets) f or the year was 280.8 million eur os, up by 29. 9 million e uros co mpared to 2 020. The level of h istorica l deprecia tions is decrea sing but is more than compensa ted by the accelera t e d deprec iation on disman tling site s . Accelera t ed depreci at i o n s of fixed asse ts The chan ges in us eful life on intangib le asse t s and pr operty, p l an t and equi pment rec ognised during the year were d e termine d on an asset by asse t basis in order to c onsider tec hnology and IT e volution. Obsolescence , dis mantling or losse s a re also considere d in this ex ercise. During 2 021, the c hange in useful life a nd/or rec ognised impairmen t charge s on proper ty, plan t and equi pment tota ls 5 3.4 million euros (c ompared with 17.3 million eur os in 20 20) and shown as ex pense o n the line “De precia tion and a mortization” a nd “impairm ent of fixe d asse ts ” in the st a tement of comprehe nsive inc ome. Impac t can be s p l i t as such: Impair ments on ca pitalized pr ojects un der con structio n (m ater ial never deploye d on site s , I T projec t never p ut in service, site civil w ork s never finally de ployed ) for an amoun t o f 1.6 m illion eur os; Network and other equipme nt for 4.9 million euro s; and Dismant ling sites for an amou nt of 46.9 million eur os : as a res ult of the RAN shar i n g agree ment bet ween Orange Belgium , Mwing z a nd Pr oximus, wh i c h con t ai ns a plan f or the dis mantling of 1,536 of O r ange Bel gium’ s sites till the end o f 2024, an accelera t e d deprec iation of 39.4 million e uros wa s booke d i n 2021 t o r eflect the early dec ommissi oning and re placemen t of these s it e s. Further more, a ll Huawei R AN ma terial will be replace d by Noki a, result i n g in an acc elerate d deprec i at ion of 7.5 million e uros. Other intangibl e a sse ts in thousand EUR 31.12.2021 31.12.2020 Net boo k value of o ther intang ible assets in t he o pening balan ce 249 978 276 882 Acquisiti on s of other intangible assets 79 337 56 269 Additions through business combinations 0 0 Depreciation and amortization - 81 682 - 83 173 Reclassifications and other items 0 0 Net boo k value of o ther intang ible assets in t he clo sing balan ce 247 439 249 978 Acquis ition of ot her intan gible asse ts are mai nly t e lecommu nication l ic ences (21. 8 million eur os) , so ftware ( 53.3 million euros) an d interna l generate d software developme nt cos ts (4.2 million euro s). in thousand EUR 31.12.2021 Gross value Accumulated depreciation and amortization Accumulated impairment Net boo k value Telecommunication licences 151 967 - 64 631 0 87 336 Brand 4 172 0 - 4 172 0 Subscriber bases 29 139 - 15 520 0 13 619 Software 608 154 - 488 421 0 119 733 Other intangible assets 150 883 - 124 131 0 26 752 Total 944 314 - 692 703 - 4 172 247 439 in thousand EUR 31.12.2020 Gross value Accumulated depreciation and amortization Accumulated impairment Net boo k value Telecommunication licences 366 261 - 271 051 0 95 210 Brand 4 172 0 - 4 172 0 Subscriber bases 29 139 - 13 724 0 15 415 Software 556 415 - 447 187 0 109 229 Other intangible assets 176 078 - 145 953 0 30 125 Total 1 132 065 - 877 915 - 4 172 249 978 68 Annual report 202 1 Telecommunication licences Type of Licence Acquisition cost Net boo k value end 2021 Net boo k value en d 2020 Useful life in months Remaining months Start depreciation period UMTS 3G 149 040 0 2 185 191 0 April 2005 4G 20 020 9 844 11 668 End Jun e 2027 65 June 2016 800 M Hz 120 000 72 092 78 149 238 143 February 2014 2G renewal 5 years 3 months 76 143 0 2 211 63 0 December 2015 License 3G 1 st Renewal 6 month s 3 700 0 0 6 0 March 2021 License 3G 2 nd Renewal 6 months 3 700 1 510 0 6 2 September 2021 License 2G 1 st Renewal 6 mon ths 7 189 0 0 6 0 March 2021 License 2G 2 nd Renewal 6 months 7 189 2 935 0 6 2 September 2021 BKM PPA - u nused perpetual licences Voxx - Telep o 1 058 955 997 300 271 August 2019 Total 388 039 87 336 95 210 The two extension s of the l i cen ces for a short p eriod of 6 month s ar e a result o f a gover nment d eci sion wi th the inten tion of bridging the peri od until th e final s pect r um auc tion wil l take place , after w hi c h the li cences w i l l be awar d e d for a longer period. T he first exte nsion of t h e 2G and 3G licens es for a peri od of 6 months was granted from March till Se pt e mber 2021 an d were ful ly deprec iated over this 6-mon th period. A second 6 months ex tensi on a s of Se ptember 2021 unti l March 20 22 was grante d and is only par tially depr eciated as p er end o f 2021. Internal ly genera ted intangi b l e assets include s oftwar e d e velopme nt costs generated by the Gr oup staf f. Other int angible a ssets ma inly relate to software acqu ired or de v e loped b y external supplier s . They are ma inly use d for the network applicati ons or f or admini s tra tive purpo ses. The usefu l lives of intang i b l e asset s a pplied in 2 021 re main co mparable t o those u sed in 2020. Investm ents rela t e d to orig inal software acqu isition m ay be fully a mortized as well but upgrad es of the se software, still in u se, are not ful l y amortiz e d. The same applies to the ori ginal site’ s research costs. Intang i b l e asset s are not s u bject to title restr i ct ion or p l edges as security f or liabilit ies. Property, plant and equi pme nt in thousand EUR 31.12.2021 31.12.2020 Net boo k value of property, plant and equip ment in the op eni ng balance 707 591 747 577 Acquisiti on s of property, plant and equipment 146 544 121 465 Additions through business combinations 0 0 Disposals and retirements - 20 0 Depreciation and amortization - 197 525 - 167 067 Impairme n t - 1 444 - 689 Reclassifications and other items 7 624 6 305 Net boo k value of p r o p erty, plant and eq uipment in the clo sin g balance 662 770 707 591 The am ount of recl assifica tions and o ther ite ms for the financ ial year 2 021 is mainly rela ted to the i ncrease in the di s m antl in g provisio n as at 31 D ecember 2021 ma inly as a re sult of the co mbine d e ffect of th e increase d dismant li n g cost per site an d the increase of num b er of sites partially o ffset by the incr ease of the discount ra te. Refer also to the key assumpt ions used in the section ‘Provisi on for di sm a ntling’. in thousand EUR 31.12.2021 Gross value Accumulated depreciation and amortization Net boo k value Land and buildings 103 937 - 67 723 36 214 Networks and terminals 2 085 284 -1 485 243 600 041 IT equipment 207 440 - 187 373 20 067 Other property, plant and equipment 33 324 - 26 876 6 448 Total 2 429 985 -1 767 215 662 770 69 Annual report 2021 in thousand EUR 31.12.2020 Gross value Accumulated depreciation and amortization Net boo k value Land and buildings 95 741 - 62 192 33 549 Networks and terminals 1 977 165 -1 321 546 655 619 IT equipment 189 685 - 176 760 12 925 Other property, plant and equipment 32 868 - 27 370 5 498 Total 2 295 459 -1 587 868 707 591 Provision for dismantlin g in thousand EUR 31.12.2021 31.12.2020 Provisions for dismantling in the opening balance 82 592 77 481 Discounting with impact on income statement 192 - 83 Utilizations without impact on income statement - 688 - 883 Changes in provision with impact on assets 7 625 6 077 Provisions for dismantling in the closing balance 89 721 82 592 o/w non-current provisions 80 656 77 094 o/w current provisions 9 065 5 498 The key assump tions used to mea s ure the network sites di smantling provision are as fol lows: 31.12.2021 31.12.2020 Number of network sites, Orange Communications Luxembourg S.A. incl. (in units) 4 628 4 591 Average dismantling cost per network site 14.9 13.1 Inflation rate 2.0 % 2.0 % Discount rate 0.253 % -0.137 % Althou gh size an d installat ion on s i te may sligh tly vary from site to site, the provision is calc ul a ted on a n average dismantling cost based o n the actual cost s i ncurred in the past for simi l ar activitie s. For 202 1 those c osts were e stima t e d at 14,9 36 euros per site (2020 t he average c ost was 13,110 eur os). For bigger sites, like M SC’s (Mo bile Swi tching Cen tre), the pr ovision is calcula ted on the sur face area of the si t es rented an d an avera ge di smantling c ost per m² based on past s i milar exper ience. Althou gh it is no t f e asible t o estima te the timin g of the ca sh outflo ws, all ne twork site s are assu m e d to be dismantle d in the f u ture. Since 2 011, the d ura tion o f the renta l c ontrac ts is cappe d a t 15 year s. The ap proach wa s mainta ined to ev aluate the provi s i on in 2021. The dis mantling pr ovision i ncrease d by 7.1 million euros . This is a c ombined effect o f higher a v era ge dis mantling c ost per site (from 1 3,110 to 14, 936 eur os per si te) leading t o an increase of the liab ility of 9.5 m illion euro s; more s ites net i m p ac t (add i t ions for 1.2 mil lion euros offset b y dismant l i ng costs f or 0.7 million euro s) ; an d ex tension o f the co ntract for the MSC No ssege m site (increase of 0.4 m illion eur os); partly of f set by a higher disc ount rate r esulting in a decrea se of the provision of - 3. 4 milli on e uros. Network sites di smantling provision i s adjus t e d when there is s uf ficient o bjective e vidence that future cha nge in technol ogy or in legislat ion will ha ve an im p ac t on the amount o f the p rovision. Besides network, the disma ntling pro vision als o includes 6. 4 million e uros of accr uals relate d to b ui ldings, M obile Switchi ng Centres (M SC’s) a nd Point - of - Pre s enc e (POP ’s ). Current fixe d a ss ets paya bl e Curren t fixed as sets payab le are non- interest be aring tha t are general ly settled o n 30 to 90 days ter m and a re related t o Proper ty , Plant an d Equipme nt inves tments an d increase d compare d to la s t year (71.7 million eur os in 20 21, com pared to 57. 0 milli on eur os a year ag o) exp l ai ned by an increase o f outstan ding i nvoices at ye ar end. 70 Annual report 202 1 Note 6: Taxes and le vies Income tax i n pro fi t and loss statem en t in thousand EUR 31.12.2021 31.12.2020 Current income tax - 15 114 - 15 373 Deferred tax expense arising to the origination and reversal of te mp orary differences 2 340 5 285 Total t ax exp ens es - 12 774 - 10 089 The de ferred tax ex p en se arising to the ori gination a nd rever sal of tem porary d i f ferences amountin g to 2.3 million e uro s con sists of temporar y difference s on fixed a ssets (1.4 million eur o s) , tax losses carried fo r ward (-1.3 million eur os), and other temp orary difference s (2.2 mi llion euro s, mainl y consisting of disman tling, other lease liab ilities an d revenue fr om c ontracts with cu stomers). Relationship between tax expense and account i ng prof i t in thousand EUR 31.12.2021 31.12.2020 Earnings before income tax 52 497 64 069 Group income tax rate 25.00 25.00 Theoretical income tax - 13 124 - 16 017 Effect of difference between local standard rate and Group rate () 55 37 Effect of permanent differences and other reconciling items () - 6 504 2 711 Effect of tax (without base) affecting current tax ( ) 3 913 417 Effect of tax (without base) affecting deferred tax 2 887 2 763 Income tax - 12 774 - 10 089 Effective tax rate 24.3% 15.7% * local rate (Orange Communications Luxembourg S.A.= 27.19%) and G roup rate (2 5.00%) ** consisting of non-deductible expenses, effect of a p pli c ation of patent income deduction and permanent differences *** adjustment on prior years Tax ex p en ses am ounted t o 12.8 m i l lion euros i n 2021 co mpare d t o 10.1 m i l lion euro s in 2020. T he effec tive tax rate c ame out a t 24.3%, which is a n increa s e c ompare d to the ef fective tax ra te of 15. 7% in 20 20. The theor etical am ount o f t ax expen ses decrea sed by 2.9 million euros in 20 21, give n the low er earnin gs before income tax. In 2021, the other n on-deduc t i ble tax ex penses an d the los s e s on inve s t ments had a negative impac t , partly o ffset by per manen t difference s resu l t i n g in a ne t impact of 6.5 m i l lion euros (see ). Per manent differ ences res ult when an item of income a nd/or expense is treate d different ly for bo ok and tax purposes a nd the differe nt treatmen t does n ot re verse in a sub s e quent yea r or result in a basis difference (f or example: disallow ed expen ses, effec t on tax ga in/loss on dispo sal of inves tment s , a sset retire ment obligati on, among st others). T he effec t of perman ent differe nces and o ther reco nciling ite ms equa l to -6.5 mi l l ion euros c onsists o f the imp airment of Upsize N.V. (-5.2 m illion eur o s) , disallo wed expen ses (-2.5 million euro s), Asset Re tirement Obligation ( 2.8 million e uros) and o ther per manent d i fference s (-1.6 milli on euro s ). Effect of tax (w i t hout base) affecting the deferre d tax amounted to 2.9 mill ion euros i n 2021.Th is amoun t main ly includes CIT include d in the ma nual ad justments ( 1.5 million euros) an d the elim ination o f the theore tical inco me tax for Mwingz (1 . 7 m illion euros). A posit iv e impac t on the taxa ble year 2019 wa s recorded in 2020 for an amou nt of 4.6 milli on euros t o re cord tax deduction s for investme nts which were a pp r oved onl y by the Br ussel s tax authori ties in 2 021 (a decrea se of 3. 5 million eur o s compare d to 20 20), partiall y offset b y c orrec t i ons on prior year inc ome tax es (0.7 m illion euros) ( see ). 71 Annual report 2021 Tax position in th e stat e me n t of financial po si tion Movements in current tax balances in thousand EUR 31.12.2021 31.12.2020 Net current tax - opening balance 4 462 1 995 Cash tax payments - 9 508 - 12 604 Current income tax expense 15 114 15 373 Changes in consolidation scope, reclassification and translation a djustments 303 - 303 Net current tax - closing balance 10 371 4 462 Due to the recupera tion o f carried f orward los ses, Ora nge Commun ications Luxemb ourg S.A. h ad no s i gnificant current t ax expense . Cash tax payment s in 2021 include 12. 5 millio n euros of prepay ments for 2 021. Movements in deferred tax balances in thousand EUR 31.12.2021 31.12.2020 Net deferred taxes - opening balance - 5 029 - 9 500 Change in income statement 2 340 5 285 Change in oth er comprehensive income - 45 - 398 Changes in consolidation scope, reclassification and translation adjustments - 25 - 415 Net deferred taxes - closing balance - 2 759 - 5 028 in thousand EUR 31.12.2021 31.12.2020 Assets Liabilities Income statement Assets Liabilities Income statement Fixed assets 0 4 146 1 423 0 5 569 1 302 Tax losses carryforward 5 710 0 - 1 284 6 994 0 2 869 Other temporary differences 87 076 91 398 2 201 86 169 92 623 1 114 Deferred taxes 92 786 95 544 2 340 93 163 98 192 5 285 Netting - 90 986 - 90 986 0 - 90 021 - 90 021 0 Total 1 800 4 558 2 340 3 143 8 171 5 285 Deferre d taxes recor ded on Orange B elgium’s operation s are esse ntially re l at ed to the marke d- to -market value o f the intere st ra te swap co nt r acts, t o the deve lopment c osts for intranet s it e s, to the d i s mantling as sets de preciation an d to the depreciat i o n of SIM cards. The de ferred tax a sset on ca rried for ward tax losses a mounts to 5 .7 million euros an d is main ly related to Orange Communica ti ons Luxemb ourg S.A. (4.6 mi llion euro s) and BKM N .V. (1.1 mill i o n euros). A deferre d tax as s et is only rec ognise d when it is proba b l e that the tax enti t y will ha v e sufficient future taxa ble pr ofits to reco ver them. The rec overabilit y of the de ferred tax ha s b e en assessed based on the bu siness pla ns used f or impairmen t testin g. Operating taxes and levies payables The o p er ating taxe s and lev ies paya bl e s amou nted to 75.5 mi l l ion euro s i n 2021 an d consis t of VAT p ayables (1 0.1 mill i o n euros ); 60.4 m i l lion eur os taxes char ged to pylons an d masts - p l us defaul t i nterests ca lculated a t the legal ra te; an d of 4.9 m illion euros related t o the Se ttlement s with the Wa lloon Re gion. Operating taxes and levies receivables The o p er ating taxe s and lev ies recei vables am ounted to 9.2 millio n euros in 20 21, com pared to 1.4 millio n euro s a year ag o and mainly consist of the recov erable VA T. 72 Annual report 202 1 Note 7: Interests in associates and joint ventures In July 2012, the Gr oup par ticipated in the con stitutio n of IRISnet S.C.R.L. The acti vity of IRI Snet S.C.R. L. starte d on 1 N o vember 2012. T he Grou p o wns 28.16 %of IRIS net S.C.R .L. equity. T he Group is repre sented on the Boar d of Direc tors by 2 o ut of 7 s ea ts. This co mpany i s c onsolida t e d using the equit y method. The net re sult of the year am ounts to 276 thousan d euros, re sulting in a net carr ying amoun t as at 3 1 December 2021 of 5,760 tho usand eur os. Note 8: Financial assets, liabilities and financial result Financi a l re s ul t in thousand EUR 31.12.2021 31.12.2020 Financial Costs - 3 232 - 5 287 Financial Income 0 0 Total Net F inancial Costs - 3 232 - 5 287 Net financ ial re s u lt decreas ed by 2.1 m illion eur os to -3.2 mil lion euro s in 2021 which is mainly exp l a ined b y lower in t er est expense s in rela t i on to the loan with A tlas Ser vices B elgium. Cash a nd cash eq ui va l e n ts, fi nanc i al liabilities in thousand EUR 31.12.2021 31.12.2020 Cash and cash equivalents Cash equivalents - 29 778 - 28 786 Cash - 23 957 - 32 030 Total cash and cash equivalents - 53 735 - 60 816 Financial liabilities Intercompany short-term borrowing - 44 200 423 Third parties short-term borrowing 1 505 1 897 Intercompany long-term borrowing 121 809 3 437 Total borrowings 123 270 205 757 Net debt (Finan cial liab ili ties- Cash and cash equivalents) 69 536 144 941 The ne t financial d e bt at the e nd of 2 021 amou nted to 69.5 million eur os, a decr ease of Orange Be lgium’s n et financial debt positi on by 75.4 million euro s com p ar ed to 144 .9 milli on e uros of net financia l debt a t the end o f Decem b er 2 02 0. Oran ge Belg iu m repaid 20 0 million e uros of the un s ec ured re volving cr edit facility w ith Atlas Ser v ice s Belg i u m t hat expire d on 15 J une 2021 a nd secured a new rev olving cre dit for 120 million eur os, also with Atl as Services Belgiu m. Additio nally, the ca sh and cas h equivale nts decrease d by 7.1 million eur os com pared to 202 0. Orange B elgium S.A. and its parent co mpany, Atlas S ervices Bel gium S.A. signed i n 2015 a R evolving Credit Facil ity Agree ment for a t ot a l facility a mount of 420 mi llion euro s with the final ma t ur ity date set at 15 J une 2021 . Bearin g in mind t he fact that the remai ning per i o d until the maturit y date as a t 3 1 Decem ber 2020 would be less than 12 month s, Orange B elgium S.A. prese nted thi s f inancial l iability ( as per 31 Dec ember 20 20: 200 million eur os) as curre nt (short term borrowin g) in the consolidate d stateme nt of fina ncial pos i t ion. The Gr oup Financ ing & Trea sury tea ms signe d an agreeme nt on 10 March 202 1 to refi nance the ex isting R evolving Credit Fac ility (RCF) b e tween Oran ge Bel gium S.A. an d Atla s Services Be lgium S.A. The am ount of t he new loan is 120 m illion euro s a nd is pre sented a s long ter m, with a maturity of 5 years. The repa yment of the re v o lving cred it facility an d the new revolving cr edit fac ility are presented o n a net ba s i s in the ca sh flo w stateme nt (see 1. 3) under “ Lo ng-term de bt rede mptions an d repaymen ts ” . 73 Annual report 2021 Change s in financ ial liabilit ies whose cash flo ws are d is c losed i n financing activities in the cas h flow s tatement (see 1.3) a re presen t e d below: in thousand EUR Other changes with no impact on cash flows from fin a ncing activities 31.12.2020 Cash Flows Acquisition Foreign exchange movement Other 31.12.2021 Intercompany short-term borrowing 200 423 - 467 0 0 - 200 000 - 44 Intercompany long-term borrowing 3 437 - 2 350 0 0 120 000 121 809 Third party borrowing 1 897 - 392 0 0 0 1 505 Financi a l ri s ks Liquidity risk Orange Belgium’s results a nd outloo k co u ld be aff ec t ed if th e terms of access to funding becomes d ifficult Orange B elgium is finance d through lon g-term cre dit facilit i e s granted by Orange Grou p en tities an d is thus not direct ly expose d to adver se change s in marke t condit ions. Com bined with the credi t facility a greement with Oran ge SA for an amoun t of 50 milli on euros an d the ref i na nced loa n with A t la s Service s B elgium S.A. for a n amoun t of 120 m illion eur os curren t f unding i s ensured un til mid-June 2026. In a dditio n, Orange Be lgium c ould ev oke other s ources o f funding s uch as ba nk loans or bond s should financ ing limitation s be im posed b y t he Orange Group. Interest rate risk Orange Belgium’s b u si ness ac tivities co uld be adversely affected by in t erest r ate fluct uations Althou gh Orange Be lgium’ s long -term credit faci lities b ear intere st at varia ble rates, t he expos ure to intere st rate ri sk is considere d low. Credit rating risk Downgr ades of Or ange Belgi um’s credit rati ng or rati ng outloo k could in creas e its borro wing cos ts and/or li mit its financi ng capacity Orange B elgium is finance d through l ong-term cre dit facilit i e s granted by Orange Gr oup ent ities until m id-2026. The curre nt fundin g agreemen t does no t foresee ra ting-base d funding a djustmen ts. As of 31 D ecember 20 21 the Ne t debt / EB ITDAaL ratio stood at 0.2x. H owever, rat ing downgra des cou ld negati vely impac t the tra ding term s that Orange Be lgium rec eives from its supplier s, thus incre asing the opera tional financ ing need s and overa ll fundin g costs. Counterparty risk on financial transactions The inso lvency or d eterio ration in t he finan cial pos ition of a b ank or ot her instit ution with whic h O r a nge Belgiu m has a financial agreem ent may have a material adverse effect o n the comp any and it s financia l positio n Orange B elgium does not have any d erivative ex posu re with fina ncial ins t i t u tions nor term de posits. In a ddition, t he credit balance s on its bank accoun ts are very limite d g iven that it is operat ing a ca sh pooling structure with aut omatic sweep ing of excess funds to Ora nge S. A. Howe v er , a defau lt of one of its main banking p artners w o uld ha v e a negati ve impact on its ca s h managem ent op er ations. This risk is miti gated by the fact tha t Orange Be lgium’s Treasur y policy fore s e es worki ng with a t least thre e differe nt banking partner s with an inves tment-gra de rating. Credit risk Custom er paym ent defa u lts could adversely affect Orange B elgiu m’s fina n ci al results and liq u idit y posit ion Orange B elgium’ s credit p olicy fore s ee s that a ll customer s who wi sh to trade on cre dit terms ar e subject to cred it verifica t i on procedur es. If the r isk is dee med not accepta bl e , paymen t terms are defined a s prepaymen t or cash on delivery. Orange c onsider s that it ha s limited concentrat ion in cr edit risk wi th respec t to trade rece ivables due to i ts large an d dive r se customer base (r esidential, professi onal an d l arge bu siness cu stomers) o peratin g in num erous indu stries. In a ddition, th e maxim um value o f the count erpart y ri sk on the s e financia l assets i s equal to their reco gnised ne t carrying value. An ana lysis of net trade rece ivables past due is provide d in Note 2. For loan s and o t her r eceiva bles, amoun ts past d ue but not provisione d are not material . Foreign exchange risk Exchang e rate fl uctuatio ns could a dversely affect Orange Belgi um’s fi nancial r esults a n d li quidity po sition Given t he main l y local nature of its business Ora nge Belgium is not exposed to significa nt foreign currency ris k . 74 Annual report 202 1 General risk ma na gem en t fram e wo rk A com p reh ensive, consisten t and inte grated r isk manage ment ap proach i s i n place t o c apitali ze on syner gies betw een Aud i t, Control a nd Risk f unctions at all level s of the or ganisa tion. Thi s a pproach is inten ded to prov ide reasona ble as surance t ha t operat i n g and strat egic targ ets are me t, that curr ent law s and regu lations are comp l ie d with, a nd that the f inancial informat ion is reliable. The m ost import ant comp onents of the risk managem ent frame work are d iscusse d i n detail i n section 2 of the C orporate Governance Statem ent. Interest- be ar i ng loans and borrowings in thousand EUR Nominal amount end 2021 Nominal amount end 2020 Interest rate Maturity 31.12.2021 31.12.2020 Unsecured revolving credit facility agreement with Atlas Services Belgium 120 000 EURIBOR + 0.69 10.03.2026 120 000 Long-term loans 7 738 10 620 1.70% - 5.48% 31.03.2024 - 01.08.2036 1 809 3 437 Total lo ng -term loans and borrowings 121 809 3 437 Unsecured revolving credit facility agreement with Atlas Service Belgium Atlas Services Belgium 37 0 000 EURIBOR + 0.95 15.06.2021 * 200 000 Cash-pool related credit facility with Orange 50 000 EONIA + 0.65 on demand 60 000 EONIA + 0. 