SES maintains upward progress

SES says that all its revenue and core profit metrics are being maintained. Indeed, its year-on-year quarterly results are most impressive, with this latest quarter’s revenues up 11.4 per cent on 2009’s numbers. However, SES managed to exclude business from its ND Satcom subsidiary, which it sold earlier this week, in its 9-month results announcement Oct 27. SES is now carrying 291 HDTV channels across its fleet.

Romain Bausch, President and CEO of SES, commented: “SES continues to make steady progress, building on the newly launched incremental capacity on the NSS-12 and Astra 3B satellites, covering the Indian Ocean Region and Middle East, respectively. SES-7 (formerly ProtoStar-2) has been fully integrated into our fleet, and we have begun selling the Ku-band capacity into the Asian market. In addition, HD TV remains a significant growth driver, with 291 HD channels broadcast on SES satellites at the end of the quarter, and interest in 3D TV continues to build. In a subsequent development, following its classification as an asset held for sale, SES has agreed the sale of a 75.1 per cent interest in ND SatCom to Astrium Services.”
– Year to date reported revenue up 6.8 per cent to €1,287.2 million (2009: EUR
1,205.1 million)
– Recurring1 revenue of €1,277 million, an increase of 4.7 per cent over the prior
year period
– Reported EBITDA rose 6.3 per cent to €961.5 million (2009: €904.8 million),
delivering an EBITDA margin of 74.7 per cent
– Industry-leading infrastructure EBITDA margin of 83.4 per cent
– Recurring EBITDA of €973 million, up 4.4 per cent over the prior year period
– Operating profit increased 7.9 per cent to €591.6 million (2009: €548.3 million)
– Profit of the group was €332.7 million (2009: €364.3 million)

Third quarter reported revenue of €442.3 million grew 11.4 per cent versus prior year period, while reported EBITDA rose 12.4 per cent to €328.8 million. The group EBITDA margin for the quarter was 74.3 per cent, with an infrastructure EBITDA margin of 82.9 per cent. Operating profit grew 14.9 per cent to €205.3 million. On a recurring basis, revenue grew by 4.7 per cent to €437 million, and EBITDA grew 5.8 per cent to €332 million. Non-operating charges – financing charges and taxation – were up 8.9 per cent on the corresponding quarter of 2009, with a lower tax charge largely offsetting a limited increase in underlying interest expenses and the impact of non-recurring foreign exchange income recorded last year. The relatively low Q3 tax charge reflects the impact of investment tax credits on fixed asset investments. Profit of the group, at €141.3 million, was ahead of the prior year period by 19.3 per cent, reflecting the positive impact of the operating profit growth.

SES Astra’s business development in the quarter was driven by various elements: Astra 3B’s Middle East beam was wholly committed, and 11 of the 12 transponders were generating revenue in the quarter; Sogecable started services on two additional transponders, supporting its HD TV offering for the Spanish market at 19.2 degrees East and Astra2Connect gathered momentum, signing agreements to support satellite internet connectivity in Albania, Belarus, Hungary, Moldova, Ukraine and the Middle East region.

As interest in 3D TV offerings gained momentum, SES Astra launched an initiative to support the introduction of 3D TV in Europe. As part of the initiative, broadcasters and set-top box manufacturers developed a common understanding of the minimum technical framework for the introduction of 3D TV.

SES reiterated its guidance of the recurring revenue growth target in a range of 4 per cent to 5 per cent for 2010, with recurring EBITDA increase in line with the recurring revenue growth. Infrastructure activities are expected to continue to deliver a recurring EBITDA margin above 82 per cent. Services activities are expected to deliver a recurring EBITDA margin of between 11 per cent and 15 per cent.

For 2010 to 2012 SES continues to target a compound annual growth rate for recurring revenue of 5 per cent. This growth rate includes the negative impact of the termination of analogue DTH transmissions in Germany, the bulk of which is expected to occur by mid-year 2012. This top line growth translates into a corresponding recurring EBITDA growth.

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