GETS Groupe Euro.

 
TIDMGETS 
 
 

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 EUR0.08 for the 2011 financial year."

IMPORTANT EVENTS IN THE PAST YEAR

 
 
    -- Dynamic cash flow managementEurotunnel continues to 

generate a significant operating cash flow.

 
 
    -- Added value for shareholdersFollowing 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 EUR147 million5 of floating rate 

notesGroupe Eurotunnel SA has taken advantage of its

significant cash reserves to optimise the management of its debt, by

buying EUR147 million of discounted notes. This represents a full-year

reduction in interest charges estimated at EUR5 million in 2012. The

nominal value of the long term debt less the floating rate notes is

EUR3.6 billion. The long term debt to asset ratio is 56.4%.

 
 
    -- The cross-Channel Fixed LinkIn 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.

 
    -- EuroporteGB 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 (EUR158 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)6Creation of the first private training centre specialising in

railway skillsThis 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 EUR403 million, the operating margin (EBITDA) increased compared to 2010 as a result of good cost control and the trading profit increased by EUR70 million to EUR247 million in 2011 (+40%)7.

Operating profit (EBIT) also increased, by EUR85 million, including insurance indemnities totalling EUR29 million relating to the fire in September 2008.

In 2011, the available cash flow enabled the payment of a dividend (EUR21 million), the purchase of variable rate notes issued by Channel Link Enterprises Finance (CLEF, the debt securitisation structure), for EUR128 million, the purchase of own shares (EUR40 million) and capital expenditure of EUR98 million. At 31 December 2011, cash and cash equivalents amounted to EUR276 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

 
EUR million                      2011     2010          %        2010 
                                        (*)restated   change   published 
Exchange rate EUR/GBP              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           4        7                      7 
cash equivalents 
Gross cost of servicing debt   (268  )  (253  )       +6  %    (255  ) 
Net cost of financing          (264  )  (246  )       +7  %    (248  ) 
and debt service 
Other net financial income     3        1                      1 
and income tax expense 
Result for the year:           11       (58   )                (57   ) 
profit/(loss) 
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 GBP1 = EUR1.148.

**EBITDA less other income (EUR9 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 (EUR28 million) and operating expenses (EUR27 million) for the period January to May 2010.

Summary

Groupe Eurotunnel SA's consolidated revenue for the 2011 financial year was EUR845 million, an increase of EUR115 million (16%) compared to 2010. On a like-for-like basis (after restatement for inclusion of GBRf's revenues of EUR28 million for the first five months of 2010), the Eurotunnel Group's revenue increased by EUR87 million (11%) as a result of growth in activity for both the Fixed Link and Europorte (EUR54 million and EUR33 million respectively). In 2011, the Group accounted for EUR9 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 EUR451 million, an increase of EUR27 million on a like-for-like basis. The operating margin and the trading profit increased by EUR70 million to EUR403 million and EUR247 million respectively. After taking into account other net operating income of EUR25 million (of which EUR20 million related to the final compensation for the rolling stock destroyed in the fire), the operating profit amounted to EUR272 million, an improvement of EUR85 million of which a total of EUR29 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 EUR211 million. Groupe Eurotunnel SA's consolidated net result in 2011 was a profit of EUR11 million compared to a loss of EUR58 million in 2010 (restated at a constant exchange rate).

Free Cash Flow8 generated in 2011 amounted EUR132 million compared to EUR112 million in 2010. At 31 December 2011, the Group held cash balances of EUR276 million compared to EUR316 million at 31 December 2010, after the purchase of EUR128 million of floating rate notes, the purchase of EUR40 million of treasury shares and EUR98 million of capital expenditure.

