SES S.A., the pre-eminent satellite operator worldwide (Paris:SESG)
(LuxX:SESG), reports on financial performance for the three months ended
31 March 2008.
FINANCIAL HIGHLIGHTS
Recurring1 revenue of EUR 390 million was up
9.1% on the prior year period
Reported revenue stable at EUR 390.6 million (Q1 2007: EUR 392.0
million*)
Despite the effect of the weaker U.S. dollar
Recurring1 EBITDA of EUR 281 million was 9.2%
ahead of the prior year period
Reported EBITDA rose 2% to EUR 275.3 million (Q1 2007: EUR 269.5
million*)
Representing an EBITDA margin of 70.5% (Q1 2007: 68.8%)
Reflecting the industry-leading infrastructure EBITDA margin of
82.2% (2007: 81.5%)
Operating profit ahead 23% at EUR 165.5 million (Q1 2007: EUR 134.7
million*)
Net profit jumped nearly 24% to EUR 120.9 million (Q1 2007: EUR 97.7
million)
Net Debt:EBITDA stood at 2.90x at the period end
Last 12 month weighted EPS EUR 1.03, favourably impacted by the
ongoing share buyback programme (2007 reported EPS of EUR 0.91)
Group utilisation rate at 31 March was 77%, or 803 of 1,038
commercially available transponders
Romain Bausch, President and CEO of SES, commented:
"SES delivered a strong financial
performance in the period, driven by solid business development across
its operations.
Despite the launch failure of AMC-14 and the continued decline of the
U.S. dollar against the euro, SES remains on a positive growth track to
deliver increased revenue. The way our business is structured means
that, although exchange differences might affect our top line, at the
bottom line where we deliver value to shareholders, exchange movements
have only marginal impact. The revised guidance published today
reflects these developments."
1 "Recurring" is a measure designed to represent underlying revenue / EBITDA
performance by removing currency exchange effects, eliminating one-time
items, considering changes in consolidation scope and excluding revenue
/ EBITDA from new business initiatives that are still in the start-up
phase.
* Restated, see note on page 6
BUSINESS REVIEW
In the quarter, all business units recorded revenue growth
(ex-currency). Revenue in the period was EUR 390.6 million against the
prior period´s EUR 392.0 million, which
included revenues from assets subsequently disposed of in the GE
transaction, and benefited from a more favourable U.S. dollar exchange
rate.
The AMC-14 satellite suffered a launch vehicle anomaly after its launch
on 15 March and was left short of its planned geostationary orbit.
Extensive assessment of the possibilities to deliver the satellite to
its intended orbit resulted in options that carried unacceptable risks
and would not have enabled effective use of the spacecraft. The
satellite was declared a total loss. SES´s
investment is fully insured and the proceeds are expected to be received
during the second and third quarters. A net charge of EUR 0.5 million
has been taken in Q1 operating expenses representing our preliminary
assessment of the net impact of the insurance proceeds, asset
write-down, and other charges and income relating to the termination of
this programme.
EBITDA, at EUR 275.3 million, was 2% ahead of prior year level and
represented an EBITDA margin of 70.5%. This EBITDA growth reflects our
ongoing cost control activities including the impact of in-orbit
insurance cost reductions. Within overall EBITDA, infrastructure
activities recorded EBITDA of EUR 276.3 million, with an infrastructure
EBITDA margin of 82.2%. Services activities also recorded growth
delivering an EBITDA margin of 11.5%, excluding EUR 7.9 million of costs
associated with start-up activities and non-recurring items.
Net profit of the Group grew 23.7% to EUR 120.9 million, benefiting from
lower depreciation charges in the period, while earnings per share grew
by 13.2% to EUR 1.03, reflecting the impact of the share buyback and
cancellation programme.
The SIRIUS-4 satellite began operations on 24 January 2008 at the
orbital position of 5 degrees East. The spacecraft replaces the SIRIUS-2
and SIRIUS-3 spacecraft and provides additional capacity for the Nordic
Central European and Eastern European and African markets. The SIRIUS-2
spacecraft is being prepared for service at a new European orbital
position, 31.5 degrees East, where SES has rights to use up to 40
coordinated BSS frequencies. SIRIUS-2 will be renamed ASTRA 5A and
deliver 26 transponders for commercial activities from this orbital slot
in a first step. The start of a new orbital position allows SES to drive
its growth in the Eastern European and Middle East markets and give new
flexibility to develop 23.5 and 5 degrees East into strong DTH positions.
