Inmarsat — FY2006 Earnings Presentation
30 slides from Inmarsat's earnings presentation, Feb 27, 2007
Slide 1: Inmarsat plc Q4 & Preliminary full year results 2006
Inmarsat plc Q4 & Preliminary full year results 2006 February 27th 2007
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 2006
Preliminary full year results 2006 Andrew Sukawaty Chairman & Chief Executive Officer
Slide 4: 2006 highlights
2006 highlights • Total revenue $500.1m, MSS revenue up 4% to $491.8m • EBITDA up 5% to $331.7m (2005 $316.0m) • Net income $127.7m (2005 $64.4m) • EPS 28 cents (2005 17 cents) • Final dividend proposed of 16 cents, up 4% • Operational highlights – Sustained growth in maritime and aeronautical secto
Slide 5: Mobile satellite services revenue
Mobile satellite services revenue US$m 600 +4% 500 $491.8 $472.5 Leasing -1.0% 60 61 Aero +35.2% 31 400 23 116 122 Land -4.7% 300 200 Maritime +6.6% 285 267 100 0 FY 2005 FY 2006
Slide 6: EBITDA
EBITDA US$m Margin 350 +5% $331.7 70% $316.0 300 66% 65% 250 64% 200 60% 150 100 55% 50 0 50% FY 2005 FY 2006
Slide 7: Dividends
Dividends US$ 25.62 cents +4% 26.66 cents 18 16.00 16 15.37 14 12 10.66 10.25 10 8 6 4 2 Interim Final Interim Final 0 FY 2005 Pro-forma FY 2006
Slide 8: Key operational highlights
Key operational highlights • Strong core business driving sustainable new revenue • BGAN service roll out complete – service introduction in Americas completed on schedule – BGAN demand driven by new customers – new distribution partners appointed • Handheld service secured through ACeS transaction
Slide 9: Q4 & Preliminary full year results 2006
Q4 & Preliminary full year results 2006 Rick Medlock Chief Financial Officer
Slide 10: 2006 full year results
2006 full year results Financial year US$m (except per share data) 2006 2005 Revenue 500.1 491.1 2% Operating costs (168.4) (174.0) -3% Loss on sale of subsidiary - (1.1) EBITDA 331.7 316.0 5% Depreciation & amortisation (156.8) (106.5) Operating profit 174.9 209.5 Net interest payable (85.1) (114.0
Slide 11: Cash flow
Cash flow Financial year US$m 2006 2005 EBITDA 331.7 316.0 Working capital/non-cash items (17.8) (8.3) Operating cash flow 313.9 307.7 Capital expenditure (114.4) (204.3) Cash interest (33.8) (66.6) Cash tax (0.5) (0.8) Free cash flow 165.2 36.0
Slide 12: Q4 highlights
Q4 highlights (Inmarsat Holdings Ltd) • Q4 revenue up 6.4% to $125.0m (Q4 2005 $117.5m) – positive underlying trends in core business – offset to higher volume discounts year over year • Q4 EBITDA up 16% to $79.4m (Q4 2005 $68.3m) – EBITDA margin 64% (Q4 2005 58%) • Net debt $837m, leverage at 2.5x
Slide 13: Q4 MSS revenue
Q4 MSS revenue (Inmarsat Holdings Ltd) US$m 140 +5.9% $122.1 120 $115.3 16.7 15.8 Leasing +5.7% 100 8.3 6.4 Aero +29.7% 26.1 80 27.1 Land -3.7% 60 40 71.0 66.0 Maritime +7.6% 20 0 Q4 2005 Q4 2006
Slide 14: Q4 operating costs
Q4 operating costs (Inmarsat Holdings Ltd) US$m 60 $49.2 -7.3% 50 $45.6 40 28.1 22.8 30 7.0 8.1 20 10 19.2 17.4 0 -5.1 -2.7 -10 Q4 2005 Q4 2006 Own work capitalised Other operating costs Network & satellite operations Employee benefit costs
Slide 15: Net debt
Net debt US$m Total $837 Leverage 900 2.5x • Lower net debt and lower leverage year $373 Discount over year 700 Notes • Comfortable leverage and significant 500 flexibility $257 ` Senior Notes Senior • 75% fixed rate 300 Leverage 0.6x • $300m available $250 bank facility Bank 100 Debt • $43m cash on
Slide 16: Financial summary
Financial summary • 2006 revenue and cash flow growth demonstrated – EBITDA margin growth year on year – significant free cash flow generated • Rigorous cost control maintained – restructuring and headcount reductions completed – savings now being realised – cost increases for 2007 tied to new activ
