- Continued strong delivery on cash
generation strategy
- Operating Verticals revenues of €660
million, down 2.4% like-for-like
- High level of profitability: EBITDA
margin of 79% at constant currency, above full-year
objective
- Discretionary Free Cash Flow of €235
million at constant currency and perimeter
- All elements of the Financial
Outlook confirmed for current and future years
Regulatory News:
The Board of Directors of Eutelsat Communications (ISIN:
FR0010221234 - Euronext Paris:ETL), chaired by Dominique D’Hinnin,
reviewed the financial results for the half-year ended 31 December
2018.
Key Financial Data
6M to Dec.
2017
Restated
6M to Dec.
2018
Change P&L
Revenues - €m 688.1
658.1
-4.4% “Operating Verticals” revenues 675.9
660.4 -2.3% “Operating Verticals” revenues at
constant currency and perimeter 669.9
653.8
-2.4%
EBITDA1- €m
546.2
518.4 -5.1% EBITDA margin
- % 79.4
78.8 -0.6 pts EBITDA
margin at constant currency - % 79.4
79.0
-0.4 pts Group share of net income - €m 158.0
150.4 -4.8% Financial structure
Discretionary Free-Cash-Flow at constant
currency and perimeter2
337.1
235.2 -30.2% Net debt - €m
3,630.3
3,304.3 -€326m Net
debt/EBITDA - X 3.3x
3.1x -0.2
pts Backlog – €bn 4.7
4.6
-2.9%
______________________
1 Operating income before depreciation and amortisation,
impairments and other operating income/(expenses).2 Net cash-flow
from operating activities - Cash Capex - Interest and Other fees
paid net of interests received.
Commenting on the First Half, Rodolphe Belmer Chief Executive
Officer of Eutelsat Communications, said: “Eutelsat delivered a
solid set of results in the First Half. While the revenues profile
reflected the anticipated back-end loading in the second half,
profitability remained robust and gearing was further reduced. We
continued to leverage all components of cash generation, with the
LEAP cost-savings plan on track, the effective application of
design-to-cost to the HOTBIRD replacement, the successful €800
million bond issue in October and the disposal of our stake in
EUTELSAT 25B. In addition, although it cannot be reliably measured
at this stage, new provisions in the 2019 French Finance Law will
likely have a significant beneficial impact on our corporate tax
bill.
On the commercial front, the Konnect Africa Broadband service is
being progressively launched in several countries, and its initial
reception reinforces our confidence in the strong potential of this
activity. Elsewhere, we signed new or renewal contracts in most
verticals including, in video, first deals for the recently
launched CIRRUS platform as well as regular capacity contracts, and
in Mobility, a multi-transponder deal for maritime connectivity.
Several leads are in the pipeline for the remainder of the
year.
In consequence we continue to target a broadly stable topline
for our operating verticals for the year as a whole, and we are
confident in our ability to deliver strongly on our profitability,
Discretionary Free Cash Flow and de-leveraging targets.”
Notes: This press release contains figures from the
consolidated half-year accounts prepared under IFRS and subject to
a limited review by the Auditors. They were reviewed by the Audit
Committee on 13 February 2019 and approved by the Board of
Directors on 14 February 2019. EBITDA, EBITDA margin, Net debt /
EBITDA ratio, Cash Capex and Discretionary Free-Cash-Flow are
considered as Alternative Performance Indicators. Their definition
and calculation can be found in appendix 3 of this document.
Figures as of 31 December 2017 have been restated throughout
this announcement to reflect the retrospective adoption of IFRS 15
on 1 July 2018. The impact of the application of IFRS 15 is
presented in the note 3 to the consolidated financial statements.
The Group adopted IFRS16 and IFRS 9 on 1 July 2018.
KEY EVENTS
Since the beginning of FY 2018-19, Eutelsat has taken further
measures to maximise cash generation, leveraging all components of
cash-flow:
- The successful issue of an €800 million
2.0 percent Eurobond with a 7-year maturity, enabling the full
redemption of the outstanding bonds bearing a 5.0 per cent coupon
maturing in January 2019. This transaction will reduce pre-tax cash
interest by some €24 million on an annualized basis from FY
2019-20;
- The disposal of the interest in
EUTELSAT 25B for a cash consideration of €135 million;
- Further progress on the implementation
of the capex optimization strategy with:
- The replacement of the HOTBIRD
constellation negotiated at highly compelling terms thanks to the
application of design-to-cost;
- A long-term service agreement with
Arianespace covering five launches until 2027, providing
cost-effective, assured access to space with schedule
flexibility;
- The LEAP cost-saving program,
comfortably on track to deliver €30m in opex savings this
year;
- The French Finance Law for 2019
contains a provision specifying the rules relating to the
territoriality of corporate tax applicable to telecommunications
satellite operators. This will likely have a significant beneficial
impact on Eutelsat’s tax bill, although it cannot be reliably
measured at this stage.