Utilisation rates increased from 76.5% on 31 December 2007 to 77.3% on
31 March 2008. The available capacity on 31 March 2008 reduced by 10
transponders from 1,048 to 1,038 transponders mainly as a result of the
co-location of AMC-2 with AMC-4 at 101 degrees West, which led to a
decrease of 24 transponders in the SES AMERICOM segment. On the other
hand, the SES AMERICOM segment brought into use six transponders of
extended Ku-band capacity on the AMC-4 and AMC-6 satellites. In
addition, the commercial activation of the SIRIUS-4 satellite at 5.0
degrees East added eight transponders in the SES ASTRA segment. The
utilised capacity on 31 March 2008 increased by one transponder. Of the
additions, 17 are coming from the SES AMERICOM segment (mainly Comcast)
six have been added in the SES NEW SKIES segment and two in the SES
ASTRA segment.
31.03.2008
= = = = = = = = = = =
Transponder utilisation
Utilised
%
Available
- - - - - -
ASTRA segment
244
83.8%
291
- - - - - -
AMERICOM segment
332
77.4%
429
- - - - - -
NEW SKIES segment
227
71.4%
318
- - - - - -
SES Group
803
77.3%
1,038
- - - - - -
SES ASTRA
In the period, SES ASTRA increased the number of HD channels on the
ASTRA and SIRIUS platforms. In Spain, the first Spanish HD channel was
introduced by Digital+ on ASTRA. VIASAT launched four new HD channels
for the Nordic markets on SIRIUS in February. The Austrian public
broadcaster ORF announced the launch of a new HD channel on ASTRA after
the end of the quarter. Furthermore, the Benelux platform CanalDigitaal/
TV Vlaanderen launched 3 new HD channels on 23.5 degrees East in April.
Including these new channels, there are now 34 HD channels broadcast on
the combined ASTRA and SIRIUS satellite systems.
The exercise of an option in the purchase agreement with Swedish Space
Corporation raised SES´s interest in SES
SIRIUS from 75% to 90%, thereby reducing the minority interest in the
consolidated results of the Group.
SES ASTRA will serve as a major hub for content delivery and
distribution for the UEFA EURO 2008 football tournament, being hosted in
Austria and Switzerland in June. Services will include the provision of
satellite capacity for standard and high-definition programming as well
as technical support including uplink and downlink services.
In France, the digital terrestrial Free-TV TNTSAT has gained significant
reach. As of end of February, 350,000 receivers had already been sold to
French households, thus driving the growth of ASTRA´s technical reach in
this market. TNTSAT is offered by SES ASTRA and CANAL+ to households
which cannot receive signals from terrestrial antennas. In a similar
concept to develop the digital terrestrial television, SES ASTRA was
assigned in Spain to be the satellite partner of choice for the
Cantabria region.
The latest updated figures from the Europe-wide Satellite Monitor, a
market research project which SES ASTRA conducts every year, revealed a
continued increase in the number of digital satellite homes in the
target markets. SES ASTRA and SES SIRIUS now reach a total of 117.2
million homes, more than 50 million of which receive directly from
satellite. In the important German market, SES ASTRA remained the major
driving force of digitalisation; the number of digital ASTRA households
increased by 21.5% in 2007, with almost two thirds of all digital
households now served by satellite. In the Benelux countries as well as
in Central and Eastern Europe, SES ASTRA showed strong growth for its
orbital position 23.5 degrees East which is successfully developing into
a third prime orbital position besides 19.2 and 28.2 degrees East.
Building on recent developments, ASTRA2Connect, the satellite
two-way broadband service, continued to make inroads, signing new
agreements with service providers in France and Italy as well as in
Germany with Deutsche Telekom.
Other service activities in the ASTRA segment continued to grow and
perform well, with ND SatCom closing an agreement with Turksat to
provide a communications network and internet access to schools. In
Germany, APS further increased the number of its customers and services.
Furthermore, SES ASTRA continued to review the business model for the
digital platform entavio which showed modest and lower than
expected subscriber development. In light of the current status of the
commercial rollout the related expenditures will be significantly lower
for the full year 2008, resulting in a lower EBITDA dilution than
foreseen in our initial guidance.
SES ASTRA´s utilisation rate at the period end
was 84%, or 244 of 291 commercially available transponders (As reported
at 31 December 2007: 85%, or 242 of 283 commercially available
transponders). During the period, the number of commercially available
transponders increased by eight following the commercial activation of
the SIRIUS 4 satellite. With the opening of a new orbital position at
31.5 degrees East, SES ASTRA will make another 27 transponders
commercially available in the next quarter.
