Market Overview

SES S.A.: Half Year 2018 Results

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SES S.A. announced solid financial results for the six months ended 30
June 2018, in line with the company's expectations, with double-digit
underlying growth in SES Networks driving an increase in overall
underlying group revenue.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180726006030/en/

Half Year 2018 Results (Photo: Business Wire)

Half Year 2018 Results (Photo: Business Wire)

Key financial highlights

  • Reported revenue of EUR 981.4 million (H1 2017: EUR 1,048.7 million),
    down 0.5% at constant FX(1)
  • Underlying revenue(2) of EUR 961.4 million; up 1.5%(1)
    (SES Video: -2.3%(1,2) and SES Networks +10.6%(1,2))
  • H1 2018 EBITDA margin of 63.3% (H1 2017: 65.5%); 64.1% excluding
    restructuring charge of EUR 8.4 million
  • Net profit attributable to SES shareholders of EUR 227.7 million (H1
    2017: EUR 275.5 million)
  • Free Cash Flow before financing of EUR 438.7 million, up 16.9%
    compared with H1 2017
  • Reaffirming revenue and EBITDA outlook for 2018 with revenue expected
    within the top half of the range and supporting the previously implied
    group EBITDA of over EUR 1,270 million, albeit at modestly lower
    EBITDA margin
  • Reaffirming 2020 revenue outlook for SES Networks with a more prudent
    forecast for SES Video. Updated 2020 EBITDA margin better reflects
    business mix going forward, with growing contribution of Networks and
    lower expectation for Video
         
    Change (%)
EUR million H1 2018   H1 2017 Reported   Constant FX(1)
Revenue 981.4 1,048.7 -6.4% -0.5%
EBITDA 621.1 687.1 -9.6% -4.4%
Operating profit 277.7 306.0 -9.3% -5.6%
Net profit attributable to SES shareholders 227.7 275.5 -17.3% n/a
Earnings per share   EUR 0.45   EUR 0.56   -19.6%   n/a

1) Comparative figures are restated at constant FX to neutralise
currency variations

2) Excluding periodic and other revenue
(disclosed separately) that are not directly related to or would distort
the underlying business trends

Steve Collar, President and CEO, commented: "We have delivered a
strong first half of 2018, fully in line with our expectations and
continuing our momentum from the first quarter. It is pleasing to see
that our underlying revenues are growing again, fuelled by sustained
performance from our Networks business and in particular from our
aeronautical and government customer segments.

"Our strong focus on execution in the core of our business delivered
important renewals at our video neighbourhoods in Western Europe and the
U.S., while we also secured new agreements to expand video platforms in
Latin America and Eastern Europe.

"Strong sales execution in SES Networks delivered important new
contracts across all verticals, including in our Fixed Data business, as
well as Mobility which continues to grow strongly. We also secured
important new agreements in both our U.S. and Global government
businesses and the strong growth in the first half of 2018 was
underscored with the recent signature of an important 'Blanket Purchase
Agreement' with the U.S. Government for services on our O3b fleet.

"We have completed the review of the outlook, as described during our Q1
2018 results, and we are pleased to reaffirm our revenue and EBITDA
outlook for 2018. Our expectation is that we will be able to deliver
revenue within the top half of the range and deliver on our implied
EBITDA, albeit with a modestly lower EBITDA margin. 2020 also looks
solid. We have trimmed our expectations of our video business and
adjusted our forecast EBITDA margin, reflecting the growing importance
of SES Networks in our business mix and the end-to-end managed service
nature of that business. Overall the picture for SES is a healthy one
with a large and profitable video business, coupled with a dynamic and
differentiated Networks business delivering double-digit year-on-year
growth for the foreseeable future.

"On the topic of U.S. C-band, I am pleased with the FCC's emphasis on
the protection of incumbent users from harmful interference and the
positioning of our market-based solution as a lead proposal in its
recent meeting. Our solution will be able to deliver a landmark win-win,
freeing up important spectrum quickly to support mid-band 5G roll-out
across the U.S. while protecting and enhancing our video distribution
neighbourhoods for the tens of millions of households that they serve."

