Eutelsat Communications : First Quarter 2014-2015 Revenues

LIKE-FOR-LIKE REVENUE GROWTH OF 4.2%, IN LINE WITH OBJECTIVES

Revenues up 4.2¹% to €357.6 million

• Video Applications up 3.2%, benefiting from capacity added in the past year
• Data down 5.0%, mixed regional trends
• Value-Added Services up 14.2%, continued uptake on KA-SAT
• Government Services² up 2.8%, benefiting from new contracts and Satmex

Order Backlog up to €6.3 billion, representing 4.5 years of revenues

Full-year and three-year financial targets confirmed; growth underpinned by arrival of new capacity and Satmex delivery

PARIS--(BUSINESS WIRE)--Regulatory News :

Eutelsat Communications (Paris:ETL) (ISIN: FR0010221234 - Euronext Paris: ETL) 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.

First quarter ended 30 September   In millions of euros	Reminder: reported Q1 2013-2014	Restated Q1 2013-2014	Reported Q1 2014-2015	Change (%) at constant currency
Video Applications	217.1	220.7	227.6	+ 3.2%
Data Services	43.2	54.2	51.2	-5.0%
Value-Added Services	23.0	23.0	26.3	+14.2%
Government Services	36.8	43.6	44.5	+ 2.8%
Other revenues	3.0	2.6	8.0	ns
Sub-total	323.2	344.1	357.6	+ 4.2%
Non-recurring revenues	0.3	0.3	-	-
Total	323.5	344.4	357.6	+ 4.1%

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).

	30 September 2013	30 June 2014	30 September 2014
Number of operational transponders^5	859	996	1,033
Number of leased transponders^6	646	784	785
Fill rate	75.2%	78.7%	76.0%

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.

	30 September 2013	30 June 2014	30 September 2014
Value of contracts (in billions of euros)	5.4	6.4	6.3
In years of annual revenues based on last fiscal year	4.2	4.6	4.5^8
Share of Video Applications	93%	84%	84%

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

Satellite	Orbital position	Estimated launch (calendar year)	Main applications	Main geographic coverage	Transponders
EUTELSAT 115 West B	114.9° West	Q1 2015	Video, Data, Government Services	Americas	34 Ku / 12 C
EUTELSAT 9B	9° East	Q2 2015	Video	Europe	50 Ku
EUTELSAT 8 West B	7°/8° West	Q3 2015	Video, Data	Middle East, Africa, South America	40 Ku / 10 C
EUTELSAT 36C^(2)	36° East	Q4 2015	Video, Data, Broadband	Russia, Sub-Saharan Africa	Up to 52 Ku / 18 Ka-band spotbeams
EUTELSAT 117 West B	116.8 ° West	Q4 2015	Video, Data, Government Services	Latin America	40 Ku
EUTELSAT 65 West A	65° West	Q2 2016	Video, Data, Broadband	Latin America	24 Ku, 10 C, up to 24 Ka-band spotbeams
EUTELSAT 172B	172° East	H1 2017	Data, Government Services, Mobility	Asia Pacific	36 Ku (regular), 14 C, 11 Ku-band HTS spotbeams
^1 Satellites generally enter into service one to two months after launch for chemical propulsion satellites. In the case of electric propulsion satellites: EUTELSAT 115 West B and EUTELSAT 117 West B will need 7 to 9 months after launch to enter in service, and EUTELSAT 172B circa 4 months. ^2 Partnership satellite with RSCC

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

	3 months ended				Full-year ended 30/06/2014
In millions of euros	30/09/2013	31/12/2013	31/03/2014	30/06/2014
Video Applications	220.7	215.2	214.7	221.7	872.3
Data Services	54.2	52.0	50.6	52.5	209.2
Value-Added Services	23.0	20.1	20.5	25.0	88.7
Government Services	43.6	43.8	44.0	43.2	174.7
Other revenues	2.6	11.9	7.8	10.0	32.4
Sub-total	344.1	343.0	337.7	352.5	1,377.3
Non-recurring revenues	0.3	0.2	-	-	0.5
Total	344.4	343.2	337.7	352.5	1,377.8

