9th Nov 2007 07:01
Inmarsat PLC09 November 2007 Inmarsat Holdings Limited Reports Third Quarter 2007 Results London, UK: 9 November 2007. Inmarsat Holdings Limited, a wholly-ownedsubsidiary of Inmarsat plc (LSE: ISAT), the leading provider of global mobilesatellite communications services, today reported consolidated financial resultsfor the 3 months ended 30 September 2007. Q3 2007 Highlights • Q3 revenue up 8.0% to $139.6 million (2006: $129.2 million) • Q3 EBITDA up 8.8% to $97.3 million (2006: $89.4 million) • Profit before tax up 25% to $33.6 million (2006: $26.9 million) • Q3 BGAN revenue $10.2 million up 28% sequentially on Q2 • BGAN subscribers reach 13,874 (2,092 additions in quarter) Andrew Sukawaty, Inmarsat's Chairman and Chief Executive Officer said, "Thestrong growth trends in our core business have maintained our momentum throughthe third quarter. This performance places us well on track to deliver on ourpreviously upgraded expectations for revenue and cash flow for the full year.Furthermore, with the launch of new services, SwiftBroadband announced inOctober, FleetPhone, announced today, and finally, FleetBroadband, which will belaunched on 19 November, we are also confident of achieving all of thesignificant operational milestones we set out for 2007." Mobile Satellite Services Third quarter revenue from our maritime sector increased 5.4% year over year.Maritime data revenue grew by 10% driven by strong industry demand trends andthe continued pace of take up of our Fleet services. The number of active Fleetterminals grew by 42% year over year and average usage per terminal was also upboth year over year and sequentially on the second quarter. Maritime voicerevenue for the third quarter was lower by 4% reflecting a lower pricing mix inthe quarter while maritime voice traffic was up both year over year andsequentially. We believe the outlook for maritime voice remains stable. Revenue in the land sector for the third quarter was up 4.6% year over year.Growth in land data revenue was 10% over the prior year driven by strong demandfor and usage of our BGAN service. BGAN revenue for the third quarter was $10.2million, up 28% sequentially on the second quarter. During the third quarter weadded 2,092 BGAN subscribers and average revenue per BGAN subscriber also showedgood growth sequentially on the second quarter. Revenue from our GAN and R-BGANland data services was impacted by volume discounts in the third quarter and, inline with our expectations, traffic fell slightly reflecting some limitedmigration to BGAN. Although we launched our first handheld satellite voice service on a regionalbasis during the third quarter, it remains too early for this service to have ameaningful impact on our land voice business. Land voice revenue overall for thethird quarter showed the continued impact of competition from other MSSproviders and was down 24% year over year. We are pleased with the earlyfeedback from the launch of our handheld IsatPhone and fixed satellite LandPhoneand look forward to a growing contribution in the coming year. Third quarter revenue from our aeronautical sector increased by 45% year overyear, driven by our Swift 64 service. Installations of Swift 64 terminals duringthe quarter continued to match the levels achieved in recent quarters. On 22October, we announced the commercial availability of our next generationSwiftBroadband service and expect to see the first commercial installationsprior to the end of the year. Leasing revenue for the quarter increased by 3.7%year over year and remained in line with management expectations. Impact of volume discounts Revenues are impacted by volume discounts which increase over the course of theyear with lower discount levels in early quarters and higher discounts in laterquarters as our distribution partners meet specific volume thresholds. Theeffect of these volume discounts is most prominent in the third and fourthquarters. Additionally, the total amount of volume discounts is affected by thegrowth in underlying revenue and the consolidation of distribution partners.The merger of Stratos Global Limited and Xantic B.V. in February 2006 hasresulted in increased levels of discounts during 2007 compared to 2006. Theimpact of the recent merger of Vizada Satellite Communications (formerly FranceTelecom Mobile Satellite Communications) and Telenor Satellite Services inSeptember 2007, in terms of additional volume discounts, would be in the rangeof $7.5 million to $8.5 million in a full year, based on historic trafficpatterns. As a result and consistent with prior years where the volume discountscheme has operated, we expect our fourth quarter 2007 revenue will be loweroverall when compared to the third quarter 2007. Liquidity At the end of the third quarter we had net external debt of $850.5 million madeup of cash of $70.1 million and total external debt of $920.6 million. Inaddition to our cash resources, we had a revolving credit facility with anamount available but undrawn at the end of the third quarter of $250 million.Cash used to fund capital expenditure during the quarter was $71.7 million. 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 currently reports each half year. A copy of financial reports for both Inmarsat Holdings Limited and InmarsatGroup Limited for the third quarter can be accessed via the investor relationssection of our website. Copies of these financial reports for the third quarterwill 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 Friday, 9 November at 3:00 p.m.London time. To access the call please dial +44 (0)20 7162 0025. The conferencecode is 771272. The call will also be recorded and available for one week afterthe event. To access the recording please dial +44 (0)20 7031 4064 and enterthe conference code 771272. The call will also be available by webcastaccessible via the investor relations section of our website. 