Q1 2012: SES Continues on Its Growth Track (capacity in Africa)

Broadcast

During the quarter, SES successfully launched the SES-4 satellite, the 50th satellite in the fleet. Brought into service in mid-April, the satellite -- which is the largest and most powerful in the fleet - will activate up to 124 transponders in the Atlantic Ocean region, serving the Americas as well as the EMEA region, and representing a significant growth driver for the group.

Satellite infrastructure has continued to develop well in the key European DTH (Direct-To-Home) TV markets, as shown by the 2011 Satellite Monitor survey published in March. A major milestone was passed as satellite's market reach grew beyond that of cable and of terrestrial reception, clear evidence of the market's preference for satellite.

HDTV is driving this positive development, with a number of capacity agreements having been signed, notably in Germany following the analogue switch-off at the end of April. Significant capacity agreements were also concluded in Latin America, the UK and the Middle East.

Revenue in the first quarter of EUR 450.2 million was 5.1% higher as reported, and 3.5% ahead on a constant foreign exchange ("FX") basis. Reported EBITDA grew 4.9% to EUR 337.3 million -- a rise of 3.4% on a constant FX basis. The group EBITDA margin for the quarter was 74.9%, derived from an infrastructure margin of 83.7% and a services margin of 15.0%.

Operating expenses increased EUR 6.0 million (EUR 4.3 million on a constant FX basis) over the prior year period, driven by the increased cost of sales associated with a strong performance from Services. Excluding this, operating costs were flat, year-on-year. Net financing costs were EUR 10.3 million higher than the prior year period, the result of higher net debt levels and lower foreign exchange gains in the period.

Depreciation rose year-on-year, driven by the stronger U.S. dollar and an impairment charge in the quarter of EUR 3 million related to circuit failures on the AMC-16 satellite (see below). Operating profit grew 2% to EUR 210.5 million, while profit of the group was EUR 151.2 million, compared to EUR 149.4 million in the same period of 2011.

SES' contract backlog was EUR 6,831 million at the end of the quarter, compared to EUR 6,591 million the year before. At 31 March, the net debt/EBITDA ratio stood at 3.01 times.

International revenues increased by 8.6% over Q1 2011 on a constant FX basis. Available satellite capacity increased by 83 transponders compared to Q1 2011. The capacity growth was driven by the YahLive payload on YahSat 1A (+23), QuetzSat-1 (+32), SES-3 relocation to 108.2 deg E (+8), AMC-3 relocation to 67 deg W (+16), the shift of AMC-6 (+3) capacity into Latin America, and a satellite payload reconfiguration (+1). Utilisation increased by 52 transponders compared to Q1 2011, resulting in an overall utilisation rate of 75.6%. The primary revenue growth drivers were from QuetzSat-1, NSS-12, and AMC-4 at 67 deg W. Average revenue per utilised transponder remains stable.

In Africa and the Middle East, a major capacity deal was signed with ICCES. The agreement includes 116 MHz of Ku band capacity on the SES-4 satellite, to support the extension of VSAT services to serve new markets across the region.

SES and its partners successfully deployed the emergency.lu communication service in South Sudan in January. The service provides vital connectivity for the United Nations humanitarian operations in that country. The service is designed to support more effective rapid response to natural disasters and man-made crises. Its deployment in South Sudan is helping to coordinate the recovery and development aid efforts in this young nation, which continues to suffer from famine and ethnic clashes.

The total Group transponder utilisation at the end of March was 79.1%, representing 1,058 of the 1,337 transponders commercially available.