“Strong execution underpinning FY 2021
outlook, future growth, and value creation”
SES S.A. announces financial results for the nine months ended
30 September 2021.
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the full release here:
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SES YTD 2021 Results (Photo: Business
Wire)
Solid performance delivering revenue of €1,319 million and
Adjusted EBITDA(1) of €823 million
- Improving trajectory in Video to -4.1% YOY(2,3) YTD 2021 from
-8.0% YOY(2,3) in FY 2020
- Resilient Networks performance, flat YOY(2,3), in a COVID
impacted environment with strong prospects for future growth
- 2% YOY(3) reduction in recurring Operating Expenses supporting
Adjusted EBITDA margin of 62%
- Over 95% of FY 2021 revenue outlook (€1,760-1,800 million(4)
vs. €1,760-1,820 million at H1 2021) already under contract
- Adjusted EBITDA outlook unchanged for FY 2021 of €1,080-1,100
million(4) (improved from €1,060-1,100 million at H1 2021)
Significant progress in delivery of value creation through
growth investments and C-band execution
- SES-17 successfully launched, with first revenues from H2 2022;
and O3b mPOWER on track to begin services by end-2022
- SES-17 and O3b mPOWER backlog over $780 million(5);up $220
million in YTD 2021 with strong customer interest
- First US C-band clearing milestone completed with $1 billion of
accelerated relocation payments expected by Q1 2022
- On track to meet second clearing milestone by end-2023,
triggering a further $3 billion in accelerated relocation
payments
Steve Collar, CEO of SES, commented: “Our laser focus on
execution has delivered another solid quarter and we remain fully
on track to deliver on our FY 2021 group revenue and EBITDA
outlook. The strength and resilience of our Video business is
reflected in the improved FY 2021 outlook on the back of important
renewals and new business signed across our core neighbourhoods,
and the continued positive momentum of our HD+ platform in
Germany.
Our Networks business is continuing to perform well against the
backdrop of an extended COVID environment with strong year-on-year
growth in Government now complemented by growing quarterly run rate
revenue in Fixed Data and Mobility, where we are starting to see a
recovery in cruise and new bandwidth demand from our aeronautical
customers.
The successful launch of SES-17 only two weeks ago was an
important step in realising our vision of a seamless, integrated,
and cloud-enabled network of the future. SES-17 will start to
generate incremental revenue and EBITDA for SES in the second half
of 2022. This will soon be joined in orbit by our second-generation
Medium Earth Orbit constellation, O3b mPOWER, with launches
starting early next year and the constellation on track for start
of service before the end of 2022.
I am delighted to report that we have completed Phase One C-band
clearing in the US, comfortably ahead of the December 2021
deadline, and we expect to receive the first $1 billion of
accelerated relocation payments within the coming months. We have
started to receive cost reimbursement from the Clearing House and
we are on track to complete Phase Two clearing by December 2023,
triggering an additional $3 billion of accelerated relocation
payments.”
_______________ 1 Excluding restructuring charge and operating
expenses/income recognised in relation to US C-band repurposing
(disclosed separately) 2 Underlying revenue, excluding periodic and
other revenue (disclosed separately) that are not directly related
to or otherwise distort the underlying business trends 3 At
constant FX which refers to comparative figures restated at the
current period FX to neutralise currency variations 4 Financial
outlook assumes a €/$ FX rate of €1 = $1.20, nominal satellite
health and launch schedule 5 Gross backlog over $780 million (fully
protected: $620 million)
Key business and financial highlights
SES regularly uses Alternative Performance Measures (APM) to
present the performance of the Group and believes that these APMs
are relevant to enhance understanding of the financial performance
and financial position.
€million
YTD 2021
YTD 2020
∆ as reported
∆ at constant FX
Average €/$ FX rate
1.20
1.12
Revenue
1,319
1,410
-6.5%
-3.3%
Adjusted EBITDA
823
883
-6.8%
-3.9%
Adjusted Net Profit
225
192
+17.2%
n/a
Adjusted Net Debt / Adjusted
EBITDA
3.4 times
3.2 times
n/a
n/a
- Underlying revenue (excluding periodic and other) was lower by
2.7% year-on-year (at constant FX) at €1,318 million. Periodic and
other revenue in YTD 2021 was €1 million (YTD 2020: €9
million).
