Market Overview

SES, Société Anonyme: Interim Results for the Six Months Ended 30 June 2018

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Contents:

OPERATIONAL REVIEW       2
FINANCIAL REVIEW 6
Responsibility statement 10
Report on review of the interim condensed consolidated financila
information
10
Interim condensed consolidated income statement 13
Interim condensed consolidated statement of comprehensive income 14
Interim condensed consolidated statement of financial position 15
Interim condensed consolidated statement of cash flows 16
Interim condensed consolidated statement of changes in shareholders'
equity
17
Interim condensed consolidated statement of changes in shareholders'
equity
18
Notes to the interim condensed consolidated financial statements 19

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
Other1 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-121 Asia-Pacific Video, Fixed Data, Mobility Launched (June 2018)
SES-141 Latin America Video, Fixed Data, Mobility Launched (January 2018)
SES-16/GovSat-12 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 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 (%)
Borrowings1 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 cost3 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.

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 20181   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 million2 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

Business risks and their mitigation

For the remaining six months of the financial year, SES does not
envisage any additional risks compared to the risk assessment performed
for year-end 31 December 2017, which are disclosed in full in the Annual
Report 2017.

Related party transactions

Refer to Note 11 – Related party transactions.

Responsibility statement

The Board of Directors and the executive management of the company
reaffirm their responsibility to ensure the maintenance of proper
accounting records disclosing the financial position of the group with
reasonable accuracy at any time, and ensuring that an appropriate system
of internal controls is in place to ensure that the group's business
operations are carried on efficiently and transparently.

In accordance with Article 4 of the law of 11 January 2008 on the
harmonisation of transparency requirements in relation to information
about issuers whose securities are admitted to trading on a regulated
market, we declare that, to the best of our knowledge, the interim
condensed consolidated financial statements for the half year ended 30
June 2018, prepared in accordance with lAS 34, "Interim Financial
Reporting" as adopted for use by the European Union give a true and fair
view of the assets, liabilities, financial position and profit of the
year of SES and its subsidiaries included in the consolidation taken as
a whole.

In addition, the management's report includes a fair review of the
development and performance of the business and the position of SES and
its subsidiaries included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face.

Romain Bausch         Steve Collar
Chairman of the Board of Directors President and Chief Executive Officer

PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator,
B.P. 1443, L-1014 Luxembourg

T : +352 494848 1, F : +352
494848 2900,
www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation
gouvernementale n°10028256)

R.C.S. Luxembourg B 65 477 -
TVA LU25482518



Report on Review of the Interim Condensed Consolidated Financial
Statements

To the Shareholders of
SES S.A.

We have reviewed the accompanying interim condensed consolidated
financial statements of SES S.A. and its subsidiaries (the "Group"),
which comprise the interim condensed consolidated statement of financial
position as at 30 June 2018 and the related interim condensed
consolidated income statement, statement of comprehensive income,
statement of cash flows and statement of changes in shareholders' equity
for the six-month period then ended, and a summary of significant
accounting policies and other explanatory information.

Board of Directors' responsibility for the
interim condensed consolidated financial statements

The Board of Directors is responsible for the preparation and
presentation of these interim condensed consolidated financial
statements in accordance with IAS 34, "Interim Financial Reporting" as
adopted by the European Union, and for such internal controls as the
Board of Directors determines are necessary to enable the preparation of
interim condensed consolidated financial statements that are free from
material misstatement, whether due to fraud or error.

Responsibility of the "Réviseur d'entreprises agréé"

Our responsibility is to express a conclusion on these interim condensed
consolidated financial statements based on our review. We conducted our
review in accordance with the International Standard on Review
Engagements (ISRE 2410, "Review of interim financial information
performed by the independent auditor of the entity"), as adopted for
Luxembourg by the "Institut des Réviseurs d'Entreprises". This standard
requires us to comply with relevant ethical requirements and conclude
whether anything has come to our attention that causes us to believe
that the interim condensed consolidated financial statements, taken as a
whole, are not prepared, in all material respects, in accordance with
the applicable financial reporting framework.

A review of interim condensed consolidated financial statements in
accordance with ISRE 2410 is a limited assurance engagement. The
"Réviseur d'entreprises agréé" performs procedures, primarily consisting
of making inquiries of management and others within the Group, as
appropriate, and applying analytical procedures, and evaluates the
evidence obtained.

The procedures performed in a review are substantially less than those
performed in an audit conducted in accordance with International
Standards on Auditing. Accordingly, we do not express an audit opinion
on this interim condensed consolidated financial statements.

Conclusion

Based on our review, nothing has come to our attention that causes us to
believe that the accompanying interim condensed consolidated financial
statements are not prepared, in all material respects, in accordance
with IAS 34, "Interim Financial Reporting" as adopted by the European
Union.

