ADDING MULTIMEDIA: SES: 2006 Another Excellent Year
SES (Paris:SESG) (LuxX:SESG):
FINANCIAL HIGHLIGHTS
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-- Revenues rose 28.4% to EUR 1,615.2 million (2005: EUR 1,258.0
million)
-- recurring, same scope revenues grew 7.4% to EUR 1,320.0 million
-- EBITDA grew 22.6% to EUR 1,080.4 million (2005: EUR 881.1 million)
-- Operating Profit improved 27.2% to EUR 605.3 million (2005: EUR
475.8 million)
-- Net Profit was 14.1% higher at EUR 435.8 million (2005: EUR 381.9
million)
-- Earnings Per Share increased by 22% to EUR 0.82 (2005: EUR 0.67)
-- Net operating cash flow increased 47.4% to EUR 1,060.1 million
(2005: EUR 719.4 million)
-- Dividend of EUR 0.44 (2005: EUR 0.40) per A share proposed
-- Buyback and cancellation of 25 million shares for a total
consideration of EUR 233 million
-- Return on average equity improved to 13.5% (2005: 11.2%)
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President & CEO Romain Bausch commented:
"These results again demonstrate SES's operational and financial
strengths, built on our solid industry position. We have once more
delivered outstanding shareholder value through the combination of
good results, continued investment in our business, increased
dividends and our share buyback programme. The acquisition of New
Skies has already delivered significant synergies, and the acquisition
of ND SatCom was closely followed by the successful bid for the German
government contract."
"More recently, we have announced a transaction with GE to buy
back their 19.5% stake in SES for assets and cash. This deal delivers
value to shareholders which will be boosted by the cancellation of the
bulk of the acquired shares. The resulting restructuring of our asset
portfolio streamlines and improves our geographic positioning without
changing our overall group strategy of growing and delivering
shareholder value."
"The outlook for 2007 is positive. SES forecasts continued revenue
growth which, with the planned share buyback and increased dividend,
delivers industry-leading total returns to shareholders."
Operations Review
In 2006 the SES group ("the Group") continued to develop and
strengthen its position in the industry.
The acquisition and integration of SES NEW SKIES into the Group
was achieved in line with plan. This acquisition delivered high
quality capacity and coverage of parts of the world where the SES
footprint was incomplete or delivered via minority participations.
Significant progress was made in delivering synergies from the
acquisition, with spacecraft control operations transferred to SES
ASTRA's facility at Betzdorf, Luxembourg and payload operations
control being transferred to SES AMERICOM's facility at Woodbine,
Maryland. The acquisition of ND SatCom, and the subsequent award of a
major German government contract, boosted SES ASTRA's presence in this
market segment, complementing the activities of AMERICOM Government
Services.
Demand for satellite capacity in the European media market remains
strong, supported by the continuing growth of existing satellite
Direct-to-Home (DTH) markets and the establishment of new markets in
Central and Eastern Europe. In North America, growth in the enterprise
and consumer broadband sector and DTH broadcasting has created
substantial demand for Ku-band satellite capacity, much of which is
supplied by SES and its affiliates. The growth of High-Definition TV
in Europe and North America, as well as the demand for global
solutions from the US government, gathers pace and will be a feature
of demand growth in the coming years.
Of total Group revenues, infrastructure activities contributed
83.4% (2005: 85.2%), and services activities 16.6% (2005: 14.8%). The
growth in service revenues results from the successful implementation
of the Group's strategy of developing its business in this area.
Infrastructure
Group infrastructure activities delivered revenues of EUR 1,416.7
million in 2006, with an EBITDA margin of 78.8%.
At the end of 2006, the number of commercially utilised
transponders across the group was 760, a utilisation rate of 75%.
Excluding the new capacity acquired with New Skies, the utilisation
rate rose to 76%, or 608 of 804 commercially available transponders.
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SES Group Utilised % Available
ASTRA segment 251 82% 305
AMERICOM segment 357 71% 499
NEW SKIES segment 152 71% 215
Full scope 760 75% 1,019
Same scope 608 76% 804
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EMEA
SES ASTRA continued to deliver the highest growth in the sector,
having benefited from the continued increase in demand for its prime
transponder capacity in its major markets at 19.2(degree) East and
28.2(degree) East; maintained growth in DTH broadcasting; concluded
further HDTV deals in the French and German markets; and developed and
promoted the new orbital position at 23.5(degree) East.
Of the 305 transponders commercially available in the SES ASTRA
satellite fleet, 251, or 82%, were contracted at December 31, 2006, a
net increase of 30 over the previous year.
