SES Profits +6% To €600.8 Mil. In 2014
SES S.A. (NYSE Euronext Paris and Luxembourg Stock Exchange: SESG) reports financial results for the year ended 31 December 2014.
Delivering revenue growth with operational optimisation, driving 5.0% growth in EBITDA
- Revenue of EUR 1,919.1 million, up 4.0% at constant FX over the prior year
- EBITDA of EUR 1,428.0 million, up 5.0% at constant FX over the prior year
- EBITDA margin improved to 74.4% from 73.7% at constant FX
- Profit of the group up 6.0% to EUR 600.8 million; EPS up 5.6% to EUR 1.49
- 2014 Dividend of EUR 1.18 per A-share proposed, representing 10% increase over 2013
Executing on SES’s strategic principles and positioning for long-term growth
- Infrastructure revenue increased by 3.8%, with 12.2% growth in “pull-through” from services
- 5.1% increase in HD TV channels over SES satellites, commensurate with revenue growth
- Six new satellites procured since 1 January 2014 to build future growth
- EUR 1.9 billion of new financing agreed, reducing cost of debt and extending average maturity
- Strong balance sheet with Net Debt / EBITDA of 2.77x (31 December 2013: 2.79x)
- Fully protected contract backlog remains strong at EUR 7.3 billion
Karim Michel Sabbagh, President and CEO, commented:
“SES delivered another year of strong revenue and EBITDA growth in 2014. This reflects a series of successes in key market verticals and geographies in securing new business, as well as further serving our long-standing customers. We have continued to execute on SES’s strategic principles for delivering long-term profitable growth, and enhancing our world-leading satellite operations. We have expanded our core video business by developing new neighbourhoods, securing new contracts and increasing channel count. Our investments in innovative solutions that bring together linear and non-linear broadcasting are also paving the way for the introduction of Ultra HD TV. Data and Mobility applications are an increasing source of demand, and SES has continued to build its capabilities across multiple verticals – securing major new contracts for fixed networks as well as maritime and aeronautical connectivity. Our government business has continued to develop, with important new business wins despite the prevailing U.S. budget constraints. Within the business, our focus on operational optimisation has improved margins and enhanced overall profitability.
“Looking forward, 2015 will be a year in which SES continues to build for future growth. The recent announcements of the SES-14, SES-15 and SES-16/GovSat programmes demonstrate SES’s commitment to generating long-term revenue growth as part of our existing investment plan. These satellite programmes will use the latest technological innovations and leverage SES’s differentiated capabilities to deliver new capacity that will optimally serve attractive market verticals across the globe.”
Revenue and EBITDA development
- Revenue up 4.0% at constant FX to EUR 1,919.1 million
- EBITDA up 5.0% at constant FX, benefiting from improved margin of 74.4%
Reported revenue increased by 3.0%, or 4.0% at constant FX, with growth in European and International infrastructure sales, combined with a strong European services performance, being the key drivers. The sale of eight transponders to Eutelsat, as part of the comprehensive agreement in January 2014, was a significant overall revenue contributor to the European growth of 9.1% (at constant FX). This was complemented by new Direct-To-Home (DTH) contracts, European services growth and the contribution of the EGNOS hosted payloads. The International segment revenue grew by 8.3% at constant FX, benefiting from the continued success in commercialising new capacity brought into service in emerging markets. The North America region has continued to be negatively impacted by the U.S. Government sequester, which was the principal factor in the revenue decrease of 13.5% at constant FX.
Operating expenses decreased 1.3% as reported, and increased 1.3% at constant FX, mostly driven by variable costs associated with growth in services revenues. The continued optimisation of operating costs, coupled with revenue growth, has led to improved margins.
Reported EBITDA increased by 4.6%, or 5.0% at constant FX, leading to an improved EBITDA margin of 74.4%, compared with 73.3% (73.7% at constant FX) for the previous year.
Depreciation and amortisation of EUR 545.4 million increased 6.2%, or 6.5% at constant FX. This reflects the on-going expansion of SES’s fleet, with three satellites launched during 2013 and two satellites in 2014. The depreciation expense also included an impairment charge against AMC-15, due to further power degradation being noted on the satellite since Q3 2014.
Operating profit of EUR 882.6 million was 3.7% higher as reported, and increased 4.1% at constant FX. Net financing costs of EUR 155.0 million reduced by 10.7%, benefiting from SES’s successful refinancing activities since 2013. This was complemented by a positive net foreign exchange gain resulting from the strengthening of the U.S. dollar exchange rate, as well as a lower value adjustment on financial assets. These more than offset the reduction in capitalised interest from EUR 41.1 million to EUR 23.7 million.
The income tax expense for the year was EUR 85.2 million (2013: EUR 87.5 million), resulting in an effective tax rate of 11.7% (2013: 12.9%).
The share of loss attributed to associates of EUR 39.0 million (2013: EUR 21.7 million loss) principally relates to SES’s 45% interest in O3b Networks, which entered into commercial service in September 2014. As a result, net profit attributable to SES shareholders of EUR 600.8 million was EUR 34.3 million (6.0%) higher than 2013, while earnings per share grew by 5.6% to EUR 1.49.
The group’s future income profile benefits from a fully protected contract backlog of EUR 7.3 billion as at 31 December 2014, representing approximately four times 2014 group revenue.
The Board is proposing a dividend of EUR 1.18 for each Class A share (2013: EUR 1.07) and EUR 0.47 for each Class B share (2013: EUR 0.43), representing an increase of 10% over the prior year. The dividend, which is subject to approval at the company’s annual general meeting on 2 April 2015, will be paid to shareholders on 22 April 2015.