PricewaterhouseCoopers, Société coopérative         Luxembourg, 26 July 2018
Represented by
 
Gilles Vanderweyen



Interim condensed consolidated income statement
For the
six month period ended 30 June 2018

In millions of euros

    2018   2017
 
 
Revenue 981.4 1,048.7
 
Operating expenses (360.3) (361.6)
EBITDA 621.1 687.1
 
Depreciation and impairment expense (303.5) (342.0)
Amortisation expense (39.9) (39.1)
Operating profit 277.7 306.0
 
Finance income 1.1 5.7
Finance costs (76.3) (74.3)
Net financing costs (75.2) (68.6)
 
Profit before tax 202.5 237.4
 
Income tax benefit Note 9 40.9 40.1
   
Profit for the period 243.4 277.5
 
Attributable to owners of the parent 227.7 275.5
Attributable to non-controlling interests 15.7 2.0
   
 

Basic earnings per share (in euro)

2018 2017
Note 10
Class A shares 0.45 0.56
Class B shares 0.18 0.22
 
Diluted earnings per share (in euro) 2018 2017
Note 10
Class A shares 0.45 0.55
Class B shares 0.18 0.22

The notes are an integral part of the interim condensed consolidated
financial statements.

Interim condensed consolidated statement of comprehensive income
For
the six month period ended 30 June 2018

In millions of euros       2018   2017
 
Profit for the period 243.4 277.5
 
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of post employment benefit obligation (1.5) 0.9
Income tax effect 0.5 (0.3)
Remeasurements of post employment benefit obligation, net of tax (1.0)

0.6

Income tax reversed relating to treasury shares impairment (4.4) -
 
Total items that will not be reclassified to profit or loss (5.4) 0.6
 
Items that may be reclassified subsequently to profit or loss
Impact of currency translation 202.3 (668.3)
Income tax effect (11.6) 38.2
Total impact of currency translation, net of tax 190.7 (630.1)
 
Net investment hedge (47.9) 149.0
Income tax effect 12.8 (41.5)
Total net investment hedge, net of tax (35.1) 107.5
 
Net movements on cash flow hedges 6.4 3.7
Total net movements on cash flow hedges, net of tax 6.4 3.7
   
Total items that may be reclassified subsequently to profit or
loss
162.0 (518.9)
   
Total other comprehensive income/(loss) for the period, net of tax 156.6 (518.3)
   
Total comprehensive income/(loss) for the period, net of tax 400.0

(240.8)

 
Attributable to:
Owners of the parent 382.3 (236.1)
Non-controlling interests 17.7 (4.7)

The notes are an integral part of the interim condensed consolidated
financial statements



Interim condensed consolidated statement of financial position
As
at 30 June 2018

In millions of euros     30 June 2018   31 December 2017
Non-current assets
Property, plant and equipment 5,036.5 4,591.4
Assets in the course of construction 1,041.8 1,480.2
Total property, plant and equipment 6,078.3 6,071.6
 
Intangible assets 4,721.5 4,630.9
Deferred tax assets Note 9 148.4 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
 
Current assets
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 Note 7 7.7 2.6
Income tax receivable 3.3 68.9
Cash and cash 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
 
Non-current liabilities
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 Note 3 30.3 -
Fixed assets suppliers 92.4 53.4
Total non-current liabilities 4,655.5 4,500.3
 
Current liabilities
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 Note 7 - 0.6
Income tax liabilities 37.1 68.8
Lease liabilities Note 3 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

The notes are an integral part of the interim condensed consolidated
financial statements.



Interim condensed consolidated statement of cash flows
For
the six month period ended 30 June 2018

In millions of euros

      2018   2017
 
Profit before tax 202.5 237.4
Taxes received/ (paid) during the period (net) 3.6 (45.9)
Adjustment for non-cash items 395.9 395.3

Consolidated operating profit adjusted for non-cash
items
and tax payments and before working capital changes

602.0 586.8
 
Changes in working capital 86.0 48.3
   
Net cash generated by operating activities 688.0 635.1
 
Cash flow from investing activities
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)
Net cash absorbed by investing activities (249.3) (259.9)
 
Free cash flow before financing activities 438.7 375.2
 
Cash flow from financing activities
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 shares1 (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
Net cash absorbed by financing activities (32.1) (721.5)
 
Net foreign exchange movements 8.9 (6.4)
Net increase / (decrease) in cash 415.5 (352.7)
 
Cash and cash equivalents at beginning of the period 269.6 587.5
Cash and cash equivalents at end of the period 685.1 234.8

1 Dividends are presented net of dividends received on
treasury shares of EUR 5.2 million (2017: EUR 8.3 million)

The notes are an integral part of the interim condensed consolidated
financial statements.



