4 May 2017 11:02
INMARSAT PLC - ANNUAL GENERAL MEETING: 4 MAY 2017
ANDREW SUKAWATY: CHAIRMAN
It's 10 o'clock. Good morning, ladies and gentlemen, and welcome to Inmarsat plc's 2017 Annual General Meeting.
I would like to start today's meeting by welcoming our board of directors:
· Dr Abe Peled, our senior independent non-executive director who joined the Board in 2013 and became SID in November 2015. Sir Bryan Carsberg and Janice Obuchowski, our independent non-executive directors who are well known to our shareholders.
· Simon Bax joined the Board in 2013 and is our Remuneration Committee Chairman; retired General Robert Kehler joined in 2014, and Rob Ruijter, our Audit Committee Chairman, was appointed early in 2015; Dr Hamadoun Touré is not able to be here with us today due to his commitments as part of the Smart Africa Smart Cities initiative for Kigali in Rwanda.
· We are also delighted to welcome Pip McCrostie to her first Inmarsat AGM and we're delighted Pip's first public board position was to join Inmarsat;
· Rupert Pearce, our Chief Executive Officer; and
· We also have Tony Bates, our Chief Financial Officer and Alison Horrocks, our Chief Corporate Affairs Officer and Company Secretary.
This morning we made an announcement that we have appointed Warren Finegold to join the Board on 1 August. We're delighted that we will benefit from his strategic and business development experience and we look forward to his contribution to our Board work later this year.
While welcoming our current board of directors, I would also like to thank two long serving Board members who retired from the Board earlier this year. Stephen Davidson and Kathleen Flaherty who had served for many years, and provided the Board with great insight and support during this time.
We have been successfully transferring the knowledge and experience of longer serving directors to the more newly- appointed ones and the Board is operating effectively with the newer Directors contributing well to discussions and debate about our business.
I'm going to ask Rupert Pearce, our CEO, to provide some commentary of how our business performed in 2016 and, as we announced our first quarter results for 2017 this morning, he will also provide some key highlights from these results as well. Before he does, let me make a few comments about your company.
As I look back over 2016, there was progress in many areas of our business as we put in place the building blocks needed to support our growth ambitions. The satellite sector was derated during the year, which had an impact on our own share price, which was also affected by our own business performance during the year where we had a slower start but a stronger finish. We delivered our latest high-speed broadband service, called Global Xpress, across the globe and have celebrated the first year of Fleet Xpress, our latest maritime service, being available. Government markets are already using Global Xpress to support their needs and they understand the benefits of a commercial operator providing some of their connectivity requirements. Until recently, in-flight passenger connectivity was something which we had not built into our business plans but we are now starting to see real opportunities for this revenue stream with a number of airlines committed and already in installation to use this service. We are pleased with how we have started 2017 with positive results announced today.
Our strategy is evolving and over the coming years we will adapt our business to become a digital services enabler. This does not mean we will move away from supporting our services which save lives at sea and in the air; we are investing for the future with new services being offered. Reliable safety services is our heritage and remains part of our DNA.
Our investments in satellite and infrastructure platforms will enable us to make a real contribution to digital society across the world. Our focus remains on serving customers in remote environments with uniform global mobile or portable connectivity that is highly reliable. I mentioned at the start of the meeting one of our Directors, Hamadoun Touré's involvement in Smart Africa; we will have our own teams in Kigali demonstrating how satellite connectivity can provide the vital communications link, and this is one example where we see Inmarsat's contribution to the digital society.
We have announced that we increased our dividend for the 11th consecutive year, delivering dividend increases every year since we listed on the Stock Exchange in 2005. We have determined that this is the right level of dividend having regard to the medium-term outlook for the business and our annual and longer term financial planning supports this.
The Board and I continue to believe we are well positioned as a Company to grow profitably in the years ahead. We are fully funded for our immediate investment needs. We are committed to achieving our ambitions which will create a strong and attractive business for our staff; improved financial results and value for our shareholders and an eco-system who will want to work with us to provide innovative platforms and solutions for the future, as well as our partners who work with us to deliver these services across the globe to customers who need reliable, cost-effective communications.
Before I hand over to Rupert Pearce, our CEO, I want to pay tribute to Inmarsat's staff. We value them for their dedication and hard work for the business; they have tremendous loyalty to Inmarsat and for what we do as a business. They play a critical part in our success and our future.
RUPERT PEARCE - CEO
Good morning ladies and gentlemen. I will summarise some of the key elements of our performance in 2016 and then provide a few comments on our Q1 results announced this morning.
2016 was a year where we continued to lay the foundations for sustained future growth in revenues and profits. We continued to build upon the roll-out of our Global Xpress services and put in place building blocks for the expansion of future services across all our business sectors. These actions will support our strategy to become a digital services enabler over the coming years.