17 on demand Uncommitted credit lines with various banks 38 300 determined upon withdrawal on demand 20 900 determined upon withdrawal on demand Short-term loans 3 119 2 700 0.9 5% - 1.64% 18.05.2022 - 31.12.2022 1 505 1 897 Transactions costs on short-term l oan 43 423 Total short-t erm loans and bo r rowings 1 548 202 320 * Credit facility agreement with Atlas Services Belgium has been ren ew ed on March 10 , 2021 for 120 million euros w ith a matur ity date of 10/03 /2026. As at 31 D ecemb er 2021, t he Group held no he dging deri vative f i na ncial in s tr ument qualifying fo r hedge account i n g. The car ryi ng amoun t of cash an d cash e quivalen ts, trade rece ivabl es a nd other assets, trade pa y a bles an d o ther paya bles is dee m ed to repre s en t their fa i r value con sidering the assoc iated short- t er m matur ity. Other non- c urren t f inancial as sets ar e measure d at amort i ze d costs which are deemed to represent their fair value. Maturity The foll owing are the rema i n ing con tractual maturities of financ ial as sets and lia bilities a t the report ing date. The amou nts are gross an d undisc ounted, an d ex clude co ntractual interest p ayments a nd as well a s the im pact of net ting agreemen ts . Interes t are not inc luded for the non-c urrent fina ncial lia b i lities due to the re v o lving natur e of the credit faci lity and vari able intere st condit i o ns. Borr owings and re paymen ts fluct uat e over t i me, depen ding on w orking ca pital re q uire ments. in thousand EUR Year ended December 2021 Amount Within 1 year Within 2-5 yea r s More than 5 years Financial assets Non-current financial assets 2 219 2 219 Non-current derivatives assets Trade receivables 188 127 188 127 Current financial assets 417 417 Current derivatives assets 243 243 Cash and cash equivalents 53 735 53 735 Financial liabilities Non-current financial liabilities 121 809 121 809 Non-current derivatives liabilities Current financial liabilities 1 461 1 461 Current derivatives liabilities 243 243 Trade payables 258 822 258 822 in thousand EUR 75 Annual report 2021 Year ended December 2020 Amount Within 1 year Within 2- 5 years More than 5 years Financial assets Non-current financial assets 2 253 110 2 143 Non-current derivatives assets Trade receivables 207 483 207 483 Current financial assets 361 361 Current derivatives assets 301 301 Cash and cash equivalents 60 816 60 816 Financial liabilities Non-current financial liabilities 3 496 3 113 383 Non-current derivatives liabilities Current financial liabilities 202 141 202 141 Current derivatives liabilities 480 480 Trade payables 296 525 296 525 Sensi t ivi ty As ind i ca ted abo v e , the ma in risk area related to exter nal varia b le element s is the co st of borro wing. Con sider ing an aver age lon g- term deb t of 103 million eur os in 2021 , a 0.6 % variation of the floa ting rate would hav e a 0.1 m illion euros impac t o n financing costs. Considering an avera ge long-ter m debt of 106 million euro s in 2020, a 0.5% variation of the floa ting rate w ould have 0 .1 million e uros impa ct on f inancing co sts. Fair value of fina n cial assets and liab il ities The ta b l e below is presente d accordin g to IFRS 9: in thousand EUR 31.12.2021 Classification under IFRS 9 (1) Book value Estimated fair value Level 1 and cash Level 2 Level 3 Trade receivables AC 188 127 188 127 188 127 Financial assets 2 636 2 636 2 636 Equity securities FVR 2 219 2 219 2 219 Financial assets at amortized cost AC 417 417 417 Cash and cash equivalents 53 735 53 735 53 735 Cash AC 23 957 23 957 23 957 Cash equivalents AC 29 778 29 778 29 778 Trade payab l es AC 258 822 258 822 258 822 Financial debts AC 123 270 123 505 123 505 1. “AC” sta nds for “a mortized cost”, “FV R” stand s for “fai r va lue thr ough profi t or loss” in thousand EUR 31.12.2020 Classification under IFRS 9 (1) Book value Estimated fair value Level 1 and cash Level 2 Level 3 Trade receivables AC 207 483 207 483 207 483 Financial assets 2 614 2 614 2 614 Equity securities FVR 2 253 2 253 2 253 Financial assets at amortized cost AC 361 361 361 Cash and cash equivalents 60 816 60 816 60 816 Cash AC 32 030 32 030 32 030 Cash equivalents AC 28 786 28 786 28 786 Trade payab l es AC 296 525 296 525 296 525 Financial debts AC 205 757 205 757 205 757 Derivatives (net amount) (2) 179 179 179 1. “AC” sta nds for “a mortized cost”, “FV R” stand s for “fai r va lue thr ough profi t or loss” 2. IFRS 9 cl assifica tion for de rivatives inst rument s depend s on their he dging qual ifica tion The financ ial as sets and lia bilities mea sured a t fair val ue in the s tatement o f financial position have bee n classifie d based on three hierarc hy levels: level 1: quoted pri ce s (unadj usted) in ac tive marke ts for i d e ntical a ssets or lia bilities t ha t the enti ty can acc ess at the measure ment da t e; level 2: inputs tha t are o b s ervable for the asse t or liab ility, either directly or indirectly; level 3: unobser v a ble input s for the a s s et or liab ility. 76 Annual report 202 1 The fa ir v a lue of investme nt securities uses a valuation te chnique d e termine d accor ding to the most ap propriate fi nancial cr i teria in each ca s e (compara ble tran sactions, multiples for com p ara ble com panies, sh areholder s’ agree ment, dis counted pre sent va lue of future ca sh flow s ). For financ ial as sets at am ortized cos t, the Gr oup consider s that the carryin g amoun t of cash an d trade rec eivables provide a reasona ble approx imation o f fair va l ue , due to the hig h liquidity of these e lements. For financ ial liabi lities at a mortized c ost, the fair value of financial li a bilities is determi ned usin g the pre s en t value of estimate d future ca sh flow s , discount ed using ra tes obser ved by the Grou p a t the en d of the per iod. The Gr oup con s i d er s the carrying value of tra de paya bles to be a re asonab le approx imation of fair val ue, due to the high liquidity. The fa ir v a lue of derivative s is determ ined usin g the presen t value of estimate d future cash flow s , discoun ted usin g the inte re st rates ob served by the Group at the en d of the period. Note 9: S h ar eho lders’ equity Share capital Change s in the nu mber of ordinary sh ares ha v e taken place during 2 021. Share capital (in thousand EUR) Number of ordinary shares (in units) As at 1 January 2021 131 721 60 014 414 As at 31 December 2021 131 721 59 944 757 All ord inary share s are ful ly paid and have a par value of 2.197 e uros. The par value cha nged s lightly co mpared t o 2020 (2.19 5 euros). As at 31 D ecemb er 2020, Ora nge Bel gium hel d 69,657 shar es acquire d in the framework of the l iquidity co nt r act. Oran ge B e lgium, as a res ult of the OPA an d the endi ng of the li quidity contract, cance ll e d these t rea sury sh ares on 23 July 2021 . Divi de nds in thousand EUR 31.12.2021 31.12.2020 Dividends on ordinary shares ( p aid ou t in 2021) - 30 007 Dividends on ordinary shares ( p aid ou t in 2020) - 30 007 Total - 30 007 - 30 007 The Oran ge Bel gium Grou p policy i s to balance the a ppropriate ca s h re turns to e quity ho lders with the require ment of maintain i ng a balance d an d sound financial position, w h ile leaving s u fficien t l eeway to c ontinue to invest i n its conv ergent s t rate gy and t h e build-o ut of its ne twork. Mana gement monitors the return on capi t a l, as we ll as the lev el of di vidends to or dinar y sharehol ders. Consid ering the u pcomin g spectrum auctions an d the balanc e sheet impact of the acqui sition of V OO, the Board of Dire ctors w ill not pro pose to t he Annua l General Mee ting of S hareholder s on 4 Ma y 2022 t o distribu te in 202 2 a gro ss ordinar y dividen d regardin g the finan cial year 2021. Treasury s hare s As a re sult of the OPA and the ending of the l i q u idity contract, Or ange Be l g ium Group can celled 69,6 57 treasur y shares on 23 Jul y 2021. As a resu lt , Orange B elgium Gr oup held no treasury shares at 31 D ecemb er 2021. A s at 31 Dece mber 2020, Oran ge Belgiu m Group he ld 69,657 treasur y s hares. 77 Annual report 2021 Note 10: Comm itments and co ntingencies Operational activities commitments in thousand EUR Total Less than one year From one to five years More than five years Handsets purchases 323 505 141 979 181 526 0 Other goods and services purchases 103 135 47 752 27 301 28 082 Investment commitments 83 414 83 017 397 0 Operational act ivi ties commitments 510 054 272 748 209 224 28 082 Guaran t ees gran t ed in thousand EUR Total Less than one year From one to five years More than five years Guarantees granted 29 592 377 5 368 23 847 In 2021, guaran tees granted relate t o network performanc e comm itments granted to some c orporate cu stomers. No other securit y (mortgage , pled ge or other) has been granted on Orange Be lgium as sets as a t 31 Dece mber 202 1. Note 11: (Non)- c urrent provisions in thousand EUR 31.12.2020 Additions Utilisations Reversal Other effect 31.12.2021 Provisions for dismantling 82 592 1 240 - 688 0 6 577 89 721 Provisions for litigations 3 481 226 - 160 - 19 1 3 529 Total p r ovisions 86 073 1 466 - 848 - 19 6 578 93 250 in thousand EUR 31.12.2019 Additions Utilisations Reversal Other effect 31.12.2020 Provisions for dismantling 77 481 86 - 883 0 5 908 82 592 Provisions for litigations 4 346 367 - 617 - 558 - 57 3 481 Total p r ovisions 81 827 453 - 1 500 - 558 5 851 86 073 Accrua ls for dis mantling c onsist of c urrent (9.1 million euros) and n on - current pro vision s (8 0.6 milli o n euros) (s ee also N ote 5 – Other int angible a ssets). Provis ions for l i t i g ations are r ecor d e d in other (non)-curr ent liabilities . Outstandin g liti gatio n Orange B elgium is engage d in variou s judicia l proce dures wher eby thir d -par ty individua ls or enti t i es are c l a iming re pair of dama ges they clai m to ha ve incurred . Each liti gation i s assessed on an in dividual b a sis in or der to asse ss as to whether it i s mor e likely than not tha t a n ou t f low of res ources w ill be nec essary to settle the l itigation an d ensure s that the assump tions to quantify the pr ovisions are valid. Outsta nding cla i m s are bui lt up dur i n g the pre vious yea rs and it ca n be reas onably assume d that they will be su bject to a Court decisi on or sol v ed by mean s of a se ttlement agr eement within the c oming year s. See Ma nagement report, section 6 f or detaile d inform ation on t he dispute s. Network sites disman tl i ng p rovisi on See No te 5 – Other intang i b le asset s and proper ty, plant an d equi p m ent. 78 Annual report 202 1 Waste Elec tr ic a l and Electronic Eq uipmen t Accord ing to the European D irective issued on that s ubject and t o the IFRIC 6 interpre tation, Or ange Bel gium is re sponsible f or the treatme nt and dis posal of an y waste electrica l and electro nic equip ment (i.e. ne twork e quipmen t, IT hard ware...) ac quired on or before 13 Augu s t 2005. Orange B elgium is current ly selling i ts electr i ca l and elec tronic equi pment wa ste to a WEE E cert i f ied third-party sup plier at a n et selling price whic h meets al l Europea n Directiv e obligati ons. The a greemen t with thi s supplier a lso inclu d e s Orange B elgium’ s obligati ons for th e perio d prior to 13 A ugust 2005. No p ro vision has to be rec ognised in this re spect in Orange Be lgium’s financia l stateme nts. Note 12: Related par t ies Rela t ionships with affi l i a ted enterpri ses Balance sheet and income statement in thousand EUR 31.12.2021 31.12.2020 ASSETS Current receivables - 33 167 - 32 454 LIABILITIES Current interest-bearing loan - 215 200 274 Non-current interest-bearing loan 120 000 3 496 Current trade payables 36 903 21 385 INCOME AND CHARGES Sales 43 828 41 112 Purchases - 74 850 - 62 326 Interests - 833 - 2 018 The ulti mate pare nt entit y o f Orange B elgium S.A. is Oran ge S.A. , 111 quai du Pré sident R oosevel t , C S 70 222 , 92449 Is sy les Moulinea ux Ce d ex, France. Related party transactions in thousand EUR 31.12.2021 Sales to related parties Purchases from related parties Amounts owed by related parties Amounts owed to related parties Orange - Traffic and services 30 149 - 40 343 - 5 033 Orange - Cash pool - 226 - 29 778 29 241 Orange Affilia t es - Tra f fic and services 13 679 - 17 738 1 631 7 687 Atlas Services Belgium - Loan - 565 13 119 760 Brand fees to Orange S.A. - 16 811 Total 43 828 - 75 683 - 33 167 156 688 in thousand EUR 31.12.2020 Sales to related parties Purchases from related parties Amounts owed by related parties Amounts owed to related parties Orange - Traffic and services 28 771 - 34 144 - 3 778 3 340 Orange - Cash pool - 188 - 27 900 3 800 Orange Affilia t es - Tra f fic and services 12 341 - 11 907 - 796 18 045 Atlas Services Belgium - Loan - 1 830 20 199 970 Brand fees to Orange S.A. - 16 275 Total 41 112 - 64 344 - 32 454 225 155 79 Annual report 2021 Terms and conditions of transactions with related parties Terms a nd con d i tions for t he sale an d purcha se of tra ff i c and ser vices, to t he centra lised trea sury mana gement a greement a nd to the rev olving cre dit facility a greemen t ar e deter mined on a n arm’ s length bas is acc ording to the nor mal market prices an d condit i o ns. Followi ng the re branding exer cise in 20 16, Ora nge Be lgium benef ited from a three year grace period. A s from Ma y 2019, a brand fee is char g e d on a year ly basis by the ul t i mate paren t O r ange S .A. whic h i s ma inly ca l cu lated a s a percent age of reta il service revenue s. There ar e no ou tstanding guarantees provide d to or r eceived fro m any rela ted partie s at the ba lance shee t date. N o allowan ce for doubtfu l debtors on amoun ts owed by related parties is ou tstanding at th e balance sheet date. Rela t ionships with Board of Dire ctor s mem b e rs and senior management in thousand EUR 31.12.2021 31.12.2020 Short-term employees benefits 3 809 4 484 Post-e m ployment benefits 444 432 Other long-term benefits 594 50 Termination benefits 0 0 Total 4 846 4 966 The tota l remunerat ion at tributed to the Boar d of Dire cto r s (exclu ding the no r mal c ompensat i o n of the CE O which is included i n the tab le above) i s as follo ws: in thousand EUR 31.12.2021 31.12.2020 Total Remuneration 335 304 Note 13: Liabilities related to c ontracts with customers and other assets related to contracts with customers Customer contract net assets and liabilities in thousand EUR 31.12.2021 21.12.2020 Customer contract net assets 50 715 51 889 Costs of obtaining a contract 10 938 11 295 Costs to fulfill a contract 0 0 Total custo mer contract n et ass et s 61 653 63 184 Prepaid telephone cards - 14 762 - 17 265 Conn ec tion fees - 533 - 335 Other deferred revenue - 40 062 - 40 622 Other customer contract liabilities - 665 - 746 Total d efer red revenue related to cus to mer co ntracts - 56 022 - 58 968 Total custo mer contract n et ass et s and liab ilities 5 631 4 216 The foll owing tab les give a n analysi s of the bal a nces of c ustomer contract net asset s : in thousand EUR 2021 2020 Customer contract net assets - i n the ope n ing balance (1) 51 889 51 593 Business related variations - 1 174 296 Changes in the scope of consolidation 0 0 Reclassifications and other items 0 0 Reclassification to assets held for sale 0 0 Customer contract net assets - in the clo sing balance 50 715 51 889 1. Ma inly includes the new cu stome r c ontrac t assets net of rela ted liabiliti es, the tran sfer of the net cont ract as sets dire ctly to trade receivable s an d impai r m ent over the perio d. 80 Annual report 202 1 The chan ge in defer red inc ome on c ustomer co ntracts ( prepaid te lephone ca rds, serv ice acce ss fees an d other unear ned inco m e) in the s tatement o f financ i al positio n is presen t e d bel ow. in thousand EUR 2021 2020 Deferred revenue related to customer contracts - in the opening balance 58 968 65 745 Business related variations - 2 946 - 6 777 Changes in the scope of consolidation 0 0 Reclassifications and other items 0 0 Reclassification to assets held for sale 0 0 Deferred revenue related to customer contracts - in the closing balance 56 022 58 968 Trade rece ivable s presente d in the co nsolidate d statemen t of financ ial posit i o n repre sent an unco nditiona l right t o receive considera tion ( p r imarily ca sh), i.e. the service s and goods promise d to the cu stomer h ave been tran sferred . By con trast, contrac t asse t s mainly ref er to amo unts alloca ted per I FRS 15 a s com p en sation for goods or ser v ice s provi ded to customer s for wh ich the r ight to col lect payme nt is su b j ect to pro viding ot her service s or good s under t ha t same c ontract (or group of contract s). This is the case in a bund l ed offer co mbining the sale of a mobile p hone and mobile co mmunica tion serv ices for a fix ed-perio d, where t he mobile p hone is in voiced at a reduce d price l eading to t he realloca tion of a portion of amounts invoice d for tele phone co mmunication service s to the s u pply of t he mobile phone. The exces s of the am ount alloca ted to the mobile p hone o ver the pric e invoice d is recogn ised as a contract a sset and transferre d to tra de receiva bl e s as the ser vice is invoice d . Contrac t assets, l ike trade rece ivable s , are su b je ct to im p a irmen t f or credit r is k . The rec overa b i lity of con tract as sets is also verified, especial ly to co v er the risk of impairme nt sho uld the con t rac t be in terrupted . Recoverab ility may also be im pacted by a change in the lega l environme nt govern ing offer s. Contrac t liabilitie s represen t amount s paid by c ustomer s to Orange before rec eiving t he goods a nd/or s er vices pr omised in the contrac t. This is typically t he case for a dvances received fr om cus t o mers or a mounts in voiced an d pa i d for go ods or ser vices not yet trans ferred, suc h as con tracts pay able in ad vance or prepaid p ack ages ( previous l y recogni sed in deferr ed inco me). Custom er contract asset s an d liabi l i ti e s are p res ented , respective ly, in curr ent asset s and curre nt liabilities since they ar e a normal part of t he Grou p’s operati ons. in thousand EUR 2021 2020 Costs of obtaining a contract - in the opening balance 11 295 13 161 Business related variations - 357 - 1 866 Changes in the scope of c on s ol idation Reclassifications and other items Reclassification to assets held for sale Costs of obtaining a cont r act - in the closing balance 10 938 11 295 Where a t elecom munication s service c ontrac t is signe d via a th i r d -par ty distri b u tor, this distribut or may rec eive bu s i ness pro vider remuner ation, gen erally pai d in the f orm of a c ommissio n for each c ontract or invoice-indexe d commi ssion. Where the c ommission is increm ental an d would no t have been paid in the a bsence of the c ontrac t, the com mission co st is es timated and capita l i zed in the balan ce sheet. I t shoul d be note d that the Group has adopted the sim p l ification m easure a uthorised by IFRS 15 to recogn is e the co s t s of obtai ning contrac ts as a n expense when the y are incurre d if the am ortizatio n period of the ass et, it woul d have recogni s e d in res pect of the m, woul d not have exceede d a year. The co s t s of ob t ai ning fixed- period mobile serv ice contrac ts are cap italized an d relea s e d to pr o f it or los s o n a straight-line o ver the enforcea ble contra ct term, a s these co sts are generall y incurred e ach time the cust omer rene ws the fixe d -per iod. There ar e no cost s to fulfil a contract in Orang e Belgi um S.A. 81 Annual report 2021 The foll owing tab le presen ts the tran saction pr ice assi gned to un fulfille d performance obligat ions as a t 31 Decem ber 202 1. Unfulfi ll e d perfor mance ob ligations are the ser vices that the Grou p is obliged to provide to c ustomer s during the r emain i n g fixed term o f the contrac t. As al l o wed by the simplifi cation me thod pr ocedure in IFR S 15, these disclosures are o nly related to perform ance ob ligations with an interna l term grea t er than one year. in thousand EUR Total 2021.12 Total 2020.12 Less than one year Y01 61 114 70 442 Between 1 and 2 years Y02 20 087 24 562 Between 2 and 3 years Y03 122 159 Between 3 and 4 years Y04 15 25 Between 4 and 5 years Y05 More than 5 years Y99 Total 81 338 95 188 On the al location of the to tal contract transact ion price t o identifie d perform ance ob ligations, a portion of the total trans acti o n price can be alloca ted to per formanc e obliga t i ons that are unsatisf ied or par tially sati sfied at the e nd of t he reporting pe riod. W e have elec ted to a pply certa in availa bl e practica l expedien ts when disclosing unfulfil led performa nce o b l i g ations, incl uding the option t o exclude expec t ed revenues from un satisfied obligations of con t rac ts with an origina l ex pecte d duration of one y ear or less. T hese con t rac ts are primarily monthly ser vice contrac ts. In addi tion, certa i n contract s offer cu stomer s the abili t y to purchas e additi onal ser v i ces. The s e a dditional services ar e not i nclude d in the tran saction price and are recogn ised when t he cust om er exerci ses the o ption (ge nerally on a month ly basis). They are n ot therefore included in unfu lfilled perf ormance o bligatio ns. Note 14: Lease agre e ments In the c ourse of i t s activiti es , the Gro up regular ly enter s into lease s as a le ssee. The leases concern th e follow i n g asse t categor ies: Land an d building s Network and term inals IT equ i p ment; an d Other Lease liabilities As of 31 Decem ber 2021, l ease liabil ities amoun t to 2 99.9 million euros, i ncluding no n -curr ent lease l iabiliti es of 255.3 million euro s and curren t lease li a bilities of 44.7 million euro s. in thousand EUR 2021 2020 Lease liabilities – in the opening balance 304 051 296 229 Increase with counterpart in right- of - u s e 50 268 54 364 Decrease in liabilities following rental payments - 51 834 - 48 419 Impact of changes in assessments - 2 566 1 877 Lease liabilities – in the closing balance 299 919 304 051 O/w n on-current lease liabilities 255 251 259 622 O/w current lease liabilities 44 669 44 429 The foll owing tab le detail s the undisc ounted fu ture ca sh flows o f lease lia bilities: in thousand EUR 31 December 2021 2022 2023 2024 2025 2026 2027 and beyond Undiscounted lease liabilities 343 714 48 395 39 994 32 405 24 559 19 973 178 388 82 Annual report 202 1 Right- of -use assets in thousand EUR 31.12.2021 Gross value Accumulated depreciation Accumulated impairment Net boo k value Land and buildings 407 261 - 121 046 286 215 Networks and terminals 5 779 - 4 068 1 711 IT equipment 3 0 - 3 Other right- of -use 21 174 - 9 917 - 19 11 238 Total right- of -use assets 434 217 - 135 031 - 22 299 164 in thousand EUR 31.12.2020 Gross value Accumulated depreciation Accumulated impairment Net boo k value Land and buildings 375 200 -82 958 292 242 Networks and terminals 5 750 -2 867 2 883 IT equipment 3 -3 Other right- of -use 16 238 -7 545 - 15 8 678 Total right- of -use assets 397 191 -93 370 - 18 303 803 in thousand EUR 2021 2020 Net boo k value of right- of -use assets -in the opening balance 303 803 297 290 Increase (new right- of - u s e assets) 54 264 57 125 Impact of changes in the scope of consolidation Depreciation - 54 020 -52 502 Impairme n t - 4 13 Impact of changes in the assessments - 4 879 1 877 Reclassifications and other items Net boo k value of right- of -use assets -in the closing balance 299 164 303 803 The tota l expens es r elating to short-ter m lease s f or which the recog nition exe mption is applied am ounted to 0.1 mi l l ion euro s f or the acco unting ye ar 2021. F or the acc ounting year 2020, the impac t in this re spect wa s also ver y limited a nd on l y amounts to 0.1 million e uros. Note 15: S ign ific ant accoun ting policies 1. Summary of signi fi ca nt ac cou n ti ng polic i es 1.1. Transactions in foreign currencies On initia l recogni tion in the f unctional currency, a forei gn currenc y transac tion is rec orded by app l y i n g the s p o t exchange r ate between the func tional curr ency and th e foreign currency at the d at e of the tran sactio n. At each b a lance sheet date, foreign mone t ar y asset s an d lia b i l i ties are t ran slated using the cl osing ra t e. Exchan ge gain s an d losse s are r ecogn ised as opera tiona l income an d expe nses when they are re lated to the opera tional act ivities. Exchan ge gain s an d losse s ar e recogn ised a s f inancial inc ome and ex penses o nly when they are r elated to t he financi ng activities. 