SES S.A., a leading worldwide satellite operator (NYSE Paris:SESG)
(LuxX:SESG), reports financial results for the twelve months ended 31
compared to prior year period
Romain Bausch, President and CEO, commented:
"SES has successfully continued to differentiate itself, reinforcing
its position in developed markets, focusing on investments in regions
and applications with high growth potential and implementing innovative
developments in new applications and satellite technology. The company
continued to expand its operations and delivered growth as foreseen,
with a strong video focus delivering a 12% increase in the number of TV
channels carried on the fleet to over 6,200. New business and renewals
during the year delivered revenue and EBITDA growth at about 6% (as
adjusted for analogue revenue in 2012) and increased the contract
backlog to an historic high (at constant FX) of EUR 7.5 billion at the
end of 2013. The success of the three satellite launches during 2013
provides a solid foundation for future growth. In particular, the launch
of SES-8 on Falcon 9 in December opens a new era and is an important
milestone in our continuous commitment to innovation and capex
"As announced, I will step down as President and CEO of SES at the
occasion of the Annual General Meeting in April after 19 years at the
helm of this great company. I have every confidence that the
company will continue to develop and prosper under the leadership of
Karim Michel Sabbagh and the executive team in place. This foundation is
set to deliver continued organic revenue and EBITDA growth of 6-7% in
2014, a 3-year (2014-2016) organic revenue and EBITDA CAGR of 4-4.5% and
significant financial headroom to invest in further profitable
opportunities. I look forward to continued involvement with the company
as a member of the Board of Directors."
Financial Review, Full year 2013
The fiscal year 2012 included EUR 42.6 million in revenue and EBITDA
from four months of analogue DTH transmissions in Germany, which ended
on 30 April 2012. This affects the reported year-on-year comparisons
Reported revenue grew by 1.9%, or 3.4% at constant FX (5.9% at constant
FX, excluding analogue). Revenue growth was principally driven by
the solid performance in the International region, which delivered an
increase in revenue of 12.8% at constant FX. New capacity, with secured
anchor customers, made an immediate contribution, complemented by
continued development of DTH platforms throughout the region. The
European region posted an increase of 1.4% at constant FX, with an
impressive ex-analogue increase of 6.3%. North American region revenue
decreased by 2.9% at constant FX, which mainly reflected the revenue
recorded in 2012 for services associated with the SES-3 Ka-band payload,
and the full year impact of the payload reduction on AMC-16.
Operating costs continued to be tightly managed, delivering EBITDA
of EUR 1,364.7 million. The EBITDA margin was 73.3%, slightly better
than the 2012 ex-analogue margin of 73.1%. The infrastructure margin of
83.3% (2012 ex-analogue: 83.0%) increased, and the services margin also
improved, to 17.1% (2012: 14.9%), reflecting the benefits of efficiency,
scale and cost management.
Depreciation and amortisation charges were 7.7% lower than the
prior year, at EUR 513.5 million. Depreciation, at EUR 466.5 million,
was lower due mainly to the absence of the charge relating to AMC-16
impairment taken in 2012. Amortisation charges, at EUR 47.0 million,
increased by 16% over 2012 levels. Accordingly, operating profit
increased by 7.7% to EUR 851.2 million.
Net financing charges of EUR 173.5 million were 2.3% higher than
the prior year, due mainly to lower capitalised interest. Net interest
expense reduced by 5.4%, reflecting the favourable rates obtained on new
The group tax charge was EUR 87.5 million (2012: tax income of
EUR 42.2 million) representing an effective tax rate of 12.9%. Note that
the tax charge in 2012 was favourably impacted by the release of tax
provisions totalling EUR 107.9 million.
The share of loss attributed to associates was EUR 21.7 million
(2012: EUR 14.0 million), principally relating to SES's 47% interest in
O3b Networks. The share of loss was mitigated by the EUR 12.4 million
gain recognised on the disposal of the group's 50% interest in Solaris
These items were the principal variances to the prior year, resulting in
2013 net profit of EUR 566.5 million, compared to EUR 648.8
million in 2012.
