SES H1 2021 Results
SES S.A. announces half year financial results for the six months ended 30 June 2021.
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SES H1 2021 Results (Photo: Business Wire)
Solid H1 performance delivering revenue of €875 million and Adjusted EBITDA(1) of €544 million
2021 Revenue and improved EBITDA outlook on track
Growth investments and C-band proceeds supporting future growth and value creation
€275 million of shareholder returns delivered since the start of 2021
Steve Collar, CEO of SES, commented: "Our strong start to 2021 continued into the second quarter providing confidence to improve the low end of our Adjusted EBITDA outlook on the back of solid execution and laser focus on reducing cost.
The lasting value of our Video business is reflected in the improved trajectory, the important long-term renewals at our core neighbourhoods, increased penetration of HD TV channels, and new paying subscribers for HD+ in Germany. Excitingly, in H2 2021, we will be expanding and enhancing our HD+ portfolio with the extension onto mobile devices and IP-enabled non-satellite homes.
Networks continues to perform well notwithstanding the COVID-impacted environment, notably in Government, reflecting the strong demand for our unique multi-orbit resilient solutions. With O3b mPOWER still over a year away from commercial launch, we have secured over $300 million in backlog from major cruise brands which underscores the compelling combination of high throughput and high flexibility of the constellation.
C-band clearance remains fully on track. The recent issuing of C-band licences by the FCC is a notable milestone towards initiation of the reimbursement process. Meanwhile, we have returned €275 million of cash to shareholders this year underscoring our commitment to delivering sustained and attractive returns for our shareholders."
1 Excluding restructuring charge and operating expenses recognised in relation to US C-band repurposing (disclosed separately)
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.
Operational performance and commentary
REVENUE BY BUSINESS UNIT
"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
Video: 60% of group revenue
At 30 June 2021, SES delivers over 8,650 total TV channels to 361 million TV homes around the world. This includes more than 3,120 TV channels in High Definition which has grown by 8% compared with 30 June 2020. At 30 June 2021, 69% of total TV channels are broadcast in MPEG-4 with an additional 4% 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.
International market revenue was higher year-on-year, while continued growth in the number of paying subscribers led to year-on-year growth in HD+ where the combination of an increase in the cost to renew a 12-month subscription from March 2021 and introduction of new Internet Protocol-based solutions into the market are expected to support the future development of the business.
In addition, revenue from Sports & Events is continuing to recover with improved performance compared with H1 2020 which was significantly impacted by cancellations and delays caused by the COVID pandemic.
Networks: 40% of group revenue
Strong 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 H1 2020 with additional new business wins secured at the end of the quarter expected to contribute to future revenue development. This was complemented by strong year-on-year revenue growth in Global Government from new capacity contracts and institutional wins.
Underlying revenue decreased compared with the prior period as lower year-on-year revenue in the Pacific region was not yet being balanced with the ongoing growth in new business from tier one mobile network operators, notably in the Americas, and the additional revenue ramp up in the global cloud segment which is expected in the second half of 2021.
The effects of the COVID pandemic on customers in the commercial aviation and cruise segments resulted in lower revenue compared with H1 2020 which had yet to see a material impact from the pandemic at that point in time. This was partly offset by a positive year-on-year performance in commercial shipping revenues. While the vast majority of commercial contracts across the entire SES business, including in Mobility, are fixed, it is expected that the impact of the COVID environment will continue to present a short-term headwind to the development of Mobility revenue. However, the long-term growth fundamentals remain in place to drive the pace of new business as demand recovers.
Future satellite launches
CONSOLIDATED INCOME STATEMENT
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
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASH FLOWS
1) Including €21 million related to US C-band repurposing (H1 2020: nil). 2) Net of dividends received on treasury shares of €3 million (H1 2020: €2 million)
QUARTERLY INCOME STATEMENT (AS REPORTED)
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)
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.
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Presentation of Results:
A presentation of the results for investors and analysts will be hosted at 9.30 CEST on 4 August 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
Confirmation code: SES
Webcast registration: https://channel.royalcast.com/landingpage/ses/20210804_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.
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 8,650 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.
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.?
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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.