GROUPE EUROTUNNEL :  2011 Annual Results

• Strong growth in revenues to ?845 million¹ (+16%² at a constant exchange rate)
• Operating margin (EBITDA) above ?400 million, equivalent to a margin of 46.6%
• Trading profit increased by 40% to ?247 million
• Interest paid on debt service stable at ?211 million
• Long term debt to asset ratio: 56.4%³
• Net profit of ?11 million
• Doubling of dividend to be proposed at AGM on 26 April 2012 (8 euro cents)

Regulatory News:

At its meeting on Wednesday 29 February 2012, the board of directors, chaired by Jacques Gounon, finalised the accounts for the year ended 31 December 2011.

Jacques Gounon, Chairman and Chief Executive Officer of Groupe Eurotunnel SA, stated:

"In 2011, the Eurotunnel Group made a clear profit and generated significant cash flows despite the uncertain economic climate. The outlook is positive and, as a sign of our confidence in the future, we will ask the shareholders to vote at the AGM for the doubling of the dividend to ?0.08 for the 2011 financial year."

IMPORTANT EVENTS IN THE PAST YEAR

• Dynamic cash flow management
  Eurotunnel continues to generate a significant operating cash flow.

• Added value for shareholders
  Following the conversion of the 2007 Warrants⁴ which enabled shareholders to benefit from the increase in value achieved within the Eurotunnel Group and the various transactions to simplify its financial structure, Groupe Eurotunnel SA (Paris:GET) (LSE:GETS) has a capital composed of 561 million shares compared to maximum of 613 million projected in 2007. Since the financial restructuring in 2007 and following the final exercise of the 2007 Warrants the combined effect of the transactions completed has led to an increase in value of almost 9%.

• Purchase of ?147 million⁵ of floating rate notes
  Groupe Eurotunnel SA has taken advantage of its significant cash reserves to optimise the management of its debt, by buying ?147 million of discounted notes. This represents a full-year reduction in interest charges estimated at ?5 million in 2012. The nominal value of the long term debt less the floating rate notes is ?3.6 billion. The long term debt to asset ratio is 56.4%.

• The cross-Channel Fixed Link
  • In 2011 almost 19 million people and approximately 17.7 million tonnes of freight crossed the Channel using the Tunnel.
  • Sustained growth in Passenger and Truck Shuttle activity.
  • Eurotunnel won the IFW Environment Award, for Leadership in Sustainable Development at the awards ceremony organised by International Freighting Weekly, Europe's leading transport and logistics publication.
  • 2% increase in the number of Eurostar passengers to nearly 9.7 million in 2011.
  • Commissioning of four SAFE stations (fire suppression zones), a major innovation to further strengthen the safety of the Channel Tunnel.
• Europorte
  • GB Railfreight, the UK subsidiary of Europorte and third largest rail freight operator in the UK, won the top prize for Freight and Logistics at Rail Magazine's National Rail Awards 2011.
  • A positive contribution to 2011 revenues (?158 million). Europorte's offer is based on punctuality and quality of service, which ensured the continuation of all existing contracts for Europorte France and the signing of new contracts, notably with leading European transport and logistics operator GEFCO.
  • Acquisition of 28 locomotives, notably the Vossloh Euro 4000 diesel-electrics, currently the most powerful in Europe.
  • The recruitment of c.100 drivers in France as part of the strategy to develop sustainable freight transport and to generate skilled jobs.
• CIFFCO (Centre International de Formation Ferroviaire de la Côte d'Opale)⁶
  • Creation of the first private training centre specialising in railway skills
    This is the first time that a privately owned transport group has created such a training centre, open to all European railway and infrastructure maintenance companies and their subcontractors, as well as those from neighbouring countries. CIFFCO is accredited by the French Public Safety authority (EPSF) and delivers courses for fifteen different skills. It is able to provide training for technicians working on the French national network as well as those of neighbouring countries.