The group's Net Debt/EBITDA ratio at 31 December stood at 2.79
At the end of 2013, the fully-protected contract backlog was
maintained at EUR 7.5 billion, an all-time high at constant FX,
reflecting new business and renewals signed during the year.
A dividend of EUR 1.07 per A-Share is proposed in respect of 2013
(2012: EUR 0.97).
Financial Review, Fourth Quarter 2013
(Comparative figures in this section stated at constant FX)
Revenue of EUR 484.3 million represents an increase of EUR 28.8 million,
or 6.3%, over the prior year period, this increase arising in the Europe
and International regions. Operating expenses of EUR 128.9 million were
held in line with the prior year period, translating into a EUR 29.0
million, or 8.9%, increase in EBITDA to EUR 355.4 million. This
represents an EBITDA margin of 73.4%, with infrastructure activities
delivering 82.6% (Q4 2012: 84.2%) and Services delivering 20.3% (Q4
Depreciation and amortisation charges in Q4 2013 of EUR 131.1 million
were significantly reduced compared to the prior year period (Q4 2012:
EUR 164.4 million), which included an impairment charge of EUR 36.6
million relating to the AMC-16 satellite. The favourable EBITDA
development, coupled with the lower depreciation, contributed to the
38.4% increase in operating profit to EUR 224.3 million (Q4 2012: EUR
FLEET DEVELOPMENT AND UTILISATION
The SES-6 satellite was launched in June and entered service at
40.5W at the end of July 2013. The ASTRA 2E satellite was
launched at the end of September and entered service at 28.2/28.5E on 1
February 2014. SES-8 was launched on SpaceX's Falcon-9 booster
and following in-orbit testing entered service on 3 February at the 95E
orbital position, where it is co-located with NSS-6.
Available transponder capacity increased by 3.6% compared to 31 December
2012, from 1,436 to 1,487, reflecting the start of service of new
satellite capacity, while utilised capacity rose by 3.0%, from 1,068 to
1,100 transponders. At 31 December 2013, the group satellite fleet
utilisation rate remained stable at 74.0% (2012: 74.4%), reflecting the
new capacity entering service, with a strong increase of 43 utilised
transponders in the International region.
Utilisation - Europe
Compared to 31 December 2012, available satellite capacity increased by
two transponders to total 347, with the impact of the end of ASTRA 1F's
Gazprom mission (-16 transponders) being offset mainly by new capacity
at 28.2/28.5E. Strong underlying growth in Europe, with favourable
developments at 19.2E, 5E and other European orbital positions,
commercialised an additional 15 transponders, offset by the end of the
ASTRA 1F Gazprom mission. Utilised capacity therefore decreased by one
transponder from 279 to 278. The overall utilisation rate in the region
stood at 80.1% (2012: 80.9%). Average revenue per utilised transponder
remained stable in the discrete national markets served.
Utilisation - North America
Available satellite capacity was unchanged during the year at 384
transponders. New business and renewals did not offset non-renewals by
commercial and U.S. government customers during the year, resulting in a
fall in the number of utilised transponders from 289 to 279,
representing a utilisation rate at the end of the year of 72.7% (2012:
75.3%). Average revenue per transponder remained stable.
Utilisation - International
Available satellite capacity increased by 49 transponders from 707 to
756. Utilisation increased by 43 transponders, from 500 to 543, a
utilisation rate of 71.8% at the close of 2013 (2012: 70.7%). Average
revenue per utilised transponder remained stable.
No spacecraft have experienced in-orbit anomalies or solar array
impairments requiring reduction of commercial capacity in 2013.
Geographic Market Regions: Europe and International the motors of
Europe region revenue increased by 1.4% to EUR 936.4 million compared to
the prior year, on a constant FX basis, and by 6.3% ex-analogue.
DTH television broadcasting remains at the core of SES's business and
accounts for the majority of European region revenue. Channel growth
continues in Western Europe markets, with HD being a significant growth
driver. The number of channels broadcast over SES satellites in Europe
grew 14% to 2,359 by year end 2013, of which 488, or 21%, were HD.
Market penetration also developed well. The 2012 SES Satellite Monitor
survey, published in March, confirmed ASTRA's increased reach in Europe,
with growth in Germany. The switch-off of analogue satellite signals and
the success of the HD+ platform contributed to the increase of over
500,000 satellite homes, bringing the total in Germany to over 18
million homes. Across Europe, ASTRA reaches 143 million TV households
(including those served indirectly via cable and IPTV retransmission).