Additional capacity was contracted with a range of broadcasters
across all markets, including UPC Direct for development of their
Central and Eastern European programming packages and TV Polska for
their digital bouquet in Poland. New contracts were signed by Canal+,
Anixe and National Geographic for their High-Definition broadcasting
packages. Important renewals were also secured, with ProSiebenSat.1 at
19.2(degree) East and the BBC at 28.2(degree) East.
In January 2007, SES ASTRA significantly enhanced its position in
the important French market with the signing of a new long-term
contract with the French Pay-TV operator CANAL+ Group for the
transmission of its programme bouquet from SES ASTRA's prime orbital
position 19.2(degree) East. SES ASTRA will transmit the full
programming line-up of CANAL+ Group from a single orbital position,
providing the framework for the future growth requirements of this key
long-term customer.
EMEA satellite fleet developments
ASTRA 1KR was launched in April and entered commercial service in
July 2006. ASTRA 1KR has 32 active transponders and provides
distribution of DTH broadcast services for customers across Europe,
with an extended reach into Eastern Europe. The new satellite allowed
SES ASTRA to replace its satellites ASTRA 1B and ASTRA 1C at the same
orbital position.
In order to further optimise the ASTRA fleet, SES ASTRA ordered
the procurement of the ASTRA 3B spacecraft from Astrium in November
2006. This will be a state-of-the-art Ku- and Ka-band spacecraft
designed for the distribution of both DTH broadcast services and
two-way broadband services across Europe and the Middle East. The
satellite will have 52 transponders of which 20 are to replace
existing in-orbit capacity while 32 represent new capacity. ASTRA 3B,
scheduled for launch in Q4 2009, will be positioned at 23.5(degree)
East thereby strengthening this third orbital position for European
DTH services. The ASTRA 1D satellite is now stationed at 23.5(degree)
East, with 16 commercially available frequencies on top of the 20
available on ASTRA 3A, allowing the immediate further development of
this position prior to the launch of ASTRA 3B.
Due to tight launch manifests and launch timing issues at our
launch providers, the 2007 launches of ASTRA 1L and SIRIUS 4 have been
slightly rescheduled. The launch of ASTRA 1L on Ariane V is now
scheduled for beginning of May 2007 instead of in Q1 2007. SIRIUS 4 is
now scheduled for launch on Proton in July 2007 instead of in Q2 2007.
The launches of ASTRA 1M in Q2 2008, and ASTRA 3B in Q4, 2009, are
still on schedule. There is no material financial impact arising from
the launch reschedules.
Americas
During 2006, SES AMERICOM continued to build on its leading
position for providing satellite capacity in North America. Public
Broadcasting Service (PBS) renewed and expanded its agreement with SES
AMERICOM, becoming the anchor customer on AMC-21 in advance of its
launch in 2008. Other significant 2006 signings included Turner
Broadcasting Service (TBS) and Hughes Network Systems (HNS). 2006 also
saw Scripps Networks launch two new HD channels, Home & Garden
Television HD (HGTV HD) and Food Network HD, on SES AMERICOM's
HD-PRIME neighbourhood.
The SES AMERICOM satellite fleet and the supporting terrestrial
networks continued to operate with a high degree of reliability. Of
the 499 transponders commercially available in the SES AMERICOM
satellite fleet, 357, or 71.4%, were contracted at December 31, 2006,
a net increase of 29 over the previous year.
Americas satellite fleet developments
AMC-18, carrying 24 C-band transponders for the extended HD-PRIME
neighbourhood at 105(degree) West, was launched in December 2006 and
entered commercial service at the beginning of February 2007. AMC-18
represents the third satellite in SES AMERICOM's HD-PRIME
neighbourhood, and will be used to distribute both standard- and
High-Definition programming to cable head-ends throughout the United
States.
The AMC-21 satellite was procured to deliver 24 Ku-band
transponders with 50-State coverage and is scheduled for launch in Q2
2008. SES AMERICOM's Canadian affiliate company Ciel began the
procurement of its Ciel-2 satellite, scheduled for launch in Q4 2008.
AMC-14, remains on schedule for launch in Q4 2007 onboard a Proton
rocket.
SES NEW SKIES
2006 marked the arrival of New Skies Satellites ('New Skies') into
the SES Group of companies. The acquisition of New Skies was completed
on March 30, 2006 and the results of SES NEW SKIES are consolidated
from that date.
SES NEW SKIES had an exceptional year in 2006, delivering its
highest ever revenues of USD 258.5 million, an increase of 7% compared
to USD 240.5 million in 2005, and contributing over USD 198 million to
the SES Group's revenue. The increase in revenue was driven by
improved market conditions and, in particular, enterprise service
delivery into Africa, the Middle East, and Central Asia.
