SERVING MISSION CRITICAL COMMUNICATION NEEDS INMARSAT PLC ANNUAL REPORT AND ACCOUNTS 2010 OUR BUSINESS Inmarsat is the world’s leading provider of a comprehensive portfolio of global mobile satellite services for use on land, at sea and in the air. We provide voice and data connectivity to end-users through the most versatile and reliable network in the world, giving us the capability to deliver innovative services and solutions on an unprecedented scale. We have been able to sustain strong revenue and profit growth because our experience, commitment, people and network infrastructure enable us and our partners to benefit from market opportunities in both buoyant and turbulent economic conditions. GLOBAL REACH EUROPE European NORTH AMERICA Investment Boeing signs Bank funds KYRGYZSTAN contract for Global Alphasat TSF supports Xpress satellites UN and NGO MIDDLE EAST monitors Oman Air debuts GSM and WiFi SINGAPORE HAITI access for Global launch of passengers 10,500 families IsatPhone Pro at call friends and PAKISTAN BRAZIL ITU deploys CommunicAsia loved-ones BGAN used after quake BGAN to relay telemedicine election results for fl ood victims SOUTH AFRICA World Cup AUSTRALIA ARGENTINA charity marathon Frontline role Dakar Rally CHILE uses BGAN in Queensland Media report debut for as cyclone miners’ rescue IsatPhone Pro follows fl oods via BGAN CONTENTS 2010 OPERATIONS GOVERNANCE FINANCIAL STATEMENTS 01 Financial Highlights 34 Board of Directors 59 Independent Auditors’ 62 Consolidated Statement 105 Company Balance Sheet Report to the Members of Changes in Equity 01 Operational Highlights 36 Executive Management of Inmarsat plc 106 Company Cash Flow 63 Consolidated Cash Flow Statement 02 Chairman and 37 Report of the Directors 60 Consolidated Income Statement Chief Executive’s Statement 106 Company Statement Review 40 Statement on Corporate 64 Notes to the of Changes in Equity Governance 60 Consolidated Statement Consolidated Financial 18 Chief Financial Offi cer’s of Comprehensive Statements 107 Notes to the Financial Review 47 Directors’ Remuneration Income Statements Report 104 Independent Auditors’ 29 Corporate Social 61 Consolidated Balance Report to the Members 108 Five-Year Summary Responsibility 58 Directors’ responsibilities Sheet of Inmarsat plc statement 108 Financial Calendar 2010 HIGHLIGHTS 2010 OPERATIONS FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS TOTAL REVENUE TOTAL DIVIDEND PAYABLE • Launch of IsatPhone Pro global US$ 1,171.6 (US$) 36.69 handheld phone 1,171.6m 1,038.1 36.69¢ 33.36 2009: US$1,038.1m 996.7 2009: 33.36¢(US$) 30.33 • US$1.2bn investment in Global Xpress network announced • LightSquared triggers agreement GOVERNANCE for roll-out of ATC 08 09 10 08 09 10 • New 176kbps entry-level BGAN OPERATING PROFIT BASIC EARNINGS PER SHARE streaming service US$460.6m 460.6 57¢(US$) 57 • New SB200 SwiftBroadband service 2009: US$356.8m 356.8 2009: 38¢(US$) and terminals for smaller aircraft 317.2 38 30 • Eight-year facility signed with European Investment Bank to build and launch Alphasat 08 09 10 08 09 10 FINANCIAL STATEMENTS EBITDA PROFIT BEFORE INCOME TAX US$696.1m 696.1 US$333.5m 333.5 594.2 2009: US$594.2m 531.2 2009: US$196.9m 193.8 196.9 08 09 10 08 09 10 FOR MORE INFORMATION inmarsat.com ANNUAL REPORT AND ACCOUNTS 2010 INMARSAT PLC 01 IN THIS SECTION CHAIRMAN AND Strategic perspectives – 02 Business review – 06 CHIEF EXECUTIVE’S REVIEW Review of operations – 09 ANDREW SUKAWATY We aim to deliver superior shareholder value based on a Chairman and Chief Executive Offi cer strategy of pursuing multiple paths to growth. We underpin this by a rigorous focus on customer needs, as well as the ongoing effi ciency of our operations, the preservation of our position as market leader, and on a disciplined assessment of the fi nancial returns. 1 OUR MULTIPLE PATHS TO GROWTH… 2 HELP US ACHIEVE OUR MISSION… Handheld voice Low data rate ET RK Managed A services /M O Services R P E E M R O A Capacity T T S IO Government U leasing N C & Military A L UAVs Our mission 1979: GLOBAL L-BAND Aero passenger To serve mission ESTABLISHED FRANCHISE connectivity ATC critical communications needs where terrestrial 2014: GLOBAL KA-BAND networks don’t go or SATELLITES AND NETWORK are ineffective. Aero passenger F I connectivity N N A IO N IT Government C S IA O & Military L P RY T US IND VSAT services Maritime & Energy In the chart above we show how our strategic roadmap links with STRATEGIC PERSPECTIVES four focus areas across the business, working together to deliver shareholder value. We are proud to be the leading provider of mobile satellite communications services, serving mission critical communications We have continued to lay the groundwork in the past year for needs where terrestrial networks don’t go or are, at times, driving additional growth opportunities in the future to maintain ineffective. Our strategy has evolved over the years as we have our leadership position over the next decade. seen the number of data