SES 2013 First Half Results 26 July 2013 SES S.A. reports financial results for the six months ended 30 June 2013. Romain Bausch, President and CEO, commented: “SES is growing in all markets. Although the German analogue switch-off in April 2012 limits the comparison with the prior year period, the underlying growth has accelerated. We launched, and will shortly bring into service, SES-6, an important satellite supporting our future growth. An impressive list of recently signed agreements with DTH operators demonstrates the success of our growth strategy in emerging markets, with Oi in Brazil, Cignal Digital TV in the Philippines, Sky Vision in Indonesia, as well as Platco Digital and Wananchi in Africa all developing their businesses on SES satellites. Revenue from these regions increased by 9.3% compared to H1 2012. Our investment in O3b Networks has also passed an important milestone, with the successful launch of its first four satellites. We eagerly await the launch in September of the next four spacecraft, allowing for the commercial operations to begin prior to the end of the year. SES has three more satellite launches scheduled for 2013, each of which contributes new capacity and will accelerate revenue growth in the second half of the year in the emerging markets where we are successfully commercialising this capacity. The 2013 revenue and EBITDA guidance range of 4-5% growth provided with the FY 2012 results announcement was based on the launch schedule as known in February. While all other assumptions on which the guidance is based remain unchanged, the dates of these satellite launches will now be later than foreseen. These schedule movements are expected to have a timing impact on revenue of up to EUR 18 million in 2013. The project economics and returns on these satellite programmes remain unaffected, consistent with the long term nature of our business. SES is now entering a period in which capital expenditure will reduce significantly, even while additional growth investments are pursued. This, coupled with rising revenue and EBITDA, will deliver strong growth in free cash flow, which may be applied to further investments and acquisitions and/or be returned to shareholders.” Key Financial Highlights The prior year period included EUR 42.6 million revenue from four months of analogue DTH transmissions in Germany, which ended on 30 April 2012. This affects the year-on-year comparisons for the first six months of 2013. Reported revenue of EUR 910.5 million increased by 2.1% over the prior year, despite the analogue revenue impact. Excluding analogue, revenue growth accelerated to 7.2%. Both infrastructure and services activities contributed strongly to revenue growth. The continuing favourable development of services businesses delivered strong revenue growth in the segment, with an accompanying increase in associated cost of goods sold. Excluding this, total operating costs were tightly managed, increasing by only 1.8%. The infrastructure margin was a robust 83.2% (2012: 83.6%; 82.7% excluding analogue), and the aggregate margin for the services businesses rose from 15.0% in the first half of 2012 to 15.3% in the current period. EBITDA for the period was EUR 662.0 million, down only 0.5% to prior, despite the absence of EUR 42.6 million of analogue EBITDA. Excluding analogue, EBITDA increased by 6.4% compared to 2012. Depreciation and amortisation charges were flat year-on-year. Operating profit of EUR 408.6 million was EUR 2.9 million, or 0.7%, lower than in the same period in 2012. Net financing charges increased, with a one-time impairment of a financial asset. The effective tax rate in the period was 13.9% (H1 2012: 8.4%), in line with the guidance for the full year. The share of associates’ loss was EUR 12.3 million, mainly relating to O3b Networks - which is in a start-up and pre-commercial operations phase. Profit of the Group was EUR 268.0 million, a reduction of 10.3% from EUR 298.7 million in the first half of 2012, mainly due to the increased share of associates’ loss and a higher tax charge. At 30 June, the net debt/EBITDA ratio stood at 3.07 times, the same level as at 30 June 2012. Operations Review The principal events in the period included the signature of important customer contracts (e.g., Oi, Orange Romania), the launch of SES-6 and the launch of the first four satellites of O3b Networks’ constellation, as well as SES’ inaugural US dollar bond issue. SES-6 was launched on a Proton rocket from the Baikonur cosmodrome on 3 June. Following its insertion into geostationary orbit, it completed in-orbit testing and is expected to enter commercial service before the end of July. Replacing the NSS-806 spacecraft at 40.5°W and doubling the available capacity at that orbital position with an incremental 49 transponders, SES-6 is home to Brazilian DTH Pay-TV provider Oi’s new, extended DTH package. The SES-6 satellite, with its high pre-fill rate, is a key driver of SES’ growth. Oi is only one example of the progress SES has made in executing its growth strategy by developing DTH businesses in the thriving emerging markets. SES has signed agreements with new customers such as Orange Romania, as well as with existing customers requiring additional capacity to develop their businesses, including Thai broadcaster IPMTV and Cignal Digital TV, the leading DTH operator in the Philippines. Since the end of June 2013, new agreements have been signed with Platco Digital, sister company of e.TV of South Africa, and Sky Vision of Indonesia, as well as a renewal and extension agreement with Wananchi, the East African DTH operator. O3b Networks, a company in which SES has a 47% interest, launched the first four satellites of an initial eight of its Medium Earth Orbit constellation on 24 June. O3b expects to launch the second group of four satellites in September 2013, allowing for operations to start in Q4. SES’ first issue in the US dollar bond market was very well received. With the order book almost four times oversubscribed, a total of USD 1 billion was issued in two tranches: USD 750 million 10-year notes at 3.6%; and USD 250 million 30-year notes at 5.3%. The issue opens SES’ access to the world’s