Interim condensed consolidated statement of changes in shareholders'
equity

For the six month period ended 30 June 2018

 

Attributable to owners of the parent

 
In millions of euros Issued

capital

  Share

premium

  Treasury shares   Perpetual bond   Other reserves   Retained earnings   Cash flow hedge reserve   Foreign currency translation reserve   Total   Non-controlling interests   Total equity
At 1 January 2018 719.0 1,635.5 (160.0) 1,300.0 2,487.0 596.1 (0.8) (588.9) 5,987.9 124.6 6,112.5
Change in accounting policies1 - - - - - (12.9) - - (12.9) - (12.9)
Restated total equity at 1 January 2018 719.0 1,635.5 (160.0) 1,300.0 2,487.0 583.2 (0.8) (588.9) 5,975.0 124.6 6,099.6
Result of the period - - - - - 227.7 - - 227.7 15.7 243.4
Other comprehensive income (loss) - - -   (5.4) - 6.4 153.6 154.6 2.0 156.6
Total comprehensive income (loss) - - - - (5.4) 227.7 6.4 153.6 382.3 17.7 400.0
Allocation of 2017 result - - - - 233.2 (233.2) - - - - -
Coupon on perpetual bond - - - - (65.6) - - - (65.6) - (65.6)
Tax on perpetual bond coupon - - - - 9.3 - - - 9.3 - 9.3
Dividends declared/ paid2 - - - - - (362.9) - - (362.9) (3.1) (366.0)
Acquisition of treasury shares - - (0.6) - - - - - (0.6) - (0.6)
Share-based compensation expense - - - - 5.2 - - - 5.2 - 5.2
Exercise of share-based compensation - - 5.3 - 0.4 - - - 5.7 - 5.7
Other movements - - - - (0.7) - - - (0.7) - (0.7)
At 30 June 2018 719.0 1,635.5 (155.3) 1,300.0 2,663.4 214.8 5.6 (435.3) 5,947.7 139.2 6,086.9

1 Represents impact of the adoption of new International Financial
Reporting Standards (Note 3)
2 Dividends are presented net of
dividends received on treasury shares of EUR 5.2 million

The notes are an integral part of the interim condensed consolidated
financial statements.



Interim condensed consolidated statement of changes in shareholders'
equity

For the six month period ended 30 June 2017

  Attributable to owners of the parent  
In millions of euros Issued

capital

  Share

premium

  Treasury shares   Perpetual bond   Other reserves   Retained earnings   Cash flow hedge reserve   Foreign currency translation reserve   Total   Non-controlling interests   Total equity
At 1 January 2017 719.0 1,635.5 (167.3) 1,300.0 2,134.5 962.7 0.3 221.8 6,806.5 138.6 6,945.1
Result of the period - - - - - 275.5 - - 275.5 2.0 277.5
Other comprehensive income (loss) - - - - 0.6 - 3.7 (515.9) (511.6) (6.7) (518.3)
Total comprehensive income (loss) - - - - 0.6 275.5 3.7 (515.9) (236.1) (4.7) (240.8)
Allocation of 2016 result - - - - 354.4 (354.4) - - - - -
Coupon on perpetual bond - - - - (24.7) - - - (24.7) - (24.7)
Tax on perpetual bond coupon - - - - 9.7 - - - 9.7 - 9.7
Transaction costs on perpetual bond - - - - (1.8) - - - (1.8) - (1.8)
Dividends declared/ paid1 - - - - - (608.3) - - (608.3) (3.5) (611.8)
Acquisition of treasury shares - - (42.6) - - - - - (42.6) - (42.6)
Share-based compensation expense - - - - 4.8 - - - 4.8 - 4.8
Exercise of share-based compensation - - 7.5 - (16.6) - - - (9.1) - (9.1)
Sale of treasury shares - - 50.9 - - - - - 50.9 - 50.9
Other movements - 0.4 - - (0.8) - - - (0.4) 1.9 1.5
At 30 June 2017 719.0 1,635.9 (151.5) 1,300.0 2,460.1 275.5 4.0 (294.1) 5,948.9 132.3 6,081.2

1 Dividends are presented net of dividends received on treasury shares
of EUR 8.3 million

The notes are an integral part of the interim condensed consolidated
financial statements.

Notes to the interim condensed consolidated financial statements
As
at 30 June 2018

(In millions of euro, unless indicated
otherwise)

Note 1 - Corporate information

SES S.A. (the "company") was incorporated on 16 March 2001 as a limited
liability company

(Société Anonyme) under Luxembourg law. References to the "group" in the
following notes are to the company and its subsidiaries. SES trades
under "SESG" on both the Luxembourg Stock Exchange and Euronext in Paris.