At the same time Eutelsat has continued to build the foundations
for its return to growth:
- Extracting greater value from its core
Video business with the launch in September 2018 of Eutelsat
CIRRUS, a hybrid satellite-OTT turnkey delivery solution enabling
broadcast customers to offer a flexible, seamless content
experience across multiple screens, and representing a further step
in the integration of satellite into the IP ecosystem;
- Capturing the connectivity opportunity
with:
- The commercial launch of the Konnect
Africa broadband service in several countries;
- The completion of the overhaul of the
distribution strategy in Europe focused on selected specialist
distribution partners and major telecom operators.
ANALYSIS OF REVENUES3
In € millions
6 months to Dec 2017
IFRS 15 restated
6 months to Dec 2017proforma4
6 months to Dec 2018
reported
Actual change
Like-for-like
change5
Video Applications 443.0 437.0
432.1
-2.5% -2.0% Government Services 79.6
79.6
81.8 +2.9% +1.7% Fixed Data
73.4 73.4
66.0 -10.2% -11.9%
Fixed Broadband 42.8 42.8
40.5
-5.5% -5.8% Mobile Connectivity 37.1 37.1
40.0 +7.9% +6.7%
Total Operating
Verticals 675.9
669.9 660.4
-2.3% -2.4%
Other Revenues6
12.2 12.2
(2.3) n/a n/a
Total revenues 688.1
682.0
658.1 -4.4% -4.5% EUR/USD
exchange rate 1.17 1.17 1.16
_______________________
3 The share of each application as a percentage of total
revenues is calculated excluding “other revenues”.4 Pro-forma
revenues reflecting the disposal of EUTELSAT 25B. Please refer to
the appendix for more detail.5 At constant currency, perimeter and
accounting standards. The variation is calculated as follows: i) H1
2018-19 USD revenues are converted at H1 2017-18 rates; ii) H1
2017-18 revenues are restated from the disposal of Eutelsat’s
interest in EUTELSAT 25B and from the impact of IFRS 15 standards;
iii) H1 2018-19 revenues are restated from the net contribution of
Noorsat.6 Other revenues include mainly compensation paid on the
settlement of business-related litigations, the impact of EUR/USD
currency hedging, the provision of various services or
consulting/engineering fees and termination fees. Hedging effect
amounted to (€7.1) million in the first half of FY 2018-19 and
+€1.9m a year earlier.
Total revenues for the First Half of FY 2018-19 stood at
€658 million down by 4.4% at constant accounting standards.
Revenues of the five Operating Verticals (ie, excluding ‘Other
Revenues’) were down by 2.4% on a like-for-like basis excluding a
negative perimeter effect of c.0.5 points (net effect of the
disposal of the stake in EUTELSAT 25B and the acquisition of
Noorsat) and a positive currency effect of c.0.5 points.
Second Quarter revenues stood at €323 million, down 5.7%
at constant accounting standards. Revenues of the five Operating
Verticals stood at €326 million, down 3.0% year-on-year and by 2.2%
quarter-on-quarter on a like-for-like basis.
Unless otherwise stated, all variations indicated below are on a
like-for-like basis, ie, at constant currency and perimeter.
Core businesses
Video Applications (66% of revenues)
First Half Video Applications revenues were down 2.0%
like-for-like to €432 million, reflecting lower Professional Video
revenues in a context of continued price pressure as well as the
impact of a lower contribution from Fransat. Excluding these two
factors, pure Broadcast revenues were broadly stable.
Second Quarter revenues stood at €215 million, down by
2.4% year-on-year but broadly stable on a quarter-on-quarter
basis.
At 31 December 2018, the total number of channels broadcast by
Eutelsat satellites stood at 7,067, up 3.8% year-on-year. HD
penetration continued to increase, standing at 1,500 channels
versus 1,275 a year earlier (+17.6%), implying a penetration rate
of 21.2% compared to 18.7% a year earlier.
