Eutelsat Communications SA · EURONEXT:ETL
Eutelsat Communications SA — H1 2016-17 Earnings Presentation
33 slides from Eutelsat Communications SA's earnings presentation, Feb 9, 2017
Slide 1: H1 2016-17 Results
H1 2016-17 RESULTS February 9, 2017
Slide 2: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 2
Slide 3: Business highlights
Business highlights Solid commercial ► Fall campaign renewal rate with DoD above expectations performance ► Progress on HD and UHD take-up on HOTBIRD supporting ► KA-SAT: contracts with SAS and Finnair for IFEC revenues ► EUTELSAT 3B: HTS payload fully re-sold ► High level of profitability in H1 201
Slide 4: First Half Key data
First Half Key data ► Revenues of €755m, down 2.5% reported and 0.9% like-for- REVENUES like1, in line with expectations ► EBITDA of €588m EBITDA ► EBITDA margin of 77.9% (vs. 77.5% in H1 2015-16) ► Group share of net income of €192m, up 2% NET INCOME ► Net margin of 25% FINANCIAL ► Discretionary Fr
Slide 5: New segmental reporting for revenues
New segmental reporting for revenues ► Revenues henceforth reported on five applications: • Video, Fixed Data and Government Services (‘Core Businesses’) • Fixed Broadband and Mobile Connectivity (‘Connectivity’) ► Consistent with new strategy ► Main changes relative to previous reporting basis arou
Slide 6: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 6
Slide 7: H1 2016-17 Revenues by application
H1 2016-17 Revenues by application REVENUE REVENUES2 LIKE-FOR-LIKE3 CONTRIBUTION1 (€m) CHANGE CORE BUSINESSES Video 64% 455 -2.0% Fixed Data 12% 85 -15.9% Government 12% 86 -9.1% Services CONNECTIVITY Fixed 7% 49 +18.3% Broadband Mobile 5% 39 +19.3% Connectivity 1 The share of each application as a
Slide 8: Q2 2016-17 revenues by application
Q2 2016-17 revenues by application REVENUE Q2 2016-172 LIKE-FOR-LIKE3 CONTRIBUTION1 (€m) CHANGE vs. Q1 2016-17 CORE BUSINESSES Video 64% 229 +0.9% Fixed Data 12% 41 -5.3% Government 12% 44 +2.7% Services CONNECTIVITY Fixed 7% 24 -4.9% Broadband stable ex one-off in Q1 Mobile 5% 18 +21.5% Connectivit
Slide 9: Video
Video 64% REVENUES1 (€M) ► H1 revenues of €455m, down 2.0% like- for-like ► Stable broadcast revenues • Positive contribution from incremental capacity 465 472 455 launched last year (E 8WB and E 36C) • Impact of rationalisation of capacity at HOTBIRD Q2 237 Q4 236 Q2 229 • Broadcast up 4% excluding
Slide 10: Fixed Data
Fixed Data 12% REVENUES1 (€M) ► H1 revenues of €85m, down 15.9% 101 like-for-like 92 85 ► Ongoing pricing pressure in all 49 Q2 geographies as expected Q4 45 Q2 41 ► Fast-growing Broadband and Mobility revenues transferred to Q1 52 Q3 47 43 new applications Q1 H1 2015-16 H2 2015-16 H1 2015-16 1 Prof
Slide 11: Government Services
Government Services 12% REVENUES1 (€M) ► H1 revenues of €86 million, down 9.1% like-for-like ► Carry-forward of lower US DoD renewals in Spring 2016 campaign 95 86 86 ► Improved q-o-q trend reflecting positive outcome of Fall 2016 Q2 47 Q4 41 Q2 44 campaign • Renewal rate above 90% • New contracts r
Slide 12: Fixed Broadband
Fixed Broadband 7% REVENUES1 (€M) ► H1 revenues of €49m, up 18.3% like-for- like1 ► Entry into service of fully-sold HTS payload on EUTELSAT 65 West A in May 49 2016 41 40 ► Resilient revenues on KA-SAT in Europe Q2 24 Q2 20 ► Impact of contract termination for Ka- Q4 22 band payload on EUTELSAT 3B
Slide 13: Mobile Connectivity
Mobile Connectivity 5% REVENUES1 (€M) ► H1 revenues of €39m, up 19.3% like-for-like ► Increased activity resulting from new capacity leases and volume increases 39 ► Growing orbital positions: 32 10° East, 21° East, 70° East, 172° East 28 Q2 18 ► Customers including Gogo and Q2 15 Q4 14 Panasonic Q1
Slide 14: New IFEC contract with Taqnia / Saudia
New IFEC contract with Taqnia / Saudia ► Multi-year lease to Taqnia of four steerable HTS Ka-band spotbeams on EUTELSAT 3B ► Capacity to be used for IFEC on 130 medium / long-haul aircraft of Saudi Arabian Airlines ► Covering flight paths from Middle East to Europe ► Potential for incremental busine
Slide 15: Backlog and Fill Rate
Backlog and Fill Rate BACKLOG (€BN) OPERATIONAL AND LEASED TRANSPONDERS 1,328 1,326 1,268 5.8 5.6 938 942 940 5.3 Video 83% 85% 84% 31 Dec. 2015 30 June 2016 31 Dec. 2016 31 December 30 June 2016 31 December Fill 2015 2016 73.9% 70.9% 70.9% rate Operational transponders leased transponders ► Backlog
Slide 16: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 2 Financial performance 4 Outlook 16
Slide 17: Profitability