The interim condensed consolidated financial statements of SES S.A. as
at and for the six month period ended 30 June 2018 were authorised for
issue in accordance with a resolution of the directors on

26 July 2018. These interim condensed consolidated financial statements
have been reviewed, not audited.

Note 2 - Basis of preparation and accounting policies

Basis of preparation

The interim condensed consolidated financial statements as at and for
the six month period ended 30 June 2018 have been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the European
Union. The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
consolidated financial statements, and should be read in conjunction
with the group's annual consolidated financial statements as at, and for
the year ended 31 December 2017.

Significant accounting policies

The accounting policies adopted in the preparation of the interim
condensed consolidated financial statements are consistent with those
applied in the preparation of the group's annual consolidated financial
statements as at, and for the year ended 31 December 2017.

A number of new or amended standards became applicable or were early
adopted for the current reporting period and the group had to change its
accounting policies and make retrospective adjustments as a result of
adopting the following standards: IFRS 9 'Financial Instruments', IFRS
15 'Revenue from Contracts with Customers' and IFRS 16 'Leases'.

The impact of the adoption of these standards and the new accounting
policies are disclosed in Note 3 below. The other standards did not have
any impact on the group's accounting policies and did not require
retrospective adjustments.

New standards and interpretations not yet adopted

A number of new standards and amendments to standards and
interpretations are relevant for the group and effective for annual
periods beginning after 1 January 2018, and have not been early adopted
in preparing these interim condensed consolidated financial statements:

Amendments to IAS 19, ‘Employee benefits' on plan amendment,
curtailment or settlement

These amendments require an entity to use updated assumptions to
determine current service cost and net interest for the reminder of the
period after a plan amendment, curtailment or settlement; and recognise
in profit or loss as part of past service cost, or a gain or loss on
settlement, any reduction in a surplus, even if that surplus was not
previously recognised because of the impact of the asset ceiling. The
effective date of these amendments is 1 January 2019. The amendment was
not yet endorsed by EU. The group does not expect any significant impact
of these amendments on its consolidated financial statements.

There are no other IFRSs or IFRIC interpretations except the ones
disclosed in the annual consolidated financial statements as at and for
the year ended 31 December 2017 or disclosed herewith, that are not yet
effective that would be expected to have a material impact on the group.

Note 3 - Implementation of new International Financial Reporting
Standards

This note explains the impact of the adoption of IFRS 9 'Financial
Instruments', IFRS 15 'Revenue from Contracts with Customers' and IFRS
16 'Leases' on the group's interim condensed consolidated financial
statements, and also discloses those new accounting policies that have
been applied from 1 January 2018, where they are different to those
applied in prior periods and are expected to have a material impact.

Summary impact on the interim condensed consolidated financial
statements

As a result of the adoption of the three new standards, certain prior
year-end financial information had to be restated, consistent with the
transitional provisions set out in the three standards. The impact of
these adjustments on the statement of financial position as at 1 January
2018 is set out in the table below:

In millions of euros          
 
Statement of 31-Dec-17 IFRS 9 IFRS 15 IFRS 16 01-Jan
Financial Position as originally 2018
(extract) presented restated
 

Non-current assets

Property, plant and equipment 4,591.40 - - 45.9 4,637.30
Trade and other receivables 317.8 0.9 - - 318.7
Deferred tax asset 70.4 1.2 3.4 - 75
 
Current assets
Trade and other receivables 648.2 -6.2 - - 642

Deferred customer contract costs

  10.4   -   1.8   -   12.2
Total assets 12,184.40 -4.1 5.2 45.9 12,231.40
 

Non-current liabilities

Lease liabilities - - - 35.5 35.5
 
Current liabilities
Deferred income 443.2 - 14 - 457.2
Lease liabilities   -   -   -   10.4   10.4
Total liabilities 6,071.90 - 14 45.9 6,131.80
 
Net assets 6,112.50 -4.1 -8.8 - 6,099.60
 
Retained earnings   596.1   -4.1   -8.8   -   583.2
Total equity 6,112.50 -4.1 -8.8 - 6,099.60
  • IFRS 9 (‘Financial Instruments') – Impact of adoption

IFRS 9 replaces IAS 39 relating to the recognition, classification and
measurement of financial assets and financial liabilities, the
derecognition of financial instruments, the impairment of financial
assets, and hedge accounting.

Classification and measurement

The group classifies its financial assets in the following measurement
categories:

  • Those to be measured subsequently at fair value through profit or
    loss; and
  • Those to be measured at amortised cost.

The adoption of IFRS 9 has not affected the classification and
measurement of financial assets. Group receivables represent contractual
cash flows and their measurement remains at amortised cost. Similarly,
derivative financial instruments used by the group continue to be
measured at fair value through the income statement. There was also no
impact on the group's accounting for financial liabilities, since the
new requirements only affect the accounting for those financial
liabilities measured at fair value through the income statement and the
group does not have such liabilities.