FINANCIAL RESULTS

At ?403 million, the operating margin (EBITDA) increased compared to 2010 as a result of good cost control and the trading profit increased by ?70 million to ?247 million in 2011 (+40%)⁷.

Operating profit (EBIT) also increased, by ?85 million, including insurance indemnities totalling ?29 million relating to the fire in September 2008.

In 2011, the available cash flow enabled the payment of a dividend (?21 million), the purchase of variable rate notes issued by Channel Link Enterprises Finance (CLEF, the debt securitisation structure), for ?128 million, the purchase of own shares (?40 million) and capital expenditure of ?98 million. At 31 December 2011, cash and cash equivalents amounted to ?276 million.

OUTLOOK

• The Queen's Jubilee in June 2012: bookings taken for this long weekend are already on the increase. The number of booths available will be more than doubled to ease passport controls and improve speed and traffic flow, always an objective of the business.
• London 2012 Olympic Games: the Eurotunnel Group is preparing itself to manage the waves of passengers and will speed up Shuttle crossing times to just 30 minutes, instead of the normal 35 minutes. Shuttle speed will be increased to 100 mph compared to 90 mph today.
• The upturn in activity appears to be continuing, but will remain gradual according to the segment. In the medium term, the Group remains confident in its ability to generate sustainable growth and, through the development of its different vectors for growth, to improve its resistance and responsiveness to the vagaries of the economy.
• Eurotunnel maintains its interest in the purchase of the three ex-Seafrance ferries. The Group is organising the resources necessary to develop this new activity in line with its criteria for profitability and for the benefit of the Nord-Pas-de-Calais region.

REVIEW OF FINANCIAL THE FINANCIAL SITUATION AND CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011

Pursuant to EC Regulation 1606/2002 of 19 July 2002 on the application of international accounting standards, the consolidated financial statements of GET SA for the financial year ended 31 December 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union at 31 December 2011.

The following information relating to Groupe Eurotunnel SA's financial situation and consolidated results must be read in conjunction with the consolidated financial statements contained in paragraph 20.3.1 of the 2011 Registration Document.

1. Comparison of financial years ended 31 December 2010 and 31 December 2011

? million		2011			2010 (*)restated			% change			2010 published
Exchange rate ?/£		1.148			1.148						1.169
Shuttle Services		399			362			+10	%		366
Railway network		278			261			+7	%		263
Other revenue		10			10			=			10
Sub-total Fixed Link		687			633			+9	%		639
Europorte		158			97			+63	%		98
Revenue		845			730			+16	%		737
Other income		9			-						-
Total turnover		854			730			+17	%		737
External operating expenses		(267	)		(232	)		+15	%		(235	)
Employee benefits expense		(184	)		(165	)		+12	%		(166	)
Operating margin (EBITDA)		403			333			+21	%		336
Depreciation		(156	)		(156	)		=			(156	)
Trading profit		247			177			+40	%		180
Other net operating income		25			10						10
Operating profit (EBIT)		272			187						190
Income from cash and cash equivalents		4			7						7
Gross cost of servicing debt		(268	)		(253	)		+6	%		(255	)
Net cost of financing and debt service		(264	)		(246	)		+7	%		(248	)
Other net financial income and income tax expense		3			1						1
Result for the year: profit/(loss)		11			(58	)					(57	)
EBITDA(**)/revenue		46.6	%		45.6	%

* In order to enable a better comparison between the two years, the 2010 consolidated income statement presented above has been recalculated at the exchange rate used for the 2011 income statement of £1 = ?1.148.

** EBITDA less other income (?9 million in 2011).

Key figures: income statement

The figures relating to 2010 take into account the activity of GB Railfreight Limited (GBRf) from the date of its acquisition on 28 May 2010. However, in order to allow a better comparison between 2010 and 2011, in the remainder of this chapter, the expression "like-for-like" means that the comparative figures have been adjusted to include GBRf's revenues (?28 million) and operating expenses (?27 million) for the period January to May 2010.