SES AMERICOM
A landmark agreement was signed with Comcast for its HITS Quantum
service, where Comcast has contracted the remaining capacity on the
AMC-18 satellite, the fifth satellite in SES AMERICOM´s
HD-PRIME neighbourhood. The agreement with Comcast covers new capacity
of 17 transponders, of which 11 were previously broadcast by a North
American competitor. This agreement means that the entire capacity of
AMC-18 is now fully contracted.
The AMC-2 satellite has been co-located with AMC-4 at 101 degrees West
providing in-orbit backup at that orbital position and supports the
offering of capacity via the South American beam on that spacecraft.
IP-PRIME, the Internet Protocol-based video broadcast service
introduced a new HD programming service, called HD-4, that allows
telephone companies which launched IPTV service in their communities to
address their subscribers´ increasing
requests for HD channels by overlaying the more efficient MPEG-4 service
on top of their existing MPEG-2 service. To date, IP-PRIME has signed a
total of 27 telcos to its managed, transport and HD-4 services with four
already installed and operational and the remainder awaiting system
installation and activation over the coming months. With a significant
number of additional telcos in the pipeline, we expect to exceed our
target of 40 installed telcos by year-end 2008.
SES AMERICOM´s utilisation rate at the period
end was 77%, or 332 of 429 commercially available transponders (As
reported at 31 December 2007: 76%, or 339 of 447 commercially available
transponders).
SES NEW SKIES
In the period SES NEW SKIES continued to make good progress and
commercialised an additional six transponders´ capacity with a variety of different clients, for different applications.
NSS-14, the replacement satellite for NSS-7, was procured from Space
Systems / Loral and is scheduled for launch late in 2010. The spacecraft
will deliver additional capacity at the 22 degrees West orbital
position, over the Atlantic Ocean Region, and permit the repositioning
of NSS-7, which will be positioned to deliver substantial additional
capacity to feed the high demand in the region.
SES NEW SKIES will be supporting international broadcasters´ live coverage of the Beijing Olympics during the summer. This support
will be delivered via SES NEW SKIES´ optimally positioned satellites.
SES NEW SKIES´ utilisation rate at the period
end was 71%, or 227 of 318 commercially available transponders (As
reported at 31 December 2007: 70%, or 221 of 318 commercially available
transponders); the 36 MHz-equivalent utilisation rate at the period end
was 72%, or 308 of 425 commercially available 36 MHz-equivalent
transponders), with utilisation at the period end benefiting from
capacity ramp-up on previously signed contracts in addition to those new
contracts mentioned above.
Outlook and guidance
SES´s business outlook remains sound, despite
the present issues in the credit markets. The company´s
business is largely unaffected by short-term fluctuations in the overall
financial and business environment since it is focused on
business-to-business relationships, which are less affected by shorter
term financial and business cycles.
The AMC-21 satellite is soon to be launched from Kourou in French
Guyana, with a payload of 24 Ku-band transponders carrying new capacity
to serve all 50 states of the U.S. Assuming the present launch schedule
the revenue contribution should be for about three months in 2008.
As a result of the several factors described above we have revised our
modelling guidance for revenue and EBITDA in 2008. The impact of the
loss of AMC-14 and the continued decline in the exchange rate of the
U.S. dollar against the euro is largely offset by new business gained in
the period, as well as a substantial reduction of entavio-related
startup costs. Assuming an average rate of USD 1.50 / euro, we now
foresee revenue in the range of EUR 1,580 - 1,620 million and EBITDA in
the range of EUR 1,086 "“ 1,126 million in the
current year.
SUMMARY FINANCIAL HIGHLIGHTS (in EUR
millions)
1. CONSOLIDATED INCOME STATEMENT
= = = = = = = = = = =
Q1, 2008
RestatedQ1, 2007 *
%
- - - - - -
- - - - - -
Revenue
390.6
392.0
--
- - - - - -
Operating expenses
(115.3
)
(122.5
)
-5.9
%
- - - - - -
EBITDA
275.3
269.5
+2.2
%
- - - - - -
- - - - - -
Depreciation & Amortisation
(109.8
)
(134.8
)
-18.5
%
- - - - - -
Operating profit
165.5
134.7
+22.9
%
- - - - - -
- - - - - -
Net financing charges
(18.4
)
(18.8
)
-2.1
%
- - - - - -
Profit for the period before tax
147.1
115.9
+26.9
%
- - - - - -
- - - - - -
Income tax expense
(26.1
)
(24.2
)
+7.9
%
- - - - - -
Profit for the period after tax
121.0
91.7
+32.0
%
- - - - - -
- - - - - -
Share of associates´ results
(0.1
)
6.0
--
- - - - - -
Net profit of the Group
120.9
97.7
+23.7
%
- - - - - -
* Restatement of Q1, 2007 reported results
The Group has elected to consolidate the financial results of joint
ventures using the equity method, the alternate method allowed by IAS 31
("Interests in Joint Ventures")
with effect from January 1, 2008. The prior year comparative figures
have been revised to be consistent with this new policy.