At the year end SES NEW SKIES operated five satellites: NSS-806 at
319.5(degree) East, NSS-7 at 338(degree)East, NSS-703 at 57(degree)
East, NSS-6 at 95(degree) East and NSS-5 at 183(degree) East. Together
these satellites provide global coverage. Transponder utilization on
the fleet grew from 65% at the end of 2005 to 71% at the end of 2006,
on a total of 215 available transponders.
At the end of 2006 SES NEW SKIES carried 508 television channels,
a growth of 9% compared to 466 channels at the end of 2005. In total
it is estimated that these channels are received by some 44 million
cable and satellite households: 25 million in India, 3.5 million in
Africa and 15 million in Latin America.
Major new deals and renewals in 2006 include the renewal of the
contract with the Department of Space of the Indian Government and
Antrix Corporation of India for the continued roll-out of DTH services
in India. At the end of 2006 approximately 5 million households in
India received DTH channels broadcast from the NSS-6 satellite.
SES NEW SKIES continued to serve the United States government by
renewing or expanding the provision of satellite capacity,
particularly in the Middle East. In 2006 there was strong growth in
government services outside the United States, in particular with the
Australian and Dutch governments for long-term support of their
overseas operations.
SES NEW SKIES satellite fleet developments
In 2007 SES NEW SKIES intends to further expand its capacity
through the transfer into the SES NEW SKIES fleet of AMC-12/ASTRA 4A
at 322.5(degree) East, AAP-1 at 108.2(degree)East and the West Africa
beam on ASTRA 2B at 28.2(degree) East. The transferred satellites will
boost fleet capacity by 47%, from 215 to 315 transponders.
SES NEW SKIES will further enhance its orbital resources through
the addition of NSS-9 in 2009. The NSS-9 satellite, which has been
ordered in 2006, will be positioned at the orbital location of
183(degree) East, allowing NSS-5 to replace the NSS-703 satellite as
it nears the end of its life. SES will choose a launch service
provider for the NSS-9 satellite in the near future.
In January 2007, the launch of NSS-8 failed as a result of a
launch malfunction. SES NEW SKIES is reviewing several options to
capture the growth that the satellite was to have delivered through
the additional capacity that would have been added to the fleet.
Services
Services activities across the Group developed satisfactorily and
according to plan. Group services activities generated revenues of EUR
271.7 million in 2006. Strong focus on cost control and other
management initiatives supported the improvement in returns from the
managed services activities with a resulting improvement in services
EBITDA margin to 10.5% (before project start-up costs) at the year
end.
SES ASTRA executed a range of initiatives, in particular
increasing its ownership in ND SatCom from 25.1% to 100%. The
transaction significantly enhances SES ASTRA's government services
offering and creates opportunities for the core infrastructure
business.
SES ASTRA started implementing its low-cost satellite-based
interactive broadband internet access ASTRA2Connect, which was
announced during Q3 2006. SES ASTRA also launched its interactive,
Bluetooth-based blucom service for international customers while
closing further major contracts with customers in the German market
(ProSiebenSat.1, N24, and the Mobile Unit of RTL).
ASTRA Platform Services delivered strong double-digit growth
during the period as it expanded its product offering and increased
the number of channels to which it provide services. It also took an
important step for future growth with the commercial rollout of the
blucom service and the signature of the first customer contracts for
the service.
In December 2006 in Germany, the Federal Cartel Office closed its
investigation of the planned introduction of the entavio platform in
the German market, following ProSiebenSat.1's decision not to proceed
with the encryption of its Free-To-Air programming lineup.
Accordingly, the development of the open and neutral entavio platform
will be refocused on Pay-TV offerings.
AMERICOM Government Services
AMERICOM Government Services (AGS) has appointed a new leader,
General (Ret.) Robert Tipton (Tip) Osterthaler, to lead the group in
continuing to build on its strong position in the provision of
satellite-based network solutions to various agencies and departments
of the US government which continue to rapidly expand their reliance
on, and use of, commercially-based satellite bandwidth and services
around the world.
Main developments in 2006 included a ground Command and Control
on-the-Move (C2oTM) service that blends antenna and modem technology
with AGS's satellite, teleport, and terrestrial infrastructure
offering two-way broadband connectivity for vehicles.
Buy-back of GE's 19.5% stake in exchange for assets and cash
On 14 February 2007, SES announced that it had agreed with GE a
EUR 1.2 billion split-off transaction in which SES will contribute
certain assets and cash to a new company and exchange shares of that
new company for GE's entire holding of 103,149,900 shares in SES,
subject to satisfaction of certain closing conditions.