On the commercial front, contracts were signed with the
Ethiopian Broadcasting Corporation and the Association of Ethiopian
Broadcasters for capacity on EUTELSAT 8 West B, representing
multi-transponder capacity including incremental resources. A new
multi-year, multi-transponder contract has also been signed with
Afghanistan Broadcasting System for capacity on the EUTELSAT 53A
satellite. Elsewhere, Eutelsat will now sell capacity directly to
beIN Media, reflecting the direct approach implemented in the MENA
region. Finally, the first contracts have been signed for the
CIRRUS platform.
Thanks to these contracts and other business opportunities in
the pipeline close to materialization, trends in Broadcast are set
to improve in the coming quarters.
Government Services (12% of revenues)
First Half Government Services revenues stood at €82
million, up 1.7% on a like-for-like basis. This reflected on one
hand the incremental business secured last year over Asia-Pacific
at the 174°East orbital position, and on the other the lower than
expected level of renewals with the US Government in the Fall 2018
campaign.
Second Quarter revenues stood at €39 million, stable on a
year-on-year basis, and down by 8.0% quarter-on-quarter.
Fixed Data (10% of revenues)
First Half Fixed Data revenues stood at €66 million, down
11.9% like-for-like. The performance of this vertical continues to
reflect ongoing pricing pressure and a highly competitive
environment, with Latin America the main contributor to the
decline.
Second Quarter revenues amounted to €33 million, down
11.7% on a year-on-year basis, and by 3.1% quarter-on-quarter.
On the commercial front, a framework agreement was signed with
Orange incorporating a material multi-transponder renewal which
secures business on a multi-year basis, as well as setting the
stage for potential incremental business in Fixed Data, Government
Services and Mobile Connectivity.
Connectivity
Fixed Broadband (6% of revenues)
First Half Fixed Broadband revenues stood at €40 million,
down 5.8% like-for-like. This performance continued to reflect
lower revenues for European Broadband in a context of scarcity of
available capacity in certain Western Europe countries and
transition to a new, self-managed distribution strategy, as well as
the expiry of a contract with a Middle-East customer for a spotbeam
on EUTELSAT 3B, re-contracted to Taqnia in the Mobile Connectivity
vertical.
Second Quarter revenues stood at €20 million, down 4.2%
year-on-year and by 1.5% quarter-on-quarter.
Revenue trends stand to improve in the Second Half, notably
thanks to the launch and progressive ramp-up of the Konnect Africa
broadband service in several countries. The commercial service was
launched in November 2018 in DRC (Democratic Republic of Congo)
with a large network of local partners ranging from telecom and
television services distributors to financial services
operators.
In Europe, an overhaul of the standalone distribution strategy,
focused on selected specialist distribution partners and telecom
operators has been completed. In this context, an agreement has
been signed with the Spanish telco operator, Masmovil, for the
distribution of broadband services via the KA-SAT satellite, while
a Preferred Partner Programme (PPP) has been launched to reinforce
relations with key partners and revitalize the distribution of
KA-SAT capacity.
Mobile Connectivity (6% of revenues)
First Half Mobile Connectivity revenues stood at €40
million, up 6.7% like-for-like. They reflected the positive impact
of the new contract with Taqnia at 3°East and 70°East, the
carry-over effect of the entry into service of EUTELSAT 172B at
end-November 2017 and the ongoing ramp-up of capacity contracts on
KA-SAT.
Second Quarter revenues stood at €19.4 million, up 2.6%
on a year-on-year basis, and down by 6.9% quarter-on-quarter.
On the commercial front, a multi-transponder contract was signed
with a leading service provider on multiple satellites for capacity
dedicated to maritime connectivity. This new contract as well as
the start of the UnicomAirNet contract for in-flight connectivity
on EUTELSAT 172B will support revenue growth in the Second
Half.
Other Revenues
In the First Half, Other revenues amounted to (€2.3)
million versus €12.2 million a year earlier. They included a
negative (€7.1) million impact from hedging operations. The
lumpiness of this line means the half yearly performance cannot be
extrapolated for the full year.
OPERATIONAL AND UTILIZED
TRANSPONDERS
The number of operational transponders at 31 December 2018 stood
at 1,419, up by three units year-on-year and down by eight versus
end-June, principally reflecting the disposal of EUTELSAT 25B.
The number of utilized transponders stood at 970, up 21 units
year-on-year and stable versus end-June. The evolution versus
end-June principally reflects the disposal of EUTELSAT 25B as well
as the outcome of the Fall renewals in Government Services, offset
by new contracts with Orange Slovensko and Ethiopian broadcasters
as well as the ramp-up at 174° East.
As a result, the fill rate stood at 68.3% compared to 67.0% a
year earlier and 68.1% at end-June.