Overall for 2016, we had an encouraging performance in a market environment that still continues to be attritional, with negligible sector growth and downwards pressure on service pricing. Our focus for 2016 was to start to generate revenues from our new Global Xpress broadband services across all our core market segments, to continue with progress in the re-positioning of our L-band services for complementary revenue growth, and to continue to invest in our support for innovative solutions and products. By and large, we met those ambitions. By the end of the year, our Global Xpress services had been launched in all of our major target markets, although we did suffer modest delays during the year as a result of some teething problems with GX's highly complex and cutting-edge technology. Today, GX is reviewing rave reviews across the board and is establishing itself as the leading global mobile broadband service on land, at sea and in the air. In addition, our core L-band business performed credibly, and continued to reinvent itself in new Government, Aviation, Maritime and Enterprise markets, especially those related to the emerging high growth opportunity known as the Internet of Things, where we believe our L-band capabilities will be especially relevant.
Our diversified business model, operating across diverse market sectors, continues to be one of our strengths and has served us well in recent years as some of our core markets has encountered headwinds. By being diversified, we can benefit from opportunities in one area if another is affected by a business downturn and this diversification allows us to stay the course through business down cycles in our core markets. One example of our diversification is our relationship with Ligado, under which we receive a revenue stream from this US-based company in return for the use of some of our spectrum over the US. The restructuring of the commercial relationship with them last year put us on a sound footing and we believe will be beneficial for both parties.
At the end of 2016, I laid out the strategy for our journey from being a mobile satellite operator to becoming a digital services enabler. The steps along this roadmap have changed the focus of our business and have created new opportunities. In this fast changing ultra-connected world of smart machines, connectivity is becoming a crucial enabler and not just a cost and mobile satellite services are becoming more relevant to the connected society.
We have four pillars supporting our strategy. These are firstly to continue to have the highest quality, cutting-edge integrated global networks; secondly to foster and support a highly innovative value-added solutions and services ecosystem working over our networks; thirdly to deliver those capabilities globally in a tailored, relevant, customer-intimate way through our own and third party highly skilled distribution networks; and fourthly to recognise that our staff and partners are strategic assets for us in ensuring we meet our goals and that as such we must strive to inspire and empower both these constituencies and to be both a great place to work and a great partner to do business with. The four pillars of Best Networks, Best Solutions, Best Distribution and Best Workplace support our strategic vision to become a global digital services enabler, serving the emerging global digital society in powerful and unique ways. In the near term, that means continuing the journey of reinventing our capabilities by driving into broadband services with GX and our new European Aviation Network, reorienting our L-band network assets to drive into new complementary markets and opportunities, and laying across the top of all our networks a new solutions platform and application partner ecosystem that will enable and accelerate value-added services over our networks. I am optimistic about how we will succeed and deliver our strategy through his year's performance and the coming years.
As we announced our Q1 2017 results this morning, I would like to share some of the highlights with you.
The uncertainty in our industry continues and we expect that structural change will continue to impact the overall industry driven by potential technological and market disruption in the future. However, We remain well positioned as a leading incumbent operator, particularly in the mobility markets, where we have established a solid core business with positive growth potential in the years ahead.
On the back of a strong finish to the year in the fourth quarter of 2016, we maintained a good pace of activity in the first quarter of 2017, and consequently, delivered a solid set of results, maintaining our positive momentum across almost all of our core markets. We saw solid revenue and EBITDA growth in Q1, set alongside increased investment and the on-going pressures that continue to impact many of our markets. This positive start to the year sets us up well for the rest of the year and into 2018.
Some highlights were positive demand for our GX services, particularly from customers in the Government sector but also installations in both Maritime and Aviation are now growing steadily. We are excited that the fourth Inmarsat-5 satellite will be launched with SpaceX later this month. This satellite will provide us with both in-orbit redundancy and additional capacity and capabilities to deploy our Global Xpress services. Good progress is being made on our European Aviation Network which will bring very high-speed broadband services over the skies of Europe. We expect commercial service to be later this year following the launch of the S-band satellite currently scheduled for the end of June. Having two satellite launches within a short timeframe is an exciting and nervous time for us as we watch years of effort from our teams and our manufacturers depend upon a successful launch. We will hope our flawless record of successful launches will continue with these two.
Andy mentioned earlier about the increasing business opportunity for in-flight connectivity services and we were delighted that Qatar Airways recently announced their decision to install GX on their A350 and 777 fleets.
In summary, our performance in Q1 further ensures we remain well placed for the future. We have well-established and proven communications networks, substantial spectrum assets to fuel those networks, differentiated capability in running global mobility services, a market-leading global distribution network and a significant base of loyal customers to whom we will continue to provide high quality service and delivery. These elements, particularly in challenging markets at a time of substantial change, provide us with a strong foundation from which to capture the significant growth opportunities that will emerge in the coming years.
ANDREW SUKAWATY - CHAIRMAN
Before we move to the formal business, I welcome any questions you may have for me, Rupert, or indeed, for any of the directors present here today.
Thank you for your investment in Inmarsat. We appreciate your support of our business.