GE will exchange its shareholding in SES for shares in a new
company, SES International Holdings, Inc. comprising assets and EUR
588 million in cash, subject to certain closing adjustments. SES has
agreed to pay an equivalent of EUR 12 for each exchanged share,
resulting in a total transaction value of EUR 1,238 million. The cash
amount and the transaction value will be increased by an additional
amount of up to EUR 45 million provided that closing occurs prior to
April 21st, 2007.
Outlook and Modelling guidance
Following the announcement of the transaction with GE last week,
updated modelling guidance was published incorporating the impact of
that transaction as well as of the major CANAL+ contract, entavio
pre-commercial costs and the NSS-8 launch failure. This guidance
remains unchanged. Based on an initial review of the impact of the
NSS-8 launch failure completed last week we are certain that we will
be taking a one-time depreciation charge of USD 21 million in Q1 to
write off capitalized programme costs. Initial indications however
suggest that no further value adjustments affecting earnings will
arise in 2007 as a result of this event.
SES guidance is for a 2007 revenue range of EUR 1,568 - 1,608
million and EBITDA range of EUR 1,041 - 1,081 million. The guidance
table can be found in the Appendix to this document.
In modelling the underlying growth of revenue and EBITDA between
the years 2006 and 2007 it should be assumed that 95% of the
respective impacts of the GE transaction reflected in the Appendix
(being EUR 76 million for revenue and EUR 36 million for EBITDA)
should be applied to the 2006 reported results.
The focus of 2007 will be to build on the acquisitions and other
achievements of last year. The foreseen growth will come from the
continued development of TV broadcasting in our core markets.
Additional capacity will become available for European DTH following
the launch of ASTRA 1L and the relocation of ASTRA 2C, as well as with
the launch of SIRIUS 4. The AMC-18 satellite will provide further
growth opportunities in the North American market.
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PRESS / ANALYST TELECONFERENCES
A press call in French will be hosted at 10.00 CET today, 19
February 2007. Journalists are invited to call the following numbers
five minutes prior to this time.
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France +33 (0)1 70 99 42 66 Luxembourg +352 342 080 8570
Belgium +32 (0)2 400 3463
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A press call in English will be hosted at 11.00 CET today, 19
February 2007. Journalists are invited to call the following numbers
five minutes prior to this time.
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UK +44 (0)20 7365 1832 France +33 (0)1 70 99 42 78
Germany +49 (0)69 9897 2630 Belgium +32 (0)2 400 3463
Luxembourg +352 342 080 8570
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A call for investors and analysts will be hosted at 14.00 CET
today, 19 February 2007. Participants are invited to call the
following numbers five minutes prior to this time.
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+33 (0)1 70 99 42 78 France
+49 (0)69 9897 2630 Germany
+32 (0)2 400 3463 Belgium
+352 342 080 8570 Luxembourg
+44 (0)20 7365 1832 UK
+1 718 354 1157 USA
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A presentation, which will be referred to in each call, will be
available for download from the Investor Relations section of our
website www.ses-global.com
A replay will be available until February 26th on our website:
www.ses-global.com
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-- This document does not constitute or form part of, and should
not be construed as, any offer for sale of, or solicitation of
any offer to buy, 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, or its advisors or any other person as to the
accuracy, completeness or fairness of the information or
opinions contained in this document, and any reliance you
place on them will be at your sole risk. Without prejudice to
the foregoing, none of SES or its advisors accepts any
liability whatsoever for any loss however arising, directly or
indirectly, from use of this document or its contents or
otherwise arising in connection therewith.