Slide 17: Q4 operating and BGAN review
Q4 operating and BGAN review Michael Butler President & Chief Operating Officer
Slide 18: Maritime sector
Maritime sector US$m • Maritime sector growth up 7.6% 50 45.8 year over year 40.5 – strong underlying growth 40 after higher volume discounts 30 25.5 25.2 • Strong Fleet product sales continue through Q4 20 • Active terminals growth 10 – up 14% year over year • Maritime data revenue up 13% 0 year ov
Slide 19: Land sector
Land sector US$m • Data revenue growth year over 25 year 21.5 22.2 – up 3% 20 • BGAN Q4 revenue $4.2m 15 – up 31% sequentially on Q3 • Voice decline driven by continued 10 migration of Mini-M to other handheld operators 5.6 5 3.9 • Handheld services introduced in September 0 – Small contribution in
Slide 20: Aeronautical & Leasing
Aeronautical & Leasing US$m • Aero revenue strong driven by 18 16.7 Swift 64 installations 15.8 16 – up 30% year over year 14 – up 4% sequentially on Q3 12 • Strong installations of Swift 64 10 8.3 through Q4 8 6.4 – another record quarter 6 – active Swift 64 terminals up 4 59% year over year 2 • Le
Slide 21: BGAN service update
BGAN service update • Momentum building in service revenue and terminals – still limited migration from GAN and R-BGAN services – continued evidence that early revenue is being driven by new users and incremental usage by existing users • New distribution has been a success factor – BGAN distributio
Slide 22: BGAN 2006 quarterly progression
BGAN 2006 quarterly progression Increasing impact of volume discounts US$m Terminals 4.5 4.2 8000 4.0 7000 3.5 3.2 6000 3.0 5000 2.5 4000 2.0 1.6 3000 1.5 1.0 2000 0.5 0.5 1000 0.0 0 Q1 Q2 Q3 Q4 Revenue BGAN terminals
Slide 23: New BGAN distribution strength
New BGAN distribution strength Partners at launch New partners • Stratos (+ Xantic) • T&T • Telenor • Telefonica • France Telecom MSC • ChinaSat • MCN (China) • Satcom Global • MVS (Russia) • Evolution Communications • SingTel • iPass • KDDi • BT • ACeS • Thales
Slide 24: Business update and outlook
Business update and outlook Andrew Sukawaty Chairman & Chief Executive Officer
Slide 25: Significant service launches in 2007
Significant service launches in 2007 • Handheld service (early Q3) – address growing hand portable market for first time – will offer service continuity in next decade – appoint new distribution • SwiftBroadband service (Q3) – key to supporting roll out of in-flight mobile services – installations b
Slide 26: Handheld service introduction
Handheld service introduction • Handheld service added to portfolio for first time – successful transfer of operations assumed from ACeS – Inmarsat now delivering service to around 10,000 active terminals in SE Asia via the Garuda satellite • Service roll out plans for 2007 on track – coverage exten
Slide 27: Handheld coverage roll out
Handheld coverage roll out pe AS OY i. — a J F2 |-4 Satellite FI |-4 Satellite || ACeS Garudat ») inmarsat
Slide 28: Aero passenger connectivity
Aero passenger connectivity • Momentum building for in-flight use of mobile phones and other PEDs – ECC regulatory framework agreed in November 2006 by CEPT countries • Distribution through On-Air and Aeromobile – Connexion service withdrawn in 2006 • Service roll-out plans announced by RyanAir and
Slide 29: Core business outlook 2007
Core business outlook 2007 • Core business strong and can accelerate growth in 2007 – new demand in maritime and aeronautical sustained in Q4 – BGAN start up period over, expect solid growth in 2007 – Handheld service to improve position in land voice market – SwiftBroadband and FleetBroadband impor
Slide 30: Questions & Answers
Questions & Answers Inmarsat plc Q4 & Preliminary full year results 2006 February 27th 2007 www.inmarsat.com/investor_relations/