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 Third quarter endedRevenue Breakdown 30 September ---------------- 2007 2006 --------- --------- (US$ in million)Revenue---------Maritime sector: voice services 24.5 25.5 data services 52.0 47.1 --------- ---------Total maritime sector 76.5 72.6Land sector: voice services 3.5 4.6 data services 28.3 25.8 --------- ---------Total land sector 31.8 30.4Aeronautical sector 11.6 8.0Leasing (incl. navigation) 16.9 16.3 --------- ---------Total mobile satellite communications services 136.8 127.3Other income 2.8 1.9 --------- ---------Total Revenues 139.6 129.2 ========= ========= Active Terminal Data As at 30 September ---------------- 2007 2006 --------- ---------Active terminals (1)(2) (000's)Maritime 145.4 137.3Land 78.7 82.1Aeronautical 8.5 7.4 --------- ---------Total active terminals 232.6 226.8 ========= ========= (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 30September. Active SPS terminals are the average number of terminals active on adaily basis during the period. (2) Active terminals as at 30 September 2007 include 8,870 SPS terminalsand 13,874 BGAN subscribers (as at 30 September 2006: 10,388 and 5,547respectively). ----------------Inmarsat Holdings Limited Third quarter endedConsolidated Profit and Loss Account 30 September ---------------- 2007 2006 --------- --------- (US$ in millions) Revenue 139.6 129.2Employee benefit costs (21.3) (21.2)Network and satellite operations costs (8.3) (8.0)Other operating costs (17.4) (13.1)Work performed by the Group and capitalized 4.7 2.5 --------- ---------EBITDA 97.3 89.4Depreciation and amortization (42.0) (44.0) --------- ---------Operating profit 55.3 45.4Interest receivable and similar income 1.7 2.0Interest payable and similar charges (23.4) (20.5) --------- ---------Net interest payable (21.7) (18.5) --------- ---------Profit before income tax 33.6 26.9Income tax expense (9.9) (15.8) --------- ---------Profit for the period 23.7 11.1 ========= ========= --------- ---------Inmarsat Holdings Limited As at As atConsolidated Balance sheet 30 September 31 December --------- --------- 2007 2006 --------- --------- (US$ in millions) Non-current assets 1,748.4 1,769.5Current assetsInventories 2.0 0.8Trade and other receivables 202.8 167.5Cash and cash equivalents 70.1 42.8 --------- ---------Total current assets 274.9 211.1 --------- ---------Total assets 2,023.3 1,980.6 --------- ---------Current liabilitiesLoans and other borrowings (62.4) (11.9)Other payables and provisions (199.8) (161.8)Non-current liabilitiesLoans and other borrowings (897.8) (910.6)Other payables and provisions (178.4) (178.7) --------- ---------Total liabilities (1,338.4) (1,263.0) --------- ---------Net assets and shareholders' funds 684.9 717.6 ========= ========= Contact:Inmarsat, London, UK Investor Enquiries Media EnquiriesSimon Ailes, +44 20 7728 1518 Christopher McLaughlin, +44 20 7728 [email protected] [email protected] INMARSAT HOLDINGS LIMITED CONDENSED CONSOLIDATED FINANCIAL RESULTS For the three and nine months ended 30 September 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 the Group's actual financial condition, results ofoperations and cash flows, and the development of the industry in which weoperate, may differ materially from those made in or suggested by theforward-looking statements contained in this document. In addition, even if theGroup's financial condition, results of operations and cash flows, and thedevelopment of the industry in which we operate, are consistent with theforward-looking statements in this document, those results or developments maynot be indicative of results or developments in subsequent periods. Importantfacts that could cause the Group's actual results of operations, financialcondition or cash flows, or the development of the industry in which we operate,to differ from current expectations include those risk factors disclosed in theGroup's Form 20-F Annual Report for the year ended 31 December 2006 as filedwith the Securities and Exchange Commission ("SEC") on 30 April 2007. As a consequence, the Group's current plans, anticipated actions and futurefinancial condition, results of operations and cash flows, as well as theanticipated development of the industry in which we operate, may differ fromthose expressed in any forward-looking statements made by us or on the Group'sbehalf. Non-GAAP Measures We use a number of non-GAAP measures in addition to GAAP measures in order toprovide readers with a better understanding of the underlying performance of ourbusiness, and to improve comparability of our results for the periods concerned.Where such non-GAAP measures are given, this is clearly indicated and thecomparable GAAP measure is also given. Net Borrowings Net Borrowings is defined as total borrowings less cash at bank and in hand lessshort term deposits with an original maturity of less than three months. We useNet Borrowings as a part of our internal debt analysis. We believe that NetBorrowings is a useful measure as it indicates the level of borrowings aftertaking account of the financial assets within our business that could beutilized to pay down the outstanding borrowings. In addition the Net Borrowingsbalance provides an indication of the net borrowings on which we are required topay interest. EBITDA We define EBITDA as profit before interest, taxation, depreciation andamortization. Other companies may define EBITDA differently and, as a result,our measure of EBITDA may not be directly comparable to the EBITDA of othercompanies. EBITDA and the related ratios are supplemental measures of our performance andliquidity under IFRS that are not required by, or presented in accordance with,IFRS or US GAAP. Furthermore, EBITDA is not a measurement of our financialperformance under IFRS or US GAAP and should not be considered as an alternativeto net income, operating income or any other performance measures derived inaccordance with IFRS or US GAAP. We believe EBITDA among other measures facilitates operating performancecomparisons from period to period and management decision making. It alsofacilitates operating performance comparisons from company to company. EBITDAeliminates potential differences caused by variations in capital structures(affecting interest expense), tax positions (such as the impact on periods orcompanies of changes in effective tax rates or net operating losses) and the ageand book depreciation of tangible assets (affecting relative depreciationexpense). We also present EBITDA because we believe it is frequently used bysecurities analysts, investors and other interested parties in evaluatingsimilar issuers, the vast majority of which present EBITDA when reporting theirresults. TABLE OF CONTENTS Operating and Financial ReviewCondensed Consolidated Income Statements for the three and nine months ended 30September 2007Condensed Consolidated Statements of Recognised Income and Expense for the threeand nine months ended 30 September 2007Condensed Consolidated Balance Sheets as at 30 September 2007Condensed Consolidated Cash Flow Statements for the three and nine months ended30 September 2007Notes to the Condensed Consolidated Financial Statements Operating and Financial Review The following is a discussion of the unaudited consolidated results ofoperations and financial condition of Inmarsat Holdings Limited ("the Company"or together with its subsidiaries, "the Group") for the three and nine monthsended 30 September 2007. You should read the following discussion together withthe whole of this document including the historical consolidated financialresults and the notes. The consolidated financial results were prepared inaccordance with International Financial Reporting Standards ("IFRS") as adoptedby the