31 Dec 2017 30 Jun 2018
31 Dec
2018
Operational transponders7
1,416 1,427
1,419
Utilized transponders8
949 971
970 Fill rate 67.0% 68.1%
68.3%
Note: Based on 36 MHz-equivalent transponders excluding high
throughput capacity.
_____________________
7 Number of transponders on satellites in stable orbit, back-up
capacity excluded.8 Number of transponders utilised on satellites
in stable orbit.
ORDER BACKLOG
The order backlog9 stood at €4.6 billion at 31 December 2018
versus 4.7 billion a year earlier and 4.6 billion at end June 2018.
The stability versus end-June reflects notably the inclusion of
future revenues related to commitments from Orange and Thales on
KONNECT VHTS as well as the new contracts in maritime and with the
Ethiopian broadcasters in Video which offset the negative effects
of the disposal of EUTELSAT 25B, the adoption of IFRS 15 and
natural backlog consumption.
The backlog was equivalent to 3.3 times 2017-18 revenues. Video
Applications represented 77% of the backlog.
31 Dec 2017 30 Jun 2018
31 Dec
2018 Value of contracts (in billions of euros) 4.7
4.6
4.6 In years of annual revenues based on
previous fiscal year 3.2 3.2
3.3 Share of Video Applications
85% 83%
77%
PROFITABILITY
EBITDA stood at €518 million at 31 December 2018 compared
with €546 million a year earlier, down by 5%. The EBITDA
margin stood at 78.8% (79.0% at constant currency) versus 79.4%
a year earlier, reflecting lower high-margin ‘Other Revenues’, the
dilutive effect of changes in perimeter as well as costs related to
the Konnect Africa project. The LEAP program is progressing in line
with expectations and is well on track to deliver on its €30m
target for the full year.
Group share of net income stood at €150 million versus
€158 million a year earlier, down 5% and representing a margin of
23%. This reflected:
- Broadly unchanged depreciation and
amortisation ((€258) million at 31 December 2018 compared with
(€254) million a year earlier);
- ‘Other operating income’ of €36
million reflecting principally the capital gain on the disposal of
the interest in EUTELSAT 25B in August 2018;
- A net financial result of (€53)
million (versus (€56) million a year earlier), mainly reflecting
the balance sheet evolution of foreign exchange gains and
losses;
- A tax rate of 35% (versus 27%
last year) which does not reflect the potential impact of the
above-mentioned new provisions included in the French Finance Law
for 2019. As a reminder, the previous year’s tax rate included a
positive non-cash one-off related to deferred tax liabilities to
reflect future changes in the French corporate tax rate, as well as
the full impact of the refund relating to the 3% dividend tax for
previous years.
CASH FLOW
In H1 2018-19 Net cash flow from operating activities
amounted to €379 million, €33 million lower than a year earlier.
This reflected principally the decrease in EBITDA partly as a
result of negative currency and perimeter impacts.
Cash Capex amounted to €130 million, fully consistent
with expectations. As a reminder, last year’s cash capex in the
first half stood at just €53 million, a level which was not
representative of the full year figure.
Interest and other fees paid net of interest received
amounted to €24 million versus €21 million last year.
As a result, Discretionary Free Cash-Flow amounted to
€225 million (€235 million at constant currency and perimeter),
down 34% on a reported basis and by 30% at constant currency and
perimeter, reflecting predominantly the phasing of investments.
This evolution should not be extrapolated for the year as a
whole.
FINANCIAL STRUCTURE
At 31 December 2018 net debt stood at €3,304 million, up
€63 million versus end-June. It reflected on one hand €225 million
in discretionary free cash-flow generated in the first semester and
half of the consideration for EUTELSAT 25B (€68 million), and on
the other, the dividend payment of €310 million and the impact of
IFRS 16 for €44 million. Other items, mainly repayments of export
credit financing and financial leases, changes in the foreign
exchange portion of the cross-currency swap and premia for
derivatives settled represented a net amount of €1 million.
The net debt to EBITDA ratio stood at 3.1 times, an
improvement on end-December 2017 (3.3 times). As a reminder,
December usually represents a peak in the annual net debt profile
reflecting the timing of the dividend payment.
The weighted average maturity of the Group’s debt stood at 2.7
years, compared to 2.5 years at end-December 2017. The average cost
of debt after hedging stood at 2.8% (2.9% in H1 2017-18). When
restated from the repayment of the January 2019 €800m maturity,
these metrics stood at 3.4 years and 2.2% respectively.
