Eutelsat Communications SA · EURONEXT:ETL
Eutelsat Communications SA — H1 2018-19 Earnings Presentation
35 slides from Eutelsat Communications SA's earnings presentation, Feb 15, 2019
Slide 1: First Half 2018-19 Results
FIRST HALF 2018-19 RESULTS 15 February 2019
Slide 2: Disclaimer
Disclaimer This document 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 of Eutelsat Communications on 14 February 201
Slide 3: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 3
Slide 4: Key financial data
Key financial data First Half Underlying REVENUES 2018-191 performance Operating Verticals €660m -2.4%2 Revenues EBITDA margin At constant currency 79.0% -0.4 pts Cash Capex (€130)m (€77)m Discretionary Free Cash-Flow €235m -30% At constant currency & perimeter Net Debt / EBITDA 3.1 -0.2x (vs. Dec.
Slide 5: Progress on our strategic roadmap
Progress on 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 5
Slide 6: Maximising cash generation
Maximising cash generation Disposal of non-core interest in ETL 25B satellite for €135m Successful refinancing of Jan 2019 Bond extending debt maturity and reducing cash interest by €24m Multi-launch agreement with Arianespace providing cost-effective access to space HOTBIRD replacement with highly
Slide 7: Extracting value from the core video business
Extracting value from the core video business INCREASE RETURNS: INCREASE REVENUES: HOTBIRD CONSTELLATION RENEWAL PROMISING TAKE UP OF EUTELSAT CIRRUS ► Two large satellites replace ► Eutelsat’s new hybrid satellite- three for the same number of OTT delivery solution operational transponders ► First
Slide 8: Broadband Europe: Overhaul of distribution strategy
Broadband Europe: Overhaul of distribution strategy with focus on specialist and telco partners ► Launch of Preferred Partner Program to revitalize KA-SAT distribution • Reinforce relations with key partners o Exclusive distribution of KA-SAT capacity o Support for SAC, installation and marketing o
Slide 9: Konnect Africa: Progressive roll-out
Konnect Africa: Progressive roll-out BUILDING OUT DISTRIBUTION DEFINING APPROPRIATE PRICING LAUNCH IN FALL 2018 NETWORK STRATEGIES (DRC EXAMPLE) ► Entry into service of ► Wholesale telcos ► Segmented price grid Al-Yah 3 and DTH operators • B2C packages ranging Revenues from $25 (5 GB)toto $75 ► Prog
Slide 10: Agenda
Agenda 1 Highlights 2 Operational performance 3 Financial performance 4 Outlook 10
Slide 11: H1 2018-19 revenues
H1 2018-19 revenues H1 19 Y-O-Y REVENUE BRIDGE (€M) ► Total revenues of €658m, down 4.4% ► Negative net perimeter impact • Consolidation of Noorsat -2.4% 3 • Deconsolidation of Eutelsat 25B (3) (15) (16) ► Positive currency effect • €/$ rate of 1.16 vs 1.17 last year ► Negative swing of -€15m in 688
Slide 12: H1 2018-19 revenues by application
H1 2018-19 revenues by application REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 (€m) CHANGE CORE BUSINESSES Video 66% 432 -2.0% Government 12% 10% 82 +1.7% Services Fixed Data 10% 66 -11.9% CONNECTIVITY Fixed 6% 40 -5.8% Broadband Mobile 6% 40 +6.7% Connectivity Total Operating Verticals 660 -2.4%
Slide 13: Video
Video 66% REVENUES (€M) ► Revenues of €432m, down 2.0% like-for-like1 ► Core broadcast excluding FRANSAT broadly stable ► High-single digit decline in 437 432 Professional Video ► Channel count up 3.8% yoy Q2 219 Q2 215 • 7,067 channels at end December 2018 • HD up from 18.7% to 21.2% ► H1 commercia
Slide 14: Focus on HOTBIRD KPIs
Focus on HOTBIRD KPIs CHANNEL COUNT HD PENETRATION MPEG 4 RAMP UP 346 +7% 584 304 +14% 548 1 002 -24 978 Penetration 30% 35% Penetration 55% 60% Dec. 2017 Dec. 2018 Dec. 2017 Dec. 2018 Dec. 2017 Dec. 2018 ► Lower channel count ► Sustained HD ramp-up, ► MPEG-4 considerably reflects anticipated end ou
Slide 15: Government Services
Government Services 12% REVENUES (€M) ► Revenues of €82m, up 1.7% like-for- 80 82 like1 ► Incremental business at 174°East Q2 39 Q2 39 ► Impact of low outcome of USG Fall 2018 renewals • Non-renewal of a single sizeable contract with a specific service Q1 41 Q1 42 provider • Not reflective of underl
Slide 16: Fixed Data
Fixed Data 10% REVENUES (€M) ► Revenues of €66m, down 11.9% like-for-like1 73 ► Continuing to reflect: 66 • Highly competitive environment • Ongoing price pressure Q2 36 Q2 33 ► Latin America the main contributor to revenue decline ► Framework agreement with Orange Q1 37 Q1 33 • Multi-transponder re
Slide 17: Fixed Broadband
Fixed Broadband 6% REVENUES (€M) ► Revenues of €40m, down 5.8% like-for-like1 ► Contract expiry for a spotbeam on ETL 3B 43 • Re-contracted to Taqnia in Mobile 40 Connectivity • c.-2 points of impact Q2 21 Q2 20 ► Lower revenues for European Broadband • Scarcity of available capacity in certain West
