7th Aug 2007 07:00
Inmarsat PLC07 August 2007 Inmarsat plc Reports 2007 Interim Results Inmarsat Holdings Limited Reports Second Quarter 2007 Results London, UK: 7 August 2007. Inmarsat plc (LSE: ISAT), the leading provider ofglobal mobile satellite communications services, and Inmarsat Holdings Limited,a wholly-owned subsidiary of Inmarsat plc, today reported consolidated financialresults for the 6 months and 3 months ended 30 June 2007. 2007 Interim Results Highlights • First half revenue $284.2 million up 15.6% (2006: $245.9 million) • EBITDA $200.8 million up 23.3% (2006: $162.9 million) • Profit before tax $77.9 million up 63.7% (2006: $47.6 million) • Strong performance across all business sectors • Interim dividend lifted by 8.3% to 11.55 cents (US$) per share Q2 2007 Highlights(Inmarsat Holdings Limited) • Q2 revenue up 15.5% to $143.4 million (2006: $124.2 million) • Q2 EBITDA up 22.8% to $101.2 million (2006: $82.4 million) • Q2 BGAN revenue $8.0 million up 12.7% sequentially on Q1 • BGAN subscribers reach 11,782 (1,940 additions in quarter) • Handheld service implemented and launched on 16 July Andrew Sukawaty, Inmarsat's Chairman and Chief Executive Officer said, "We had arecord-breaking second quarter for revenue and maintained strong growth trendsacross our MSS business sectors. The second quarter contributed to excellentresults in both revenue and profit for the first half 2007 and we are raisingour interim dividend by 8.3%. In view of the sustained growth in our business wehave also increased our expectations for the full year." Launch of third Inmarsat-4 satellite in 2008 Inmarsat has also announced today that a contract has been signed withInternational Launch Services for the launch of our third Inmarsat-4 satelliteon a Proton launch vehicle and that we now expect to launch this satellitebetween March and April 2008. Mobile Satellite Services Second quarter revenue from our maritime sector increased 11% year over year.Maritime data revenue grew by 16% and we sustained year over year growth inmaritime voice revenue. While we continue to see strength in all our keymaritime services, it is our Fleet product range that continues to be the engineof our maritime growth. While growth in active terminals in maritime grew by 12%year over year, growth in Fleet terminals was up 46% for the same period.Activations of Fleet terminals during the second quarter were at the highestquarterly level since the service was launched and average revenue per Fleetterminal was also up 6% year over year. Revenue in the land sector for the second quarter was up 13% year over year.Land data saw year over year growth of 20%, primarily driven by demand for ourBGAN service. Once again, we do not believe the second quarter performance forBGAN was marked by any material migration from our established land dataservices, GAN and R-BGAN. This trend continues to support our view that much ofthe growth in our BGAN service revenue continues to be generated by newcustomers and incremental demand from existing customers. Land voice revenue for the quarter continued to be impacted by competition fromother MSS operators who primarily offer voice services through handheldsatellite phones. On 16 July after the end of the quarter we announced thelaunch of our own handheld satellite phone and low cost fixed phone, initiallyavailable to users in much of Africa, Asia and the Middle East. We are confidentthat the introduction of our own handheld satellite phone service will allow usto address the competition and improve the outlook for our land voice revenue. Second quarter revenue from our aeronautical sector increased by 45% year overyear. We are maintaining strong revenue growth in our aeronautical sector as aresult of increased demand for our Swift 64 service. Leasing revenue for thequarter increased by 27% year over year and was in line with managementexpectations. Transaction with Communications Investment Partners On 12 June the shareholders of Stratos Global Corporation voted to support thecash offer of C$7.00 per share made by CIP Canada Investment Inc, a wholly ownedsubsidiary of Communications Investment Partners Limited (CIP), to acquire theentire issued share capital of Stratos Global. Following this event and withprogress on regulatory clearances in line with expectations, we and CIP remainon track for fourth quarter closing of the transaction we announced on 19 March. Outlook With our core business performing well and operating cost expectations fully inline, we now expect our full year performance to be ahead of our previousexpectations. Impact of volume discounts The volume discounts we offer to our distributors have an increasing impact onour margins as the year progresses. As our distributors reach certain volumetargets we reduce our wholesale prices and this process reduces our marginsuntil the end of the calendar year when our rates are then reset to theirpre-discount level. Although overall growth in traffic will have an offsettingeffect, volume discounts have their greatest impact on our wholesale prices andrevenue during the third and fourth quarter of the year. Liquidity At the end of the second quarter we had net external debt of $861.8 million madeup of cash of $89.0 million and total external debt of $950.8 million. Inaddition to our cash resources, we had a revolving credit facility with anamount available but undrawn at the end of the second quarter of $250 million.Cash used to fund capital expenditure during the quarter was $42.8 million and$73.1 million was used to fund the final dividend for the financial year 2006. Inmarsat plc Inmarsat Holdings Limited, through its subsidiary Inmarsat Finance II plc, isthe issuer of $450 million of 10.375% Senior Discount Notes due 2012. InmarsatGroup Limited, through its subsidiary Inmarsat Finance plc, is the issuer of$310.4 million of 7.625% Senior Notes due 2012. Both Inmarsat Holdings Limitedand Inmarsat Group Limited are required by the terms of the Notes outstanding toreport quarterly financial results. Inmarsat plc is the ultimate parent companyof the Inmarsat group and reports each half year. A copy of the interim financial results report for Inmarsat plc for the 6 monthsended 30 June 2007 is incorporated into this press release and is also availablefrom our website. A copy of financial reports for both Inmarsat Holdings Limitedand Inmarsat Group Limited for the second quarter can be accessed via theinvestor relations section of our website. Copies of these financial reports forthe second quarter will also be filed with the SEC later today on form 6-K. Other Information Inmarsat management will discuss the results announced today and other financialand business information in a conference call on Tuesday, 7 August at 3:00 p.m.London time (United States, 10:00 a.m. EST). To access the call please dial +44(0)20 7162 0125. The conference code is 759927. The call will also be recordedand available for one week after the event. To access the recording please dial+44 (0)20 7031 4064 and enter the conference code 759927. The call will also beavailable by webcast accessible via the investor relations section of ourwebsite. Forward-looking Statements Certain statements in this announcement 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 factorsthat may cause our actual results, performance or achievements, or industryresults, to be materially different from those projected in the forward-lookingstatements. These factors include: general