largest and most liquid capital market, and further diversifies the group’s financing options, at the same time more closely matching maturities to SES’ business profile. Europe European revenue, on a constant FX basis, decreased by 3.0% to EUR 454.6 million, the comparative period having included EUR 42.6 million of revenue from analogue transmissions in Germany. When excluding analogue, the year-on-year comparison showed growth of EUR 28.4 million, an increase of 6.7%, primarily driven by new business on 12 transponders and HD+. Available satellite capacity increased by 12 transponders compared to H1 2012, added by SES-5 at the 5°E orbital position. The overall utilisation rate in the region stood at 82.0% at the end of June. Average revenue per utilised transponder remains stable in the discrete national markets served. The 2012 SES Satellite Monitor survey, published in March, confirmed ASTRA’s increased reach in Europe, with strong gains 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 percent of the 85 million satellite TV homes and 80 percent of the 35 million satellite HD homes. Georgian pay-TV broadcaster MagtiSat completed its first year of operations. In January, the company signed a contract for an additional transponder to further extend its DTH bouquet from the 31.5°E orbital position. In May, Telekom Srbija signed a multi-year capacity deal on ASTRA 3B, positioned at 23.5°E, for TV, radio and data services feeds, complementing the coverage it already delivers via ASTRA at 19.2°E. Orange Romania concluded a multi-year contract for seven transponders for a DTH platform in Romania. The new TV package, delivering over 40 HD channels, complements its existing mobile service, enabling the company to offer full multi-device communication services to its customers. SES Broadband Services launched its enhanced satellite internet access offering in March. Using newly available Ka-band capacity on the ASTRA 2F satellite, the service now features connectivity delivering up to 20 Mbit/s download speeds, doubling the speeds formerly available. SES TechCom won a contract with BT for the provision of satellite communications infrastructure and services to Galileo. Galileo is the European satellite navigation system which is scheduled to enter full operations by the middle of the decade. In Germany, the HD+ platform continued to develop well, with 2.7 million active households at the end of June 2013, of which 1.2 million are paying households. The platform is well on course to exceed its target of 1.25 million paying households by the end of the year. North America North American operations delivered a good result, with government business performing as expected. North American revenue, on a constant FX basis, increased by 5.9% to EUR 203.1 million. The increase against the prior year period includes a one-time recognition of revenue in Q2 2013 for capacity on AMC-9, as well as higher levels of equipment sales to government customers. Available satellite capacity reduced by 4 transponders compared to H1 2012, ue to the payload reduction on AMC-16 during the second half of 2012. Utilised capacity reduced by 17 transponders, including the 4 transponders on AMC-16, compared to the prior year period, resulting in a utilisation rate of 74.0%. Average revenue per utilised transponder remains stable. Globecast signed a contract renewing its capacity over the Americas. The capacity is on the AMC-1 and NSS-806 satellites. Leading content distributor iN DEMAND renewed a transponder on AMC-1 for the delivery of Pay-Per-View and Video On Demand sports and entertainment television content to cable audiences across North America. SES Government Solutions continued to deliver a solid performance in line with expectations, delivering year-on-year revenue growth. International International revenue increased by 9.3% over H1 2012 to EUR 252.8 million, on a constant FX basis, as new capacity addressing emerging markets was successfully commercialised. Available satellite capacity increased by 74 transponders compared to H1 2012. The capacity  growth was driven by the new capacity on SES-5 (+52) and the relocation of NSS-7. Utilisation increased by 47 transponders compared to H1 2012, resulting in an overall utilisation rate of 73.1%. Average revenue per utilised transponder remains stable. In the Pacific region, Pactel extended its connectivity offering, signing a multi-year, multitransponder contract for capacity on NSS-9 at 183°E. The capacity will support its provision of internet access. Another significant player in the region, Digicel, signed for additional capacity on NSS-9 to support its cellular network in Papua New Guinea. As part of a collaboration with O3b Networks, Digicel will combine SES and O3b capacities for high-quality voice and high-speed mobile data services, thus enabling fibre-like speeds. In the Russian Far East, Vimpelcom signed an agreement for incremental capacity to serve increased demand in the region. CET, a major European teleport operator providing corporate VSAT and media broadcast services, signed up for Ku-band capacity on NSS-12, supporting inter-regional connectivity between Europe and East Africa. As previously mentioned, Oi Brazil has signed a major multi-year transponder capacity agreement for the majority of the Ku-band capacity on the newly launched SES-6 satellite. Its new DTH package, including a substantial HD line-up, is offered to the Brazilian market via this satellite at 40.5°W. Other new business in Asia included a renewal and capacity extension agreement with Thai DTH broadcaster IPMTV. The agreement renews capacity on the NSS-6 satellite and secures new capacity on SES-8, scheduled to be launched in Q4 2013. Mediascape, the leading DTH operator in the Philippines, extended its partnership with SES via a new multi-year, multi-transponder deal on SES-7 at 108.2°E. The new capacity expansion will allow MediaScape, through its brand Cignal Digital TV, to further expand its services for the provision of DTH satellite TV in the Philippines. Cignal Digital TV currently offers 22 HD channels and 65 SD channels to more than half a million subscribers across the Philippine archipelago.