SES
Continues
to
Show
Recurring
Growth
in
Q1
2010
23
April
2010
SES
S.A.,
one
of
the
world’s
leading
satellite
operators,
(Paris:SESG)
(LuxX:SESG),
reports
its
financial
performance
in
the
three
months
to
31
March
2010.
Romain
Bausch,
President
and
CEO
of
SES,
commented:
"These
results
for
the
first
quarter
of
the
year
are
in
line
with
our
expectations
and
represent
a
solid
base
for
the
progress
we
expect
to
deliver
during
the
rest
of
the
year.
Recent
commercial
agreements
announced
after
the
end
of
the
quarter
underline
the
growth
potential
in
the
markets
we
serve.
The
addition
of
new
capacity
from
forthcoming
launches,
including
ASTRA
3B,
and
the
integration
of
the
Protostar-2
satellite
into
the
SES
fleet
will
contribute
to
our
growth.
However,
due
to
the
delay
to
the
launch
of
the
ASTRA
3B
satellite,
and
the
reduction
of
revenue
from
AMC-16,
we
consider
it
prudent
to
slightly
adjust
the
guidance
that
was
published
in
February.”
Financial
Review
SES’
financial
performance
in
the
quarter
was
in
line
with
our
expectations.
Recurring
revenue
of
EUR
422
million,
an
increase
of
2.4%
over
the
prior
year
period,
benefited
from
three
months’
revenue
contribution
from
Ciel-2,
and
first
incremental
revenue
from
NSS-12.
NSS-12
entered
into
service
during
January,
adding
39
new
transponders
to
serve
the
growing
demand
in
the
Indian
and
other
Asian
markets.
Recurring
EBITDA
was
EUR
311
million,
up
2.2%
over
the
prior
year
period.
This
represents
a
73.8%
margin.
The
EBITDA
margin
delivered
by
the
infrastructure
activities
of
the
group
remained
high,
at
83.3%.
Depreciation
and
amortisation
in
the
period
was
also
similar
to
the
prior
year,
at
EUR
119.4
million;
the
resulting
operating
profit
was
EUR
188.2
million.
Net
financing
charges
for
the
quarter
of
EUR
63.7
million
show
a
rise
of
EUR
22.5
million
over
the
EUR
41.2
million
for
the
same
period
of
2009.
Of
this
increase,
EUR
14.4
million
arises
on
the
revaluation
of
intercompany
balances
and
currency
holdings
which
are
both
set
off
by
equal
and
opposite
accretions
to
the
Group’s
currency
exchange
reserve
and
hence
have
neither
a
cash
nor
an
overall
shareholders´
equity
impact.
The
balance
of
the
increase
comes
mainly
from
a
rise
in
net
interest
charges,
including
higher
amortisation
of
loan
origination
charges,
while
the
underlying
cost
of
servicing
group
borrowings
is
little
changed
from
the
prior
year.
At
31
March,
the
Net
Debt/EBITDA
ratio
was
3.11
times.
Operations
Review
The
business
environment
for
FSS
operators
remains
favourable,
with
strong
demand
being
well
balanced
against
supply.
At
the
period
end,
transponder
utilisation
had
grown
to
909
of
1,157
commercially
available
transponders.
During
the
first
three
months
of
the
year,
the
NSS-12
satellite
was
brought
into
operation,
adding
capacity
and
facilitating
fleet
management
operations
to
support
SES’
continued
development.
NSS-5
was
relocated
to
340
degrees
East,
adding
a
further
31
transponders.
The
launch
of
the
ASTRA
3B
satellite,
initially
scheduled
for
25
March,
was
postponed
twice
due
to
an
anomaly
in a
component
of
the
rocket
during
the
countdown
phase.
Arianespace
is
now
targeting
a
May
launch
date.
ASTRA
3B
will
enter
into
service
at
the
23.5
degrees
East
orbital
position
over
Europe,
adding
new
capacity
for
Europe,
and
for
the
Middle
East
via
a
dedicated
beam.
The
delay
to
the
launch
is
reducing
the
incremental
revenue
expected
to
be
generated
by
this
satellite
in
2010.
By
acquiring
the
remaining
10%
of
the
shares
from
the
Swedish
Space
Corporation,
SES
ASTRA
has
taken
full
ownership
of
SES
SIRIUS.
SES
SIRIUS
operates
the
leading
satellite
system
in
the
Nordic
and
Baltic
countries
with
a
strong
market
position
in
Central
and
Eastern
Europe.
