Following the ‘will they, won’t they?’ takeover palaver which has encircled Inmarsat (ISAT) and its US-peer EchoStar recently, the British telecoms group could have done with a decent set of half-year results. That was not to be. Adjusted post-tax profits crashed 32 per cent to $76m in the first six months of the year, after rising finance costs and depreciation charges hammered margins. Include the impact of a $207m liability on the group’s 2023 convertible bond, and Inmarsat crashed into a net loss position.
Meanwhile, the story hasn’t changed in any of the group’s four trading divisions – strong revenue growth in the aviation division was offset by turbulence in government and enterprise, while maritime managed to remain flat. And these trends are likely to persist – over the next five years management only expects average revenue growth in the mid-single digits.
All the while, capital expenditure remains high. True, a decline in major project costs improved net cash outflows in this period, but management is still expecting total capex of between $500m and $600m in every one of the next three years. After that period of intense spending, revenues and cash inflows may begin to recover and only then will management consider dividend growth again.
| INMARSAT (ISAT) | ||||
| ORD PRICE: | 550p | MARKET VALUE: | £2.54bn | |
| TOUCH: | 549-550p | 12-MONTH HIGH / LOW: | 808p | 334p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 144 | |
| NET ASSET VALUE: | 237ȼ* | NET DEBT: | 195% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2017 | 684 | 63.4 | 8.0 | 21.6 |
| 2018 | 717 | -119 | -29.0 | 8.0 |
| % change | +5 | - | - | -63 |
| Ex-div: | 13 Sep | |||
| Payment: | 19 Oct | |||
| *Includes intangible assets of $779m, or 169ȼ a share £1=$1.31 | ||||