-- This document includes "forward-looking statements". All
statements other than statements of historical fact included
in this document, including, without limitation, those
regarding SES's 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's 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
document. Forward-looking statements contained in this
document regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. SES does not undertake any obligation
to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
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FINANCIAL REVIEW BY MANAGEMENT
In Euro millions unless otherwise stated
Summary Financial Information
------------------------------------
Variance
2006 2005 Variance %
Revenues 1,615.2 1,258.0 +357.2 +28.4%
Operating expenses (534.8) (376.9) +157.9 +41.9%
---------------------------------
EBITDA 1,080.4 881.1 +199.3 +22.6%
Depreciation (438.6) (363.0) +75.6 +20.8%
Amortisation (36.5) (42.3) -5.8 -13.7%
---------------------------------
Operating profit 605.3 475.8 +129.5 +27.2%
Net financing charges (80.8) (4.7) +76.1 --
---------------------------------
Profit before tax 524.5 471.1 +53.4 +11.3%
Income tax expense (99.4) (99.3) +0.1 --
Share of associates' result 10.5 9.0 +1.5 +16.7%
Minority interests 0.2 1.1 -0.9 -81.8%
---------------------------------
Net profit for the period 435.8 381.9 +53.9 +14.1%
---------------------------------
Earnings per A-share (euro) 0.82 0.67 +0.15 +22.4%
-3.1 %
EBITDA margin 66.9% 70.0% points --
-3.4 %
Net income margin 27.0% 30.4% points --
Net operating cash flow 1,060.1 719.4 +340.7 +47.4%
Free cash flow (17.5) 433.1 -450.6 --
Net debt 2,903.2 2,107.1 +796.1 +37.8%
Net debt / EBITDA 2.68 2.39 +0.29 +12.1%
+34.8 %
Net debt / Total equity 95.3% 60.5% points --
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Operating profit development ( with percentage change to previous
quarter )
----------------------------------------------------------------------
Q1 % Q2 % Q3 % Q4 %
Revenue 329.3 - 2.0% 381.2 +15.7% 481.8 +26.4% 422.9 -12.2%
Operating
expenses (102.1) - 6.6%(108.9) +6.6%(157.9)+45.0%(165.9) +5.1%
-----------------------------------------------------
EBITDA 227.2 +0.3% 272.3 +19.9% 323.9 +18.9% 257.0 -20.7%
Depreciation (92.9) - 5.5%(112.4)+21.0%(113.4) +0.9%(119.9) +5.7%
Amortisation (7.9)- 37.8% (7.8) -1.3% (10.9)+39.7% (9.9) -9.2%
-----------------------------------------------------
Operating profit 126.4 + 9.4% 152.1 +20.3% 199.6 +31.2% 127.2 -36.3%
-----------------------------------------------------
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Revenue
----------------------------
2006 2005 Variance %
Revenue 1,615.2 1,258.0 +357.2 +28.4%
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The revenue growth in 2006 compared to 2005 reflects primarily the
impact of the acquisition of SES NEW SKIES on March 30, 2006 and the
purchase of the outstanding shareholding in, and assumption of full
control over, ND SatCom on June 29, 2006. Together these new Group
operations generated over half of the additional revenues in the year.
Beyond this impact the Group experienced further high single-digit
growth in its existing businesses reflecting continuing strong
developments in SES ASTRA's UK, German and Eastern Europe markets as
well as geographical expansion into the African market.
Finally one-off revenue items, mainly termination fees resulting
from the cessation of activities of Connexion by Boeing and
transponder sales by SES AMERICOM to Star One, made an additional
contribution to the positive development.
Earnings before interest, tax, depreciation and amortisation
("EBITDA")
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2006 2005 Variance %
Operating expenses 534.8 376.9 +157.9 +41.9%
EBITDA 1,080.4 881.1 +199.3 +22.6%
EBITDA margin 66.9% 70.0% -3.1 % pts --
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EBITDA rose strongly in 2006 reflecting the three factors set out
above in the revenue section. The reported EBITDA is after taking a
charge of EUR 28.5 million for restructuring costs of teleports in the
US and the remaining charge for the integration of SES NEW SKIES.
Excluding the non-recurring restructuring charge, the Group's
EBITDA margin was 68.7%, reflecting the increased proportion of
services in the revenue mix this year. Services revenues increased
45.4% to EUR 271.7 million, being 16.6% (2005: 14.8%) of the total,
with organic growth representing about half of this gain and the
balance mainly attributable to the acquisition of ND SatCom.
The margin in the Group's infrastructure business remained robust
at 78.8% (2005: 80.2%) when the restructuring charge is excluded. On
the same basis, the reported services margin rose from 4.0% in 2005 to
5.6% in 2006. Normalised for start-up costs, services delivered an
EBITDA margin of 10.5%.
Operating profit
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2006 2005 Variance %
Depreciation 438.6 363.0 +75.6 +20.8%
Amortisation 36.5 42.3 -5.8 -13.7%
Operating profit 605.3 475.8 +129.5 +27.2%
*T
Depreciation in 2006 was EUR 75.6 million higher than in 2005
reflecting the first-time consolidation of the five satellite fleet of
SES NEW SKIES for the nine months beginning in April. This added EUR
55.2 million to the Group's depreciation expense. Also the satellites
ASTRA 1KR, launched in April 2006, and AMC-23 (launched in December
2005) contributed to the increase in depreciation over the prior year.