In Europe, ASTRA now serves 73% of the 85 million satellite TV homes and
80% of the 35 million satellite HD homes.
Several new contracts for DTH services were signed during the year.
MagtiSat, the Georgian DTH platform, contracted a fourth transponder at
31.5E to support its growing operation. Telkom Srbija signed a
multi-year deal for capacity at 23.5E, and Orange Romania contracted
additional capacity for TV services. Later in the year, Arqiva signed a
multi-year, multi-transponder capacity agreement for the UK at
Other developments included an agreement with RTL to broadcast Swiss DTH
programming on the ASTRA fleet with effect from 2014, and an agreement
with RAI to distribute HD programming from 19.2E for the Italian market.
On 4 October 2013, SES initiated transmissions on the newly acquired 500
MHz of German frequencies at 28.5E. The access to these frequencies will
add a net 20 incremental transponders to the SES fleet's capacity at the
28.2/28.5E neighbourhood once the fleet configuration is completed with
the entry into service of ASTRA 2G.
SES Broadband Services signed a number of agreements with resellers for
the marketing and distribution of its enhanced offering, now featuring
download speeds of up to 20 Mbps.
HD+ continued to develop strongly, with the line-up increasing to 16 HD
channels following the addition of Disney HD to the platform. The number
of paying customers passed 1.4 million at the end of 2013, a 49%
increase over the 2012 year-end number, while a further 1.3 million
households are in the initial 12-month free reception period, securing
future growth. In 2014, further development of the platform is foreseen,
with three new channels expected to begin transmissions in April. In May
2014, HD+ will introduce an increase in the technical access fee to EUR
60 per annum, reflecting the increased breadth of programming now
available on the platform. The HD+ business is a prime example of SES's
commitment to providing our customers with differentiated services, and
of our strategy to support future profitable growth developments.
TechCom signed an important agreement to provide terrestrial
infrastructure and services to the European Galileo programme.
Toward the end of the year, SES and its joint venture partner Eutelsat
agreed the sale of Solaris Mobile to EchoStar.
North America region revenue decreased by 2.9% to EUR 398.0 million
compared to the prior year, on a constant FX basis. The decline was
largely accounted for by the absence of the one-time revenue recorded in
2012 for services provided to a customer on SES-3, the full-year impact
of the payload reduction on AMC-16, and non-renewals by certain
commercial and government customers.
Operations in North America saw further increases in demand for mobility
solutions. Notable developments during the year included agreements with
Gogo, Hughes/Row44 and Panasonic, covering network establishment and
satellite capacity for aeronautical broadband connectivity over North
America and the North Atlantic. Transponder capacity contracts were
signed for the North Atlantic beam on SES-6, and other satellites
delivering continental coverage. These contracts demonstrate the
attractiveness of satellite for mobility applications and of our
commitment to develop these to deliver sustained growth.
KVH, a U.S. provider of maritime communications solutions, including
broadband connectivity solutions, added capacity to support its
operations. ITC Global contracted for incremental capacity to extend its
North American communications network for oil & gas operations, and
Globecast and iN Demand renewed their capacity contracts.
SES Government Solutions delivered revenue broadly flat compared to
prior year, with some contracts not being renewed during the second half
of the year as a consequence of the U.S. budgetary constraints. Despite
this, good growth potential is foreseen for the medium to long term as
the demand for capacity to serve mobile operations continues to
increase. The U.S. government procurement process is also under review,
and is expected to improve the procurement and budgeting process for
commercial satellite capacity contracts.
International region revenue increased by 12.8% to EUR 528.1 million
compared to the prior year, on a constant FX basis.
Business developed well in all the geographies comprising the region, in
particular in Latin America and in Asia, where DTH television platforms
continued to proliferate. In Brazil, Oi contracted the majority of the
Latin American capacity on the SES-6 satellite, launched in June, while
Asian operators contracted additional capacity for their growing DTH
offerings, with Sky Vision (Indonesia), GSAT and Mediascape/Cignal
(Philippines) and IPMTV (Thailand) all signing new transponder
contracts. DTH operations in Africa also developed well, with a DTH
neighbourhood now established on SES-5. Zuku TV transferred its
operations from NSS-12 to SES-5, where other DTH platforms include those
operated by Platco Digital and Star Times.