Key business highlights

  • Group revenue of EUR 981.4 million and EBITDA of EUR 621.1 million was
    in line with the company's expectations, with underlying revenue
    (excluding periodic and other) of EUR 961.4 million growing by 1.5%
    (at constant FX).
  • The implementation of IFRS 15 accounting change is now expected to
    have no negative impact (previously EUR 15-20 million) as the standard
    makes an allowance for a transitional adjustment. The 2018 outlook has
    been restated accordingly, adding back the EUR 15-20 million, and an
    amount of EUR 10.4 million has been recorded in H1 2018 revenue.
  • SES Video's underlying revenue of EUR 650.0 million in H1 2018 was
    2.3% lower than H1 2017 at constant FX with growth in video services
    offsetting lower video distribution revenue. Q2 2018 underlying
    revenue of EUR 328.5 million included a EUR 10.4 million transitional
    adjustment, as noted above.
  • Important renewals were signed across SES' core video neighbourhoods
    (including Viacom, M7 Group and Comcast). These complemented
    multi-year agreements in Latin America (PCTV) and Central and Eastern
    Europe (Telekom Srbija). MX1 signed additional business, notably to
    support the distribution of UHD broadcasting of the FIFA World Cup.
  • SES Networks' underlying revenue of EUR 311.4 million was 10.6% higher
    than H1 2017 at constant FX. Mobility (+30.9%) and Government (+17.4%)
    delivered strong growth, while Fixed Data revenue (-5.6%) was lower
    than the prior period. SES Networks' underlying revenue in Q2 2018 was
    EUR 158.4 million (up 12.7% versus Q2 2017 at constant FX).
  • The business continued to build momentum and secured important new
    agreements across all Networks' verticals with Fixed Data business
    (Wateen Telekom and Our Telekom); in Mobility (STECCOM and MSC) and in
    Government (Burkina Faso and the European Space Agency), as well as a
    Blanket Purchase Agreement with the U.S. Department of Defense.
  • Periodic and other revenue in H1 2018 was EUR 20.0 million compared
    with EUR 39.6 million in H1 2017 at constant FX which included a
    significant up-front contribution from the sale of transponders to
    Global Eagle Entertainment.
  • EBITDA margin of 63.3% included a restructuring charge of EUR 8.4
    million associated with the group's on-going optimisation programme.
    Excluding this item, the EBITDA margin was 64.1%.
  • Net profit attributable to SES shareholders of EUR 227.7 million in H1
    2018 included a positive tax contribution related to the recognition
    of a deferred tax asset following the entry into service of
    SES-16/GovSat-1 in Q1 2018, as well as the transfer of the O3b Jersey
    business to Luxembourg in Q2 2018.
  • Net debt to EBITDA ratio (as per the rating agency methodology) of
    3.53 times increased from 3.27 times at Q4 2017 due mainly to the
    decrease in 12-month rolling EBITDA caused by FX and lower periodic
    and other revenue, as well as the higher proportion of capital
    expenditure, interest and dividend payments in the first half of 2018.
    The net debt to EBITDA ratio is expected to be below 3.30 times by the
    end of 2018.
  • SES's fully protected contract backlog at 30 June 2018 stood at EUR
    7.1 billion (30 June 2017: EUR 7.4 billion at constant FX). Over 90%
    of the 2018 expected group revenue is already contractually committed.

OPERATIONAL REVIEW

Underlying revenue of EUR 961.4 million was EUR 14.4 million (or 1.5%)
higher than H1 2017 at constant FX. Total group revenue included
periodic and other revenue of EUR 20.0 million (H1 2017: EUR 43.6
million).

Second quarter 2018 underlying revenue of EUR 486.9 million was
EUR 14.5 million (or 3.1%) higher at constant FX than the prior period.
This included a transitional adjustment of EUR 10.4 million relating to
the first year adoption of changes in IFRS 15, as noted above.

REVENUE BY BUSINESS UNIT

         
    Change (%)
EUR million H1 2018   H1 2017 Reported   Constant FX
SES Video 658.5 699.7 -5.9% -2.0%
  • Underlying
650.0 693.2 -6.2% -2.3%
  • Periodic
8.5 6.5 n/m n/m
SES Networks 322.2 343.5 -6.2% +3.9%
  • Underlying
311.4 311.9 -0.2% +10.6%
  • Periodic
10.8 31.6 n/m n/m
Sub-total 980.7 1,043.2 -6.0% -0.1%
  • Underlying
961.4 1,005.1 -4.4% +1.5%
  • Periodic
19.3 38.1 n/m n/m
Other(1) 0.7 5.5 n/m n/m
Group Total   981.4   1,048.7   -6.4%   -0.5%

"Underlying" revenue represents the core business of capacity sales,
as well as associated services and equipment. This revenue may be
impacted by changes in launch schedule and satellite health status.
"Periodic" revenue separates revenues that are not directly related to
or would distort the underlying business trends on a quarterly basis.
Periodic revenue includes: the outright sale of transponders or
transponder equivalents; accelerated revenue from hosted payloads during
the course of construction; termination fees; insurance proceeds;
certain interim satellite missions and other such items when material.

1)
Other includes revenue not directly applicable to SES Video or SES
Networks

SES Video: 67% of group revenue (H1 2017: 67%)

SES Video's underlying revenue of EUR 650.0 million was EUR 15.5 million
(or 2.3%) lower than H1 2017 at constant FX. Total revenue for SES Video
in H1 2018 included EUR 8.5 million of periodic revenue (H1 2017: EUR
6.5 million).

Second quarter 2018 underlying revenue of EUR 328.5 million was
EUR 3.3 million (or 1.0%) lower at constant FX than the prior period and
EUR 10.2 million (or 3.1%) lower at constant FX excluding the impact of
IFRS 15 as noted above.

At H1 2018, SES distributed 7,941 total TV channels globally, up 3%
compared with H1 2017 reflecting positive development across all major
regions. 65.0% of total TV channels are now broadcast in MPEG-4 (H1
2017: 63.5%).