economic and business conditions;changes in technology; timing or delay in signing, commencement, implementationand performance of programmes, or the delivery of products or services underthem; structural change in the satellite industry; relationships with customers;competition; and ability to attract personnel. You are cautioned not to rely onthese forward-looking statements, which speak only as of the date of thisannouncement. We undertake no obligation to update or revise any forward-lookingstatement to reflect any change in our expectations or any change in events,conditions or circumstances. ----------------Inmarsat Holdings Limited Second quarter endedRevenue Breakdown 30 June ---------------- 2007 2006 --------- --------- (US$ in millions) Revenues----------Maritime sector:voice services 26.2 25.5data services 54.0 46.5 --------- ---------Total maritime sector 80.2 72.0Land sector:voice services 3.9 5.0data services 29.4 24.6 --------- ---------Total land sector 33.3 29.6Aeronautical sector 10.7 7.4Leasing (incl. navigation) 17.1 13.5 --------- ---------Total mobile satellite communications services 141.3 122.5Subsidiary revenuesOther income 2.1 1.7 --------- ---------Total Revenues 143.4 124.2 ========= ========= Active Terminal Data As at 30 June ---------------- --------- 2007 2006 --------- ---------Active terminals (1)(2) (000's)Maritime 144.2 128.5Land 79.3 77.8Aeronautical 8.3 7.2 --------- ---------Total active terminals 231.8 213.5 ========= ========= (1) Active terminals are the number of subscribers (BGAN and R-BGAN) orterminals that have been used to access services at any time during thepreceding twelve-month period (other services except SPS) registered at 30 June.Active SPS terminals are the average number of terminals active on a daily basisduring the period. (2) Active terminals as at 30 June 2007 include 8,491 SPS terminals and11,782 BGAN subscribers (as at 30 June 2006: nil and 3,367 respectively). ----------------Inmarsat Holdings Limited Second quarter endedConsolidated Profit and Loss Account 30 June ---------------- 2007 2006 --------- --------- (US$ in millions) Revenue 143.4 124.2Employee benefit costs (23.4) (20.5)Network and satellite operations costs (8.4) (8.1)Other operating costs (14.4) (16.2)Work performed by the Group and capitalized 4.0 3.0 --------- ---------EBITDA 101.2 82.4Depreciation and amortization (41.4) (36.0) --------- ---------Operating profit 59.8 46.4Interest receivable and similar income 2.2 3.5Interest payable and similar charges (22.4) (24.1) --------- ---------Net interest payable (20.2) (20.6) --------- ---------Profit before income tax 39.6 25.8Income tax expense (2.6) (9.2) --------- ---------Profit for the period 37.0 16.6 ========= ========= --------- ---------Inmarsat Holdings Limited As at As atConsolidated Balance sheet 30 June 31 December --------- --------- 2007 2006 --------- --------- (US$ in millions) Non-current assets 1,736.7 1,769.5Current assetsInventories 0.6 0.8Trade and other receivables 205.3 167.5Cash and cash equivalents 89.0 42.8 --------- ---------Total current assets 294.9 211.1 --------- ---------Total assets 2,031.6 1,980.6 --------- ---------Current liabilitiesLoans and other borrowings (64.7) (11.9)Other payables and provisions (152.4) (161.8)Non-current liabilitiesLoans and other borrowings (927.0) (910.6)Other payables and provisions (173.3) (178.7) --------- ---------Total liabilities (1,317.4) (1,263.0) --------- ---------Net assets and shareholders' funds 714.2 717.6 ========= ========= Contact: Inmarsat, London, UKInvestor Enquiries Media EnquiriesSimon Ailes, +44 20 7728 1518 Christopher McLaughlin, +44 20 7728 [email protected] [email protected] INMARSAT PLC CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTSFor the half year ended 30 June 2007 (unaudited) Forward-Looking Statements This document contains forward-looking statements. These forward-lookingstatements include all matters that are not historical facts. Statementscontaining the words "believe", "expect", "intend", "may", "estimate" or, ineach case, their negative and words of similar meaning are forward-looking. By their nature, forward-looking statements involve risks and uncertaintiesbecause they relate to events that may or may not occur in the future. Wecaution you that forward-looking statements are not guarantees of futureperformance and that our actual financial condition, results of operations andcash flows, and the development of the industry in which we operate, may differmaterially from those made in or suggested by the forward-looking statementscontained in this document. In addition, even if our financial condition,results of operations and cash flows, and the development of the industry inwhich we operate, are consistent with the forward-looking statements in thisdocument, those results or developments may not be indicative of results ordevelopments in subsequent periods. Important facts that could cause our actualresults of operations, financial condition or cash flows, or the development ofthe industry in which we operate, to differ from current expectations includethose risk factors disclosed in the Group's Form 20-F Annual Report for InmarsatHoldings Limited for the year ended 31 December 2006 as filed with theSecurities and Exchange Commission on 30 April 2007. As a consequence, our current plans, anticipated actions and future financialcondition, results of operations and cash flows, as well as the anticipateddevelopment of the industry in which we operate, may differ from those expressedin any forward-looking statements made by us or on our behalf. TABLE OF CONTENTSBusiness and Financial ReviewCondensed Consolidated Interim Income StatementCondensed Consolidated Interim Statement of Recognised Income and ExpenseCondensed Consolidated Interim Balance SheetCondensed Consolidated Interim Statement of Cash FlowsNotes to the Condensed Consolidated Interim Financial ResultsIndependent Review Report to Inmarsat plc Business and Financial Review The following is a discussion of the consolidated results of operations andfinancial condition of Inmarsat plc (the "Company" or together with itssubsidiaries, the "Group") for the half year ended 30 June 2007. You should readthe following discussion together with the whole of this document including thehistorical consolidated financial results and the notes. The condensedconsolidated interim financial results were prepared in accordance withInternational Financial Reporting Standards ("IFRS") as adopted by the EuropeanUnion ("EU") and IFRIC interpretations issued and effective at the time of thisreport. There are no material differences for the Group between IFRS and IFRS asadopted by the EU. Overview Inmarsat is the leading provider of global mobile satellite communicationsservices, providing data and voice connectivity to end-users worldwide. Inmarsathas nearly 30 years of experience in designing, launching and operating itssatellite-based network. With a fleet of ten owned and operated geostationarysatellites, the Group provides a comprehensive portfolio of global mobilesatellite communications services for use on land, at sea and in the air. Theseinclude voice and broadband data services, which support safety communications,as well as standard office applications such as email, internet, secure VPNaccess and videoconferencing. The Group's revenues, operating profit and EBITDAfor the half year ended 30 June 2007 were $284.2m, $118.1m and $200.8mrespectively (2006: $245.9m, $87.5m and $162.8m respectively). The results of the Group's operations are reported in US dollars as the majorityof revenues and borrowings are denominated in US dollars. CIP Canada offer for Stratos Global Corporation accepted On 12 June 2007 the shareholders of Stratos Global Corporation Inc ("Stratos"),one of our key independent distribution partners, voted at an ExtraordinaryGeneral Meeting to support the cash offer of C$7.00 per share made by CIP CanadaInvestment Inc ("CIP Canada"), a wholly owned subsidiary of CommunicationsInvestment Partners Limited ("CIP"), to acquire the entire issued share capitalof Stratos. Inmarsat Finance III Limited ("Inmarsat III"), a wholly owned subsidiary ofInmarsat plc, has agreed to provide a loan of up to $275m to fund theacquisition ("Transaction") by CIP Canada and an additional loan, in certaincircumstances, to fund a tender for Stratos' outstanding bonds. Subject to thereceipt of regulatory approvals for the Transaction, on completion of CIPCanada's acquisition of Stratos, Inmarsat III will have an option to acquireStratos ("Call Option"). The loan facility has a ten year term, which isconditional upon the completion of CIP Canada's acquisition of Stratos. It bearsinterest at 5.75% per annum until 31 December 2010 (on a Pay In Kind basis to 14April 2009) and 11.5% per annum thereafter, and is secured by means of a rightof sale pledge over CIP UK's shareholding in CIP Canada. Regulatory approvals are required before the acquisition by CIP Canada can becompleted. Regulatory approvals have been received by CIP and the review by theFCC in the US is currently ongoing, CIP and Stratos are working on this, withsupport from our teams as appropriate. We currently expect that the regulatoryapprovals for the acquisition will be received during the fourth quarter of2007. Inmarsat III's Call Option is not exercisable prior to 14 April 2009, whencertain of Inmarsat's distribution agreements expire and terminates on 31December 2010. The option is exercisable for a payment of between $750,000 and$1.0m. Following the acquisition of Stratos by CIP Canada and, until such timeas a decision is made to exercise the option, Stratos will continue its currentoperations and business as usual. In order to fund the loan facility, Inmarsat III entered into a new $411.5mborrowing facility agreement with three banks on 19 March 2007. Borrowings underthis facility will be structurally subordinated to all of Inmarsat's otheroutstanding indebtedness. Subject to closing, Inmarsat III expects to draw up to$260m of the facility to fund the loan and to pay fees and expenses of thetransaction. The undrawn facility amount will be available to Inmarsat III tofund an additional loan as necessary to support CIP Canada's funding of amandatory tender offer for Stratos' outstanding bonds that will be requiredfollowing completion of CIP Canada's acquisition. In the event Stratosbondholders do not tender their bonds to CIP Canada, no additional drawing underthe Inmarsat III facility will be required. As the recent trading price ofStratos' outstanding bonds has been well above the mandatory tender price, it isnot currently anticipated that Stratos bondholders will tender any bonds to CIPCanada. Launch of new Satellite Phone Services The first handheld satellite phone in the Inmarsat service portfolio and relatedland fixed phone, called the IsatPhone and LandPhone respectively, were launchedcommercially on 16 July 2007 as part of a new range of low cost Satellite PhoneServices ("SPS"), positioning the Company as the world's only one-stop providerof mobile voice and broadband satellite communications. In connection with our SPS we have appointed the first eight servicedistribution partners to support the launch. These distribution partners areACeS; Chinasat; Evosat; Fono; MCN; MVS; SatCom Global and Stratos Global,providing a mix of new and existing distributors and covering all relevantgeographies. On 7 June 2007 we announced an exclusive agreement with Axiom Telecom, one ofthe world's largest retailers and distributors of mobile communicationsproducts, to manage the global distribution of our mobile and fixed phones inour SPS portfolio. Axiom Telecom will support our channel as the logistics andrepair partner for the handheld, fixed and maritime satellite phones - stockingproducts, fulfilling orders, and providing maintenance services for the productsand related peripherals. Dividends A final dividend of 16.00 cents (US dollars) per ordinary share (total dividend$73.1m) for the 2006 financial year as recommended by the Directors was approvedand paid to shareholders on 25 May 2007. The Board intends to declare and pay an interim dividend of 11.55 cents (USdollars) per ordinary share on 26 October 2007 to ordinary shareholders on theRegister at the close of business on 28 September 2007. Dividend payments willbe made in Pounds Sterling based on the exchange rate prevailing in the Londonmarket four business days prior to payment. This dividend has not beenrecognised as a liability for the half year ended 30 June 2007. Construction of a third satellite access station We have begun construction of a third satellite access station in Hawaii USA,which will transmit and receive our BGAN traffic to and from our satellitenetwork. The third SAS in Hawaii will provide global visibility to ourInmarsat-4 fleet once the third Inmarsat-4 satellite is launched. Revenues Revenues for the half year ended 30 June 2007 were $284.2m, an increase of$38.3m, or 15.6%, compared with the half year ended 30 June 2006. The table below sets out the components of the Group's total revenue for each ofthe periods under review. -------- -------- -------- 2007 2006 Increase/ Half year Half year (decrease) (unaudited) (unaudited) (US$ in millions) % -------- -------- --------RevenuesMaritime sector:Voice services 52.5 50.2 4.6%Data services 105.8 90.8 16.5%---------------------------- -------- -------- --------Total maritime sector 158.3 141.0 12.3%Land mobile sector:Voice services 7.8 10.7 (27.1%)Data services 57.8 49.0 18.0%---------------------------- -------- -------- --------Total land mobile sector 65.6 59.7 9.9%Aeronautical sector 20.8 14.4 44.4%Leasing (incl. navigation) 34.6 27.3 26.7%---------------------------- -------- -------- --------Total mobile satellite communicationsservices 279.3 242.4 15.2%---------------------------- -------- -------- --------Other income 4.9 3.5 40.0%---------------------------- -------- -------- --------Total revenue 284.2 245.9 15.6%---------------------------- -------- -------- -------- --------------------------------- ------- --------(000's) 2007 2006 Half year Half year ------- --------Active terminals(1)(2)Maritime 144.2 128.5Land mobile 79.3 77.8Aeronautical 8.3 7.2--------------------------------- ------- --------Total active terminals 231.8 213.5--------------------------------- ------- -------- (1) Active terminals are the number of subscribers (BGAN and R-BGAN) orterminals that have been used to access services at any time during thepreceding twelve-month period (other services except SPS) registered at 30 June.Active SPS terminals are the average number of terminals active on a daily basisduring the period. (2) Active terminals as at 30 June 2007 include 8,491 SPS terminals and 11,782BGAN subscribers (as at 30 June 2006: nil and 3,367 respectively). During the half year ended 30 June 2007, revenues from mobile satellitecommunications services were $279.3m, an