1.2. Business combinations, goodwill and goodwill impairment Busine ss combina tions are a ccounte d for app lying the ac quisition method: the ac quisition c ost is mea sured at t he acqu i s ition date a t the fair va lue of the consi deration tran sferred, in cluding al l continge nt con s i d er ation. Su bsequen t changes in contin gent considera tion are ac coun ted for e i t her throu gh profit or loss or through other c omprehen s i v e income in accorda nce with the applica ble stan dards; 83 Annual report 2021 if the in iti a l acco unting for a busine ss combina tion is inco mp le te by the end of the reportin g period in which the com b i nation occurs, the Grou p reports provisiona l amoun ts for the items for which the ac coun t i ng is inc omplete. Th ose pro visional amoun ts are adju sted duri ng the mea suremen t period , o r a dditio nal asset s or l iabilities are r ecogni s e d, to re flect new infor mation obta ined abou t facts an d circum st a nces t hat existed at the ac quisition d ate that, i f known, would h ave affec ted t he amoun ts recogni sed at tha t date; Good will is the d ifference b etween t he consid eration tr ansferred an d the fair v alue of t he ident i f iable asse ts and lia bilities assume d at the acq uisition date and i s recogni s e d as an a sset in the statemen t of finan cial posit ion. For each busines s combina tion with ownersh ip intere st below 10 0%, non-contr olling in t er ests are measure d: either a t fair value: in this ca se, good will relatin g to no n -c ontrolling i nterest s is re cogn ised; or at the no n- contro l l ing intere st’s pro portionate share of the ac q u iree’s iden tifiable ne t assets: in this ca se, good will is on ly recogni s e d for the share acq uired. Acquis ition related costs are directl y recognise d in the inc ome s t at ement dur ing the period in which they are incurre d. When a busines s combina t i on is achi eved in s t a ges, t he previou sly held e quity intere st is re - measure d a t fair v alue at the acquisit ion date t hrough pr ofit or l oss. The a tt r ibutabl e other co mp r ehens ive income, i f any, is rec ognis ed on the sa me basi s as would b e r equire d if the p r eviously held equit y interests w ould have been d isposed. Good will is no t a mortize d but teste d for impair ment a t l east annual ly or mor e frequen tly when there is a n indicati on that it may be impaire d. Therefore, the e volution of general ec onomic an d financ ial trends, t h e differe nt levels o f resilience of the telecom municat i o n operat ors with re spect to the decli ne of local e conomi c environme nts, the ch ange s in the marke t capit alization values of telecom municat i o n compani es, as well as actua l economi c performa nce co mpared to market ex pectation s represen t externa l indicator s that are a nalysed by the Gro up, toget her with in t er nal per formance i ndicators , in order to asses s whether an impairm ent test s h ould be performed more tha n once a ye ar. IAS 36 re quires t hese test s to be perf ormed at the level of each Cas h Gener ati n g Unit (CGU) or gro ups of C GUs likel y to benef i t from ac quisition-rel ated syner gies. T o deter mi n e whet her an imp ai r m en t loss s h ould be rec ognise d , the carr ying valu e of the assets an d liabil i t ies of the CGUs or group s o f CGUs i s compare d to the rec overa b le amo unt. The rec overabl e amoun t of a CGU i s its value in use. Value in use is the presen t value of the future ca sh flow s expecte d to be der ived fr om the CGU s. Cash flow pro j ec tions ar e bas e d on econ omic and re gulator y assum ptions, lice nce ren ewal assu mp t i o ns and forec ast tra ding cond itions d ra wn u p b y the Grou p’s manage ment, as f ollows: cash f l o w project ions are based on f ive - year bus i ne ss plan s; cash f l o w project ions beyon d that ti meframe may be extrapolate d by appl yi n g a decl ining or f lat growth rate o v er the next two years (f or some CG Us), foll owed by a growth r ate to p erpetuity re flecting t he expecte d long-term gro wth in the marke t; the cash f lows o btained are discounte d using a ppropriate rates for the type of busines s and the c ountrie s concer ned. Carrying values o f CGUs te st e d incl ude goodw ill, intang ible asse ts with in d e finite use ful life ari sing from busine ss combina t ions and asse ts with fi nite usefu l life (pro p er ty, plant and equ ipment, int angible a ssets an d n e t work i n g capital, includin g intr agr oup balance s ). Net b o ok value s ar e discl osed at the level of the CGUs an d grou p s of CGU s , i.e. includ ing acco unting item s related to transac tions wit h other C GUs and gro ups of C GUs. For a C GU partia l l y owned by the Gr oup, whe n it include s a por tion rel a ting to n on-control l i ng intere sts, the i mpairmen t loss is allocate d between the own ers of the parent and the non-contr olling intere sts o n the same basis as t h at on which pr ofit or los s is allocate d (i.e. o wnership int erest). Impair ment loss for goo dwil l is account ed for in t he inco me stateme nt and is never su bsequent l y reversed. The va l ue s in u s e of the bus inesses, which are most o f the reco verable am ounts an d which su pport the book v a lues of lo ng -term assets, ar e sens i t ive to the v aluation method an d the assum ptions use d in the m odels. Th ey are also sensitive t o any cha ng e in the busine ss environ ment that is differe nt from th e assumpti ons used. Orange Be lgium reco gnizes a ssets as impaired if e vents or circum st a nces occur that in volve ma terial adver se change s of a perm anent nat ure affec ting the ec onomic climate or the assum ptions and targets use d at the t ime of the acquisit ion. Ne w e vents or adverse circ umstanc es coul d c onduct Orange Be l g ium to revie w the pre sent value of its a s s ets and to rec o g nize further su bstantial i mpairment losses tha t coul d have an ad verse effe ct on its re sults. Impair ment test o n the go odwill alloc ated to t he segment “B elgium” is perf ormed at lea st at the e nd of eac h financ ial year to assess w hether i t s carryin g amoun t does not excee d its r ecoverab le amoun t . E stimati ng the fair value le ss costs to sell wi l l take into acco unt Oran ge Belgiu m’s share p r ice as quoted o n the stock exchan ge. 84 Annual report 202 1 1.3. I ntangible assets This as s e t categor y include s intang ible assets with a f inite useful lif e s u ch as the cost of the teleco mmunica tion licenc es , the co st of netw ork desi gn and dev elopmen t, the cost o f purchase d and internally generated software. Intang i b l e asset s are measure d on ini ti a l reco gnition at c ost. The co st inclu des the purc hase pri ce, im port duties , non-refun dable purchas e taxes, a ft er deduct ion of tra de discou nts an d re bates, an d any d irec tly attri butable c osts of pre paring the a sset f o r its intende d use, i.e. c osts of employee b e nefits, professi onal fees an d testin g costs. After ini tial recogn ition, in t an gible as sets are carr ied a t c ost less an y accu mulated a mortization a nd im p a irment los ses. The res idual value of intan gible asse ts is assu med to be zero unle ss the con ditions p r ovided for by IAS 38 are met. Intang i b l e asset s are amort ized over the useful life an d a ssessed for impair ment whene ver there is an in dication t hat the intangible asset m ay be im paired. The de p rec iable a mount of a n intan gible asset with a fini te usefu l l i fe is alloca ted on a l inear bas is over i ts useful l if e. The am ortization of the mo bile licence s starts when t hey are rea dy to operat e. Amortiz ation of t he licences should start when the as s e t is availab le for u se, i.e. when it is in t he location and tec hnical condition necessar y for it t o be ca p ab le of opera ting in t he manner intended b y the mana gemen t , e ven if the asset is actual ly not b e ing used. Th e licence will be a v a ilable for use when the fir s t geograp hi c al zone will be dec lared “rea dy to lau nch” by t he techni cal team. The full am ount wi l l b e amorti zed on a straight line basis over its re maining u seful life o f that d at e. The G SM and UM TS licence s have b een grante d for a per iod of 15 years (ori ginally) a nd 20 years respect ively. The GSM licen ce renewal for 5 year s was ter minated in 2021 an d re place d twice by short term license r enewa l f or 6 mon ths. The 4G l icence, a cquired in 2011, ha s been gra nt e d for a period of 15 year s , till the 1 o f July 20 27. The 800 MHz lice nce was ac quired i n Novem ber 2013 an d is valid for a peri od of 20 years. The usefu l life of a cquired and interna lly genera ted so ftware i s 5 years (net work sof tware) or 4 year s ( non-n etwork s oftware) an d their a mo r tization starts w hen the sof tware is r eady fo r use. The am ortization period a nd amorti zation me thod for an intangi ble asset w ith a fini te useful life are rev iewed at least at each financ i al year-end . Any cha ng e in the u s e ful life or in the ex pected pattern of c onsum p t ion of the future eco nomic bene fits embod ied in the asset, is acc ounted fo r prospe ctively as a chang e in an acc ounting e stimate. The change s in usefu l life on intangi ble assets re cogni sed during th e year are d e termine d on indiv idual asset basis. O bsolesce nce, dism antling or l o sses are also con sidere d in the exer cise. Amortiz ation cos ts are recor ded in t he income statement under the heading “D epreciat ion and am ortizati on of other intangib l e assets an d proper ty, plant an d equi p m ent”. Researc h costs are ex p e nsed a s incurred. D evelopm ent expen diture on an individua l projec t is recogn ised as a n intangi ble asse t when the Grou p ca n demon strate the technical feasibility of complet ing the i n tangible a sset so that i t will be avai lable for u se or sale, it s intention to comp l e te and i ts ability t o use or sell the asset, how the a sset will generate future eco nomic be nefit s, t he availab i l ity of resourc es to c omplete the asse t a nd the ability to measure re liably the expe nditure dur ing dev elopment. Followi ng initial rec ognitio n of the de velopmen t expen diture as an asset, t he cost model is ap plied requir ing the asset to b e carried at co s t less any a ccumula ted amor t i zation an d accum ulated im p a irment l osses. A mo r tization of the a sset begins when develo pment is co mplete an d the as s e t is avai lable fo r use. It is a mortized over the p er i o d of expect ed futur e b e nefit. Dur in g the period of develo pment, th e asset i s t ested for impair ment annual ly. 1.4. P roperty, plant and equipment The foll owing ite ms of pro perty, pla nt and equ ipment are classifi ed under the tangi bl e asset s ca tegory: building , network infrastruc ture an d equipment , IT server s and per sonal co mputers, o ffice furn iture, lea sehold im provemen ts, equip ment lea s e d t o cu stomer s. Upon rec ognition, tangible a ssets are measure d at cost . The co s t i n cludes t h e purcha s e price, i mport d u ti e s and no n -refun d a ble purchas e taxes, a ft er deduct ion of tra de discou nts an d re bates, an d any c osts direct ly attributa ble to br inging the as set to the locatio n and cond ition for i t to be cap able of o peratin g in the ex p e cted ma nner. Th e cost of re placin g part of an it e m of pr o perty, plant an d equip ment is reco gnised a s an asset when i ncurred an d if the rec ognition cr iteria are met. Al l o ther r epair and 85 Annual report 2021 ma int enance c osts are rec ognise d in profit or loss as incurred. The cost includes a lso the e stimated co st to d i s mantle the netwo rk sites a nd to refurb ish the ren ted prem ises whe n such obligation ex ists. The co s t s relate d to the ins t a llation & a ctivation of the cable a nd that are directl y attributab le to brin g the asse t into work ing condit i o n for its intended u s e , are rec ognised as an asset. After ini tial reco gnition, tan gible as s e ts are mea sured at c ost les s an y accu mulated d e preciation an d impair ment lo ss es. The de p rec iable a mount of a tangi b le asset is al locate d on a sy stematic a nd linear ba sis over its useful life. The de preciation of a tangib l e a sset star ts when it is ready to opera t e as intend ed. The usefu l life of e ach categ ory of tan gible a s s ets has bee n determ ined as fo llows: Buildin g 20 year s Pylon s and netw ork constru ctions 20 y ear s Optica l fiber 15 year s Network equipmen t 5-10 y ear s Messag i n g equi pment 5 years IT server s 5 years Persona l comput ers 4 years Office fur niture 5-1 0 years Leaseh old improv ements 9 year s or renta l perio d if shorter Cable e quipmen t 3-4 year s The res idual value a nd the u seful life o f a tang ible asset are r evie wed at leas t a t each financial year -en d and, if ex p e ctatio ns differ from p r evious est imates, the c hange s are accoun ted for pr ospectivel y as a chan ge in a n account i n g estima te. The ch ange s i n useful l i f e on tan gible as s et s re cogn ised during the ye ar are deter mined on individua l asset bas is. O b s olescence, disma ntling or losse s are a lso considere d in the exercise. The co s t s relate d to the ac tivation o f the cable a lso inclu des the co sts relate d to instal l a tion work perform ed at t he c usto m er’s locatio n to instal l the mo dem and are amortise d over three year s , based u pon stab le historic al usage data available within the Orange Group. Deprec i a tion cost s are rec orded in t he income s tatem ent under t he headin g “Depreci ation and amortizat ion of o t her intangi ble assets an d proper ty, plant and equi pment”. An item of pro p er ty, plant a nd equipme nt is derec ognise d upon disposal or when n o f u ture ec onomic be nefits are ex pected fro m its use or dispo sal . Any ga in or los s arising on de -re cogni tion of the a sset is included i n the income state ment in th e year the a sset is dereco gnise d . Accelerat ed depre ciation i s the deprec iation o f fixed as sets at a fa ster rate ear l y i n their u seful lives and is mainl y used at O ra nge Belgiu m when manageme nt decide s to take as sets out of service ear ly (ex. d ismantling of technica l sites). The net bo ok value of th a t asset wi ll then be d e preciated over the remainin g period ( of service). The as s e t retireme nt obligat ion (ARO) r elating to the net wo rk sites is measure d base d o n the kno wn term of sites re nt a l contracts, assumi ng a high probabilit y of rene wal upon ea c h re newa l date and consideri ng that th e entire s ites park w ill be disman tled in the future. The disman tling a sset is mea sured by u sing ap propriate in flation an d discoun t rates. The Gr oup is req uired to d ismantle tec hnical e quipme nt and rest ore tech ni c al sites. When t he obligat ion arise s , a disman tlement a sset is r ecognise d in com p en sation f or the dis mantling p r ovis i o n. The pr ovision i s based on dismant li n g costs ( on a per-site basis) incurr ed by the Grou p to meet its environ mental c ommitme nts over the a sset di smantling an d site res toration planning. The pro vision is as sessed o n the bas is of the i d entified co sts for th e current f iscal year , extrapo lated for fu ture years using the best es t i mate of the commit ment se t t lement. Th is esti mate is revised annual ly and ad j u sted where a ppropri ate agai nst the asset t o which it relates. The provis ion is pre sent-discounte d. 1.5. I mpairment of tangible and intangible items o th er th a n goodwill The Gr oup asses s e s at each balance sheet da te whether there is an indicati on t ha t an as set may be i mpaired. I f any such indicat i o n exists, or when an nual im p a irmen t t esting for an asset is required, Orange B elgium m akes an es timate of the as s et ' s recovera ble amou nt. An a sset's reco verable a mount is the higher of an asset' s or cash-generat ing un it ' s fair value less cos ts to sell an d its value in use and is determ ined for a n indivi dual asse t, unless t he asset does not ge nerate ca sh inflo ws that are largel y indepen dent of t hose from other as sets or grou ps of as sets. Where the carry ing a mount of a n asset ex ceeds it s recoverab le amoun t , the asse t is con s i d er ed imp aired and i s writt en down t o its reco verable am ount. In a ssessing v a lue in u se, the est ima ted 86 Annual report 202 1 future ca sh flow s ar e disco unted to t he ir pre s en t valu e using a po st- t ax discoun t rate tha t re flects c urrent market ass essment s o f the time value of money an d the risk s specific to the a sset. Impa irment lo sses are rec ognise d in the inc ome s t atement in the operat i n g expense s under the head ing “Impairm ent of fixe d assets” wh ich also incl udes the losses on material ne ver de p l oyed on sites, I T project n ever put in service, site civil w orks never finall y deployed. For as s e ts exclu ding good will, an a ssessmen t is made at each rep orting da te as to whet her there is any in d i cation tha t previously recogni s e d impair ment lo sses ma y no longer ex ist or may have de crease d. If such in dication ex ists, the Group e stimate s the asset's or c ash-gen erating u nit's rec overable am ount. A previously rec ognised impairmen t loss is reversed only if there h as been a change in the ass umptions used to determine t he ass et's recover able am ount since t he last i mpairmen t loss wa s recogni s e d. The rever s al is limite d so tha t t he carrying amount of the asset does no t exceed i ts recovera ble am ount, nor ex ceed th e carrying amoun t that woul d have bee n determ ined, ne t of depr eciation, ha d no i mpairment loss been r ecogni s e d for the asset in pri or years. Such rever s a l is reco gnised in the inco me state ment unles s the a ss e t is carri ed at revalu ed amou nt, in which ca se the rever s al is treated as a reva luation incr ease. 1.6. Borrowing costs Borro wing costs are cap it a lized after 1 Januar y 20 09. Evaluatio n o f the need to capita lize borrow ing c osts is made a t pro j ec t l e vel. Up to en d of 20 08, borro wing costs w ere rec ognised as a n expen s e in the perio d in which they occur red. 1.7. G overnment grants A govern ment gran t is reco gnised when there i s a reaso nable assur ance that the gran t will be rec eived an d the co nditions attache d to the m are com plied with. When t he grant rel ates to an expen s e item, it is r ecognise d as incom e over th e perio d nec essary to match on a sy s t ematic b a sis to the co s t s that i t i s intended to compe nsate. Where th e grant r elates to an a sset, the fair valu e is cred it e d to the carr y i ng amount of the a sset and i s release d to the income stateme nt over the expecte d useful l i fe of the r elevant as s e t by e q ua l annual instalmen ts. 1.8. Taxes Curre nt income taxes Curren t income tax asset s an d liabili t i es for the c urren t an d prior periods are measur ed at the a mount ex pected t o be recovered from or p a id to th e taxation a uthor i t ies. The tax ra tes and tax law s u sed to co mpute the amoun t are those t hat are ena cted or substant ively enac ted by the balance sheet da te. Defer re d i ncom e tax Deferre d income tax is pro vided usi ng the liabil i t y metho d on temp orary differe nces a t the balan ce sheet date betw een the tax basis of assets an d liabili t i es and the ir carrying a mount s f or financ ial reportin g purp oses. Deferre d income tax liabili t i es are rec ognised fo r a ll ta xable temp orary differen ces, excep t: where t he deferre d income tax liabili ty arises fr om the i n itial rec ognition o f goodwil l or of an as set or lia bility in a tra n sacti on that is no t a bu s in ess com bination a nd, at the time of the transac tion, affec ts neither the acc ounting p rofit nor tax able pr ofit or loss; a nd in res p ec t of taxa ble temp orary differenc es ass ociate d with inve stments i n subsi d iar ies, asso ciates and interes t s i n joint venture s , where the timing of the rever sal of the temp orary differenc es can b e contr olled and i t is pr obable tha t the tem p orar y difference s will n ot reverse in the fore seeable f uture. Deferre d tax asset s are reco gnised f or all dedu ctible tem porary d if f erences, carry forwar d of unu sed tax cre dits and un used t ax losse s , to the exten t that it is probable that taxab le prof i t will be ava ilable aga inst wh ich the ded uctible tem po rar y difference s, and the carr y forwar d of unuse d tax cred its and u nused ta x losses ca n be util i s ed exce pt: where t he deferre d income tax asse t relating to the deduct ible tem po rar y diff erence ari ses from t he initia l r ecogn ition of an asset or liability i n a transac tion that is not a bu siness combinat i o n and, at the time of the tran saction, af fects ne ither t he account i n g profit nor taxa ble profit or loss; an d in res p ec t of de d uc tible tem porary differe nces a ssociate d with inve stments in subsidiar ies, asso ciates and intere sts in joint venture s , deferre d income tax asset s ar e recogn ised only to the ex tent that it is proba ble that the tem p orar y differe nces wil l rever s e i n the fore seeable fu ture and taxable pr ofit wil l be availab le again s t which the temporar y difference s can b e utilise d . The carr ying amo unt of de ferred inco me tax as sets is r ev i ewed at ea ch bala nce sheet d a te and re duced t o the exten t t hat it is no longer pr obable t ha t suffic i en t taxable p r ofit wi ll be availab le to all ow all or par t of the deferred inc ome tax a sset to be utilised. Unrecogn ised def erred inco me tax as sets are rea sses s e d at each balance s heet date an d are rec ognise d to the exte nt that i t h a s beco me probable t hat futur e taxable pr ofit will a llow t he deferre d tax asse t to be reco vered. 87 Annual report 2021 Deferre d income tax asset s and lia bilities are measured a t the tax ra tes that are expect ed to ap ply to the year when the asset is realised or the liab ility is se ttled, ba s e d on tax ra t e s (and tax laws) tha t have been e nacte d o r subs t an tively enacted at t he balance sheet da te. Deferre d income tax asset s and deferr ed inc ome tax lia bilities are offset, if a l egally enf orceable r ight exi sts to set of f c urrent tax assets aga inst curre nt inco me tax liab ilities an d the deferr ed income taxes re l a te to the same taxa ble entit y and the same taxa tion author ity. Sales t ax Revenue s, expense s and a ssets are rec o g nised net of the amo unt of sa les tax exce pt: where t he sales tax incurre d on a purcha se of as sets or s ervices i s not reco verable fr om the taxa tion autho rity, in wh ich case the sale s tax is re cognised a s part of the acqui sition c ost of the a sset or a s part of the expen se item as applica bl e ; and receiva bl e s and payables tha t are sta t e d with th e amoun t of sale s tax inclu ded. The ne t amoun t o f sales tax recovera ble from, or payab l e to, the tax ation aut hority i s i ncluded a s part of re ceiva b le s or pa y ables in the balan ce sheet. Operatio n al t axes: I FRIC 21 The IFRIC 21 inter pretation was ado pted by the E uropea n Union in the firs t semester 2014. It defines the o bligating e vent that gives rise to a liab ility to p a y a lev y (a s the act ivity tha t t r iggers the levy) an d refer s t o other s ta ndards t o determ ine w he ther the recogni s e d liabi l i ty gives ri se to an as set or ex pense. Orange B elgium a pplies IFR IC 21 in the conso lidated fi n ancial sta tement s of 31 Dec ember 202 1 to a li mited num b er of lev ies whose acc ountin g is mo d i fi e d by the interpre tation: p rop er ty with holding t ax, tax on o ffice space, tax on class 1/2/ 3 site s (hazard ous and/ or insalubr ious sites) , sites tax an d taxes on adver tising boar ds, panel s, etc. 1.9. I n v entories Inventorie s are a ssets held for sale in the ord inary co urse of bus i n ess, i.e. ha ndset s an d acce ssories. Inventorie s are measured a t the lower of cost a nd net realisable v a lue. The c ost of in ventories comprise s all costs of purchase, cost of conversio n and other c osts inc urred in bringing t he invent ories to t hei r presen t location a nd con dition. The m easure m en t of our in v en tories i s d e termine d by the weighted a verage me thod. The weigh ted averag e unit cos t is the to tal amoun t that has bee n paid f or the inven to r y divi ded by the n umber of units i n the inven to r y. Net r ealisable v alue is the estimat ed selling price in the ordinar y c ourse of busines s, less e s t imated co sts of c ompletion a nd the e stimated c osts nece ssary to make th e sale. 1.10. C ash and cash equivalents Cash an d cash e q u ivalen t s i n clude ca sh on han d and cash depo sits with a maximum term of 3 months. Cas h a nd cash equivalen ts held w ith financ ial instit utions are measured a t nomina l value. Ba nks and intercompan y cash pooling o verdrafts ar e classifie d as short -term finan cial liab i l ities. 1.11. O wn shares (liquidity contract) The pur chase of own (Orange B elgium) share s or obligati ons in the frame w ork of a li quidity co nt rac t are ac counted for as a deduct io n from eq uity. 1.12. Long-term provisions Provis ions are rec ognised when Oran ge Belgiu m has a present obligation ( legal or c onstructi ve) as a result of a past eve nt, it is probab le that an o utflow o f resource s embod y i ng econo mi c benefi ts will be req uired t o settle the obligatio n and a re liable estimate can be made of th e amoun t of the o bligation. Where Ora nge Bel gium ex pects so me or all of the provisio n to be re imbursed , the rei mbursement is recogni sed as a se parate asset but only whe n the rei mbursem ent is virtu ally cer t ai n. The exp ense re lating to an y provisi on is prese nted i n the inco me stateme nt net of a ny reim bursemen t. If the e ffect of the time value of mone y is mater ial, provis ions are di s c ounted using a curr ent pre-tax ra te that reflec ts, where appropri ate, the r is k s spec ific to the l iability. Wher e di s c ounting i s u sed, the i ncrease in the pro vision due to the p assage of time i s recogni s e d as a bo r rowing c ost. 88 Annual report 202 1 The es t i mate of t he disman tling co s t s regar d i ng the net work sites a nd of t he re furbish ment cos ts relate d to the ren ted premi s es is recogni s e d as an it e m of ta ngible a sset. This e stimate is also rec ognised a s a provi sion tha t i s mea s ure d by using ap p ro priate inflation and disc ount rate s . 1.13. Em ployee benefits Short-ter m empl oyee benef its, such a s wage s , salaries, so cial secur ity contri butions, pa id annua l leave, pro fit -shar i n g and bonuse s, medical care, co mpany car s a nd other s are recog nised dur ing the per iod in w hich the ser vice has been ren d er ed by the emplo yee. Short-ter m empl oyee benef its are sho wn as lia bilities as a r esult of a lega l or construc tive prese nt obliga tion an d when a re liable estima te of such li a bilities c an be ma d e. As a c onsequence of the la w of 18 D ecember 2 015, mi nimum re turns are g uarantee d by the em ployer a s follow s: for the contributi ons paid as from 1 Jan uary 20 16, a new variable m inimu m return ba s e d on OL O rates, with a mini mum of 1.75% a nd a maxi mum of 3. 75%. In v iew of the low rates of the OLO in the las t years, t he return h as been i n itially set t o 1.75%; for the contributi ons paid until end Dec ember 2 015, the previously a pplicable legal retur ns (3.25% and 3.7 5% respec tively on the em ployer an d employee c ontributi ons) cont inue to ap ply until ret i re ment da te of the p articipant s. In view of the min imum re turns guara ntees, tho se plans qualify a s D efined Ben efit p l an s. In order to ensure that the d efined c ontributio n pension p lan in forc e guarantee s its participan ts the m inimum retur n required by law a t t he date of departure re gardi ng the acce ss, Orange Belgium ordere d a com p l ete actuari al com p u tation un der the PUC meth od . The act uary perfor med pr oj ec tions acc ording to a pre-defi ned me thodology an d with cert ain assu mptions. This rep ort indica t e s that the a ccumula ted reserv es are suf ficient t o cover any deficit a nd this for a ll scenar ios. A s a c onsequ ence, as o f 31 December 2021, n o provisi on has been r ecogn ised. As Oran ge Belgiu m S.A. ha s no unc onditional righ t to a refu nd or a red uction in future cash co nt r ibution s no asse t has been r ecognise d neither . 