European Union ("EU") and IFRIC interpretations issued and effective atthe time of this report. There are no material differences for the Group betweenIFRS and IFRS as adopted 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 three months ended 30 September 2007 were US$139.6m, US$55.3m andUS$97.3m respectively (30 September 2006: US$129.2m, US$45.4m and US$89.4mrespectively). The results of the Group's operations are reported in US dollars as the majorityof revenues and borrowings are denominated in US dollars. Satellite phone services ("SPS") From 16 July 2007, our service portfolio now includes the new handheld IsatPhoneservice and the fixed LandPhone service provided through eight distributionpartners. IsatPhone, which is the first handheld satellite phone in theInmarsat portfolio, is a dual-mode satellite/GSM phone that is targeted atbusiness and personal users who travel or work in areas where local telephonenetworks are unreliable or non-existent. LandPhone is a fixed land satphoneinstallation targeted at remote villages. Our SPS portfolio will be extended in the fourth quarter of 2007 with the launchof FleetPhone, Inmarsat's new maritime satellite phone. Initially SPS will beavailable across the Middle East, Africa and Asia and will be rolled-outglobally following an extensive network and terminal modernisation anddevelopment programme to be completed by early 2009. Launch of the third Inmarsat-4 satellite On 3 August 2007, we signed a contract with International Launch Services("ILS") for the launch of our third Inmarsat-4 satellite on a Proton launchvehicle and have been allocated a launch period of March-April 2008. Ouroption to launch the third Inmarsat-4 satellite using an Atlas launch vehicleremains in place as a backup capability. The launch of the third Inmarsat-4satellite will provide global coverage for our existing BGAN, SPS andSwiftBroadband services and will provide the foundation for our to be launchednew broadband maritime service, FleetBroadband. On 5 September 2007 an ILS Proton rocket suffered a launch failure and we havebeen advised that this was as a result of a defective cable. ILS has alsoindicated that the launch failure is not expected to result in a delay to ourcontracted March-April 2008 launch date. SwiftBroadband now commercially available On 5 September 2007 the Inmarsat network was upgraded to provide SwiftBroadbandand on 22 October the service became commercially available for the first time.SwiftBroadband is Inmarsat's first fully Internet Protocol (IP)-based servicefor the aeronautical market providing "always on" connectivity. SwiftBroadband is suitable for a range of applications from aircraft operationand management to cabin applications such as email, internet access, SMS textmessaging and integration into In-flight Entertainment systems. SwiftBroadbandis also being deployed for the in-flight use of cellular phones and PDAs. IsatM2M satellite telematics service launched On 10 September 2007, we announced the introduction of our new low data rateservice, IsatM2M. IsatM2M is a next-generation satellite telematics servicebased on the trusted and globally-accepted Inmarsat D+ service. We haveappointed Satamatics and SkyWave as global distributors for IsatM2M. Alphasat project On 8 November 2007, we announced that agreements have been signed with theEuropean Space Agency ("ESA") to become the commercial operator for the Alphasatproject for the development of a new satellite. Alphasat is an ESA initiativefor the development of Alphabus, a new satellite platform capable of carrying alarge communications payload. Through the Alphasat project we will build andlaunch an advanced L-Band payload which will supplement the existing Inmarsat-4satellite constellation and offer the opportunity for new and advanced serviceswith access to a new allocation of L-band spectrum. Astrium Satellites, asubsidiary of the European Aeronautic Defence and Space Agency ("EADS") has beencontracted to build the satellite. We expect costs for the satellite in orbit(excluding insurance) to be in the region of €260.0 million. Andrew Sukawaty, Chairman and Chief Executive Officer extends role On 28 September 2007, Inmarsat plc announced that Andrew Sukawaty, its Chairmanand Chief Executive Officer since March 2004, had agreed to remain in the jointrole for a further period which is expected to be not less than two years. It isanticipated that he will then transition to the sole role of Chairman. JohnRennocks will remain as the Deputy Chairman and Senior Independent Non-ExecutiveDirector. Interim Dividends On 27 September 2007, the Board declared and paid an interim dividend ofUS$52.8m to Inmarsat plc (the ultimate parent company). Inmarsat plc paid aninterim dividend per ordinary share to its shareholders on 26 October 2007. Revenues Revenues for the three months ended 30 September 2007 were US$139.6m, anincrease of US$10.4m, or 8.0%, compared with the three months ended 30 September2006. The table below sets out the components of the Group's total revenue foreach of the periods under review: ----------- ------ ----------- ------ Three months ended Increase/ Nine months ended Increase/ 30 September (decrease) 30 September (decrease) 2007 2006 2007 2006 ------ ------ ------ ------ ------ ------ (US$ in millions) % (US$ in millions) % ------ ------ ------ ------ ------ ------RevenuesMaritime sector: Voice services 24.5 25.5 (3.9) 77.0 75.7 1.7 Data services 52.0 47.1 10.4 157.8 138.0 14.3------------------ ------ ------ ------ ------ ------ ------ Total maritime sector 76.5 72.6 5.4 234.8 213.7 9.9Land mobile sector: Voice services 3.5 4.6 (23.9) 11.3 15.3 (26.1) Data services 28.3 25.8 9.7 86.1 74.7 15.3------------------ ------ ------ ------ ------ ------ ------Total land mobile sector 31.8 30.4 4.6 97.4 90.0 8.2Aeronauticalsector 11.6 8.0 45.0 32.4 22.4 44.6Leasing (incl.navigation) 16.9 16.3 3.7 51.5 43.6 18.1------------------ ------ ------ ------ ------ ------ ------Total mobilesatellitecommunicationsservices 136.8 127.3 7.5 416.1 369.7 12.6------------------ ------ ------ ------ ------ ------ ------Other income 2.8 1.9 47.4 7.7 5.4 42.6------------------ ------ ------ ------ ------ ------ ------Total revenue 139.6 129.2 8.0 423.8 375.1 13.0------------------ ------ ------ ------ ------ ------ ------ --------------------------MSS revenue by sector Three months ended 30 September 2007 2006 ------- -------Maritime 55.9% 57.0%Land mobile 23.2% 23.9%Aeronautical 8.5% 6.3%Leasing 12.4% 12.8% ------- ------- (000's) As at 30 September 2007 2006 ------- -------Active terminals(1)(2)Maritime 145.4 137.3Land mobile 78.7 82.1Aeronautical 8.5 7.4---------------------------------- ------- -------Total active terminals 232.6 226.8---------------------------------- ------- ------- (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 