increase of $36.9m, or 15.2%, comparedwith the half year ended 30 June 2006. Growth has been strongest in the newerservices such as Fleet (maritime users), BGAN (land users) and Swift 64 (aerousers). Revenue has also benefited from the introduction of the ACeS handheldcustomer base in September 2006. The maritime, land mobile, aeronautical andleasing sectors accounted for 56.7%, 23.5%, 7.4% and 12.4% of total revenuesfrom mobile satellite communications services respectively during the half yearended 30 June 2007. Active terminal numbers increased by 8.6% between 30 June 2006 and 30 June 2007,with strong growth particularly in the maritime and aeronautical sectors.Maritime active terminals were up 12.2% period over period, while our base ofactive Fleet terminals grew by 46.1%. In the aeronautical sector, we have seencontinued growth in Swift 64 (high-speed data, up 55.5%) and 'Classic' Aero(low-speed data, up 11.7%) with increased active terminal numbers. Terminalgrowth has also benefited from the addition of ACeS handheld terminals whichhave been included since September 2006. Maritime Sector. During the half year ended 30 June 2007, revenues from themaritime sector were $158.3m, an increase of $17.3m, or 12.3%, compared with thehalf year ended 30 June 2006. This reflects an increase in both voice and datarevenues. Revenues from data services in the maritime sector during the half year ended 30June 2007 were $105.8m, an increase of $15.0m, or 16.5%, compared with the halfyear ended 30 June 2006. The increase in revenues from data services reflectsgreater demand, as a result of the continued take-up and strong usage of ourFleet services. Demand for Fleet terminals has also been driven by growth in theglobal shipping new-build market and from the migration from our Inmarsat Aanalogue terminals, service for which ends on 31 December 2007. There has alsobeen growth in the low-speed data services of Mini M and Inmarsat B driven byincreased demand for email access at sea. Revenues from voice services in the maritime sector during the half year ended30 June 2007 were $52.5m, an increase of $2.3m or 4.6% compared with the halfyear ended 30 June 2006. Historically our voice revenues for the maritime sectorhave been affected by the migration of users from our higher-priced analogueservice to our lower-priced digital services and to a lesser extent bycompetition. During the half year ended 30 June 2007, this has been more thanoffset by increased demand for voice services in our newer Fleet services andthe revenues from ACeS voice customers. Land Mobile Sector. During the half year ended 30 June 2007, revenues from theland mobile sector were $65.6m, an increase of $5.9m, or 9.9%, compared with thehalf year ended 30 June 2006. Revenues from data services in the land mobile sector during the half year ended30 June 2007 were $57.8m, an increase of $8.8m, or 18.0%, compared with the halfyear ended 30 June 2006. The increase is a result of strong growth and usage ofBGAN. Although not material to our BGAN revenue for the second quarter, towardsthe end of the quarter we started to see some migration away from our R-BGANservice which will cease at the end of 2008 and expect this to increase overtime. Compared to our expectations our GAN service remains robust although weexpect some migration to BGAN to also start to have an effect in due course.Usage levels among land data users are subject to volatility from quarter toquarter depending on end customer activity. Revenues from voice services in the land mobile sector during the half yearended 30 June 2007 were $7.8m, a decrease of $2.9m, or 27.1%, compared with thehalf year ended 30 June 2006. This continues the trend seen over the last fewyears of declining traffic volumes resulting from competition, principally forour Mini M and large antenna Mini M services, from operators of handheldsatellite telephones who offer lower-priced voice services. This was partiallyoffset by growth in BGAN voice, and we remain confident that our launch of SPSover a wider geographic area will address this decline in due course. Whilstland voice services currently represent a small percentage of our MSS revenues,2.8% for the half year ended 30 June 2007, we believe there is a significantopportunity to grow this market segment through our BGAN voice offering and ournew SPS portfolio. Revenues from BGAN services during the half year ended 30 June 2007 are set outin the table below. These figures include voice, data and subscription revenues.As at 30 June 2007, there were 11,782 active BGAN subscribers. ----------------------------------- ------- -------BGAN Services 2007 2006 Half year Half year (unaudited) (unaudited) ------- -------Revenues (US$ in millions) 15.1 2.1Active subscribers 11,782 3,367----------------------------------- ------- ------- Aeronautical Sector. During the half year ended 30 June 2007, revenues from theaeronautical sector were $20.8m, an increase of $6.4m, or 44.4%, compared withthe half year ended 30 June 2006. The increase continues to be attributedprimarily to the strong performance of the Swift 64 high-speed data service,which targets the government aircraft and business jet markets as well as beingused by commercial airlines. In addition revenues for low-speed data servicesbenefited from increased industry demand. Leasing. During the half year ended 30 June 2007, revenues from leasing were$34.6m, an increase of $7.3m, or 26.7%, compared with the half year ended 30June 2006. The increase is a result of the new navigation contracts and anaeronautical Swift 64 lease, which commenced in June 2006, and increased take-upof other leasing business. Other income. Other income was $4.9m for the half year ended 30 June 2007, anincrease of $1.4m, or 40.0%, compared with the half year ended 30 June 2006. Theincrease in other income relates to additional in-orbit support servicesprovided to other satellite operators. Other income consists primarily of incomefrom the provision of conference facilities, renting surplus office space, feesfor in-orbit support services and revenue from sales of SPS end-user terminals. Seasonality - Impact of volume discounts. Revenues are impacted by volumediscounts which increase over the course of the year with lower discount levelsin early quarters and higher discounts in later quarters as our distributionpartners meet specific volume thresholds. The effect of these volume discountswill be most prominent in the fourth quarter. Additionally, until April 2009,the total amount of volume discounts will be affected by the consolidation ofdistribution partners. If the proposed merger of Vizada SatelliteCommunications (formerly France Telecom Mobile Satellite Communications) andTelenor Satellite Services is completed, the impact in terms of additionalvolume discounts would be in the range of $6.0m to $8.0m in a full year, basedon historic traffic patterns. Net operating costs Net operating costs in the half year ended 30 June 2007 were $83.4m, an increaseof $0.3m or 0.4% compared with the half year ended 30 June 2006. The table belowsets out the components of the Group's net operating costs for each of theperiods under review. -------------------------------- --------- ---------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) --------- ---------Employee benefit costs 46.4 41.8Restructuring costs including termination benefits - 6.8Network and satellite operations costs 16.8 15.0Other operating costs 28.2 26.3Work performed