Liquidity remained strong, with undrawn credit lines of €650
million and cash of €677 million on top of the €800 million
earmarked for the redemption at maturity of the January 2019
bond.
DIVIDEND
The Annual General Meeting of Shareholders of 8 November 2018
approved the payment of a dividend of €1.27 per share in respect of
the financial year ended 30 June 2018, up from €1.21 the previous
year. The dividend was paid on 22 November 2018.
FINANCIAL OUTLOOK
The underlying trend of the five Operating Verticals is broadly
in line with our expectations. The second half will benefit from
the ramp-up of Konnect Africa (fixed broadband), the contracts with
China Unicom on EUTELSAT 172B and in maritime at several orbital
positions (mobile connectivity) as well as an expected improvement
in Video on the back of an easing comparison basis for Fransat and
new business signed (Ethiopian broadcasters, Orange Slovensko,
Afghanistan Broadcasting System) and in the pipeline. The Group
therefore confirms its expectation of ‘broadly stable’
revenues10 for the current fiscal year with a return to
slight growth from FY 2019-20.
All other elements of the financial outlook are also
confirmed:
- The EBITDA margin (at constant
currency) is expected above 78% from FY 2018-19, taking into
account the impact of IFRS 15 and IFRS 16 accounting
standards.
- The estimated Cash Capex11 spend
is expected at an average of €400 million12 per annum for the
period July 2017 to June 2020.
- Discretionary Free Cash Flow is
expected to grow at a mid-single digit CAGR in the period July
201713 to June 2020 (at constant currency and excluding the impact
of the disposal of the interest in EUTELSAT 25B).
- The Group is committed to maintaining a
sound financial structure to support its investment grade credit
rating with a net debt / EBITDA ratio below 3.0x.
- It also reiterates its commitment to
serving a stable to progressive dividend.
This outlook is based on the nominal deployment plan outlined
hereunder.
__________________________
9 The backlog represents future revenues from capacity or
service agreements and can include contracts for satellites under
procurement.10 Revenues for the Operating Verticals (excluding
Other revenues) at constant currency, perimeter and accounting
standards. Proforma revenues for the five operating verticals stood
at €1,330 million in FY 2017-18, excluding the contribution of
EUTELSAT 25B from August 2017 and restated from the impact of IFRS
15 standards.11 Including capital expenditure and payments under
existing export credit facilities and long-term lease agreements on
third party capacity.12 Including impact of new IFRS 16 accounting
standard.13 Net cash-flow from operating activities - Cash Capex -
Interest and Other fees paid net of interest received.
FLEET DEPLOYMENT
Nominal launch programme
Satellite1 Orbital
position
Estimated
launch(calendar
year)
Main
applications
Main
geographic
coverage
Physical
Transponders/
Spot beams
36 MHz-
equivalent
transponders
/ Spot beams
Of which
expansion
EUTELSAT 7C 7° East Q2 2019 Video
Turkey, Middle-East, Africa 44 Ku 49 Ku 19 Ku
EUTELSAT 5 WEST B 5° West Q2 2019 Video
Europe, MENA 35 Ku 35 Ku None EUTELSAT QUANTUM
To be
confirmed
H2 2019 Government Services Flexible 8
“QUANTUM”
beams
Not applicable Not applicable KONNECT To be
confirmed
H2 2019 Connectivity Africa
Europe
65 spot beams 75 Gbps 75 Gbps KONNECT VHTS
To be
confirmed
2021 Connectivity
Government Services
Europe ~230 spot beams 500 Gbps 500
Gbps EUTELSAT HOTBIRD 13F 13° East 2021 Video
Europe
MENA
80 Ku2 73 Ku2 None EUTELSAT HOTBIRD 13G
13° East 2021 Video Europe
MENA
80 Ku2 73 Ku2 None 1 Chemical propulsion
satellites (EUTELSAT QUANTUM, EUTELSAT 5 West B) generally enter
into service 1 to 2 months after launch. Electric propulsion
satellites (EUTELSAT 7C, KONNECT, KONNECT VHTS, EUTELSAT HOTBIRD
13F and EUTELSAT HOTBIRD 13G) between 4 and 6 months. 2 Nominal
capacity corresponding to the specifications of the satellites.
Total operational capacity at the HOTBIRD orbital position will
remain unchanged with 102 physical transponders (95 36 Mhz
equivalent transponders) operated, once regulatory, technical and
operational constraints are taken into account.