Communications networks represent an important element of SES's customer
base in the International region, with new contracts being signed for
capacity to support GSM backhaul (Pakistan, Papua New Guinea and the
Pacific region), and VSAT networks (Russian Far East, Middle East), and
for inter-regional connectivity.
The international region also benefited from revenue from the ASTRA 3A
satellite, an asset operating in inclined orbit, for operations in the
fourth quarter of 2013.
Late in 2013, SES sold its 75% interest in Glocom, the remaining part of
the ND SatCom-related business participations, to its minority owner.
Service activities, with HD+ and SPS at the core, have continued to
develop favourably, delivering a revenue increase of 14.1% at constant
FX. Services have also been an important factor in driving demand for
satellite transponder capacity, with a 12.7% increase in 'pull-through'
capacity recorded in 2013, at constant FX. Scale benefits have supported
the increase in services margin to 17.1%, from 14.9% in 2012.
SES has a commitment to innovation as part of its mission to deliver
enhanced returns. In 2013, SES unveiled the IP-LNB, which receives
satellite transmissions and converts them into IP format, ready to be
integrated into today's IP-based home communications environment.
Developments such as this safeguard the role of satellite in the
entertainment landscape and facilitate its integration into the IP-based
reception devices proliferating today.
SES has also led the way in supporting the development of electric
propulsion for satellites, an initiative which will deliver cost and
lifespan benefits. SES is partnering with the European Space Agency
(ESA) and the German Aerospace Center (DLR) on the Electra project, to
develop a satellite using all-electric propulsion. Electric propulsion
allows satellites to carry bigger payloads for the same cost and reduces
the cost of launching a given payload and keeping it in orbit.
In December, in keeping with SES's pursuit of innovation, SES-8 was the
first commercial satellite to be launched to geostationary transfer
orbit by SpaceX, a newcomer to the launch service industry, whose
approach to launch vehicle production delivers a significant reduction
in launcher cost. The success of the SES-8 mission is expected to have
far-reaching consequences for the industry, as launch costs reduce as a
proportion of overall programme costs.
Recent developments in new market verticals, such as aeronautical
mobility via the agreements with Gogo, Panasonic and Hughes/Row44, and
the development of significantly differentiated HTS capabilities via the
investment in O3b Networks, are further increasing the long-term
attractiveness and relevance of SES's satellite applications.
Settlement of dispute with Eutelsat
On 30 January 2014, SES and Eutelsat announced the settlement of the
dispute related to SES's right to operate German frequency rights at
28.5E. The two companies have concluded a series of agreements,
including a comprehensive settlement of legal proceedings, confirming
SES's right to operate at the 28.5 degrees East orbital position and
containing long-term commercial as well as frequency coordination
elements. The agreements allow SES to fully exploit its satellite and
fleet investments and to operate and commercialise its assets and
frequency spectrum efficiently.
O3b Networks provides high-speed business-to-business broadband
connectivity across the developing world using a constellation of
satellites in Medium Earth Orbit. O3b launched its first four satellites
in June 2013. Following in-orbit tests on these first four satellites,
O3b delayed the launch of the second four satellites to make
modifications to its subsequent satellites. For this reason the start of
commercial operations has been delayed. Satellites 5 to 8 are expected
to be launched in Q2 2014. Funding discussions are underway that will
enable the launch of satellites 9 to 12. SES owns a 47% interest in O3b
Two spacecraft are scheduled to launch in 2014. ASTRA 5B is due to be
launched on an Ariane 5 rocket from Kourou in French Guiana in March.
The spacecraft will be positioned at 31.5E, where its payload of 40
transponders will increase the marketable capacity for services into
Central and Eastern Europe, as well as Russia and the CIS.
The ASTRA 2G spacecraft is now scheduled to be shipped in April 2014 for
subsequent launch on a Proton rocket from Baikonur Cosmodrome in
Kazakhstan. ASTRA 2G will provide follow-on capacity at the prime
European orbital neighbourhood at 28.2/28.5E, as well as incremental
Ku-band capacity in the Africa region.
