26th Apr 2006 13:26
Inmarsat PLC26 April 2006 26 April 2006 Inmarsat plc Andrew Sukawaty, Chairman & Chief Executive Officer - Speech given toShareholders at the Company's Annual General Meeting held on 26 April 2006 Good morning Ladies and Gentlemen. It is now 10.30am and it's time to start theproceedings. I offer a very warm welcome to all of you to Inmarsat plc's firstannual general meeting as a public company. In June 2005, Inmarsat listed on the London Stock Exchange. We have been inbusiness for more than 27 years with a long and successful history as a globalmobile satellite communications services provider. Our new public ownershipstructure positions us well to continue delivering highly reliable andinnovative global mobile satellite services. 2005 was a transformational year for Inmarsat - we were pleased with our solidfinancial performance and our many significant operational achievements. I willreturn to our successes in 2005, but first I'd like to introduce you to membersof your board. I am joined today by my board colleagues - John Rennocks, our Deputy Chairmanand senior independent non-executive director. John is also Chairman of ourAudit Committee; Sir Bryan Carsberg and Stephen Davidson, both independentnon-executive directors. Stephen is our Remuneration Committee Chairman; RickMedlock, our Chief Financial Officer and Michael Butler, our Chief OperatingOfficer. Retired Admiral James Ellis Jr, our fourth independent non-executivedirector, is based in the United States and is unfortunately not able to join ustoday, due to other commitments. Alison Horrocks, our company secretary is alsowith us, and other members of the management team are also present at themeeting. As this is our first annual general meeting as a public company, manyof the directors will be either standing for appointment or re-appointment. Iwill provide you with a short summary of their experience when we get to theformal resolutions to elect them. One of the resolutions shareholders are being asked to approve today relates tothe Remuneration Report. We have provided full information in the report aboutthe Company's remuneration policies and how this is set for the executivedirectors. We have also provided details of the incentive plans in place for allstaff. We believe that the Company's policies ensure we retain the highestcalibre of staff and have effective reward systems in place which areperformance based. I believe that your board collectively possesses all of the necessary range ofqualities and experience to lead the company effectively. They are supported inachieving this by an experienced management team with a skilled and talentedstaff. I would also like to thank our previous board members who stood down just beforethe IPO - Graham Wrigley and Richard Wilson, who were representatives of thefunds of private equity firms Permira and Apax respectively and David Preiss, arepresentative of Lockheed Martin, a former large shareholder. Bjarne Aamodt,resigned from the board in November 2005. Bjarne represented Telenor, previouslya large shareholder and one of our leading distribution partners. The companyappreciates their support, particularly for endorsing the Inmarsat-4 programme. I'd like to give you an overview now of how our business performed in 2005 andgive you some further information on our Inmarsat-4 programme. Inmarsat successfully listed on the London Stock Exchange in June 2005. As apublic company, we have said we will seek opportunities to grow our revenueswhile building on our core business, and that we will pay an attractivedividend. In October 2005 we paid our first interim dividend and have proposed afinal dividend to shareholders which will be paid on 26th May, if shareholdersapprove the resolution at the AGM being held today. The full year dividend willbe 16.42 US cents. If we had been listed for a full financial year, the dividendwould have equated to 25.62 US cents. We have committed to shareholders that wewill deliver attractive overall returns and this is a demonstration of thatcommitment. Now I would like to take a moment to highlight some features of our operations.As a pure wholesaler of airtime, we work closely with our global network ofdistribution partners. These in turn operate with over 400 service providers insome 180 countries, on six continents, to provide our services to end-usersworldwide. We have long-established relationships with the majority of thesepartners and with the manufacturers who build the terminals. We believe thatthere will be opportunities to increase the market demand for mobile satellitecommunications through the introduction of new services and applications. Ownership of satellite companies over the last year or so has changedsignificantly with companies coming to market as public entities, andconsolidation has occurred at the distribution partner and service providerlevels. While consolidation does cost us in terms of increased volume discounts,we believe that this consolidation can be beneficial to the overall marketopportunity. Where merged companies focus on how the total number of users canbe expanded by offering more attractive pricing to the end-user, the market canbe increased. The global communications industry is highly competitive and weexpect to continue to face competition from a number of communicationstechnologies - for example VSAT and fixed satellite services, and otherhand-held satellite services. Our response to this is to proactively enhance ourproduct offering and continue our efforts to deliver excellent customer service.Against this background, we have seen revenue growth in 2005 and also in thenumber of activated terminals being used by our customers. During this time, wehave maintained tight control of our operating expenditure despite incurringadditional costs to run our new land earth stations, which will bring moreefficiency in our network for our new services. We have also had to absorb thesignificant shifts in the US$-£ exchange rate over the last two years. Thislatter cost will always be a feature of our business as we report in US$ butapproximately 60% of our costs are in sterling. We operate a one-year forwardhedging