Eutelsat Communications : First Quarter 2014-2015 Revenues

Eutelsat Communications reported revenues for the first quarter ended 30 September 2014.

Preliminary note: first quarter 2013/2014 revenues have been restated. Please refer to note on page 5 for more details.

Commenting on the first quarter, Michel de Rosen, Chairman and CEO said: “Like-for-like¹ revenue growth of 4.2% for the first quarter was in line with our objectives, and we are on track to deliver on our full-year financial targets. Our core Video activity saw a further pick-up in revenue growth reflecting capacity added in the past year serving high-growth markets. Regional trends in Data remained mixed, with ongoing tough conditions in EMEA but good momentum in Latin America. Growth in Value-Added Services remained robust on the back of the continued uptake on KA-SAT. Government Services benefited from new contracts and the good performance of Satmex.

Our order backlog stood at 6.3 billion euros, representing over 4.5 years of revenues and continuing to lend strong visibility to our business. The Satmex acquisition and the roll-out of our targeted fleet deployment plan mean we are well positioned to capture the growth opportunities we have identified in our sector. The underlying drivers in our core applications remain positive.”

FIRST QUARTER 2014-2015 REVENUE ANALYSIS³

Total first quarter revenues for the Group stood at €357.6 million, up 4.2%, at constant currency and excluding non-recurring revenues. By application, the breakdown is as follows :

VIDEO APPLICATIONS

Revenues from Video Applications were up 3.2% to €227.6 million, representing 65.1% of Group revenues. This increase in particular reflected the entry into service of the Express-AT1 satellite, which was operational for the full quarter, additional resources added at 7°/8° West in September 2013 and a good performance from Satmex Video applications. These positive elements more than offset the impact of the suspension of operations on certain frequencies at 28.5° East in October 2013.

In September an agreement was announced with Nilesat, the Egyptian satellite operator, for a long-term lease on the EUTELSAT 8 West B satellite to be launched in 2015, confirming the continued strong potential at 7°/8° West, which is the leading video neighbourhood in the Middle East and North Africa.

At 30 September 2014, the total number of channels broadcast by Eutelsat satellites stood at 5,788. Excluding Satmex (322 channels as at 30 September 2014), the channel count was up 16.0% year-on-year to 753. Including Satmex, 629 channels were broadcast in High Definition, up from 439, implying a penetration rate of 10.9%, compared to 9.3% at 30 September 2013.

DATA SERVICES

Data Services revenues decreased by 5.0% to €51.2 million, and represented 14.6% of Group revenues. Regional trends were mixed: the environment remained difficult in EMEA but momentum in Latin American and Asia-Pacific was favourable. The Satmex acquisition has ameliorated our geographic mix in this application.

VALUE ADDED SERVICES

Value Added Services revenues amounted to €26.3 million, up 14.2% and accounting for 7.5% of Group revenues. Uptake on KA-SAT continued, with 166,000 broadband terminals activated at 30 September 2014, up from 108,000 a year earlier, and 154,000 at 30 June 2014.

GOVERNMENT SERVICES

Revenues from Government Services stood at €44.5 million, up 2.8%, accounting for 12.7% of Group revenues. This growth reflected new contracts, notably on EUTELSAT 48D and EUTELSAT 33B, as well as the good performance of Satmex, which more than offset the impact of the lower level of contract renewals in 2013-2014.

September/October 2014 contract renewals were in line with expectations.

OTHER⁴ AND NON-RECURRING REVENUES

Other revenues amounted to €8.0 million, compared with €2.6 million at 30 September 2013, reflecting notably the agreements with SES at 28°5 East.

There were no non-recurring revenues at 30 September 2014.

OPERATIONAL AND LEASED TRANSPONDERS

The fill rate stood at 76.0% at 30 September 2014, compared to 78.7% at 30 June 2014. This evolution reflects mainly the entry into service of new satellites (Express-AT2, EUTELSAT 3B and EUTELSAT 7B).

Note: KA-SAT’s 82 spot beams as well as EUTELSAT 3B’s 5 Ka-band spot beams are considered transponder equivalents. KA-SAT’s fill rate is considered to be at 100% when 70% of the capacity is taken up.

ORDER BACKLOG

The order backlog⁷ stood at €6.3 billion at 30 September 2014, up by 16% year-on-year including Satmex and by 10% excluding Satmex. It was equivalent to 4.5 times 2013-2014 revenues. Video Applications represented 84% of the backlog.

OUTLOOK

Revenues (at constant currency and excluding non-recurring revenues)

Based on a nominal satellite deployment plan, the Group targets organic revenue growth of around 4.0% for the current year on a proforma basis⁹.

With the deployment of additional capacity, average revenue growth should be above 5% for the two subsequent years to 30 June 2017.

EBITDA

The EBITDA margin is targeted at above 76.5% for each fiscal year until 30 June 2017.

All other targets published in July 2014 are also confirmed.

FLEET DEPLOYMENT PROGRAMME

Estimated launch schedule¹

RECENT EVENTS

Fleet deployment

Express-AT2, which was launched on 16 March 2014 in the framework of the partnership with RSCC, went into operation in early July 2014.

EUTELSAT 3B, which was launched on 25 May 2014, entered into operational service in early July 2014 and replaced the EUTELSAT 3A and EUTELSAT 3D satellites.

In mid-July 2014, EUTELSAT 3D was relocated to 7° East where it is now co-positioned with EUTELSAT 7A and has been renamed EUTELSAT 7B.

Scrip Dividend

Eutelsat’s Board of Directors will submit for approval by the General Shareholders’ Meeting of 7 November 2014 a resolution providing for the introduction of an option for shareholders to receive the entire dividend, either in cash or in new shares of the Company. The price of the new shares issued as payment of the dividend will amount to 90% of the average share price during the 20 trading sessions preceding the General Shareholders’ Meeting, less the net amount of the dividend and rounded up to the nearest euro cent.

RESTATED REVENUES FOR FISCAL YEAR 2013-2014

As of Q1 2014-2015, published revenues take account of changes in perimeter (acquisition of Satmex, disposal of KabelKiosk) as well as several reclassifications between the various applications in order to better reflect the final usage of the capacity.

To facilitate comparison with financial year 2013-2014, the table below shows restated revenues using the same basis as financial year 2014-2015:

Quarterly restated revenues by business application

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