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Daily news   |
SES Full Year
2021 Results February 24, 2022 SES S.A. announces
financial results for the year ended 31 December
2021. Steve Collar, CEO of
SES, commented: “2021 was a strong
year for SES with revenue and Adjusted EBITDA in
line with our objectives, over €1.2 billion of
commercial renewals and new business wins secured,
an increase in our Adjusted Net Profit reflecting
our focus on all cost lines, and our net debt to
EBITDA reaching a 6-year low. Our Video business
delivered an improved trajectory on the back of
important renewals with our long-term broadcast
partners, growing number of HD TV channels, and the
expansion of the HD+ offering in Germany. Our
Networks business performed well against the
backdrop of an extended COVID environment, with a
recovery in Mobility contributing to positive
year-on-year growth in H2 2021, which we expect to
accelerate over 2022. 2021 was also a pivotal
year for our C-band initiative in the US as we
completed phase one clearing ahead of the FCC
deadline and received $977 million (pre-tax) in
accelerated relocation payments. Phase two is fully
on track with a busy year of satellite launches in
2022, paving the way to triggering an additional
incentive of $3 billion in late 2023. Looking forward and in
2022 we will bring our network of the future to the
market with SES-17 entering commercial service in
July and the first services on O3b mPOWER delivered
before the end of the year. Customer engagement is
growing well with almost a billion dollars of
backlog now signed, including five of the top six
major cruise lines, Microsoft, Marlink, and our
landmark joint venture partnership with Reliance
Jio. We also welcome the progress being made by the
European Commission in the definition of a secure
and sovereign multi-orbit European space
architecture which aligns well with both our
infrastructure and our vision. Finally, we returned €275
million of cash to shareholders in 2021,
underscoring our commitment to sustained and
attractive shareholder returns. Increasing the base
dividend for 2021 by 25% reflects our confidence in
the long-term growth fundamentals and value creation
of SES.” 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.
·
Underlying revenue (excluding
periodic and other) was lower by 2.6% year-on-year
at €1,780 million. ·
Video underlying revenue of
€1,046 million represents a reduction of 4.6%
year-on-year, compared with -8.0% year-on-year in
2020, whereby lower revenue from mature markets was
partially offset by the growth of HD+ in Germany and
a recovery in Sports & Events. ·
Networks underlying revenue
of €734 million was flat compared with 2020 (+0.5%)
with growth in Government (+3.8%) offsetting
short-term COVID-related impacts on Mobility (-1.5%)
and near-term declines in Fixed Data (-1.8%).
Networks delivered a positive year-on-year
performance in H2 2021 reflecting a recovery in
Mobility, combined with new revenue from Cloud and
MNO customers. ·
Adjusted EBITDA of €1,091
million represented an Adjusted EBITDA margin of
61.2% (2020: 61.4%) with recurring operating
expenses of €691 million (2020: €707 million). ·
Adjusted EBITDA (as reported)
excludes restructuring expenses of €8 million (2020:
€40 million), an accelerated relocation payment of
€839 million (2020: nil) associated with the
repurposing of US C-band spectrum, and US C-band
operating expenses (net of reimbursement income) of
€60 million (2020: €33 million). ·
Adjusted Net Profit (as
reported) improved to €323 million including lower
depreciation expense (down 8.0% year-on-year), a
21.1% reduction in the net interest expense, a net
foreign exchange gain of €37 million (2020: loss of
€32 million), and income tax expense of €34 million
(2020: income tax expense of €66 million). ·
Adjusted Net Profit excludes
(net of tax) the restructuring expenses and C-band
items noted above, as well as €724 million in
non-cash impairment expenses comprising €673 million
relating to the write-down of goodwill in the North
American cash generating unit, triggered largely by
the recognition of the income from the first US
C-band accelerated relocation payment of €839
million (pre-tax), and €51 million of net impairment
expense for space segment assets. ·
At 31 December 2021, Adjusted
Net Debt (including 50% of the €1.175 billion of
hybrid bonds as debt) stood at €3,120 million,
compared with €3,418 million 12 months ago, and
represented an Adjusted Net Debt to Adjusted EBITDA
ratio of 2.9 times (compared with 3.0x a year ago).