- Video underlying revenue of €785 million represents a reduction
of 4.1% year-on-year (at constant FX), compared with -8.0%
year-on-year in FY 2020, where lower revenue from mature markets
was partially offset by the growth of HD+ in Germany, higher
revenues generated across International markets, and a recovery in
Sports & Events. Q3 2021 underlying revenue of €259 million was
4.6% lower year-on-year (at constant FX) and 1.3% lower compared
with Q2 2021.
- Networks underlying revenue of €533 million was flat compared
with YTD 2020 (-0.6% at constant FX) with strong ongoing growth in
Government (+7.7%) offsetting short-term COVID-related impacts on
Mobility (-8.8%) and near-term declines in Fixed Data (-2.9%). Q3
2021 underlying revenue of €184 million (-1.3% YOY at constant FX)
was 4.8% higher than Q2 2021 reflecting a recovery in Cruise,
combined with new revenue from Aeronautical, Cloud, and Energy
customers.
- Adjusted EBITDA of €823 million represented an Adjusted EBITDA
margin of 62.4% (YTD 2020: 62.6%) and benefitted from a 2.1%
year-on-year reduction (at constant FX) in operating expenses.
- Adjusted EBITDA excludes restructuring expenses of €7 million
(YTD 2020: €28 million) and net operating expenses associated with
the accelerated repurposing of US C-band spectrum which totalled
€18 million (YTD 2020: €21 million).
- Adjusted Net Profit improved by 17.2% year-on-year to €225
million including the positive combination of the lower recurring
operating expenses highlighted above, lower depreciation and
amortisation expenses (down 7.3% year-on-year), and a 21.0%
reduction in the net interest expense. Adjusted Net Profit also
included a net foreign exchange gain of €24 million (YTD 2020: loss
of €19 million).
- At 30 September 2021, Adjusted Net Debt (including 50% of the
now €1.175 billion of hybrid bonds as debt, per the rating agency
methodology) of €3,703 million was 4.2% lower than 30 September
2020 and represented an Adjusted Net Debt to Adjusted EBITDA ratio
of 3.4 times (30 September 2020: 3.2 times).
- Contract backlog at 30 September 2021 was €5.2 billion (€5.8
billion gross backlog including backlog with contractual break
clauses).
- In July 2021, SES completed a share buyback programme totalling
€94 million. 12 million A-shares were purchased at a weighted
average price of €6.56 and 6 million B-shares at a weighted average
price of €2.62, maintaining the ratio of two A-shares to one
B-share, as required by the Articles of Association. The shares
acquired under the programme are intended to be cancelled, reducing
the total number of voting and economic shares.
- FY 2021 revenue outlook (assuming a €/$ FX rate of €1 = $1.20,
nominal satellite health and launch schedule) is expected to be
between €1,760-1,800 million (previously €1,760-1,820 million),
including €1,030-1,040 million for Video (which is improved from
€1,000-1,030 million) and €720-750 million for Networks (previously
€750-780 million).
- FY 2021 Adjusted EBITDA outlook, excluding restructuring and
net US C-band repurposing impact, is unchanged and expected to be
between €1,080-1,100 million (assuming a €/$ FX rate of €1 = $1.20,
nominal satellite health and launch schedule),having previously
been increased from €1,060-1,100 million.
- Expected capital expenditure (net cash absorbed by investing
activities excluding acquisitions, financial investments, and US
C-band repurposing) is €300 million in 2021 and €950 million in
2022 reflecting growth investments in SES-17 and O3b mPOWER.
Thereafter, capital expenditure is expected to reduce to €510
million in 2023, €570 million in 2024, and €340 million in
2025.