In practical terms this revision involved withdrawing the line-by-line
impact of the Group´s 34.1% effective share
of AsiaSat´s Q1 2007 results and disclosing
these as an additional net amount of EUR 3.4 million on the line "Share
of associates´ result".
Neither net profit of the Group or consolidated shareholders equity are
impacted by these changes.
SUMMARY FINANCIAL HIGHLIGHTS (in EUR
millions) /cont.
2. QUARTERLY DEVELOPMENT
= = = = = = = = = = =
Year-to-date, Q1 2008
Q1
Q2
Q3
Q4
YTD
- - - - - -
- - - - - -
Revenue
390.6
--
--
--
390.6
- - - - - -
Operating expenses
(115.3
)
--
--
--
(115.3
)
- - - - - -
EBITDA
275.3
--
--
--
275.3
- - - - - -
Depreciation & Amortisation
(109.8
)
--
--
--
(109.8
)
- - - - - -
Operating profit
165.5
--
--
--
165.5
- - - - - -
3. ANALYSIS BY PRIMARY GEOGRAPHIC SEGMENT
= = = = = = = = = = =
Year-to-date, Q1 2008
SES
ASTRA
SES AMERICOM
SES
NEW SKIES
Other operations/ Elimination
Total
- - - - - -
- - - - - -
Revenue
240.9
91.4
62.7
(4.4
)
390.6
- - - - - -
Operating expenses
(67.9
)
(34.5
)
(14.6
)
1.7
(115.3
)
- - - - - -
EBITDA
173.0
56.9
48.1
(2.7
)
275.3
- - - - - -
EBITDA margin
71.8
%
62.3
%
76.7
%
--
70.5
%
- - - - - -
- - - - - -
Depreciation & amortisation
(56.9
)
(35.3
)
(17.3
)
(0.3
)
(109.8
)
- - - - - -
Operating profit
116.1
21.6
30.8
(3.0
)
165.5
- - - - - -
4. ANALYSIS BY SECONDARY BUSINESS SEGMENT
= = = = = = = = = = =
Year-to-date, Q1 2008
Infra-structure
Services
One-time
Items*
Other operations/ Elimination
Total
- - - - - -
- - - - - -
Revenue
336.2
76.2
0.8
(22.6)
390.6
- - - - - -
EBITDA
276.3
8.8
(7.1)
(2.7)
275.3
- - - - - -
EBITDA margin
82.2%
11.5%
--
--
70.5%
- - - - - -
* Start-up costs and non-recurring items
Additional information is available on our website www.ses.com
PRESS / ANALYST TELECONFERENCES
A press call will be hosted at 11.00 CET today, 28 April 2008.
Journalists are invited to call the following numbers five minutes prior
to this time.
= = = = = = = = = = =
Belgium
+32 (0)2 789 8726
- - - - - -
France
+33 (0)1 70 99 42 98
- - - - - -
Germany
+49 (0)69 5007 1317
- - - - - -
Luxembourg
+352 342 080 8656
- - - - - -
UK
+44 (0)20 7806 1967
- - - - - -
Confirmation Code: 4097266
- - - - - -
A call for investors and analysts will be hosted at 14.00 CET
today, 28 April 2008. Participants are invited to call the following
numbers five minutes prior to this time.
= = = = = = = = = = =
Belgium
+32 (0)2 789 8726
- - - - - -
France
+33 (0)1 70 99 42 95
- - - - - -
Germany
+49 (0)69 5007 1316
- - - - - -
Luxembourg
+352 342 080 8656
- - - - - -
Switzerland
+41 (0)43 456 9299
- - - - - -
UK
+44 (0)20 7806 1968
- - - - - -
USA
+1 718 354 1387
- - - - - -
Confirmation Code: 8918304
- - - - - -
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.com
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
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
therewith.
This presentation includes "forward-looking
statements". All statements other than
statements of historical fact included in this presentation, 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 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, its directors
officers or advisors do not undertake any obligation to update or revise
any forward-looking statements, whether as a result of new information
future events or otherwise.