Acceleration of High Definition (HD) in Europe, North America and
International markets led to a year-on-year increase of 7% in the global
number of HDTV channels, now totalling 2,765, while the total number of
commercial UHD channels also increased from 20 to 38 compared with H1
2017, mainly driven by new Ultra HD (UHD) TV channels launched in Europe.

SES VIDEO REVENUE BY VERTICAL

         
    Change (%)
EUR million H1 2018   H1 2017 Reported   Constant FX
Video Distribution 495.5 537.5 -7.8% -3.7%
  • Underlying
487.0 531.0 -8.3% -4.2%
  • Periodic
8.5 6.5 n/m n/m
Video Services 163.0 162.2 +0.5% +3.7%
  • Underlying
163.0 162.2 +0.5% +3.7%
  • Periodic
-- -- n/m n/m
SES Video 658.5 699.7 -5.9% -2.0%
- Underlying 650.0 693.2 -6.2% -2.3%
- Periodic   8.5   6.5   n/m   n/m

Video Distribution

Underlying revenue in H1 2018 was 4.2% lower than H1 2017.

European distribution revenue remained stable compared with H1 2017.

North America decreased, as anticipated, due to the lower volume from
the switch-off of SD TV channels that had already been replaced with HD,
as well as lower revenue from the occasional use business.

In International, there is an encouraging commercial pipeline for SES-9
and SES-10 which will support the gradual ramp-up of these new assets.
This will offset the impact of market conditions which remain
challenging in the near term, contributing to lower (year-on-year)
underlying revenue.

Second quarter 2018 underlying revenue of EUR 242.7 million was
4.2% lower (constant FX) than the prior period.

Video Services

Underlying revenue was 3.7% higher in H1 2018 compared with the prior
period.

The HD+ business grew as a result of the increase in the annual
subscription fee (from EUR 60 per annum to EUR 70 per annum) that was
introduced at the start of Q2 2017.

This was complemented by stability in MX1 revenue as new business in
Europe, bundling capacity and services, offset non-renewal of certain
legacy contracts.

Second quarter 2018 underlying revenue of EUR 85.8 million was
9.5% higher (constant FX) including the EUR 10.4 million transitional
adjustment relating to IFRS 15, as noted above.

SES Networks: 33% of group revenue (H1 2017: 33%)

Underlying revenue of EUR 311.4 million was EUR 29.8 million (or 10.6%)
higher than H1 2017 at constant FX reflecting new revenue in
aeronautical mobility, as well as growth in both U.S. and Global
Government revenue.

Total revenue for SES Networks in H1 2018 included EUR 10.8 million of
periodic revenue. This compared with periodic revenue of EUR 31.6
million in H1 2017 which included the second of two significant up-front
revenue contributions from the sale of transponders to Global Eagle
Entertainment.

Second quarter 2018 underlying revenue of EUR 158.4 million was
12.7% higher (constant FX) than the prior period.

SES NETWORKS REVENUE BY VERTICAL

         
    Change (%)
EUR million H1 2018   H1 2017 Reported   Constant FX
Government 131.0 120.1 +9.1% +19.2%
  • Underlying
123.2 115.1 +7.1% +17.4%
  • Periodic
7.8 5.0 n/m n/m
Fixed Data 114.0 139.6 -18.4% -9.4%
  • Underlying
111.0 130.6 -15.0% -5.6%
  • Periodic
3.0 9.0 n/m n/m
Mobility 77.2 83.8 -7.8% +4.0%
  • Underlying
77.2 66.2 +16.6% +30.9%
  • Periodic
-- 17.6 n/m n/m
SES Networks 322.2 343.5 -6.2% +3.9%
- Underlying 311.4 311.9 -0.2% +10.6%
- Periodic   10.8   31.6   n/m   n/m

Government

Underlying revenue grew by 17.4% in H1 2018, compared with H1 2017.

There was strong growth in U.S. Government business which was driven by
the significant incremental adoption of SES Networks' O3b-based services
by the U.S. Department of Defense.

Global Government revenue also saw strong growth as the extension and
expansion of service commitments was complemented by the commencement of
services on SES-16/GovSat-1 which entered into commercial operation at
the end of Q1 2018.

Second quarter 2018 underlying revenue of EUR 63.8 million was
21.7% higher (constant FX) than the prior period.

Fixed Data

Underlying revenue in H1 2018 was down 5.6% year-on-year at constant FX.

Revenue in the Americas and Asia grew benefiting from the on-going
expansion of managed service agreements supporting telecommunications
companies and mobile network operators to extend their 3G and 4G network
reach.

Fixed Data revenue in Europe, the Middle East and Africa were lower
(year-on-year) reflecting the impact of lower wholesale capacity revenue
which offset positive momentum on the O3b Medium Earth Orbit (MEO) fleet.

Second quarter 2018 underlying revenue of EUR 54.8 million was
5.3% lower (constant FX) than the prior period.

Mobility

Underlying revenue grew by 30.9%, versus H1 2017, driven by strong
demand from aeronautical service providers in North America following
the entry into service of SES-15 in January 2018.

Maritime revenue was marginally negative (year-on-year) as lower
equipment-related revenue offset a positive contribution from services
contracted by new customers recently secured in cruise.