Operational performance and commentary
REVENUE BY BUSINESS UNIT
Revenue (€ million) as
reported
Change (YOY) at constant
FX
Q1 2021
Q2 2021
Q3 2021
YTD 2021
Q1 2021
Q2 2021
Q3 2021
YTD 2021
Average €/$ FX rate
1.22
1.20
1.19
1.20
Video (total)
263
263
259
785
-4.6%
-3.2%
-4.6%
-4.1%
- Video underlying
263
263
259
785
-4.6%
-3.2%
-4.6%
-4.1%
Government (underlying)
71
76
73
220
+8.5%
+14.0%
+1.2%
+7.7%
Fixed Data (underlying)
55
53
59
167
-1.0%
-6.7%
-1.1%
-2.9%
Mobility (underlying)
47
47
52
146
-9.1%
-12.3%
-5.0%
-8.8%
Periodic(1)
-
-
-
-
n/m
n/m
n/m
n/m
Networks (total)
173
176
184
533
-3.8%
-0.7%
-1.3%
-1.9%
- Networks underlying
173
176
184
533
+0.1%
-0.5%
-1.3%
-0.6%
Sub-total
436
439
443
1,318
-4.3%
-2.2%
-3.3%
-3.3%
- Underlying
436
439
443
1,318
-2.8%
-2.2%
-3.3%
-2.7%
- Periodic(1)
-
-
-
-
n/m
n/m
n/m
n/m
Other revenue
-
-
1
1
n/m
n/m
n/m
n/m
Group Total
436
439
444
1,319
-4.3%
-2.3%
-3.2%
-3.3%
“At constant FX” refers to comparative
figures restated at the current period FX to neutralise currency
variations. “Underlying” revenue represents the core business of
capacity sales, as well as associated services and equipment. This
revenue may be impacted by changes in launch schedule and satellite
health status. “Periodic” revenue separates revenues that are not
directly related to or would distort the underlying business trends
on a quarterly basis. Periodic revenue includes: the outright sale
of transponders or transponder equivalents; accelerated revenue
from hosted payloads during construction; termination fees;
insurance proceeds; certain interim satellite missions and other
such items when material. “Other” includes revenue not directly
applicable to Video or Networks
1) YTD 2021 periodic revenue nil (YTD
2020: €8 million)
Video: 60% of group revenue
At 30 September 2021, SES delivers 8,555 total TV channels to
361 million TV homes around the world. This includes some 3,150 TV
channels in High Definition which has grown by 8% compared with 30
September 2020. At 30 September 2021, 71% of total TV channels
carried over the SES network are broadcast in MPEG-4 with an
additional 5% broadcast in HEVC.
The impact from customers ‘right-sizing’ volumes in mature
markets (Western Europe and the US), lower US wholesale revenue,
and the decision to reduce exposure to low margin services
activities led to an overall year-on-year revenue reduction, albeit
at a much slower pace of decline as compared with the trend in
2020.
The initial benefit of the increase in the cost to renew a
12-month subscription implemented in March 2021 and continued
growth in the average number of paying subscribers led to
year-on-year growth for HD+ in Germany. Looking forward, the full
annualised contribution from the price increase and the
introduction of new Internet Protocol-based solutions, such as HD+
ToGo which was launched in October 2021, into the market are
expected to support the future development of the business.
In addition, International market revenue was higher
year-on-year, while revenue from Sports & Events is continuing
to recover, with improved performance compared with YTD 2020 which
was impacted by cancellations and delays caused by the COVID
pandemic.
Networks: 40% of group revenue
Government
The positive contribution from new MEO- and GEO-enabled network
solutions for the US Government led to overall strong year-on-year
growth in revenue compared with YTD 2020. This was partly offset by
the cancellation of services during Q3 2021 resulting from the US
withdrawal from Afghanistan.
The growth in US Government was complemented by higher
year-on-year revenue generated from Global Government customers for
new capacity services and institutional solutions.
Fixed Data
Underlying revenue decreased compared with the prior period as
lower year-on-year revenue in the Pacific region and wholesale
business in Africa and Europe was not yet being balanced with the
ongoing growth in new business from tier one mobile network
operators, notably in the Americas, revenue ramp up in the global
cloud segment, and new revenue generated from services in the
Energy segment.
Mobility
The effects of the COVID pandemic on customers in the commercial
aviation and cruise segments resulted in lower revenue compared
with YTD 2020. This was partly offset by a positive year-on-year
performance in commercial shipping revenues. The long-term
fundamentals remain strong with revenue in Q3 2021 improving by €5
million (or 11.8%) compared with Q2 2021 and reflecting recovery in
Cruise as ships return to service and new business providing
additional capacity to commercial aviation customers.