Since the last quarterly update in October 2018, the launches of
EUTELSAT 7C and EUTELSAT 5 WEST B are now expected in Q2 2019,
versus Q1 2019 previously, with no material impact on the revenue
profile.
Changes in the fleet in the First Half
- Eutelsat sold its interest in the
EUTELSAT 25B satellite to the co-owner of the satellite,
Es’hailSat.
- The Al Yah 3 satellite started
operations.
- EUTELSAT 33C was relocated to 133°West
and renamed EUTELSAT 133 WEST A.
- EUTELSAT 59A reached the end of its
operational life and was de-orbited.
CORPORATE GOVERNANCE
The Ordinary and Extraordinary Shareholders’ Meeting of 8
November 2018 renewed the mandates of Ross McInnes and Bpifrance
Participations.
The Board is composed of twelve members, 42% of whom are women
(five out of twelve) and 58% of whom are independent directors
(seven out of twelve).
The Combined General Meeting also approved all the other
resolutions, including the approval of the accounts, the dividend
for the 2017-18 Financial Year, compensation of corporate officers
and compensation policy.
Elsewhere, Esther Gaide has been appointed chairwoman of the
Audit, Risks and Compliance Committee replacing Ross McInnes who
will remain a member of this Committee. Ross McInnes has been
appointed chairman of the Nomination and Governance Committee
replacing Carole Piwnica who will remain a member of this
Committee.
*******
First Half 2018-19 results conference call
and webcast
A conference call will be held on Friday, 15 February
2019 at 9:00am CET
To connect to the call, please use the following numbers:
- + 33 (0) 1 76 77 22 57 (France)
- + 44 (0) 330 336 9411 (UK)
- + 1 929 477 0448 (USA)
Access code: 3700127#
The presentation will also be available via webcast on our
website at http://www.eutelsat.com/en/investors.html
Recording available from 15 February 1:00pm to 22 February,
1.00pm CET
- + 33 (0) 1 70 48 00 94 (France)
- + 44 (0) 207 660 0134 (UK)
- + 1 719 457 0820 (USA)
Access code: 3700127#
Documentation
Consolidated accounts are available at:
www.eutelsat.com/investors/index.html
Financial calendar
The financial calendar below is provided for information
purposes only. It is subject to change and will be regularly
updated.
- 14 May 2019: Third Quarter 2018-19
revenues
- 31 July 2019: Full Year 2018-19
results
About Eutelsat Communications
Founded in 1977, Eutelsat Communications is one of the world's
leading satellite operators. With a global fleet of satellites and
associated ground infrastructure, Eutelsat enables clients across
Video, Data, Government, Fixed and Mobile Broadband markets to
communicate effectively to their customers, irrespective of their
location. Over 7,000 television channels operated by leading media
groups are broadcast by Eutelsat to one billion viewers equipped
for DTH reception or connected to terrestrial networks.
Headquartered in Paris, with offices and teleports around the
globe, Eutelsat assembles 1,000 men and women from 46 countries who
are dedicated to delivering the highest quality of service.
Eutelsat Communications is listed on the Euronext Paris Stock
Exchange (ticker: ETL).
For more about Eutelsat please visit: www.eutelsat.com
___________________________________________________________________________________________________
Disclaimer
The forward-looking statements included herein are for
illustrative purposes only and are based on management’s current
views and assumptions. Such forward-looking statements involve
known and unknown risks. For illustrative purposes only, such risks
include but are not limited to: postponement of any ground or
in-orbit investments and launches including but not limited to
delays of future launches of satellites; impact of financial crisis
on customers and suppliers; trends in Fixed Satellite Services
markets; development of Digital Terrestrial Television and High
Definition television; development of satellite broadband services;
Eutelsat Communications’ ability to develop and market Value-Added
Services and meet market demand; the effects of competing
technologies developed and expected intense competition generally
in its main markets; profitability of its expansion strategy;
partial or total loss of a satellite at launch or in-orbit; supply
conditions of satellites and launch systems; satellite or
third-party launch failures affecting launch schedules of future
satellites; litigation; ability to establish and maintain strategic
relationships in its major businesses; and the effect of future
acquisitions and investments.
Eutelsat Communications expressly disclaims any obligation or
undertaking to update or revise any projections, forecasts or
estimates contained in this presentation to reflect any change in
events, conditions, assumptions or circumstances on which any such
statements are based, unless so required by applicable law.