Summary

Groupe Eurotunnel SA's consolidated revenue for the 2011 financial year was ?845 million, an increase of ?115 million (16%) compared to 2010. On a like-for-like basis (after restatement for inclusion of GBRf's revenues of ?28 million for the first five months of 2010), the Eurotunnel Group's revenue increased by ?87 million (11%) as a result of growth in activity for both the Fixed Link and Europorte (?54 million and ?33 million respectively). In 2011, the Group accounted for ?9 million of other income in respect of indemnities against operating losses resulting from the fire in 2008 following payments received from insurers during the year. Operating costs totalled ?451 million, an increase of ?27 million on a like-for-like basis. The operating margin and the trading profit increased by ?70 million to ?403 million and ?247 million respectively. After taking into account other net operating income of ?25 million (of which ?20 million related to the final compensation for the rolling stock destroyed in the fire), the operating profit amounted to ?272 million, an improvement of ?85 million of which a total of ?29 million related to insurance indemnities for the fire in 2008. The net cost of financing and debt service increased by 7% mainly as a result of the effect of the increase in inflation rates on the revaluation of the nominal value of the index-linked tranche of the debt, although the interest paid remained relatively stable at ?211 million. Groupe Eurotunnel SA's consolidated net result in 2011 was a profit of ?11 million compared to a loss of ?58 million in 2010 (restated at a constant exchange rate).

Free Cash Flow⁸ generated in 2011 amounted ?132 million compared to ?112 million in 2010. At 31 December 2011, the Group held cash balances of ?276 million compared to ?316 million at 31 December 2010, after the purchase of ?128 million of floating rate notes, the purchase of ?40 million of treasury shares and ?98 million of capital expenditure.

1.1. Revenues

At ?687 million, revenues for the Fixed Link for the 2011 financial year grew by ?54 million (9%) compared to 2010 at a constant exchange rate. At ?158 million, the Europorte segment's revenues increased by ?61 million. On a like-for-like basis, Europorte's revenues increased by ?33 million (26%). The Group's consolidated revenues totalled ?845 million, an increase of ?115 million (16%) compared to 2010. On a like-for-like basis, the Group's revenues increased by ?87 million (11%).

a) Fixed Link revenues

i) Shuttle Services

Traffic		2011		2010		% change
Truck Shuttle		1,263,327		1,089,051		+16%
Passenger Shuttle
Cars*		2,262,811		2,125,259		+6%
Coaches		56,095		56,507		-1%

* Includes motorcycles, vehicles with trailers, caravans and camper vans.

Compared to 2010, Shuttle Services revenues increased by 10% in 2011, to ?399 million.

Truck Shuttle

After a return to growth in 2010 (+3%), the Short Straits cross-Channel truck market continued to grow in 2011 at an estimated 5% compared to 2010. Nevertheless, it remains about 12% below 2007, prior to the economic crisis. The number of trucks transported by the Shuttles in 2011 increased by 16% compared to 2010 and the Truck Shuttle's market share improved by about 3.5 points to reach more than 38% and stabilise at a level similar to that of before the fire in 2008.

Passenger Shuttle

The Short Straits cross-Channel car market contracted slightly (c.-0.4%) in 2011 compared to 2010 when it was boosted by the consequences of the eruption of the Icelandic volcano on air transport. Despite this decline in the market, Le Shuttle's traffic continued to grow: the number of cars transported in 2011 increased by 6% and its market share improved by about 3 points to more than 46%.

The coach market also contracted slightly in 2011, leading to a reduction in Eurotunnel's coach traffic of 1% compared to 2010.

ii) Railway network

Traffic		2011		2010		% change
Passenger trains (Eurostar)
Passengers*		9,679,764		9,528,558		+2%
Rail freight trains**
Number of tonnes		1,324,673		1,128,079		17%
Number of trains		2,388		2,097		14%

* Only passengers travelling through the Channel Tunnel are included in this table, excluding those who travel between Paris-Calais and Brussels-Lille.