IFRS 9 was adopted without restating comparative information. The
adoption of IFRS 9 resulted in changes in the recognition principles in
the area of impairment and adjustments to the opening balances
recognised in the interim condensed consolidated financial statements.
In accordance with the transitional provisions in IFRS 9, comparative
figures have not been restated, but rather have been recognised in the
opening balance sheet on 1 January 2018 as set out in the table above.

All the group's hedge relationships in place at the end of 2017 continue
to qualify as hedges under IFRS 9 with hedge documentation in place
aligned with the requirements of IFRS 9.

At initial recognition, the group measures a financial asset at its fair
value plus, in the case of a financial asset not remeasured to fair
value through the income statement, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value and revalued through the
income statement are expensed in the period when they were incurred.

There are two measurement categories into which the group classifies its
debt instruments:

1. Amortised cost: Assets that are held for
collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised
cost. Interest income from such financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly through the income
statement as part of foreign exchange gains and losses. Impairment
losses are presented as a separate line item in the income statement.

2. Fair value through the income statement:
Assets that do not meet the criteria for amortised cost, or fair value
remeasurement through other comprehensive income, are remeasured to fair
value through the income statement. Any gain or loss on a debt
investment that is subsequently remeasured to fair value is recognised
as part of net financing charges in the income statement covering the
period in which it arises.

Impairment of financial assets

From 1 January 2018, the group assesses on a forward looking basis the
expected credit losses associated with its debt instruments carried at
amortised cost. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.

For trade receivables, the group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables. The group
applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade receivables
have been grouped based on shared credit risk characteristics and the
days past due. The loss allowances for trade receivables as at 31
December 2017 reconcile to the opening loss allowances on 1 January 2018
as set out in the table above.

  • IFRS 15 (‘Revenue from Contracts with Customers')

The adoption of IFRS 15 (‘Revenue from Contracts with Customers') has
resulted in certain changes in revenue recognition policies and
adjustments to the opening balances recognised in the interim condensed
consolidated financial statements. The group applied the standard using
the modified retrospective approach which means that the cumulative
impact of the adoption was recognised in retained earnings as of 1
January 2018 without the restatement of comparatives from 2017.

The total impact on the group's retained earnings as at 1 January 2018
is set out in the table above.

The above impact of IFRS 15 is related only to the allocation of
subscription revenue in connection with one of the services provided by
HD Plus GmbH. These were previously recognised on a ‘front-loaded'
basis, matching the timing of the underlying operating expenses arising
during the provision of the service. From 1 January 2018 the group
instead linearises both the subscription revenue and the associated
operating costs over the 12-month term of the subscription agreement.

  • IFRS 16 (‘Leases')

The adoption of IFRS 16 has resulted in changes in accounting policies
and adjustments to the amounts recognised in the 2017 financial
statements. The group has applied the simplified transition approach as
allowed by the standard, and therefore has not restated comparative
closing 2017 amounts, but rather has adjusted the opening balance sheet
as set out in the table above.

Specifically, the group has recognised leased assets, and associated
lease liabilities, in relation to contracts previously classified as
‘operating leases' under the provisions of IAS 17. These assets and
liabilities were measured at the present value of the remaining lease
payments, discounted using the group's weighted average incremental
borrowing rate of 3.66% as at 1 January 2018.

The group has applied the following practical expedients:

  • Applying a single discount rate to a portfolio of leases with similar
    characteristics; and
  • Not accounting for leases which end within 12 months from the date of
    the initial application or the underlying asset has a low value.

As at 31 December 2017, the group had non-cancellable operating lease
commitments of

EUR 52.5 million, mainly in relation to office buildings and ground
segment assets. The group determined that only approximately 1% of these
relate to payments for short-term and low-value leases which will
continue to be recognised on a straight-line basis as an expense in the
consolidated income statement over the duration of the agreements.

The amount of right-of-use assets and lease liabilities recorded as an
adjustment to the opening balance sheet was EUR 45.9 million. The
difference between the operating lease commitments and the right-of-use
assets recognised represents impact of discounting over the outstanding
lease term.

Note 4 - Alternative performance measures

SES regularly uses alternative performance measures to present the
performance of the group.

These measures may not be comparable to similarly titled measures used
by other companies and are not measurements under IFRS or any other body
of generally accepted accounting principles, and thus should not be
considered substitutes for the information contained in the group's
financial statements.

i. Net debt

Net debt is defined as current and non-current borrowings less cash and
cash equivalents, all as disclosed on the consolidated statement of
financial position. The group believes that net debt is relevant to
investors, since it gives an indication of the absolute level of
non-equity funding of the business. This can be compared to the income
and cash flows generated by the business, and available undrawn
facilities.

