Inmarsat plc reports interim results 2019 - a robust performance
Inmarsat plc, the world leader in global mobile satellite communications, today announces unaudited financial results for the half year and second quarter ended 30 June 2019.
Summary and Financial Highlights
Inmarsat delivered a robust performance in the first half of 2019, supported by our diversified growth portfolio, with revenue growth delivered in a focussed set of core end markets, where we lead with sustainable differentiation.
Operational Highlights – H1 2019:
· Group Revenue increased $16.1m, 2.2%, to $733.3m. Revenue, excluding Ligado and RigNet settlement, up $29.9m, 4.6%, to $682.3m, driven by growth in Aviation and Government:
o Maritime: continued revenue decline in the mid-market partly offset by on-going double-digit revenue growth in fast-growing VSAT segment
o Government: strong performance against particularly tough comparator for US business in Q2
o Aviation: further double-digit revenue growth in In-Flight Connectivity, with steady revenue growth from Core business
o Enterprise: continued decline of products in legacy markets
o GX-generated revenues: increased 60.1 to $176.4m (H1 2018: $110.2m), including $90.7m in Q2 2019 (Q2 2018: $60.2m)
o Ligado and other: includes $50.8m revenue relating to settlement of arbitration case with RigNet
o Q2 Group Revenue: increased $14.6m, 3.9%, to $386.4m. Revenue, excluding Ligado and RigNet settlement, down $3.5m, 1.0%, to $335.6m, due to revenue declines in Maritime and Enterprise more than offsetting revenue growth in Aviation and Government
· Group EBITDA: increased by $11.6m, 3.1%, to $384.6m. EBITDA (excluding Ligado, RigNet settlement and costs relating to recommended offer for the Group) increased by $46.3m, 15.0%, to $354.5m, reflecting revenue growth and lower costs:
o Q2 Group EBITDA: increased $34.1m, 17.2%, to $232.2m. EBITDA (excluding Ligado, RigNet settlement and costs relating to recommended offer for the Group), increased by $19.9m, 12.0%, to $185.3m, reflecting lower costs
· Profit / (Loss) After Tax: improved by $6.6m, reflecting the forgoing and an increased change in the unrealised conversion liability on the 2023 Convertible Bond of $220.8m, as well as costs relating to recommended offer for the Group
Comprises revenue contribution from Central Services, Ligado Networks and income received as a result of the final settlement of the RigNet arbitration case. Further details on each of these elements can be found in Central Services section of this report.
In response to the Guidelines on Alternative Performance Measures (‘APM’s) issued by the European Securities and Markets Authority, we have provided additional information on the APMs used by the Group, including definitions and reconciliations to statutory measures, within Appendix 1 of this document.
GX network development:
· Design and build of 5 new satellites, to be launched from 2022, announced during the period:
o GX7, GX8 and GX9 satellites, in partnership with Airbus Defence and Space, to materially enhance GX’s network capacity, capabilities and operational agility
o GX10A and GX10B satellite payloads, in partnership with Space Norway, to provide unique coverage of the Arctic region
Recommended offer for the Group:
· Transaction approved by Inmarsat’s shareholders and expected to complete during Q4 2019, subject to receiving certain regulatory conditions as set out in the scheme document. There is good progress on the regulatory processes
Rupert Pearce, Chief Executive Officer, commented on the results:
“Inmarsat produced a robust performance in the first half of the year, supported by continued traction with Global Xpress, as we continue to focus on building and defending market share in our target markets.”
The Board remains confident about the future prospects and outlook for the Group and reiterates the following guidance, unchanged from March 2019:
· A target of mid-single digit percentage revenue growth on average over the five year period, 2018 to 2022, with EBITDA and Free Cash Flow generation improving steadily1
· 2019 revenue, excluding Ligado, of $1,300m to $1,400m
· Annual GX revenues at a run rate of $500m by the end of 2020
· Cash Capex of $500m to $600m per annum for 2019 and 2020
· Capex is expected to meaningfully moderate after 2020, falling initially to within a range of $450m to $550m in 2021
· Ratio of Net Debt to EBITDA to normally remain below 3.5x
This guidance excludes any impact from any successful acquisition of, or any unsuccessful attempt to acquire, the Group.
The reference to EBITDA and Free Cash Flow generation over the five year period 2018 to 2022, in the first bullet point above, constitutes an ordinary course profit forecast for the purposes of Rule 28.1 of the City Code on Takeovers and Mergers (the "Takeover Code") (the “Inmarsat Profit Forecast”).
The basis of preparation and assumptions in respect of the Inmarsat Profit Forecast are set out in Part 5 of the scheme document published by Inmarsat dated 18 April 2019 (the "Scheme Document").
In accordance with Rule 27.2(d) of the Takeover Code, the Inmarsat Directors have considered the Inmarsat Profit Forecast and confirm that it remains valid as at the date of this announcement.
Results conference call
Inmarsat management will discuss the results on a conference call on Thursday 1 August at 08.30am UK time. The call can be accessed by dialling +44 (0) 207 192 8000 (from the UK and Europe) or +1 631 510 7495 (from the US), with a passcode of 2597404 and is also accessible via this link: https://edge.media-server.com/mmc/p/33c4k7mx.