Net financing charges
The charges can be analysed as follows:
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2006 2005 Variance %
Net interest expense (129.9) (74.3) +55.6 +74.8%
Capitalised interest 22.7 17.2 +5.5 +32.0%
Net foreign exchange gains 14.7 48.4 -33.7 -69.6%
Dividend income 1.5 -- +1.5 --
Gain on disposal of
subsidiary 15.0 -- +15.0 --
Value adjustments (4.8) 4.0 -- --
------------------------------------------
Net finance (charges) /
income (80.8) (4.7) +76.1 --
------------------------------------------
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The net interest expense rose sharply with the higher debt levels
implemented in 2006 and the contribution of the two high yield bonds
taken over with the purchase of New Skies. These were refinanced in
August at terms better reflecting the Group's normal terms.
Net foreign exchange gains were realized on financial derivatives
and on the holding of US dollar denominated liabilities during the
year as the dollar weakened against the Euro from Euro 1 : USD 1.1875
at the start of the year to Euro 1 : USD 1.3170 at the close.
Finally a book gain of EUR 15.0 million was made in February 2006
on the disposal of the Group's 100% interest in SES Re S.A., a captive
insurance company in Luxembourg.
Income tax expense
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2006 2005 Variance %
Income tax expense 99.4 99.3 +0.1 --
Reported tax rate 19.0% 21.1% -2.1 % pts --
*T
The tax charge for the year remained flat despite an increase in
11.3% of profit before taxes, reducing the Group's reported tax rate
from 21.1% in 2005 to 19.0% in 2006.
Net profit and earnings per share
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2006 2005 Variance %
Net profit of the Group 435.8 381.9 +53.9 +14.1%
*T
The net profit attributable to equity holders of the parent rose
14.1% in 2006 compared to the prior year. Earnings per share, based on
the weighted number of shares in issue, rose even more strongly
reflecting the impact of the share buyback programme.
Cash flow
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2006 2005 Variance %
Operating cash flow 1,060.1 719.4 +340.7 47.4%
Free cash flow (17.5) 433.1 -450.6 --
*T
Operating cash flow rose strongly compared to 2005 reflecting
largely the additional EUR 199.3 million of EBITDA generated by the
expanded Group and a drop of EUR 141.4 million in the Group's
investment in working capital - the latter arising mainly due to
significant revenue upfront payments received.
The acquisition of SES NEW SKIES and ND SatCom, and the disposal
of SES Re, with a combined cash impact of EUR 635.6 million in the
year significantly affect the free cash flow in 2006 when compared to
2005. All the above transactions were in the first half of 2006 - the
free cash flow recorded for the second half of the year of EUR 224.8
million was up over 88% compared to the corresponding level in 2005.
Net debt
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2006 2005 Variance %
Cash and cash equivalents (393.4) (196.8) +196.6 +99.9%
Loans and borrowings 3,296.6 2,303.9 +992.7 +43.1%
------------------------------------------
Net debt 2,903.2 2,107.1 +796.1 +37.8%
+34.8 %
Net debt / Total equity 95.3% 60.5% pts --
Net debt / EBITDA 2.68 2.39 +0.29 +12.1%
*T
During the year the Group issued three new bonds to a total value
of EUR 1,450.0 million within the framework of the European Medium
Term Note programme. These were partially used to reduce other
borrowings, but more substantially for the acquisition of SES NEW
SKIES and ND SatCom in a combined amount, net of cash acquired, of EUR
620.0 million, to refinance existing SES NEW SKIES borrowings of USD
445.0 million. A further EUR 233.1 million was applied to the
acquisition of shares and FDRs as part of the Group's share buyback
programme.
Contract backlog
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2006 2005 Variance %
Contract backlog - fully
protected (1) 6,497.3 6,489.9 +7.4 +0.1%
Contract backlog - gross 7,108.1 7,073.7 +34.4 +0.5%
(1) "fully protected" backlog is the backlog amount calculated from
the minimum amounts due on contracts, taking into account any 'step-
out' or early termination clauses.
*T
Fully protected backlog stood at EUR 6,497.3 million on December
31, 2006 and thus remained flat to the previous year, but is up by EUR
260 million or 4.2% on a constant exchange rate basis. The
contribution from the acquisitions of New Skies and ND SatCom
overcompensated for the loss of the Connexion by Boeing contract and
backlog run-off. Gross backlog mirrored this development. Fully
protected backlog equals more than 4 times 2006 recurring revenues
(gross: 4.5 times).
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*T
SES, S.A.
