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SES slashes Dividend by 50%

March 2, 2020

By Chris Forrester

SES has reported revenues “in line” with financial expectations, but the numbers showed that group revenues fell 1.3 per cent. SES announced that its “A” general class shareholder Dividend would be 40 euro-cents per share, a fall of 50 per cent on last year.

It is its A class shares that are held by the general public and financial institutions. SES B class shares are held by the Luxembourg government, and a couple of Luxembourg-owned public investment banks (Banque et Caisse d’Epargne (BCEE) and Société Nationale de Crédit et d’Investissement (SNCI)). The B class shareholders also see a dividend cut from 32 euro-cents to 16 euro-cents per share.

SES said the company is considering spinning off its Networks division which saw revenues grow 4.5 per cent during the year (and a rise of 20 per cent over the past two years).

In a statement, SES announced the next phase of strategic transformation “to position itself for future growth and deliver value to both customers and stakeholders that includes the potential separation of its Networks business within SES, a programme of innovation, greater operational and strategic focus and resource rationalisation and optimisation across the business”.

An SES “comprehensive programme” to plan for future growth, called ‘Simplify and Amplify’ and executed throughout 2020, comprises a series of strategic actions to enable SES to best deliver against its declared purpose of doing the extraordinary in space to deliver amazing experiences everywhere on Earth. It is the next phase in a process that began in 2017 when SES first established distinct units for its video and data businesses.

Other financial highlights include:

  • Group revenue of €1.9839 billion down 1.3 per cent as reported (-3.8 per cent YOY at constant FX)
  • Free cash flow before financing activities of €826.3 million (2018: €870.5 million) representing 41.7 per cent of group revenue
  • Video revenues, now 61 per cent of revenues, declined 7.8 per cent to €1.21 billion
  • 365 million homes now getting services from SES
  • More than 3000 HD and UHD channels carried
  • Contracted backlog €6.3 billion

The Simplify and Amplify concept has four key elements:

  • Create Pure-Play Verticals
  • Focus on Core Strengths
  • Simplify Operations
  • Innovate for the Future

“Our vision is content and connectivity everywhere, and we are positioning SES to realise this vision and deliver growth and value for our customers in their fast-changing markets,” said Steve Collar, CEO of SES. “This next phase of our strategic transformation is designed to ensure that we prepare SES for an exciting future while delivering on our commitments to customers and to the market today. In so doing, we will make SES a simpler organisation to do business with and deliver substantial value to all of our stakeholders.”

As to the cutting of its Dividend, SES says: “The proposed dividend of EUR 0.40 underscores our continued commitment to maintaining SES’ Investment Grade credit rating, providing an attractive return to shareholders while supporting the short-term investment peak in our fast-growing, highly differentiated Networks business. We believe that we have established a unique and non-replicable value proposition within our Networks business with verticals such as Aeronautical, Cruise and Government offering strong growth opportunities that demand focus and scale. Accordingly, we are undertaking a programme of transformation that includes the consideration to separate our Networks business within SES and potentially provide it with access to external capital.”

SES guidance for the upcoming year (to December 31st 2020) in terms of group revenue is €1.92-€2 billion) and down on previous guidance of €2.06-€2.16 billion. Video revenue expectations are also reduced.

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