Revenues of 755 million, down 0.9% like-for-like[1], in line with expectations
High level of profitability: EBITDA margin of 77.9%
Net Income: 192 million, up 2.2%
Strong growth in Discretionary Free Cash Flow, up 27% to 325 million
EBITDA margin target raised on the back of LEAP' cost-savings plan; all other financial objectives confirmed
Upcoming joint-venture with ViaSat paving the way for future growth in Connectivity
Paris, 9 February 2017 - The Board of Directors of Eutelsat Communications (ISIN: FR0010221234 - NYSE Euronext Paris: ETL), chaired by Michel de Rosen, reviewed the financial results for the half-year ended 31 December 2016.
Key Financial Data 6 months to Dec. 2015 6 Months to Dec. 2016 Actual change Like-for-like change
Revenues - m 774.4 755.1 -2.5% -0.9%
EBITDA [2]- m 600.3 588.0 -2.0%
EBITDA margin - % 77.5 77.9 0.4 pt
Group share of net income - m 188.0 192.2 2.2%
Financial structure
Discretionary Free-Cash-Flow [3] 256.7 324.8 26.5%
Net debt - m 3,723.3 3,885.0 161.7m
Net debt/EBITDA - X 3.18x 3.37x
Backlog - bn 5.8 5.3 -8.0%
Commenting on the First Half, Rodolphe Belmer Chief Executive Officer of Eutelsat Communications, said: First Half revenues were in line with expectations, and we are on track to reach our current and three year objectives thanks to a solid commercial performance. We are also on target to deliver on our commitment to reduce capital expenditure, notably thanks to the highly effective application of design-to-cost' for satellite procurement. This semester we have also launched the LEAP' cost-savings plan, aimed at generating 30 million in annualised savings by fiscal year 2018-19, contributing to the robustness of our Free Cash Flow generation targets and enabling us to raise our EBITDA margin outlook. We are making strong progress in our newly defined Connectivity' business line, with the lease of the HTS payload on EUTELSAT 3B for in-flight connectivity on Saudi Arabian Airlines, and contracts on KA-SAT for in-flight connectivity for SAS and Finnair. By securing Ka-band capacity from Yahsat we will also launch our African broadband initiative with only a slight delay relative to the original plan. Finally, we are about to close a joint-venture with ViaSat which paves the way for a step-up in broadband and mobile connectivity from the early 2020s, with no change to our Capex framework.
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 7 February 2017 and approved by the Board of Directors of Eutelsat Communications on 8 February 2017.
HIGHLIGHTS
Solid commercial performance supporting revenues:
Fall campaign renewal rate with the US Department of Defense above expectations;
Progress on HD and Ultra HD channel take-up on HOTBIRD;
Contracts signed for in-flight Connectivity for SAS and Finnair on KA-SAT and for Saudi Arabian Airlines on the HTS payload of EUTELSAT 3B, which is now fully leased.
Delivering on Capex reduction and Discretionary Free Cash Flow generation:
EUTELSAT 5 West B satellite procurement with design-to-cost' policy enabling Capex savings of more than 30%;
Strong growth in Discretionary Free Cash Flow in the first half.
Robust profitability:
Launch of LEAP' cost-savings plan aimed at generating 30 million in annualised savings by 2018-19;
EBITDA margin outlook raised.
Preparing the ground for future growth in Connectivity:
Securing of Ka-band capacity from Yahsat enabling the launch of the African broadband initiative (Konnect Africa) in H2 2016-17;
Upcoming joint-venture with ViaSat paving the way for a step-up in Connectivity from the early 2020s, with no change to Capex outlook.
ANALYSIS OF REVENUES [4]
Note: In line with the strategy presented on June 27, Eutelsat will henceforth communicate its revenues on the basis of five applications: Video, Fixed Data and Government Services (Core Businesses), Fixed Broadband and Mobile Connectivity (Connectivity). Please refer to the note in the appendix to this document for more details.
Previous reported applications
New applications
Variation
In millions 6months to Dec 2015
In millions 6 months to Dec 2015 Proforma[5] 6 months to Dec 2016 Vs. reported revenues Like-for-like change[6]
Video Applications 468.9
Video Applications 464.6 455.4 N/A -2.0%
Data Services 118.0
Fixed Data 101.0 84.9 -15.9%
Value-Added Services 55.1
Government Services 94.9 86.1 -9.1%
Government Services 106.2
Fixed Broadband 41.1 48.6 18.3%
Other revenues 26.1
Mobile Connectivity 32.3 38.5 19.3%
Sub-total 774.4
Other revenues [7] 28.4 41.6 47.9%
Non-recurring revenues -
Total 774.4
Total 762.2 755.1 -2.5% -0.9%
EUR/USD exchange rate 1.11 1.11
Group First Half revenues stood at 755.1 million, down 0.9% at constant currency and perimeter. On a reported basis, revenues were down 2.5% reflecting a 1.6 point negative perimeter effect (disposal of Alterna'TV, Wins/DHI[8] and DSAT Cinema). There was no significant currency effect in the first half.Second quarter revenues stood at 370.2 million, down 2.4% like-for-like and by 4.3% on a reported basis.
Core businesses
Video Applications (64% of revenues)
Video Applications revenues in the first half were down 2.0% like-for-like to 455.4 million. The decline was fully attributable to lower revenues in Professional Video. Broadcast revenues were stable on the back of the contribution from incremental capacity launched during the course of last year (EUTELSAT 8 West B for MENA and EUTELSAT 36C for Sub-Saharan Africa), which more than offset the negative impact of rationalisation of capacity at the HOTBIRD position and lower revenues from FRAN
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Revenues of 755 million, down 0.9% like-for-like[1], in line with expectations