Future satellite launches
Satellite
Region
Application
Launch Date
SES-17
Americas
Fixed Data, Mobility,
Government
Launched
O3b mPOWER (satellites
1-3)
Global
Fixed Data, Mobility,
Government
Q1 2022
O3b mPOWER (satellites
4-6)
Global
Fixed Data, Mobility,
Government
Q2 2022
O3b mPOWER (satellites
7-9)
Global
Fixed Data, Mobility,
Government
H2 2022
SES-18 & SES-19
North America
Video (US C-band accelerated
clearing)
H2 2022
SES-20 & SES-21
North America
Video (US C-band accelerated
clearing)
H2 2022
SES-22
North America
Video (US C-band accelerated
clearing)
H2 2022
O3b mPOWER (satellites
10-11)
Global
Fixed Data, Mobility,
Government
2024
CONSOLIDATED INCOME STATEMENT
€ million
YTD 2021
YTD 2020
Average €/$ FX rate
1.20
1.12
Revenue
1,319
1,410
US C-band repurposing income
57
--
Operating expenses
(578)
(576)
EBITDA
798
834
Depreciation expense
(426)
(472)
Amortisation expense
(72)
(65)
Operating profit
300
297
Net financing costs
(67)
(135)
Profit before tax
233
162
Income tax expense
(30)
(14)
Non-controlling interests
2
6
Net profit attributable to
owners of the parent
205
154
Basic and diluted earnings per
share (in €)(1)
Class A shares
0.39
0.26
Class B shares
0.15
0.10
1) Earnings per share is calculated as
profit attributable to owners of the parent divided by the weighted
average number of shares outstanding during the year, as adjusted
to reflect the economic rights of each class of share. For the
purposes of the EPS calculation only, the net profit for the year
attributable to ordinary shareholders has been adjusted to include
the assumed coupon, net of tax, on the perpetual bonds. Fully
diluted earnings per share are not significantly different from
basic earnings per share
€ million
YTD 2021
YTD 2020
Adjusted EBITDA
823
883
US C-band repurposing income
57
--
US C-band operating expenses
(75)
(21)
Restructuring expenses
(7)
(28)
EBITDA
798
834
€ million
YTD 2021
YTD 2020
Adjusted Net Profit
225
192
US C-band repurposing income
57
--
US C-band operating expenses
(75)
(21)
Restructuring expenses
(7)
(28)
Tax on material exceptional
items
5
11
Net profit attributable to
owners of the parent
205
154
SUPPLEMENTARY INFORMATION
QUARTERLY INCOME STATEMENT (AS REPORTED)
€ million
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Average €/$ FX rate
1.11
1.10
1.17
1.18
1.22
1.20
1.19
Revenue
479
469
462
466
436
439
444
US C-band repurposing income
--
--
--
10
27
20
10
Operating expenses
(194)
(207)
(175)
(231)
(203)
(193)
(182)
EBITDA
285
262
287
245
260
266
272
Depreciation expense
(158)
(161)
(153)
(153)
(140)
(143)
(143)
Amortisation expense
(23)
(21)
(21)
(30)
(19)
(29)
(24)
Impairment expense
-
-
-
(277)
-
-
-
Operating
profit/(loss)
104
80
113
(215)
101
94
105
Net financing costs
(46)
(45)
(44)
(49)
(26)
(18)
(23)
Profit/(loss) before
tax
58
35
69
(264)
75
76
82
Income tax benefit/(expense)
(9)
(2)
(3)
21
(8)
(8)
(14)
Non-controlling interests
2
2
2
3
2
-
-
Net Profit/(loss)
51
35
68
(240)
69
68
68
Earnings/(loss) per share (in
€)(1)
Class A shares
0.09
0.05
0.12
(0.56)
0.13
0.12
0.14
Class B shares
0.03
0.02
0.05
(0.22)
0.05
0.05
0.05
Adjusted EBITDA
288
294
301
269
268
276
279
Adjusted EBITDA margin
60%
63%
65%
58%
61%
63%
63%
US C-band repurposing income
--
--
--
10
27
20
10
US C-band operating expenses
--
(13)
(8)
(22)
(34)
(25)
(16)
Restructuring expenses
(3)
(19)
(6)
(12)
(1)
(5)
(1)
EBITDA
285
262
287
245
260
266
272
1) Earnings per share is calculated as
profit attributable to owners of the parent divided by the weighted
average number of shares outstanding during the year, as adjusted
to reflect the economic rights of each class of share. For the
purposes of the EPS calculation only, the net profit for the year
attributable to ordinary shareholders has been adjusted to include
the coupon, net of tax, on the perpetual bonds. Fully diluted
earnings per share are not significantly different from basic
earnings per share.
