SES Reports Financial Results

27 July 2012

SES S.A. reports financial results for the six months ended 30 June 2012.

Romain Bausch, President and CEO, commented: “SES continues on its growth track and is well positioned to develop its business in the world’s emerging markets.
SES is reporting solid half year results in line with our expectations. The switch-off of
analogue satellite TV broadcasts in Germany took place, as scheduled, at the end of April.

The remarketing of the newly available capacity is on track, and HD channel growth is, as projected, an important driver of demand for this capacity.

The SES-4 satellite, launched in February, completed in-orbit testing and entered commercial service in mid-April. SES-4 carries replacement and new capacity for Europe and Africa and provides full coverage of the Americas, plus a global beam to support mobile and maritime customers. High-power, regional beams provide service to Europe, the Middle East, and West Africa, as well as North and South America.

The SES-5 satellite was launched on 9 July and is presently undergoing in-orbit testing before entering commercial service, which is foreseen to be in the third quarter. SES-5 will serve markets in Africa and in Europe.”

Financial Review
Reported revenue in the six months increased by 4.8% to EUR 891.9 million, while reported EBITDA grew by 5.3% to EUR 665.1 million. On a constant FX basis, revenue rose 1.4%, contributing to an increase in EBITDA of 2.1%. Operating expenses increased EUR 6.9 R 1.2 million on a constant FX basis) over the prior year, driven by
the increased cost of sales resulting from the strong performance from services activities.

Excluding this impact, operating costs were flat, year-on-year. The group’s EBITDA margin for the first six months was 74.6%, derived from an infrastructure margin of 83.6% and a services margin of 15.0%.

Depreciation rose year-on-year, driven mainly by fleet additions and the stronger U.S. dollar as well as by an impairment charge in the first quarter of EUR 3 million. Reported operating profit rose 2.4% to EUR 411.5 million. Net financing costs were EUR 19.2 million higher than the prior year period, reflecting lower foreign exchange gains in the current period. This has been offset by a lower tax charge and elimination of discontinued operations. As a result, the profit of the group increased 2.3% from EUR 292.1 million to EUR 298.7 million.

Net operating cash flow, at EUR 593.2 million, was 20.3% above the prior year level, resulting from changes in operating assets and liabilities, and lower outflows from investing activities also contributed to the strong growth in free cash flow before financing activities.

SES’ contract backlog remained stable at the first quarter 2012 level of EUR 6.8 billion.
At 30 June, the net debt/EBITDA ratio stood at 3.07 times, compared to 3.12 times at 31
December 2011.

Operations Review
The principal events in the period were the successful launch and entry into service of the
SES-4 satellite and the scheduled switch-off of analogue satellite TV in Germany at the end of April which occurred as scheduled. Follow-on digital services, many in High Definition, began on eight of the 29 ‘analogue’ transponders.

Europe
European revenues, on a constant FX basis, were flat compared to the prior year period.
Available satellite capacity increased by 32 transponders compared to H1 2011, driven by ASTRA 1F (+16) at 55°E and ASTRA 1N (+16) at 28.2°E . Utilisation decreased by 9
transponders. This net figure is the result of the end of analogue transmissions in Germany (-32) and the end of cable contracts at 23.5°E (-12 ), largely compensated by new transponder contracts for DTH and other applications (+35). The overall utilisation rate in the region stood at 81.4% at the end of June. Average revenue per utilised transponder remains strong, with a modest dilution impact resulting from the mix of new incremental capacity and the termination of analogue transmissions.

In Europe, steady progress was made as the transponder capacity formerly used for analogue transmissions to the German language market became available for new customers. A majority of this recommercialised capacity is being contracted to serve this market, with HD offerings continuing to represent a major demand driver.

HD+, the platform for HD Free-To-Air broadcasts in Germany, has continued to develop
strongly. With the addition of Super RTL HD and DMAX, there are now 14 HD channels
available on the platform. As of the end of June, there were over 2.6 million active HD+
households. Of these, over 634,000 are paying customers of HD+. The balance are HD+
users in the initial 12 month free trial period. The company expects the number of households paying the annual EUR 50 technical access fee to exceed one million by the end of the year.


North America
North American revenues, on a constant FX basis, decreased by 2.4% compared to the prior year period. Apart from the AMC-15 and AMC-16 satellite health-related impact, North American revenues were relatively flat compared to H1 2011. Available satellite capacity reduced by 28 transponders compared to H1 2011, resulting from AMC-15 (-10), AMC-16 (-4) and AMC-6 (-12) C-band capacity changes. In addition, two AMC-6 transponders were switched to serve the Latin American region. Utilised capacity reduced by 5 transponders compared to the prior year period as new business (+9) offset the reduction (-14) of capacity on the AMC-15 and AMC-16 spacecraft, resulting in a utilisation rate of 77.6%. Average revenue per utilised transponder remains stable.
In March, ITC Global signed a renewal agreement, securing its oil & gas and maritime
markets in the Gulf of Mexico, utilising capacity on the AMC-9 satellite.

International
International revenues increased by 8.0% over H1 2011 on a constant FX basis. Available
satellite capacity increased by 101 transponders compared to H1 2011. The capacity growth was driven by the YahLive payload on YahSat 1A (+23), QuetzSat-1 (+32), SES-4 (+27), AMC-3 relocation to 67°W (+16), the shift of AMC-6 (+2) capacity into Latin America, and a satellite payload reconfiguration (+1). Utilisation increased by 48 transponders compared to H1 2011, resulting in an overall utilisation rate of 74.2%. Average revenue per utilised transponder remains stable.

In the Americas, the 67°W orbital position was rein forced as the AMC-3 satellite was
relocated from 87°W to join AMC-4. Together, the t wo spacecraft can offer up to 28 Ku-band transponders at 67°W to support multiple applications across the region.