Management Report ETL COM FINAL
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Société anonyme with a Board of Directors and a share capital of 219 641 955 euros Registered office: 70 rue Balard, 75015 Paris 481 043 040 R.C.S. PARIS MANAGEMENT REPORT OF THE BOARD OF DIRECTORS ON THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 VERSION APPROVED BY THE BOARD ON 30 JULY MANAGEMENT REPORT OF THE BOARD OF DIRECTORS – VERSION APPROVED ON 30 JULY INDEX INTRODUCTION .......................................................................................................................4 1.1 KEY POINTS IN THE FINANCIAL YEAR ................................................................................................ 5 2 OVERVIEW OF THE GROUP’S MARKETS .........................................................................10 2.1 THE FIXED SATELLITE SERVICES (“FSS”) INDUSTRY .......................................................................... 10 2.2 AN INFRASTRUCTURE AT THE HEART OF COMMUNICATION AND BROADBAND .............................................. 11 2.3 A GROWING BUSINESS , DRIVEN BY VIDEO APPLICATIONS AND BROADBAND ............................................... 12 2.4 COMPETITION .......................................................................................................................... 15 3 PRESENTATION OF THE SERVICES OFFERED BY THE GROUP DURING THE PERIOD ....18 3.1 ANALYSIS OF COMMERCIAL ACTIVITY DURING THE YEAR ....................................................................... 18 3.2 OTHER INFORMATION ON COMMERCIAL ACTIVITY DURING THE YEAR ....................................................... 21 4 A FLEET CONCENTRATED ON EXTENDED EUROPE .........................................................24 4.2 INCIDENTS DURING THE FINANCIAL YEAR ......................................................................................... 31 4.3 A RECORD FILL FACTOR OF 93.4% AT 30 JUNE 2008........................................................................ 31 4.4 POLICY OF THE GROUP FOR INSURING ITS SATELLITE FLEET ................................................................. 31 5 ACTIVITIES OF SUBSIDIARIES AND EQUITY INTERESTS..............................................33 5.1 SUBSIDIARIES .......................................................................................................................... 35 5.2 EUTELSAT S.A. (F RANCE ) AND ITS SUBSIDIARIES .............................................................................. 36 5.3 EQUITY INTERESTS .................................................................................................................... 38 6 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 – FINANCIAL INFORMATION ....................................................................................................39 6.1 FINANCIAL AND ACCOUNTING POLICY – IFRS STANDARDS ................................................................... 39 6.2 CONSOLIDATED SIMPLIFIED BALANCE SHEET OF EUTELSAT COMMUNICATIONS ........................................... 43 6.3 SIMPLIFIED CONSOLIDATED INCOME STATEMENT OF EUTELSAT COMMUNICATIONS ..................................... 44 6.4 OPERATING INCOME .................................................................................................................. 45 6.5 FINANCIAL RESULT .................................................................................................................... 45 6.6 CONSOLIDATED NET RESULT ........................................................................................................ 49 7 COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 – FINANCIAL INFORMATION .......................................................................................................................50 7.1 ACCOUNTING AND FINANCIAL PRINCIPLES ........................................................................................ 50 7.2 COMPANY ACTIVITIES AND KEY HIGHLIGHTS DURING THE YEAR .............................................................. 50 7.3 EXTRACTS FROM THE COMPANY 'S BALANCE SHEET AND INCOME STATEMENT AT 30 JUNE 2008...................... 50 8 OBJECTIVES OF THE GROUP...........................................................................................52 9 CORPORATE GOVERNANCE ............................................................................................54 9.1 CHANGES IN THE COMPOSITION OF THE BOARD OF DIRECTORS ............................................................. 54 9.2 ROLE & COMPOSITION OF THE COMMITTEES AND WORKING GROUPS OF THE BOARD OF DIRECTORS .............. 56 9.3 INFORMATION CONCERNING THE MEMBERS OF THE BOARD OF DIRECTORS ............................................... 57 9.4 INFORMATION CONCERNING THE COMPENSATION PAID TO THE COMPANY OFFICERS .................................... 