1.14. Leases The ne w standard , IFRS 1 6 "Leases”, is of man datory ap plication since 1 Janu ary 20 19. Orange B elgium S.A. class ifies as a lease, a c ontract t ha t c onvey s to the les see the ri ght to con t ro l the u se of an i de ntified as set for a g iven perio d, includin g a servic e contract if it co nt a ins a lea s e compo nent. Orange B elgium S.A. has defined f our major l ea se contrac t categor ies: 1. Lan d and bui ldings: the s e contrac ts mainly concern c ommercia l ( point of sale) or ser vice acti vity (office s and h ead office) lease s , a s well as leases of technica l buildings not ow ned by the Group. Re al esta t e leases en tered in t o in Belg ium genera lly have lon g terms ( between 7 a nd 11 year s). 2. Net works an d termina ls: the Gro up is req ui re d to lea se a cer t ai n number of asset s in connec tion with i ts mob ile activit i e s. T hi s is nota bly the ca s e of lan ds to be use d to insta ll antennas, mobile sites lease d from a t h ird - party opera tor and certa in “TowerC os” contra cts (co mpanies opera ting te l ec om t o wers). Lea ses are a lso entere d into as p ar t o f fixed wire line acce ss network activities . 3. IT (& network) equipme nt: this as set cate go r y primar ily compr ises lease s of server s and h osting spa ce in datacenter s . 4. Ot her: this as s e t categ ory primar ily com p r ises lea s e s of ve hi c les. There ar e no rea l rel evant difference s in the fo ur categor ies in the c ontext of IFRS 16, the ru l es and calc ulation me t h ods ar e identica l . Leases ar e recogni sed in th e consolida ted state ment of financia l position via an as s e t reflecti ng the righ t to use t he lea sed asset s and a lia bility refle cting the re lated lea se obliga tions. In t he consol idated inco me stateme nt, amor tization and deprec iation of the right- of -use as s e t is prese nted separa tely fr om the int erest expen se on the l ease lia bility. In the consolidate d stateme nt of cash flows, ca sh outf l o ws relatin g to intere st impac t operatin g flows, wh ile repa y m ents of t he lease l ia bility im pact financ ing fl o ws. 89 Annual report 2021 Finall y , Orange Be lgium S.A. applies the follo wing authori zed prac tical exped ients: Exclusion of leases with a r esidual term expiring withi n 12 mon ths of the f irst appl i ca tion data . This prac tical ex pedien t is applie d f or all contra cts, inc luding t ho se with a tacit r enewal cla use at the transition date. In ap plying th is practi cal expedient, the Gr oup calls on its judg ment and ex p erie nce ga ined in the pre vious ye ars to d et ermine w hether it is reasona bly certain to exerci s e a r enewa l option, tak ing acco unt of t he re levant facts an d c ircum s t ances. Exclusion of leases of asset s with a re placement value of le ss than a pp r oxima t e ly 5,000 euros; Exclusion of init ial direct c osts fro m the mea s ure ment o f the righ t - of -use asse t at the da te of firs t - time app l i cation; and The inclu sion in the openin g balance sheet of provisio ns for oner ous con t rac ts measure d a s of 31 D ecembe r 2018 pursuant to IAS 37, a s an alter native t o impairme nt testing of righ t - of -use asse ts in the opening balance shee t. a) Acco unting poli cies Lease Liabiliti es: Orange B elgium S.A. recogn izes a l ia bility (i.e . a lease l ia bility) at the date the un derlying a sset is made ava i l able. This lea se liabi l i ty is equa l to the pre sent value of fixe d a nd fixe d in - substance payment s not paid at that da te, plus a ny amount s that Oran ge is reasona bly certain to pay a t the en d of the lea s e, such as the exerci se price of a purcha se option ( where it is reasonab ly certain to be exer cised), or penalties payable to the les s or for ter minating the lease (w here the ter mination option is re asonably certa in t o be exerci s e d). Orange B elgium S.A. only takes in t o acc ount the lease co mponent of lease wh en measur ing the l ea se liabi lity. For ce rtain a sset classes where the lease incl udes ser vice and le ase com p o nents, the Group may recogn ize a sin gl e contract classified a s a leas e (i.e. wit hout dist i nc tion bet ween the ser vice and l ea se com ponent). Orange systema ti c ally deter mines t he lease ter m as t he perio d during whic h lease s cannot be canceled, plus per iods co vered by any exte nsion o ptions tha t the lessee i s reasona bly cer tain to exer cise and by any ter mination opti o ns that the le ssee is rea sonably certain n ot to exer cise. For o p en -ended l ea ses, Oran ge Belgiu m S.A. g enerally a dopts the notice peri od as the enforcea ble perio d . The Gr oup nonethele ss asse sses, based on the c ircumstance s of eac h lease, the enforcea ble perio d taking acc ount of certain ind icators suc h as the ex istence o f non-insi gnificant penalties in the even t of termi nation b y t he lessee. The Gr oup cons iders in partic ular the econo mi c impor tance of t he leased a sset whe n determini ng this en fo rc eable period. For each contrac t , Orange Be lgium S. A. applie s a discou nt ra te deter mine d based on t he loan yi eld spec i f ic to eac h contract , accor d i ng to its term plus the Grou p ' s credit s pread if the interes t rat e can’t be readil y determine d from the contrac t. In order to deter mine the l oan yield s pecific to each c ontract, Orang e Belg ium applie s the follo wing met hod: Deter mination of a risk-free ra te curve ac cording to the currenc y an d maturity bas ed on g overnmen t bond yields. Applicat ion of Oran ge Be l g ium S.A.’s credit spread acc ording t o the currenc y and ma t ur ity. Select i o n of the ap plica b le ra te for each lease co nt ra ct, c orrespon ding to the average ma turity of the con tract. After the lease c ommence ment date, the amoun t of t he l e ase lia bility ma y be reasse ssed to re flect chan ges intro duced in t he follo w in g main ca ses: A chang e in term re sulting from a co nt ra ct am e n dment or a c hange in asses sment of the reasona ble certa inty tha t a re newal option will be exer cised or a termina tion optio n will no t be exerc ised; a change in the a mount of lease pay ments, for ex amp l e f ollowing a pplicat ion of a ne w index or rate in t he ca se of variable paymen ts; and any other c ontrac tual chan ge, for exa mple a cha nge to the scope of the lease or the un derlying a sset. b) Acco unting po licies RO U assets: A righ t - of use is re cognised as an as s e t, with a c orres ponding lea se liabi l i ty. The r i g ht - of -use a sset is e q ua l to the a mount o f the lease l ia bility at inc eption Work perf orme d by the les s e e and m odification s to th e leased a sset, as w e ll as guar antee de posits, are n ot co mponents of the right- of -use as s e t and are r ecognise d in acc ordance wi t h other stan dards. Finall y , the right- of -use a sset is d e preciated in the c onsolidated income statemen t on a strai ght - line bas is over the lea se term adopte d by the Gro up. 90 Annual report 202 1 c) Acco unting poli cies Id entified ass ets: In certain circu mstances, Orange Belg ium rents a space t o set up a n antenna. M ost ofte n, the spac e is a pi ece of lan d or a part of a r oofto p o r balcon y etc… The identifie d asset is the part of land which is ren ted per t he term s o f the lea s e contrac t. In most c ircumstance s, the lea se contract does not allow the owner of the spac e to sub stitute i t b y another o ne. Conse quently, the co nt rac ts mo st often d o not incl ude a sub stitution right to the owner. Al l benefits from use of the part of the la nd rented are obtaine d by Oran ge Belgiu m. In cer t ain c ircum s ta nces, Oran ge Belgiu m rents a space on the tower and/or in the shelter from a third-par ty operat or. This s pace can be defined as a d edicated s p a ce, volu me or pa yload in th e contract. The co ntract con veys the right to use an identifie d asset. The space in the tower an d gran ted by the third-party operator is physi cally ident if i able. Even in t he case th e space would no t be explici tly spec i f ied in the contract, it will bec ome iden tified at t he time the spot i s made a v a ilable for Orange Be lgium t o install it s e quipment. When the contract a l l ows the owner of t he tow er to subs t i t u te the space wh ich is in itially rente d by Oran ge Belg i u m, this right either is genera lly exerci sable onl y in very specific ca s e s (se c urity, heighten ing of the tower…) which can no t be an ti c ipated at t he beginnin g of the co ntract, or is su b je ct to th e pre-approval of Orange. Conseq uently, thi s substitut ion right is deem ed not su bst a ntive for the sup pli er . All the ec onomic ben efits fro m use of the space are obta ined by Orange Be lgi u m. Fixed w ireline: the se lease s mainly c oncern acce s s t o the loca l loop w here Oran ge is a mark et chal lenger (t ot a l or p art ial unbund ling), as w ell as the l ea se of la nd tran s m ission ca bles. ▪ Regardin g the acce ss to th e local lo op, the i d en tified asset is the de dicated p a ir of cop p er wires i nstalled fr om the telepho ne exchan ge / cen t ral office to the cus tomer's pre mises. In most ca ses, the p urchase or der for ms explic itly menti o n the spec ific pair o f copper w ires relate d to Oran ge. Ev en if the pa ir of co p p er wire s is not ex plicitly specifie d in the purchas e order for m, it wi ll become identified when the su bscriber ’s acces s is grante d to Orang e by the i ncumbent. Then Orange is able t o connect t he pair o f copper w ires from it s own D SLAM to the custo mer premi ses set-t op box. T he full unbund ling contrac ts do no t permit a ny subst itution righ t. All the ec onomic b enefits fr om the u s e of the dedicate d pairs of copper ar e obta i ne d by Oran ge. Indee d, Oran ge has the ex clusive u se of the d e dicate d pair of c opper w ires to deliver re t a il telecom municat i o n service s ( voice an d broadba nd) to it s final cu s t omer in ex change fo r a su bscription fee, which i s determ i ne d by Oran ge. Howe v er , as this i s not mat erial (only 10 line s are still in u se repre senting a total yearl y c ost of approxi mately 2, 000 eur os) for Oran ge Belgiu m S.A., these contrac ts are n ot part of t he IFRS16 calculat i o n. ▪ Regardin g the lea s e of lan d transmi ssion cable s, Orange B elgium lease either a speci fi c cable or a capac ity portion of a cable. • In so me cases, th e supplier gra nts Oran ge Bel gium th e use of a n identifie d and fully dedicate d cable (for ex ample dark fi ber cable) f or a deter mined peri od. Oran ge Bel gium is re sponsible f or directing and oper ating the dark fiber with its own ac t i ve network equipme nt and re s ource s. The ident ified as s et is the de dicated d ar k fiber in stalled by the supplier fr om a point A to a point B. I n most ca ses, th e contract s or the purch ase or d er form s explicitl y mentio n the specific dark fi b er involved (usually de scribed b y an i d en tification nu mber). E ven in the ca se wher e the dar k fiber is not ex plicitly spe cified in th e purchase order fo r m, it will b ecome i d en tified a t the time the acces s is grante d to Orange by the su pplier. Th en Orange is able t o conne ct its own ac tive e quipment t o th e d e dicate d dark fibe r. Unless a subs tantive sub stitution r ight is pr operly ide ntified i n a contrac t, Orange c onsider s that the d e dicate d dark fi b er s are identifie d assets. F urtherm ore, all the e conom ic benef i t s from the use of the dedica t e d dark fi ber are obtained by Orange. I ndeed, Orange has the exc l u sive use of the d e dicated fi b er ca b le used for c ore net w ork opera tions purpose s. • In so me cases, th e suppl i er grants Oran ge Bel gium a high spee d ac cess l ink connec ting two ge ographic points for a determ i ne d transm ission ca pacity an d period. The su pplier is res ponsible f or direct i n g and o p er ating the l ines and their maintenance with its o wn acti v e n etwork e quipment and reso urces. Th is form of capacity arr angeme nt does n ot conve y the right t o use an identified a s s e t. Thi s f orm of leased lines arrange ment (capac ity arran gement) o nly conve ys to Oran ge a righ t to acce s s a capaci ty (i.e. a qua ntity) as me ntione d in the offer s. Thi s kind of a greement does no t fall wit hi n the sc ope of IFR S 16. 1.15. Loyalty commission s Loyalt y c ommi s s ions earned by the d istributi on channel s on post-paid c ontracts ar e recog nised upfro nt upon c ontrac t subscri ption. 1.16. Financial discounts Financ i a l discoun ts gran t e d to cust omers or rece ived from sup pliers for earl y paymen ts are deducte d from r ev en ue and co sts of sales a s incurred. 1.17. D i v idend A divide nd declar ed by the General A ssembly of the shareh olders af ter the bala nce shee t date i s n ot recog nised as a liability at that da te. 91 Annual report 2021 1.18. TV content contracts Expense s relate d to acquire d TV distri bution ri ghts are r ecognised in the pro fit and l oss state ment as inc urred an d n ot capita lized as intan gible as s e t and con s e quentl y a mortized over t he term of the con t r act. The C ompany b e lieves tha t it on ly acquires the distribu tion right t o air a certa in channe l and ha s no view or influence on future schedu li n g and c ontent. As s uc h, there is only a limited a bility to predict si gnificant au diences or reven ues from fu ture airing s , which implies that the ac q u ired TV distribution rights do not meet the r equireme nts to be rec ognise d as an in tangible a sset under I AS 38. 1.19 Segment reporting Decision s on alloc ation of re source s a nd opera ting se gments’ p erforma nce asse ssment of Group co mponent s are made by the Chief Exec utive Officer (ma i n operation al decisi on- maker ) at operat i n g segmen ts’ level, mainly co mposed by geogra phical locatio ns. Thus, t he opera t i ng segmen ts are: Belgiu m; and Luxemb ourg. The use o f shared re source s is taken into acc ount in segme ntal res ults based either on contract ual agreem ents terms b e tween legal ent ities, or ex ternal be nchmark s, or by al locating costs am ong all se gments. The supp l y of share d resource s is includ ed in other re venues o f the ser v ic e provider, and the use of the resource s is inclu ded in ex p e nses take n into acc ount for the calcu lat ion of the ser vice user ’s EBITD AaL (as fro m acco unting year 2019). The cost of shared res ources ma y be aff ected b y changes i n contrac tual relatio nships or or ganisa tion an d may ther efore im pact the se gment res ults disc l o sed from one year to another. 1.20. Financial instruments The stan dard IFR S 9 "Fina ncial ins t ru ments" i s of manda tory app l ic ation since 1 Januar y 2018. IFRS 9 co mprises three pha ses: cla s s i f ication an d measure ment of f inancial a ssets an d liabilities, impairme nt of financ ial as sets and he dge accou nting. Classi f icat ion and measurem ent of financial assets and li abilities The cla ssification proposed by IFRS 9 determ in es the wa y assets ar e recogni sed and m easure d . The finan cial asse t classifica tion depend s on the co mbina t i on of the f ollowing two crite ria: the Gr oup’s bu s i ness mo del for mana ging finan cial as s e ts; and the co nt rac tual cas h flow char acter i s tics of the financial a sset (whe ther or not solely pa yments o f principa l a nd intere st ) . Based on the co mbined an alysis of th ese two cr iteria, IFR S 9 ident ifies three busines s model s : Financ i a l assets measured at fair valu e throug h profit or loss (FVR) Certain investment securitie s which are not cons olidate d or equit y -acco unted, a nd cash in vestment s such as n egotiab le debt securi ti e s and d ep osits, tha t are com pliant w i t h the Gr oup’s risk manageme nt polic y or invest ment strate gy, ma y be designa t e d by Orange as b e ing rec ognised at fair value thr ough p rof it or los s . These a ssets are r ecogni s e d at fair v a lue at incepti on and su bsequent l y . All change s in fa i r v alue ar e recorde d in net finan cial ex p e nses. Financ i a l assets measured at fair valu e throug h other comprehen sive inco me that ma y be recla ssified (or not) t o profit or los s (FVOCI) Investm ent secur ities which are not co nsolida t e d or e q u ity-accounte d are, su bj e ct to exce ptions, re cogni s e d as as s e ts at fair value thr ough other compre hensive i ncome t hat may no t be recla s s i f ied to pr ofit/loss. They are r ecognise d at fair v a lue at incepti on and su bsequent l y . Temporar y change s in value and gains (losses) on dispo s a ls are rec orded in o ther com prehensi v e income t hat may n ot be recl assifie d t o profit/lo ss. Financ i a l assets measured at amorti zed cost (A C) This cat egory main ly inclu des loans an d recei v a bles. These ins t r uments are r ecogni s e d at fair v a lue at i nception a nd are subse quently mea sured a t a mortize d c ost using t h e effec t i ve intere st method. I f there i s any objec tive ev i d ence of impair ment of these assets, the value o f the asse t is revie wed at the en d of each reportin g period. An impair ment los s is recog nised in the income statemen t when im p a irmen t tests demons trate th at the fina ncial asse t carrying amount i s h igher th an its rec overable amoun t . For tra d e re ceiva bles, the pro visionin g syste m also co v er s ex pected lo sses. Asset s p r eviou s l y classifie d as avai lable-for-sale a ssets an d held- to -maturi ty inve s t ments un d er IAS 39 are now pre sented in the follo w in g categ ories: financ i al assets a t fair value through p r ofit or loss; financ i al assets a t fair value through other co mp r ehensive income; financ i al assets a t fair value through other compr ehensive in come that may be rec lassified to profi t o r loss; and financ i al assets a t amort i ze d cost. 92 Annual report 202 1 Impairm ent of fina ncial asset s IFRS 9 i ntroduce d a new ex pected l o ss mode l for imp ai r ment of f i na ncial as sets. The new stan dard require s expecte d c red i t losse s t o be take n into acco unt from the initial recognitio n of financ ial instru ments. In a ddition t o the exi sting provis ion syste m, the Group ha s electe d to app l y a simplif i e d appro ach of a nticipate d impairmen t upon a sset recog nition. Hedge a ccountin g Derivat ive instrume nts are m easure d a t fair va lue in the s t a tement of f inancial p osition an d presen ted accor ding to t he ir maturity date re gardless o f whether they qua lify for he dge accoun ting under I FRS 9. Interest -bearin g lo ans and b orrowin gs Loans an d borrow ings are i n itially rec ognised at the fair value of the considera tion recei ved less d irectly at tributab le trans ac tion costs. After ini tial reco gnition, in terest-bearing loans an d borrow ings are s u bsequent ly mea s ure d at am ortized cost u sing the e ffective intere st metho d . Gains an d losse s are recogn ised in inc ome when the l iabilities ar e derec ognised as well as t hrough the a mor tization pro cess. Trade a nd other sh ort-term pay ables Trade an d other s h ort-term p a yable s with no s t a ted intere st rate are measure d at the ori ginal invo ice or no minal a mount when the effect of discoun ting is im material. Offsettin g a fina ncial asset a nd a fi nancial liabi lity Trade rece ivable s a nd payab les are of fset and the net amount i s presented on the face of the balance shee t when suc h amoun ts may lega lly be o ffset and a c lear inten tion to s ettle th em on a ne t basis ex ists. 1.21 Revenue from contracts with customers IFRS 15 e stablishe s a com prehensi ve f ra mew ork for de termining whether, h ow much and whe n re v en ue is reco gnised. It re places IAS 18 Re venue, I AS 11 Co nstructio n Contract s and r elated inter pretation s. Most re venue fal ls within the applica tion sco pe of IFR S 15 “Reve nue from contract s with cu stomers”. Ora nge’ s product s a nd services are offere d to cus t o mers un der service contract s only an d contracts combini ng the equ ipment u sed to acce ss serv i ce s and/or o ther serv ice offers . Revenue is re cogn ised net of V AT an d other taxes collected on beha lf of go vernment s . (1) Stand alone se rvice offe rs (mobi l e services only, fixe d s ervices only, con v er gent ser vice) Orange B elgium S.A. pro poses to Mas s marke t and C orporate markets cu stomers a ran ge of fix ed and mobile tele phone ser vices, fixed and mobile I nternet acce ss ser vi c es and c ontent offer s (TV). Some contract s are for a f ixed term ( gen erally 12 or 2 4 month s), while o t her s ma y be termi nated at s hort notice (i.e. m onthly arr angemen ts or port i o ns of serv ices). Service re venue i s recogni s e d when the service is pro v i ded, base d on use (e. g. minu tes of traffic or bytes of data proce ssed) or the per iod (e.g. m onthly s er vice cos ts ) . Postpa id mobile r evenues are recog nised with out refe rence to act ual data o r voice u sage/all ow a nce. T he voice or data al lowanc e or the postpaid tari ff plan d oes not ha ve any im pa ct on the ca lculati on of the transaction price or en forcea ble perio d. For lim ited data off ers howe v er , any ac tual exces s data us age is bill ed and rec ognised as revenue as incurre d. Under s ome con t en t offer s, Orange may act solely as an agent en abling t he supply by a thir d -party of good s or service s to the customer and no t as a princ ipal in th e supply of the c ontent. In s uch case s, revenue is r ecogn ised net of a mounts tra nsferre d to the thir d-party. Contrac ts with cus tomers generall y do not inc lude a material righ t, as the price invo iced for c ontracts an d the ser vices purchased and cons umed by the cus t o mer bey ond the s pecific s cope (e.g. a dditiona l consum ption, opt i o ns, etc.) generally re flect the i r standalon e selling prices. Service o bligation s transferr ed to the cu stomer at the same pace are t rea ted as a single o bligatio n. When c ontracts i nc lude co nt rac t u al clauses coverin g commerc ial disc ounts (in i t ial discoun t on sig nature of t he contrac t or condit i o nal on a tt a ining a co nsumpti on thresho ld) or f ree offers (e. g. three m onths of subscr i p tion free o f charge), Orange B e lgium SA de fers these discount s or free of fers over t h e enfor ceable perio d of the co ntract (per iod dur i n g which O r ange Belgium S. A. and the cu stomer have a firm co mmitmen t). Where a pplic able, the co nsiderati on payab l e t o the cu stomer is r ecogni s e d as a d eductio n from re venue in ac cordance with the s pecific ter ms and condition s of each c ontract. (2) Sep arate equip ment sal es 93 Annual report 2021 Orange B elgium S.A. pro poses to Mas s marke t and C orporate market custo mers s ev eral way s to buy t hei r equipm ent (primari ly mobile p hones): e quipmen t sales ma y be separa te from or bundled with a ser vice offer . When separate fr om a ser vice off er, the amoun t invoiced is recogni sed in re v en ue on de livery and receivab l e immed i a tely or in instalmen t over a period of up to 24 months . Where pa yment s are r eceive d in instal ments, the offer co mprises a financia l c ompone nt and inter est is ca lculated a nd deducte d from t he a mount i n voiced an d recogni sed over the pay ment per iod in net f inance co sts. Such tra nsactions are howe ver limited. When t he equip ment sale i s c ombine d with a s ervice offer , the am ount alloc ated to t he equip ment (bund led sale – see be low) is recogni s e d in reve nue on d elivery an d receive d over the s ervice co ntract. Where Ora nge pur chases a nd sells e quipment to indirec t c hannels, the Grou p general ly consider s that Orange ma intains c ontrol until fina l resale to the end-cu stomer (t he distrib utor act s as an agen t), even wher e owner ship is tran sferred t o the dis t ri butor. Sales pr oceed s are therefore recogn ised whe n the en d -cu stomer tak es posses sion of the equip ment (on a ctivation) . (3) Bundl ed equip ment a n d s ervic e offers Orange proposes numerou s offers t o i ts Mass market an d C orpora t e market cu stomer s c omprisin g equipm ent and serv ices (e.g. a commun ication s c ontrac t ). Equipme nt revenu e is reco gnised separa tely if t he tw o compone nts are di stinct (i.e. if the cus tomer can re ceive t he ser v ic es separa tely). Where o ne of th e comp onents in the offer i s not at i t s s e parate s e lling pri ce, revenue is alloca ted to each com p o nent in prop ortion to th eir indiv idual selling prices. This is n otably the ca se in o ffers co mbining the sale of a mobi le phone at a reduce d price, where the i ndividual se lling pr ice of the m obile phone is con s i dered eq ual to its purchase c ost plus a commercia l mar gi n based o n marke t practice. The pr ovision of Modem s an d deco d er s (F or Internet / TV offer s ) is neither a separa te com p o nent of the Cab le a ccess s er vice nor a lease, as Orang e maintain s contr ol of the b ox and mo d e ms. (4) Servic e off er s to carrie rs ( whole sal e) The Gr oup has ma inly the following possible t ypes of commercia l agreemen ts entere d into w i t h Operat or customer s for d om e stic wholesa l e activiti es and Intern ational ca rrier o ff er s: Pay- as - you- go model: con tract genera lly app li e d to “legac y” regu lated acti v i ties (roam ing, da t a solution co ntracts,…), where contrac t services are not co vered b y a firm vo lume comm itment. Re venue i s recogni s ed a s the service s are pro vided (whi ch corresp onds to tran sfer of c ontrol) o v er the c ontractu al term; an d Send- or -pay model: co nt rac t wher e the pric e, volume and term are define d . The cu stomer has a comm i t ment to p ay the amoun t indicated in the con tract irres pective of ac tual traf fic consu med over the com mitment per iod. Thi s contract categor y notabl y includes cer tain MVN O contrac ts. The re lated revenue i s recognise d progre ssively base d on act ual traffic during t he period, to reflec t t ra nsfer of control to the custom er. In ca se MVNO c ontract s are struc tured with a minimu m commit ment, minimu m com mitments are r ecognise d as reve nue unles s usage excee ds the minimu m comm i t ment. Specific revenue s treams an d relate d recogniti on criter ia are as fo llows: Sales of equipm ent Sales of equipme nt to the distribut ion channe ls and to t he final cu stomers are recog nised in re v e nue u pon deliver y. Cons ignme nt sales are r ecogni s e d in reve nue upo n sale to the final customer. Reven ue from t he sale of p repaid cards Sales of p re paid car ds are rec ognised at facia l value as deferred in come at t h e time of sale and released i n the prof i t and los s stateme nt as reve nue upon u sage. Interco nnectio n revenu e Traffic re venue pa id by other teleco mmunica t i on oper ato r s for us e of our ne twork is recog nised up on usage. Reven ue shari n g Revenue ar i sin g from c ontracts w ith third-par ty conte nt provi d er s is recog nised after deduc t i on of the f ees pa id to them in remuner ation of t he produc t or serv i ce delivere d. Reven ue deferred until pay ment fo r w hich coll ectio n is not co nsidered p robable Revenue of whic h the collec tability is not reas onably assured at the point o f sale is deferred un til the p ayment ha s been received. 