by the Group and capitalised (8.0) (6.8)-------------------------------- --------- ---------Total net operating costs 83.4 83.1-------------------------------- --------- --------- Employee benefit costs Employee benefit costs during the half year ended 30 June 2007 were $46.4m, anincrease of $4.6m, or 11.0% compared with the half year ended 30 June 2006(excluding non-recurring restructuring costs of $6.8m incurred in 2006). Theincrease can be attributed largely to the accrual of staff bonuses and anadverse movement in the Group's hedged rate of exchange, which has increasedfrom $1.77/£1.00 in 2006 to $1.81/£1.00 in 2007 (the majority of staff costs areincurred in Sterling and we report the Group's results in US dollars). Inaddition, although to a lesser extent, costs have increased with additionalheadcount in Batam, Indonesia for which we assumed responsibility following theACeS collaboration arrangements in September 2006. Total full-time equivalentheadcount at 30 June 2007 was 448 (includes Batam employees: 57), compared to381 as at 30 June 2006 (includes Batam employees: nil). Network and satellite operations costs Network and satellite operations costs during the half year ended 30 June 2007were $16.8m, an increase of $1.8m, or 12.0%, compared with the half year ended30 June 2006. The increase is primarily due to in-orbit insurance costs for theInmarsat-4 F1 and F2 satellites which commenced on expiry of the launchinsurance policy, being 11 March 2006 for the F1 and 8 November 2006 for the F2. Other operating costs During the half year ended 30 June 2007, other operating costs were $28.2m, anincrease of $1.9m, or 7.2%, compared with the half year ended 30 June 2006.During the half year ended 30 June 2007, the Group recognized a foreign exchangeloss of $1.2m (2006: $0.3m gain) on the revaluation of certain foreign exchangecontracts. The remainder of the increase is attributable to higher direct costof sales with the introduction of SPS terminal sales. The increase was offset inpart by lower rental costs in the half year ended 30 June 2007 compared to thehalf year ended 30 June 2006 which included a non-cash and non-recurringadjustment to rental costs as a result of amending the accounting treatment forrental payments on our head office building to record costs on a straight-linebasis. Work performed by the Group and capitalised Own work capitalised during the half year ended 30 June 2007 was $8.0m, anincrease of $1.2m, or 17.6%, compared with the half year ended 30 June 2006. Ownwork capitalised reflects the shift of work from our BGAN and Inmarsat-4programme, now that it is largely operational, to work on new services that aresoon to be introduced such as FleetBroadband, SwiftBroadband and the globalrollout of our SPS service. EBITDA As a result of the factors discussed above, EBITDA for the half year ended 30June 2007 was $200.8m, an increase of $38.0m, or 23.3%, compared with the halfyear ended 30 June 2006. EBITDA margin has increased to 70.7% for the half yearended 30 June 2007 compared to 66.2% for the half year ended 30 June 2006. Set forth below is a reconciliation of profit for the period to EBITDA for eachof the periods indicated: -------------------------------- --------- -------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) --------- -------Profit for the period 63.6 31.3Add back:Income tax expense 14.2 16.2Net interest payable 40.3 40.0Depreciation and amortization 82.7 75.3-------------------------------- --------- -------EBITDA 200.8 162.8-------------------------------- --------- ------- Depreciation and amortisation During the half year ended 30 June 2007, depreciation and amortisation was$82.7m, an increase of $7.4m, or 9.8%, compared to the half year ended 30 June2006. The increase relates principally to a full six months of depreciation in2007 on the second Inmarsat-4 satellite following commencement of commercialservice in February 2006 as well as the commencement of depreciation on certainelements of the Inmarsat-4 ground network that became commercially operationalduring 2006. Operating profit As a result of the factors discussed above, operating profit during the halfyear ended 30 June 2007 was $118.1m, an increase of $30.6m, or 35.0%, comparedwith the half year ended 30 June 2006, the majority of which is accounted for byincreased revenues partially offset by the higher depreciation charge. Net interest payable Interest payable for the half year ended 30 June 2007 was $43.3m, a decrease of$1.2m compared with the half year ended 30 June 2006, due primarily to a $1.9mdecrease in our pension and post-retirement liability finance costs as a resultof favourable foreign exchange movements. Additionally lower interest wasincurred on our Senior Notes as a result of the purchase of $43.6m of thesenotes during the half year ended 30 June 2006. The decrease was largely offsetby $1.7m of additional interest on our Senior Discount Notes following thesemi-annual accretion of interest. Interest receivable for the half year ended 30 June 2007 was $3.0m, a decreaseof $1.5m compared with the half year ended 30 June 2006. The decreaseprincipally relates to the interest rate swap which expired in December 2006. Profit before income tax During the half year ended 30 June 2007, profit before income tax was $77.8m, anincrease of $30.3m compared with the half year ended 30 June 2006. Income tax expense The tax charge for the half year ended 30 June 2007 was $14.2m, compared to$16.2m for the half year ended 30 June 2006. The decrease in the effective taxrate for the half year ended 30 June 2007 (18.3%) and 2006 (34.1%) is largelydriven by the effect of adjusting the deferred tax balances to take account of areduction in corporation tax rate from 30% to 28%. In addition there has been areduction in the level of permanent differences. Excluding the reduction incorporation tax rate the effective rate would have been 30.1%. The Group's tax profile is such that material cash tax payments are not expectedin the next twelve months as available capital allowances and deductions forinterest charges are anticipated to be in excess of the taxable profits. Profit for the period As a result of the factors discussed above, profit for the half year ended 30June 2007 was $63.6m, an increase of $32.3m compared with the half year ended 30June 2006. Liquidity and capital resources The Group had net borrowings at 30 June 2007 of $897.2m primarily comprising ofSenior Credit Facility drawings of $300.0m, Senior Notes of $256.8m (net of$53.6m Senior Notes held by the Group, being 17.3% of the aggregate principalamount outstanding), Senior Discount Notes of $391.7m (including accretion ofprincipal) and deferred satellite payments of $57.1m, net of cash and cashequivalents of $94.3m. See note 8. Net cash from operating activities during the half year ended 30 June 2007 was$169.0m compared to $134.0m during the half year ended 30 June 2006. Theincrease primarily relates to increased EBITDA and movements in working capital. Net cash used in investing activities during the half year ended 30 June 2007was $76.6m compared with $40.6m for the half year ended 30 June 2006, reflectingcapital expenditure for the continued construction of other new BGAN servicessuch as Fleetbroadband and Swiftbroadband, investment in our new SPS network andthe payment of outstanding milestones relating to the construction of ourInmarsat-4 satellites. In addition the Group incurred $7.6m in transaction feesduring the