Its
two
satellites,
SIRIUS
3
and
SIRIUS
4
(now
ASTRA
4A)
are
positioned
at 5
degrees
East.
The
Protostar-2
satellite,
for
which
SES
was
the
winning
bidder
at
an
auction
in
December
2009,
is
subject
to
U.S.
regulatory
approval
before
closing
of
the
transaction,
expected
during
the
second
quarter.
Following
the
receipt
of
the
approval,
the
satellite
will
be
moved
to
its
final
location
at
108.2
degrees
East,
to
be
co-located
with
NSS-11
to
serve
the
Indian
and
East
Asian
markets.
The
fleet
operational
performance
was
largely
nominal;
however,
some
additional
solar
array
circuit
failures
on
certain
of
the
LM
A2100
satellites
were
experienced
during
the
recent
eclipse
period.
In
consultation
with
the
customer,
some
of
the
AMC-16
satellite
transponders
were
shut
down
in
March
to
conserve
power.
The
financial
impact
of
this
action
is
an
annualised
revenue
reduction
which
is
not
expected
to
exceed
USD
10
million,
with
no
other
satellites
being
commercially
affected.
The
launch
of
the
SES-1
satellite,
scheduled
for
24
April,
marks
the
start
of
the
replacement
programme
of
the
North
American
fleet,
which
will
provide
additional
mitigation
against
potential
future
circuit
failures.
SES
ASTRA
SES
ASTRA’s
operational
reach1
rose
to
125
million
TV
homes,
three
million
more
than
the
year
before.
For
the
first
time,
satellite’s
reach
is
greater
than
that
of
cable
in
Europe,
with
77
million
satellite
and
71
million
cable
households.
The
growth
of
High
Definition
TV
continued,
with
some
six
million
“HD-viewing”
homes.
The
number
of
HDTV
channels
carried
on
the
ASTRA
satellite
system
had
grown
to
114
by
the
end
of
the
quarter,
and
at
today’s
date
has
reached
123,
exceeding
earlier
expectations.
M7
contracted
two
transponders
for
HD
broadcasts
in
the
Netherlands.
The
success
of
HD
is
underpinned
by
the
substantial
number
of
HD
screens
sold
across
Europe.
125
million
HD
Ready
TV
sets
have
been
sold
since
the
start
of
HD
broadcasts
in
2005.
It
is
expected
that
by
2013,
an
estimated
55
million
households
will
be
equipped
with
both
an
HD
Ready
TV
set
and
a
suitable
HD
receiver.
Satellite
is
expected
to
remain
the
largest
distribution
platform
for
HD.
In
Germany,
the
HD+
platform
has
developed
favourably,
exceeding
expectations,
with
more
than
750,000
smart
cards
ordered
from
HD+
by
different
set-top
box
manufacturers.
SES
ASTRA
also
confirmed
the
attractiveness
of
satellite
delivery
for
complementing
the
limited
reach
of
terrestrial
distribution
technologies.
In
France,
the
growth
of
TNTSAT
(digital
terrestrial
TV
distributed
by
satellite
for
those
unable
to
receive
the
terrestrial
signal)
on
ASTRA
reached
a
record
with
1.85
million
TNTSAT
receivers
now
in
the
market.
Launched
in
March
2007,
TNTSAT
has
thus
continued
the
trend
of
strong
growth
of
the
last
two
years.
SES
ASTRA
signed
a
second
contract
with
The
European
Commission
for
a
hosted
payload
services
for
EGNOS
(European
Geostationary
Navigational
Overlay
Service).
This
payload
will
be
incorporated
on
the
ASTRA
5B
satellite,
presently
under
construction
by
EADS
Astrium.
EGNOS
is
Europe's
first
contribution
to
satellite
navigation
and
a
precursor
of
Galileo,
the
global
satellite
navigation
system
that
the
European
Union
is
developing.
In
South
Africa,
the
new
pay-TV
operator
ODM
announced
the
launch
of
TopTV,
a
bouquet
of
up
to
55
channels,
scheduled
to
begin
service
in
May
2010.
ODM
has
contracted
three
transponders
on
the
ASTRA
4A
satellite
to
deliver
its
initial
programme
line-up,
and
SES
ASTRA
has
a
20%
equity
stake
in
that
operator.
SES
WORLD
SKIES
SES
WORLD
SKIES’
development
continued
to
be
largely
focused
outside
North
America,
with
the
entry
into
service
of
the
NSS-12
satellite
in
January,
delivering
additional
capacity
at
the
important
orbital
position
57
degrees
East
for
the
Asian
and
African
markets.