94 Annual report 202 1 1.22 Earnings per share The Gr oup disc l o ses both basic earn ings per share and dilute d earn i n gs per shar e for con tinuing opera tion s: ▪ basic e arnings p er share ar e calcula ted by di v i ding net income fo r the year attributab le to the e quity hol ders of the Grou p by the weig hted a v er age num b er of or dinary share s outstan ding duri ng the period; ▪ diluted e arnings per share ar e calcula ted base d on the s ame net income an d weigh ted- a verage number o f o r dinar y shares outstan ding after adjustmen t for the e ffects of all dilut iv e poten t i al ordinar y share s. When basic earn ings per s hare are ne gative, d il u ted earnin gs per share are identica l to bas ic earning s per shar e. Trea s ury share s owne d , which ded ucted fr om the c onsolidate d e quity, do not en ter into t he calcu l at ion of ear nings per share. Note 16: S u bsequent events On 22 Marc h 20 22, the BIPT declare d th at fi v e ap pli ca t i ons were s u bmitted and r etaine d for the au ction f or the 900 MHz, 1800 MHz and 2100 MH z ra dio freque ncy bands, which are mainly use d for 2G, 3G and 4G applica tions, and that there are equa lly five candida tes retaine d f or the 3400-3 800 MHz b an d, which is a core band for the 5 G t e chno l o gy. For the o t he r 5G- re late d b ands, the BIPT anno unced tha t 5 applicant s m a y obtain spe ctrum in the 70 0 MHz band, a nd that 3 cand idates app lied and were reta ined for the 140 0 MHz ban d. The identit y of the opera to r s is no t disc l osed as t he procedure is anon ymous until the final outco m e of the auct ion, a nnounce d f or June 202 2. Also on 22 March 2022, the IT-grou p NRB announc ed it i s one of t he cand idates for the spectrum which it would use for B 2B applica t i ons onl y. None o f the abo v e mentio ned even ts were a djusting events and no other adjust i ng events ar ose b et w e en t he balance sheet date and the date at which the f inancial s tatements have bee n authorise d for i ssue. 95 Annual report 2021 Note 17: Glossary Finan cia l KPIs Revenues revenues in line with the offer Provide Group revenues split in convergent services, mobile only s er v ice s , fixed on ly se r vi ce s, IT & integration services, wholesale, equipment sales and other revenu es . retail service revenues Revenue aggregation of revenues from convergent services, mob ile only ser v ic es , fixed on ly services, IT & integration services. convergent services Revenues from B2C convergent offers (excluding equipment sales). A convergent offer is def ined as an offer combining at least a broadband access (xDSL, FTTx, cable or Fixed -4G (fLTE) with cell -lo ck) and a mobile voice contract (excluding MVNOs: Mobile Virtual Network Operator). Convergent services revenues do not include incoming and visitor roaming revenu es . mobile only services Revenues from mobile offers (excluding B2C con v ergent off er s an d equipment sales) and M2M connectivity, excluding incoming and visitors roaming revenues. fixed only services Revenues from fixed offers (excluding B2C convergent offers and equipment sales) including (i) fixed broadband, (ii) fixed narrowband, and (iii) data infrastructure, managed networks, and incoming ph one calls to customer relations call centres. IT & integratio n services Revenues from collaborative services (consulting, integration, messaging, project management), application services (customer relationship management and inf r astructure applications), hosting, cloud computing services, security services, video- con ferencing and M2M services. It als o includes equipment sales associated with the supply of these services. Wholesale Revenues with third-party telecom operators for (i) mobile: incoming, visitor roaming, domestic mobile interconnection (i.e. network sharing and domestic roaming agreement) and MVNO, and for (ii) fixed carriers services. equipment sales Revenues from all mobile and fixed equipment sales, excluding (i) equipment sales associated with th e supply of IT & Integration services, and (ii) equipment sales to dealers and brokers. other revenues Include (i) equipment sales to brokers and dealers, (ii) portal, on-line advertisi n g revenues, (iii) corporate transversal business line activities, and (iv) other miscellan eous revenu es. Profit & Loss Data on a comparable basis Data based on comparable accounting principles, scope of consolidation and exchange r ates ar e presented for previous periods. The transition from data on an historical basis to data on a comparable basis consists of keeping the results for the period ended and then restating the results for the corresponding period of the preceding year for the purpose of presenting, over comparable periods, financial data with comparable accountin g pr inciples, scope of con s olidation and exchange rate. Th e method used is to apply to the data of the corresponding period of the preceding year, th e accounting principles and scope of consolidation for the period j ust e n de d a s well as the av e rage exchange rate used for the income statement for the period ended. Changes in data on a comparable basis reflect organic business chan ges . Data on a comparable basi s is not a financial aggregate as defined by IFRS and may not be c ompa rable to s imi lar l y -named indicators used by other companies. EBITDAaL (since 1 January 2019) EBITDA after lease is not a financial measure as defined by IFRS. It c orresponds to th e net p rofit before: taxes; net interest expense; share of profit/losses from as soci ate s; imp ai rme n t of goodwill and fixed assets; effects resulting from business combinations; reclassification of cumulative translation adjustment from liquidated entities; depreciation and amortizatio n; the effects of s ign ifica n t l it igation, specific labour expenses; review of the investments and business portfolio, restructuring cos t s. Cash flow statement Operating cash flow EBITDAaL minus eCapex since 1 January 2019. Organic cash flow Organic cash flows correspond to net cash provided by operating activities decreased by capex/eCapex and the repayment of lease liabilities, increased by proceeds from sale of property, plant and equipment and intangible assets and adjusted for the payments for acquisition of telecommunications licences. eCapex (since 1 January 2019) Economic Capex is not a financial measure as defined by IFRS. It corresponds to cap ita l ex penditures on tangible and intangible assets excluding telecommunication licen ce s and excluding inve stme n ts through fi nancial leases less proceeds from the disposal of fixed an d intan gi ble a ss et s. licences & spectrum Cash out related to acquisitions of licences and spectrum. change in WCR Change in net inventories, plus change in gross trade receivables , p lus change in trade payables, plus change in other elements of WCR. other operatio nal it ems Mainly of fset of non-cash items included in adjusted EBITDA, items not included in adjusted EBITDA but included in net cash provided by operating activities, and cha nge in fixed asset paya b les. net debt variat i on Variation of net debt lev e l. 96 Annual report 202 1 Operatio n al KPIs Convergent B2Cconvergent customer base Number of B2C customers holding an offer combining at least a broadband access (xDSL, FTTx, cable or Fixed-4G (fLTE) with cell-lock) and a mobile voice contract (excluding MVNOs). B2C convergent ARPO Average quarterly Revenues Per Offer (ARPO) of convergent servi ces are calculated b y d i vid ing (a) the revenues from convergent offers billed to the B2C customers (excluding eq u ipm ent sa le s) ov e r the past three months, by (b) the weighted average number of convergent offers over the same period. The weighted average number of convergent off ers is the av erage of the m on thly a v er age s during the period in question. The monthly average is the arithme tic mean of th e n umber of convergent offers at the start and end of the month. Convergent ARPO is expressed as month ly revenues per convergent offer. Mobile mobile customer base (excl. MVNOs) Number of customers with active simcard, including (i) M 2 M and (ii) business and internet everywhere (excluding MVNOs). Contract Customer with whom Orange has a formal contractual agreement with the customer billed on a monthly basis for access fees and any additional voice or data us e. Prepaid Customer with whom Orange has written contract with the customer paying in advance an y data or voice use by purchasing vouchers in retail outlets for example. M2M (machine- to -machine) Exchange of inf ormati on be tween machines that is established b etw een the central control sys t em (server) and any type of equipment, through one or several communication network s . mobile B2C convergent custo mer s Number of mobile lines of B2C convergent customers. mobile only customers Number of mobile customers (see definition of this term) excluding mobile convergent customers (see definition of this term). MVNO customers Hosted MVNO customers on Orange networks. mobile only ARPO ( quarterly) Average quarterly Revenues Per Offer (ARPO) of mobile only serv ice s ar e ca lc u lated by dividing (a) the revenues of mobile only services billed to the customers, g enerated o ver the pas t three months, by (b) the weighted average number of mobile only customers (excluding M2M customers) over the same period. The weighted average number of customers is the average of the monthly averages during the period in question. The month ly av erag e i s th e ar ithmetic m ean of the number of customers at the start and end of the month . M obil e only ARP O i s exp resse d as monthly revenues per customer. Fixed number of lines (copper + FTTH) Number of fixed lines operated by Orange. B2C broadband converg ent customers Number of B2C customers holding an offer combining at least a broadband access (xDSL, FTTx, cable or Fixed-4G (fLTE) with cell -lock) and a mobile voice contract (excluding MVNOs). fixed broadband only cus t omers Number of fixed broadband customers excluding broadband convergent customers (see definition of this term). fixed only broadband AR PO (q uarterly) Average quarterly Revenues Per Offer (ARPO) of fixed only broadband services (xDSL, FTTH, Fixed-4G (fLTE), satellite and Wimax) are calculated by dividing ( a) the r even ues from consumer fixed only broadband services over the past three months, by (b) the wei gh ted a ve r age num ber of accesses over the same period. The weighted average number of ac ce ss e s i s th e a verage of the monthly averages during the period in question. The month ly ave rage i s th e ar ithmetic m ean of the number of accesses at the start and end of the month. ARPO is expressed as monthly revenues per access. 97 Annual report 2021 98 Annual report 202 1 Orange Belgium S.A. annual accounts 2021 Comme nt s on Orange Belgium S. A.’s 2021 annual accounts prepared according to Belgian accounting standards The stat utory inc ome state ment and b alance s h eet are pre s e nted hereaf ter. A s for the ex haustive ann ual account s of Orang e Belg i u m S.A., we refer y ou to the web site of the Ce ntral Ba lance Shee t Office ( http:// www.nbb. be ). 99 Annual report 2021 Balance sheet after a pp ropriati on in thousand EUR 31.12.2021 31.12.2020 ASSETS Formation expenses 240 152 Fixed assets 986 867 1 053 802 Intangible fixed assets 204 915 207 065 Tangible fixed assets 680 792 724 962 Land and buildings 296 660 363 510 Plant, machinery and equipment 311 604 299 161 Furniture and vehicles 16 816 15 587 Other tangible fixed assets 14 727 12 005 Tangible assets under construction and advance payments made 40 986 34 699 Financial fixed assets 101 159 121 775 Affiliated enterprises 91 618 112 584 Participating interests 86 206 107 172 Amounts receivable 5 412 5 412 Other enterprises linked by participating interests 9 147 8 797 Participating interests 9 147 8 797 Other financial assets 395 395 Amounts receivable and cash guarantees 395 395 Current assets 245 092 261 107 Amounts receivable after more than one year 1 111 Other amounts receivable 1 111 Stocks and contracts in progress 17 780 20 530 Stocks 17 780 20 530 Goods purchased for resale 17 780 20 530 Amounts receivable within one year 224 200 234 900 Trade debtors 155 220 173 354 Other amounts receivable 68 980 61 546 Current investments 230 2 705 Own shares 0 1 519 Other investments and deposits 230 1 186 Cash at bank and in hand 978 318 Deferred charges and accrued income 1 904 2 543 Total Assets 1 232 199 1 315 061 100 Annual report 202 1 in thousand EUR 31.12.2021 31.12.2020 EQUITY AND LIABILITIES Equity 562 187 533 903 Capital 131 721 131 721 Issued capital 131 721 131 721 Reserves 13 172 14 691 Legal reserve 13 172 13 172 Reserves not available 0 1 519 In respect of own shares held 0 1 519 Accumulated profits (losses) (+) ( -) 417 294 387 492 Investment grants 0 0 Provisions and deferred taxes 86 554 79 075 Provisions for liabilities and charges 86 554 79 075 Pensions and similar obligations 80 23 Other risks and costs 86 474 79 052 Amounts payable 583 458 702 083 Amounts payable after more than one year 120 012 13 Financial debts 120 000 0 Other loans 120 000 0 Other amounts payable 12 13 Amounts payable within one year 410 814 646 007 Current portion of amounts payable after more than one year falling due within o ne yea r : 0 200 000 Financial debts 29 272 18 217 Credit institutions 0 0 Other loans 29 272 18 217 Trade deb ts 275 938 300 971 Suppliers 275 938 300 971 Bills of exchange payable 0 0 Taxes, remuneration and social security 100 531 93 581 Taxes 74 224 67 780 Remuneration and social security 26 306 25 800 Other amounts payable 5 074 33 239 Accrued charges and deferred income 52 632 56 062 Total Equity and L iab ili ties 1 232 199 1 315 061 101 Annual report 2021 Income statement in thousand EUR 31.12.2021 31.12.2020 Operating income 1 306 972 1 259 778 Turnover 1 255 393 1 209 033 Own construction capitalized 14 507 12 596 Other operating income 37 072 38 149 Non-recurring operating income 0 0 Operating charges 1 240 162 1 198 925 Raw materials, consumables 612 396 587 449 Purchases 609 473 583 824 Stocks: decrease (increase) (+) (-) 2 923 3 625 Services and other goods 208 953 222 112 Remuneration, social security costs and pensions 127 308 129 502 Depreciation of and amounts written off formation expenses, inta ngible a n d tangible fixed assets 269 742 245 296 Amounts written off stocks, contracts in progress and trade debt ors : appropriations (write-b a cks) (+) (-) 1 184 - 5 976 Provisions for risks and charges: appropriations (uses and write-backs) (+) ( -) - 146 - 1 765 Other operating charges 20 725 22 307 Non-recurring operating charges 0 0 Operating profit ( l oss) (+) (-) 66 811 60 853 Financial income 613 707 Recurring financial income 413 707 Income from financial fixed assets 42 0 Income from current assets 141 535 Other financial income 230 172 Non-recurring financial income 200 0 Financial charges 22 585 6 114 Recurring financial charges 1 619 4 621 Debt charges 866 3 770 Other financial charges 753 851 Non-recurring financial charges 20 966 1 492 Profit (loss) for the period befo re taxes (+) ( -) 44 839 55 447 Income taxes (+) (-) 13 832 13 764 Income taxes 13 832 14 831 Adjustment of income taxes and write- b acks of ta x provisions 0 1 068 Profit (loss) for the period (+) (-) 31 006 41 683 Profit (loss) for the period availa ble for appro p riation (+) (-) 31 006 41 683 102 Annual report 202 1 Appropriations and withdra wings in thousand EUR 31.12.2021 31.12.2020 Profit (loss) to be a pprop riat ed (+) ( -) 418 498 419 831 Profit (loss) to be appropriated (+) (-) 31 006 41 683 Profit (loss) to be carried forward (+) (- ) 387 492 378 148 Transfers from capital and reserves 0 0 From reserves 0 0 Transfers to capital and reserves 0 1 321 To other reserves 0 1 321 Profit (loss) to be carr ied f orward (+) (-) 417 294 387 492 Profit to be d istribute d 1 204 31 018 Dividends 0 30 007 Other beneficiaries 1 204 1 001 103 Annual report 2021 Corporate Gover nance Statement 1. Introduction Orange Belgium adopted the 2020 Belgian Corporate Governance Code (the “CGC”) as its compulsory refer ence code as dened by the Belgian Code of Companies and Associations. It is available on the Corporate Governance Committee website (http://www . corporategovernancecommittee.be). However , the application of the principles of the CGC takes into account the company’ s specicities, its size, needs and ownership structure. Orange Belgium’ s Corporate Governance Charter (the “Charter”) amended to comply with the CGC and approved by the Board of Dir ectors on 27 November 2019 became effective on 6 May 2020. It is available on Orange Belgium’ s website (https://corporate.orange.be/en/nancial-information/ corporate-governance). This Charter describes the main aspects of the company’ s corporate governance, including its governance structure and the internal rules of the Board of Directors, the Executive Management, and other committees set up by the Board of Dir ectors. The company considers that its Charter as well as this Corporate Governance Statement reect both the spirit and the provisions of the CGC and the r elevant provisions of the Belgian Companies and Associations Code, with the exception of the two following deviations, as detailed in Appendix VI of the Charter: a. Remuneration of Non-Executive Directors Article 7.6 of the CGC stipulates that each non-executive director receives a part of his remuneration under the form of shares of the Company . The Board believes nonetheless that it is in the best interest of the Company and its stakeholders to deviate from this provision for the following reason: The remuneration policy of the non-executive directors is in first instance based on the will to attract, motivate and keep qualified directors having the profile and experience required for business administration. In order to achieve that, the Company operates a transparent remuneration policy in line with market standards and taking into account the scale, the organization and the complexity of the Company . No performance related remuneration in connection with the performance of the Company is anticipated for non-executive directors, in accordance with article 7.5 of the CGC. In order to avoid that the non-executive directors, among which the independent directors, would be overly influenced by the stock market price of the Company’ s shar e, the Company has decided not to grant a part of their remuneration under the form of shares of the Company . The Company believes that this deviation to the CGC allows the non- executive directors to be the guardians of the legitimate interests of all stakeholders of the Company and to focus on its long-term perspectives. The Company underlines that the directors (executive and non-executive) belonging to Orange Group exercise their mandate free of charge and that the latter act as well in the best interests of the Company and in a perspective of sustainable value-creation for the shareholders and the stakeholders as a whole. Moreover , the remuneration policy (as described in the Remuneration Report that is submitted to the approval of the General Meeting) has never generated any issues or has never resulted in arbitration or adverse behaviour . It allows to achieve a balance between the various underlying objectives of the CGC as a whole. b. Ownership Threshold for Executive Management Article 7.9 of the CGC stipulates that the Board determines a minimal ownership threshold that the managers (i.e. the members of the Executive Management) should hold. The Board believes nonetheless that it is in the best interest of the Company and its stakeholders to deviate from this provision for the following reason: The remuneration policy of the Executive Management is in first instance based on the will to attract, motivate and keep qualified executive managers having the profile and experience required for operational business management. In order to achieve that, the Company operates a transparent remuneration policy in line with market standards and taking into account the scale, the organization and the complexity of the Company . The various components of the r emuneration of the Executive Management are described in the Remuneration Report. In accordance with article 7.7 of the CGC, the Board ensures that there is an appropriate balance between fixed and variable remuneration, and cash and deferred remuneration. In order to match the interests of the executive managers to the objectives of sustainable value-creation, the variable part of the remuneration is structured to link reward to individual performance and to the overall performance of the Company . As the r emuneration policy of the Executive Management already had the ambition to remunerate the members of the Executive Management in relation to the short-term performance and the realization of the long-term strategic ambitions of the Company , the Board has decided The chapter contains more information than the minimum framework r equires Annual report 2021 104 not to impose to the members of the Executive Management to keep, in addition, a minimal amount of shares. Such an obligation would only add little added value compared to the remuneration policy already put in place and the monitoring hereof could in addition create useless administrative burden. The Board believes therefore that the current remuneration policy (as described in the Remuneration Report that is submitted to the approval of the General Meeting) already encourages the Executive Management sufficiently to act in the best interests of the Company and in a perspective of sustainable value-creation and that it allows to achieve a good balance between the various underlying objectives of the provision and of the CGC as a whole. 