CONSOLIDATED INCOME STATEMENT
For the year ended December 31
(in EURO millions)
2006 2005
Revenue 1,615.2 1,258.0
Cost of sales (159.2) (110.0)
Staff costs (181.7) (119.8)
Other operating expenses (193.0) (147.1)
Depreciation (438.6) (363.0)
Amortisation (36.5) (42.3)
----------------
Operating profit 605.3 475.8
Finance revenue 92.0 73.2
Finance costs (172.8) (77.9)
----------------
Profit for the period before tax 524.5 471.1
Income tax expense (99.4) (99.3)
----------------
Profit for the period after tax 425.1 371.8
Share of associates' result 10.5 9.0
----------------
Profit for the year 435.6 380.8
----------------
Attributable to
Equity holders of parent 435.8 381.9
Minority interest (0.2) (1.1)
----------------
Net profit of the Group 435.6 380.8
----------------
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SES, S.A.
CONSOLIDATED BALANCE SHEET
As at December 31
(in EURO millions)
2006 2005
NON-CURRENT ASSETS
Property, plant and equipment 3,067.7 2,820.4
Assets in the course of construction 695.0 694.3
----------------
Total property, plant and equipment 3,762.7 3,514.7
Intangible assets 3,382.6 3,019.1
Investments in associates 88.6 100.7
Other financial assets 19.7 21.7
Deferred income tax assets 37.6 5.1
----------------
Total non-current assets 7,291.2 6,661.3
CURRENT ASSETS
Inventories 23.3 4.6
Trade and other receivables 288.5 191.8
Prepayments 42.3 54.5
Valuation of financial instruments 2.6 54.0
Short-term investments 24.8 --
Cash and cash equivalents 393.4 196.8
----------------
Total current assets 774.9 501.7
----------------
TOTAL ASSETS 8,066.1 7,163.0
----------------
EQUITY
Attributable to equity holders of the parent 3,012.2 3,449.0
Minority interest 32.9 34.5
----------------
Total equity 3,045.1 3,483.5
NON-CURRENT LIABILITIES
Interest-bearing loans and borrowings 2,947.3 2,145.1
Provisions and deferred income 210.4 140.2
Deferred tax liabilities 806.0 737.2
----------------
Total non-current liabilities 3,963.7 3,022.5
CURRENT LIABILITIES
Interest-bearing loans and borrowings 349.3 158.8
Trade and other payables 310.1 207.9
Valuation of financial instruments 22.1 9.5
Income tax payable 144.1 117.2
Deferred income 231.7 163.6
----------------
Total current liabilities 1,057.3 657.0
TOTAL LIABILITIES 5,021.0 3,679.5
----------------
TOTAL LIABILITIES AND EQUITY 8,066.1 7,163.0
----------------
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SES, S.A.
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended December 31
(in EURO millions)
2006 2005
Profit before taxes 524.5 471.1
Taxes paid during the year (69.8) (169.0)
Net financing charges paid on non-operating
activities 43.4 22.7
Depreciation and amortisation 475.2 405.3
Amortisation of client upfront payments (65.1) (33.3)
Other non-cash items in consolidated income statement 10.5 27.7
--------- -------
Consolidated operating profit before working capital
changes 918.7 724.5
Changes in operating assets and liabilities
(Increase) / Decrease in inventories (1.7) (1.4)
(Increase) / Decrease in trade debtors (28.7) (21.3)
(Increase) / Decrease in other debtors 9.5 (7.2)
(Increase) / Decrease in prepayments and deferred
charges (7.6) 8.4
Increase / (Decrease) in trade creditors 6.4 (16.1)
Increase / (Decrease) in other creditors (3.0) (7.7)
Increase / (Decrease) in payments received on account (7.4) 13.6
Increase / (Decrease) in upfront payments 129.2 10.6
Increase / (Decrease) in other deferred income 44.7 16.0
--------- -------
Net cash (absorbed) / generated by operations 141.4 (5.1)
Net operating cash flow 1,060.1 719.4
Cash flow from investing activities
Purchase of intangible assets (7.0) (18.2)
Purchase of tangible assets (456.5) (474.8)
Disposal of tangible assets 29.7 --
Acquisition of New Skies Satellites (net of cash
acquired) (579.2) --
Acquisition of ND SatCom shareholdings (net of cash
acquired) (40.8) --
Disposal SES Re (15.6) --
Acquisition of ASTRA Platform Services (net of cash
acquired) -- (0.1)
Acquisition of shareholding in SATLYNX (net of cash
acquired) -- (1.0)
Realised proceeds on settlement of swap transactions (2.1) 142.2
Investment in non-consolidated financial assets (6.0) --
Proceeds on disposal of non-consolidated financial
assets -- 65.6
--------- -------
Net cash (absorbed) / generated by investing
activities (1,077.5) (286.3)
Cash flow from financing activities
New borrowings 1,450.0 93.2
Repayment of borrowings (715.0) (0.7)
Dividends paid on ordinary shares (215.3) (176.3)
Dividends paid to minority shareholders -- (4.9)
Net financing paid on non-operating activities (43.4) (21.9)
Acquisition of own shares (266.1) (517.4)
Exercise of share options by employees (1.5) (0.3)
Dividends from equity investments 17.4 11.6
Loans granted to associate -- (4.7)
--------- -------
Net cash absorbed by financing activities 226.1 (621.3)
Net foreign exchange movements (12.1) 3.1
Net (decrease) / increase in cash 196.6 (185.1)
Net cash at beginning of the year 196.8 381.9
========= =======
Net cash at end of the year 393.4 196.8
========= =======
*T
SES, S.A.
