SES claims resilient year as it also signs long-term renewal with Sky UK that will add over 90m in the secured backlog.
SES has announced the financial results for the year ended 31 December 2020. It has reported total revenues of 1,760-1.876m, down 6.9% annual on a reported basis and 4.5% at a constant currency exchange. Adjusted EBITDA was 1.152m, falling 6.9% and 5.9% on a reported basis and constant currency respectively. Net profit though fell 47.3% on a reported basis compared with 2019 to $203m.
The main growth engine was Networks where underlying revenue grew, for the third consecutive year, at 5.3% at constant FX to total 759m. Contribution from new business signed in 2019 supporting growth in Mobility (up 9.0% annually), expansion of connectivity services driving a return to growth in Fixed Data (+6.7%), while Government (+1.7%) benefited from new business secured during the second half of 2020.
However, by contrast video business underlying revenues fell 8.0% at constant FX over the twelve months to 1,000-1,030m. This said the company reflected the combination of lower distribution revenue, falling 7.8% compared with the previous year, from right-sizing of capacity by customers in mature markets, and lower Services revenue (-8.7%) including the impact of Covid-19 on Sports & Events revenue.
Capital expenditure (representing net cash absorbed by investing activities excluding acquisitions, financial investments, and US C-band repurposing) is now expected to be 660m in 2021 and 880m in 2022 reflecting the important growth investment in SES-17 and O3b mPOWER. Thereafter, Capital Expenditure is expected to reduce significantly to 220m in 2023, 570m in 2024, and 340m in 2025, representing an average annual capital expenditure of 375m (2023-2025).
Commenting on the financial report, Steve Collar, CEO of SES, said: 2020 was a strong year for SES. The combination of considerable commercial execution and laser focus on controlling discretionary spending ensured that, despite the COVID-19 environment, we protected the bottom line with Adjusted EBITDA in line with our pre-COVID-19 outlook and at the top end of our mid-year outlook. We successfully executed our Simplify & Amplify programme delivering OpEx savings of 50m from 2022 onwards, while Net Debt and leverage is at a five-year low on the back of strong cash generation.
2020 was a landmark year for our US C-band initiative, starting with the FCCs final Report and Order and ending with the record-breaking spectrum auction, crystallising SES opportunity to earn $4bn in accelerated relocation payments. The clearing is on track and we expect to meet the December 2021 and December 2023 deadlines.
We secured more than 1.3bn in customer agreements in the year including an important long-term commitment with Canal+ covering multiple orbital positions; contract extensions with public and commercial broadcasters across our prime video neighbourhoods; new MEO-GEO-based solutions for the US Government; new Telco and MNO connectivity solutions in Latin America and Asia; and, in return for supporting customers whose businesses are especially affected by COVID-19, secured additional backlog in Cruise and Aero. Our recently announced renewal and extension with Sky means that, to date, we have added more than 440m in contract backlog at our core video neighbourhoods since the end of Q3 2020. 2020 was a year like no other for our employees and customers alike. We moved swiftly and successfully into a remote office environment, protecting customer and satellite operations in the process. I could not be more grateful to SES employees for their resilience and commitment to supporting our customers.
2021 represents a year of unique and significant opportunities for SES. It will see us realise the first $1bn from C-band repurposing and execute on a strong pipeline of commercial opportunities to further grow, driven by the increasing backlog of now $740m for SES-17 and O3b mPOWER ahead of launch in the second half of 2021. These assets form the bedrock of our unique, multi-orbit value proposition to serve the strong and expanding demand for data across all our segments and will drive sustained, profitable growth for SES in the years ahead.
On the other hand, Sky UK has extended its contract with SES for satellite capacity in a new agreement that will add over EUR 90m in the secured backlog. This renewal is in addition to capacity already under contract that extends through 2027. By the end of the renewed contract, Sky UK will have been an SES customer continuously for almost four decades, illustrating the strength and value of the partnership to Sky UKs business in terms of the reliability, performance, high-quality viewing experience and reach of SESs satellite services.
Patrick Behar, Chief Business Officer at Sky UK, said: Were pleased to continue working with SES, a world leader in satellite provision. SES has been a valued partner to Sky for decades and this agreement represents the latest step in a long and successful relationship.