30September. Active SPS terminals are the average number of terminals active on adaily basis during the period. (2) Active terminals as at 30 September 2007 include 8,870 SPS terminals and13,874 BGAN subscribers (as at 30 September 2006: 10,388 and 5,547respectively). During the three months ended 30 September 2007, revenues from mobile satellitecommunications services were US$136.8m, an increase of US$9.5m, or 7.5%,compared with the three months ended 30 September 2006. Growth has beenstrongest in the newer services such as Fleet (maritime users), BGAN (landusers) and Swift 64 (aeronautical users). Active terminal numbers increased by 2.6% between 30 September 2006 and 30September 2007, with strong growth in the maritime and aeronautical sectors.Maritime active terminals were up 5.9% period over period, while our base ofactive Fleet terminals grew by 42%. There was an overall 4.1% decrease in landsector terminals; however BGAN subscribers grew by 150%. In the aeronauticalsector, we have seen continued growth in Swift 64 (high-speed data, up 52%) and'Classic' Aero (voice and low-speed data, up 13%) with increased active terminalnumbers. Maritime Sector. During the three months ended 30 September 2007, revenues fromthe maritime sector were US$76.5m, an increase of US$3.9m, or 5.4%, comparedwith the three months ended 30 September 2006. This reflects an increase in datarevenues partially offset by a decrease in voice revenues. Revenues from data services in the maritime sector during the three months ended30 September 2007 were US$52.0m, an increase of US$4.9m, or 10.4%, compared withthe three months ended 30 September 2006. The increase in revenues from dataservices has been driven by the continued take-up and strong usage of our Fleetservices. Demand for Fleet terminals has also been driven by growth in theglobal shipping new-build market and from the migration from our Inmarsat Aanalogue service which will be discontinued on 31 December 2007. Revenues from voice services in the maritime sector during the three monthsended 30 September 2007 were US$24.5m, a decrease of US$1.0m or 3.9% comparedwith the three months ended 30 September 2006. Historically our voice revenuesfor the maritime sector have been affected by the migration of users from ourhigher-priced analogue service to our lower-priced digital services and to alesser extent by competition. Within the digital services, there has also beenan increase in both the proportion of traffic associated with certain of ourpromotional schemes and the level of discounts through customer consolidationand growth of Fleet, resulting in lower average prices. This has been partiallyoffset by increased demand for voice services in our newer Fleet services andrevenues from SPS customers. Land Mobile Sector. During the three months ended 30 September 2007, revenuesfrom the land mobile sector were US$31.8m, an increase of US$1.4m, or 4.6%,compared with the three months ended 30 September 2006. This reflects anincrease in data revenues partially offset by a decrease in voice revenues. Revenues from data services in the land mobile sector during the three monthsended 30 September 2007 were US$28.3m, an increase of US$2.5m, or 9.7%, comparedwith the three months ended 30 September 2006. The increase as in the previousquarter is a result of strong growth and usage of BGAN, offset in part by adecline in GAN and R-BGAN, which as expected have begun to experience decreaseddemand through the migration of users to our BGAN service. Although we expectthe migration to BGAN to have a larger impact in the future we do not expectmigration to adversely impact overall land data revenues. Revenues from voice services in the land mobile sector during the three monthsended 30 September 2007 were US$3.5m, a decrease of US$1.1m, or 23.9%, comparedwith the three months ended 30 September 2006. This continues the trend seenover the last few years of declining traffic volumes resulting from competition,principally for our Mini M and large antenna Mini M services, from operators ofhandheld satellite telephones who offer lower-priced voice services. This waspartially offset by growth in BGAN voice and we remain confident that our launchof SPS over a wide geographic area in July 2007 will address this decline in duecourse. Whilst land voice services currently represent a small percentage of ourMSS revenues, 2.6% for the three months ended 30 September 2007, we believethere is a significant opportunity to grow this market segment through our BGANvoice offering and our new SPS portfolio. Revenues from BGAN services during the three months ended 30 September 2007 areset out in the table below. These figures include voice, data and subscriptionrevenues. As at 30 September 2007, there were 13,874 active BGAN subscribers. ---------- ----------BGAN Services Three months ended Nine months ended 30 September 30 September ---------- ---------- 2007 2006 2007 2006 ------ ------ ------ ------Revenues (US$ in millions) 10.2 3.2 25.3 5.3Active subscribers 13,874 5,547 13,874 5,547 ------ ------ ------ ------ Aeronautical Sector. During the three months ended 30 September 2007, revenuesfrom the aeronautical sector were US$11.6m, an increase of US$3.6m, or 45.0%,compared with the three months ended 30 September 2006. The increase continuesto be attributed primarily to the strong performance of the Swift 64 high-speeddata service, which targets the government aircraft and business jet markets aswell as being used by commercial airlines. In addition revenues for low-speeddata services benefited from increased industry demand. Leasing. During the three months ended 30 September 2007, revenues from leasingwere US$16.9m, an increase of US$0.6m, or 3.7%, compared with the three monthsended 30 September 2006. The increase is a result of the new navigationcontracts and growth in land leases, which are predominately government based. Other income. Other income was US$2.8m for the three months ended 30 September2007; an increase of US$0.9m, or 47.4%, compared with the three months ended 30September 2006. The increase in other income relates to additional in-orbitsupport services provided to other satellite operators. As well as the provisionof in-orbit services to other operators, other income consists primarily ofincome from the provision of conference facilities, renting surplus office spaceand 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 discountsare most prominent in the third and fourth quarters. Additionally, the totalamount of volume discounts is affected by the growth in underlying revenue andthe consolidation of distribution partners. The merger of Stratos GlobalLimited and Xantic B.V. in February 2006 has resulted in increased levels ofdiscounts during 2007 compared to 2006. The impact of the recent merger ofVizada