SEGMENTAL INFORMATION
For the year ended December 31, 2006
(in EURO millions)
PRIMARY GEOGRAPHICAL SEGMENTS
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For the year ended December 31, 2006
----------------------------------------------------------------------
OTHER
SEGMENTS/
EMEA AMERICAS NSS ELIMINATION Total
Revenues
====================
External 886.7 544.9 150.0 33.6 1,615.2
Inter-segment 8.9 1.5 5.9 (16.3) --
--------------------------------------------------
Total 895.6 546.4 155.9 17.3 1,615.2
Operating expenses (234.6) (223.5) (58.1) (18.6) (534.8)
--------------------------------------------------
EBITDA 661.0 322.9 97.8 (1.3)1,080.4
Depreciation (188.1) (178.9) (55.2) (16.4) (438.6)
Amortisation (33.3) (3.2) -- -- (36.5)
--------------------------------------------------
Operating profit 439.6 140.8 42.6 (17.7) 605.3
--------------------------------------------------
*T
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*T
For the year ended December 31, 2005
----------------------------------------------------------------------
OTHER
SEGMENTS/
EMEA AMERICAS NSS ELIMINATION Total
Revenues
External 761.5 458.8 -- 37.7 1,258.0
Inter-segment 3.2 0.4 -- (3.6) --
--------------------------------------------------
Total 764.7 459.2 -- 34.1 1,258.0
Operating expenses (160.5) (179.0) -- (37.4) (376.9)
--------------------------------------------------
EBITDA 604.2 280.2 -- (3.3) 881.1
Depreciation (181.5) (155.0) -- (26.5) (363.0)
Amortisation (30.3) (5.6) -- (6.4) (42.3)
--------------------------------------------------
Operating profit 392.4 119.6 -- (36.2) 475.8
--------------------------------------------------
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SECONDARY BUSINESS SEGMENTS
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*T
Infrastructure Services Elimination Total
Revenue 2006 1,416.7 271.7 (73.2) 1,615.2
Percentage of total 87.7% 16.8% (4.5)% 100.0%
Net of elimination 83.4% 16.6% -- 100.0%
Revenue 2005 1,124.8 186.8 (53.6) 1,258.0
Percentage of total 89.4% 14.8% (4.2)% 100.0%
Net of elimination 85.2% 14.8% -- 100.0%
Revenue growth
compared to prior
year +26.0% +45.4% -- +28.4%
*T
APPENDIX
Guidance Table
for Modelling Purposes
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*T
Financial Impact - Guidance Update
2007 Analyst guidance
EUR million 6 November 2006 14 February 2007
Update
for
1 EUR = 1 EUR = recent
1.27 USD 1.30 USD events1) 2007
Total
-Revenues 1660-1700 1644-1684 (76) 1568-1608
-EBITDA 1100-1140 1089-1129 (48) 1041-1081
Infrastructure
-Revenues 1384-1421 1371-1408 (39) 1332-1369
-EBITDA 1098-1129 1088-1119 (30) 1058-1089
Services
-Revenues 349-374 346-371 (37) 309-334
-EBITDA2) 34-46 33-45 (6) 27-39
1) Includes GE transaction (assumes effective date 1. April), entavio
pre-commercial costs, NSS-8 failure impact and Canal+ new contract
2) Services EBITDA normalised for entavio and other pre-commercial
costs
--GE transaction reduces revenues and EBITDA, but has a favourable
impact on the SES Group EBITDA margin due to the change in the
business mix (+1.0% point)
--Entavio impact on EBITDA assumes EUR 1 million per month for pre-
commercial costs (-0.7% points)
--Other 2007 financial revisions included such as NSS-8 launch failure
and new CANAL+ contract
*T