- Press Release
- Dec 8, 2022
Inmarsat plc reports Interim Results 2016
Inmarsat plc (LSE: ISAT.L), the leading provider of global mobile satellite services, today provided the following unaudited information for the half year ended 30 June 2016.
- Inmarsat returned to growth in Q2, more than compensating for a soft Q1. Good revenue growth in Aviation, Government and Ligado Networks (‘Ligado’) outweighed weaker results in Maritime and Enterprise. Margins expanded in Q2 mainly reflecting an improved revenue mix and Sterling weakness.
- Maritime announced major strategic partnerships with three of the largest maritime VSAT resellers, Marlink, SpeedCast and Navarino. This strong endorsement of our Maritime GX offering, Fleet Xpress, commits our partners to over 5,000 Fleet Xpress VSAT installations over five years. FleetBroadband and XpressLink, which now account for over 80% of Maritime revenues, continued to grow well throughout the period.
- Aviation began demonstration flights, enabling airlines to see GX deliver high bandwidth inflight connectivity to the cabin. We have continued to progress cabin connectivity deals with major airlines and remain confident of taking attractive market share in this fast-emerging new sector.
- Government revenues grew, reflecting the initial take up of GX and increased operational activity, as well as success in our diversification strategy. In July, Inmarsat was awarded a material five year satcoms contract with the US government.
- Ligado elected for the 30MHz option. Variations to the Cooperation Agreement were agreed under which Ligado will pay Inmarsat $337m over 2016 to 2018, with other sums being deferred to 2021. Transition of spectrum was postponed and interim spectrum usage rights were granted back to Inmarsat until Ligado receives its FCC license and moves to deploy ATC services.
- With most activities denominated in US Dollars and a business that is well diversified across markets and geographies, Inmarsat is relatively well placed to withstand Brexit related market challenges.
Second Quarter Financial Headlines
- Total revenues up $19.0m (+6.1%) at $330.4m (Q2 2015: $311.4m)
- Maritime $0.7m lower at $146.6m (-0.5%)
- Government up $1.6m to $72.0m (+2.3%)
- Enterprise $1.9m lower at $38.5m (-4.7%)
- Aviation up $2.6m to $33.4m (+8.4%)
- Ligado Networks income up $18.0m at $35.5m (+102.9%)
- EBITDA up $36.3m (+21.9%) at $202.2m (Q2 2015: $165.9m)
- Profit after tax up $22.6m (+41.7%) at $76.8m (Q2 2015: $54.2m)
Half Year 2016 Financial Headlines
- Total revenues up $12.8m (+2.1%) at $629.0m (2015: $616.2m)
- Ligado Networks income up $18.4m to $53.4m (+52.6%)
- EBITDA up $25.7m (+7.5%) at $368.4m (2015: $342.7m)
Rupert Pearce, Inmarsat’s Chief Executive Officer, commented,
“We continue to compete aggressively and successfully in all of our core markets and to make solid progress with our long term GX and Aviation growth agendas.
Strong customer interest for GX is evident in all of our Business Units. In Maritime, we secured three major strategic deals which will bring over 5,000 vessels to GX over the next five years. In Government the take up of GX is gaining traction with rising revenues and strong operational interest. In Aviation, whilst closing cabin connectivity deals is taking longer than we expected, we have continued to make further progress, competing strongly in ongoing airline tenders for passenger connectivity services and the build out of our European Aviation Network is running to plan. We are currently conducting a worldwide live demonstration of our GX Aviation services to major airlines, which has been extremely well-received. I therefore continue to be confident in the long term growth prospects for the Group.
Nevertheless, our markets continue to be challenging and the outlook is becoming much harder to call as the macro economic environment worsens, new satellite capacity arrives driving prices lower, our new GX products launch and the Aviation passenger connectivity market becomes established.
I was also pleased to be able to report at the end of Q1 that Ligado Networks had opted to take the 30 MHz option under our Cooperation Agreement. This agreement is expected to provide several hundred million dollars of value to our shareholders over the next three years.
I am pleased to announce an increased interim dividend of 20.59 cents per share for 2016. With effect from this interim dividend, we will also be providing our shareholders with more choice through the option of a scrip dividend alternative.”
Outlook and Guidance
As discussed above, the outlook for our markets and the company has become much more difficult to forecast. Nevertheless, with the background of strong long term growth in the demand for satellite communications services, the market-leading global broadband capabilities of GX, our unique position within Aviation, the resilience and differentiation of our L-Band franchise, the power of our global distribution channel and our full service global mobile offer that together strongly position Inmarsat against our competitors, we remain confident that Inmarsat is well placed to grow over the medium and longer term. We therefore re-iterate our current guidance of:
- 2016 revenues (ex Ligado Networks income) of $1,175m to $1,250m
- 2018 revenues (ex Ligado Networks income) of $1,450m to $1,600m
- Annual run rate of GX revenues of $500m reached by the end of 2020
- Capital expenditure of $500m to $600m in each of 2016, 2017 and 2018.
- Net debt to be normally maintained at less than 3.5x EBITDA.
Capital Markets Day
The company will host a Capital Markets Day in London on the morning of Friday 7 October.
In May the company announced the appointment of Pip McCrostie as a non-executive director and a member of the company’s audit committee, to take effect from 1 September 2016. With her background as a senior leader within EY, Pip brings a wealth of experience in managing a global growth business and in advising enterprises across a wide range of strategic issues.
Forward looking Statements
This announcement contains ‘forward-looking statements’ within the meaning of the US 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 or 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.
While Inmarsat plc is the ultimate parent company of our group, our subsidiary Inmarsat Group Limited is required by the terms of our Senior Notes to report consolidated financial results on a quarterly basis. A copy of the resulting financial report for Inmarsat Group Limited will be available via the Investor Relations section of our website.
Inmarsat management will host a presentation of the results on Thursday 4 August at the company’s offices at 99 City Road, London EC1Y 1AX. The presentation will begin at 09.00 hrs BST (London time).
A live webcast of the presentation will also be available through our website at www.inmarsat.com/about-us/investor-relations/ and via a simultaneous conference call: +44 (0) 20 3427 1914; for US: +1877 280 1254, access Code 9179472.
Inmarsat plc – Contacts
Tel: +44 (0)20 7728 1518
Chris McLaughlin/Jonathan Sinnatt
Tel: +44 (0)20 7728 1935