Profitability EBITDA (€M) ► EBITDA of €588m, down 2% • 2.5% decline in reported revenues 600 588 ► EBITDA margin slightly up to 77.9% benefiting from • Recurrent favourable phasing of operating costs Margin (%) 77.5 77.9 • High level of ‘Other Revenues’ 77.4 77.4 77.5 (€42m, + 48% yoy) mostly with n
Slide 18: Net income
Net income Extracts from the consolidated income H1 H1 Change statement in €m1 2015-16 2016-17 Revenues 774 755 -2.5% ► Stable margin vs H1 2015-16 EBITDA2 600 588 -2.0% ► Favourable phasing of Opex in H1 ► High level of ‘Other revenues’ Operating ► Higher D&A 361 337 -6.7% ► Capital gain on Wins/DH
Slide 19: Discretionary Free-Cash Flow up 27%
Discretionary Free-Cash Flow up 27% In €m (130) 1 (27) 482 (1) 325 (1) Net cash Flow from Cash Capex Interest and Other Discretionary Free operations fees paid net of Cash-flow interests received H1 2015-16 447 (171) (19) 257 (1) Cash Capex includes capital expenditures and payments under existing e
Slide 20: Net debt
Net debt In €m (325) 266 (54) (9) 4,007 3,885 Net Debt at Discretionary Dividends Equity Net Debt at divestments Other end- Jun 16 Free Cash paid end-Dec 16 Flow as reported 2020
Slide 21: Financial structure
Financial structure NET DEBT / EBITDA RATIO1 ► Net Debt/EBITDA ratio reduced to 3.37x vs. 3.44x at 30 June 2016 3.44 3.37 ► Average cost of debt after 3.18 hedging reduced to 3.1% (vs 3.6% in H1 2015-16) ► Average weighted maturity of 2.9 years ► New BBB/stable rating by Fitch • Further support to I
Slide 22: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 Financial performance 4 3 2 Outlook 22
Slide 23: Our strategic roadmap
Our strategic roadmap STEP 1 STEP 2 GROW CASH-FLOW GROW TOPLINE 2016-2019 2019-2025+ 2017-19 Maximise Free-Cash-Flow generation Build on our core Capture longer of core businesses video business term potential to accelerate growth in Connectivity 23
Slide 24: Progress in H1
Progress in H1 Cost-savings plan: Launch of ‘LEAP’ Financial and operational Capex optimisation: EUTELSAT 5 WB procured measures with significant savings STEP 1 Maximise Asset disposals: Wins /DHI , Hispasat put option Free Cash exercised Flow Optimizing Video: Ramp-up of HD and UHD on HOTBIRD reven
Slide 25: LEAP Programme: €30m cost-savings by 2019
LEAP Programme: €30m cost-savings by 2019 LAUNCH OF LEAP WITH IDENTIFIEDSAVINGS TIMING AND IMPACT OF LEAP ► EBITDA margin above 75% FY 2016-17 FY 2017-18 FY 2018-19 • Scope for improvement relative to Launch best-in class and €15m €30m quick wins savings savings ► c.€140m of adressable costs identif
Slide 26: HOTBIRD update
HOTBIRD update ON TRACK TO PREPARE RETURN TO GROWTH SOLID FUNDAMENTALS 1,030 1,055 * ► Rationalisation of distribution completed Resilient channel count ► Differentiated pricing to incentivise June 2016 Dec. 2016 HD migration +15% 545 ► Ongoing migration of FTA to HD 475 • Launch of Euronews HD MPEG
Slide 27: Agreement with ViaSat…
Agreement with ViaSat… CLOSING OF JV AGREEMENT WHAT’S NEW? ► Combining Eutelsat’s European ► Initial JV perimeter extended to broadband business with include both fixed broadband AND ViaSat’s expertise in-flight mobility ► Two entities: ► Initial technical assessment of Viasat 3 VHTS technology • In
Slide 28: …paving the way for the longer-term Connectivity opportunity
…paving the way for the longer-term Connectivity opportunity ► Core market for Fixed Broadband via satellite estimated at Significant long- c.5m households in Europe in 20301 term potential ► Global revenues for in-flight connectivity capacity expected to exceed €1bn in 2025 VHTS game- ► Provision o
Slide 29: Financial outlook
Financial outlook ► FY 2016-17: Between -3% and -1% REVENUES ► FY 2017-18: Broadly stable (At constant currency, and perimeter) ► FY 2018-19: Slight growth ► FY 2016-17 and FY 2017-18: above 76% EBITDA MARGIN1 ► FY 2018-19: heading towards 77% (versus above 75% previously) ► FY 2016-17 to FY 2018-19
Slide 30: To Sum Up:
To Sum Up: On track to deliver on revenue objectives, underpinned by solid commercial performance Raised EBITDA margin outlook on the back of ‘LEAP’ cost-savings plan Strong growth in Discretionary Free-Cash-Flow with opex savings coming on top of Capex and financial costs Paving the way for Connect
Slide 31: Appendices
APPENDICES a eutelsat
Slide 32: Future launches
Future launches EUTELSAT EUTELSAT AFRICAN Name 172 B EUTELSAT 7C 5 WEST B BBAND. SATELLITE Position 172° East 7° East 5° West TBD TBD Launch1 Q2 2017 H2 2018 H2 2018 2019 2019 Manufacturer Launcher TBD TBD TBD Asia-Pacific MENA Europe Flexible SSA Coverage SSA MENA Data Data Applications GS Video Vi
Slide 33: 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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