Second quarter 2018 underlying revenue of EUR 39.8 million was
31.3% higher (constant FX) than the prior period.

Other Revenue

Other revenue includes transactions not directly applicable to SES Video
or SES Networks and was EUR 0.7 million in H1 2018, compared with EUR
5.5 million in H1 2017. This included EUR 0.5 million in the second
quarter 2018 (Q2 2017: nil).

Future satellite capacity and fleet update

COMMITTED LAUNCH SCHEDULE

             
Satellite   Region   Application   Launch Date
SES-12(1) Asia-Pacific Video, Fixed Data, Mobility Launched (June 2018)
SES-14(1) Latin America Video, Fixed Data, Mobility Launched (January 2018)
SES-16/GovSat-1(2) Europe/MENA Government Launched (January 2018)
O3b (satellites 13-16) Global Fixed Data, Mobility, Government Launched (March 2018)
O3b (satellites 17-20) Global Fixed Data, Mobility, Government H1 2019
SES-17 Americas Fixed Data, Mobility, Government H1 2021
O3b mPOWER (satellites 1-7)   Global   Fixed Data, Mobility, Government   H1 2021

1) To be positioned using electric orbit raising (entry into service
typically around six months after launch)

2) Procured by
GovSat

The first six months of 2018 was an important and successful period, as
SES-14, SES-16/GovSat-1, four additional O3b satellites (satellites 13
to 16) and SES-12 were launched, adding important future growth
capabilities.

SES-16/GovSat-1 entered into service in March 2018, while O3b satellites
13 to 16 are now augmenting the existing constellation of 12 MEO
satellites. SES-14 and SES-12 are expected to enter into service by Q4
2018 and Q1 2019, respectively.

Financial Outlook

Following the review by the incoming CEO and CFO, the 2018 revenue
outlook is unchanged and expected to be within the top half of the
range, driven by strong growth in SES Networks' revenue. This
performance supports the previously implied Group EBITDA for 2018 of
over EUR 1,270 million (as shown below), notwithstanding the updated
EBITDA margin which reflects the increasing contribution of SES Networks
to the overall business.

Group revenue is expected to grow between 2018 and 2020, fuelled by the
strong growth outlook for SES Networks which is re-affirmed. The outlook
for SES Video revenue in 2020 is updated to reflect a more prudent
expectation for the business.

Over the same period, Group EBITDA is also expected to grow as the
additional revenue from SES Networks more than offsets the lower
expected EBITDA margin profile; in line with SES' strategy of delivering
best-in-class managed services and changing business mix.

Establishing SES as an integrated provider of media and connectivity
solutions will allow the business to maximise customer retention and
satisfaction; develop and capture new growth opportunities; increase
scale and operational leverage; enhance competitive advantage and enable
SES to deliver sustained and profitable growth over the medium-to-long
term.

         
    FY 2018(1)   FY 2020
SES Video revenue EUR 1,320 - 1,335 million EUR 1,250 - 1,300 million (from over EUR 1,350 million)
SES Networks revenue EUR 660 - 690 million EUR 850 - 900 million (from over EUR 875 million)
Other revenue Approximately EUR 10 million Approximately EUR 10 million
Total revenue EUR 1,990 - 2,035 million (within the top half of the range) EUR 2,110 - 2,210 million (from over EUR 2,235 million)
EBITDA margin Approximately 63% (from 64% - 64.5%) 62% - 64% (from over 65%)
Implied Group EBITDA   Over EUR 1,270 million(2)   EUR 1,340 - 1,410 million (from over EUR 1,450 million)

Financial outlook assumes EUR/USD exchange rate of 1.15, nominal
launch schedule and satellite health status. EBITDA outlook for FY 2018
includes a restructuring charge of EUR 10-12 million (of which EUR 8.4
million was recognised in H1 2018)

1) FY 2018 financial
outlook has been restated to reflect the group's updated expectation
that there will be no impact from the changes to IFRS 15 on SES Video
revenue, as compared with the previous outlook of a reduction of EUR 15
- 20 million

2) FY 2018 implied Group EBITDA is calculated
based on total revenue of EUR 2,010 million (being the mid-point of the
range), or above, and the updated EBITDA margin of around 63%.
Previously implied Group EBITDA was calculated based on total restated
revenue of EUR 1,990 million (being the low end of the range) and an
EBITDA margin of 64% which is equal to EUR 1,270 million

FINANCIAL REVIEW

Income Statement

REVENUE, OPERATING EXPENSES AND EBITDA

                 
EUR million   H1 2018   H1 2017   Change   Change (%)
Revenue 981.4 1,048.7 (67.3) -6.4%
Revenue (constant FX) 981.4 986.7 (5.3) -0.5%
         
Operating expenses (360.3) (361.6) +1.3 +0.3%
Operating expenses (constant FX) (360.3) (337.2) (23.1) -6.9%
         
EBITDA 621.1 687.1 (66.0) -9.6%
EBITDA (constant FX)   621.1   649.5   (28.4)   -4.4%

Reported revenue was EUR 67.3 million lower than the prior
period, of which EUR 62.0 million (over 90%) was as a result of the
weaker U.S. dollar since H1 2017. At constant FX, lower periodic and
other revenue in H1 2018 offset growth in underlying revenue which
increased by EUR 14.4 million (or 1.5%).