1.1.Revenues

At EUR687 million, revenues for the Fixed Link for the 2011 financial year grew by EUR54 million (9%) compared to 2010 at a constant exchange rate. At EUR158 million, the Europorte segment's revenues increased by EUR61 million. On a like-for-like basis, Europorte's revenues increased by EUR33 million (26%). The Group's consolidated revenues totalled EUR845 million, an increase of EUR115 million (16%) compared to 2010. On a like-for-like basis, the Group's revenues increased by EUR87 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 EUR399 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 EUR278 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 EUR158 million in 2011, Europorte's revenues increased by EUR61 million compared to 2010. On a like-for-like basis, Europorte's revenues increased by EUR33 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 EUR9 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 EUR403 million has increased by EUR70 million (21%) compared to 2010, of which EUR9 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 EUR267 million in 2011, external operating expenses increased by EUR5 million (15%) compared to 2010. At a constant exchange rate and on a like-for-like basis, external operation charges increased by EUR16 million (7%) mainly due to:

 
 
    -- a EUR24 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 EUR8 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 EUR184 million increased by EUR19 million compared to 2010. At a constant exchange rate and on a like-for-like basis, they increased by EUR11 million of which EUR2 million was in respect of the Fixed Link and EUR9 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 EUR25 million of other net operating income mainly consisted of EUR20 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 EUR272 million compared to EUR187 million in 2010, an improvement of EUR85 million of which EUR15 million related to other operating income.

1.5.Net cost of financing and debt service

Income from cash and cash equivalents decreased by EUR3 million in 2011, 2010 having benefitted from the receipt of penalty interest in respect of a VAT reimbursement which has been partially offset by EUR0.8 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 EUR268 million in 2011, the gross cost of servicing debt increased by EUR15 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 EUR12 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 EUR211 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 EUR11 million compared to a loss of EUR58 million in 2010 (restated at a constant exchange rate).

2.Cash flows in 2011 and 2010

 
EUR million                                    Year ended    Year ended 
                                             31 December   31 December 
                                             2011          2010 
Exchange rate EUR/GBP                            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 EUR48 million compared to a net cash inflow of EUR60 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 EUR339 million compared to EUR286 million the previous year, an improvement of EUR53 million.

a)Cash flow from operating activities

At EUR418 million the net cash inflow from operating activities increased by EUR65 million in 2011 compared to 2010. This increase is mainly explained by:

 
 
    -- an increase in Fixed Link revenue receipts of EUR47 million, mainly for 

Shuttle Services,

 
    -- an increase of EUR36 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 EUR15 million in Fixed Link operating expenses, and 
 
    -- a net decrease of EUR4 million in Europorte's operating cash flows. 
 

b)Cash flow from investing activities

At EUR77 million in 2011 cash flow from investing activities increased by EUR7 million compared to 2010, and comprised mainly:

 
 
    -- EUR98 million of capital expenditure (EUR50 million in 2010), EUR51 million 

of which related to Fixed Link activities (EUR45 million in 2010); the

remaining EUR47 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 EUR20 million relating to compensation for rolling stock 

destroyed during the fire in 2008 (EUR6 million received in 2010).

Note that the figure for 2010 included net payments of EUR28 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 EUR387 million, compared to EUR226 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:

 
 
    -- EUR211 million interest paid on the Term Loan and associated hedging 

transactions (EUR206 million in 2010), the effect of the indexation of

the nominal giving rise to cash payments only on its repayment),

 
    -- EUR128 million for the acquisition of the floating rate notes, 
 
    -- EUR40 million on acquiring treasury shares, 
 
    -- EUR21 million paid in dividends (EUR18 million paid in 2010), 
 
    -- EUR4 million of interest received (EUR9 million in 2010), and 
 
    -- EUR10 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.

 
EUR'000                                     31 December  31 December 
                                          2011         2010 
Exchange rate EUR/GBP                         1.197        1.162 
Long term financial liabilities    A      3,871,622    3,753,824 
Other financial assets:            B      131,931      - 
floating rate notes 
Long term financial liabilities    A-B=C  3,739,691    3,753,824 
less other financial assets 
Tangible fixed assets: property,   D      6,626,841    6,691,232 
plant and equipment 
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).

 
EUR'000                                            31 December   31 December 
                                                 2011          2010 
Exchange rate EUR/GBP                                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                     -             28,658 
in subsidiary undertakings 
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 201226 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 (GBP1=EUR1.148), 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 GBP1=EUR1.197.

6 The Opal Coast International Railway Training School

7 Includes insurance indemnities of EUR9 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