The following table reconciles net debt to the relevant balance sheet
line items:

In millions of euros   30 June 2018   31 December 2017
Borrowings - non-current 3,504.8 3,413.8
Borrowings - current 967.5 534.1
Borrowings, less 4,472.3 3,947.9
Cash and cash equivalents 685.1 269.6
Net debt 3,787.2 3,678.3

ii. EBITDA and EBITDA margin

EBITDA is defined as profit for the period before the impact of
depreciation, amortisation, net financing charges and income tax. EBITDA
Margin is defined as EBITDA divided by revenue. The group believes that
EBITDA and EBITDA margin are useful supplemental indicators that may be
used to assist in evaluating a company's operating performance.

The following table reconciles EBITDA to the income statement line items
from which it is derived:

In millions of euros   30 June

2018

  30 June

2017

Profit before tax 202.5 237.4
Add: Depreciation expense and impairment expense 303.5 342.0
Add: Amortisation expense 39.9 39.1
Add: Net financing costs 75.2 68.6
EBITDA 621.1 687.1

The following table provides a reconciliation of EBITDA margin:

In millions of euros   30 June 2018   30 June

2017

Revenue 981.4 1,048.7
EBITDA 621.1 687.1
EBITDA margin (%) 63.3% 65.5%

iii. Operating profit and operating profit margin

Operating profit is defined as profit for the period before the impact
of net financing charges and income tax. The group uses operating profit
to monitor its financial return after both operating expenses and a
charge representing the cost of usage of both its property, plant and
equipment and definite-life intangible assets.

The following table reconciles operating profit to the income statement
line items from which it is derived:

In millions of euros   30 June

2018

  30 June

2017

Profit before tax 202.5 237.4
Add: Net financing costs 75.2 68.6
Operating profit 277.7 306.0

Operating profit margin is defined as operating profit as a percentage
of revenue. SES believes that operating profit margin is a useful
measure to demonstrate the proportion of revenue that has been realised
as operating profit, and therefore an indicator of profitability.

The following table provides a reconciliation of operating profit margin:

In millions of euros   30 June

2018

  30 June

2017

Revenue 981.4 1,048.7
Operating profit 277.7 306.0
Operating profit margin (%) 28.3% 29.2%

iv. Net debt to EBITDA ratio

Net debt to EBITDA ratio is defined as net debt divided by EBITDA. The
group believes that net debt to EBITDA ratio is a useful measure to
demonstrate to investors its ability to generate the income needed to be
able to settle its loans and borrowings as they fall due.

The following table reconciles the net debt to EBITDA ratio to net debt
and EBITDA:

In millions of euros   30 June

2018

  31 December

2017

Net debt 3,787.2 3,678.3
Twelve-month rolling EBITDA 1,258.2* 1,324.2
Net debt to EBITDA ratio 3.01 times 2.78 times

* 2018 twelve-month rolling EBITDA was calculated as follows:

In millions of euros   30 June

2018

EBITDA as at 30 June 2018 621.1
Add: EBITDA as at 31 December 2017 1,324.2
Less: EBITDA as at 30 June 2017 687.1
EBITDA 1,258.2

v. Free cash flow before financing activities

Free cash flow before financing activities is defined as net operating
cash flow less net cash absorbed by investing activities. Available free
cash flow is used for the payment of dividends, the servicing and
repayment of borrowings and other financing activities, and SES believes
it is therefore a useful measure for investors.

The following table reconciles "Free cash flow before financing
activities" to the cash flow statement line items from which it is
derived:

In millions of euros   30 June 2018   30 June

2017

Net cash generated by operating activities 688.0 635.1
Add: Net cash absorbed by investing activities (249.3) (259.9)
Free cash flow before financing activities 438.7 375.2

Note 5 - Estimates

The preparation of the interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the
reported amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates.

In preparing these interim condensed consolidated financial statements,
the significant judgments made by management in applying the group's
accounting policies and the key sources of estimation uncertainty were
the same as those that applied to the consolidated financial statements
as at and for the year ended 31 December 2017.

Impairment charge for space segment assets

During the first half of 2018 an impairment charge of EUR 5.5 million on
space segment assets has been recorded by the group in connection with
the AMC-10 satellite. In 2017, an impairment charge of EUR 40.3 million
was recorded, mainly related to the AMC-9 satellite (EUR 38.4 million)
due to an anomaly on the satellite and bringing its net book value to
zero.

Income tax

Taxes on income in the interim periods are accrued using the tax rate
that would be applicable to expected total annual profit or loss.

Note 6 - Segmental information

The group continues to report its activities as a single reportable
operating segment in 2018.

At the time of the approval of the 2017 consolidated financial
statements, the expectation was that additional responsibilities would
be allocated to SES Video and SES Networks, making them more distinct
and autonomous in their operations with their operating results being
separately presented and reviewed by executive management.

