Eutelsat Communications SA · EURONEXT:ETL
Eutelsat Communications SA — FY2018-19 Earnings Presentation
38 slides from Eutelsat Communications SA's earnings presentation, Jul 31, 2019
Slide 1: Full Year 2018-19 Results
FULL YEAR 2018-19 RESULTS 31 July 2019
Slide 2: Disclaimer
Disclaimer This document contains figures from audited consolidated financial statements prepared under IFRS, reviewed by the Audit Committee on 29 July 2019 and adopted by the Board of Directors of Eutelsat Communications on 30 July 2019. These accounts will be subject to the approval of shareholde
Slide 3: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 3
Slide 4: Highlights of FY 2018-19
Highlights of FY 2018-19 All financial objectives below the topline either met or exceeded Discretionary Free Cash-flow objective exceeded a year ahead of schedule Further measures to maximise cash generation, including debt refinancing, asset disposals and material tax savings Proposed dividend per
Slide 5: All financial objectives below the topline met or exceeded
All financial objectives below the topline met or exceeded Actual Objective Performance Operating Verticals Circa -3% -3.1%1 revenues (at constant currency and perimeter) Above 78% EBITDA margin (at constant currency) 78.4%2 + Cash Capex Average €400m p.a. €323m ++ Discretionary Mid-single digit 3-y
Slide 6: DFCF: Implied 3-year CAGR of 6.9% already achieved
DFCF: Implied 3-year CAGR of 6.9% already achieved +€87m In €m +22% 43 91 (44) (48) 45 480 393 FY 17 DFCF * EBITDA Change in WCR & Tax Paid Cash Capex Interest paid FY 19 DFCF * other items *DFCF as per financial objectives definition, ie restated as follows: i) FY 17 excludes contribution of ETL 25
Slide 7: Several operational achievements to underpin future performance
Several operational achievements to underpin future performance VIDEO FIXED BROABDAND MOBILE CONNECTIVITY ► Proven resilience of ► European Broadband ► Market share gains in core Broadcast PPP starting to bear maritime mobility fruit • Substantial ► Addition of several commercial wins with new DTH p
Slide 8: Resilience of Core Broadcast
Resilience of Core Broadcast UNDERLYING STABILITY OF CORE BROADCAST CONTINUED PROGRESSION IN KEY INDICATORS Evolution of Core Broadcast revenues +4% 7,092 6,824 Channel 197 197 198 197 196 195 197 197 count June 2018 ex. 25B June 2019 1,375 +13% 1,551 HD Penetration 20% 22% June 2018 ex. 25B June 20
Slide 9: European Broadband: launch of PPP starting to bear fruit
European Broadband: launch of PPP starting to bear fruit LAUNCH OF PREFERRED PARTNERSHIP INFLEXION IN NET ADDS DURING Q4-19 PROGRAMME END 2018 Net monthly adds on KA SAT ► Focus on few, selected partners 1 500 ► Incentives to maximise market 1 000 share 500 - ► Lower churn for PPP customers -500 ► T
Slide 10: Leveraging all components of cash-flow to maximize cash generation
Leveraging all components of cash-flow to maximize cash generation Reduction of €74m in FY 19 tax burden after change in French tax territoriality treatment Two successful bond issuances reducing pre-tax cash interest by c.€34m p.a. at run-rate Successful completion of ‘LEAP 1’ cost-saving program w
Slide 11: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 11
Slide 12: FY 2018-19 revenues
FY 2018-19 revenues FY 19 YOY REVENUE BRIDGE (€M) ► Total revenues of €1,321m, down 5% ► Negative net perimeter impact • Carry-forward effect of Noorsat -3.1% 21 • Deconsolidation of Eutelsat 25B (11) (39) (41) ► Positive currency effect • €/$ rate of 1.14 vs 1.19 last year ► Negative swing of -€39m
Slide 13: FY 2018-19 revenues by application
FY 2018-19 revenues by application REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 (€m) CHANGE Video 66% 864 CORE BUSINESSES -1.9% Government 12% 10% 162 -1.5% Services Fixed 10% 127 -14.6% Data CONNECTIVITY Fixed 6% 80 -5.6% Broadband Mobile 6% 80 +4.0% Connectivity Total Operating Verticals 1,313 -3
