Eurotunnel 2005 and 2006 results

2005: Net result a major loss:

  • Impairment £1.75 billion;
  • Negative equity of £1.3 billion

2006: Excellent operating results:

  • Revenue up, to £568 million (+5%), with revenues from Shuttle activity up by +7%;
  • Excellent profitability from activities (operating margin / revenue), up four points to 59%;
  • Strong improvement in trading profit: +42% to £220 million;
  • Net loss due to the impact of financial charges: -£143 million.

A Safeguard Plan to avoid bankruptcy
2006 was a year devoted to restructuring of the company’s operations and to negotiations with the creditors, initially to find a consensual agreement and subsequently, from 2 August onwards, in the context of a Safeguard Procedure. The Safeguard Plan put forward by the company was approved by the Paris Commercial Court on 15 January 2007.

The Joint Board of Eurotunnel approved the accounts for 2005 and 2006, on the basis of the Safeguard Plan, at its meeting, chaired by Jacques Gounon, on 6 March 2007.

The Auditors and Commissaires aux Comptes certified the accounts with matters of emphasis, notably regarding going concern. This depends upon the full implementation of the Safeguard Plan and, particularly, upon the success of the Exchange Tender Offer (ETO). If this was to fail, Eurotunnel would probably be put in liquidation.

Negative equity, but operations growing strongly
The 2005 accounts show negative equity of £1.3 billion, on 31 December 2005, following an impairment which reduced the asset value to £5.1 billion.
The operations, following a period of substantial reorganisation, were already showing significant improvement. The trading profit improved 19% compared to 2004, to £153 million.

In 2006, the operations were record making: revenue improved 5%, trading profit leapt by 42% to £220 million, and a corresponding profitability for activities of 59% (operating margin / revenue), up four points compared to 2005.

However, in the absence of a financial restructuring of the debt, the company was left with unsupportable financial charges (£368 million), which led to a net loss of £143 million. After restructuring, and assuming that this had taken place on 1 January 2006, the pro forma net result (that is to say with interest calculated on the basis of the new debt) would have been at break even for 2006, the final year of the MUC (Minimum Usage Charge).

Jacques Gounon, Chairman and Chief Executive declared, “These excellent operating results clearly show that it will only be through the new company, Groupe Eurotunnel SA (GET SA), created as a result of Safeguard and the ETO, relieved of more than half of the current debt and with substantially reduced financial charges, that we will finally be able to remove the spectre of bankruptcy which threatened Eurotunnel in 2005.”

Annexes:
Financial analysis and Summary combined accounts for 2006
Financial analysis and Summary combined accounts for 2005
The interactive version of the Eurotunnel 2006 Annual Review

Eurotunnel manages the infrastructure of the Channel Tunnel and operates accompanied truck shuttle and passenger shuttle (car and coach) services between Folkestone, UK and Calais, France. Eurotunnel also earns toll revenue from train operators (Eurostar for rail passengers, and EWS and SNCF for rail freight) which use the Tunnel. Eurotunnel is quoted in London, Paris and Brussels.