** Rail freight services by train operators (DB Schenker on behalf of BRB, the SNCF and its subsidiaries, and Europorte) using the Tunnel.

The Eurotunnel Group earned revenues of ?278 million from the use of its Tunnel railway network by Eurostar passenger trains and the freight train services of the rail companies in 2011, an increase of 7% compared to 2010.

In 2011, the number of Eurostar passengers using the Tunnel reached 9.68 million, an increase of 1.6% compared to 2010 which benefitted from the transfer of some air traffic following the eruption of the Icelandic volcano.

After a year of repeated disruptions to rail freight traffic and the ending of wagonload services in 2010, the creation of new rail freight services using the Tunnel in 2011 has resulted in a growth in traffic compared to 2010 of 14% in terms of the number of trains and of 17% in terms of tonnage transported. This growth includes both the creation of new intermodal services and the short term transportation of steel during the second and third quarters.

b) Europorte revenues

At ?158 million in 2011, Europorte's revenues increased by ?61 million compared to 2010. On a like-for-like basis, Europorte's revenues increased by ?33 million (26%), driven by the start-up of new contracts and increased activity in existing contracts, mainly for GBRf and Europorte France.

1.2. Other income

Other income corresponds to insurance indemnities relating to operating losses following the fire in September 2008. Income of ?9 million was accounted for in 2011 following payments received from insurers. In the context as described in note A.3 to the consolidated financial statements in paragraph 20.3.1 of the 2011 Registration Document, no additional income has been accounted for in 2011.

1.3. Operating margin (EBITDA)

The operating margin of ?403 million has increased by ?70 million (21%) compared to 2010, of which ?9 million was due to insurance indemnities relating to the fire in September 2008 received and accounted for in 2011. EBITDA less other income expressed as a percentage of revenue was 46.6% in 2011 compared to 45.6% in 2010.

a) External operating expenses

At ?267 million in 2011, external operating expenses increased by ?5 million (15%) compared to 2010. At a constant exchange rate and on a like-for-like basis, external operation charges increased by ?16 million (7%) mainly due to:

• a ?24 million increase in Europorte's costs associated with the growth in their activity and the investment in training of train drivers prior to the start of new contracts in 2012, and
• an ?8 million decrease in Fixed Link's costs mainly due to the reduction in insurance premiums and local French taxes partially offset by a small increase in the cost of electricity and maintenance.

b) Employee benefits expense

Employee benefits expenses in 2011 totalling ?184 million increased by ?19 million compared to 2010. At a constant exchange rate and on a like-for-like basis, they increased by ?11 million of which ?2 million was in respect of the Fixed Link and ?9 million in respect of Europorte and its subsidiaries, reflecting the increased staff numbers resulting from their growth in activity.

1.4. Operating profit (EBIT)

The depreciation charge for 2011 remained stable in total compared to 2010, the increase resulting from the investment in rolling stock by Europorte's subsidiaries being offset by a small decrease in the depreciation of other assets.

The ?25 million of other net operating income mainly consisted of ?20 million of insurance indemnities received in respect of final compensation for rolling stock considered irreparable following the fire in 2008 and which was written off during the 2008 and 2009 financial years.

The operating result in 2011 was a profit of ?272 million compared to ?187 million in 2010, an improvement of ?85 million of which ?15 million related to other operating income.

1.5. Net cost of financing and debt service

Income from cash and cash equivalents decreased by ?3 million in 2011, 2010 having benefitted from the receipt of penalty interest in respect of a VAT reimbursement which has been partially offset by ?0.8 million of interest received on the floating rate notes purchased in the second half of 2011 (see notes A.2 and P.2 to the consolidated financial statements in paragraph 20.3.1 of the 2011 Registration Document).