Slide 14: Video
Video 66% REVENUES (€M) ► Revenues of €864m, down 1.9% like-for-like1 • Core broadcast excluding FRANSAT broadly stable 871 864 • Double digit decline in Professional Video Q4 216 Q4 217 ► Q4 revenues down 1.1% YoY but up 0.3% QoQ Q3 218 Q3 215 ► Channel count up 4% YoY • 7,092 channels at end June
Slide 15: Focus on HOTBIRD KPIs
Focus on HOTBIRD KPIs CHANNEL COUNT HD PENETRATION MPEG 4 -50 +11% +4% 1002 366 597 574 952 329 33% XX% % 33% 38% % 58% 63% June 2018 June 2019 June 2018 June 2019 June 2018 June 2019 ► Reflects mostly the end of ► HD ramp-up ► MPEG-4 considerably simulcast / dual outpacing MPEG-4 more advanced illu
Slide 16: Government Services
Government Services 12% REVENUES (€M) ► Revenues of €162m, down 1.5% like- for-like1 • Low level of renewals with USG in FY 19 158 162 • Carry-forward effect of incremental business over APAC at 174°East Q4 40 Q4 40 ► Q4 revenues down 7.9% YoY and 40 Q3 38 Q3 1.5% QoQ ► FY 2019-20 to reflect: Q2 39
Slide 17: Fixed Data
Fixed Data 10% REVENUES (€M) ► Revenues of €127m, down 14.6% like-for-like1 ► Continuing to reflect: 143 • Highly competitive environment 127 • Ongoing price pressure Q4 34 Q4 30 ► Softer volumes in Latin America Q3 35 Q3 30 ► Q4 down 16.4% YoY and 1.4% QoQ Q2 36 Q2 33 ► From FY 2019-20, this vertic
Slide 18: Fixed Broadband
Fixed Broadband 6% REVENUES (€M) ► Revenues of €80m, down 5.6% like-for-like1 • Down 3.5% excl contract expiry for a spotbeam on E3B (recontracted in Mobility) 84 80 ► Lower revenues in European Broadband, but improvement in Q4 Q4 21 Q4 21 • PPP starting to bear fruit Q3 21 ► Konnect Africa: modest
Slide 19: Mobile Connectivity
Mobile Connectivity 6% REVENUES (€M) ► Revenues of €80m, up 4.0% like-for-like1 reflecting: • Start of UnicomAirNet contract in Jan ‘19 • Carry-forward of Taqnia contract at 3° 80 and 70°East 74 • Ongoing ramp-up of capacity contracts Q4 21 on KA-SAT Q4 20 • End of temporary wide-beam contract on ET
Slide 20: Backlog and Fill Rate
Backlog and Fill Rate BACKLOG (€BN) OPERATIONAL AND UTILIZED TRANSPONDERS 1,427 1,387 4.6 4.4 971 960 Video 83% 75% 30 June 2018 30 June 2019 30 June 2018 30 June 2019 Fill rate 68.1% 69.2% Operational transponders Utilized transponders ► 3.3 years of revenues ► Operational txp reflecting disposal o
Slide 21: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 Financial performance 4 Outlook 21
Slide 22: Profitability
Profitability EBITDA (€M) ► EBITDA margin of 78.4% at constant currency versus 1,078 1,032 77.6% in FY 2017-18 despite • Lower revenues • Roll-out costs of Konnect Africa Margin at ► Successful completion of constant 77.6% 78.4%1 currency LEAP 1 opex plan 77.4 77.4 77.5 • €32m in savings versus €30m
Slide 23: Successful completion of LEAP cost-saving program
Successful completion of LEAP 1 cost-saving program BREAKDOWN OF COST SAVINGS ► Targeting external costs ► Adressable cost base of €140m 10% reduced by >20% ► €30m objective exceeded 25% 45% ► Underpinning record EBITDA margin 20% €32m in total savings in FY 19 Technical costs Consulting SG&A* Marke
Slide 24: Net income
Net income Extracts from the FY FY 2018-19 Change consolidated income statement in €m1 2017-18 Revenues 1,391 1,321 -5.0% EBITDA2 1,078 1,032 -4.3% Operating ► Capital gain on sale of E25B 554 526 -5.0% ► Impairment of assets income ► Negative one-off impact of Noorsat integration in FY18 ► Higher c
Slide 25: Discretionary Free Cash Flow
Discretionary Free Cash Flow In €m 439 (323) 31 FX & Impact 848 of E25B 1 (117) (1) 408 (1) Net Cash Flow from Cash Capex Interest and Other Discretionary Free operations fees paid net of Cash Flow interests received Change at constant +13 +35 (9) +39 FX, excl E25B Reported change (33) 35 (9) (7) 1
