Paris, 9 April 2020. The Board of Directors of Eutelsat Communications (Euronext Paris: ETL) met today. The Board and management are closely monitoring the impact of Covid-19 on the company's operations and financial objectives. During this uncertain period our priorities are safeguarding the health and well-being of our employees and wider communities, working with authorities to halt the spread of Covid-19, and fully supporting our customers.
Business continuity
We have an active and capable remote working culture and we have responded quickly to ramp up our IT infrastructure to support both our employees and our operations. We have a well-rehearsed Business Continuity Plan for key workers in mission-critical posts, enabling our teleports and control centres to operate nominally and support our customers who are reliant on our services.
Impact of Covid-19 on revenues
Compared with many industries, our activity is highly resilient, characterized as it is by long-term contracts, a substantial backlog ( 4.3bn as of 31 December 2019, representing 3.3 years of revenues) and the criticality of our capacity for customers. This is especially true of our core broadcast business which represents over 60% of revenues.
Overall the impact on FY 2019-20 total revenues will be limited.
Nevertheless, certain verticals or sub-verticals are feeling the effects of the current crisis, particularly since mid-March. These include:
Occasional Use (circa 1% of Group revenues, included in the Professional Video vertical) which is impacted by the postponement or cancellation of sports and other events;
Mobile Connectivity (6% of Group revenues) which is affected by the impact on airline and maritime traffic;
And, to a lesser extent, Fixed Broadband (6% of Group revenues) which is experiencing a slowdown in gross adds in a context of more challenging customer gathering.
Revenues at the end of February were in line with our expectations; however, these effects will be progressively felt in the Third and Fourth quarters of the current Financial Year (2019-20), and are likely to be reflected at least into the early months of FY 2020-21, together with a more generalised slowdown in the pace of new business.
Elsewhere, the crisis is affecting the operations of other players in our supply chain, notably satellite manufacturers, launchers, and gateway installers, with the following impacts:
The launch of EUTELSAT QUANTUM, planned for the third quarter of calendar 2020, is likely to be delayed;
The deployment of ground gateways supporting the operations of EUTELSAT KONNECT is likely to be partially delayed.
In consequence the revenue ramp-up of these two expansion satellites will be pushed out. This will have no impact on revenues of the current fiscal year, but delays will affect our expectations for FY 2020-21.
Updated Financial outlook
In the light of the impact in the Third and Fourth Quarters, we estimate the risk to FY 2019-20 revenues resulting from the Covid-19 crisis is of the order of 20 million. In consequence we now expect revenues from the five operating verticals of around 1,250 million[1], compared with our previous expectation of revenues in the lower end of a range of 1,270 to 1,315 million[2]. This limited impact highlights the resilience of our overall activities.
We continue to assess the effect of the crisis on the outer years. While this is ongoing, we are temporarily suspending our objective of Discretionary Free-Cash flow of circa 500 million[3]in Fiscal year 2021-22, although we are confident our business will remain highly cash generative. An updated objective will be provided by the end of July.
With regard to the other elements of our financial outlook:
Cash Capex will remain at an average not exceeding 400[4] million per annum for the period July 2019 to June 2022;
We will continue to implement the LEAP 2 plan, aimed at generating 20 to 25 million in annual savings by Fiscal year 2021-22;
We maintain our objective of a sound financial structure to support our investment grade credit rating and will continue to aim at a medium-term net debt / EBITDA ratio around 3x.
As a measure of prudence and in order to preserve maximum financial flexibility during this uncertain period, we are also temporarily suspending our policy of a stable to progressive dividend'. The Board of Directors will recommend a dividend cut of 30% in respect of FY 2019-20 to the Annual General Shareholders meeting in November 2020. Our policy of a stable to progressive dividend will be resumed as soon as circumstances permit, based on our resilient cash-flow generation and robust financial health.
The share buyback program of at least 100 million by June 2022 was launched in March with a first tranche of 20 million by July 2020 which is well underway and will be completed in due time. The program will then be suspended until further notice.
Financial position
Eutelsat's financial profile is strong with:
A Net Debt to EBITDA ratio of 3.2x at end-December 2019 providing substantial headroom relative to the 4.0x Debt covenant on non-Bond Debt;
A well-spread refinancing schedule, with no maturities before June 2021 ( 500 million Bond);
A strong liquidity position at end December 2019 with cash of 373 million and undrawn credit lines of 798 million, of which 300 million were drawn in the course of March in order to give additional security;
A free-cash-flow generation which will remain strong.
Rodolphe Belmer, Chief Executive Officer of Eutelsat Communications, said: In this unprecedented context, our focus is on the health and well-being of our employees and wider communities and on ensuring full business continuity for our customers, at a time when the demand for high quality, reliable connectivity has never been higher.
Our activity is resilient compared
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Paris, 9 April 2020. The Board of Directors of Eutelsat Communications (Euronext Paris: ETL) met today. The Board and management are closely monitoring the impact of Covid-19 on the company's operations and financial objectives. During this uncertain period our priorities are safeguarding the health and well-being of our employees and wider communities, working with authorities to halt the spread of Covid-19, and fully supporting our customers. 
