SES SA FDR (Class A) · EURONEXT:SESG
SES SA FDR (Class A) — SES — Investor Day (2006)
16 slides from SES SA FDR (Class A)'s investor day presentation, 2006
Slide 1: Investor Day 2006 – Chief Financial Officer
Investor Day 2006 Mark RIGOLLE Chief Financial Officer
Slide 2: Financial Strategy
Financial Strategy • Support Group development strategy • Optimise WACC through appropriate balance sheet leverage • Current target is 3.0x Net Debt/EBITDA Maintain flexibility while delivering above average returns to shareholders 2
Slide 3: Three planks
Three planks • Continued investment in the business – growing EBITDA • Increasing dividends – sustainable growth in per share dividend • Share buyback and cancellation programme – EUR 517m in 2005; EUR 101m in Q1 2006 – permits maintenance of target leverage 3
Slide 4: EBITDA growth and increased Dividends
EBITDA growth and increased Dividends EBITDA quarterly (1)(2) SES GLOBAL Total Dividend Payout EUR m Ratio and Dividend (EUR) per A Share 227 58% 63% 58% 226 52% 220 219 213 0.40 187 0.30 0.20 0.22 2002 2003 2004 2005 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Payout ratio Dividend per A-share • Revenue gr
Slide 5: SES's business has evolved…
SES’s business has evolved… • Only a few years ago, group revenues were almost entirely derived from satellite infrastructure, delivering c. 80% EBITDA margins • SES’s strategy to develop services activities is based on their inherent value-creation as well as the “pull-through” for transponder capa
Slide 6: Delivering value from services investments
Delivering value from services investments • Services activities have much lower capital requirements than satellite infrastructure • Costs are mainly operating expenses, rather than depreciation • SES applies an IRR hurdle rate of 20% to services investments – reflecting shorter contract terms and
Slide 7: SES's services activities
SES’s services activities Revenue contribution 2005 Services Revenue Q1 2006 Services Revenue Total Services Revenue: EUR 186.6m Total Services Revenue: EUR 48.0m Video Related Video Related Services Services 23% 21% Government Services Government 40% Services 36% Managed Services Managed 24% Servic
Slide 8: Video-related services (e.g. APS)
Video-related services (e.g. APS) • Broadcasting services – programme encryption, multiplexing, uplinking, IP encapsulation and more – customers select which services they wish to use • Revenues of approximately EUR 40m in 2005 • Characteristics – typical EBITDA margin 30-35% – “sticky” applications
Slide 9: Government Services (mainly AGS)
Government Services (mainly AGS) • End-to-end services, in particular to US Government agencies – consultancy – bandwidth sales – equipment sales • Revenues of approximately EUR 70 m in 2005 • Characteristics: – typical EBITDA margin of 15-20%, depending on level of low margin equipment sales – “sti
Slide 10: Managed services (e.g. SATLYNX)
Managed services (e.g. SATLYNX) • Managed services include – telecoms-type services such as: • VSAT corporate broadband networks • Internet trunking – corporate recovery systems • Revenues approximately EUR 50 m in 2005 • Characteristics: – typical EBITDA margin 5-10% – short contract terms and high
Slide 11: SES's services – going forward
SES’s services – going forward • Video-related services – APS a central component of digital satellite services development • Germany • new markets of Central and Eastern Europe – IP-PRIME for distribution of IPTV content to telcos in US • fixed and mobile applications • Government services – AGS we
Slide 12: Enhancing modelling guidance
Enhancing modelling guidance • SES revenues from sources other than satellite capacity contracts have grown • “Services” activities are characterised by: – lower capital investment requirements, hence almost no depreciation – lower EBITDA margins – “lumpiness” (e.g. intermittent equipment sales, con
Slide 13: New Services Coming
New Services Coming • “Dolphin” • blucom • IP-PRIME Not yet generating revenues; some costs already being incurred 13
Slide 14: Enhancing modelling guidance
Enhancing modelling guidance • To improve visibility for investors, SES is now providing, for the current year: – a target range for total Revenues and EBITDA – target ranges for both the satellite infrastructure and satellite services segments • Despite the impact of the later launch date of AMC-14
Slide 15: 2006 guidance
2006 guidance EUR million SES Group Total Revenues 1340 - 1360 Total EBITDA 900 - 920 Infrastructure - Revenues 1185 - 1195 - EBITDA 925 - 935 Services - Revenues 210 - 220 - EBITDA 17 - 22 1 EUR = 1.23 USD Note: Ranges are without New Skies and project start-up costs 15
Slide 16: Modelling guidance (reiterated)
Appendix Modelling guidance (reiterated) • Revenues (recurring) – double digit CAGR for the period 2005-2007 – high single-digit percentage revenue growth in 2006 • Gross EBITDA margin – below 70% in 2006 as a result of a further increase of the services business as well as a slippage of revenues ge