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Yahsat revenues up 3% YoY

November 7, 2023

Al Yah Satellite Communications Company (Yahsat), the UAE’s satellite solutions provider has announced its consolidated financial results for the nine months ended September 30th 2023.

Revenue and Normalised EBITDA grew 3 per cent for the first nine months of the year versus the prior year to reach AED 1.2 billion (€302.4m) and AED 713 million respectively. Net Income more than doubled whilst Normalised Net Income was in line versus the prior year period at AED 274 million.

Underpinning this performance were historically strong results in Mobility Solutions, the Thuraya business providing mobile satellite services using L-band spectrum, which recorded revenue growth for the nine-month period of 22 per cent and third quarter growth of 81 per cent versus the prior year, driven by higher equipment sales and service revenues.

Meanwhile Infrastructure, the Group’s largest segment providing communications capacity to the UAE Government by means of an index-linked long-term contract, continued to grow its year-on-year revenues by 1 per cent. Managed Solutions, the Group’s second largest segment, providing complete value-added satellite communications solutions, primarily to the UAE Government and related entities, reported slightly lower revenues mainly due to a strong comparative period although remains well positioned to deliver full year revenues in line, or better, than prior year. Data Solutions, offering satellite-based broadband data solutions, saw marginally lower revenues from fewer equipment sales but recorded a significant improvement in underlying operating profitability.

Highlights for the nine-month period include:

· Revenue of AED 1.2 billion, up 3 per cent year-on-year.

· Normalised EBITDA of AED 713 million, up 3 per cent year-on-year, with a strong margin of 60 per cent (prior year 60 per cent).

· Normalised Net Income (profit) of AED 274 million, in line with the prior year period and maintaining a healthy margin of 23 per cent (prior year 24 per cent).

· Contracted future revenue of AED 25.3 billion, equivalent to 15.7 times last-twelve-month revenue and representing a multi-fold increase versus year end 2022 (of AED 7.3 billion or 4.6x last twelve-month revenue).

· Yahsat’s highest ever mandate awarded by the UAE Government during the quarter worth AED 18.7 billion for satellite capacity and managed services of which AED 3.7 billion [USD 1 billion] will be received in advance.

· Strong cash generation with Discretionary Free Cash Flow of AED 627 million (USD 171 million), 6 per cent lower versus prior year due to a reimbursement of advance payments to the UAE Government (approx $75 million per annum starting 2023) previously received during the construction phase of the AY1 and AY2 satellites. This was largely offset by improved collection of receivables.

· Historically strong balance sheet with record negative Net Debt of more than AED 583 million, total available liquidity of AED 2.6 billion and long-term visibility of future cash flows up to 2043, supporting Yahsat’s future investment in organic growth (Al Yah 4 and Al Yah 5) and opportunistic acquisitions, without impacting its attractive progressive dividend policy.

· Positive net finance income of AED 36 million benefiting from higher interest rates on short-term deposits versus prior year.

· On track to grow full year 2023 dividend by at least 2 per cent to 16.46 fils per share or AED 402 million – based on the last closing share price, this continues to imply an annualised dividend yield of well over 6 per cent, amongst the highest currently offered by UAE listed stocks.

· Guidance for full year revenue, EBITDA, and cash capex and investments remain unchanged, whilst guidance for Discretionary Free Cash Flow is increased to a range of AED 514-588 million from AED 477-550 million.

Ali Al Hashemi, Group CEO of Yahsat, commented: “The third quarter has been one of several historic achievements which reinforce the company’s future growth trajectory. Our reported revenue growth for the nine-month period underpinned by one of the strongest third quarters on record has resulted in improved financial guidance for 2023 and means that we are well positioned to record our strongest ever performance for the full year. Our financial position with record low leverage has never been stronger and continues to support our attractive progressive dividend policy. The construction of the Thuraya-4 NGS satellite remains on track for launch in 2024 and entry into service in H1 2025, with new advanced capabilities that will allow us to offer additional applications to our customers. Our largest ever contract award during the quarter – an AED 18.7 billion satellite capacity and managed services mandate from the UAE Government that includes the procurement of two new satellites, Al Yah 4 and Al Yah 5, has propelled our contracted future revenues to an all-time high and will support our core government business going forward whilst securing significant predictable cashflows all the way out to 2043.”

“This is a very exciting time for Yahsat. These achievements continue to differentiate our investment case amongst regionally-listed peers and within the global satellite industry, which continues to witness significant transformation. We remain in a strong position to take advantage of value accretive opportunities, underpinned by our unique backlog of future revenues and our historically strong balance sheet,” he added.

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