Operating expenses were EUR 1.3 million lower as reported and
EUR 23.1 million higher at constant FX including a restructuring charge
of EUR 8.4 million as part of the roll-out of a company-wide
optimisation programme. The balance of the movement at constant FX
reflects higher operating expenses, primarily to support the expansion
of SES Networks, as this segment captures new business from fast-growing
data-centric demand.

Group EBITDA of EUR 621.1 million in H1 2018 represented an
EBITDA margin of 63.3% (H1 2017: 65.5%) and 64.1% excluding the
restructuring charge.

DEPRECIATION, AMORTISATION AND OPERATING PROFIT

                 
EUR million   H1 2018   H1 2017   Change   Change (%)
Depreciation and impairment expense (303.5) (342.0) +38.5 +11.3%
Amortisation expense (39.9) (39.1) (0.8) -2.0%
Depreciation, impairment and amortisation (343.4) (381.1) +37.7 +9.9%
Depreciation, impairment and amortisation (constant FX) (343.4) (355.5) +12.1 +3.4%
         
Operating profit 277.7 306.0 (28.3) -9.3%
Operating profit (constant FX)   277.7   294.0   (16.3)   -5.6%

Reported depreciation, impairment and amortisation expense
reduced by EUR 37.7 million to EUR 343.4 million. This reflected the
impact of the weaker U.S. dollar and the impairment charge of EUR 38.4
million expensed in the prior period. These items offset an increase
driven by the entry into service of new satellites since 30 June 2017.

Group operating profit represented an operating profit margin of
28.3% (H1 2017: 29.2%) including the restructuring charge of EUR 8.4
million.

PROFIT ATTRIBUTABLE TO SES SHAREHOLDERS

                 
EUR million   H1 2018   H1 2017   Change   Change (%)
Net interest expense and other (94.1) (96.1) +2.0 +2.1%
Capitalised interest 17.8 21.8 (4.0) -18.1%
Net foreign exchange gains 1.1 5.7 (4.6) -80.9%
Net financing costs (75.2) (68.6) (6.6) -9.5%
Profit before tax 202.5 237.4 (34.9) -14.7%
         
Income tax benefit/(expense) 40.9 40.1 +0.8 +2.0%
Profit after tax 243.4 277.5 (34.1) -12.3%
         
Non-controlling interests (15.7) (2.0) (13.7) n/m
Profit attributable to SES shareholders 227.7 275.5 (47.8) -17.3%
         
Coupon on hybrid (perpetual) bond, net of tax (23.8) (23.5) (0.3) -1.3%
Adjusted profit attributable to SES shareholders 203.9 252.0 (48.1) -19.1%
Earnings per A Class share   EUR 0.45   EUR 0.56   EUR (0.11)   -19.6%

Net financing costs were EUR 6.6 million higher than H1 2017
which included a net foreign exchange gain of EUR 5.7 million. Excluding
this gain, net financing costs were slightly higher than the prior
period as lower capitalised interest offset lower net interest expense.

The positive income tax contribution included the recognition of
a one-time deferred tax asset relating to SES-16/GovSat-1 in Q1 2018, as
well as the transfer of the O3b Jersey business to Luxembourg in Q2
2018. The group's normalised effective tax rate was 27.3% in H1
2018 (H1 2017: 13.1%).

The recognition of the deferred tax asset relating to SES-16/GovSat-1 is
also the principal reason for the increase in non-controlling
interests
as the satellite is owned by GovSat, a 50/50 public
private partnership between SES and the Government of Luxembourg.

Consequently, net profit attributable to SES shareholders of EUR
227.7 million (H1 2017: EUR 275.5 million) represented earnings per
share
of EUR 0.45 (H1 2017: EUR 0.56) after deducting the assumed
coupon (net of tax) for the group's hybrid (perpetual) bonds.

Cash Flow and Financing

FREE CASH FLOW BEFORE FINANCING ACTIVITIES

                 
EUR million   H1 2018   H1 2017   Change   Change (%)
Net cash generated by operating activities 688.0 635.1 +52.9 +8.3%
Net cash absorbed by investing activities (249.3) (259.9) +10.6 +4.1%
Free cash flow before financing activities   438.7   375.2   +63.5   +16.9%

Net cash generated by operating activities was EUR 52.9 million
above the prior year including positive changes in working capital.

Higher cash generated by operating activities and lower net cash
absorbed by investing activities
resulted in an increase of EUR 63.5
million (or +16.9%) in free cash flow before financing activities compared
with the prior year. Consequently, the ratio of free cash flow before
financing activities to revenue increased from 35.8% in 2017 to 44.7% in
2018.