applications used by our customers increase, the size and cost of the terminals dramatically reduce We consider four perspectives when we plan for the future. First and the spectrum effi ciency and throughput of our satellites and foremost is our focus on customers and their diverse needs greatly increase. in the markets we serve. Second, we look internally at how we are positioning ourselves operationally to effi ciently and effectively service those needs. Third, we look at our ability to embed and 02 INMARSAT PLC ANNUAL REPORT AND ACCOUNTS 2010 INMARSAT PLC BOARD The Board is collectively responsible for the long-term success of the Group and determines the nature and extent of the risks the Group should take to achieve its strategic objectives. 2010 OPERATIONS 3 AND DRIVE OUR STRATEGIC SUCCESSES CUSTOMER/ Highly reliable comms for data transmission on the move We are driving growth in our MARKET Bundled value voice established BGAN, FleetBroadband and SwiftBroadband services with new Competitive reliable handheld service applications, delivered to new industries, Premium services – good value in targeted geographic areas. Innovative services GOVERNANCE OPERATIONAL Highest reliability standards We will maintain our L-band network with Accelerated revenue growth in our core business and new services satellites purchased on a rolling basis to offer a range of new and enhanced Fixed-cost base through primarily wholesale approach and careful capex planning Inmarsat products and services. Professionally rewarding, challenging and enjoyable place to work INDUSTRY Our position as the leading mobile satellite services With the launch of our IsatPhone Pro POSITION (‘MSS’) provider global handheld phone we can now offer Being technology leader in MSS unrivalled voice quality and reliability for Providing a broad range of leading innovative services years to come. FINANCIAL STATEMENTS Offering premium services – at good value FINANCIAL To deliver superior total shareholder returns by increasing Continued investment in the L-band revenue growth on a largely fi xed-cost base through Alphasat and the development of Build sustainable cash returns to shareholders the Global Xpress platform are designed Prudent capex planning to accelerate cash fl ow growth as revenues increase. sustain the leadership in our offer. Finally, we do a full and government sectors. With this investment we are targeting our disciplined assessment of what returns we can deliver to our existing customers and distribution channel with services many shareholders as we tackle the marketplace opportunities. are already using or demanding for the future as their bandwidth needs grow. With a focus on these four perspectives, we announced a new investment programme. This programme has become our In our review of the multiple paths we are pursuing to achieve our next-generation Inmarsat-5 (‘I-5’) satellites and services which targeted growth, the Global Xpress programme is expected to we have named Global Xpress™. Global Xpress (‘GX’) is targeting start commercial operations over two satellites in 2013. In 2014, a US$1.4bn existing market opportunity. This US$1.2bn capital we expect to have a global service operating over the three programme will launch new mobile broadband satellite services satellites. These satellites are being built by the world leader signifi cantly faster than our current available services. We will be in this Ka-band satellite technology, Boeing Satellite Systems the fi rst to offer true global mobile VSAT-type services. This will International, Inc. (‘Boeing’). We are targeting US$500m of open up broadband opportunities in the maritime, energy and annual revenues, fi ve years after we offer a global service. ANNUAL REPORT AND ACCOUNTS 2010 INMARSAT PLC 03 CHAIRMAN AND CHIEF EXECUTIVE’S REVIEW CONTINUED Whilst Global Xpress complements our L-band franchise, it can also provide an upgrade path to existing customers who may The Global Xpress network will be delivered in the Ka-band via the new series of Inmarsat-5 spacecraft being built by Boeing in the U.S. develop higher bandwidth needs, and affords them the opportunity to migrate over time from existing services to the new GX services. Some customers may also choose to use both services simultaneously in the future through hybrid packages we plan to offer. With Global Xpress we also intend to pre-sell some of the capacity, as most Fixed Satellite operators do today. In the fi rst demonstration of this we have signed Boeing as a distributor with a signifi cant commitment for capacity on the Inmarsat-5 (‘I-5’) constellation representing 10% of the planned income in the fi rst fi ve years of operations. Of course, we remain well-positioned to continue growing our core L-band franchise as well. With three generations of satellite constellations in operation, another one currently being built – Alphasat, which will operate in the L-band spectrum – we continue to invest for the future here as well.