Cash and cash equivalents of €1,049 million at 31
December 2021 included €344 million received as part
of the C-band accelerated relocation payment, while
the balance of the payment (€518 million) was
received in early January 2022. ·
Contract backlog at 31
December 2021 was €5.2 billion (€5.8 billion gross
backlog including backlog with contractual break
clauses). ·
Board of Directors has
proposed a 2021 dividend of €0.50 per A-share and
€0.20 per B-share, representing a 25% increase over
the prior year. Subject to shareholders’ approval at
the Annual General Meeting (7 April 2022), the
dividend will be paid on 21 April 2022. Financial Outlook ·
2022 group revenue (assuming
an FX rate of €1=$1.13, nominal satellite health,
and nominal launch schedule) is expected between
€1,750-1,810 million, with mid-single digit
year-on-year decline in Video and low- to mid-single
digit year-on-year Networks growth. ·
2022 Adjusted EBITDA
(excluding restructuring and US C-band repurposing)
is expected to be between €1,030-1,070 million
(assuming an FX rate of €1=$1.13, nominal satellite
health, and nominal launch schedule). The implied
year-on-year increase in recurring operating
expenses reflects additional operating expenses in
Networks associated with the entries into commercial
service of SES-17 and O3b mPOWER during H2 2022. ·
SES-17 and O3b mPOWER are
expected to be important drivers of low- to
mid-single digit average growth (at constant FX) in
group revenue and Adjusted EBITDA from 2023 onwards.
This outlook anticipates a ‘flattening of the curve’
in Video to low-single digit average decline being
more than offset by an acceleration to
high-single/low-double digit average growth in
Networks. ·
Capital expenditure (net cash
absorbed by investing activities excluding
acquisitions, financial investments, and US C-band
repurposing) is expected to be €950 million in 2022
reflecting the growth investments in SES-17 and O3b
mPOWER. Thereafter, capital expenditure is expected
to reduce to €540 million in 2023, €570 million in
2024, €380 million in 2025, and €360 million in
2026. 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: 59% of group
revenue At 31 December 2021, SES
delivers 8,386 total TV channels (up 1%
year-on-year) to more than 355 million TV homes
around the world. This includes some 3,105 TV
channels in High Definition which has grown by 6%
compared with 31 December 2020. 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 trends in 2020 and
2019. 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
(launched in October 2021) and HD+ IP (launched in
February 2022), into the market are expected to
support the future development of the business. In addition,
international market revenue was flat year-on-year,
while revenue from Sports & Events is continuing to
recover, with improved performance compared with
2020 which was impacted by cancellations and delays
caused by the COVID pandemic. Networks: 41% of group
revenue In Government, the
positive contribution from new MEO- and GEO-enabled
network and institutional solutions for both the US
and Global customers led to year-on-year growth in
revenue compared with 2020. This was partly offset
by the cancellation of services during Q3 2021
resulting from the US withdrawal from Afghanistan. For Fixed Data underlying
revenue decreased by a low-single digit amount
compared with the prior year as lower year-on-year
revenue in the Pacific region and wholesale business
in Africa was not yet being balanced with the
ongoing growth in new business from tier one mobile
network operators, notably in the Americas and Asian
regions, as well as new revenue in the global cloud
segment. In the Mobility segment,
the continued effects of the COVID pandemic on
customers in the commercial aviation and cruise
segments resulted in lower revenue compared with
2020. This was partly offset by a positive
year-on-year performance in commercial shipping
revenues. The long-term fundamentals remain strong
with sequential revenue improvement during H2 2021
reflecting recovery in Cruise, as ships return to
service, and new business providing additional
capacity to commercial aviation customers. Future satellite
launches
In October 2021, SES-17
was successfully launched by Arianespace. This
Ka-band high throughput satellite is expected to
enter commercial service by mid-2022 and will
deliver broadband connectivity over the Americas,
the Caribbean, and Atlantic Ocean. Thales Avionics
is the anchor customer and will use SES-17 to
deliver connectivity solution for commercial
aviation clients over North America. In November 2021, SES
ordered two geostationary Ku-band satellites for its
prime orbital slot at 19.2 degrees East to maintain
the premium services it provides to its European
video customers and to capture new opportunities in
the region. These two replacement satellites (ASTRA
1P and ASTRA 1Q) are expected to replace the four
satellites (ASTRA 1KR, ASTRA 1L, ASTRA 1M, and ASTRA
1N) that are currently serving customers at this
orbital location, realising significant efficiencies
by reducing capital expenditure needs at 19.2
degrees East by more than 50%. CONSOLIDATED INCOME
STATEMENT Year ended 31 December
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 As at 31 December
1) Trade and other
receivables (current and non-current) include €1,273
million related to US C-band repurposing (31
December 2020: €21 million). 2) Fixed Asset
Suppliers (current and non-current) includes €655
million (31 December 2020: €313 million) related to
US C-band repurposing CONSOLIDATED STATEMENT
OF CASH FLOWS Year ended 31 December
1) Including €38
million related to US C-band repurposing (2020: €10
million). 2) Net of dividends received on treasury
shares of €2 million (2020: €2 million)
SUPPLEMENTARY
INFORMATION 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: $1.13)
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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