SES S.A. announced financial results for the nine and three months ended 30 September 2017.
Executing differentiated strategy to deliver return to sustained and profitable growth
- Revenue EUR 1,527.2 million, up 2.5% over prior period
- EBITDA margin 65.1% and operating profit margin 29.4% (YTD 20161: 66.4% and 32.1% respectively)
- Net profit EUR 394.5 million (YTD 2016: 328.8 million excluding one-off gain related to the consolidation of O3b; and EUR 824.0 million including this gain)
- Net debt to EBITDA ratio29 times (YTD 2016: 3.30 times), in line with SES’s financial framework
Enabling customers’ success with the most flexible and scalable satellite-based solutions
- Substantial contract backlog of EUR 7.5 billion, including contribution from long-term Sky Deutschland renewal
- Total TV channels +6% (YOY) and HDTV channels +7% (YOY) with growth in both developed and developing markets
- Focus on differentiated managed services delivering 2.2% (YOY) growth in SES Networks’ revenue
- Improving future business mix and growth across network-centric verticals with new contract wins
- Significantly expanding future addressable markets in network-centric verticals with O3b mPOWER investment
Karim Michel Sabbagh, President and CEO, commented: “SES has continued to make steady progress in executing its strategy and investing for the future in growth markets where we have a competitive advantage.
SES Video’s underlying business remains stable with attractive long-term contracts in prime neighbourhoods, and additional growth potential in integrated platforms and services. This is demonstrated by the recently announced multi-year capacity renewal with Sky Deutschland and the addition of exclusive Eurosport content to our HD+ platform in Germany.
SES remains on track to deliver sustained and profitable medium-term growth. The recent announcement of O3b mPOWER builds on capabilities of the only successful non-geostationary broadband system to deliver the first global, multi-terabit satellite network and reinforces our position as the world’s leading satellite enabled solutions provider.”
At 30 September 2017, SES’s fully protected contract backlog was EUR 7.5 billion (30 September 2016: EUR 8.0 billion). The substantial backlog is the result of the successful commercial activity across SES Video and SES Networks. Excluding the impact of the change in the EUR/USD FX rate, the contract backlog was broadly stable as new long-term contracts replaced the roll-off from revenue recognised in the period.
SES Video: 68% of group revenue (YTD 2016: 69%)
- Reported revenue up 1.1% to EUR 1,031.5 million
- 6% (YOY) growth in total TV and 7% (YOY) growth in HDTV channels with improvement in all key regions
- MX1 revenue lower due to non-renewals of certain legacy services; refocusing portfolio of services for growth
Third Quarter 2017 Highlights and Business Trends
Total TV channels grew 6% year-on-year to 7,743 TV channels with increases in all three of SES’s major regions – Europe, North America and International. The principal changes compared with Q3 2016 were:
- 7% increase in High Definition (HD) to 2,601 HDTV channels, now 33.6% of TV total channels (Q3 2016: 33.3%);
- The proportion of total TV channels broadcast in MPEG-4 increased from 59.9% to 63.5%; and
- Commercial Ultra HD (UHD) channels on the SES network increased from 17 UHD channels to 24 UHD channels
The business remained solid, underpinned by long-term contracts and a substantial contract backlog, including an important capacity renewal with Sky Deutschland, covering seven transponders at SES’s prime video neighbourhood of 19.2 degrees East, to continue to deliver content to millions of subscribers. In October 2017, QVC signed a ten-year agreement for incremental capacity at 19.2 degrees East and MX1 backend services to launch a new UHD channel, as well as extending existing capacity commitments to continue distribution in SD and HD.
Additionally, Globecast increased their capacity usage from two to four transponders at the heart of North America’s leading cable neighbourhood to expand content distribution services to dozens of U.S. cable networks.
SES Video continued to execute opportunities in developing markets. This included a multi-year agreement with Viasat Ukraine to broadcast 40 pay-TV channels, including 13 HDTV channels, expanding the partnerships where SES already broadcasts 60 free-to-air TV channels to millions of households; as well as a contract to support the launch of the first digital terrestrial television multiplex in Uzbekistan by delivering a minimum of 12 free-to-air TV channels and four radio channels over satellite across the entire country.
HD+, a full end-to-end pay-TV platform in Germany, continued to expand its subscriber base and content offering. Notably in Q3 2017, HD+ signed an agreement with Discovery Networks Germany to deliver a ‘Eurosport package’ providing customers with a range of premium sports events.
MX1, the integrated media solutions business, also continued to see some commercial success with its comprehensive product offering, enhancing the business portfolio of services and future growth outlook. A new CEO (Wilfried Urner) has been appointed in order to drive the expected growth from this business unit.
 Net profit attributable to SES shareholders
 Based on rating agency methodology (treats hybrid bonds as 50% debt and 50% equity)