With the change in the leadership team which became effective in April
2018, these developments have been reassessed and a revised approach is
now being adopted which will in fact result in an enhanced level of
integration of many of the group's operations. This integrated
organisational approach will also be reflected in how the group's
operating results are presented to executive management.

The combination of the above factors led to the assessment that a single
reporting segment approach continues to be appropriate.

When analysing the performance of the operating segment, the comparative
prior year figures are analysed as reported and at 'constant FX' -
recomputed using the exchange rates applying for each month in the
current period.

The financial results for the six month period ended 30 June 2018 for
the SES satellite operations operating segment, and the comparative
prior period figures at constant FX, are set out below:

In millions of euros  

2018

 

Constant FX 2017

  Change

Favourable + / Adverse

Revenue 981.4 986.7 -0.5%
Operating expenses (360.3) (337.2) -6.9%
EBITDA 621.1 649.5 -4.4%
EBITDA margin (%) 63.3% 65.8% -2.5 pts
 
Depreciation and impairment (303.5) (317.3) +4.4%
Amortisation (39.9) (38.2) -4.8%
Operating profit 277.7 294.0 -5.6%

Note 7 - Fair value management of financial instruments

The interim condensed consolidated financial statements do not include
all fair value management information and disclosures required in the
annual financial statements; they should be read in conjunction with the
group's annual financial statements as at 31 December 2017.

The group uses the following hierarchy levels for determining the fair
value of financial instruments by valuation technique:

1) Quoted prices in active markets for identical assets or liabilities
(Level 1);

2) Other techniques for which all inputs which have a significant effect
on the recorded fair value are observable either directly or indirectly
(Level 2);

3) Techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data (Level
3).

The fair value of investments that are actively traded in organised
financial markets is determined by reference to quoted market bid prices
at the close of business on the reporting date. For investments where
there is no active market, fair value is determined using valuation
techniques. Such techniques include using recent arm's-length market
transactions; reference to the current market value of another
instrument, which is substantially the same; discounted cash flow
analysis and option pricing models. The fair value of forward exchange
contracts is calculated by reference to current forward exchange rates
for contracts with similar maturity profiles.

The following tables present the group's financial assets and
liabilities that are measured at fair value:
As at 30 June 2018

                 
Assets (in millions of euros) Level 1 Level 2 Level 3 Total
Derivatives
Interest Rate swaps - 7.7 - 7.7
Total - 7.7 - 7.7

As at 31 December 2017

                 
Assets (in millions of euros) Level 1 Level 2 Level 3 Total
Derivatives
Forward currency exchange contracts - 0.6 - 0.6
Interest Rate swaps - 2.0 - 2.0
Total - 2.6 - 2.6
                 
Liabilities (in millions of euros) Level 1 Level 2 Level 3 Total
Derivatives
Interest Rate swaps - 0.6 - 0.6
Total - 0.6 - 0.6

A change in the group's credit default rate by +/- 5% would only
marginally impact profit and loss.

Set out below is an analysis of financial derivatives by category:

    30 June 2018   31 December 2017
In millions of euros Fair value asset   Fair value liability Fair value asset   Fair value liability
 
Derivatives 7.7 - 2.6 0.6
Forward currency exchange contracts - - 0.6 -
Interest rate swaps 7.7 - 2.0 0.6
 
Total valuation of financial derivatives 7.7 - 2.6 0.6
Of which: Non-current - - - -
Of which: Current 7.7 - 2.6 0.6

The group also has a number of financial instruments which are not
measured at fair value in the balance sheet. For the majority of these
instruments, the fair values are not materially different to their
carrying amounts, since the interest receivable/payable is either close
to current market rates or the instruments are short-term in nature.
Significant differences were identified for the following category of
financial instruments at 30 June 2018:

Borrowings:

In millions of euros

  Carrying amount   Fair value
Eurobond 2026 (EUR 500 million) 495.0 500.5
Eurobond 2018 (EUR 500 million) 499.3 503.1
Eurobond 2020 (EUR 650 million) 648.8 700.6
Eurobond 2021 (EUR 650 million) 648.1 729.3
US Bond 2019 (USD 500 million) 427.3 426.9
US Bond 2023 (USD 750 million) 641.6 628.5
US Bond 2043 (USD 250 million) 209.3 186.8
US Bond 2044 (USD 500 million) 419.0 373.4
Euro Private Placement 2027 (EUR 140 million) issued under EMTN 139.5 168.9
Coface 181.3 184.0
Fixed Term Loan Facility (LuxGovSat) 115.0 133.0
German Bond 2032 (EUR 50 million) 48.1 60.8
Total borrowings 4,472.3 4,595.8