APPENDICES
Appendix 1: Additional financial
data
Extract from the consolidated income statement (in €
millions)
Six months ended December 31
201714
2018 Change (%) Revenues 688.1
658.1 (4.4%) Operating expenses
(141.9)
(139.7) (1.6%) EBITDA
546.2
518.4 (5.1%) Depreciation and
amortisation (254.2)
(257.6) +1.3% Other operating
income (expenses) (10.4)
35.7
n.a. Operating income 281.7
296.6
+5.3% Financial result (55.8)
(53.2)
-4.7% Income tax expense (60.6)
(85.0) +40.3%
Income from associates (1.0)
(1.3) +30.0% Portion of
net income attributable to non-controlling interests (6.3)
(6.8) +7.9% Group share of net income
158.0
150.4 -4.8%
Net debt to EBITDA ratio
31 Dec. 2017
31 Dec. 2018
Net debt at the beginning of the period €m 3,641
3,242 Net debt at the end of the period €m
3,630
3,304 Net debt / EBITDA (Last twelve
months) X 3.3
3.1
Change in net debt (€ millions)
Half-year ending 31/12/2017
31/12/2018 Net cash flows from operating activities
412.1 378.7 Cash Capex (52.8)
(130.0) Interest and Other fees paid net of interests
received (20.5) (23.5)
Discretionary Free Cash
Flow 338.8 225.3 (Acquisition) /
disposal of equity investments and subsidiaries (89.0) 67.5
Distributions to shareholders (including non-controlling interests)
(295.5) (310.5) Change in foreign exchange portion of the
cross-currency swap 32.4 (11.9) IFRS 16 Impact as of 1 July 2018 -
(43.8) Other 23.7 10.7
Decrease (increase) in net
debt 10.4 (62.7)
Appendix 2: Quarterly revenues by
application
Reported Revenues
The table below shows quarterly reported revenues. As a
reminder, IFRS 15 was adopted from July 1st 2018.
In € millions
Q1 2017-18 Q2 2017-18
Q3 2017-18 Q4 2017-18 FY
2017-18 Q1 2018-19 Q2 2018-19 Video
223.3 225.9 225.0 223.1 897.3
217.2 214.9 Government Services 41.1
39.6 38.0 40.2 158.9 42.4 39.4
Fixed Data 37.1 36.3 34.9 34.2
142.5 33.3 32.6 Fixed Broadband 22.3
21.8 21.5 21.1 86.7 20.4 20.1
Mobile Connectivity 18.6 18.5 17.9 19.5
74.4 20.6 19.4
Total operating
verticals 342.4 342.1
337.3 338.1 1,359.8
334.0 326.4 Other Revenues 6.8
5.4 0.1 35.8 48.1 1.2 (3.5)
Total 349.1 347.4
337.4 373.9 1,407.9
335.1 322.9
Proforma revenues
The table below shows quarterly proforma revenues for FY
2017-18. For comparability purposes with FY 2018-19 figures, they
are restated from the following items:
- The contribution of Eutelsat 25B as of
August 2017. As a reminder, Eutelsat sold its interest in the
Eutelsat 25B satellite in August 2018.
- The impact of IFRS 15.
In € millions
Q1 2017-18 Q2 2017-18
Q3 2017-18 Q4 2017-18 FY
2017-18 Video 217.9 219.0 217.9
215.6 870.5 Government Services 41.1 38.5
38.0 40.2 157.8 Fixed Data 37.2
36.2 35.3 34.2 143.0 Fixed Broadband
22.0 20.9 20.8 20.7 84.3 Mobile
Connectivity 18.6 18.5 17.9 19.5
74.4
Total operating verticals 336.8
333.0 329.9 330.2
1,330.0 Other Revenues 6.6 5.5 0.6
33.9 46.7
Total 343.5
338.6 330.4 364.1
1,376.6
Appendix 3: Alternative performance
indicators
In addition to the data published in its accounts, the Group
communicates on three alternative performance indicators which it
deems relevant for measuring its financial performance: EBITDA,
cash capex and Discretionary free cash flow (DFCF). These
indicators are the object of reconciliation with the consolidated
accounts.
EBITDA, EBITDA margin and Net debt / EBITDA ratio
EBITDA reflects the profitability of the Group before
Interest, Tax, Depreciation and Amortization. It is a key indicator
in the Fixed Satellite Services Sector. The table below shows the
calculation of EBITDA based on the consolidated P&L accounts
for H1 2017-18 and H1 2018-19:
Six months ended December 31 (€ millions) 2017
2018 Operating result 281.7 296.6 +
Depreciation and Amortization 254.2 257.6 - Other operating income
and expenses 10.4 (35.7)
EBITDA
546.2 518.4
The EBITDA margin is the ratio of EBITDA to revenues. It is
calculated as follows:
Six months ended December 31 (€ millions) 2017
2018 EBITDA 546.2 518.4 Revenues
688.1 658.1
EBITDA margin (as a % of revenues)
79.4 78.8
At constant currency, the EBITDA margin stood at 79.0% as of 31
December 2018.
