Inmarsat — FY2007 Earnings Presentation
32 slides from Inmarsat's earnings presentation, Mar 6, 2008
Slide 1: Q4 & Preliminary full year results 2007
Inmarsat plc Q4 & Preliminary full year results 2007 March 6th 2008 The mobile satellite company TM
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in this presentation 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 result
Slide 3: Preliminary full year results 2007
Preliminary full year results 2007 Andrew Sukawaty Chairman & Chief Executive Officer The mobile satellite company TM
Slide 4: 2007 financial highlights
2007 financial highlights Total revenue up 15.3% to $576.5m (2006: $500.1m) • Includes CIP/Stratos for 21 days (1) • Inmarsat Core revenue up 11.4% to $557.2m (2006: $500.1m) EBITDA up 17.0% to $388.1m (2006 $331.7m) (1) • Inmarsat Core EBITDA up 15.6% to $383.5m (2006: $331.7m) Profit before tax up
Slide 5: Inmarsat Core – MSS revenue
Inmarsat Core – MSS revenue (1) US$m +11.1% 600 $546.6 500 $491.8 66 Leasing +10% 60 44 31 Aero +44% 400 126 116 Land +8% 300 200 285 Maritime +9% 310 100 0 FY 2006 FY 2007 (1) Inmarsat plc and its subsidiaries excluding CIP 5
Slide 6: Inmarsat Core – EBITDA
Inmarsat Core – EBITDA (1) US$m Margin 450 +16% 80% 400 $383.5 75% 350 $331.7 300 70% 250 69% 65% 200 66% 150 60% 100 55% 50 0 50% FY 2005 FY 2006 (1) Inmarsat plc and its subsidiaries excluding CIP 6
Slide 7: Dividends
Dividends US$ cents 26.66 cents +8.3% 28.88 cents 20 18 17.33 16.00 16 14 11.55 12 10.66 10 8 6 4 2 Interim Final Interim Final 0 FY 2006 FY 2007 7
Slide 8: Q4 & Preliminary full year results 2007
Q4 & Preliminary full year results 2007 Rick Medlock Chief Financial Officer The mobile satellite company TM
Slide 9: 2007 – Financial overview
2007 – Financial overview IFRS requires consolidation of CIP and Stratos Global • Call option remains in place, first exercise April 2009 “Inmarsat Core” = Inmarsat plc excluding CIP and Stratos Inmarsat Holdings and Inmarsat Group quarterly reporting entities continue as before Stratos Global expec
Slide 10: Inmarsat plc – Consolidation analysis
Inmarsat plc – Consolidation analysis Inmarsat Adjust- Inmarsat Core CIP ments plc US$m 2007 2007 2007 Revenue 557.2 31.6 (12.3) 576.5 Operating costs (173.7) (27.0) 12.3 (188.4) EBITDA 383.5 4.6 - 388.1 Depreciation & amortisation (174.2) (2.5) - (176.7) Operating profit 209.3 2.1 - 211.4 Net inter
Slide 11: Inmarsat Core - 2007 full year results
Inmarsat Core - 2007 full year results (1) Financial year US$m 2007 2006 Revenue 557.2 500.1 11.4% Operating costs (173.7) (168.4) 3.1% EBITDA 383.5 331.7 15.6% Depreciation & amortisation (174.2) (156.8) Operating profit 209.3 174.9 19.7% Net interest payable (83.8) (85.1) Profit before tax 125.5 8
Slide 12: Inmarsat Core - 2007 cash flow
Inmarsat Core - 2007 cash flow (1) Financial year US$m 2007 2006 EBITDA 383.5 331.7 Working capital/non-cash items (10.8) (3.8) Operating cash flow 372.7 327.9 Capital expenditure (209.9) (114.4) Capitalised operating costs (17.5) (14.0) Cash interest (33.5) (33.8) Cash tax 0.1 (0.5) Free cash flow
Slide 13: Inmarsat Holdings Ltd - Q4 operating costs
Inmarsat Holdings Ltd - Q4 operating costs US$m 60 +5.3% $48.0 50 $45.6 40 22.8 26.3 30 8.7 8.1 20 10 17.4 18.8 0 -2.7 -5.8 -10 Q4 2006 Q4 2007 Own work capitalised Other operating costs Network & satellite operations Employee benefit costs 13
Slide 14: Inmarsat Core - Net debt
Inmarsat Core - Net debt (1) US$m Leverage $1,131 2.9x 1100 Convertible Convertible Bond $231 Bond (2) completed during Q4 to 900 fund loan to CIP Discount $280m of liquidity 700 $412 Notes through cash and undrawn bank facilities 500 ` Senior Fully funded and no debt $219 Notes maturities in 2008 3
Slide 15: Inmarsat Core - Financial summary
Inmarsat Core - Financial summary (1) Revenue growth healthy and ahead of plan, up 11% 9 Operating cash flow growth up 15% 9 Pre-tax profit growth up 40% 9 Delivering dividend growth, up 8.3% 9 Significant capex reductions post 2008 9 Fully funded and significant liquidity 9 (1) Inmarsat plc and its
Slide 16: Core - Q4 operating review
Inmarsat Core - Q4 operating review Michael Butler President & Chief Operating Officer The mobile satellite company TM
