inmarsat plc reports 2007 interim results
Inmarsat Holdings Limited Reports Second Quarter 2007 Results
Inmarsat plc (LSE: ISAT), the leading provider of global mobile satellite communications services, and Inmarsat Holdings Limited, a wholly-owned subsidiary of Inmarsat plc, today reported consolidated financial results for the 6 months and 3 months ended 30 June 2007.
2007 Interim Results Highlights
• First half revenue $284.2 million up 15.6% (2006: $245.9 million)
• EBITDA $200.8 million up 23.3% (2006: $162.9 million)
• Profit before tax $77.9 million up 63.7% (2006: $47.6 million)
• Strong performance across all business sectors
• Interim dividend lifted by 8.3% to 11.55 cents (US$) per share
Q2 2007 Highlights
(Inmarsat Holdings Limited)
• Q2 revenue up 15.5% to $143.4 million (2006: $124.2 million)
• Q2 EBITDA up 22.8% to $101.2 million (2006: $82.4 million)
• Q2 BGAN revenue $8.0 million up 12.7% sequentially on Q1
• BGAN subscribers reach 11,782 (1,940 additions in quarter)
• Handheld service implemented and launched on 16 July
Andrew Sukawaty, Inmarsat’s Chairman and Chief Executive Officer said, “We had a record-breaking second quarter for revenue and maintained strong growth trends across our MSS business sectors. The second quarter contributed to excellent results in both revenue and profit for the first half 2007 and we are raising our interim dividend by 8.3%. In view of the sustained growth in our business we have also increased our expectations for the full year.”
Launch of third Inmarsat-4 satellite in 2008
Inmarsat has also announced today that a contract has been signed with International Launch Services for the launch of our third Inmarsat-4 satellite on a Proton launch vehicle and that we now expect to launch this satellite between March and April 2008.
Mobile Satellite Services
Second quarter revenue from our maritime sector increased 11% year over year. Maritime data revenue grew by 16% and we sustained year over year growth in maritime voice revenue. While we continue to see strength in all our key maritime services, it is our Fleet product range that continues to be the engine of our maritime growth. While growth in active terminals in maritime grew by 12% year over year, growth in Fleet terminals was up 46% for the same period. Activations of Fleet terminals during the second quarter were at the highest quarterly level since the service was launched and average revenue per Fleet terminal was also up 6% year over year.
Revenue in the land sector for the second quarter was up 13% year over year. Land data saw year over year growth of 20%, primarily driven by demand for our BGAN service. Once again, we do not believe the second quarter performance for BGAN was marked by any material migration from our established land data services, GAN and R-BGAN. This trend continues to support our view that much of the growth in our BGAN service revenue continues to be generated by new customers and incremental demand from existing customers.
Land voice revenue for the quarter continued to be impacted by competition from other MSS operators who primarily offer voice services through handheld satellite phones. On 16 July after the end of the quarter we announced the launch of our own handheld satellite phone and low cost fixed phone, initially available to users in much of Africa, Asia and the Middle East. We are confident that the introduction of our own handheld satellite phone service will allow us to address the competition and improve the outlook for our land voice revenue.
Second quarter revenue from our aeronautical sector increased by 45% year over year. We are maintaining strong revenue growth in our aeronautical sector as a result of increased demand for our Swift 64 service. Leasing revenue for the quarter increased by 27% year over year and was in line with management expectations.
Transaction with Communications Investment Partners
On 12 June the shareholders of Stratos Global Corporation voted to support the cash offer of C$7.00 per share made by CIP Canada Investment Inc, a wholly owned subsidiary of Communications Investment Partners Limited (CIP), to acquire the entire issued share capital of Stratos Global. Following this event and with progress on regulatory clearances in line with expectations, we and CIP remain on track for fourth quarter closing of the transaction we announced on 19 March.
Outlook
With our core business performing well and operating cost expectations fully in line, we now expect our full year performance to be ahead of our previous expectations.
Impact of volume discounts
The volume discounts we offer to our distributors have an increasing impact on our margins as the year progresses. As our distributors reach certain volume targets we reduce our wholesale prices and this process reduces our margins until the end of the calendar year when our rates are then reset to their pre-discount level. Although overall growth in traffic will have an offsetting effect, volume discounts have their greatest impact on our wholesale prices and revenue during the third and fourth quarter of the year.
Liquidity
At the end of the second quarter we had net external debt of $861.8 million made up of cash of $89.0 million and total external debt of $950.8 million. In addition to our cash resources, we had a revolving credit facility with an amount available but undrawn at the end of the second quarter of $250 million. Cash used to fund capital expenditure during the quarter was $42.8 million and $73.1 million was used to fund the final dividend for the financial year 2006.
Inmarsat plc
Inmarsat Holdings Limited, through its subsidiary Inmarsat Finance II plc, is the issuer of $450 million of 10.375% Senior Discount Notes due 2012. Inmarsat Group Limited, through its subsidiary Inmarsat Finance plc, is the issuer of $310.4 million of 7.625% Senior Notes due 2012. Both Inmarsat Holdings Limited and Inmarsat Group Limited are required by the terms of the Notes outstanding to report quarterly financial results. Inmarsat plc is the ultimate parent company of the Inmarsat group and reports each half year.
A copy of the interim financial results report for Inmarsat plc for the 6 months ended 30 June 2007 is incorporated into this press release and is also available from our website. A copy of financial reports for both Inmarsat Holdings Limited and Inmarsat Group Limited for the second quarter can be accessed via the investor relations section of our website. Copies of these financial reports for the second quarter will also be filed with the SEC later today on form 6-K.
Other Information
Inmarsat management will discuss the results announced today and other financial and business information in a conference call on Tuesday, 7 August at 3:00 p.m. London time (United States, 10:00 a.m. EST). To access the call please dial +44 (0)20 7162 0125. The conference code is 759927. The call will also be recorded and available for one week after the event. To access the recording please dial +44 (0)20 7031 4064 and enter the conference code 759927. The call will also be available by webcast accessible via the investor relations section of our website.
Forward-looking Statements
Certain statements in this announcement constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those projected in the forward-looking statements. These factors include: general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance of programmes, or the delivery of products or services under them; structural change in the satellite industry; relationships with customers; competition; and ability to attract personnel. You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. We undertake no obligation to update or revise any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances.
