Sesa Spa

Hello and welcome to the SES half year 2023 results call. My name is Laura and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Richard Whiting, Head of Investors Relations, to begin today's conference. Thank you.

Thanks, Laura. Good morning, everyone. Thanks for joining this analyst and investor call for our H1 2023 results. This morning's presentation was uploaded along with the press release to the investors section at SES.com if you don't already have it. As always, please note the disclaimer at the back of the document. In a moment, Rui Pinto, CEO, will present the main business highlights, followed by Sandeep Jalan, CFO, to cover the financials in more detail. After some closing remarks from Rui, we will be happy to take your questions. So with that, let me hand over to Rui.

Thank you. Thanks, Richard. Good morning. Good afternoon, everyone. First, I'm mindful that call with me after our leadership transition at SES. I have to say I feel privileged to lead the company at such an exciting time in our industry, and I'm looking forward to the opportunity of engaging with all of you in the course of this call and the next few calls. Why don't we go and immediately start with page three and the highlights of what I think was a really strong start of the year for SES. I'm pleased with the solid first half financial performance of our network business. We are delivering growth on the back of a double-digit sub-tunnel mobility and notably on our cruise segment as well. In video, our revenue performance was fully consistent with our expectations and we are continuing to sign important long-term renewals, which reflect the value of our core neighborhoods. As a result, I'm pleased to say we are on track to deliver on our financial outlook for the full year, for the fall of 2023. In addition to that, I'm pleased to say that today we are announcing a share-by-back program of up to 150 million euros, which demonstrates our conviction in SES's long-term fundamentals. And what I believe, we believe, is our current share price undervaluation, representing an attractive opportunity to deploy capital in the best interests of our shareholders. Moving on to O3B Empower, on O3B Empower, I'm pleased to say we have now deployed all the upgraded ground infrastructure, and a number of Empower-ready customer terminals that make the best use of the Empower fleet capabilities, both in space and on the ground. As the name states, the old 3B Empower-ready terminals, being with many of our customers, allow us to have starters, commercial service starters, and I think it's very beneficial to both us and to our customers. We also have the first two Empower satellites in their final orbital positions, with more than four months of accumulated operations in space already completed. And the follow-on two satellites, S3 and F4, will be arriving at their final locations in the near orbit by the end of August. The launch of satellites number five and number six, out of the 11 that we have currently being manufactured, is currently planned with SpaceX for Q3 2023. Whilst we wait for that launch, we continue the testing of the power payloads in space. Let me add as well that in the course of operations, this operations campaign of the first four satellites, we did observe a number of sporadic trip-offs on a fraction of the numerous power modules on board. These trip-offs were recovered quickly and without impact on the performance of the power payloads. We will continue to investigate this phenomenon, and in parallel, we are revising our operational procedures so that we can take these sporadic events into account. We are being extremely transparent on what we are doing because, as you realize, we want Empower to work flawlessly for SCS and for our customers. We still plan to launch all 3D Empower services by the end of this year. On the commercial front, the combined backlog for SCS 17 and all 3D Empower is increasing, and it now stands at more than a billion dollars, as new deals signed in the mobility segment and in fixed data have more than replaced the revenues consumed in H1 2023. That's an outstanding result for us. This backlog number still does not yet count the commitment from the Luxembourg government, which moved one step closer with the Luxembourg parliament's approval of our new global services program. That is valued at 195 million euros over a 10-year period. Mio Global Service, or MGS as we call it internally, will take advantage of all 3B Empower's ability to deliver flexible, high-performance connectivity solutions and provide resilient, secure SATCOM capabilities for Luxembourg, for its partners in the areas of defense, security, and disaster recovery. Also in government, we are very pleased to say that the consortium of SES and a small number of other European space and telecom players, the consortium named Space Rise, has been selected to develop a proposal for IRIS II. I'm pleased with the progress that we are making on this important project for Europe. It's still in the early phases, but it's rewarding to see that we'll be delivering the initial proposal for the European Commission on the 7th of August as a team. This is an attractive opportunity to create for Europe a space-based sovereign communications network, and SCS is a firm believer in this project alongside our other consortium members. I'm looking forward to coming back to this topic in future calls. Finally, I'm delighted to say that After more than three years of hard work from many inside and outside SCFs, we have cleared the 300 megahertz of cement packing in the U.S. ahead of schedule. We have submitted our certification. We have passed the 10-day period for objections. And we are now focused on working with SCC to have approval of that certification as the last major milestone to receiving the phase 2 pre-tax incentive payment of $3 billion. We are confident that we will get this payment in Q4, realizing a tremendous amount of value for SES. If I could move on to page 4, and we'll talk a little bit about the numbers. The revenue of 987 million euros was fully in line with expectations, with a split of 51% for networks and 49% for EU. In the last six months, we have signed a total of 960 million euros worth of contract renewals and new business wins across the group. In networks, this included six data deals with our partners Marlin, CSE Mexico, Telecom's Cook Islands, new aviation revenue, including an expansion of our business jet service with Luxstream, as well as cruise and commercial shipping winds. On the U.S. government segment, we had awards on programs such as CSS2 with EMARSAT, the Trojan Network, and the WIN-T program. I apologize for the acronym. This is complemented by a health increase on our video backlog of 350 million euros. And notably, in the last few days, we agreed a multi-transponder renewal with our customer Telefonica on our 19.2 degrees east neighborhood. Telefonica is the operator of the Spanish movie star Play Space TV platform. And this renewal adds more than 90 million euros to our backlog just this week again. As a result, our fully protected contract backlog, which doesn't include the next government, stood at €4.7 billion at the end of June, underpinning the visibility, the longevity and the strength of our future revenue streams and cash flow. We are also maintaining a strong grip on costs and discretionary spend. with our adjusted EBITDA for the first half of 2023 standing at 530 million euros, representing a margin of 54% as we gradually move from video to networks. As I mentioned already, this means we are fully on track to achieve our revenue and adjusted EBITDA outlook for the full year of 2023. If I could then move on to more business details. Let's move on to page five. So on page five, second quarter revenue grew up 3.4% year on year. And I have to say that that has not been the case in the last few years. We are very pleased with that result. And that turns out to be that in the first half of 2023, we are 3.1% higher as compared with The key driver continues to be the strong performance in our mobility segment, mainly driven by further expansion of our cruise business, despite competition. That's a robust first-half performance in government and fixed data, which included €7 million of periodic revenue in Q1 as well. Looking ahead to the remainder of this year, The combination of deals signed to date and visibility into the pipeline of near-term deals will allow us to deliver a step-up in revenue from H1 from the first half to the second half of 2023, which is already fully implied in our full-year outlook. Going on to video now on page 6, please. You can see that the outturn of H1 of the first half of 2023 was similarly tracking well against our budget. and indicative of the secular trends we would expect to see going forward that you're familiar with. A reduction of 2% year-on-year in the second quarter contributed to the overall revenue in the first six months closing at 3.5% lower than the first half of 2022, and that is excluding 10 million euros of periodic revenue booked in the prior year, otherwise it would look a little bit better. Across the business, the reductions The reduction is mainly coming from lower volumes in the mature markets, but we are delighted to say that pricing has been stable, and even in some cases, we're able to slightly increase pricing with the benefit of having indexation clauses given the current inflation in approximately 20% of our video contracts. While still a relatively small part of our overall video revenue, Our sports and events business is continuing to expand, growing, and it established SCS as a trusted partner for major sports brands and marquee events, further solidifying our position in the video market. We are very proud of that achievement in sports and events. With that, I would like to hand over to our CFO, Sandeep, to give more details on the financials.