2. Risk Management and Internal Control A comprehensive, consistent and integrated risk management approach is in place to capitalize on syner gies between Audit, Control and Risk functions at all levels of the or ganisation. This approach is intended to pr ovide reasonable assurance that operating and strategic targets ar e met, that current laws and regulations ar e complied with, and that the nancial information is reliable. Risk management The framework and the process of risk management, as well as the organization and the r esponsibilities relating to it are formalised in a charter as well as a risk map, validated by the Executive Management and approved by the Audit Committee and the Board of Dir ectors. Business and operational key players in the differ ent departments are responsible for the identication, analysis, assessment and treatment of their risks. The company risk map is approved at least once a year by the Executive Management and submitted to the Audit Committee for overall assessment of approach and methodology . T oday , this risk map includes, but is not limited to, the following risk clusters: • Geopolitical instability , liquidity and macro-economic crisis • Reputational damage • Breach of availability , integrity or condentiality of data or information • Corruption, ethical breach • Frauds • Damage to property or other assets • Destabilisation by a disruptive business model or innovation (sectorial risk) • Inability to improve the business models on conver gence • Failure or malfunction of the pr otability monitoring, decision process, the pr oject mode or the strategy • Failure to transform or simplify pr ocesses and systems • Human health and safety • Errors and nancial pr ejudices • Insufcient, costly , wrong or late infrastructure investment (sectorial risk) • Loss of or difculty to attract and r etain key or rare skills • Major business interruption • Non-compliance with or increase of laws or r egulations • Key partnership underperformance • Impacts of climate change • Security (including cybersecurity) • M&A monitoring Internal control environment and contr ol activities For the purpose of managing risks, an internal control approach and framework has been deployed for many years at Orange Belgium. It covers aspects such as governance, delegations of powers and signatures, policies, pr ocesses, procedur es, segregation of duties and controls to ensur e selected risk treatments (r etain, reduce, transfer , avoid) are effectively carried out. Through its vision, its mission and its values, Orange Belgium Group denes its corporate cultur e and promotes ethical values that are r eected in all its activities. There is a charter of professional ethics at company level and a section of the company’ s intranet, accessible to all employees, that is dedicated to compliance, ethics, corporate social responsibility and to the company cultur e in general. Within the framework of promoting ethical values, a pr ofessional warning system allows for reporting condential information intended to strengthen the contr ol environment. The human resour ces management and the social responsibility of the company ar e described in the corporate brochur e of the annual report. The management and control of the company and the functioning of the management bodies are detailed in the declaration of corporate governance contained in the annual report as well as in the company’ s articles of association. This corporate governance covers in particular the responsibilities of these bodies, their internal regulations as well as the main rules to be r espected in the management of the company . The control activities ar e carried out rstly by the functional or operational managers under the supervision of their supervisors. All major processes and the contr ols that they encompass are formalised. As part of the Orange Gr oup, this internal control environment ensur es conformity with the American Sarbanes-Oxley and Sapin II laws requir ements that must be complied with at the Orange Group level. All documentation is regularly r eviewed and duly updated. Specic functions of assurance (i.e. fraud, revenue assurance, data privacy , security , business continuity and crisis management), compliance and audit (i.e. ‘Internal Audit’) have also been set up. The budget control covers not only the budget aspects, but also key performance indicators. In order to ensur e adequate nancial planning and follow-up, a nancial planning procedur e which describes planning, quantication, implementation and review of the budget in alignment with the periodical forecasts, is closely followed up. Information and communication The company maintains transparent communication its employees, in conformity with its values and based on a multiple system integrating in particular its intranet and periodical presentations by the Executive Management at differ ent levels. Advanced data processing and contr ol processes ensure reliable information is made available in a timely manner , in particular nancial reporting. Orange Belgium Group aspir es to be open and transparent in its disclosure to the public, shar eholders, customers, employees and other stakeholders. The company publishes detailed nancial reports pr oviding a comprehensive set of key performance indicators and nancial statements for each business segment. These results ar e made available to the press and to the investor and nancial analyst community during dedicated meetings (conference calls/webcasts/ Annual report 2021 105 physical meetings). The provided information is accessible to all and available on the company’ s website (https://corporate. orange.be). Monitoring In addition to the front-line contr ol activities, specic functions of assurance, compliance and audit are in place to ensur e the internal control environment is constantly assessed. Internal Audit reports to the Audit Committee to ensur e it can carry out its assignments with independence and impartiality . The Audit Committee monitors the responsiveness to audit engagements and the follow-up of (corrective) action plans. The Audit Committee also monitors and controls the r eporting process of the nancial information disclosed by the company and its reporting methods. T o this effect, the Audit Committee discusses all nancial information with the Executive Management and with the external auditor and if required, examines specic issues with respect to this information. The Audit Committee of the Board of Dir ectors monitors and reviews at least once a year with the Executive Management the quality and effectiveness of the risk management and the internal control environment set up by the Executive Management. It must monitor that the main risks, such as but not limited to fraud, revenue assurance, data pr otection, security , compliance & ethics, security and legal, are properly identied, managed and disclosed in accordance with the framework which was approved by the Boar d of Directors. For more detailed information r egarding this monitoring, refer ence is made to Audit Committee T erms of Reference (Appendix III of the Corporate Governance Charter). 3. Shareholders The following table shows Orange Belgium’ s shareholder structure as at 31 December 2021, as evidenced by the notications received pursuant to article 14, al. 4 of the Law of 2 May 2007: Shareholders' structur e based on declarations date declaration # shares notified % stake notified % stake owned ASB 25/05/2021 46 191 064 76.97% 76.94% Polygon Global Partners LLP ** 27/05/2021 3 215 933 5.36% 5.36% Boussard & Gavaudan Asset Management 18/04/2014 1 810 714 3.02% 3.02% Free oat 14.66% 14.67% T otal 100.00% 100.00% Denominator 60 014 414 Denominator *** 59 944 757 * The position notied consists of 46,121,407 shares dir ectly held by ASB and 69,657 treasury shares held by Orange Belgium ** Polygon owns 1,657,000 shares and 1,546,000 swaps *** 69,657 treasury shar es have been cancelled on 23 July 2021 Boussard & Gavaudan has declar ed on 11 February 2022 that it has crossed the 3% threshold downwards in January 2020. The r emaining position was sold in April 2021 Annual report 2021 106 Atlas Services Belgium – an Orange S.A. wholly-owned subsidiary – is Orange Belgium’ s main shareholder . In compliance with Belgian legal regulations on transpar ency as regar ds notication of shareholding thresholds of listed companies, Orange Belgium sets notication thresholds at 3%, 5% and multiples of 5%. Notification in compliance with the law on takeover bids On 24 August 2009, the company received a notication fr om its ultimate parent company Orange S.A. pursuant to Article 74 §7 of the law of 1 April 2007 concerning takeover bids. This notication detailed Orange S.A.’ s ownership of Orange Belgium. As at 24 August 2009, Orange S.A. held indirectly 31,753,100 Orange Belgium shares. The chain of contr ol was reconrmed on 1 July 2013 after an internal restructuring of the Orange Group. As a result of a public takeover bid launched in 2021, Orange S.A. increased its indir ect ownership to 46,191,064 Orange Belgium shares and notied Orange Belgium ther eof on 26 May 2021. The organisation chart below illustrates Orange Belgium’ s corporate structure as at 31 December 2021. Orange (France) Atlas Services Belgium (Belgium) Orange Belgium (Belgium) Orange Communications Luxembourg (Luxembourg) Smart Services Network (Belgium) IRISnet (Belgium) Walcom Business Solutions (Belgium) BKM (Belgium) CC@PS (Belgium) Belgian Mobile ID (Belgium) A3Com (Belgium) A&S Partners (Belgium) CommuniThings (Belgium) MWingz (Belgium) Upsize (Belgium) 100% 100% 100% 76.94 % 100% 6.59 % 100% 100% 10.45% 50% 100% 100% 100% 28.16 % Annual report 2021 107 4. Relevant information as provided by Article 34 of the Royal Decree of 14 November 2007 Capital structure – special contr ol rights The share capital of Orange Belgium is r epresented by 59,944,757 shares without nominal value, each r epresenting an equal share of the capital. The shar es are register ed or dematerialised. There ar e no specic categories of shares and all shares have the same voting rights with no exceptions. The principle of the company has always been to respect the rule “one share, one vote”. The company has decided not to make use of the option offer ed by article 7:53 of the Code of Companies and Associations to grant a double voting right to fully paid-up shares that ar e registered in the shar e register for at least two years without interruption in the name of the same shareholder . T ransfer of shares No specic restrictions have been placed on the fr ee transfer of shares other than those set out by law . Exercise of voting rights No legal or regulatory r estrictions are placed on the exercise of voting rights as regar ds the company’ s shares. Shareholder agr eements Orange Belgium is not aware of any shar eholder agreements which could restrict the transfer of shar es and/or the exercise of voting rights. Appointment, renewal, r esignation and dismissal of directors The directors ar e appointed or re-appointed by the General Meeting upon proposal by the Boar d of Directors, which takes into consideration the proposals made by the Remuneration and Nomination Committee and by those shareholders holding at least 3% of the share capital. The dir ectors are generally appointed for a period that does not exceed four years in accordance with the r ecommendation of article 5.6 of the CGC; their mandate can be renewed by a r esolution of the General Meeting. Such renewal is subject to the limits prescribed by law , as regards the r e-appointment as independent director . If a directorship becomes vacant during the term of of ce, the remaining dir ectors have the right to appoint a replacement director , on the recommendation of the Remuneration and Nomination Committee. The nal appointment of the director is submitted to the next General Meeting for approval. The directors may be dismissed at any time by the General Meeting. The General Meeting held in 2021 has renewed the dir ectors’ mandates for a term of two years. Modification of the Articles of Association The General Meeting may only deliberate on and decide to amend the articles of association when the changes proposed are set out specically in the notice convening the General Meeting, and when the shareholders pr esent or represented by proxy , represent at least half the capital. If the latter condition is not met, a second General Meeting must be convened which shall validly deliberate and decide, regar dless of the share of capital r epresented by the shareholders present or r epresented by proxy . The modication shall only be accepted if approved by three quarters of the votes cast, not counting abstentions. A modication of the company purpose shall only be accepted if approved by four fths of the votes cast. Powers of the Board of Dir ectors, in particular to issue and buyback shares The Board of Dir ectors is not empowered to issue new shares as long as the company does not make use of the authorised capital procedur e. The Extraordinary General Meeting of 6 May 2020 has, in accordance with and within the limitations set out in the Code of Companies and Associations, authorised the Board of Directors to acquir e own shares of the company , by purchase or exchange, on or outside the regulated market. The company may only acquire shar es of the company if it does not hold more than 20% of its own shar es. The purchase price shall not be less than eighty-ve per cent (85%) or more than one hundred and fteen per cent (115%) of the average closing price on the regulated market on which the shar es were admitted during the 5 working days pr eceding the purchase or exchange. This authorisation shall r emain valid for a period of ve (5) years as from 6 May 2020. This authorisation extends to the acquisition (by purchase or exchange) of shares of the company by a dir ect subsidiary company , in accordance with article 7:221 and following of the Code of Companies and Associations and under the conditions laid down in those provisions. The Board of Dir ectors is also authorised to alienate or to cancel the own shares. This authorisation extends to the cancellation of the shares of the company acquir ed by a direct subsidiary as well as to the alienation of the company’ s shares by a direct subsidiary company at a price determined by the Board of Dir ectors of the latter . The Board of Directors of the company is also authorised to have the cancellation of own shares of the company r ecorded by a notary public, and to amend and co-ordinate the Articles of Association in or der to bring them in line with the relevant decisions. On the basis if this power , the Board of Directors decided on 23 July 2021 to cancel 69,657 own shares. These shar es were acquired in the framework of the liquidity contract that was entered into between the Company and Kepler Cheuvr eux and which was terminated on 2 September 2021. Significant agreements that may be impacted by a change of control of the company Agreements to which the company is a party and which ar e covered by Article 7:151 of the Code of Companies and Associations, where applicable, ar e presented and approved by the Special General Shareholders Meeting. Agreements pr oviding for compensation in the event of a public takeover bid There ar e no specic agreements between the company and the members of the Board of Dir ectors or the personnel which provide for compensation in the event of a public takeover bid. Annual report 2021 108 5. Composition and functioning of the Board of Directors and its Committees The rules governing the structure, composition, functioning role and assessment of the Boar d of Directors and of its Committees are set out in the Charter . The internal rules of the Board of Dir ectors (Appendix I), the Audit and Risk Committee (Appendix III) and the Remuneration and Nomination Committee (Appendix IV) are attached to the Charter . The company opts for a one-tier governance structure: the Board of Dir ectors has the power to accomplish all required or useful acts in order to achieve the corporate purpose of the company , except for those acts that are reserved by law to the General Meeting. The operational management of the company , including without limitation the daily management, is carried out by the Executive Management (see section 6 below). Board of Dir ectors Structure and composition The Board of Dir ectors is comprised of a reasonable number of directors enabling its ef fective functioning, while taking into account the specicities of the company . As at 31 December 2021, the Board of Dir ectors consisted of 11 members: • 10 of the 11 members of the Board of Dir ectors are non- executive directors; • amongst the non-executive directors 3 dir ectors are independent; • 4 members of the Board of Dir ectors are women; • There is no age limit within the Boar d of Directors. The composition of the Board of Dir ectors is determined on the basis of diverse and complementary competencies, experience and knowledge, as well as on the basis of gender and age diversity and diversity in general. In particular , the composition of the Board of Dir ectors must be such that the Board of Dir ectors, as a whole, possess the following competencies: (i) “generic competencies”, namely in the eld of nance, accounting, governance, management and organisation; and (ii) “industry specic competencies”, namely in the eld of operations, technology , distribution, etc. During 2021, the following changes occurred within the Boar d of Directors: • The mandates of the following Directors wer e renewed for a term of two years by the Ordinary General Meeting of Shareholders on 5 May 2021: Mrs. Clarisse Heriar d Dubreuil, Mrs. Mari-Noëlle Jégo-Laveissière, K2A Management and Investment Services BVBA repr esented by Mr . Wilfried V erstraete, Leadership and Management Advisory Services SPRL repr esented by Mr . Grégoire Dallemagne, Mrs. Béatrice Mandine, Mr . Christophe Naulleau, Mr . Xavier Pichon, The House of V alue – Advisory & Solutions BVBA represented by Mr . Johan Deschuyffeleer , Société de Conseil en Gestion et Stratégie d’Entreprises SPRL r epresented by Mrs. Nadine Rozencweig-Lemaitre and Mr . Jean-Marc Vignolles; • Mr . Matthieu Bouchery was appointed by the Ordinary General Meeting of Shareholders on 5 May 2021 for a term of two years, to replace Mr . Ramon Fernandez; • The mandate of Mrs. Martine De Rouck expired at the end of the Ordinary General Meeting of Shar eholders of 5 May 2021 and was not renewed; • Mr . Christian Luginbühl was co-opted by the Board of Directors with ef fect from 1 July 2021, to replace Mr . Christophe Naulleau. Name Function Main function Bor n Nationality End of mandate The House of V alue - Advisory & Solutions (6) Director/ Chairman Director of companies NA Belgian AGM 2023 Xavier Pichon (1)(2) Executive director CEO - Orange Belgium 1967 French AGM 2023 K2A Management and Investment Services (3)(7) Independent director Director of companies NA Belgian AGM 2023 Société de Conseil en Gestion et Stratégie d'Entreprises (3)(4) Independent director / Vice-Chairman Director of companies NA Belgian AGM 2023 C. Heriard Dubr euil (1) Director Head of Finance & Strategy Europe - Orange S.A. 1973 French AGM 2023 B. Mandine (1) Director Head of Communication & Brand - Orange S.A. 1968 French AGM 2023 Ch. Luginbühl (1)(8) Director Senior VP Governance & Large Projects - Orange S.A. 1967 Swiss AGM 2023 J.-M. Vignolles (1) Director COO Europe - Orange S.A. 1953 French AGM 2023 M.-N. Jégo-Laveissière (1) Director Deputy CEO Europe - Orange S.A. 1968 French AGM 2023 M. Bouchery (1) Director Head of Group Finance and T reasury - Orange S.A. 1978 French AGM 2023 Leadership and Management Advisory Services (LMAS) (3)(5) Independent director Director of companies NA Belgian AGM 2021 (1) Dir ectors who represent the majority shareholder (Atlas Services Belgium). (2) Dir ector in charge of the daily management since 1 September 2020. (3) The independent directors have signed a declaration stating that they comply with the criteria of independence mentioned in the Code of Companies and Associations. (4) The company Société de Conseil en Gestion et Stratégie d’Entr eprises (SOGESTRA) is represented by Ms Nadine Lemaitre-Rozencweig. (5) The company Leadership and Management Advisory Services (LMAS) is r epresented by Mr Grégoire Dallemagne. (6) The company The House of V alue - Advisory & Solutions is represented by Mr Johan Deschuyffeleer . (7) The company K2A Management and Investment Services is r epresented by Mr Wilfried V erstraete. (8) Mr Christian Luginbühl was co-opted at the board meeting of 1 July 2021 in r eplacement of Mr Christophe Naulleau. His nal appointment will be proposed to the AGM to be held on 4 May 2022. Annual report 2021 109 1. J. Deschuyffeleer 2. X. Pichon 3. W . V erstraete 7. Ch. Naulleau 8. JM. Vignolles 9. MN. Jégo-Laveissière 4. N. Lemaitre-Rozencweig 5. C. Heriard Dubr euil 6. B. Mandine 10. R. Fernandez 11. M. De Rouck 12. G. Dallemagne 13. M. Bouchery 14. C. Luginbühl Annual report 2021 110 Functioning and role The Board of Dir ectors meets at least four times a year . Non- executive directors meet at least once a year without the CEO and the other executive directors (wher e applicable), in compliance with Article 3.11 of the CGC. The Board of Dir ectors may only deliberate validly if at least half its members are pr esent or represented. The decisions ar e adopted by a simple majority of the votes cast. The Board of Dir ectors met 14 times in 2021. Each director’ s individual attendance rate is presented in the table below . During the year , the Board of Directors’ discussions, reviews and decisions focused on: • the company’ s strategy and structure • the budget and nancing • the operational and nancial situation • the commercial r esults • the strategic projects • the public voluntary and conditional takeover bid launched by Orange S.A. on the shares of Orange Belgium (discussion and review legal documentation, pr ospectus, independent expert reports, etc.) • the acquisition of VOO • the cancellation of own shares and termination of the liquidity contract • the roll out and monitoring of a Covid-19 pr evention plan • the functioning and resolutions of the committees set up by the Board of Dir ectors • the appointment and co-optation of new members of the Board of Dir ectors • the renewal of mandates of chairman and vice-chairman of the Board of Dir ectors • the appointment of a new CFO • the evolution of the regulatory framework • the risk management • the assessment of the Board of Dir ectors and the committees • the management of distribution channels • the development of the B2B division • the development of 5G / bre network • the branding and the communication • the network licences • the spectrum requir ements There wer e no transactions or contractual relationships in 2021 between the company and its Board members giving rise to conicts of interests. Members of the Board of Directors Function 25.01 4.02 25.03 1.04 11.04 20.04 3.05 1.07 23.07 30.09 20.10 25.10 21.11 17.12 The House of V alue - Advisory & Solutions (J. Deschuyffeleer) Director/ Chairman P P P P P P P P P P P P P P Ch. Naulleau Director P P P P P P P P n/a n/a n/a n/a n/a n/a K2A Management and Investment Services (W . V erstraete) Independent director P P P R P P P P P P P P P P SOGESTRA (N. Lemaitre- Rozencweig) Independent director/Vice- chairman P P P R P P P P P P P P P P X. Pichon Director P P P P P P P P P P P P P P B. Mandine Director P P P P P P P P R R P P P P M. De Rouck Independent director P P E P P R P n/a n/a n/a n/a n/a n/a n/a J.-M. Vignolles Director P P P P P P P P P P P P P P Leadership and Management Advisory Services (G. Dallemagne) Independent director P P P P P P P P R P P P P P R. Fernandez Director P P P P P P P n/a n/a n/a n/a n/a n/a n/a C. Heriard Dubr euil Director (replaces F . Gelibter) P P P P P P P P P P P P P P M.-N. Jégo-Laveissière Director (replaces V . Le Boulanger) P P P P P P P P P p R P P P M. Bouchery Director (replaces R. Fernandez) n/a n/a n/a n/a n/a n/a n/a P P P P P P P C. Luginbühl Director (replaces Ch. Naulleau) n/a n/a n/a n/a n/a n/a n/a n/a P P P P P P P: Present (in person or by call) R: validly repr esented E: excused Annual report 2021 111 Evaluation The Board of Dir ectors is responsible for a periodic evaluation of its own effectiveness with a view to ensur e a continuous improvement in the governance of the company . In this respect, and under the lead of the Chairman of the Board of the Dir ectors, the Board of Directors must r egularly assess (at least once every three years) its size, composition, performance and interaction with the Executive Management. This evaluation process has four objectives: • assessing the operation of the Board of Dir ectors; • checking that the important issues are thor oughly prepared and discussed; • evaluating the actual contribution of each director to the work of the Board of Dir ectors, by his or her attendance at the Board of Dir ectors and Committee meetings and his or her constructive involvement in discussions and decision- making; • comparing the Board of Dir ectors’ current composition against the Board of Dir ectors’ desired composition. In order to enable periodic individual evaluations, the dir ectors must give their full assistance to the Chairman of the Board of Directors, the Remuneration and Nomination Committee and any other persons, whether internal or exter nal to the company , entrusted with the evaluation of the directors. The Chairman of the Board of Dir ectors, and the performance of his or her duties within the Board of Dir ectors, must also be carefully evaluated. The non-executive directors must assess, on an annual basis, their interaction with the Executive Management and, if necessary , make proposals to the Chairman of the Board of Directors with a view to facilitating impr ovements. Based on the results of the evaluation, the Remuneration and Nomination Committee, where appr opriate and possibly in consultation with external experts, submits a report commenting the strengths and weaknesses of the Boar d of Directors and make pr oposals to appoint new members or not to re-elect certain members. An extensive evaluation exercise of the Boar d of Directors and its committees has started in 2020 and was nalised in 2021. Board Committees With a view to the efcient performance of its duties and responsibilities, the Boar d of Directors has set up special committees to analyse specic issues and to advise and report to the Boar d of Directors on those issues. These committees have an advisory role. The new Charter , applicable as from 6 May 2020, presents 3 special committees: • Audit and Risk Committee • Remuneration and Nomination Committee • Committee for the Supervision of the Governance The rst two committees are also for eseen in the company’ s articles of association. The Committee for the Supervision of the Governance has been abolished with effect as fr om 1 July 2021 and the topics dealt with in this committee will henceforth be dealt with by the Audit and Risk Committee. The Charter will be amended accordingly . The Board of Dir ectors pays particular attention to the composition of each of its committees to ensure that in appointing the members of each committee, the needs and qualications that are r equired for the optimal operation of that committee are taken into account. Under the lead of its Chairman, the Board must r egularly assess (at least once every three years), the operation of each committee and, in particular , its size, composition and performance. This assessment serves the same four objectives as those set out above to assess the Board of Directors. Audit and Risk Committee The Audit and Risk Committee (the “Audit Committee”) is comprised of at least three dir ectors at all times. All members of the Audit Committee must be exclusively non-executive directors and the majority of them must be independent directors. As at 31 December 2021, the Audit Committee is comprised of three dir ectors: Société de Conseil en Gestion et Stratégie d’Entreprises (SOGESTRA, r epresented by Ms. Nadine Lemaitre-Rozencweig), Mrs. Clarisse Heriar d-Dubreuil and Leadership and Management Advisory Services (repr esented by Mr . Grégoire Dallemagne). Mrs. Martine De Rouck left the Audit Committee at the end of her director’ s mandate (5 May 2021). Pursuant to Article 3:6, §1 (9°) of the Code of Companies and Associations, the company must justify the independence and expertise, in both accounting and audit matters, of at least one of the members of the Audit Committee. Mr . Grégoire Dallemagne, independent director , is the newly appointed Audit Committee member who meets the independence criteria pursuant to Article 3.5 of the CGC. His expertise in audit and nancial matters is endorsed by an extensive career in the telecoms industry as well as the energy sector . The Audit Committee is responsible for pr eparing a long-term audit programme covering