Satellite Communications (formerly France Telecom Mobile SatelliteCommunications) and Telenor Satellite Services in September 2007, in terms ofadditional volume discounts, would be in the range of US$7.5m to US$8.5m in afull year, based on historic traffic patterns. Net operating costs Net operating costs in the three months ended 30 September 2007 were US$42.3m,an increase of US$2.5m, or 6.3%, compared with the three months ended 30September 2006. The table below sets out the components of the Group's netoperating costs for each of the periods under review: ------------------ ------------- ------------(US$ in millions) Three months ended Nine months ended 30 September 30 September------------------ ------------- ------------ 2007 2006 2007 2006 -------- ------- ------- -------Employee benefit costs 21.3 21.2 67.4 62.6Restructuring costs includingtermination benefits - - - 6.8Network and satellite operationscosts 8.3 8.0 25.1 23.0Other operating costs 17.4 13.1 45.9 39.7Work performed by the Group andcapitalized (4.7) (2.5) (12.7) (9.3)----------------------- -------- ------- ------- -------Total net operating costs 42.3 39.8 125.7 122.8----------------------- -------- ------- ------- ------- Employee benefit costs Employee benefit costs during the three months ended 30 September 2007 wereUS$21.3m, an increase of US$0.1m, or 0.5% compared with the three months ended30 September.2006. Overall employee benefit costs are comparable between the twoperiods with higher salary costs in the three months ended 30 September 2007offset by lower employee benefit costs. The increase in salary costs is a result of additional headcount in both Londonand Batam (our office in Indonesia), an adverse movement in the Group's hedgedrate of exchange, which has increased from US$1.77/£1.00 in 2006 to US$1.81/£1.00 in 2007 (the majority of staff costs are in Sterling and we report theGroup's results in US dollars) and the impact of annual salary increases. Totalfull-time equivalent headcount at 30 September 2007 was 451 (includes Batamemployees: 58), compared to 436 as at 30 September 2006 (includes Batamemployees: 53). Offsetting the increase in salary costs is a lower bonusprovision due to a change in the timing of provisioning to earlier periods in2007 in addition to a decrease in benefits due to lower defined benefit pensionscheme service costs following changes to benefit rates in July 2007. Network and satellite operations costs Network and satellite operations costs during the three months ended 30September 2007 were US$8.3m, an increase of US$0.3m, or 3.8%, compared with thethree months ended 30 September 2006. The increase is primarily due to theinclusion of three months of in-orbit insurance costs for the Inmarsat-4 F2satellite in 2007 (2006: nil) which commenced on expiry of the launch insurancepolicy, being 8 November 2006. Other operating costs Other operating costs during the three months ended 30 September 2007 wereUS$17.4m, an increase of US$4.3m, or 32.8%, compared with the three months ended30 September 2006. The increase primarily relates to the introduction of new SPSterminal sales with higher direct cost of sales, additional professional fees asa result of increased business activities and a VAT write off. The remainder ofthe increase relates to phasing differences of normal operating expenses betweenthe two periods. Work performed by the Group and capitalized Own work capitalized during the three months ended 30 September 2007 wasUS$4.7m, an increase of US$2.2m, or 88.0%, compared with the three months ended30 September 2006. Own work capitalized reflects the shift of work from our BGANand Inmarsat-4 programme, now that it is largely operational, to work on our newservices that are soon to be introduced such as FleetBroadband, SwiftBroadbandand the global rollout of our SPS service. EBITDA As a result of the factors discussed above, EBITDA for the three months ended 30September 2007 was US$97.3m, an increase of US$7.9m, or 8.8%, compared with thethree months ended 30 September 2006. EBITDA margin has increased to 69.7% forthe three months ended 30 September 2007 compared to 69.2% for the three monthsended 30 September 2006. EBITDA margin is expected to be lower in the lastquarter of 2007 due to increasing volume discounts earned by our distributionpartners. Set forth below is a reconciliation of profit for the period to EBITDA for eachof the periods indicated: ----------------------- ------------- ------------(US$ in millions) Three months ended Nine months ended 30 September 30 September----------------------- ------------- ------------ 2007 2006 2007 2006 -------- ------- ------- -------Profit for the period 23.7 11.1 87.3 42.5Add back:Income tax expense 9.9 15.8 24.2 32.0Net interest payable 21.7 18.5 61.9 58.5Depreciation and amortization 42.0 44.0 124.7 119.3----------------------- -------- ------- ------- -------EBITDA 97.3 89.4 298.1 252.3----------------------- -------- ------- ------- ------- Depreciation and amortization During the three months ended 30 September 2007, depreciation and amortizationwas US$42.0m, a decrease of US$2.0m, or 4.5%, compared with the three monthsended 30 September 2006. The decrease principally relates to accelerateddepreciation associated with the planned closure of the land earth station atGoonhilly which held certain of our operating assets in the three months ended30 September 2006 of US$2.9m (2007: nil). Operating profit As a result of the factors discussed above, operating profit during the threemonths ended 30 September 2007 was US$55.3m, an increase of US$9.9m, or 21.8%,compared with the three months ended 30 September 2006, due to increasedrevenues offset in part by higher net operating costs. Net interest payable Interest payable for the three months ended 30 September 2007 was US$23.4m, anincrease of US$2.9m compared with the three months ended 30 September 2006. Theincrease relates to US$1.3m of non-recurring premium paid on the purchase ofUS$38.0m of our Senior Notes in the three months ended 30 September 2007, higherinterest charges on the Senior Discount Notes, following the semi-annualaccretion of interest to principal, and interest charges on the additionalUS$50.0m of drawings made on our Senior Credit Facility during the year. Interest receivable for the three months ended 30 September 2007 was US$1.7m, adecrease of US$0.3m compared with the three months ended 30 September 2006.Although cash and cash equivalent balances were higher during the three monthsended 30 September 2007, the increase in bank interest receivable was offset bythe absence of any comparable unrealized gain in the three months ended 30September 2007 (2006: US$0.8m) on an interest rate swap which expired at the endof 2006. Profit before tax As a result of the factors discussed above, profit before tax during the