NET DEBT TO EBITDA RATIO

                 
EUR million   30 June 2018   31 December 2017   Change   Change (%)
Borrowings(1) 4,472.3 3,947.9 +524.4 +13.3%
Cash and cash equivalents (685.1) (269.6) (415.5) -154.1%
Net debt 3,787.2 3,678.3 +108.9 +3.0%
         
Net debt / EBITDA (rating agency)(2) 3.53 times 3.27 times 0.26 times +8.0%
Weighted average interest cost(3) 3.56% 3.79%    
Weighted average debt maturity   6.7 years   7.0 years        

1) As presented using IFRS recognition principles, where hybrid
(perpetual) bonds are treated as 100% equity

2) Rating
agency methodology treats the hybrid bonds as 50% debt and 50% equity

3)
Excluding loan origination costs, commitment fees and hybrid bonds
(average coupon of 5.05%)

The group's Net debt to EBITDA ratio (as per the rating agency
methodology which treats the hybrid bonds as 50% debt and 50% equity) at
30 June 2018 of 3.53 times (30 June 2017: 3.24 times) increased from
3.27 times at 31 December 2017 due mainly to the decrease in 12-month
rolling EBITDA caused by FX, lower periodic and other revenue, as well
as the higher proportion of capital expenditure, interest and dividend
payments in the first half of 2018. The net debt to EBITDA ratio is
expected to be below 3.30 times at the end of 2018.

CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE

         
EUR million   2018   2017
Average EUR/USD exchange rate 1.2127 1.0789
     
Revenue 981.4 1,048.7
     
Operating expenses (360.3) (361.6)
EBITDA(1) 621.1 687.1
EBITDA margin 63.3% 65.5%
     
Depreciation and impairment expense (303.5) (342.0)(3)
Amortisation expense (39.9) (39.1)
Operating profit 277.7 306.0
Operating profit margin 28.3% 29.2%
     
Net financing costs (75.2) (68.6)
Profit before tax 202.5 237.4
     
Income tax benefit/(expense) 40.9(4) 40.1
Profit after tax 243.4 277.5
     
Non-controlling interests (15.7)(4) (2.0)
Profit attributable to owners of the parent 227.7 275.5
     
Earnings per share (in EUR)(2)    
Class A shares 0.45 0.56
Class B shares   0.18   0.22

1) Earnings before interest, tax, depreciation, amortisation and
share of associates' result (net of tax)

2) Earnings per
share is calculated as profit attributable to owners of the parent
divided by the weighted average number of shares outstanding during the
year, as adjusted to reflect the economic rights of each class of share.
For the purposes of the EPS calculation only, the net profit for the
year attributable to ordinary shareholders has been adjusted to include
the assumed coupon, net of tax, on the perpetual bonds. Fully diluted
earnings per share are not significantly different from basic earnings
per share

3) Includes impairment charge of EUR 38.4
million against AMC-9

4) Includes recognition of
one-time deferred tax asset in Q1 2018, following the entry into service
of SES-16/GovSat-1 (owned by GovSat, a 50/50 public private partnership
between SES and the Government of Luxembourg), resulting in a
corresponding increase in non-controlling interests

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

         
EUR million   30 June 2018   31 December 2017
EUR/USD exchange rate at closing 1.1658 1.1993
     
Property, plant and equipment 5,036.5 4,591.4
Assets in the course of construction 1,041.8 1,480.2
Intangible assets 4,721.5 4,630.9
Deferred tax assets 148.4 70.4
Trade and other receivables 309.2 317.8
Deferred customer contract costs 13.7 15.2
Other financial assets 6.9 5.0
Total non-current assets 11,278.0 11,110.9
Inventories 33.4 30.1
Trade and other receivables 525.1 648.2
Deferred customer contract costs 16.1 10.4
Prepayments 52.9 43.7
Derivatives 7.7 2.6
Income tax receivable 3.3 68.9
Cash and equivalents 685.1 269.6
Total current assets 1,323.6 1,073.5
Total assets 12,601.6 12,184.4
     
Equity attributable to the owners of the parent 5,947.7 5,987.9
Non-controlling interests 139.2 124.6
Total equity 6,086.9 6,112.5
Borrowings 3,504.8 3,413.8
Provisions 46.3 41.2
Deferred income 420.7 477.3
Deferred tax liabilities 435.5 438.5
Other long-term liabilities 125.5 76.1
Lease liabilities 30.3 -
Fixed assets suppliers 92.4 53.4
Total non-current liabilities 4,655.5 4,500.3
Borrowings 967.5 534.1
Provisions 15.6 12.7
Deferred income 438.7 443.2
Trade and other payables 362.2 385.6
Derivatives -- 0.6
Income tax liabilities 37.1 68.8
Lease liabilities 10.4 -
Fixed assets suppliers 27.7 126.6
Total current liabilities 1,859.2 1,571.6
Total liabilities 6,514.7 6,071.9
     
Total equity and liabilities   12,601.6   12,184.4

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE

         
EUR million   2018   2017
Profit before tax 202.5 237.4
     
Taxes received/ (paid) during the year (net) 3.6 (45.9)
Adjustment for non-cash items 395.9 395.3
Consolidated operating profit before working capital changes 602.0 586.8
Changes in working capital 86.0 48.3
Net operating cash flow 688.0 635.1
     
