SES S.A. has reported its financial results for the six months ended 30 June 2016 which show a 4.2% drop in turnover of €956.8 million, with net profit of €227.3 million

The main figures for the first half of 2016 include the following:

- Revenue of €956.8 million, down 4.2% as reported (-4.8% at constant FX1)
- EBITDA of €699.8 million, down 5.4% as reported (-5.8% at constant FX1 and same scope2)
- EBITDA margin 73.1% (H1 2015: 74.1%) and 73.5% at same scope2
- Net profit attributable to shareholders of €227.3 million (H1 2015: €275.4 million)
- Net operating cash flow of €566.8 million (H1 2015: €784.4 million)
- Substantial contract backlog of €7.3 billion (H1 2015: €7.4 billion)

Karim Michel Sabbagh, President and CEO, commented: “SES’s first half results were in line with management’s expectations, while the appeal of SES’s differentiated and holistic solutions to major customers has continued to deliver substantial contract backlog and validates SES’s capability-driven strategy. SES is well positioned with strong foundations to generate sustainable and long-term growth. SES is globalising the business and developing the strongest, most scalable and flexible solutions across the four market verticals. SES has continued to build market-leading positions in global video and aeronautical connectivity. In Government, SES is delivering robust performance with the benefit of new contracts and renewals with the U.S. Government, as well as expanding with new global government customers. In Enterprise, SES is growing the proportion of revenue from tier one global/regional customers and the provision of value-add managed services and network platforms. Although changing market dynamics result in short-term headwinds for the balance of SES’s Enterprise business, these will be more than offset in the medium to longer term, as SES continues to scale up and complement its global network and capabilities with additional products and solutions. This global network will seamlessly combine our GEO and MEO systems. O3b expands SES’s global reach and satellite-enabled solutions, augments SES’s differentiated capabilities in data-centric verticals and enhances SES’s growth profile, including Enterprise. The transaction to move to 100% exceeds SES’s investment hurdle rates and accelerates over EUR 100 million of synergies by 2021. The completion of the equity raising and hybrid bond issue will allow SES to execute this important transaction, while retaining SES’s investment grade credit status (BBB/Baa2) and commitment to a progressive dividend policy.”

SES’s fully protected contract backlog remains robust at €7.3 billion as at 30 June 2016 (30 June 2015: €7.4 billion), benefiting from new business and renewals across SES’s four market verticals.

Video: 70% of group revenue (H1 2015: 66%)

SES has continued to benefit from the transition from Standard Definition (SD) to High Definition (HD) TV channel formats. Of the 7,463 total TV channels broadcast by SES’s global fleet (30 June 2015: 7,164), 32.7% are broadcast in HD (30 June 2015: 30.4%). This represents a growth in HDTV channels of 12.1% (YOY) to 2,442 HDTV channels. At 30 June 2016, 60% of SES’s total TV channels are broadcast in MPEG-4 (30 June 2015: 54%).

SES is also growing its commercial Ultra HD (UHD) portfolio. At 30 June 2016, SES now broadcasts 16 commercial UHD TV channels (30 June 2015: none), including all regional variations. In January 2016, SES and Vivicast Media unveiled UHD-1 for audiences of North American cable operators and telcos. Then, in May 2016, SES announced an agreement for the world’s first Ultra HD sports channel, Viasat Ultra HD. The new channel is to be launched in Scandinavia in August 2016, and broadcasts a range of sporting events, including selected live Champions League matches.

Enterprise: 12% of group revenue (H1 2015: 15%)

75% of SES’s Enterprise revenue is comprised of major global and regional service providers, telcos and mobile operators, as well as applications requiring wide beam satellite coverage. These include corporate networks, Enterprise Broadband and transaction processing (such as for petrol stations and ATMs), which SES complements with the provision of managed services and network platforms to deliver additional value-added solutions.

SES is repositioning its Enterprise business and developing new products and solutions, in the context of the changing market dynamics in this vertical. While there may be some further headwinds in the short term, these initiatives will enhance SES’s ability to deliver optimal solutions for customers over the medium to long term.

Mobility: 5% of group revenue (H1 2015: 3%)

Growth in revenue reflected the important benefit from the commercialisation of capacity across SES’s existing global fleet for in-flight connectivity. In H1 2016, SES also signed two further significant long-term pre-commitments for future SES satellites, which contributed to SES’s future contract backlog.

Government: 12% of group revenue (H1 2015: 13%)

Reported revenue was lower than the prior year period, which had benefitted from the accelerated revenue contribution associated with the construction phase of the Wide Area Augmentation Systems (WAAS) and Global-Scale Observations of the Limb and Disk (GOLD) hosted payloads. Excluding these two U.S. Government-funded payloads, Government revenue was 8.9% lower (at constant FX).

SES now supports a total of 57 global government customers and has continued to expand its global government business. In January 2016, SES secured a new contract with the Kativik Regional Government, in Canada, to provide satellite services across the northern Quebec region. The contract, which began on 30 June 2016, includes 12 transponders on SES-2 to deliver critical C-band communications capabilities. The service will triple the bandwidth currently available across the region.