The Net debt / EBITDA ratio is the ratio of net debt to
last-twelve months EBITDA. It is calculated as follows:
Six months ended December 31 (€ millions) 2017
2018
Last twelve months EBITDA15
1,090.2 1,050.7
Closing net debt16
3,630.3 3,304.3
Net debt / EBITDA
3.3 3.1
Cash Capex
The Group on occasion operates capacity within the framework of
financial leases, or finances all or part of certain satellite
programs under export credit agreements, leading to outflows which
are not reflected in the item “acquisition of satellites and other
tangible or intangible assets”. Cash Capex including these two
elements is published in order to reflect the totality of Capital
Expenditures undertaken in any financial year.
Cash Capex therefore covers the acquisition of satellites and
other tangible or intangible assets as well as payments in
respect of export credit facilities and long term financial leases
on third party capacity.
The table below shows the calculation of Cash Capex for H1
2017-18 and 2018-19:
Six months ended December 31 (€ millions) 2017
2018 Acquisitions of satellites, other property and
equipment and intangible assets 26.7 82.2
Repayments of ECA loans and lease
liabilities17
26.2 47.8
Cash Capex 52.8
130.0
Discretionary free cash flow (DFCF)
The Group communicates on Discretionary free cash flow which
reflects its ability to generate cash after the payment of interest
and taxes. DFCF generally and principally serves the dividend
payment and debt reduction.
Discretionary free cash flow is defined as Net cash flow from
operating activities less Cash Capex as well as interest and other
financial costs, net of interest income.
The table below shows the calculation of Discretionary free cash
flow for H1 2017-18 and 2018-19 and its reconciliation with the
cash flow statement:
Six months ended December 31 (€ millions) 2017
2018 Net cash flows from operating activities
412.1 378.7 Acquisitions of satellites, other property and
equipment and intangible assets (26.7) (82.2)
Repayment of Export credit
facilities18
(11.9) (11.9) Repayment in respect of lease liabilities (14.3)
(35.9) Interest and other fees paid net of interest received
(20.5) (23.5)
Accounting discretionary Free-Cash Flow
338.8 225.3
Perimeter impact19
Currency impact20
(1.8)
-
5.5
4.4
Discretionary Free-Cash Flow at constant currency and
perimeter 337.1 235.2
__________________________
14 Figures as of 31 December 2017 have been restated to reflect
the adoption of IFRS 15 from 1 July 2018. The impact of the
application of IFRS 15 standards is presented in the note 3 to the
consolidated financial statements.15 Based on reported figures for
fiscal year 2017-18.16 Net debt includes all bank debt, bonds and
all liabilities from lease agreements and Export Credit Agencies as
well as Forex portion of the cross-currency swap, less cash and
cash equivalents (net of bank overdraft). Net Debt calculation is
available in the Note 14 of the appendices to the financial
accounts.17 Included in lines “Repayment of borrowings” and of
“Repayment of lease liabilities” of cash-flow statement18 Included
in the line “Repayment of borrowings” of cash-flow statement19
Impact of the disposal of EUTELSAT 25B satellite. For comparability
purposes: i) H1 2017-18 is restated from the contribution of the
EUTELSAT 25B to Free-Cash-Flow from August 2017; ii) H1 2018-19 is
restated from the advanced payment made by Es’hailSat for capacity
on EUTELSAT 25B (€5.5 million) which had to be reimbursed by
Eutelsat to Es’hailSat when the asset was sold in August 2018.20 H1
2018-19 discretionary Free-Cash Flow has been converted at H1
2017-18 €/$ rate and hedging revenue have been excluded.
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version on businesswire.com: https://www.businesswire.com/news/home/20190214005920/en/
PressMarie-Sophie EcuerTel: + 33 1 53 98 37
91mecuer@eutelsat.com
InvestorsJoanna DarlingtonTel: +33 1 53 98 31
07jdarlington@eutelsat.com
Cédric PugniTel: +33 1 53 98 31 54cpugni@eutelsat.com
Alexandre EnjalbertTel: +33 1 53 98 46
81aenjalbert@eutelsat.com
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