threemonths ended 30 September 2007 was US$33.6m, an increase of US$6.7m or 24.9%compared with the three months ended 30 September 2006. Income tax expense The tax charge for the three months ended 30 September 2007 was US$9.9m,compared with US$15.8m for the three months ended 30 September 2006. The decrease in effective tax rate from 58.7% for the three months ended 30September 2006 to 29.5% for the three months ended 30 September 2007 is largelydriven by the inclusion of a non-recurring US$5.6m adjustment made following areview of certain historic tax provisioning positions for the three months ended30 September 2006. Profit for the period As a result of the factors discussed above, profit for the three months ended 30September 2007 was US$23.7m, an increase of US$12.6m compared with the threemonths ended 30 September 2006. Liquidity and capital resources The Group had Net Borrowings at 30 September 2007 of US$906.5m primarilycomprising Senior Credit Facility drawings of US$300.0m, Senior Notes ofUS$218.8m (net of US$91.6m Senior Notes held by the Group, being 29.5% of theaggregate principal amount outstanding), Senior Discount Notes of US$401.7m(including accretion of principal) and deferred satellite payments of US$55.0m,net of cash and cash equivalents of US$70.1m. The total borrowings figures givenin note 5 can be reconciled to the net borrowings figure above as follows: ------------------------------- -------- --------(US$ in millions) As at As at 30 September 31 December 2007 2006------------------------------- -------- --------Total borrowings 976.6 941.2Cash and cash equivalents (70.1) (42.8)------------------------------- -------- --------Net Borrowings 906.5 898.4------------------------------- -------- -------- Net cash generated from operating activities during the three months ended 30September 2007 was US$111.2m compared to US$85.5m during the three months ended30 September 2006. The increase primarily relates to increased EBITDA andmovements in working capital. Net cash used in investing activities during the three months ended 30 September2007 was US$73.2m compared with US$35.7m for the three months ended 30 September2006, reflecting capital expenditure for the continued construction of other newBGAN services such as FleetBroadband and SwiftBroadband, investment in our newSPS network, prepaid launch costs associated with our Inmarsat-4 F3 satelliteand the payment of outstanding contractual milestones relating to theconstruction of our Inmarsat-4 satellites. Net cash used in financing activities during the three months ended 30 September2007 was US$53.9m compared to US$15.2m for the three months ended 30 September2006. The increase relates to the purchase of US$38.0m of Senior Notes by theGroup during the three months ended 30 September 2007 (2006: nil) The Group continually evaluates sources of capital and may repurchase,refinance, exchange or retire current or future borrowings and/or debtsecurities from time to time in private or open-market transactions, or by anyother means permitted by the terms and conditions of borrowing facilities anddebt securities. CIP Canada offer for Stratos Global Corporation Final regulatory approvals from the US Federal Communications Commission ("FCC")are required before the acquisition by CIP Canada Investment Inc ("CIP Canada")of Stratos Global Corporation Inc ("Stratos") can be completed. CIP Canada andStratos currently expect that FCC approvals will be received during the fourthquarter of 2007. Recent Events Subsequent to 30 September 2007, there have been no material events which wouldaffect the information reflected in the condensed consolidated financial resultsof the Group. INMARSAT HOLDINGS LIMITED CONDENSED CONSOLIDATED INCOME STATEMENT (unaudited) ----------------------- ------------ ------------(US$ in millions) Three months ended Nine months ended 30 September 30 September----------------------- ------------ ------------ 2007 2006 2007 2006 -------- ------ ------- -------Revenue 139.6 129.2 423.8 375.1Employee benefit costs (21.3) (21.2) (67.4) (62.6)Restructuring costs includingtermination benefits - - - (6.8)Network and satellite operationscosts (8.3) (8.0) (25.1) (23.0)Other operating costs (17.4) (13.1) (45.9) (39.7)Work performed by the Group andcapitalized 4.7 2.5 12.7 9.3Depreciation and amortization (42.0) (44.0) (124.7) (119.3)----------------------- -------- ------ ------- -------Operating profit 55.3 45.4 173.4 133.0Interest receivable and similarincome 1.7 2.0 4.8 6.5Interest payable and similar charges (23.4) (20.5) (66.7) (65.0)----------------------- -------- ------ ------- -------Net interest payable (21.7) (18.5) (61.9) (58.5)----------------------- -------- ------ ------- -------Profit before income tax 33.6 26.9 111.5 74.5Income tax expense (9.9) (15.8) (24.2) (32.0)----------------------- -------- ------ ------- -------Profit for the period 23.7 11.1 87.3 42.5----------------------- -------- ------ ------- ------- CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited) ----------------------- ------------ ------------(US$ in millions) Three months ended Nine months ended 30 September 30 September----------------------- ------------ ------------ 2007 2006 2007 2006 ------- ------- ------- -------(Losses)/gains on cash flow hedges (1.7) (1.8) (4.0) 5.6Actuarial gains from pension andpost-retirement healthcare benefits - - 9.0 7.1Tax credited directly to equity 0.5 0.6 (1.5) 0.3----------------------- ------- ------- ------- -------Net gains recognised directly inequity (1.2) (1.2) 3.5 13.0----------------------- ------- ------- ------- -------Profit for the period 23.7 11.1 87.3 42.5----------------------- ------- ------- ------- -------Total recognised income for theperiod 22.5 9.9 90.8 55.5----------------------- ------- ------- ------- ------- INMARSAT HOLDINGS LIMITED CONDENSED CONSOLIDATED BALANCE SHEET ------------------------------ -------- --------(US$ in millions) As at As at 30 September 31 December------------------------------ -------- -------- 2007 2006 (unaudited) (audited) -------- --------AssetsNon-current assetsProperty, plant and equipment 1,228.5 1,247.5Intangible assets 519.8 522.0Derivative financial instruments 0.1 ------------------------------- -------- -------- 1,748.4 1,769.5 -------- --------Current assetsCash and cash equivalents 70.1 42.8Trade and other receivables 198.0 159.0Inventories 2.0 0.8Derivative financial instruments 4.8 8.5------------------------------ -------- -------- 274.9 211.1 -------- --------Total assets 2,023.3 1,980.6------------------------------ -------- -------- LiabilitiesCurrent liabilitiesBorrowings 62.4 11.9Trade and other payables 173.3 151.8Provisions 0.2 1.6Current income tax liabilities 26.3 8.4------------------------------ -------- -------- 262.2 173.7 -------- --------Non-current