SES H1 2023 RESULTS
SES S.A. announces financial results for the six months ended 30 June 2023.
Ruy Pinto, CEO of SES, commented: "The strong start to the year continued into Q2 resulting in a solid H1 financial performance and confirmation of the 2023 financial outlook. Networks is growing on the back of strong performance in Mobility and robust outturns in Government and Fixed Data. In Video, we have signed additional important renewals which underpin the long-term cash fundamentals and value of our direct-to-home neighbourhoods.
Today, we are announcing a share buyback programme which demonstrates our conviction in SES's long-term fundamentals.
With O3b mPOWER expected to be in commercial service by the end of this year, customers will benefit from an expanded set of capabilities for flexible, guaranteed, and high-performance connectivity to meet requirements in competitive, high growth segments.
In Government, the Luxembourg Parliament recently approved funding for an important, multi-year commitment to O3b mPOWER, while the group of SES and other European space and telecom players has been selected to develop a proposal for the European Commission's future satellite constellation, IRIS2.
Lastly, we are delighted to have cleared C-band ahead of schedule, after more than 3 years of hard work, and expect to receive the $3 billion (pre-tax) accelerated relocation payment in Q4 2023."
Key business and financial highlights (at constant FX unless explained otherwise)
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.
Networks revenue of €501 million represented a growth of 3.1% compared with H1 2022, with growth in Mobility (of +13.8%), complemented by robust performance in Fixed Data (+0.2%), which included periodic revenue of €7 million in Q1 2023, as well as Government (-0.7%).
Video revenue of €486 million represents a reduction of 5.2% compared with H1 2022, or a 3.5% reduction excluding periodic revenue of €10 million which was recognised in Q1 2022.
Adjusted EBITDA of €530 million represented an Adjusted EBITDA margin of 54% (H1 2022: 61% and 56% on a like for like basis, assuming DRS Global Enterprise Solutions had been acquired on 31 December 2021).
Adjusted EBITDA excludes significant special items of €31 million (H1 2022: €16 million), comprising net U.S. C-band expenses of €10 million (H1 2022: €13 million) and other significant special items of €21 million (H1 2022: €3 million) related to acquisition costs and restructuring expenses.
Adjusted Net Profit of €116 million included a net foreign exchange (FX) loss of €2 million (H1 2022: gain of €26 million) which was partly offset by higher year on year reported capitalised interest and lower year-on-year reported income tax expense. Adjusted Net Profit excludes significant special items (highlighted above) and their related net tax benefit of €7 million (H1 2022: €27 million).
At 30 June 2023, Adjusted Net Debt (including 50% of the €1,175 million of hybrid bonds as debt) was €3,932 million and represented an Adjusted Net Debt to Adjusted EBITDA ratio of 3.6 times, compared with 3.5 times at 31 December 2022. At 30 June 2023, the total amount of remaining U.S. C-band clearing cost reimbursements expected to be received in the future was approximately $500 million.
Contract backlog at 30 June 2023 was €4.7 billion (€5.7 billion gross backlog including backlog with contractual break clauses).
2023 group revenue and Adjusted EBITDA outlook (assuming an FX rate of €1=$1.09, nominal satellite health, and nominal launch schedule) remains on track and expected to be between €1,950 - 2,000 million and between €1,010 - 1,050 million respectively.
Capital expenditure (net cash absorbed by investing activities excluding acquisitions, financial investments, U.S. C-band repurposing, and assuming an FX rate of €1=$1.09) is also unchanged and expected to be around €550 million in 2023.
SES is, today, announcing a share buyback programme of up to €150 million expected to be executed by 30 June 2024 under the authorisation given by the Annual General Meeting of shareholders held on 6 April 2023. SES will purchase up to 20 million A-shares and up to 10 million B-shares in equal proportion to maintain the ratio of two A-shares to one B-share, as required by the Articles of Association. The aggregate value of the programme shall not exceed €150 million, and the shares acquired under the programme are intended to be cancelled to reduce the total number of voting and economic shares.
REVENUE BY BUSINESS UNIT
Future satellite launches
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASH FLOWS
QUARTERLY INCOME STATEMENT (AS REPORTED)
LIKE-FOR-LIKE REVENUE BY BUSINESS UNIT
(Pro forma as if the acquisition of DRS Global Enterprise Solutions had been completed on 31 December 2021)
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.
Presentation of Results:
A presentation of the results for investors and analysts will be hosted at 9.30 CEST on 3 August 2023 and will be broadcast via webcast and conference call. The details for the conference call and webcast are as follows:
U.K. +44 (0) 33 0551 0200
France +33 (0) 1 70 37 71 66
Germany +49 (0) 30 3001 90612
U.S.A. +1 786 697 3501
Confirmation code SES
Webcast registration https://channel.royalcast.com/landingpage/ses/20230803_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.
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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 around 8,000 channels and has an unparalleled reach of 369 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.
1)At constant FX (comparative figures restated to neutralise currency variations) and "like for like" (assumes the acquisition of DRS Global Enterprise Solutions on 31 December 2021, instead of actual acquisition date of 1 August 2022, see page 7)
2) Excluding periodic revenue (H1 2023: nil; H1 2022: €10 million). Including periodic revenue, Video was 5.2% lower YOY at constant FX
3) Including significant deals signed since 1 July 2023
4) Excluding operating expenses/income recognised in relation to U.S. C-band repurposing and other significant special items (disclosed separately)
5) Financial outlook assumes a €/$ FX rate of €1 = $1.09, nominal satellite health, and nominal launch schedule
6) Gross backlog $1,025 million (fully protected: $835 million)
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