policy to minimise any additional costs associated with exchange ratemovements. Over the last five years, as part of our commitment to be innovators in ourbusiness sector, Inmarsat has committed to a $1.5 billion investment programme.This allows us to introduce our next generation of mobile communicationsservices, which is enabled by our new global constellation of satellites. Wecall these the "Inmarsat-4" satellites, or I-4s. Two I-4s have now been launched. One in March and one in November 2005 and theseare both now carrying operational traffic. They cover between them approximately85% of the landmass of the earth, covering around 98% of the world's population.Apart from being able to carry traffic for our existing services, they alsocarry our new broadband service. This is called Broadband Global Area Network,or BGAN. We have a third Inmarsat-4 satellite, which has been built and fullytested, but is currently being held in storage. We believe that businessopportunities we are working on, and/or indeed the performance of our corebusiness, will support this launch of this third satellite in due course. A datehas not yet been set. Dates will be subject to the launch company's timetableand when they may have availability. Our customers use us in mission critical and often life-saving tasks, globally,and on a daily basis. They have come to rely on us in situations where othernetworks either cannot serve them or cannot serve them well. During 2005, weonce again delivered on our commitments to provide a reliable, high qualityservice. Inmarsat provides satellite communications services for the GlobalMobile Distress and Safety System, known as GMDSS which is approved by theInternational Maritime Organisation, referred to as the IMO. This system ensuresthose at sea can rely on our services in times of emergency. Over the years, we have seen an increasing growth in the use of our dataservices and data now represents 68% of our "on-demand" revenues. Our newermaritime services - the Fleet family - performed strongly during the year, withthe premium service, Inmarsat Fleet F77 being enhanced early in 2005 with theintroduction of a higher data speed capability of up to 128kbps. Yachtscompeting in the global Volvo Ocean Race are using Fleet and Inmarsat C to bringthe excitement of the live action of this Race to billions of world-wide fans.In this most demanding of maritime environments, Inmarsat provides reliablesafety and communications links. As well as video-feeds, and instantcommunications for both voice and data requirements, our services also supportsafety at sea, which provides peace of mind for mariners, their families and themaritime industry. Our land sector revenues were lower than those experienced in 2004. This waspartly due to a reduction in activity from government and military users in theMiddle East and the impact of reducing pricing for our R-BGAN service designedto stimulate demand in certain areas. We have also seen continued competitionfor voice business from MSS handheld operators. We launched our BGAN service in December 2005. This is the world's firstsatellite mobile communications service providing both voice and broadband datasimultaneously. All the BGAN terminals are competitively priced and highlyportable. They offer data speeds of up to half a megabit per second, fromterminals approximately 1/3rd the size, lighter and around 1/3rd the cost oftheir precedessors. With the BGAN service already available over Europe, Africa,the Middle East and Asia, we are introducing services across the Americas. Inmarsat's aeronautical service performed extremely well in 2005 and we sawstrong demand during the year for our Swift64 voice and data service. We arepreparing for the service introduction of SwiftBroadband which will utilise ournew Inmarsat-4 satellites and currently expect the first avionics to beavailable at the end of 2006, with a full commercial service for SwiftBroadbandavailable during 2007. Similarly, we are also planning to introduce aFleetBroadband service for our maritime users. This will again complement ourstrategy to introduce higher-speed data services across all our sectors. Before I pass onto the formal business, I'd like to summarise our last year andhow we see 2006. 2005 was, as I've said earlier, a transformational year for Inmarsat, with asolid financial performance and significant operational achievements. We expectto see revenue growth in 2006 broadly consistent with the trends seen in 2005.As for the launch of any new service, we recognise that time will be needed forBGAN to become established in the market and that momentum for the service willbuild as the year progresses. In the Annual Report, we referred to a restructuring which was taking placefollowing the completion of the Inmarsat-4 programme, reducing staff costs goingforward. This has now been finalised and I believe the operational structure wenow have in place will allow us to target our energies and attention on seekinginnovative ways to grow the business. We are focused on identifying opportunities to grow revenues, increase ourEBITDA and manage our costs carefully. We see areas where we can grow thebusiness - such as in the defence sector; in the newly emerging opportunity inhybrid satellite terrestrial systems in the US and Canada; in the hand-heldsatellite voice market and the aero market in passenger connectivity. Ourefforts are focused on how we can realise benefits for shareholders from thesegrowth opportunities. We remain concentrated on our core business and makingsure that in particular, our maritime business and the new BGAN business, buildsteadily during 2006. Thank you for your investment in Inmarsat. We aim to continue to be anattractive company for you to invest in now and over the coming years. Our firstquarter results for Inmarsat Holdings Limited, which is a wholly ownedsubsidiary of Inmarsat plc and reports its quartely results to the SEC in theUS, will be available on our website on 17th May. Copies of any other investorpresentations may also be accessed from our website. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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