* * *

About Eutelsat Communications: Established in 1977, Eutelsat Communications (Euronext Paris: ETL, ISIN code: FR0010221234) is one of the world's leading and most experienced operators of communications satellites. The company provides capacity on 37 satellites to clients that include broadcasters and broadcasting associations, pay-TV operators, video, data and Internet service providers, enterprises and government agencies. Eutelsat’s satellites provide ubiquitous coverage of Europe, the Middle East, Africa, Asia-Pacific and the Americas, enabling video, data, broadband and government communications to be established irrespective of a user’s location. Headquartered in Paris, with offices and teleports around the globe, Eutelsat represents a workforce of 1,000 men and women from 32 countries who are experts in their fields and work with clients to deliver the highest quality of service. www.eutelsat.com

First quarter 2014-2015 Revenues conference call

A conference call will be held on Thursday, 30 October 2014 at 6:30 pm CET.

To connect to the call, please use the following numbers:

• + 33(0) 1 76 77 22 25 (from France)
• [phone] (from the UK or elsewhere)
• [phone] (from United States)

Access code: 3232032 #

Instant replay number will be available from 30 October 8:30pm CET to 5 November, midnight.

• [phone] (from France)
• + 44 (0) 20 3427 0598 (from the U.K or elsewhere)
• [phone] (from the United States)

Access code: 3232032 #

Financial calendar

The financial calendar below is provided for information purposes only. It is subject to change and will be regularly updated.

• November 7, 2014: Annual General Shareholders Meeting
• February 12, 2015: First Half 2014-2015 Results
• May 12, 2015: Third Quarter 2014-2015 Revenues

APPENDIX

Satmex quarterly revenues by business application

	Three months ended
In millions of euros	31/03/2014	30/06/2014	30/09/2014
Video Applications	7.3	8.1	8.2
Data Services	13.7	14.2	14.4
Value-Added Services	-	-	-
Government Services	4.4	4.9	5.2
Other	-	-	-
Sub-total	25.4	27.2	27.9
Non-recurring revenues	-	-	-
Total	25.4	27.2	27.9

Channel growth at neighbourhoods serving Central and Eastern Europe, Russia, Middle East, Africa

Orbital position	Markets	30/09/2013	30/09/2014	Growth
7°/ 8° West	North Africa, Middle East	688	810	+ 17.7%
7° East	Turkey, Africa	222	351	+ 58.1%
16° East	Central Europe, Indian Ocean Islands, Africa	728	854	+ 17.3%
36° East	Russia, Africa	786	875	+ 11.3%
56° East	Russia	0	292	na
Total		2,424	3,182	+31.3%

¹ On a proforma basis (including revenues for Satmex from July to December 2013 and adjusting for the impact of the KabelKiosk disposal) at constant currency and excluding non-recurring revenues.
² The nomenclature of the activity previously known as ”Multi-usage” is henceforth ”Government Services”.
³ i) all revenue growth rates are made against the first quarter restated figures of the previous fiscal year, are at constant currency and exclude non-recurring revenues. Please refer to page 5 for more detail; ii) the share of each application as a percentage of total revenues is calculated excluding “other revenues” and “non-recurring revenues”.
⁴ Other revenues mainly include compensation paid on the settlement of business-related litigation, the financing of certain research programmes by the European Union and other organisations, and the recognition of EUR/USD foreign exchange gains/losses.
⁵ Number of transponders on satellites in stable orbit, back-up capacity excluded
⁶ Number of transponders leased on satellites in stable orbit
⁷ The backlog represents future revenues from capacity lease agreements and can include contracts for satellites under procurement
⁸ Based on proforma revenues for fiscal year 2013-2014.
⁹ Based on proforma revenues, excluding non-recurring revenues, of €1,377 M for FY 2013-2014 (see note on page 5 for more details).