At ?268 million in 2011, the gross cost of servicing debt increased by ?15 million compared to 2010 at a constant exchange rate as a result of the unusual and historically high level of inflation rates in the UK (5.4% for 2011 compared to an average of just under 3% between 2007 and 2010 due in particular to the effect of the increase in VAT) and the resulting effect on the nominal amount of the index-linked tranche of the debt. By way of example, a variation of 1% in the inflation rate would have an impact of ?12 million on the amount of the principal of tranches A₁ and A₂. This increase in interest charges has no effect in 2011 on the cash flows relating to interest and related hedging payments on the Term Loan which remain relatively stable at ?211 million (see paragraph 10.2 of the 2011 Registration Document) as the effect of the indexation on the nominal gives rise to cash payments only upon repayment of the debt.

1.6. Net result

The net consolidated result for Groupe Eurotunnel SA in 2011 was a profit of ?11 million compared to a loss of ?58 million in 2010 (restated at a constant exchange rate).

2. Cash flows in 2011 and 2010

? million		Year ended 31 December 2011			Year ended 31 December 2010
Exchange rate ?/£		1.197			1.162
Net cash inflow from trading		418			353
Other operating cash flows and taxation		(2	)		3
Net cash inflow from operating activities		416			356
Net cash outflow from investing activities		(77	)		(70	)
Net cash outflow from financing activities		(387	)		(226	)
(Decrease)/increase in cash in year		(48	)		60

In total, the net cash outflow in 2011 was ?48 million compared to a net cash inflow of ?60 million in 2010, largely as a result of financial operations to buy floating rate notes and GET SA shares. Before financing, the net cash inflow was ?339 million compared to ?286 million the previous year, an improvement of ?53 million.

a) Cash flow from operating activities

At ?418 million the net cash inflow from operating activities increased by ?65 million in 2011 compared to 2010. This increase is mainly explained by:

• an increase in Fixed Link revenue receipts of ?47 million, mainly for Shuttle Services,
• an increase of ?36 million in the amount received from insurers in respect of operating losses and material damage relating to the fire in September 2008,
• an increase of ?15 million in Fixed Link operating expenses, and
• a net decrease of ?4 million in Europorte's operating cash flows.

b) Cash flow from investing activities

At ?77 million in 2011 cash flow from investing activities increased by ?7 million compared to 2010, and comprised mainly:

• ?98 million of capital expenditure (?50 million in 2010), ?51 million of which related to Fixed Link activities (?45 million in 2010); the remaining ?47 million primarily being invested in the acquisition of new locomotives for the Europorte businesses as part of their development plan. The Group is currently studying the possibility of partially refinancing these locomotives,
• a receipt of ?20 million relating to compensation for rolling stock destroyed during the fire in 2008 (?6 million received in 2010).

Note that the figure for 2010 included net payments of ?28 million for the acquisition of the subsidiaries purchased in 2009 and 2010.

c) Cash flow from financing activities

In 2011, cash outflows from financing activities amounted to ?387 million, compared to ?226 million in 2010. The difference is largely explained by the cost of acquiring the floating rate notes (see notes A.2 and P.2 to the consolidated financial statements contained in paragraph 20.3.1 of the 2011 Registration Document) and treasury shares in 2011. Cash flows from financing activities in 2011 principally comprised:

• ?211 million interest paid on the Term Loan and associated hedging transactions (?206 million in 2010), the effect of the indexation of the nominal giving rise to cash payments only on its repayment),
• ?128 million for the acquisition of the floating rate notes,
• ?40 million on acquiring treasury shares,
• ?21 million paid in dividends (?18 million paid in 2010),
• ?4 million of interest received (?9 million in 2010), and
• ?10 million received from the exercise of the 2007 Warrants.

3. Debt service cover ratios

The debt service cover ratio and the synthetic service cover ratio for Groupe Eurotunnel SA at 31 December 2011 were 1.72 and 1.52 respectively, and thus the financial covenants for the period were respected.

4. Long Term Debt to Asset Ratio

The Group defines its Long Term Debt to Asset Ratio as the ratio between long-term financial liabilities less the value of the floating rate notes which were purchased during 2011 as a percentage of tangible fixed assets. At 31 December 2011, the ratio remained stable at 56.4% compared to 56.1% at 31 December 2010.