liabilitiesBorrowings 897.8 910.6Other payables 4.7 6.7Provisions 32.0 37.6Deferred income tax liabilities 141.7 134.4------------------------------ -------- -------- 1,076.2 1,089.3 -------- --------Total liabilities 1,338.4 1,263.0------------------------------ -------- --------Net assets 684.9 717.6------------------------------ -------- -------- Shareholders' equityOrdinary shares 0.4 0.4Share premium 346.1 346.1Other reserves 341.8 342.0(Accumulated losses)/retained earnings (3.4) 29.1------------------------------ -------- --------Total shareholders' equity 684.9 717.6------------------------------ -------- -------- INMARSAT HOLDINGS LIMITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT (unaudited) --------------------- ------------- -------------(US$ in millions) Three months ended Nine months ended 30 September 30 September ------------- ------------- 2007 2006 2007 2006--------------------- -------- -------- -------- --------Cash flow from operating activitiesCash generated from operations 109.6 82.9 275.9 216.6Interest received 1.6 2.7 4.3 4.1Income taxes paid - (0.1) (0.1) (0.5)--------------------- -------- -------- -------- --------Net cash inflow from operatingactivities 111.2 85.5 280.1 220.2--------------------- -------- -------- -------- --------Cash flow from investing activitiesPurchase of property, plant andequipment (71.7) (31.7) (139.2) (72.3)Consideration under ACeScollaboration arrangement (1.5) (4.0) (3.0) (4.0)--------------------- -------- -------- -------- --------Net cash used in investing activities (73.2) (35.7) (142.2) (76.3)--------------------- -------- -------- -------- --------Cash flow from financing activitiesDividends paid - - (73.1) (49.8)Drawdown of revolving Senior CreditFacility - - 50.0 -Interest paid on Senior Notes andFacilities (15.9) (15.2) (34.5) (35.6)Finance lease disposal fees - - (1.4) -Purchase of Senior Notes (38.0) - (38.0) (43.6)Loan to fellow Group Undertaking - - (12.8) ---------------------- -------- -------- -------- --------Net cash used in financing activities (53.9) (15.2) (109.8) (129.0)--------------------- -------- -------- -------- --------Foreign exchange adjustment (0.8) (0.4) (0.7) (0.4)--------------------- -------- -------- -------- --------Net (decrease)/increase in cash andcash equivalents (16.7) 34.2 27.4 14.5--------------------- -------- -------- -------- -------- Movement in cash and cash equivalentsAt beginning of period 86.7 14.7 42.6 34.4Net (decrease)/increase in cash andcash equivalents (16.7) 34.2 27.4 14.5--------------------- -------- -------- -------- --------As reported on balance sheet (net ofbank overdrafts) 70.0 48.9 70.0 48.9--------------------- -------- -------- -------- --------At end of period, comprisingCash at bank and in hand 3.1 4.1 3.1 4.1Short-term deposits with originalmaturity of less than 3 months 67.0 44.9 67.0 44.9Bank overdrafts (0.1) (0.1) (0.1) (0.1)--------------------- -------- -------- -------- -------- 70.0 48.9 70.0 48.9 -------- -------- -------- -------- Notes to the Condensed Consolidated Financial Statements 1. General information The principal activity of Inmarsat Holdings Limited and its subsidiaries ("theGroup") is the provision of mobile satellite communications services. These unaudited condensed consolidated financial results were approved for issueby the Board of Directors on 9 November 2007. 2. Principal accounting policies Basis of preparation These financial statements have been prepared in accordance with IFRS and IFRICinterpretations applicable to companies reporting under IFRS as adopted by theEU. There are no material differences for the Group between IFRS and IFRS asadopted by the EU. The unaudited Group results for the three and nine months ended 30 September2007 have been prepared on a basis consistent with the IFRS accounting policiesas set out on pages F1-F53 of the consolidated financial statements for the yearto 31 December 2006 as filed with the SEC on Form 20-F on 30 April 2007. The unaudited condensed consolidated financial results are based upon accountingpolicies and methods consistent with those used and described in the annualfinancial statements prepared under IFRS, save as disclosed in note 6. Theseinterim financial statements should be read in conjunction with the most recentannual financial statements. In the opinion of management all adjustments of anormally recurring nature considered necessary for a fair presentation have beenincluded. Operating results for the three and nine months ended 30 September2007 are not necessarily indicative of the results that may be expected for theyear ending 31 December 2007. The consolidated balance sheet as at 31 December2006 has been derived from the audited consolidated financial statements at thatdate but does not include all of the information and footnotes required by IFRSfor complete financial statements. Basis of accounting The preparation of the condensed consolidated financial statements in conformitywith IFRS requires management to make certain estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the Balance Sheet dates and the reportedamounts of revenue and expenses during the reported period. Although these estimates are based on management's best estimate of the amount,event or actions, these results ultimately may differ from those estimates. Accounting policies adopted in preparing these condensed consolidated financialstatements have been selected in accordance with IFRS. 3. Segmental information The Group operates in one business segment being the supply of mobile satellitecommunications services ("MSS"). "Other" in the three and nine months ended 30 September 2007 principallycomprises income from technical support to other operators, the provision ofconference facilities and leasing surplus office space to externalorganizations. Primary reporting format - business segments --------------- ------------------- -------------------(US$ in millions) Three months ended 30 September 2007 Three months ended 30 September 2006------------------- (unaudited) (unaudited) MSS Other Unallocated Total MSS Other Unallocated Total--------------- ------ ------ ------- ------ ------ ------ ------- ------- Revenue 138.1 1.5 - 139.6 127.6 1.6 - 129.2--------------- ------ ------ ------- ------ ------ ------ ------- -------Segment result(operatingprofit) 55.6 (0.3) - 55.3 48.0 (2.6) - 45.4Net interestcharged to theincomestatement - - (21.7) (21.7) - - (18.5) (18.5)--------------- ------ ------ ------- ------ ------ ------ ------- -------Profit beforeincome tax 33.6 26.9Income taxexpense (9.9) (15.8) ------ -------Profit for theperiod 23.7 11.1 ------ ------- Segment assets 1,953.2 - 70.1 2,023.3 1,980.3 - 49.0 2,029.3Segmentliabilities (210.2) - (1,128.2) (1,338.4) (260.1) - (1,128.5) (1,388.6)Capitalexpenditure(a) (53.8) - - (53.8) (7.9) - - (7.9)Depreciation (36.6) - - (36.6) (40.8) - - (40.8)Amortizationof intangibleassets (5.4) - - (5.4) (3.2) - - (3.2)--------------- ------ ------ ------- ------ ------ ------ ------- ------- (a) Capital expenditure stated using accruals basis.