The
new
capacity
comprises
39
transponders
and
is
already
committed
to
customers
who
will
be
initiating
services
in
the
coming
months.
One
of
the
first
new
customers
is
Wananchi,
which
has
contracted
three
transponders
on
the
satellite
to
deliver
DTH
and
broadband
services
in
East
Africa.
In
the
Americas,
a
cooperation
agreement
was
signed
with
the
Andean
Community
to
bring
the
67
degrees
West
orbital
position
into
use.
A
satellite
will
be
positioned
at
this
orbital
position
in
the
next
few
months
to
secure
the
access
to
the
frequencies.
In
turn,
SES
is
committed
to
make
a
certain
amount
of
capacity
available
to
the
Andean
Community,
while
having
the
right
to
commercially
develop
the
majority
of
the
frequencies
available
at
this
orbital
position.
SES
WORLD
SKIES
continued
its
successful
development
of
relationships
with
DTH
broadcasters
in
the
period,
resulting
in
the
recent
announcements
of
significant
capacity
agreements
for
Puerto
Rico
Telephone,
which
has
contracted
five
transponders
on
AMC-21
under
a
long-term
agreement
for
its
Claro
TV
DTH
service.
In
the
U.S.,
SES
WORLD
SKIES
is
hosting
a
platform
on
which
leading
broadcasters,
programmers,
TV
manufacturers
and
technology
providers
will
test
all
aspects
of
delivering
3D
TV.
The
objective
of
the
initiative
is
to
accelerate
the
introduction
of
3D
TV
and
facilitate
its
successful
introduction
as
an
integral
component
of
the
home
entertainment
experience.
The
tests
start
this
spring.
Finally,
SES
WORLD
SKIES
has
greatly
enhanced
U.S.
Department
of
Defense
access
to
group
bandwidth
and
global
connectivity,
with
the
installation
of a
new,
mission-critical
communications
node
in
Virginia.
This
facility
further
enables
cooperation
with
the
U.S.
government
customer
and
offers
ease
of
access
for
essential
communications
requirements.
Corporate
Developments
In
the
first
quarter,
SES
made
further
progress
in
optimising
its
financing.
Recent
initiatives
included
the
successful
10-year,
EUR
650
million
eurobond
offering
in
March.
This
latest
financing,
which
secured
a
favourable
fixed
interest
rate
of
4.625%
further
improves
our
financing
maturity
profile.
At
the
beginning
of
April,
Andrew
Browne
took
up
his
position
as
Group
Chief
Financial
Officer.
Andrew
has
a
distinguished
history
in
the
satellite
sector,
having
been
the
CFO
of
Intelsat
and
thereafter
of
New
Skies
until
its
integration
into
SES
in
2008.
Outlook
and
Guidance
The
results
for
the
first
quarter
of
the
year
are
in
line
with
our
expectations
and
provide
a
solid
base
for
future
growth.
Recent
commercial
agreements
underline
the
growth
potential
in
the
markets
we
serve.
The
addition
of
new
capacity
from
forthcoming
launches,
including
ASTRA
3B,
the
integration
of
the
Protostar-2
satellite
into
the
SES
fleet,
and
the
start
of
services
on
NSS-5
at
340
degrees
East
is
integral
to
the
achievement
of
our
growth
targets.
However,
following
the
delay
to
the
launch
of
the
ASTRA
3B
satellite,
and
taking
into
account
the
reduction
of
revenue
from
AMC-16,
we
consider
it
prudent
to
make
a
slight
adjustment
to
the
guidance
that
was
published
in
February,
to
reflect
these
developments.
The
financial
guidance
for
2010
is
thus
adjusted
from
around
5%
recurring
revenue
growth,
to a
target
range
of
4%
to
5%,
with
recurring
EBITDA
increase
in
line
with
the
recurring
revenue
growth.
Infrastructure
activities
are
nevertheless
expected
to
continue
to
deliver
a
recurring
EBITDA
margin
above
82%.
Services
activities
are
expected
to
deliver
a
recurring
EBITDA
margin
of
between
11%
and
15%.
For
2010
to
2012
SES
continues
to
target
a
compound
annual
growth
rate
for
recurring
revenue
of
5%,
including
the
effect
of
the
termination
of
analogue
DTH
transmissions
in
Germany,
the
bulk
of
which
is
expected
to
occur
by
mid-year
2012.
This
top
line
growth
translates
into
a
corresponding
recurring
EBITDA
growth.