Note 8 - Dividends declared and paid during the period

Six month period ended 30 June

In millions of euros   20182   20171
 
Class A dividend (2017: EUR 0.80, 2016: EUR 1.34) 271.1 452.8
Class B dividend (2017: EUR 0.32, 2016: EUR 0.54) 61.4 102.8
Total dividends declared and paid during the period 332.5 555.6

1 Net of withholding tax of EUR 61.0 million paid in October
2017
2 Net of withholding tax of EUR 35.6 million not
yet paid

Note 9 - Income tax benefit

The SES group acquired 100% of the shares of the Jersey-based satellite
operator O3b Networks Limited (‘O3b') in the second half of 2016. As
part of a post-acquisition integration, the O3b business - including
operational and recently-launched satellites, satellites under
construction, and orbital slots - was transferred from Jersey to
Luxembourg in Q2 2018. The transfer gave rise to investment tax credits
in the amount of EUR 59.2 million being recognised in the statutory
accounts of the related Luxembourg entities.

Part of these investment tax credits are being utilised against current
income tax; therefore, only the remaining portion of EUR 41.2 million
has been recognised as a deferred tax asset which is available for
offset against future corporate income taxes in Luxembourg.

Furthermore, the successful launch of SES-16/GovSat-1, followed by its
entrance into operational service in Q1 2018, has triggered the
recognition of an additional deferred tax asset of EUR 25.8 million
primarily in respect of investment tax credits.

The income tax benefit of EUR 40.9 million recognised for the period
ended 30 June 2018 is due primarily to the recognition of deferred taxes
of EUR 83.8 million, the main elements of which are set out above. This
income is partially offset by the current income tax expense for the
period of

EUR 42.9 million which includes a provision of EUR 10.7 million mainly
due to withholding tax risk in India.

Note 10 - Earnings per share

Earnings per share is calculated by dividing the net profit for the year
attributable to ordinary shareholders of each class of shares by the
weighted average number of shares outstanding during the year as
adjusted to reflect the economic rights of each class of share. The net
profit for the year attributable to ordinary shareholders has been
adjusted to include an assumed coupon, net of tax, on the perpetual bond.

For the period ended 30 June 2018, basic earnings per share of EUR 0.45
per Class A share

(30 June 2017: EUR 0.56), and EUR 0.18 per Class B share (30 June 2017:
EUR 0.22) have been calculated on the following basis:

Profit attributable to the owners of the parent for calculating basic
earnings per share:

In millions of euros

 

Six month period ended 30 June

2018   2017
Profit attributable to owners of the parent 227.7 275.5
Assumed coupon on perpetual bond (net of tax)   (23.8)   (23.5)
Total   203.9   252.0

Assumed coupon accruals of EUR 23.8 million (net of tax) for the period
ended 30 June 2018

(2017: 23.5) related to the perpetual securities issued during 2016 have
been considered for the calculation of the basic and diluted earnings
available for distribution.

Weighted average number of shares, net of own shares held, for
calculating basic earnings per share:

Six month period ended 30 June

   

2018

  2017
Class A shares (in million) 376.0 376.9
Class B shares (in million) 191.7 191.7
Total 567.7 568.6

Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of
all dilutive potential ordinary shares which are primarily related to
the share-based compensation plans. A calculation is done to determine
the number of shares that could have been acquired at fair value based
on the monetary value of the subscription rights attached to outstanding
share options. The number of shares calculated as above is compared with
the number of shares that would have been issued assuming the exercise
of the share options and the difference, if it results in a dilutive
effective, is considered to adjust the weighted average number of share.

For the period ended 30 June 2018, diluted earnings per share of EUR
0.45 per Class A share

(30 June 2017: EUR 0.55), and EUR 0.18 per Class B share (30 June 2017:
EUR 0.22) have been calculated on the following basis:

Profit attributable to the owners of the parent for calculating diluted
earnings per share:

 

In millions of euros

 

Six month period ended 30 June

2018   2017
Profit attributable to owners of the parent 227.7 275.5
Assumed coupon on perpetual bond (net of tax)   (23.8)   (23.5)
Total   203.9   252.0

Weighted average number of shares, net of own shares held, for
calculating diluted earnings per share:

 

Six month period ended 30 June

    2018   2017
Class A shares (in million) 377.6   378.1
Class B shares (in million)   191.7   191.7
Total   569.3   569.8

Note 11 - Related party transactions

No related party transactions have occurred during the six month period
ended 30 June 2018 which have a significant impact on the financial
position or results of the group.

Note 12 - Post balance sheet events

There are no material events occurred after the reporting date until the
date when the interim condensed consolidated financial statements were
authorised by the Board of Directors.

SES, Société Anonyme
Château de Betzdorf
L-6815 Luxembourg
Registre
de Commerce
RCS Luxembourg B 81.267
Tel : +352 710 7251
Fax
: +352 710 725 309
www.ses.com

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