59 9.5 OTHER INFORMATION CONCERNING THE COMPANY OFFICERS ................................................................ 60 9.6 INFORMATION ABOUT THE COMPANY ’S SHARE CAPITAL ........................................................................ 60 10 OTHER INFORMATION PRESENTED............................................................................65 10.1 RESEARCH AND DEVELOPMENT ..................................................................................................... 65 10.2 TABLE OF RESULTS FOR THE LAST FIVE FINANCIAL PERIODS.................................................................. 65 10.3 NON -DEDUCTIBLE CHARGES AND EXPENDITURES FOR THE YEAR ENDED 30 JUNE 2008................................ 65 - 2- MANAGEMENT REPORT OF THE BOARD OF DIRECTORS – VERSION APPROVED ON 30 JULY 10.4 AGREEMENTS REFERRED TO IN ARTICLE L.225-38 OF THE CODE DE COMMERCE ....................................... 65 10.5 AGREEMENTS WITH A RELATED PARTY ............................................................................................ 65 10.6 ACQUISITION OF SHARES BY THE COMPANY ..................................................................................... 65 10.7 EMPLOYEE PARTICIPATION IN THE SHARE CAPITAL OF THE COMPANY ...................................................... 65 10.8 DIVIDEND POLICY ..................................................................................................................... 65 10.9 ALLOCATION OF THE RESULT ........................................................................................................ 66 10.10 POWERS DELEGATED TO THE BOARD OF DIRECTORS BY GENERAL MEETINGS OF SHAREHOLDERS ................... 66 10.11 ENVIRONMENTAL INFORMATION .................................................................................................... 67 10.12 POST BALANCE -SHEET EVENTS ...................................................................................................... 68 11 THE GROUP’S PRINCIPAL RISKS................................................................................69 RISKS RELATED TO THE GROUP ’S FLEET OF SATELLITES AND TO THE INVESTMENTS NECESSARY FOR ITS DEPLOYMENT ...... 69 RISKS ASSOCIATED WITH THE EVOLUTION OF THE TELECOMMUNICATIONS SATELLITE MARKET ................................... 71 FINANCIAL RISKS AND OTHER RISKS . .......................................................................................................... 73 ANNEXES 1. CONSOLIDATED FINANCIAL STATEMENTS OF EUTELSAT COMMUNICATIONS AT 30 JUNE 2008 2. COMPANY FINANCIAL STATEMENTS OF EUTELSAT COMMUNICATIONS AT 30 JUNE 2008 3. TABLE OF RESULTS FOR THE LAST FIVE FINANCIAL PERIODS 4. TABLE OF AUDITORS’ FEES 5. REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS IN ACCORDANCE WITH ARTICLE L.225-37 OF THE CODE DE COMMERCE - 3- MANAGEMENT REPORT OF THE BOARD OF DIRECTORS – VERSION APPROVED ON 30 JULY Dear shareholders(s) We are required to submit to you a management report on the activities of Eutelsat Communications (the Company) and the Eutelsat 1 Group for the year ended 30 June 2008. We are also presenting the Company and consolidated financial statements for the year ended 30 June 2008. The consolidated statements take into account the intra-group relations with our subsidiaries and affiliated companies. This report was adopted by the Board of Directors at its meeting on 30 July 2008. Introduction With a fleet of 24 satellites in geostationary orbit (GEO) broadcasting more than 3 120 television channels from 20 orbital positions between 16° West and 70.5° East , the Group is leader in Extended Europe for the provision of Fixed Satellite Services (FSS). It operates and supplies mainly capacity for video applications, professional data networks and value-added services. Via its fleet, the Group covers the entire European continent, the Middle East and North Africa (“Extended Europe”), as well as sub-Saharan Africa and a large section of the Asian and American continents, potentially giving the Group access to 90% of the world’s population. Leading European and international media and telecommunications operators are among the users of the Group’s capacity, e.g.: - private and public broadcasters, including the European Broadcasting Union (EBU), RAI, France Télévisions, Deutsche Welle, BBC, Mediaset, TVN, TF1, RTL, France 24, ARD and ZDF, NHK, Discovery Channel, CCTV, Eurosport and Euronews; - major pay-TV digital television operators, including Sky Italia, the Canal + Group, BskyB, Bis, Orange, TeleColumbus, ART, Orbit, Multichoice Africa, Gateway, Cyfra+, Polsat, n, Digiturk, NTV+ and Tricolorr; - International groups such as Renault, Shell, Total, General Motors, Volkswagen, Euronext, Reuters, Schlumberger and Associated