Payments for purchases of intangible assets (15.1) (10.9)
Payments for purchases of tangible assets (231.6) (239.7)
Other investing activities (2.6) (9.3)
Cash flow from investing activities (249.3) (259.9)
Free cash flow before financing activities 438.7 375.2
     
Proceeds from borrowings 500.0 34.5
Repayment of borrowings (26.9) (68.7)
Coupon paid on perpetual bond (65.6) (24.7)
Dividends paid on ordinary shares, net of dividends received on
treasury shares
(327.3) (547.3)
Dividends paid to non-controlling interests (3.1) (3.5)
Interest paid on borrowings (102.8) (110.1)
Payments for acquisition of treasury shares (0.6) (42.6)
Proceeds from treasury shares sold and exercise of stock options 0.1 40.8
Lease payments (5.2) --
Other financing activities (0.7) 0.1
Cash flow from financing activities (32.1) (721.5)
Free cash flow after financing activities 406.6 (346.3)
     
Net foreign exchange movements 8.9 (6.4)
Net increase/(decrease) in cash and equivalents 415.5 (352.7)
Cash and equivalents at beginning of the period 269.6 587.5
Cash and equivalents at end of the period   685.1   234.8

Supplementary information:

QUARTERLY REVENUE BY VERTICAL (REPORTED)

         
  Revenue (reported)   Change (YOY) at constant FX
EUR million Q1 2018   Q2 2018   H1 2018 Q1 2018   Q2 2018   H1 2018
Video Distribution 247.2 248.3 495.5 -4.3% -3.1% -3.7%
- Underlying 244.3 242.7 487.0 -4.2% -4.2% -4.2%
- Periodic 2.9 5.6 8.5 n/m n/m n/m
Video Services 77.2 85.8 163.0 -2.0% +9.5% +3.7%
- Underlying 77.2 85.8 163.0 -2.0% +9.5% +3.7%
- Periodic -- -- -- n/m n/m n/m
SES Video 324.4 334.1 658.5 -3.8% -0.2% -2.0%
- Underlying 321.5 328.5 650.0 -3.6% -1.0% -2.3%
- Periodic 2.9 5.6 8.5 n/m n/m n/m
Government 59.4 71.6 131.0 +12.0% +26.0% +19.2%
- Underlying 59.4 63.8 123.2 +13.0% +21.7% +17.4%
- Periodic -- 7.8 7.8 n/m n/m n/m
Fixed Data 56.2 57.8 114.0 -11.1% -7.7% -9.4%
- Underlying 56.2 54.8 111.0 -6.0% -5.3% -5.6%
- Periodic -- 3.0 3.0 n/m n/m n/m
Mobility 37.4 39.8 77.2 -14.8% +31.3% +4.0%
- Underlying 37.4 39.8 77.2 +30.4% +31.3% +30.9%
- Periodic -- -- -- n/m n/m n/m
SES Networks 153.0 169.2 322.2 -4.5% +13.0% +3.9%
- Underlying 153.0 158.4 311.4 +8.5% +12.7% +10.6%
- Periodic -- 10.8 10.8 n/m n/m n/m
Sub-total 477.4 503.3 980.7 -4.0% +3.9% -0.1%
- Underlying 474.5 486.9 961.4 0.0% +3.1% +1.5%
- Periodic 2.9 16.4 19.3 n/m n/m n/m
Other(1) 0.2 0.5 0.7 n/m n/m n/m
Group Total   477.6   503.8   981.4   -4.9%   +4.0%   -0.5%

"Underlying" revenue represents the core business of capacity sales,
as well as associated services and equipment. This revenue may be
impacted by changes in launch schedule and satellite health status.
"Periodic" revenue separates revenues that are not directly related to
or would distort the underlying business trends on a quarterly basis.
Periodic revenue includes: the outright sale of capacity; accelerated
revenue from hosted payloads during the course of construction;
termination fees; insurance proceeds; certain interim satellite missions
and other such items when material.

1) Other includes
revenue not directly applicable to SES Video or SES Networks

QUARTERLY INCOME STATEMENT (AS REPORTED)

                     
EUR million   Q2 2017   Q3 2017   Q4 2017   Q1 2018   Q2 2018
Average EUR/USD exchange rate 1.0947 1.1655 1.1764 1.2221 1.2033
           
Revenue 508.1 478.5 507.8 477.6 503.8
Operating expenses (178.6) (171.0) (178.2) (173.2) (187.1)
EBITDA 329.5 307.5 329.6 304.4 316.7
EBITDA margin 64.8% 64.3% 64.9% 63.7% 62.9%
           
Depreciation and impairment (190.5)(1) (146.0) (147.0) (147.0) (156.5)
Amortisation (19.7) (19.1) (20.4) (18.6) (21.3)
Operating profit 119.3 142.4 162.2 138.8 138.9
Operating profit margin 23.5% 29.8% 31.9% 29.1% 27.6%
           
Net financing costs (38.9) (33.6) (41.1) (35.9) (39.3)
Profit before tax 80.4 108.8 121.1 102.9 99.6
           