Slide 17: Inmarsat Holdings Ltd - Q4 MSS revenue
Inmarsat Holdings Ltd - Q4 MSS revenue US$m +6.9% 140 $130.5 $122.1 14.7 120 Leasing -12.0% 16.7 11.9 100 8.3 Aero +43.4% 28.4 26.1 Land +8.8% 80 60 40 Maritime +6.3% 75.5 71.0 20 0 Q4 2006 Q4 2007 17
Slide 18: Maritime sector
Maritime sector US$m ¾ Voice up 2% 49.9 50 45.8 ¾ Data up 9% 40 ¾ Active terminals up 6% 30 ¾ ARPU up 25.2 25.6 20 Fleet terminal sales 10 momentum sustained through Q4 0 FleetBroadband launched in Q4 2006 Q4 2007 November Voice Data 18
Slide 19: Land mobile sector
Land mobile sector ¾ Voice down 10% US$m 30 ¾ Data up 12% 24.9 25 ¾ Active terminals down 4.5% 22.2 20 15 BGAN drives momentum in land data • Revenue up 167% 10 • Subscribers up 122% 5 3.9 3.5 • Sustained ARPU 0 Satellite Phone Services contribution Q4 2006 Q4 2007 from 2008 Voice Data 19
Slide 20: BGAN quarterly progression
BGAN quarterly progression US$m 12.0 11.3 18 10.2 16 10.0 14 8.0 8.0 7.1 12 10 6.0 8 4.2 4.0 3.2 6 1.6 4 2.0 0.5 2 0.0 0 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Revenue BGAN terminals 000s 20
Slide 21: Aeronautical & Leasing
Aeronautical & Leasing US$m 18 16.7 ¾ Aero revenue up 44% 16 14.7 ¾ Active aero terminals up 15.6% 14 11.9 12 10 Sustained demand for Swift 64 8.3 8 service 6 4 SwiftBroadband launched in October 2 In-flight GSM service trials underway 0 Q4 2006 Q4 2007 Leasing impacted by lower demand Aero Leasing
Slide 22: Extending our broadband platform
Extending our broadband platform FleetBroadband SwiftBroadband Launched Launched November 2007 October 2007 Capture increasing demand for Extend market leadership in data data services connectivity Raise barriers to VSAT competition Enable implementation of in-flight further GSM service by airlines
Slide 23: Business development and outlook
Business development and outlook Andrew Sukawaty Chairman & Chief Executive Officer The mobile satellite company TM
Slide 24: 2008 priorities
2008 priorities Continued core business growth and cost control Successful launch of third Inmarsat-4 satellite Implementation of global satellite phone voice service Progress spectrum opportunities New distribution agreement 24
Slide 25: Launch of third Inmarsat-4 satellite
Launch of third Inmarsat-4 satellite On track for late April launch Proton launch vehicle >95% success rate Launch insurance placed 25
Slide 26: Satellite Phone Services
Satellite Phone Services Service launched July 2007 Pre-pay platform launched November 2007 Customer acquisition and channel development Global network by Q4 2008 Modernised phone by Q1 2009 Reiterate target 10% market share by 2010 26
Slide 27: Aero passenger connectivity
Aero passenger connectivity Passenger trials – Qantas and Air France Data acceptance, voice to come Inmarsat Classic and SwiftBroadband services Ryanair Q2 for commercial service introduction Expect further trials and deployments in 2008 Revenue opportunity from 2009 27
Slide 28: Spectrum cooperation agreement with MSV
Spectrum cooperation agreement with MSV Signed December 2007, effective immediately Outstanding regulatory issues resolved More spectrum available to support BGAN migration Commercial terms for an ATC implementation agreed Defines the benefits of L-band for ATC 28
Slide 29: Distribution agreement objectives
Distribution agreement objectives New distribution agreement sent out January 2008 Next step - discussions and refinement New agreement effective April 2009 Call option on CIP/Stratos effective April 2009 29
Slide 30: Inmarsat Core – 2008 outlook
Inmarsat Core – 2008 outlook (1) Trading conditions in our key sectors remain positive Steady momentum in Maritime, Land Mobile and Aeronautical customer growth New services introduced in 2007 to expand portfolio and ensure we can meet increasing customer demand Expect continued good growth in 2008
Slide 31: Inmarsat Core - Summary
Inmarsat Core - Summary (1) 2007 revenue growth 11.4% 9 2007 EBITDA growth 15.6% 9 2007 dividend growth 8.3% 9 Market leadership 9 Growth options 9 (1) Inmarsat plc and its subsidiaries excluding CIP 31
Slide 32: Questions & Answers
Questions & Answers Inmarsat plc Q4 & Preliminary full year results 2007 6 March 2008 www.inmarsat.com The mobile satellite company TM