(b) Revenue from the sale of user terminals is classified as MSS revenue for thepurpose of segment reporting --------------- ------------------- -------------------(US$ in millions) Nine months ended 30 September 2007 Nine months ended 30 September 2006------------------- (unaudited) (unaudited) MSS Other Unallocated Total MSS Other Unallocated Total--------------- ------ ------ ------- ------ ------ ------ ------- ------- Revenue 418.1 5.7 - 423.8 370.7 4.4 - 375.1--------------- ------ ------ ------- ------ ------ ------ ------- -------Segment result(operatingprofit) 172.8 0.6 - 173.4 134.3 (1.3) - 133.0Net interestcharged to theincomestatement - - (61.9) (61.9) - - (58.5) (58.5)--------------- ------ ------ ------- ------ ------ ------ ------- -------Profit beforeincome tax 111.5 74.5Income taxexpense (24.2) (32.0) ------ -------Profit for theperiod 87.3 42.5 ------ ------- Segment assets 1,953.2 - 70.1 2,023.3 1,980.3 - 49.0 2,029.3Segmentliabilities (210.2) - (1,128.2) (1,338.4) (260.1) - (1,128.5) (1,388.6)Capitalexpenditure(a) (103.6) - - (103.6) (54.7) - - (54.7)Depreciation (108.7) - - (108.7) (106.0) - - (106.0)Amortizationof intangibleassets (16.0) - - (16.0) (13.3) - - (13.3)--------------- ------ ------ ------- ------ ------ ------ ------- ------- (a) Capital expenditure stated using accruals basis.(b) Revenue from the sale of user terminals is classified as MSS revenue for thepurpose of segment reporting 4. Net interest payable ----------------------- ------------- ------------(US$ in millions) Three months ended Nine months ended 30 September 30 September----------------------- ------------- ------------ 2007 2006 2007 2006----------------------- -------- ------- ------- -------Accretion of principal on SeniorDiscount Notes (10.0) (9.0) (29.2) (26.5)Interest on Senior Notes and SeniorCredit Facility (10.7) (9.1) (29.4) (29.0)Unwinding of discount on deferredsatellite liabilities (0.9) (0.8) (2.6) (2.8)Amortization of debt issue costs (0.9) (0.9) (2.7) (2.4)Pension and post-retirement liabilityfinance costs (0.7) (0.6) (2.2) (4.0)Other interest (0.2) - (0.5) -Interest and facility fees payable onbank loans and overdrafts - (0.1) (0.1) (0.3)----------------------- -------- ------- ------- -------Total interest payable and similarcharges (23.4) (20.5) (66.7) (65.0)----------------------- -------- ------- ------- -------Bank interest receivable and otherinterest 1.5 1.2 4.6 4.5Interest rate swap - 0.8 - 2.0Intercompany Interest 0.2 - 0.2 ------------------------ -------- ------- ------- -------Total interest receivable and similarincome 1.7 2.0 4.8 6.5----------------------- -------- ------- ------- -------Net interest payable (21.7) (18.5) (61.9) (58.5)----------------------- -------- ------- ------- ------- 5. Borrowings Borrowings are shown net of unamortized deferred finance costs, which have beenallocated as follows: --------------- --------------- ------------------(US$ in millions) As at 30 September 2007 As at 31 December 2006--------------- ------- ------ ------ -------- ------ ------- Deferred Deferred finance finance Amount costs Net balance Amount costs Net balance--------------- ------- ------ ------ -------- ------ -------Senior CreditFacility 300.0 (1.3) 298.7 250.0 (1.6) 248.4Senior DiscountNotes 386.7 (7.5) 379.2 367.6 (8.2) 359.4- Accretion ofprincipal 15.0 - 15.0 4.9 - 4.9Senior Notes 218.8 (7.6) 211.2 256.8 (8.9) 247.9Premium onSenior Notes 1.0 - 1.0 1.1 - 1.1Deferredsatellitepayments 55.0 - 55.0 60.6 - 60.6Bank overdrafts 0.1 - 0.1 0.2 - 0.2--------------- ------- ------ ------ -------- ------ -------Total Borrowings 976.6 (16.4) 960.2 941.2 (18.7) 922.5--------------- ------- ------ ------ -------- ------ ------- 6. Summary of differences between IFRS and United States GAAP The condensed consolidated financial statements have been prepared in accordancewith accounting principles under IFRS, which differ in certain material respectsfrom generally accepted accounting principles in the United States ("US GAAP").Such differences involve methods for measuring the amounts shown in thecondensed consolidated financial statements, as well as different disclosuresrequired by US GAAP. Further details on these differences between IFRS andUS GAAP are set forth in note 34 of our consolidated financial statements forthe year ended 31 December 2006 as filed with the SEC on Form 20-F. The following table contains a summary of the adjustments to profit for thefinancial period between IFRS and US GAAP: ----------------------- ------------ ------------(US$ in millions) Three months ended Nine months ended 30 September 30 September----------------------- ------------ ------------ 2007 2006 2007 2006 ------- ------- ------- --------Profit for the financial period asreported under IFRS 23.7 11.1 87.3 42.5US GAAP adjustments:Pension plans (0.2) 0.1 (0.6) 1.2Financial instruments - 0.1 - 0.5Deferred taxation 9.8 3.3 (4.6) (2.0)Facility fees and amortization - - - (2.5)Development costs and amortization (0.6) - 1.1 (0.7)Depreciation on tangible fixed assets (0.4) (0.3) (1.0) (1.0)Stock options (including UK NationalInsurance) 0.2 0.2 (0.5) 0.7Capitalized interest 5.2 5.9 18.6 20.8Deferred income on sale and leaseback 0.7 0.8 2.2 4.3Network and satellite costs andamortization 0.1 0.1 0.4 0.4Amortization of intangible assets (0.3) (0.4) (0.9) (1.1)----------------------- ------- ------- ------- --------Total US GAAP adjustments 14.5 9.8 14.7 20.6----------------------- ------- ------- ------- --------Net income under US GAAP 38.2 20.9 102.0 63.1----------------------- ------- ------- ------- -------- The following table contains a summary of the adjustments to shareholders' fundsbetween IFRS and US GAAP: -------------------------------- -------- -------(US$ in millions) As at As at 30 September 31 December 2007 2006-------------------------------- -------- -------Total shareholders' funds as reported under IFRS 684.9 717.6US GAAP adjustments:Deferred taxation (44.7) (40.3)Development costs and amortization (56.6) (57.7)Tangible fixed assets 2.4 3.4Goodwill (155.9) (155.9)Stock options (including UK National Insurance) 2.2 2.6Network and satellite operation costs andamortization (7.4) (7.8)Deferred income on disposal of tangible assets (50.1) (52.3)Capitalized interest 188.7 170.0Intangible assets 70.9 71.8-------------------------------- -------- -------Total US GAAP adjustments (50.5) (66.2)-------------------------------- -------- -------Shareholders' equity under US GAAP 634.4 651.4-------------------------------- -------- ------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Inmarsat