Slide 26: DFCF/revenue ratio almost doubled in three years
DFCF/ revenue ratio almost doubled in three years DFCF to revenue ratio 16% 28% 30% 31% 1,529 1,478 1,391 1,321 408 415 408 247 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 Total revenues Reported Discretionary Free Cash Flow 26
Slide 27: Further reduction in Net Debt
Further reduction in Net Debt In €m -€169m 65 44 3,242 3,304 408 68 3,073 112 310 Net Debt at Discretionary Equity Lease Dividend paid IFRS 16 Other Net Debt at end-June 18 Free divestments liabilities impact 1 end-June 19 Cash Flow and Export Credit repayments 1 As of 1 July 2018 27
Slide 28: Financial structure
Financial structure NET DEBT / EBITDA RATIO1 ► Net Debt/EBITDA ratio of 2.98x • Slight reduction vs 30 June 2018 (3.01x) • In line with target ► Average cost of debt after hedging 3.01x 2.98x reduced to 2.6% • vs 2.9% in FY 2017-18 ► Average weighted maturity of 3.6 years vs 2.2 years at 30 June 201
Slide 29: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 Financial performance 4 Outlook 29
Slide 30: Reminder: Our strategic roadmap
Reminder: Our strategic roadmap Step 1 Step 2: return to growth GROW TOPLINE MAXIMIZE EXTRACT VALUE CAPTURE THE FREE CASH-FLOW FROM THE CORE CONNECTIVITY GENERATION VIDEO BUSINESS OPPORTUNITY 30
Slide 31: Key priorities for FY 2019-20
Key priorities for FY 2019-20 MAXIMIZE EXTRACT VALUE FROM THE CAPTURE THE FREE CASH FLOW CORE CONNECTIVITY GENERATION VIDEO BUSINESS OPPORTUNITY ► Execute on LEAP 2 ► Exploit growth pockets ► Maintain momentum cost savings plan • Market incremental in maritime mobilty capacity on E7C ► Relocate Pari
Slide 32: FY 20: Key trends by Operating Vertical
FY 20: Key trends by Operating Vertical Resilience of core Broadcast Broadcast 60% Entry into service of ETL 7C Data & Professional 15% Ongoing competitive pressure Video Government Entry into service of EGNOS payload 12% Delayed launch of Eutelsat Quantum Services Fixed Improvement in European Broa
Slide 33: Financial outlook
Financial outlook OPERATING VERTICALS REVENUES1 ► FY 2019-20: between €1,280m and €1,320m ► FY 2019-20 to FY 2021-22: average of CASH CAPEX €400m2 per year DISCRETIONARY FREE CASH FLOW3 ► FY 2021-22: around €500m ► Maintain investment grade rating LEVERAGE ► Net debt / EBITDA below 3.0x ► Stable to
Slide 34: To sum up
To sum up Consistent delivery on below-topline objectives despite challenging environment for core businesses Successful execution of cash generation strategy with cash flow/revenue ratio doubled in three years, and DFCF target reached a year early On track for connectivity-driven return to growth,
Slide 35: Appendix
APPENDIX
Slide 36: Future launches
Future launches EUTELSAT KONNECT KONNECT EUTELSAT EUTELSAT Name 5 WEST B VHTS HOTBIRD 13F HOTBIRD 13G Orbital 5° West TBD TBD TBD 13° East 13° East Position Launch date1 Q4 2019 Q4 2019 Q3 2020 H2 2021 H2 2021 H2 2021 Manufacturer Launcher TBD TBD TBD Europe SSA Flexible Europe Europe Europe Coverag
Slide 37: Key Financial Data
Key Financial Data FY 2017-18 Key Financial Data FY 2018-19 Change Restated P&L Revenues - €m 1,390.5 1,321.1 -5.0% “Operating Verticals” revenues 1,343.9 1,313.1 -2.3% “Operating Verticals” revenues at constant currency and perimeter 1,330.0 1,288.7 -3.1% EBITDA1 - €m 1,078.5 1,032.4 -4.3% EBITDA m
Slide 38: Disclaimer
Disclaimer This presentation does not constitute or form part of and should not be construed as any offer for sale of or solicitation of any offer to buy any securities of Eutelsat Communications, nor should it, or any part of it, form the basis of or be relied on in connection with any contract or
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