?'000				31 December 2011		31 December 2010
Exchange rate ?/£				1.197		1.162
Long term financial liabilities		A		3,871,622		3,753,824
Other financial assets: floating rate notes		B		131,931		-
Long term financial liabilities less other financial assets		A-B=C		3,739,691		3,753,824
Tangible fixed assets: property, plant and equipment		D		6,626,841		6,691,232
Long Term Debt to Asset Ratio		C/D		56.4%		56.1%

5. Free Cash Flow

The Group defines its Free Cash Flow as net cash flow from operating activities less net cash flow from investing activities (excluding the acquisition of shareholdings in subsidiary undertakings) and net cash flow from financing activities relating to the service of the debt (Term Loan and hedging instruments) plus interest received (on Cash and cash equivalents).

?'000		31 December 2011			31 December 2010
Exchange rate ?/£		1.197			1.162
Net cash inflow from operating activities		415,983			356,400
Net cash outflow from investing activities		(77,377	)		(70,476	)
Acquisition of shareholdings in subsidiary undertakings		-			28,658
Interest paid on the NRS		-			(5,712	)
Interest paid on the Term Loan		(161,525	)		(151,622	)
Interest paid on the hedging instruments		(49,063	)		(53,896	)
Interest received on cash and cash equivalents		3,421			8,920
Interest received on other financial assets		698			38
Free Cash Flow		132,137			112,310

Forthcoming events in 2012:

18 April 2012: traffic and revenue for first quarter of 2012
26 April 2012: Groupe Eurotunnel SA AGM

Additional information:

Groupe Eurotunnel files its annual financial report for the year ending 31 December 2011 with the Autorité des marches financiers (AMF). Groupe Eurotunnel SA's consolidated and company accounts for the year ended 31 December 2011 were finalised by the board of directors on 29 February 2012.

Status of the accounts for the year 2011, in respect of the statutory audit: accounts certified.

This press release and the 2011 Registration Document (including Groupe Eurotunnel SA's annual accounts for the year ended 31 December 2011) will be available on our website: www.eurotunnelgroup.com under the heading "regulatory information".

¹ The figures for the Group's consolidated income statement in 2010 have been recalculated at the average exchange rate for 2011 (£1=?1.148), to enable a better comparison between the two periods.

² Like for like, taking account of the GB Railfreight revenues for the period from January to May 2010 (before its acquisition by the Eurotunnel Group on 28 May 2010), the growth in the Group's consolidated revenue is 11%.

³ The Group defines its long term debt to asset ratio as the ratio between long-term financial liabilities less the value of the floating rate notes which were purchased during 2011 as a percentage of tangible fixed assets. At 31 December 2010 the ratio was 56.1%. The calculation of this ratio is set out in section 4 below.

⁴ Warrants for shares issued in 2007: securities note approved by the Autorité des marches financiers (AMF) on 4 April 2007 (visa n° 07-113) and delisted from the NYSE Euronext Paris market before opening on 2 January 2012.

⁵ Calculated at the exchange rate at 31 December 2011 of £1=?1.197.

⁶ The Opal Coast International Railway Training School

⁷ Includes insurance indemnities of ?9 million relating to the operating losses following the fire in September 2008

⁸ The Group defines its Free Cash Flow as net cash flow from operating activities less net cash flow from investing activities (excluding the acquisition of shareholdings in subsidiary undertakings) and net cash flow from financing activities relating to the service of the debt (Term Loan and hedging instruments) plus interest received (on Cash and cash equivalents). The calculation is shown in section 5 below.

For media enquiries
John Keefe Consultant, + 44 (0) 1303 284491
press@eurotunnel.com
or
For investor enquiries
Michael Schuller, +44 (0) 1303 288749
Michael.schuller@eurotunnel.com

Partner Area