QUARTERLY OPERATING PROFIT (AT CONSTANT €/$ FX RATE OF €1:
$1.20)
€ million
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Average €/$ FX rate
1.20
1.20
1.20
1.20
1.20
1.20
1.20
Revenue
459
449
456
463
440
439
441
US C-band repurposing income
-
-
-
10
28
20
11
Operating expenses
(184)
(194)
(172)
(230)
(206)
(193)
(181)
EBITDA
275
255
284
243
262
266
271
Depreciation expense
(150)
(152)
(150)
(148)
(142)
(144)
(142)
Amortisation expense
(22)
(21)
(21)
(28)
(19)
(29)
(23)
Impairment expense
-
-
-
(277)
-
-
-
Operating
profit/(loss)
103
82
113
(210)
101
93
106
Adjusted EBITDA
278
285
297
267
270
276
277
US C-band repurposing income
-
-
-
10
28
20
11
US C-band operating expenses
-
(12)
(7)
(22)
(35)
(25)
(16)
Restructuring expenses
(3)
(18)
(6)
(12)
(1)
(5)
(1)
EBITDA
275
255
284
243
262
266
271
ALTERNATIVE PERFORMANCE MEASURES
SES regularly uses Alternative Performance Measures (‘APM’) to
present the performance of the Group and believes that these APMs
are relevant to enhance understanding of the financial performance
and financial position. These measures may not be comparable to
similarly titled measures used by other companies and are not
measurements under IFRS or any other body of generally accepted
accounting principles, and thus should not be considered
substitutes for the information contained in the Group’s financial
statements.
Alternative Performance Measure
Definition
Reported EBITDA and EBITDA
margin
EBITDA is profit for the period
before depreciation, amortisation, net financing cost and income
tax. EBITDA margin is EBITDA divided by revenue.
Adjusted EBITDA and Adjusted EBITDA
margin
EBITDA adjusted to exclude
material exceptional items. In 2020 and 2021, the primary
exceptional items are restructuring charges and the net impact of
the repurposing of US C-band spectrum. Adjusted EBITDA margin is
Adjusted EBITDA divided by revenue.
Adjusted Net Debt to Adjusted
EBITDA
Adjusted Net Debt to Adjusted
EBITDA, represents the ratio of Net Debt plus 50% of the group’s
hybrid bonds (per the rating agency methodology) divided by the
last 12 months’ (rolling) Adjusted EBITDA.
Adjusted Net Profit
Net profit attributable to owners
of the parent adjusted to exclude material exceptional items. In
2020 and 2021, the primary exceptional items are restructuring
charges, the net impact of the repurposing of US C-band spectrum,
and the net impact of impairment expenses.
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Presentation of Results:
A presentation of the results for investors and analysts will be
hosted at 9.30 CET on 4 November 2021 and will be broadcast via
webcast and conference call. The details for the conference call
and webcast are as follows:
U.K. (Standard International
Access):
+44 (0) 33 0551 0200
France:
+33 (0) 1 70 37 71 66
Germany:
+49 (0) 30 3001 90612
NL:
+31 (0) 20 708 5073
U.S.A.:
+1 212 999 6659
Confirmation code:
SES
Webcast registration:
https://channel.royalcast.com/ses/#!/ses/20211104_1
The presentation is available for download from
https://www.ses.com/investors/financial-results and a replay will
be available shortly after the conclusion of the presentation.
About SES
SES has a bold vision to deliver amazing experiences everywhere
on earth by distributing the highest quality video content and
providing seamless connectivity around the world. As the leader in
global content connectivity solutions, SES operates the world’s
only multi-orbit constellation of satellites with the unique
combination of global coverage and high performance, including the
commercially proven, low latency Medium Earth Orbit O3b system. By
leveraging a vast and intelligent, cloud-enabled network, SES is
able to deliver high quality connectivity solutions anywhere on
land, at sea or in the air, and is a trusted partner to the world’s
leading telecommunications companies, mobile network operators,
governments, connectivity and cloud service providers,
broadcasters, video platform operators and content owners. SES’s
video network carries over 8,500 channels and has an unparalleled
reach of 361 million households, delivering managed media services
for both linear and non-linear content. The company is listed on
Paris and Luxembourg stock exchanges (Ticker: SESG). Further
information is available at: www.ses.com.
Disclaimer
This presentation does not, in any jurisdiction, including
without limitation 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, or 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 occur or continue in the future. SES, and its
directors, officers and 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211103006395/en/
Richard Whiteing Investor Relations Tel: +352 710 725 261
richard.whiteing@ses.com
Suzanne Ong External Communications Tel: +352 710 725 500
suzanne.ong@ses.com
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