SES First Quarter 2015 Results
SES S.A. (NYSE Euronext Paris and Luxembourg Stock Exchange: SESG) reports financial results for the three months ended 31 March 2015.
Highlights
Comparison to prior year period affected by 2014 transponder sales and the terms of the AMC-15/-16 capacity renewal agreements with EchoStar
– Revenue of EUR 477.8 million, up 2.6% (down 4.9% at constant FX[1]) over prior year
– EBITDA of EUR 356.1 million, up 3.2% (down 4.6% at constant FX1) over prior year
– EBITDA margin of 74.5% (Q1 2014: 74.3% at constant FX1)
– Profit of the group of EUR 131.0 million
– Contract backlog of EUR 7.4 billion at 31 March 2015
– Net Debt/EBITDA of 2.76 times at 31 March 2015
Continuing to develop key market verticals and build for future growth
– International segment now delivers over 30% of group revenue
– Technical reach grew by 7% (YOY) to 312 million TV homes; International up 14% (YOY) to 75 million
– 6.8% growth (YOY) in HD TV channels broadcast by SES satellites
– Serving next generation data demand by securing major in-flight connectivity and network agreements
– Three new satellite programmes, with significant pre-commitments already secured
– Two new U.S. Government funded hosted payloads, one each on board SES-14 and SES-15
Karim Michel Sabbagh, President and CEO, commented:
“SES has made a productive start to 2015. We are continuing to build the foundations of our future growth through new investments, expanding our capabilities and increasing our technical reach across the globe. Our video business continues to grow. This is measurable in terms of the number of HD channels carried and the level of households and population reached by our global fleet, which is particularly pronounced in emerging markets where SES is successfully expanding its presence.
The revenue and EBITDA comparison is impacted by the sale of transponders to Eutelsat recorded in Q1 2014 and by the terms of the AMC-15/-16 capacity renewal agreements with EchoStar in advance of the launch of SES-11 at the end of 2016. Taking these factors into account, Q1 2015 revenue at constant FX was in line with the prior year period.
Looking forward, we continue to develop our competitive position in video and are building our capabilities to meet the requirements of next generation data. The addition of HTS capacity on SES-14 and SES-15 will – along with SES-12 – allow us to provide more flexible and efficient fixed/mobile data solutions on a global scale. Our commitment to innovation has also enabled us to secure multi-year agreements for two U.S. Government funded hosted payloads.
We remain focused on improving our procurement process and delivering CapEx efficiencies, with the overriding objective of serving our customers by having the right assets, in the right place and at the right time.”
Financial Performance
Group revenue as reported was EUR 477.8 million, representing an increase of 2.6% and including the benefit of the stronger U.S. Dollar. On a constant FX basis, revenue was 4.9% lower compared with Q1 2014 which had included the outright sale of four transponders under the comprehensive settlement agreement with Eutelsat. Growth in European services and new infrastructure business was offset by the impact of the terms of the AMC-15/-16 capacity renewal agreements with EchoStar in North America until the launch of SES-11 at the end of 2016, with EchoStar contracting the full Ku-band capacity on the new satellite.
EBITDA as reported increased by 3.2% to EUR 356.1 million, representing a decrease of 4.6% at constant FX, with further operational optimisation partially offsetting the revenue reduction. Operating expenses of EUR 121.7 million were 1.0% higher as reported, but 5.7% lower at constant FX. The lower operating expenses reflect the benefits of ongoing cost management and related savings, as well as variable costs of sales and operational charges, contributing to an improvement in the group’s EBITDA margin (at constant FX) from 74.3% to 74.5%.
Depreciation and amortisation expense increased to EUR 141.0 million (up 12.3%, or 1.0% at constant FX), resulting from the impact of the stronger U.S. Dollar and a slight reduction in depreciation.
Group net financing costs were lower by EUR 24.5 million, or two thirds, due to net foreign exchange gains of EUR 32.3 million from the positive effect of the stronger U.S. Dollar. The net interest expense increased marginally by EUR 2.0 million to EUR 48.3 million, with lower average financing costs offset by the stronger U.S. Dollar, while capitalised interest was EUR 3.3 million lower, due to reduced capital expenditures.
The income tax expense of EUR 39.7 million represented an effective tax rate of 19.6%, impacted by the tax on net foreign exchange gains recorded in Q1 as noted above.
SES’s share of joint ventures and associates’ result was a loss of EUR 31.2 million (Q1 2014: loss of EUR 4.9 million). This principally related to the group’s investment in O3b Networks, which entered into commercial service in September 2014.
Net profit attributable to SES shareholders of EUR 131.0 million was EUR 19.2 million, or 12.7%, lower than Q1 2014, reflecting the additional EUR 26.3 million loss from associates as noted above.
The Net Debt to EBITDA ratio at 31 March 2015 was 2.76 times (31 March 2014: 2.66 times).
