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Inmarsat profits fall in first quarter

Post-tax profits crashed $326m lower after a change to liabilities over a convertible bond and costs relating to the takeover offer
Inmarsat shareholders will vote on the take-private offer on 10 May

Inmarsat Plc (LON:ISAT) reported soft sales and profits at the start to the year but said it remained confident about hitting full-year targets as it awaits being taken private.

The satellite operator, which is being taken private in a US$3.4bn deal by a private equity-led consortium, generated revenue of US$346.9mln in the first quarter, up 0.4% on the same period a year ago. For the full year it maintained guidance of $1,300mln-$1,400mln.

READ: Inmarsat shares rocket higher after agreeing US$3.4bn takeover by private equity-led consortium

Underlying earnings (EBITDA) fell 12.9% to US$152.4mln. Excluding Ligado and costs relating to the takeover offer, EBITDA increased 18.7% to $169.4m.

Post-tax profit crashed $326m lower, which Inmarsat said mainly reflecting a change in the unrealised conversion liability on its 2023 convertible bond of $297.9m, as well as US$17mln costs relating to the offer.

If shareholders vote on 10 May to approve the offer and there are regulatory hiccups, the board expect the deal to be completed by the end of the year.

The trading update came ahead of the group’s annual shareholder meeting on Wednesday, an event that last year saw investors vote down the executive pay policy, following rebellions against pay at AGMs in 2012, 2013 and 2015.

Chief executive Rupert Pearce said the first quarter was “a strong underlying performance... building on the positive momentum achieved during 2018", saying the group continued to “build and aggressively defend market share in our target markets”.

Revenue from the Maritime arm, the group’s largest division, was down 9.5%, while the Government and Aviation segments saw sales up 28.6% and 53.4%.  The Enterprise arm was down 13.8% and cash from the deal with US network Ligado was down 90.1%.

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