SES-9 is scheduled for launch in H1 2015, and will be positioned at
108.2E to serve the Asia-Pacific region.
SES-10 is scheduled to be launched in H2 2016 on Falcon 9, under SES's
multiple launch agreement with SpaceX. It will be positioned at 67W to
serve the Andean Community and other Latin American markets.
SES's differentiation from its peers has supported its ability to secure
attractive financing in the global capital markets. Significant progress
was made during the year in diversifying the company's financing base.
In March 2013, the company launched its inaugural U.S. dollar bond. The
issue was significantly oversubscribed, raising USD 1 billion in two
tranches: USD 750 million 10-year notes with a coupon of 3.6% and USD
250 million 30-year notes with a coupon of 5.3%.
SES successfully placed an EUR 500 million 5-year Euro bond in October
2013. The bond was priced with a coupon of 1.875%, the lowest coupon in
the company's history.
In January 2014, the company successfully renewed its EUR 1.2 billion
Revolving Credit Facility on favourable terms. Twenty banks participated
in the syndicate for the 5-year multicurrency revolving credit facility
with two one-year extension options. The margin at the current rating of
BBB / Baa2 is 45 bps p.a. (replacing the former syndicated and committed
credit line with a margin of 95 bps p.a.).
Outlook and Guidance
Revenue and EBITDA is expected to show strong organic growth in 2014 of
6%-7% (at constant FX and same scope), based on the present launch
schedule and fleet health status. The growth will be supported by the
full-year contribution from capacity brought into operation in 2013 and
in early 2014, from services growth and from the commercialisation of
SES's extensive portfolio of in-orbit assets.
SES today publishes a new 3-year revenue and EBITDA CAGR guidance for
the period 2014-2016. At constant FX and at same scope, revenue and
EBITDA is expected to deliver an organic 4%-4.5% CAGR in the period,
based on the present launch schedule and fleet health status. This
growth is expected to be driven by the commercialisation of new and
existing transponder capacity and the continued development of related
services, in particular in the Europe and International regions.
SES's capital expenditure reduced in 2013, and will continue to adjust
as the satellite replacement cycle approaches its minimum level. Capital
expenditure has reduced from EUR 835 million in 2011 to EUR 419 million
in 2013 and is expected to stabilise at an annual average of about EUR
450 million during 2015-2018. Free cash flow before financing and
dividends is therefore significantly increasing from 2013 onwards,
reflecting the growth in revenue and EBITDA and the reduction in capital
expenditure. SES will continue to seek attractive, profitable, organic
and non-organic investment opportunities, prioritising investments to
enable SES to offer differentiated services to support its growth in
developed and emerging markets. The company will also continue to
enhance cash returns to shareholders, while maintaining its investment
grade credit rating.
Quarterly development of operating results (as reported)
Quarterly development of operating results (at constant FX)
Transponder utilisation at end of period
U.S. dollar exchange rate
1 "Constant FX" refers to the restatement of comparative
figures to neutralise currency variations and thus facilitate
comparison. 2012 comparative revenue and operating expenses are also
adjusted to reflect the disposal of the Glocom business in November 2013.
For chart (or graph), please see www.ses.com
Revenue growth on a constant FX basis was strong across both the
International and European regions. International growth of 12.8% or EUR
60.1 million was primarily fuelled by new direct-to-home capacity from
the SES-5 and SES-6 satellites.
European ex-analogue growth of 6.3% or EUR 55.1 million was primarily
driven by the continued strong performance of service activities and the
recontracting of transponder capacity.
North American revenues reduced by 2.9% or 11.7 MEUR, which mainly
reflected the revenue recorded in 2012 for services associated with the
SES-3 Ka-band payload, and the reduction in AMC-16 capacity.
Revenue by downlink region:
In millions of euro
Operating expenses of EUR 497.8 million increased by 5.1% year-on-year
at constant FX, as the continuing favourable development of services
businesses delivered strong revenue growth, with an accompanying
increase in associated cost of goods sold. Excluding this, total
operating costs were tightly managed, increasing by only 2.8%.