half year ended 30 June 2007 in relation to the offer by CIP Canadato acquire Stratos and made a $1.5m payment in respect of the ACeS collaborationarrangement. Net cash used in financing activities during the half year ended 30 June 2007was $43.0m compared to $113.7m during the half year ended 30 June 2006. Duringthe half year ended 30 June 2007 the Group drew down $50.0m on the revolvingSenior Credit Facility ($300.0m facility), paid $18.6m of interest costs onSenior Notes and Facilities and paid fees of $1.4m related to a finance leasedisposal. The Group also paid dividends totalling $73.0m to shareholderscompared to $49.7m in 2006. During the half year ended 30 June 2006, the Grouppurchased $43.6m of its Senior Notes (2007: $nil). On 19 March 2007, Inmarsat III entered into a new $411.5m loan facility withthree banks. The purpose of the facility is to provide a loan to CIP inconnection with an offer by CIP Canada to acquire the entire issued sharecapital of Stratos and to provide a further loan, if required to fund amandatory tender for Stratos's outstanding 9.875% bonds. At 30 June 2007 therewere no drawings under the loan facility. Drawings under the facility will besubordinated to all of the other indebtedness of the Group. The Group continually evaluates sources of capital and may repurchase,refinance, exchange or retire current or future borrowings and/or debtsecurities from time to time in private or open-market transactions, or by anyother means permitted by the terms and conditions of borrowing facilities anddebt securities. Outlook With our core business performing very well and operating costs fully in line,we now expect our full year performance to be ahead of our previousexpectations. Recent Events Having explored several options in an effort to secure a 2008 launch date forour third Inmarsat-4 satellite we are pleased to report that on 3 August 2007we signed a contract with International Launch Services for the launch of ourthird satellite on a Proton launch vehicle and have been allocated a launchperiod between March and April 2008. Our option to launch the third satelliteusing an Atlas launch vehicle remains in place and will now be regarded as abackup capability. The launch of the third satellite will provide globalInmarsat-4 coverage for our existing BGAN service and will benefit our newbroadband maritime and aeronautical services as well as our global satellitephone service. We have been selected by the European Space Agency ("ESA") as the preferredoperator for the Alphasat project. Alphasat is an ESA initiative for thedevelopment of Alphabus, a new platform capable of carrying a largecommunications payload. The Group's mission will consist of an advanced L-Bandpayload which will supplement the existing satellite constellation and offer theopportunity for new and advanced services with access to a new allocation ofL-band spectrum. Commercial contract negotiations are currently beingfinalised and are expected to be completed before the end of the financial year. Subsequent to 30 June 2007, other than the events discussed above, there havebeen no material events, which would affect the information reflected in thecondensed consolidated interim financial results of the Group. CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT For half year ended 30 June ----------------------------- ---------- ----------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) ---------- ---------- Revenue 284.2 245.9----------------------------- ---------- ----------Employee benefit costs (46.4) (41.8)Restructuring costs including termination benefits - (6.8)----------------------------- ---------- ----------Total employee benefit costs (46.4) (48.6)Network and satellite operations costs (16.8) (15.0)Other operating costs (28.2) (26.3)Work performed by the Group and capitalised 8.0 6.8----------------------------- ---------- ----------EBITDA 200.8 162.8Depreciation and amortisation (82.7) (75.3)----------------------------- ---------- ----------Operating profit 118.1 87.5Interest receivable and similar income 3.0 4.5Interest payable and similar charges (43.3) (44.5)----------------------------- ---------- ----------Net interest payable (40.3) (40.0)----------------------------- ---------- ----------Profit before income tax 77.8 47.5Income tax expense (14.2) (16.2)----------------------------- ---------- ----------Profit for the period 63.6 31.3----------------------------- ---------- ---------- Earnings per share for profit attributable to the equityholders of the Company during the period (expressed inUS$ per share)-Basic 0.14 0.07-Diluted 0.14 0.07----------------------------- ---------- ---------- CONDENSED CONSOLIDATED INTERIM STATEMENT OF RECOGNISED INCOME AND EXPENSE For half year ended 30 June ----------------------------- ---------- ----------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) (as restated) ---------- ---------- Actuarial gains from pension and post-retirementhealthcare benefits 9.0 7.1Gains on cash flow hedges 13.3 9.4Tax charged directly to equity (6.4) (0.3)----------------------------- ---------- ----------Net gains recognised directly in equity 15.9 16.2----------------------------- ---------- ---------- Profit for the period 63.6 31.3----------------------------- ---------- ---------- Total recognised income for the period 79.5 47.5----------------------------- ---------- ---------- CONDENSED CONSOLIDATED INTERIM BALANCE SHEET --------------------- ---------- ---------- ----------(US$ in millions) As at 30 June As at 31 December As at 30 June 2007 2006 2006 (unaudited) (audited) (unaudited)--------------------- ---------- ---------- ---------- ASSETSNon-current assetsProperty, plant andequipment 1,219.7 1,247.5 1,294.4Intangible assets 517.0 522.0 521.2Derivative financialinstruments - - 1.9--------------------- ---------- ---------- ---------- 1,736.7 1,769.5 1,817.5--------------------- ---------- ---------- ----------Current assetsCash and cashequivalents 94.3 42.8 15.1Trade and otherreceivables 189.0 152.0 152.4Inventories 0.6 0.8 0.4Derivative financialinstruments 21.9 8.5 6.1--------------------- ---------- ---------- ---------- 305.8 204.1 174.0--------------------- ---------- ---------- ----------Total assets 2,042.5 1,973.6 1,991.5--------------------- ---------- ---------- ----------LIABILITIESCurrent liabilitiesTrade and other payables 124.1 146.0 137.3Borrowings 64.5 11.8 36.8Provisions 0.2 1.6 2.6Current income taxliabilities 23.0 8.4 23.3Derivative financialinstruments 0.1 - 0.4--------------------- ---------- ---------- ---------- 211.9 167.8 200.4--------------------- ---------- ---------- ----------Non-current liabilitiesOther payables 5.8 6.7 33.4Borrowings 927.0 910.6 870.3Provisions 31.8 37.6 34.7Deferred income taxliabilities 140.1 134.4 173.3Derivative financialinstruments - - 0.4--------------------- ---------- ---------- ---------- 1,104.7 1,089.3 1,112.1--------------------- ---------- ---------- ----------Total liabilities 1,316.6 1,257.1 1,312.5--------------------- ---------- ---------- ----------Net assets 725.9 716.5 679.0--------------------- ---------- ---------- ---------- SHAREHOLDERS' EQUITYOrdinary shares 0.4 0.4 0.4Share premium 677.0 675.4 675.3Other reserves 22.4 11.3 19.9Retained earnings/(accumulated losses) 26.1 29.4 (16.6)--------------------- ---------- ---------- ----------Total shareholders'equity 725.9 716.5 679.0--------------------- ---------- ---------- ---------- INMARSAT PLC CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT For half year ended 30 June ------------------------------ --------- ---------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) --------- ---------Cash flow from operating activitiesCash generated from operations 166.4 133.0Interest received 2.7 1.4Income taxes paid (0.1) (0.4)------------------------------ --------- ---------Net cash inflow from operatingactivities 169.0 134.0------------------------------ --------- ---------Cash flow from investing activitiesPurchase of property, plantand equipment (67.5) (40.6)Corporate finance activities (9.1) ------------------------------- --------- ---------Net cash used in investingactivities (76.6) (40.6)------------------------------ --------- ---------Cash flow from financing activitiesDividends paid to shareholders (73.0) (49.7)Drawdown of revolving SeniorCredit Facility 50.0 -Interest paid on Senior Notesand Facilities (18.6) (20.4)Finance lease disposal fees (1.4) -Purchase of Senior Notes - (43.6)------------------------------ --------- ---------Net cash used in financingactivities (43.0) (113.7)------------------------------ --------- ---------Foreign exchange adjustment 0.1 ------------------------------- --------- ---------Net increase/(decrease) incash and cash equivalents 49.5 (20.3)------------------------------ --------- --------- Movement in cash and cashequivalentsAt beginning of period 42.7 35.1Net increase/(decrease) incash and cash equivalents 49.5 (20.3)------------------------------ --------- ---------As reported on balance sheet(net of bank overdrafts) 92.2 14.8------------------------------ --------- ---------At end of period, comprisingCash and cash equivalents perthe balance sheet 94.3 15.1Bank overdrafts (2.1) (0.3)------------------------------ --------- --------- 92.2 14.8 --------- --------- NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS 1. General Information These unaudited condensed consolidated interim financial results were approvedby the Board of Directors for issue on 7 August 2007. The financial information for the year ended 31 December 2006 does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. A copy of the statutory accounts for that year has been delivered to theRegistrar of Companies. The auditor's report on those accounts was not qualifiedand did not contain statements under section 237(2) or (3) of the Companies Act1985. 2. Principal accounting policies and critical estimates Basis of preparation The unaudited condensed consolidated interim financial results have beenprepared using accounting policies consistent with International FinancialReporting Standards (IFRS) and in accordance with International AccountingStandard (IAS) 34 "Interim Financial Reporting". The same accounting policies, presentation and methods of computation arefollowed in these condensed consolidated interim financial results as wereapplied in the preparation of the Group's Annual Report for the year ended 31December 2006 as available on our website www.inmarsat.com. The preparation of the condensed consolidated interim financial results inconformity with IFRS requires management to make certain estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the balance sheet dates andthe reported amounts of revenue and expenses during the reported period.Although these estimates are based on management's current knowledge of theamount, event or actions, these results ultimately may differ from thoseestimates. The functional currency of the Company and Group is the US dollar, as themajority of operational transactions are denominated in US dollars. There have been no changes to the critical accounting estimates disclosed in thepublished financial statements for the year ended 31 December 2006. 3. Restatement of results for the period ended 30 June 2006 The Consolidated Statement of Recognised Income and Expense for the half yearended 30 June 2006 has been restated to include the $1.8m deferred tax credit onshare options, previously disclosed in the Reconciliation of Movements inShareholders' Equity, note 7, only. 4. Segment information The Group operates in one business segment being the supply of mobile satellitecommunications services ("MSS"). "Other" principally comprises income from technical support to other operators,the provision of conference facilities and leasing surplus office space toexternal organisations. Primary reporting format-Business segments --------------------- -------------------------- 2007 Half year (unaudited)(US$ in millions) Mobile Other Unallocated Total--------------------- satellite -------- -------- -------- communications services --------Revenue 280.0 4.2 - 284.2--------------------- -------- -------- -------- --------Segment result(operating profit) 117.2 0.9 - 118.1Net interest charged to the IncomeStatement - - (40.3) (40.3)--------------------- -------- -------- -------- --------Profit before income tax 77.8Income tax expense (14.2) --------Profit for theperiod 63.6 -------- Segment assets 1,948.2 - 94.3 2,042.5Segment liabilities (162.0) - (1,154.6) (1,316.6)Capital expenditure(a) (49.8) - - (49.8)Depreciation (72.1) - - (72.1)Amortisation of intangible assets (10.6) - - (10.6)--------------------- -------- -------- -------- --------(a) Capital expenditure stated using accruals basis. --------------------- -------------------------- 2006 Half year (unaudited)(US$ in millions) Mobile Other Unallocated Total--------------------- satellite -------- -------- -------- communications services --------Revenue 243.1 2.8 - 245.9--------------------- -------- -------- -------- --------Segment result(operatingprofit) 86.2 1.3 - 87.5Net interestcharged to theIncome Statement - - (40.0) (40.0)--------------------- -------- -------- -------- --------Profit beforeincome tax 47.5Income tax expense (16.2) --------Profit for the period 31.3 -------- Segment assets 1,976.4 - 15.1 1,991.5Segment liabilities (208.8) - (1,103.7) (1,312.5)Capital expenditure(a) (46.8) - - (46.8)Depreciation (65.2) - - (65.2)Amortisation of intangible assets (10.1) - - (10.1)--------------------- -------- -------- -------- --------(a) Capital expenditure stated using accruals basis. 5. Net interest payable ---------------------------- ----------- -----------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) ----------- ----------- Accretion of principal on Senior Discount Notes (19.2) (17.5)Interest on Senior Notes and Senior CreditFacility (18.7) (19.9)Amortisation of debt issue costs (1.8) (1.5)Unwinding of discount on deferred satelliteliabilities (1.7) (2.0)Pension and post-retirement liability financecosts (1.5) (3.4)Other interest payable (0.3) -Interest and facility fees payable on bank loansand overdrafts (0.1) (0.2)---------------------------- ----------- -----------Total interest payable and similar charges (43.3) (44.5)---------------------------- ----------- ----------- Bank interest receivable and other interest 3.0 3.3Interest rate swap - 1.2---------------------------- ----------- -----------Total interest receivable and similar income 3.0 4.5---------------------------- ----------- -----------Net interest payable (40.3) (40.0)---------------------------- ----------- ----------- 6. Tax ---------------------------- ----------- -----------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) ----------- ----------- Current tax:UK corporation tax 15.3 0.8 ----------- ----------- 15.3 0.8 ----------- -----------Deferred tax:Current year (1.1) 15.4 ----------- ----------- (1.1) 15.4 ----------- -----------Total tax charge 14.2 16.2 ----------- ----------- The corporation tax charge for the half year is $14.2m (2006: $16.2m), with aneffective tax rate of 18.3% (2006: 34.1%) and represents the best estimate ofthe weighted average annual corporation tax rate expected for the full financialyear. This differs from the UK corporation tax rate of 30% largely because ofthe effect of adjusting the deferred tax balances to take into account thereduction in corporation tax rate from 30% to 28% with effect from 1 April 2008.In addition there has been a reduction in the level of permanent differences. 