all company activities. Without prejudice to additional r oles that the Board of Directors may assign the Audit Committee, its role is to assist the Boar d of Directors in its r esponsibilities with respect to: • monitoring of the reporting pr ocess of nancial reporting; • monitoring of the effectiveness of the internal control and risk management systems; • review of the budget pr oposals presented by the management; • monitoring of internal audit and its effectiveness; • monitoring of the statutory audit of the nancial reports; • monitoring of the nancial relations between the company and its shareholders; • review and monitoring of the independence of the external auditor . The Audit Committee must convene whenever necessary for the proper operation of the Committee, and in any event at least four times a year and regularly r eports to the Board of Directors. The Committee met 6 times in 2021. Annual report 2021 112 In 2021, the main subjects discussed by the Audit Committee were: • annual assessment of the committee’ s functioning • periodical nancial, budget and activity reports • internal control, including qualitative aspects • internal audit (plan, activities, reports and conclusions) • assessment of the external audit and report of the statutory auditor • risk management (annual security plan, cartography of important risks and events, Covid-19 follow-up) • cancelation of liquidity agreement • annual review and r eport on “Fraud & Revenue Assurance” • monitoring ACR recommendations • GDPR and data security • annual report on ethics, compliance and litigation, data privacy status • local audit mission on salary recalculation • local audit mission on transaction with related parties Remuneration and Nomination Committee The Remuneration and Nomination Committee is comprised of at least three dir ectors at all times. All members of the Remuneration and Nomination Committee must be exclusively non-executive directors and the majority of them must be independent directors. As at 31 December 2021, the Remuneration and Nomination Committee is comprised of ve directors: The House of V alue – Advisory Solutions (represented by Mr . Johan Deschuyffeleer), Société de Conseil en Gestion et Stratégie d’Entreprises (SOGESTRA, r epresented by Ms. Nadine Lemaitre-Rozencweig), Mr . Christian Luginbühl (who replaced Mr . Jean-Marc Vignolles as from 1 July 2021 on this committee), K2A Management Investment Services (repr esented by Mr . Wilfried V erstraete) and Leadership and Management Advisory Services (repr esented by Mr . Grégoire Dallemagne, who joined the committee as from 1 July 2021). The Remuneration and Nomination Committee is responsible for assisting the Boar d of Directors in dening a remuneration policy for the company’ s directors and Executive Management. Every year , it prepares a remuneration report for the Boar d of Directors. The Remuneration and Nomination Committee ensures that pr ocedures regar ding the appointment and renewal of dir ectors are followed as objectively as possible. It provides the Boar d of Directors with recommendations on the appointment and r emuneration of the directors, the CEO and other members of the Executive Management. The Remuneration and Nomination Committee must convene whenever necessary for the proper operation of the committee, and in any event at least twice a year . The committee met 5 times in 2021. In 2021, the main subjects discussed by the Remuneration and Nomination Committee were: • composition and remuneration of the Boar d of Directors and the Executive Management • proposal r egarding the appointment and remuneration of a new CFO • departure of Chief People Of cer and proposed replacement • proposal for appointing and co-opting dir ectors • analysis of the remuneration r eport • endorsement of the performance bonus • company’ s teleworking policy • assessment of the Board of Dir ectors and its Committees • Orange Group shar e plan for employees • talent management and succession planning Members of the Audit Committee Function 3.02 19.04 22.07 28.09 19.10 15.12 SOGESTRA (N. Lemaitre-Rozencweig) Independent Director/ Chairman P P P P P P M. De Rouck Independent director P E n/a n/a n/a n/a Leadership and Management Advisory Services (G. Dallemagne) Independent director P P E P E P C. Heriard Dubr euil Director (r eplaces F . Gelibter) P P P P P P P: Present (in person or by call) R: validly repr esented E: excused Members of the Remuneration and Nomination Committee Function 29.01 03.02 14.06 22.07 24.11 The House of V alue - Advisory & Solutions (J. Deschuyffeleer) Director/ Chairman P P P P P K2A Management and Investment Services (W . V erstraete) Independent director P P P P P SOGESTRA (N. Lemaitre-Rozencweig) Independent director P P P P P M. De Rouck Independent director P P n/a n/a n/a J.-M. Vignolles Director P P P n/a n/a Leadership and Management Advisory Services (G. Dallemagne) Independent director n/a n/a n/a E p C. Luginbühl Director (replaces J.M. Vignolles) n/a n/a n/a P p P: Present (in person or by call) R: validly repr esented E: excused Annual report 2021 113 Committee for the Supervision of the Governance The Committee for the Supervision of the Governance is an ad-hoc committee responsible for monitoring developments in relation to corporate governance and to ensure their adequate implementation in the company . The Committee for the Supervision of the Governance has been abolished with effect fr om 1 July 2021 and the topics dealt with in this committee will henceforth be dealt with by the Audit Committee. The Committee for the Supervision of the Governance met once in 2021. In 2021, the main subject discussed by the Committee for the Supervision of the Governance was the auto-assessment questionnaires of the Boar d of Directors and its committees. 6. Composition and functioning of the Executive Management The rules governing the structure, composition, functioning, role and assessment of the Executive Management ar e detailed in the Charter . The Executive Management’ s internal rules are pr esented in the appendices (Appendix II). Executive Management Structure and composition The Executive Management of the company comprises the CEO and all persons who directly r eport to him and that head a department of the company . The appointment of the members of the Executive Management is submitted to the Board of Dir ectors for prior approval, on the recommendation of the Remuneration and Nomination Committee. Mrs. Isabel Carrion, Chief People Ofcer , left her role on the 1 st September 2021, and was replaced on an ad interim basis by Mr . Paul-Marie Dessart, the General Secretary . As at 31 December 2021, the Executive Management is comprised of 9 members: Functioning and role The Executive Management is responsible for managing the company by supporting the CEO in the daily management of the company and in the performance of his or her other duties. Generally , the Executive Management meets weekly , or whenever necessary for the proper operation of the Executive Management and the company . Members of the Corporate Governance Function 22.02 M. De Rouck Independent director (Chairman) P Ch. Naulleau Dir ector P SOGESTRA (N. Lemaitre-Rozencweig) Independent director (Vice-chairman) P P: Present (in person or by call) R: validly repr esented E: excused Executive Management 2021 Xavier Pichon Chief Executive Ofcer Antoine Chouc Chief Financial Ofcer W erner De Laet Chief Enterprise Ofcer / Chief Wholesale & Innovation Of cer Paul-Marie Dessart Secretary General / Chief People Of cer ad interim Javier Diaz Sagredo Chief IT Ofcer Christophe Dujardin Chief Consumer Ofcer Stefan Slavnicu Chief T echnology Ofcer Bart Staelens Chief T ransformation & Customer Experience Ofcer Isabelle V anden Eede Chief Brand, Communication & CSR Ofcer assisted by Jelle Jacquet (Deputy CPO) Annual report 2021 114 1. X. Pichon 6. C. Dujardin 3. W . De Laet 9. I. V anden Eede 2. A. Chouc 7. S. Slavnicu 4. PM. Dessart 8. B. Staelens 5. J. Diaz Sagredo Annual report 2021 115 8. Diversity Policy Orange Belgium values diversity and implements various criteria in its selection processes to account for age, gender , educational background as well as pr ofessional experience. The composition of the Board of Dir ectors and of the Executive Management is determined on the basis of diverse and complementary competencies, experience and knowledge. With respect to gender diversity , when a directorship is available, the company makes the best effort to pr esent candidates of both genders to ensure that at least one-thir d of the Board members ar e of different gender than the other members. The Board of Dir ectors currently has four female directors out of a total of 11. In the framework of the legislation regar ding the publication of information with respect to diversity , the company’ s diversity policy will be further developed and monitored by the Boar d of Directors. During the year , Orange Belgium further aligned its diversity approach with Orange S.A.’ s approach. During 2021: • W e were successfully re-certied for 4 years on our equal opportunities and inclusion policies by Bureau V eritas following the GEEIS standard (Gender Equality Eur opean and International Standard) • Our employees also valued our efforts as shown by the results of the yearly social bar ometer held by the Group • W e continued our focus on gender equity (8 March 2021 internal campaign, intensied well-being approach, recurr ent gender pay gap analysis, sponsoring of Y oung ICT woman Boost Camp…) • Orange Belgium was made more attractive for millennials (further deployment of our innovative employer branding campaign co-created with our employees…) • Extended support was offer ed to all employees during lockdown periods with special focus on wellbeing (online sessions, extensive communication, recurr ent mood polls, online health challenge) and parents (10% par ental leave, easier access to parental leave, donation of holidays to colleagues,…) • In the last 10 years we have made some important changes: we doubled the number of female directors and of female managers and our pay gap is now amongst the lowest in the Orange Group. The Orange Group diversity policy aims at fostering talents and encouraging the inclusion of all employees based on two pillars: gender equality and equal opportunities. Orange Belgium focuses on developing all available talents for a unique experience by: • Offering a diverse and inclusive work envir onment that encourages all our employees to progr ess and to develop their talents for a unique experience; • Focusing on diversity in the broad sense: pr omoting team diversity; • Ensuring well-being as a key component of our equity and inclusion strategy . On 17 July 2019, the Group signed a Global Agr eement on workplace gender equality with the UNI global unions covering 3 main areas: gender equality in the workplace; work-life balance; combatting discrimination and violence. In 2021 we created a bi-yearly diversity committee to follow-up on the implementation of this agreement with all stakeholders; Exco, personnel repr esentatives, Condence person, CSR repr esentative and HR. Orange Group main objectives for 2025: • Programmes to support and enable job integration of priority groups in 100% of Orange countries (people fr om disadvantaged backgrounds, with a disability , from the LGBT + community , juniors/seniors…) • 30% of women on the courses run by the Orange Campus training centre • Maintain 85% of employees who think that Orange reects the diversity of society (Results of the 2020 social barometer) • 25% of women in technical professions (20.5% end-2020) • 35% of managers are women (32% end-2020) • Orange Group GEEIS-AI - certied (Gender Equality European and International) • GEEIS certications in 26 countries • At least 6% of employees with a disability in Orange S.A. (France) Equal opportunities Gender balance in all roles W ork-life balance Raising awareness Discrimination, sexism, harassment & violence Objectives Ensure equal opportunities for all regar dless of gender , age, origin, … Ensure a balanced repr esentation of women in management levels and in technical roles As a key component of workplace gender equality and driver for a better quality of life in the workplace Further strengthen communication and awareness-raising, deploy initiatives encouraging men to play a part in gender equality or work-life balance Put in place necessary preventive actions to combat any form of discrimination Group & OBE Diversity & Gender Equality ambitions 2025: Annual report 2021 116 9. Remuneration Report Introduction This remuneration r eport concer ns the 2021 nancial year . Remuneration relating to the 2021 nancial year complies with the remuneration policy that was applicable to that nancial year , as explained in the remuneration report of the previous year , and as henceforth explained in the Remuneration Policy , that will be submitted for approval to the General Meeting of Shareholders on 4 May 2022, and to be found on the Orange Belgium website. As far as needed, the remuneration policy is incorporated into this remuneration r eport. Orange Belgium has recor ded a 3.6% increase in revenues from €1,262.5m in 2020 to €1,307.5m in 2021 while EBITDAaL has grown 8.9% (fr om €312.1m in 2020 to €339.8m). On the other hand, the Organic Cash Flow has decr eased by 14.3% from €122.4m to €104.6m. T aking into consideration both Belgian and Luxembourg scope, we observe an incr ease of 3.7% in revenues fr om €1,314.9m in 2020 to €1,363.5m in 2021 and a positive evolution of EBITDAaL up 9.1% from €323.5m to €353m in 2021. Organic Cash Flow decr eased from €122.4m to €104.8m, down by 14.4%. The Management Report chapter gives a comprehensive overview of this evolution from 2020 to 2021. This Management Report chapter also includes an exhaustive list of events that occurred in 2021. 2021 has been a new challenging year for Orange Belgium. Despite the current sanitary context, Orange Belgium has successfully launched hey!, its b brand. hey! is a 100% digital brand based on a participative approach that is designed for ultra-connected users. Another important milestone in the history of Orange has been the signing of a deal with Nethys for the acquisition of 75% VOO shares less 1. The closing of this transaction is submitted to the approval of the Eur opean Commission, expected in the coming months. On the B2B market, Orange was the rst operator to open a 5G lab, a major step towards the ambition to become the preferr ed 5G operator for the industry . Despite the ongoing sanitary crisis, Orange Belgium’ s Executive T eam has succeeded in keeping their employees or ‘team members’ (as we call them) very motivated and proud to be part of the company via frequent communications, close contacts, mood polls, etc. This pride to be part of Orange Belgium is clearly reected in an incr eased employee Net Promoter Scor e, referred to as e-NPS. Fr om 22 at the end of 2019, it rose to 48 at the end of 2021. This is an outstanding achievement, unsurpassed in the history of Orange Belgium and demonstrates that despite the crisis, our team members are committed to the company . 1. T otal r emuneration The tables below contain each individual director’ s total remuneration split by component and including any remuneration fr om any undertaking belonging to the same group. Furthermor e, the tables below present the relative proportion of xed and variable r emuneration. In accordance with Article 3:6 §3, of the Belgian Code of Companies and Associations, amounts of remuneration for the members of the Board of Dir ectors are disclosed individually (table 1), and amounts of remuneration for the members of the Executive Management are disclosed globally (table 2). Name of director , position Financial year Fixed remuneration Variable r emuneration Extraordi - nary items Pension expense T otal Re - muneration Proportion of fixed and variable re - muneration Base salary Fees Fringe benets One-year variable Multi-year variable The House of V alue - Advisory & Solutions (1) 2021 99,000 2020 84,600 SOGESTRA (N. Lemaitre- Rozencweig) (2) 2021 82,800 2020 68,400 M. De Rouck (3) 2021 33,600 2020 62,400 Leadership and Management Advisory Services (G. Dallemagne) ( 4 ) 2021 60,000 2020 45,600 K2A Mangement and Investment Services (W . V erstraete) (5) 2021 60,000 2020 43,200 CEO 2021 316,911 100,661 171,973 148,936 72,041 810,523 Fix: 60% V ariable: 40% 2020 375,955 99,412 329,093 50,000 71,547 926,007 Fix: 59% V ariable: 41% TOT AL 2021 316,911 335,400 100,661 171,973 148,936 72,041 1,145,922 Fix: 72% V ariable: 28% 2020 375,955 304,200 99,412 329,093 50,000 71,547 1,230,207 Fix: 69% V ariable: 31% (1) as Pr esident of the Board of Directors and member of the Remuneration and Nomination Committee (2) as Vice-President of the Board of Dir ectors, member of the Audit Committee, member of the Remuneration and Nomination Committee and member of the Governance Supervisory Committee (3) as member of the Audit Committee, member of the Remuneration and Nomination Committee and member of the Governance Supervisory Committee (4) as member of the Audit Committee and member of the Remuneration and Nomination Committee (5) as member of the Remuneration and Nomination Committee T able 1 Annual report 2021 117 The details of the structure and components of the remuneration of the members of the Executive Management are explained her eunder . Structure of the r emuneration of the members of the Executive Management The remuneration of the members of the Executive Management consists of the following elements: • Y early base remuneration (around 51% of total r emuneration) • V ariable remuneration, based on short- and long-term performance and encouraging the attainment of company objectives (around 32% of total r emuneration) - Short-term variable remuneration called “performance bonus”, - Long-term variable remuneration called “Long-term Incentive Plan 2019-2021” and “Long-term Incentive Plan 2020-2022”, “Long-term Incentive Plan 2021-2023”. • General Meeting of Shareholders of May 2011 decided to apply the exception provided for in article 520ter of the Belgian Companies Code (article 7:91 of the new Belgian Code of Companies and Associations) (combined with article 525 (article 7:121 of the new Belgian Code of Companies and Associations) to take into account the competitive and constantly developing context that is intrinsic to the telecommunications sector . • Other elements of remuneration (ar ound 17% of total remuneration) - Group insurance consisting of four parts: life – death – invalidity and exemption of premiums - Hospital insurance - Employee prot sharing plan - Company car/car allowance - Meal vouchers Components of the remuneration of the members of the Executive Management The remuneration policies concerning the Executive Management are assessed and discussed by the Nomination and Remuneration Committee that submits its proposals for approval to the Boar d of Directors. The yearly base remuneration The yearly base remuneration is intended to r emunerate the nature and extent of individual r esponsibilities. It is based on market benchmarks while respecting internal equity within the company . The variable remuneration 1) The Performance bonus The short-term variable remuneration consists of a pr oportion to encourage individual performance and another part aimed at attaining company objectives. In 2021, the targets for the individual variable part wer e as follows: The targets for the individual part ar e set against the main business priorities aligned with the company strategy . The progr ess against those priorities is assessed based on a number of indicators. The quality of management and leadership behaviour is also taken into consideration during the evaluation. The targets for the collective part wer e as follows: • Organic Cash Flow • EBITDAaL (Earnings before Interest, T axes, Depreciation and Amortization, after Lease) • Brand Net Promoter Scor e that measures the percentage of customers who are pr omoters minus percentage of customers who are detractors consolidated per main business line • Employee Net Promoter Scor e that measures to what extent Orange Belgium employees would recommend Orange Belgium as a good place to work (percentage of employees who are pr omoters minus percentage of employees who are detractors) The performance bonus is granted in cash, in warrants, in options on shares which ar e not connected to the company or benets available in the Flex Income Plan. More specically: • A rst portion (the collective part) is paid in cash under the form of a collective bonus CLA90 (up to the ceiling free of taxes and normal social security charges) • A second portion is paid in warrants or options on shares which are not connected to the company (up to the tax ceiling of 20% of the yearly remuneration); • A third portion is paid in the Flexible Income Plan, r esulting in cash or benets in kind. Other members of the manage - ment Financial year 1. Fixed remuneration 2. V ariable remuneration 3. Extraordi - nary items 4. Pension expense 5. T otal Re - muneration 6. Proportion of fixed and variable re - muneration Base salary Fees Fringe benets One-year variable Multi-year variable Executive Committee 2021 2,058,266 301,195 827,147 444,642 371,800 4,003,050 Fix: 68% V ariable: 32% 2020 1,806,499 298,001 772,678 0 360,902 3,238,080 Fix: 76% V ariable: 24% T able 2 Annual report 2021 118 The performance criteria, their relative weighting and the actual outcome in 2021 can be summarized as follows: Name of director , position 1. Performance criteria 2. Relative weighting of the per - formance criteria 3. Information on Performance T argets [optional] 4. a) Measured perfor - mance b) Actual award outcome a) Minimum target/ threshold performance b) Corresponding award a) Maximum target / performance b) Corresponding award CEO Individual target: Progr ess against business priorities aligned with the business strategy as well as management attitude and quality of leadership 40% a) overachieved b) 103% Collective target: Organic Cash Flow 18% a) S2/2020: achieved S1/2021: overachieved b) 122.5% Collective target: EBITDAaL 18% a) S2/2020: below target S1/2021: below target b) 72% Collective target: Brand NPS 12% a) S2/2020: below target S1/2021: overachieved b) 112% Collective target: e-NPS 12% a) S2/2020: overachieved S1/2021: overachieved b) 106% Executive Management Individual target: Progr ess against business priorities aligned with the business strategy as well as management attitude and quality of leadership 40% a) overachieved b) S2/2020: 108% S1/2021: 111% Average: 109.5% Collective target: Organic Cash Flow 18% a) S2/2020: achieved S1/2021: overachieved b) 122.5% Collective target: EBITDAaL 18% a) S2/2020: below target S1/2021: below target b) 72% Collective target: Brand NPS 12% a) S2/2020: below target S1/2021: overachieved b) 112% Collective target: e-NPS 12% a) S2/2020: overachieved S1/2021: overachieved b) 106% Annual report 2021 119 2) The long-term variable remuneration The long-term variable remuneration consists of r ecurring Long-T erm Incentive Plans (2019-2021, 2020-2022 and 2021- 2023) which repr esent 30% of yearly xed remuneration of executive members after three years. The L TIP is a “rolling plan” over three-year performance periods with awards consider ed and decided annually by the Nomination and Remuneration Committee. The Nomination and Remuneration Committee decided on three company KPI’ s and targets to apply to each annual L TIP award for the three-year performance period at the beginning of the nancial year . Company targets are weighted independently 50%/50%/50%, with a maximum possible achievement for each L TIP award of 150%. Subject to the achievement of at least one company target in any thr ee-year performance period, individual contribution by the executive member can add an additional 25% to the nal result subject to an overall maximum L TIP potential of 175% of the target award. L TIP awards will vest subject to company performance measured over each thr ee-year period with plan payments paid in cash, in warrants or in the form of non-company share options, or benets available in the Flex Income Plan (possibly pension benets). In the case of payment in the form of options, these options are fr ozen for one year . In 2020, the company KPI’ s decided for the 2020-2022 L TIP award wer e as follows: • T otal Shareholder Return (TSR) • Organic Cash Flow (OCF) • Growth in Mobile Conver gence: number of B2C convergent mobile customers at the end of the relevant period compared to the strategic plan appr oved by the Board of Directors. The 2018-2020 L TIP results in a payout of 100% for the executive members eligible in March 2021. In 2021, the company KPI’ s decided for the 2021-2023 L TIP award wer e identical as for the 2020-2022 L TIP: • T otal Shareholder Return (TSR) • Organic Cash Flow (OCF) • Growth in Mobile Conver gence: number of B2C convergent mobile customers at the end of the relevant period compar ed to the strategic plan approved by the Boar d of Directors. The 2019-2021, the 2020-2022 and 2021-2023 awards ar e anticipated to vest and become payable in respectively Mar ch 2022, March 2023 and Mar ch 2024 subject to results. Other elements of the remuneration 1) Group insurance - additional pension plan The additional pension plan is a plan with predened contributions. The acquired r eserve consists of employers’ contributions solely . The amounts paid into the pension plan are specied in table 1 (total remuneration). 2) Employee profit sharing plan In accordance with the law of 22 May 2001, Orange Belgium shares 1% of the net consolidated pr ot under certain circumstances with the members of the personnel including the members of the Executive Management. In the event the conditions are fullled, the amount granted to each employee, including the members of the Executive Management, is identical regar dless of the position held. In 2019, Orange Belgium decided to share 2% of the net consolidated prot as of the 2020 r esults, under certain circumstances with the members of the personnel including the members of the Executive Management. The percentage could amount to a maximum of 3%, but capped overall at €1.5m payout, depending on the achievement of results (subject to the achievement of the nancial stretch tar get(s) set above the budget). In 2021, the General Shareholders Meeting appr oved the award of a pr ot-sharing scheme resulting in an amount of €850.19 gross per employee (including members of the Executive Management), paid in June 2021. 