The Infrastructure margin was 83.3%, an increase of 0.3% points on the
ex-analogue margin recorded for 2012 of 83.0%. The Services margin of
17.1% represented a significant strengthening over the prior year margin
at constant FX of 14.9%.
The overall margin of 73.3% reflects a rise over the 73.1% recorded in
2012 for ex-analogue activities, despite an increased contribution of
Services revenue, from 20.5% in 2012 to 22.7% in 2013.
1 Revenue elimination refers to cross-charged
capacity and other services; EBITDA impact represents unallocated
Aggregated depreciation and amortisation charges were lower
year-on-year, mainly reflecting impairment charges totalling EUR 36.6
million taken in connection with the AMC-16 satellite in 2012.
Profit before tax
The increase of EUR 3.9 million in net financing charges in 2013 mainly
reflects lower capitalised interest charges than the prior year, related
to the capital expenditure cycle. Overall interest charges were lower
due to the favourable terms of refinancing activities in 2013, with a
5.4% reduction in net interest expense.
Profit attributable to equity holders of the parent
Net profit decreases year on year reflecting the one-time favourable
impact of tax provision releases recorded in 2012 of EUR 107.9 million.
Excluding this item, underlying net profit rose 4.7%.
Whilst operating cash flow declined 6.9% year on year, reflecting both
the weaker U.S. dollar and an increased investment in working capital,
free cash flow jumped 35.6% as cash outflows for capital expenditure
The group's net debt/EBITDA ratio was 2.79 at the end of the year,
against 2.96 at the end of 2012.
CONSOLIDATED INCOME STATEMENT
For the year ended December 31
1 Earnings before interest, tax, depreciation,
amortisation and share of joint ventures and associates' result.
2 Earnings per share are calculated by dividing the
net profit for the year attributable to ordinary shareholders by the
weighted average number of shares outstanding during the year, as
adjusted to reflect the economic rights of each class of share. Fully
diluted earnings per share are insignificantly different from basic
earnings per share.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31
1 Restated for the adoption of IAS 19 (revised) and for
certain balance sheet reclassifications
CONSOLIDATED STATEMENT OF CASH FLOWS
Additional information is available on our website www.ses.com
A press call will be hosted at 11.00 CET today, 21
February 2014. Journalists are invited to call the following numbers
five minutes prior to this time.
A call for investors and analysts will be hosted at 14.00 CET
today, 21 February 2014. Participants are invited to call the following
numbers five minutes prior to this time.
A presentation, which will be referred to during the call, will be
available for download from the Investor Relations section of our website
A replay will be available for one week on our website: www.ses.com
Disclaimer / "Safe Harbor" Statement
This presentation does not, in any jurisdiction, and in particular not
in the U.S., constitute or form part of, and should not be construed as,
any offer for sale of, or solicitation of any offer to buy, or any
investment advice in connection with, any securities of SES nor should
it or any part of it form the basis of, or be relied on in connection
with, any contract or commitment whatsoever.
No representation or warranty, express or implied, is or will be made by
SES, its directors, officers or advisors or any other person as to the
accuracy, completeness or fairness of the information or opinions
contained in this presentation, and any reliance you place on them will
be at your sole risk. Without prejudice to the foregoing, none of SES or
its directors, officers or advisors accept any liability whatsoever for
any loss however arising, directly or indirectly, from use of this
presentation or its contents or otherwise arising in connection
This presentation includes "forward-looking statements". All statements
other than statements of historical fact included in this presentation,
including, without limitation, those regarding SES' financial position,
business strategy, plans and objectives of management for future
operations (including development plans and objectives relating to SES
products and services) are forward-looking statements. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the actual
results, performance or achievements of SES to be materially different
from future results, performance or achievements expressed or implied by
such forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding SES and its subsidiaries and
affiliates, present and future business strategies and the environment
in which SES will operate in the future and such assumptions may or may
not prove to be correct. These forward-looking statements speak only as
at the date of this presentation. Forward-looking statements contained
in this presentation regarding past trends or activities should not be
taken as a representation that such trends or activities will continue
in the future. SES and its directors, officers and advisors do not
undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
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