7. Reconciliation of movements in shareholders' equity ------------------ ------- ------- ------- ---------- ------(US$ in millions) Ordinary Share Other Retained earnings/ Total share premium reserves (accumulated losses) capital account ----------------- ------ ------ ------ --------------- ------ Balance as at 1 January 2006 0.4 672.3 8.7 (4.9) 676.5Fair value gains - cash flow hedges - - 9.4 - 9.4Issue of ordinary share capital - 3.0 - - 3.0Share option charge - - 1.8 - 1.8Profit for the period - - - 31.3 31.3Dividend payable - - - (49.8) (49.8) Actuarial gains from pension andpost-retirement healthcare benefits - - - 7.1 7.1Tax charged directly to equity - - - (0.3) (0.3)----------------- ------ ------ ------ --------------- ------Balance as at 30 June 2006 0.4 675.3 19.9 (16.6) 679.0----------------- ------ ------ ------ --------------- ------Fair value losses - cash flow hedges - - (1.2) - (1.2)Issue of ordinary share capital - 0.1 - - 0.1Share option charge - - 1.2 - 1.2Profit for the period - - - 96.4 96.4Dividend payable - - - (48.4) (48.4)Actuarial losses from pension andpost-retirement healthcare benefits - - - (1.9) (1.9)Movement in cumulative translation reserve - - (6.6) - (6.6)Tax charged directly to equity - - (2.0) (0.1) (2.1)----------------- ------ ------ ------ --------------- ------Balance as at 31 December 2006 0.4 675.4 11.3 29.4 716.5----------------- ------ ------ ------ --------------- ------Fair value gains - cash flow hedges - - 13.3 - 13.3Issue of ordinary share capital - 1.6 - - 1.6Share option charge - - 1.4 - 1.4Profit for the period - - - 63.6 63.6Dividend payable - - - (73.1) (73.1)Actuarial gains from pension andpost-retirement healthcare benefits - - - 9.0 9.0Tax charged directly to equity - - (3.6) (2.8) (6.4)----------------- ------ ------ ------ --------------- ------Balance as at 30 June 2007 0.4 677.0 22.4 26.1 725.9----------------- ------ ------ ------ --------------- ------ 8. Net borrowings These balances are shown net of unamortised deferred finance costs, which havebeen allocated as follows: ----------------- ----------------- ----------------(US$ in millions) As at 30 June 2007 As at 31 December 2006 (unaudited) (audited) ------- ------- ------- ------- ------ ------ Deferred Deferred finance finance Amount costs Net balance Amount costs Net balance----------------- ------- ------- ------- ------- ------ ------Current:Bank overdraft 2.1 - 2.1 0.1 - 0.1Deferred satellitepayments 12.4 - 12.4 11.7 - 11.7Senior CreditFacility 50.0 - 50.0 - - ------------------ ------- ------- ------- ------- ------ ------Total currentborrowings 64.5 - 64.5 11.8 - 11.8----------------- ------- ------- ------- ------- ------ ------ Non-current:Senior CreditFacility 250.0 (1.4) 248.6 250.0 (1.6) 248.4Senior DiscountNotes, 10.375% 386.7 (7.7) 379.0 367.6 (8.2) 359.4-Accretion ofprincipal 5.0 - 5.0 4.9 - 4.9Senior Notes 256.8 (8.1) 248.7 256.8 (8.9) 247.9Premium onSenior Notes 1.0 - 1.0 1.1 - 1.1Deferredsatellitepayments 44.7 - 44.7 48.9 - 48.9----------------- ------- ------- ------- ------- ------ ------Total non-currentborrowings 944.2 (17.2) 927.0 929.3 (18.7) 910.6----------------- ------- ------- ------- ------- ------ ------Total borrowings 1,008.7 (17.2) 991.5 941.1 (18.7) 922.4----------------- ------- ------- ------- ------- ------ ------Cash and cashequivalents (94.3) - (94.3) (42.8) - (42.8)----------------- ------- ------- ------- ------- ------ ------Net borrowings 914.4 (17.2) 897.2 898.3 (18.7) 879.6----------------- ------- ------- ------- ------- ------ ------ -------------------------- ----------------------(US$ in millions) As at 30 June 2006 (unaudited) --------- -------- -------- Deferred finance Amount costs Net balance --------- -------- --------Current:Bank overdraft 0.3 - 0.3Deferred satellite payments 11.5 - 11.5Current portion - Senior Credit Facility 25.0 - 25.0-------------------------- --------- -------- --------Total current borrowings 36.8 - 36.8-------------------------- --------- -------- -------- Non-current:Senior Credit Facility 225.0 (2.0) 223.0Senior Discount Notes, 10.375% 349.5 (8.4) 341.1-Accretion principal 4.6 - 4.6Senior Notes 256.8 (9.7) 247.1Premium on Senior Notes 1.2 - 1.2Deferred satellite payments 53.3 - 53.3-------------------------- --------- -------- --------Total non-current borrowings 890.4 (20.1) 870.3-------------------------- --------- -------- --------Total borrowings 927.2 (20.1) 907.1-------------------------- --------- -------- --------Cash and cash equivalents (15.1) - (15.1)-------------------------- --------- -------- --------Net borrowings 912.1 (20.1) 892.0-------------------------- --------- -------- -------- 9. Dividends ------------------------------ ---------- ---------(US$ in millions) 2007 2006 Half year Half year (unaudited) (unaudited) ---------- --------- Ordinary SharesFinal dividend for the year ended 31 December 2006of 16.00 cents (US$) (2005: 10.95) per share 73.1 49.8------------------------------ ---------- --------- In May 2007, a final dividend of 16.00 cents for the 2006 financial year (2006:10.95 cents for the 2005 financial year) per share was paid to shareholders. TheBoard intends to declare and pay an interim dividend of 11.55 cents (US dollars)per ordinary share on 26 October 2007 to ordinary shareholders on the Registerat the close of business on 28 September 2007. Dividend payments will be madein Pounds Sterling based on the exchange rate prevailing in the London marketfour business days prior to payment. In accordance with IAS10, this dividendhas not been recognised as a liability for the half year ended 30 June 2007. 10. Earnings per share Basic and diluted earnings per share is based on a weighted average number ofordinary shares in issue of 457,035,470 and 460,001,272 respectively (2006:453,497,292 and 458,753,854). At 30 June 2007, there were a total of 457,482,416ordinary shares in issue. 11. Contingent liabilities / Contingent assets There were no material contingent assets or liabilities at 30 June 2007. INDEPENDENT REVIEW REPORT TO INMARSAT PLC Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 which comprise the condensed consolidatedinterim income statement, the condensed consolidated interim balance sheet, thecondensed consolidated interim statement of recognised income and expense, thecondensed consolidated interim cash flow statement and related notes 1 to 11. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority and the requirements of IAS 34 whichrequire that the accounting policies and presentation applied to the interimfigures are consistent with those applied in preparing the preceding annualaccounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Deloitte & Touche LLPChartered Accountants London 7 August 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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