Income tax 67.8 9.4 81.1 10.1 30.8
           
Non-controlling interests (1.1) 0.8 (0.6) (14.8) (0.9)
Profit attributable to owners of the parent 147.1 119.0 201.6 98.2 129.5
           
Earnings per share (in EUR)(2)          
Class A shares 0.30 0.23 0.42 0.19 0.26
Class B shares   0.12   0.09   0.17   0.08   0.10

1) Includes EUR 38.4 million of impairment charge related to the loss
of AMC-9

2) Earnings per share is calculated as profit
attributable to owners of the parent divided by the weighted average
number of shares outstanding during the year, as adjusted to reflect the
economic rights of each class of share. For the purposes of the EPS
calculation only, the net profit for the year attributable to ordinary
shareholders has been adjusted to include the coupon, net of tax, on the
perpetual bonds. Fully diluted earnings per share are not significantly
different from basic earnings per share

QUARTERLY OPERATING PROFIT (AT CONSTANT FX)

                     
EUR million   Q2 2017   Q3 2017   Q4 2017   Q1 2018   Q2 2018
Average U.S. dollar exchange rate 1.2033 1.2033 1.2033 1.2033 1.2033
Revenue 484.5 470.3 501.7 480.5 503.8
Operating expenses (165.4) (167.5) (175.4) (174.9) (187.1)
EBITDA 319.1 302.8 326.3 305.6 316.7
EBITDA margin 65.9% 64.4% 65.0% 63.6% 62.9%
           
Depreciation (179.5) (142.7) (144.7) (148.2) (156.5)
Amortisation (19.3) (18.9) (20.3) (18.7) (21.3)
Operating profit 120.3 141.2 161.3 138.7 138.9
Operating profit margin   24.8%   30.0%   32.2%   28.9%   27.6%

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Presentation of Results:

A presentation of the results for investors and analysts will be hosted
at 9.30 CEST on 27 July 2018, and will be broadcast via webcast
and conference call. The details for the conference call and webcast are
as follows:

Belgium +32 (0)2 400 6926 / 0800 38625
France +33 (0)1 76 77 22 57
/ 0805 101 278
Germany +49 (0)69 2222 2018 / 0800 101 1732
Luxembourg
+352 2787 0187 / 800 27206
U.K. +44 (0)330 336 9411 / 0800 279 7204
U.S.A.
+1 323 794 2093 / 866 548 4713

Confirmation code: 9386776

Webcast registration: https://edge.media-server.com/m6/go/SES_18HY

The presentation will be available for download from the Investors
section of the SES website (www.ses.com),
and a replay will be available for two weeks from the Investors section
of the SES website.

About SES

SES is the world's leading satellite operator with over 70 satellites in
two different orbits, Geostationary Orbit (GEO) and Medium Earth Orbit
(MEO). It provides a diverse range of customers with global video
distribution and data connectivity services through two business units:
SES Video and SES Networks. SES Video reaches over 351 million TV homes,
through Direct-to-Home (DTH) platforms and cable, terrestrial, and IPTV
networks globally. The SES Video portfolio includes MX1, a leading media
service provider offering a full suite of innovative services for both
linear and digital distribution, and the ASTRA satellite system, which
has the largest DTH television reach in Europe. SES Networks provides
global managed data services, connecting people in a variety of sectors
including telecommunications, maritime, aeronautical, and energy, as
well as governments and institutions across the world. The SES Networks
portfolio includes GovSat, a 50/50 public-private partnership between
SES and the Luxembourg government, and O3b, the only non-geostationary
system delivering fibre-like broadband services today. Further
information is available at: www.ses.com

Disclaimer

This presentation does not, in any jurisdiction, and in particular not
in the U.S., constitute or form part of, and should not be construed as,
any offer for sale of, or solicitation of any offer to buy, or any
investment advice in connection with, any securities of SES nor should
it or any part of it form the basis of, or be relied on in connection
with, any contract or commitment whatsoever.

No representation or warranty, express or implied, is or will be made by
SES, its directors, officers or advisors or any other person as to the
accuracy, completeness or fairness of the information or opinions
contained in this presentation, and any reliance you place on them will
be at your sole risk. Without prejudice to the foregoing, none of SES or
its directors, officers or advisors accept any liability whatsoever for
any loss however arising, directly or indirectly, from use of this
presentation or its contents or otherwise arising in connection
therewith.

This presentation includes "forward-looking statements". All statements
other than statements of historical fact included in this presentation,
including, without limitation, those regarding SES's financial position,
business strategy, plans and objectives of management for future
operations (including development plans and objectives relating to SES
products and services) are forward-looking statements. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the actual
results, performance or achievements of SES to be materially different
from future results, performance or achievements expressed or implied by
such forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding SES and its subsidiaries and
affiliates, present and future business strategies and the environment
in which SES will operate in the future and such assumptions may or may
not prove to be correct. These forward-looking statements speak only as
at the date of this presentation. Forward-looking statements contained
in this presentation regarding past trends or activities should not be
taken as a representation that such trends or activities will continue
in the future. SES and its directors, officers and advisors do not
undertake any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.

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