3) Other benefits The members of the Executive Management benet from other advantages, in accordance with market practices within the sector and their level of function, such as hospital insurance, company car , meal vouchers, mobile phone with subscription. 2. Share-based r emuneration In 2021, the Board of Dir ectors of Orange S.A. decided to implement a share awar d for the 3 year period 2021-2023 approved pursuant to the pr ovisions of the nineteenth resolution of the General Shar eholders Meeting of 5 May 2021. The aim of the Orange S.A. Long T erm Incentive Plan is to develop corporate loyalty amongst employees who occupy senior positions in the Group and to align the inter ests of beneciaries, the Group and shar eholders. The Board of Dir ectors of Orange S.A. decided on 28 July 2021 to award to eligible executive members of the company and certain other key employees rights to 2,000 Orange S.A. shares for “Executives” and 1,000 Orange S.A. shar es for “Leaders”, subject to the terms and conditions of the 2021- 2023 award. Shar es will only vest at the end of the vesting period for the award on or after 31 Mar ch 2024, subject to the presence conditions and achievement of the performance conditions as assessed by the Board of Dir ectors of Orange S.A. Additionally , the Board of Directors of Orange S.A. decided on 21 April 2021 to implement an Employee Share Pur chase Offering (Of fre Réservée au Personnel, ORP) in France and internationally , intended to strengthen the Group’ s employee shareholding. Under this of fering named “T ogether 2021”, executive members of the company and other employees were able to elect to pur chase Orange S.A. shares at a 30% discount to the market price and receive matching shar es up to certain limits according to the matching ratio and terms prescribed for the of fer . The shares purchased and the matching shares r eceived by the employees were awarded in December 2021 and are subject to a lock up period of ve years with the possibility of earlier release under certain conditions. The Chief IT Ofcer and the Chief People Of cer each purchased 177 Orange S.A. shar es at a discount to the market price and both received 219 matching shar es under the offer being subject to the ve year lock up period. 3. Severance payments All members of the Executive Management have an employment contract. The Chief Consumer Business Ofcer who joined the company in January 2020 and the Chief Executive Ofcer who joined the company in September 2020, benet from a 12-month exit guarantee. For the other members of the Executive Management, labour law applies and no specic severance clauses have been agreed. Annual report 2021 120 4. Use of the right to reclaim No circumstances justied any r eclaim in 2021. 5. Derogations and deviations fr om the remuneration policy In 2021, the Chief Executive Ofcer and the Chief IT Of cer beneted from the payout of the 2018-2020 L TIP due to eligibility rights granted to them on a prorated basis on commencement of their employment with the company . The incentive amounts were paid in Mar ch 2021 and are included in the gures in table 2. 6. Comparative information - evolution of remuneration and performance 2019 2020 2021 Directors/Executive Remuneration CEO total remuneration (in €) 740 319 926 007 810 523 Executive Management total remuneration (in €) 3 574 649 3 238 080 4 003 050 Orange’ s performance Net Prot (in m€) 33.3 54 39.7 T otal Revenues (in m€) 1 340.8 1 314.9 1 363.5 EBITDAaL (in m€) 300.1 323.5 353.0 Organic Cash Flow (in m€) 112.2 122.4 104.8 Brand NPS () 117.5% vs. target 97.6% vs. target 121.3% vs. target Brand NPS () 104.9% vs. target 77.6% vs. target eNPS () 110% vs target 137.5% vs. tar get 113.2% vs. target eNPS () 110% vs. target 143.3% vs. tar get Average r emuneration on a full-time basis of employees Average r emuneration per employee (in €) 68 627 69 157 71 304 () for Brand NPS and eNPS, the table shows the achievement vs tar get at the end of the 1st semester of the relevant year to be consistent with payment dates of the performance bonus. The performance bonus paid in 2021 relates to semester 2 of 2020 and semester 1 of 2021. This change has been r etroactively applied in 2020 and 2019 for consistency reason. (**) for Brand NPS and eNPS, the table shows the achievement vs target at the end of the second semester of the relevant year , as calculated in Annual Report 2020. The methodology used to calculate the average remuneration on a full-time equivalent basis of employees takes into account: sum of the yearly base pay (monthly base salary * 13.92) and sum of the actual variable remuneration for all employees of Orange Belgium excluding CEO and Executive Management divided by the sum of the Full Time Equivalent based on the contractual work schedule. All the elements that have been considered to calculate the CEO and Exco remuneration on a yearly basis have been included in the calculation: employer contribution in the meal vouchers, prot sharing, employer contribution in the gr oup insurance, employer contribution in hospitalisation insurance, company car , car allowance, benet in kind for mobile phone and consumption vouchers in 2021. The refer ence period taken was the month of December of the year in question. Ratio between the highest remuneration and the lowest remuneration The ratio between the total remuneration of Orange Belgium’ s CEO and the total remuneration of the lowest paid employee is equivalent to 22.16. 7. Information on shareholder vote Not applicable. 10. Contractual relations with dir ectors, managers and companies of the Group Every contract and every transaction between a director or a member of the Executive Management and the company requir es prior approval from the Boar d of Directors, after informing and consulting with the Audit Committee in that respect. Such contracts or transactions should be concluded at commercial conditions, in accor dance with the prevailing market circumstances. The prior appr oval of the Board of Directors is r equired, even if articles 7:96 and 7:97 of the Code of Companies and Associations are not applicable to the said transaction or the said contract. However , services delivered by the company in its normal course of business and at normal market conditions (i.e. a normal “customer relationship”) ar e not subject to such prior approval. There ar e agreements and/or invoices regar ding the performances of the staff members and/or delivery of services or goods between the company and several companies of the Orange Group. These contracts and invoices ar e reviewed by the Audit Committee. 11. Application of article 7:97 of the Code of Companies and Associations during the 2021 financial year The procedur e foreseen in article 7:97 of the Code of Companies and Associations has not been applied during the 2021 nancial year . 12. Information concerning the tasks entrusted to the auditors The audit of Orange Belgium’ s consolidated and statutory nancial statements is entrusted to KPMG Bedrijfsrevisor en / Réviseurs d’Entreprises. During 2021, the statutory auditor and linked companies provided services for which the fees wer e as follows: • Audit services €512,576 • Audit-related services €20,000 Annual report 2021 121 Statutory auditor’ s r eport Statutory auditor’ s report to the general meeting of Orange Belgium SA/NV on the consolidated nancial statements as of and for the year ended December 31, 2021 In the context of the statutory audit of the consolidated nancial statements of Orange Belgium SA/NV (“the Company”) and its subsidiaries (jointly “the Group”), we provide you with our statutory auditor’ s report. This includes our report on the consolidated nancial statements for the year ended December 31, 2021, as well as other legal and regulatory r equirements. Our report is one and indivisible. W e were appointed as statutory auditor by the general meeting of May 6, 2020, in accordance with the pr oposal of the board of dir ectors issued on the recommendation of the audit committee and as presented by the workers’ council. Our mandate will expire on the date of the general meeting deliberating on the annual accounts for the year ended December 31, 2022. W e have performed the statutory audit of the consolidated nancial statements of the Group for ve consecutive nancial years. Report on the consolidated financial statements Unqualified opinion W e have audited the consolidated nancial statements of the Group as of and for the year ended December 31, 2021, prepar ed in accordance with International Financial Reporting Standards as adopted by the Eur opean Union, and with the legal and regulatory r equirements applicable in Belgium. These consolidated nancial statements comprise the consolidated statement of nancial position as at December 31, 2021, the consolidated statements of comprehensive income, changes in equity and cash ows for the year then ended and notes, comprising a summary of signicant accounting policies and other explanatory information. The total of the consolidated statement of nancial position amounts to EUR’000 1.659.672 and the consolidated statement of comprehensive income shows a net pr ot for the year of EUR’000 39.723 and total comprehensive income attributable to equity holders of the parent of EUR’000 39.463. In our opinion, the consolidated nancial statements give a true and fair view of the Group’ s equity and nancial position as at December 31, 2021 and of its consolidated nancial performance and its consolidated cash ows for the year then ended in accordance with International Financial Reporting Standards as adopted by the Eur opean Union, and with the legal and regulatory r equirements applicable in Belgium. Basis for our unqualified opinion W e conducted our audit in accordance with International Standards on Auditing (“ISAs”) as adopted in Belgium. In addition, we have applied the ISAs as issued by the IAASB and applicable for the current accounting year while these have not been adopted in Belgium yet. Our responsibilities under those standards ar e further described in the “Statutory auditors’ responsibility for the audit of the consolidated nancial statements” section of our report. W e have complied with the ethical requirements that are relevant to our audit of the consolidated nancial statements in Belgium, including the independence requir ements. W e have obtained from the board of directors and the Company’ s ofcials the explanations and information necessary for performing our audit. W e believe that the audit evidence we have obtained is sufcient and appr opriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our pr ofessional judgement, were of most signicance in our audit of the consolidated nancial statements of the current period. These matters were addr essed in the context of our audit of the consolidated nancial statements as a whole, and in forming our opinion thereon, and we do not pr ovide a separate opinion on these matters. Revenue recognition fr om telecommunication activities W e refer to note 15.1.21 ‘Revenue from contracts with customers’, note 2 ‘Sales, trade receivables, other curr ent and non-current assets and impact of the health crisis linked to the Covid-19 pandemic’ and note 13 ‘Liabilities related to contracts with customers and other assets r elated to contracts with customers’ of the consolidated nancial statements. Description Revenue recognition is an inher ent industry risk of error which arises from amongst others the complexity of the telecommunication billing systems, the large amount of data processed to determine billing and r evenue, the combination of differ ent products sold and price and promotion changes introduced during the year . Our audit procedur es W e gained insight into the processes surrounding the recognition of the various r evenue streams, from contract signature and initial communication up to the invoicing and the receipt of payments. W e took into account the high level of integration of the various IT systems, by including IT specialists in our audit team, and by testing the design, implementation and effectiveness of the key automated contr ols of the relevant IT systems affecting r evenue recognition. Annual report 2021 122 As part of our audit procedur es, we have: • identied the key controls implemented by Orange Belgium in relation to the r evenue cycle that were relevant for our audit and tested their effectiveness; • tested a sample of customer billings and compared these to supporting evidence (e.g. customer orders or contracts and cash received); • tested a sample of deferred and accrued r evenue ending balances and compared these to supporting evidence; • assessed the accounting treatment of any signicant new products and pr omotions in the year; and • assessed a selection of manual journal entries posted to revenue accounts at year end by comparing them with our independent calculations and estimates and by ensuring that evidence supporting these manual entries was available. W e have also assessed the appropriateness of the information presented in notes 2, 13 and 15.1.21 to the consolidated nancial statements. Goodwill valuation W e refer to note 4 ‘Goodwill’ of the consolidated nancial statements. Description At December 31, 2021, the total goodwill recognized in the consolidated statement of nancial position amounts to EUR’000 89.474. The goodwill impairment loss recognized for the year 2021 amounts to EUR’000 14.937. As indicated in note 4, Orange Belgium performs an impairment test at least annually and more fr equently when there is an indication of impairment. These tests ar e performed at the level of each cash generating unit (‘CGU’) or group of CGUs, which generally correspond to the operating segment. An impairment loss is recognized if the r ecoverable amount is lower than the carrying value. The recoverable amount is determined by Orange Belgium, based upon the value in use. The estimate of value in use is the present value of futur e expected cash ows. The assessment of the value in use requir es numerous estimates and judgments from management, and in particular the assessment of the competitive, economic and nancial environment of the countries in which Orange Belgium operates, the ability to realize operating cash ows fr om strategic plans, the level of investment to be made and the discount and growth rates used in calculating r ecoverable amounts. Our audit procedur es W e gained insight into the procedure implemented by Orange Belgium for carrying out the annual impairment test and in particular the review of the cash ows used in the calculation of the recoverable amount. With the assistance of our valuation specialists, we have assessed the appropriateness of the method used by Orange Belgium to calculate the recoverable amounts. T o assess the reliability of the data from the business plan used to calculate the recoverable amount, we have in particular: • assessed the procedur e for devising and approving business plans; • evaluated the management’ s identication of the CGUs; • compared cash ow for ecasts with business plans from previous nancial years; • compared business plans fr om previous nancial years with actual data over the nancial periods in question; • challenged the key assumptions made by management relating to r evenue, EBITDA and capital expenditures with external data when available, such as market research or analysts’ memos; • assessed the method used to determine the weighted average cost of capital (‘WACC’) and the perpetual gr owth rate (‘PGR’) by comparing them to the market range and to data re-calculated with our own data sour ces; • challenged the appropriateness of the sensitivity analysis performed by management by performing further sensitivity analyses, primarily focused on changes in operating cash ows; and • tested the mathematical accuracy of the cash ow models. W e have also assessed the appropriateness of the information presented in note 4 to the consolidated nancial statements. Board of dir ectors’ responsibilities for the preparation of the consolidated financial statements The board of dir ectors is responsible for the preparation of these consolidated nancial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the Eur opean Union, and with the legal and regulatory r equirements applicable in Belgium, and for such internal control as board of dir ectors determines, is necessary to enable the preparation of consolidated nancial statements that are fr ee from material misstatement, whether due to fraud or error . In preparing the consolidated nancial statements, the boar d of directors is r esponsible for assessing the Group’ s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of dir ectors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Statutory auditor’ s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain r easonable assurance as to whether the consolidated nancial statements as a whole are fr ee from material misstatement, whether due to fraud or error , and to issue an auditor’ s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or err or and are consider ed material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of the users taken on the basis of these consolidated nancial statements. When performing our audit we comply with the legal, regulatory and pr ofessional requirements applicable to audits of the consolidated nancial statements in Belgium. The scope of the statutory audit of the consolidated nancial statements does not extend to providing assurance on the future viability of the Gr oup nor on the efciency or effectivity of how the board of dir ectors has conducted or will conduct the business of the Group. Our responsibilities r egarding the going concern basis of accounting applied by the board of dir ectors are described below . Annual report 2021 123 As part of an audit in accordance with ISAs, we exer cise professional judgement and maintain pr ofessional skepticism throughout the audit. W e also perform the following procedur es: • Identify and assess the risks of material misstatement of the consolidated nancial statements, whether due to fraud or error , design and perform audit procedures r esponsive to those risks, and obtain audit evidence that is sufcient and appropriate to pr ovide a basis for our opinion. The risk of not detecting a material misstatement resulting fr om fraud is higher than for one resulting fr om error , as fraud may involve collusion, forgery , intentional omissions, misrepresentations, or the override of internal control; • Obtain an understanding of internal controls relevant to the audit in order to design audit pr ocedures that are appropriate in the cir cumstances, but not for the purpose of expressing an opinion on the ef fectiveness of the Group’ s internal control; • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and r elated disclosures made by boar d of directors; • Conclude on the appropriateness of boar d of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signicant doubt on the Group’ s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are r equired to draw attention in our auditors’ report to the r elated disclosures in the consolidated nancial statements or , if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However , future events or conditions may cause the Group to cease to continue as a going concern; • Evaluate the overall presentation, structur e and content of the consolidated nancial statements, including the disclosures, and whether the consolidated nancial statements repr esent the underlying transactions and events in a manner that achieves fair presentation; • Obtain sufcient appr opriate audit evidence regarding the nancial information of the entities or business activities within the Group to expr ess an opinion on the consolidated nancial statements. W e are responsible for the direction, supervision and performance of the group audit. W e remain solely responsible for our audit opinion. W e communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and signicant audit ndings, including any signicant deciencies in internal control that we identify during our audit. W e also provide the audit committee with a statement that we have complied with relevant ethical r equirements regar ding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, r elated safeguards. For the matters communicated with the audit committee, we determine those matters that were of most signicance in the audit of the consolidated nancial statements of the current period and are ther efore the key audit matters. W e describe these matters in our auditor’ s report unless law or regulation precludes public disclosur e about the matter . Other legal and regulatory r equirements Responsibilities of the Board of dir ectors The board of dir ectors is responsible for the preparation and the content of the board of dir ectors’ annual report on the consolidated nancial statements. Statutory auditor’ s responsibilities In the context of our engagement and in accordance with the Belgian standard which is complementary to the International Standards on Auditing as applicable in Belgium, our responsibility is to verify , in all material respects, the board of dir ectors’ annual report on the consolidated nancial statements and to report on these matters. Aspects concerning the board of directors’ annual report on the consolidated financial statements Based on specic work performed on the board of dir ectors’ annual report on the consolidated nancial statements, we are of the opinion that this r eport is consistent with the consolidated nancial statements for the same period and has been prepar ed in accordance with article 3:32 of the Companies’ and Associations’ Code. In the context of our audit of the consolidated nancial statements, we are also r esponsible for considering, in particular based on the knowledge gained throughout the audit, whether the board of dir ectors’ annual report on the consolidated nancial statements contains material misstatements, that is information incorrectly stated or misleading. In the context of the procedur es carried out, we did not identify any material misstatements that we have to report to you. Information about the independence • Our audit rm and our network have not performed any engagement which is incompatible with the statutory audit of the consolidated accounts and our audit rm remained independent of the Group during the term of our mandate. • The fees for the additional engagements which are compatible with the statutory audit referr ed to in article 3:65 of the Companies’ and Associations’ Code were corr ectly stated and disclosed in the notes to the consolidated nancial statements. European Single Electr onic Format (ESEF) In accordance with the draft standar d on the audit of compliance of the Financial Statements with the European Single Electronic Format (her eafter “ESEF”), we have audited as well whether the ESEF-format is in accordance with the regulatory technical standar ds as laid down in the EU Delegated Regulation nr . 2019/815 of 17 December 2018 (hereafter “Delegated Regulation”). Annual report 2021 124 The Board of Dir ectors is responsible for the preparation, in accordance with the ESEF r equirements, of the consolidated nancial statements in the form of an electronic le in ESEF format (hereafter “digital consolidated nancial statements”) included in the annual nancial report. It is our responsibility to obtain suf cient and appropriate information to conclude whether the format and the tagging of the digital consolidated nancial statements comply , in all material respects, with the ESEF r equirements under the Delegated Regulation. In our opinion, based on our work performed, the format of and the tagging of information in the ofcial Dutch and French version of the digital consolidated nancial statements as per December 31, 2021, included in the annual nancial report of Orange Belgium SA/NV , are, in all material respects, prepar ed in compliance with the ESEF requirements under the Delegated Regulation. Other aspects • Reference is made to the boar d of directors’ annual report which states the board of dir ectors’ view that the Company is exempt from the obligation to pr epare and disclose the non-nancial information as requir ed by article 3:32 §2 of the Companies’ and Associations’ Code since the Company is a subsidiary of Orange SA, who prepar es a consolidated board of dir ectors’ annual report, that includes the non- nancial information, in accordance with the applicable EU directive. • This report is consistent with our additional r eport to the audit committee on the basis of Article 11 of Regulation (EU) No 537/2014. Zaventem, April 1, 2022 KPMG Bedrijfsrevisor en - Réviseurs d’Entreprises Statutory Auditor repr esented by Alexis Palm Bedrijfsrevisor / Réviseur d’Entr eprises Annual report 2021 125 Declaration by the r esponsible persons W e, the undersigned, Xavier Pichon, CEO, and Antoine Chouc, CFO, declare that to our knowledge: a) the nancial statements drawn up in accordance with the prevailing accounting standar ds, give a true and fair view of the company’ s assets, liabilities, nancial position and results of the issuer and the companies included within its consolidation; b) the management report contains an accurate overview of the business activities evolution, the results and the nancial situation of the issuer and the companies included within its consolidation, and a description of the main risks and uncertainties they are confr onted to. Xavier Pichon CEO Antoine Chouc CFO Annual report 2021 126
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