Slide 18: Mobile Connectivity
Mobile Connectivity 6% REVENUES (€M) ► Revenues of €40m, up 6.7% like-for-like1 reflecting: • New contract with Taqnia at 3°East and 70°East 40 37 • Carry-over effect of entry into service of EUTELSAT 172B Q2 19 • Ongoing ramp up of capacity contracts on Q2 19 KA-SAT ► New multi-transponder contract
Slide 19: Backlog and Fill Rate
Backlog and Fill Rate BACKLOG (€BN) OPERATIONAL AND UTILIZED TRANSPONDERS 1416 1427 1419 949 971 970 4.7 4.6 4.6 % 85% 83% 77% Video 31 Dec. 2017 30 June 2018 31 Dec. 2018 Fill 67.0% 68.1% 68.3% 31 Dec. 2017 30 June 2018 31 Dec. 2018 rate Operational transponders Utilized transponders ► 3.3 years of
Slide 20: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 Financial performance 4 Outlook 20
Slide 21: Profitability
Profitability EBITDA (€M) ► EBITDA margin of 79.0% at constant currency vs. 79.4% in H1 2017-18 546 518 • Lower ‘Other Revenues’ • Roll-out costs of Konnect Africa • Disposal of ETL 25B Margin at • Consolidation of Noorsat constant 79.4% 79.0%1 currency 77.4 77.4 77.5 ► LEAP cost saving plan in line
Slide 22: Net income
Net income Extracts from the H1 H1 2018-19 Change consolidated income statement in €m1 2017-18 Revenues 688 658 -4.4% EBITDA2 546 518 -5.1% Operating 282 297 +5.3% ► Capital gain related to the sale of ETL 25B in Aug’ 18 income Financial result (56) (53) -4.7% ► Reflecting the evolution of foreign e
Slide 23: Discretionary Free Cash-Flow reflecting Capex phasing
Discretionary Free Cash-Flow reflecting Capex phasing In €m 235 10 FX & perimeter impact 379 1 (130) (24) (1) 225 (1) Net cash Flow from Cash Capex Interest and Other Discretionary Free operations fees paid net of Cash-flow interests received Change at constant (22) (77) (3) (102) FX & perimeter Rep
Slide 24: Evolution of Net Debt
Evolution of Net Debt In €m +€63m 44 1 (225) 3,304 (68) 311 3,242 Net Debt at Discretionary Equity Dividend paid IFRS 16 Other Net Debt at end-June 18 Free Cash-Flow divestments impact 1 end-Dec. 18 1 As of 1 July 2018 24
Slide 25: Financial structure
Financial structure NET DEBT / EBITDA RATIO2 ► Net Debt/EBITDA ratio reduced to 3.1x • vs 3.3x at 31 Dec 2017 ► Average cost of debt after hedging reduced to 2.2% when restated from 3.3x the repayment of the Jan. 19 maturity1 3.1x • vs 2.9% in H1 2017-18 ► Average weighted maturity of 3.4 years when
Slide 26: Significant progress on all components of cash generation
Significant progress on all components of cash generation since FY 16 Item Achievement Status Guidance reduced from Cash Capex Delivered €500m to €400m LEAP program generating Opex Secured €30m external cost-savings €50m savings through Cash interest Secured bond refinancing Asset >€600m asset sold
Slide 27: Agenda
Agenda 1 Recent highlights 2 Operational performance 3 Financial performance 4 Outlook 27
Slide 28: Revenue trend to improve in H2
Revenue trend to improve in H2 VIDEO FIXED BROADBAND MOBILE CONNECTIVITY ► New contracts on ETL 8WB and ETL 16A ► Ramp-up of Konnect ► New multi-transponder Africa contract with a leading maritime service provider ► Increased direct sales in MENA ► Improved trends in ► UnicomAirNet contract ► FRANSA
Slide 29: Financial outlook confirmed
Financial outlook confirmed OPERATING VERTICALS REVENUES ► Broadly stable in FY 2018-191 (At constant currency, perimeter and ► Return to slight growth from FY 2019-20 accounting standards) EBITDA MARGIN ► Above 78% from FY 2018-19 (At constant currency) Taking into account impact of IFRS 15 and 16
Slide 30: To Sum Up
To Sum Up Several important measures to boost cash generation including successful bond issue and further asset disposals Progress on the long-term components of our performance in Video and Connectivity, with Konnect Africa potential confirmed Robust EBITDA margin, despite lower revenues and other
Slide 31: Appendix
APPENDIX
Slide 32: Future launches
Future launches EUTELSAT EUTELSAT KONNECT EUTELSAT EUTELSAT Name 7C 5 WEST B KONNECT VHTS HOTBIRD HOTBIRD 13F 13G Orbital 7° East 5° West TBD TBD TBD 13° East 13° East Position Launch date1 Q2 2019 Q2 2019 H2 2019 H2 2019 2021 2021 2021 Manufacturer Launcher TBD TBD TBD MENA Europe Flexible SSA Euro
Slide 33: Key Financial Data
Key Financial Data 6M to Dec. 6M to Dec. Key Financial Data 2017 Change 2018 Restated 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
Slide 34: Proforma revenues by application
Proforma revenues by application 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.
Slide 35: 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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